The desire for gold is the most universal and deeply rooted commercial instinct of the human race - Gerald M. Loeb Gerald Loeb (1899 - April 13, 1974) was a founding partner of E.F. Hutton & Co., a renowned Wall Street trader, and the author of the books The Battle For Investment Survival and The Battle For Stock Market Profits. Loeb promoted a view of the market as too risky to hold stocks for the long term in contrast to well known value investors. He also created the Gerald Loeb Award, given annually for excellence in various categories of financial journalism. 1
Case for Gold Investment The Value of Gold Gold: A perceived safe haven asset Low correlations Store of value: Hedge against inflation Currency: Medium of exchange Evolved in the marketplace over the last 5,000 years. Unique Demand: Consumption product, especially in markets like India and China Demand for weddings and religious occasions Some Current Trends Quantitative Easing leading to increase in the price of Gold Gold s Investment demand on the rise Globally hedge funds, ETFs and mutual funds are driving up investment demand for Gold Central Banks increasing Gold reserves aggressively 2
Low Correlations with other Asset Classes Asset Class Gold SENSEX CNX MIDCAP INDEX CRISIL COMPOSITE BOND NIFTY Gold 1.00 SENSEX 0.16 1.00 CNX MIDCAP INDEX 0.12 0.85 1.00 CRISIL COMPOSITE BOND -0.03 0.15 0.21 1.00 NIFTY 0.18 0.99 0.86 0.16 1.00 Gold is an Effective Diversifier - Helps to contain Portfolio Risk. Low correlation with major asset classes Past Correlations may or may not be observed in future. Source: Bloomberg as on 15 th Feb 2012. All figures in local currency 3
Unique Dual Demand Dynamics The desire of gold jewellery adds an interesting consumption paradigm to this asset class, especially in markets like India (& China) World Gold Demand flows 5yr Avg (Q4 '05 to Q3 '10) Investment Industrial Jewellery Gold investing therefore has a dual dynamic Investment and Consumption Investment 31% Jewellery 57% Significant physical demand: Gold Demand for Jewellery is almost twice that of investment demand Industrial 12% Source: GFMS,World Gold Council. * Includes Identifiable and non-identifiable investment 4
Gold in India 18000 tonnes worth just under USD 1 trillion or 11% of global stock Represents approx. 15 gms gold per capita holding ETF Holdings currently just at USD 2.7 bn or approx 0.27% of national gold holdings Almost all gold is held as bullion or jewelry Significant demand for investment gold destined for consumption Source: GFMS, World Gold Council and internal analysis. Data as on 17 th May, 2011 The statements contained herein may include statements of future expectations and other forward-looking statements that are based on external current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Please refer to the Scheme Information Document for further information. 5
MOSt GOLD SHARES - Do we need one more? Motilal Oswal MOSt Shares Gold ETF For the 1st time ever, directly buy from AMC in 10 gram lots OR Buy Gold ETFs from stock exchange terminal (1 gm i.e. 1 unit or higher) For the 1st time ever, redeem ETF Units for physical Gold bars as low as 10gms Get pure imported gold- fineness or purity of 99.5% or higher At a price lower than other options in the market Delivery centers across 22 cities in India Pass through price benefit to consumers!!! Make the MOSt of your GOLD! Get gold at a lower price! 6
MOSt GOLD SHARES Get gold at a lower price Get gold at a lower price: MOSt Gold Shares opens up the Spot Gold price to retail investors for the 1 st time Cost effective: Investors buy & accumulate ETF units True gold accumulation Redeem for cash, physical gold bars at better rates than any other Banks/ Jeweller Best of both worlds: MOSt Gold Shares marries the investment benefits of Gold with its Consumption seamlessly Other avenues in the market Premium over spot prices Banks 6% - 17% Jewellers 6% - 7% The above premium over spot prices may differ from bank to bank and jeweller to jeweller 7
MOSt GOLD SHARES Guaranteed Purity India s first GOLD ETF to Break down from 1 Kg to 10 Gms creation unit lots Designated delivery locations across India Pure Imported Gold Certified by one of five 'Approved Good Delivery Referees' of the London Bullion Market Association (LBMA), Responsible for the testing of samples, the provision of reference samples, and other functions in support of the 'Good Delivery' system. The 10 gm bar Individually registered and sealed in protective Certicard packaging Official Assay Certificate that guarantees fine gold content and weight *Guaranteed Purity - Imported gold of finesse 995 or higher 8
MOSt GOLD SHARES Gold collection centers across 22 locations *Ahmedabad *Bangalore Bhubaneswar Chennai *Hyderabad Jaipur Kolkata Delhi Coimbatore Kochi Kanpur Lucknow Madurai *Mumbai Surat Visakhapatnam Vijayawada Thrissur Salem Indore Trichy Trivandrum For details of gold collection, please refer out websites & Scheme Information Document (SID) of MOSt Gold Shares 9
Buying Physical Gold Parameter MOSt Gold Shares Other GOLD ETF s Jeweller Bank Physical Lots 10 gms or multiples 1 Kg. or multiples N.A. N.A. Gold Collection Centres Mode of Holding 22 Locations across India Only Mumbai N.A. N.A. Demat Demat Physical (Bars / Coins) Physical (Bars / Coins) Pricing Spot Gold prices Spot Gold prices Differs from one to another. Neither transparent nor standard. Differs from bank to bank. Not Standard. Purity 99.5% or higher 99.5% or higher Can t Say High Risk of Theft No, Secured Vaults No, Secured Vaults Yes Yes Wealth Tax No No Yes Yes Long Term Capital Gains Tax Indexation benefit after one year Indexation benefit after one year Only after 3 years Only after 3 years Liquidity High High Relatively at High Cost Low on Liquidity For further details, please refer Scheme Information Document (SID) of MOSt Gold Shares 10
MOSt GOLD SHARES Key Features Investment objective: To provide return by investing in Gold Bullion. Performance: Benchmarked to the Spot Gold Price. The units of the Scheme bought or sold On Stock Exchanges (BSE/NSE) minimum Invests only in physical gold of 99.5 purity or higher No Entry or Exit Load Minimum Investment during NFO: Rs. 10,000/- and multiples of Re. 1/- Fund Manager: Mr. Rajnish Rastogi trading lots of one units (1gm) Directly with the Mutual Fund in creation unit lot of 10 units and multiples For further details and delivery charges, please refer to the Scheme Information Document (SID) 11
Cash Creation process T Creation request received before the cut-off time (3pm). T Cash credited into MF Bank A/C Amount of cash determined from the CU file uploaded daily on the AMC website T Receipt of Cash by Fund. Fund purchases Gold from market on behalf of investor T AMC sends the Txn Slip to R&T agent T+2 R&T to allot units on receipt of custodian confirmation of receipt of physical gold by the Fund. T+2 R&T agent credits the ETF units into the investor`s DP A/C. T+3 Units trade on exchange The above process flow is only for understanding purpose and may vary from case to case. For further details, please refer Scheme Information Document (SID) of MOSt Gold Shares 12
Physical Redemption process T Request for redemption received by AMC from the investor by 3 pm PAN Card and self attested copy of specified identity proofs received by AMC T Request time stamped at AMC DP Instruction Copy Acknowledgement delivered to investor along with copy of terms and conditions T Units confirmed received at AMC DP Investor Transfers cash due if any to MF bank account T+5 Gold released for delivery after person/document verification at gold collection centre Gold Delivered and Acknowledgement Accepted R&T agent cancels the ETF units AMC deposits the cash component if any into the bank The above process flow is only for understanding purpose and may vary from case to case. For further details, please refer Scheme Information Document (SID) of MOSt Gold Shares 13
Disclaimer: The information contained in this document is for general purposes only and not a complete disclosure of every material fact and terms and conditions and features of the Scheme. The information / data herein alone is not sufficient and shouldn t be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions and data included in this document are as on date and are subject to change without notice. While utmost care has been exercised while preparing this document, Motilal Oswal Asset Management Company Limited does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this document. No part of this document may be duplicated in whole or in part in any form and/or redistributed without prior written consent of the Motilal Oswal Mutual Fund/Motilal Oswal Asset Management Company Limited. Readers should before investing in the Scheme make their own investigation and seek appropriate professional advice. Statutory Details: Constitution: Motilal Oswal Mutual Fund has been set up as a trust under the Indian Trust Act, 1882. Trustee: Motilal Oswal Trustee Company Limited. Investment Manager: Motilal Oswal Asset Management Company Ltd. Sponsor: Motilal Oswal Securities Ltd. Scheme Name & Classification: Motilal Oswal MOSt Shares Gold ETF (MOSt Gold Shares), an open ended Exchange Traded Fund. Investment Objective: The investment objective of the Scheme is to provide return by investing in Gold Bullion. The performance of the fund will be benchmarked to the Spot Gold Price. However, the performance of scheme may differ from that of the underlying index due to tracking error. There can be no assurance or guarantee that the investment objective of the Scheme would be achieved. Asset Allocation: Gold Bullion: 95%-100%; Government Securities, Money Market Instruments and cash at call: 0-5%. Load: Entry Load: Nil Exit Load: Nil Terms of Issue: Minimum Application Amount: During NFO, Rs. 10,000/- and in multiples of Re. 1/- each. Ongoing Basis, On the Exchange: The units of the Scheme are proposed to be listed on the Capital Market Segment of National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Ltd. (BSE). On the Exchange, the units of the Scheme can be purchased/sold in minimum lot of 1 unit and in multiples thereafter. Directly with the Fund: Investors can buy/sell units of the Scheme in creation unit size of 10 units (10 gms) and multiples of 10 units (10 gms) thereof. The scheme offers only redemption in kind (physical delivery of gold) directly with the fund. Face Value & Issue Price: The units being offered will have a face value of Rs. 10/- each. Units will be issued at a premium equivalent to difference between allotment price and the face value of Rs. 10/-. Investor Benefits and General Services: During continuous offer, sale and redemption of units of the Scheme would be at NAV based prices on all business days. NAVs to be declared on all business days. Risk Factors: (1) All Mutual Funds and securities investments are subject to market risks and there can be no assurance that the Scheme s objectives will be achieved (2) As the price/value/interest rates of the securities in which the Scheme invests fluctuates, the Net Asset Value (NAV) of the Scheme may go up or down depending upon the factors and forces affecting the securities market (3) Past performance of the Sponsor/AMC/Mutual Fund and its affiliates does not indicate the future performance of the Scheme and may not provide a basis of comparison with other investments (4) Motilal Oswal MOSt Shares Gold ETF (MOSt Gold Shares ) is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme, its future prospects and returns. Investors are therefore urged to study the terms of offer carefully and consult their Investment Advisor before they invest in the Scheme (5) The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Mutual Fund beyond the initial contribution made by it of an amount of Rs. 1 Lac towards setting up of the Mutual Fund (6) The present Scheme is not a guaranteed or assured return Scheme. (7) Investment in the scheme shall be subject to various other risk factors including but not limited to risk associated with investment in Gold, currency risk, exchange rate risk, tracking error risk, etc. Disclaimer of NSE: 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 Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the full text of the Disclaimer Clause of NSE. Disclaimer of BSE: It is to be distinctly understood that the permission given by Bombay Stock Exchange Ltd. should not in any way be deemed or construed that the SID has been cleared or approved by Bombay Stock Exchange Ltd. nor does it certify the correctness or completeness of any of the contents of the SID. The investors are advised to refer to the SID for the full text of the Disclaimer Clause of the Bombay Stock Exchange Ltd. For further Scheme Specific Risk Factors & other details, Please read the Scheme Information Document (SID) & Statement of Additional Information (SAI) carefully before investing. A copy of SID, SAI and KIM alongwith the application form are available at the office of the AMC, R&T, Distributors, or can be downloaded from www.motilaloswal.com/assetmanagement and www.mostshares.com. 14