Reliance Mutual Fund

- “R*Shares NV20 ETF” (an open ended Index Exchange Traded Fund)

[Rajiv Gandhi Equity Savings Scheme (RGESS) qualified scheme]

NFO Opens : 11-June-2015

NFO Closes : 12-June-2015 Offer for Sale of Units at Rs.10/- (On allotment, the value of each unit of the Scheme would be approximately equal to

1/10th of the value of NV20 Index) per unit during the new fund offer period and Continuous offer for Units at NAV

based prices

Value Investing

- Opportunity For Investment

What is Value Investing

Value investing is one of the major fundamental approaches of equity

investment in the world. Value Investing is the philosophy of investing in

securities which is undervalued in reference to its intrinsic worth.

3

Intrinsic value of a company is based on factors like tangible assets,

earnings, dividends, financial strength and stability, quality of

management etc

Buying at or below intrinsic value provides a "margin of safety" in value

stocks that can help absorb unfavorable developments, with

subsequently less risk of a market overreaction on the downside.

In general, value investing is a long term approach which tends to

initially produce current income via dividends and also offer the

potential for long-term appreciation when the market recognizes the true

value of the stocks.

Stock Screening in Value Investing

The selection of companies for value investing are based on broad

parameters like

4

Predictable and Proven Earnings

Has a competitive edge

Stable Financial structure with low debt

Fairly or undervalued stock based on margin of safety

NV20 Index

A route to Value Invest in India

Launched in January 2009, the NV20 Index is designed to reflect the behavior

and performance of a diversified portfolio of 20 value companies forming part of

CNX Nifty Index .

It consists of the 20 most liquid value blue chip companies listed on NSE. NV20

Index provides exposure to broader sectors of the economy The company

should have an investable weight factor (IWF) of at least 10%.

The Weightage of the index constituent (where applicable) is capped at 15%,

Weightage of such stock may increase between the rebalancing periods.

Companies which have given dividends of not less than four percent, including

bonus for at least seven years out of the nine years immediately preceding the

review period.

Companies are selected on the basis of ROCE , PE, PB and DY. Companies with

relatively lower PE and PB, while higher DY and ROCE are selected.

About NV20 Index

Source : IISL

NV 20 – Index Methodology

Source : IISL

Companies forming the part CNX Nifty on the construction and

rebalancing date are taken into consideration for selection of stocks

Stocks are selected on the basis of ROCE , PE, PB and DY and final

ranking is derived to select the value stocks from CNX Nifty

Ranks are assigned to all the Nifty constituents based on each parameter

i.e. ROCE, PE, PB & DY *.Relatively lower PE and PB receives a better

rank, while higher DY and ROCE receive a better rank

Weights of 0.4, 0.3, 0.2 and 0.1 are assigned to ranks of ROCE, PE, PB and

Dividend Yield respectively to derive the final ranking for selection

The top 20 companies as per the ascending order of the final ranking are

selected to form the index.

Index Re-Balancing: Index is re-balanced on semi – annual basis. The cut-off date is January 31

and July 31 of each year, i.e. For semiannual review of indices, average data for six months ending

the cut-off data is considered. Four weeks prior notice is given to market from the date of change.

NV20 & CNX Nifty- Year Ending Ratios

Basic characteristic of value companies are low P/E ratio and high dividend yield. As

per the year ending data mentioned in table, the P/E ratio of NV20 index is lower

than CNX Nifty and the Dividend Yield of NV20 is higher than CNX Nifty consistently.

NV 20 CNX Nifty

Date Index

Value P/E P/B Dividend

Yield %

Index

Value P/E P/B Dividend

Yield %

31/12/2009 2083 19.3 3.2 1.40 5201 23.2 3.7 0.95

31/12/2010 2684 21.2 3.6 1.24 6135 24.5 3.9 1.02

30/12/2011 2093 15.9 3.0 2.14 4624 16.8 2.8 1.63

31/12/2012 2604 15.4 3.1 1.85 5905 18.7 3.1 1.4

31/12/2013 2918 14.0 2.3 1.90 6304 18.7 3.0 1.48

31/12/2014 3861 16.0 2.6 1.56 8283 21.2 3.5 1.27

29/05/2015 3787 16.7 2.7 2.1 8434 23.1 3.7 1.4

Source : IISL

Past Performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other

investment.

NV20 & CNX Nifty – Index Movement

Than NV20 has outperformed CNX Nifty and the outperformance has been consistent

since Jan, 2009.

500

1000

1500

2000

2500

3000

3500

4000

4500

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

May

-13

Sep-

13

Jan-

14

May

-14

Sep-

14

Jan-

15

May

-15

NV 20 Index Nifty

Source : IISL

Past Performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other

investment.

NV20 & CNX Nifty – Calendar Year Returns

NV20 has given higher returns than CNX Nifty in all calendar years except in

2012

Source : IISL

Past Performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other

investment.. *YTD Returns as on 29th May 2015.

Total Annualised Return (Including Dividend)

Calendar Year NV 20 CNX Nifty Difference

2009 112.31% 73.24% 39.07%

2010 31.22% 19.22% 11.99%

2011 -20.93% -23.81% 2.88%

2012 27.11% 29.43% -2.33%

2013 14.17% 8.07% 6.10%

2011 34.73% 32.90% 1.83%

YTD* -1.38% 2.12% -3.50%

Constituents of NV20 Index

Source : IISL as on 29-May-2015

SL No. SECURITYNAME WEIGHTAGE

1 INFOSYS LTD. 15.04

2 ICICI BANK LTD. 13.86

3 RELIANCE INDUSTRIES LTD. 10.89

4 TATA CONSULTANCY SERVICES LTD. 10.06

5 AXIS BANK LTD. 7.54

6 STATE BANK OF INDIA 6.57

7 HINDUSTAN UNILEVER LTD. 4.59

8 OIL & NATURAL GAS CORPORATION LTD. 4.46

9 MAHINDRA & MAHINDRA LTD. 4.38

10 HCL TECHNOLOGIES LTD. 4.22

11 COAL INDIA LTD. 3.79

12 HERO MOTOCORP LTD. 2.65

13 BAJAJ AUTO LTD. 2.38

14 NTPC LTD. 2.12

15 BHARAT PETROLEUM CORPORATION LTD. 1.66

16 TATA STEEL LTD. 1.65

17 GAIL (INDIA) LTD. 1.36

18 BANK OF BARODA 1.15

19 PUNJAB NATIONAL BANK 0.86

20 NMDC LTD. 0.77

Constituents of NV20 Index

Provides diversification across 7 broad sectors

The highest exposure is to Financials Sector

Lowest Exposure is to Metals

Source:IISL 29th May 2015

29.98%

29.31%

20.50%

9.41%

4.59%

4.56%

1.65%

Financial Services

IT

Energy

Automobile

Consumer Goods

Industrial Manufacturing

Metals

Why Invest In

Exchange Traded Fund (ETF)?

Structured like Mutual Funds, but listed & traded on the exchange

like stocks

An ETF represents a basket of stocks that reflect an index

An ETF helps you to achieve portfolio diversification, risk mitigation

& cash equalization.

Ease of transaction - Can be easily bought / sold like any other

stock on the exchange subject to availability of buyer and seller

through terminals spread across the country

Ease of Liquidity - Can be bought / sold anytime during market

hours at prices that are expected to be close to actual NAV of the

Scheme. Thus, investor transacts at real-time prices instead of end-

of-day prices subject to availability of buyer and seller

Other Special Features

Instant diversification through exposure to a large number of

stocks by purchasing as low as 1 unit

Efficient tool to execute strategies like arbitraging between

cash & futures market

Ability to put limit orders

ETF UNIT

ETF Fund

Basket of

Stocks

ETFs – Concepts

Low Cost Long Index Exposure – Derivatives have a high roll-over cost and

also known for short term gains, ETFs hence makes a cost efficient option for

maintaining long index positions.

Cash Equitization – Investors who maintain cash positions, awaiting suitable

investment options, can use ETFs to gain instant exposure to equity markets as

per their asset allocation, helping them access and not miss out on any market

movements

Core / Satellite Investment Strategies - ETFs allow investors to maintain broad-

based / fundamental index ETF as their core and actively move satellite

investment exposure to momentum or sector ETFs as per the market movements

Sector Rotation / Tactical Allocation – ETFs can be used to add or be

overweight specific markets, sectors or industries to a core portfolio

Portfolio Completion - ETFs allow investors to fill gaps in a portfolio in specific

asset classes or sectors

Use of ETFs by Arbitrator* - Low cost ETFs assist in arbitrages as buying ETF is

fairly convenient compared to buying the entire set of stocks in the index basket

*Subject to the market condition and availability of spread and liquidity.

ETFs – an effective tool for one’s portfolio

ETF Stocks

Exposure in NV Index Buying a Single unit Need to buy 20 Stocks

Rebalancing Easy Difficult

Transaction Procedure Only a single unit needs to

be purchased

20 different stocks in different

weightage needs to be

purchased

Minimum Investment

Single Unit Price depending

on the unit size For eg If one

unit is 1/10 of the Index,

3800/10= 380 one needs to

spend only 380 Rs to buy

one unit

The cost of buying 20 stocks

at their market price.(Very

High Cost as compare to

ETF)

Above table only shows investment in NV20 through different modes. Investors may makes investment in NV20 via other modes also.

Investors are advised to consult their financial advisor before making any investment

Investment in NV20 via different Modes

R*Shares NV20 ETF (An open-ended, Index Exchange Traded Fund)

[Rajiv Gandhi Equity Savings Scheme (RGESS) qualified scheme]

Investment in R*Shares NV20 ETF is a route to value investing in India

It allows investors to take part in India growth story by essentially investing in

20 most liquid value blue chip companies listed on NSE.

The index is designed to serve as both a benchmark and an investable index

and is comprised of 20 constituent stocks representing large, relatively well-

established companies across key sectors

Investments in R*Shares NV20 ETF can form part of “core equity portfolio”,

especially for Institutional investors

By investing in R*Shares NV20 ETF, strategies like “cash equitization” can be

effectively deployed because of its inherent advantages like one of the best

market representation.

Positioning –R*Shares NV20 ETF

ETI

About R*Shares NV20 ETF

R*Shares NV20 ETF will be listed as an Exchange Traded Fund (ETF) on NSE Ltd.

with Reliance Capital Asset Management Ltd. being the Asset Manager of

R*Shares NV20 ETF

R*Shares NV20 ETF will invest in NV20 Index companies only, in the same

proportion as the underlying index, monitored and corrected (if required) daily

Launched in January 2009, the NV20 Index is the subset of CNX Nifty Index , one

of the oldest and most prominent broad based benchmark in India

Investment objective or R*Shares NV20 ETF would be to provide returns that,

before expenses, closely correspond to the total returns of the securities as

represented by the NV20 Index subject to tracking errors. However there can be no

assurance or guarantee that the investment objective of the scheme would be

achieved

P/E: 16.72 , P/B : 2.72, Dividend Yield : 2.05 as on 29th May 2015 for NV 20 Index*

* - Source : www.nse-india.com & Ratios of NV 20 Index .

Scheme Features : R*Shares NV20 ETF

Investment Objective The investment objective of R*Shares NV20 ETF is to provide returns

that, before expenses, closely correspond to the total returns of the

securities as represented by the NV20 Index subject to tracking

errors. However there can be no assurance or guarantee that the

investment objective of the Scheme will be achieved.

Nature of Scheme An Open Ended, Index Exchange Traded Fund, RGESS

Benchmark NV20 Index

Securities constituting NV20 Index

95%-100%

Money Market instruments including CBLO 0%-5%

(with maturity not exceeding 91 days)

Asset Allocation

Liquidity

Listed on Recognized Stock Exchanges & available for trade in 1

(one) unit and in multiples of 1 unit and with AMC in form of creation

unit size of 6000 units and multiples thereafter

Load Structure Entry & Exit Load : Nil

Transparency/NAV Disclosure

The NAV will be calculated & disclosed on or

before 5 working days from the closure of NFO

and subsequently at the close of every

working day which shall be published in at

least two daily newspapers and also uploaded

on the AMFI website and RMF website.

Units of the scheme will be available in

Dematerialized (electronic) form only.

The applicant under the scheme will be

required to have a beneficiary account with a

Depository Participant of NSDL/CDSL and will

be required to indicate in the application the

Depository Participants (DP)name, DP ID

Number & the beneficiary account number of

the applicant.

Minimum Application Amount

Exchange : The minimum number of Units that

can be bought or sold on the exchange is 1

(one) unit and in multiples of 1 unit.

Directly from AMC : Restricted to Authorized

Participants & Large Investors in form of

creation unit size of 6000 units & in multiples

thereafter

Dematerialization

Allotment of Units

The value of each unit of the Scheme would be

approximately equal to 1/10th of the value of

NV 20 Index

Scheme Features : R*Shares NV20 ETF

Reliance Mutual Fund’s

ETF Features

Liquidity: Apart from being readily available for trade on the recognized stock

exchanges, ETF units can also be bought in creation units size by large investors

directly from the asset management company ( 6000 units @ 1/10 of NV 20 Index)

Less of Ambiguity: The ETF’s investment strategy & stock selection is clearly

defined, holding stocks as per the underlying Index in the same weightages,

monitored and adjusted (if required) for any index change on a daily basis

Diversification: Buying a single unit will offer diversification benefit in the entire

index companies

Transparency: The index constituents are available in the public domain on a daily

basis (available on Bloomberg page “RITE”)

Reliance MF ETF – key advantages

Disclaimer - Please refer respective SID /KIM to know more about RMF Scheme

Trading options available

Subscription Process Features

Through Stock

Exchange

online terminal

/ stock broker

• Can trade as less as 1 Unit

• Funding to be done on T+1

• Unit credit on T+2

• Transaction on Exchange traded price

• No paperwork

• Transaction on order matching and availability of quotes

Through AMC

(Authorized

Participants &

Large Investors)

Transaction

form with

requisite

documents

• Can transact in multiples of creation unit size

• Can happen in Cash or basket of stocks

• Transaction in exchange of Portfolio deposit & Cash

Component

Redemption Process Features

Through Stock

Exchange

online terminal

/ stock broker

• Can trade as less as 1 Unit

• Units taken on T+1

• Amount credited T+2

Through AMC

(Authorized

Participants &

Large Investors)

Redemption

Request

• Can trade in multiples of creation unit size

• Can happen in Cash or basket of stocks

• Transaction in exchange of Portfolio deposit & Cash

Component

Live Prices (NAV) with the basket is available on Bloomberg page “RITE” for

reference

Key Responsibilities

Head - ETF

Fund Management

Total work experience of over 25

years

Krishan Daga is Fund Manager of various equity

ETFs of Reliance Mutual fund i.e. R*Shares

Banking ETF, R*Shares CNX 100 ETF, R*Shares

Nifty ETF, R*Shares Consumption ETF, R*Shares

Dividend Opportunities ETF and R*Shares Sensex

ETF. He is also managing Quant PLUS fund, Gold

Savings Fund, R*Shares Gold ETF, Nifty Index

Fund, Sensex Index Fund, Arbitrage Fund and

various dual funds with long term call option

Strategy.

He also heads ETF business. He has been with

the Reliance Capital Asset Management Ltd since

July 2007.

Previous stints include Quantitative Analyst at

HSBC Securities (1995 to 2003), JP Morgan

(2003-2004), Brics Securities (2004-2005) and

Deutsche Securities (2005 to 2007).

Specialist in Quantitative Analysis and Portfolio

Attribution Analysis.

Graduate in Commerce from Rajasthan University.

About the Fund Manager

(Rajiv Gandhi Equity Savings Scheme)

RGESS is an equity savings scheme aimed at encouraging new retail investors in India. It

encourages small investors to benefit from investing in domestic capital markets.

‘New Retail Investors’ who have gross total annual income less than or equal to Rs. 12 Lakhs

eligible for tax benefits through section 80CCG of Income Tax Act, 1961

Investments have to be made in eligible securities as mentioned in RGESS.

The holding period of eligible securities is three years with fixed lock-in of first year and a

flexible lock-in period of subsequent two years.

In the ‘flexible lock-in’ period, investors will be permitted to trade, subject to specified conditions

Deduction is available upto 50% of invested in such shares and mutual fund units, maximum

deduction is available upto Rs. 25000.

For further details on RGESS, kindly refer the Scheme Information Document

About RGESS

Disclaimer

Scheme Specific Risk Factors: Trading volumes and settlement periods may restrict liquidity in equity and debt investments.

Investment in Debt is subject to price, credit, and interest rate risk. The NAV of the Scheme may be affected, inter alia, by changes in

the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The NAV may also be subjected to

risk associated with tracking error, investment in derivatives or script lending as may be permissible by the Scheme Information

Document.

NSE Disclaimer: It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that

the Scheme Information Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of

the contents of the Draft Scheme Information Document. The investors are advised to refer to the Scheme Information Document for

the full text of the Disclaimer Clause of NSE

Disclaimers

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and

therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual and

statistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-

party sources, which are deemed to be reliable. It may be noted that since RCAM has not independently verified the accuracy or

authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and

information has been processed or arrived at; RCAM does not in any manner assures the accuracy or authenticity of such data and

information. Some of the statements & assertions contained in these materials may reflect RCAM’s views or opinions, which in turn

may have been formed on the basis of such data or information.

Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive

at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees,

affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary

damages, including on account of lost profits arising from the information contained in this material.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Thank You