I. DEFINITIONS AND ABBREVIATIONS In this Offer Document, the following words and expressions shall have the meaning specified below, unless the

Transcription

1 I. DEFINITIONS AND ABBREVIATIONS In this Offer Document, the following words and expressions shall have the meaning specified below, unless the context otherwise requires: Applicable NAV : Applicable NAV is the Net Asset Value per Unit at the close of the Working Day on which the application for purchase or redemption is received at the designated investor service centre and is considered accepted on that day. An application is considered accepted on that day, subject to it being complete in all respects and received prior to the cut-off time on that Working Day. Asset Management Company/ AMC/ Investment Manager/RCAM : Reliance Capital Asset Management Limited, the Asset Management Company incorporated under the Companies Act,1956, and authorized by SEBI to act as the Investment Manager to the Schemes of Reliance Mutual Fund (RMF) Bonus Unit : Bonus Unit means and includes, where the context so requires, a unit issued as fully paid-up bonus unit by capitalising a part of the amount standing to the credit of the account of the reserves formed or otherwise in respect of this scheme. CDSC : Contingent Deferred Sales Charge, a charge imposed when the units are redeemed within the first four years of unit ownership. The SEBI (Mutual Fund) Regulations, 1996 provides that a CDSC may be charged only for the first four years after purchase and mandates the maximum amount that can be charged in each year. Continuous Offer : Offer of the Units when the Scheme becomes open ended, after closure of the initial offer. Custodian : Deutsche Bank, Mumbai, acting as Custodian to the Scheme, or any other custodian who is appointed by the Trustee. Designated Investor Service Centres (DISC/Official point of acceptance for transaction) : Any location as may be defined by the Asset Management Company from time to time, where investors can tender the request for subscription, redemption or switching of units, etc. Entry Load : Load on subscriptions/switch in Exit Load : Load on redemptions/switch out. FII : Foreign Institutional Investors, registered with SEBI under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, Investment Management Agreement (IMA) : The Agreement entered into between Reliance Capital Trustee Co. Limited and Reliance Capital Asset Management Limited by which RCAM has been appointed the Investment Manager for managing the funds raised by RMF under the various Schemes and all amendments thereof. Load : A charge that may be levied as a percentage of NAV at the time of entry into the scheme/plans or at the time of exiting from the scheme/ plans. Local Cheque : A Cheque handled locally and drawn on any bank, which is a member of the banker s clearing house located at the place where the application form is submitted. Mutual Fund Regulations/ Regulations : Securities and Exchange Board of India (Mutual Funds) Regulations as amended from time to time and such other regulations as may be in force from time to time to regulate the activities of Mutual Funds. Net Asset Value/NAV : Net Asset Value / NAV of the Units in each plan of the Scheme is calculated in the manner provided in this Offer Document or as may be prescribed by Regulations from time to time. The NAV will be computed upto four decimal places. NRI : Non-Resident Indian. Offer Document : The document issued by Reliance Mutual Fund, offering units of Reliance Vision Fund, an open-ended equity growth Scheme for subscription. PIO : Person of Indian Origin. Purchase Price : Purchase Price to the investor of Units of any of the plans computed in the manner indicated in this offer document. RBI / Reserve Bank of India : Reserve Bank of India, established under the Reserve Bank of India Act, RMF/Mutual Fund/the Fund : Reliance Mutual Fund (formerly known as Reliance Capital Mutual Fund), a Trust under Indian Trust Act, 1882 and registered with SEBI vide registration number MF/022/95/1 dated June 30, RCTC/Trustee/Trustee Company : Reliance Capital Trustee Co. Limited, a Company incorporated under the Companies Act, 1956, and authorized by SEBI and by the Trust Deed to act as the Trustee of Reliance Mutual Fund. RCL/Sponsor/Settlor : Reliance Capital Limited Redemption Price : Redemption Price to the investor of Units of any of the plans computed in the manner indicated in this offer document. Registrar /Karvy : Karvy Computershare Pvt. Ltd., who have been appointed as the Registrar or any other Registrar who is appointed by RCAM. Scheme : Reliance Vision Fund, an open-ended equity growth Scheme. SEBI : The Securities and Exchange Board of India. OCB: Overseas Corporate Body. Plans : The Scheme offers two Plans, Growth Plan and Dividend Plan Trust Deed : The Trust Deed entered into on April 24, 1995 between the Sponsor and the Trustee, and all amendments thereof. Trust Fund : The corpus of the Trust, unit capital and all property belonging to and/or vested in the Trustee. Unit : The interest of the investors in any of the plans, of the scheme which consists of each Unit representing one undivided share in the assets of the corresponding plan of the scheme. Unitholder : A person who holds Unit(s) under the scheme. Unitholders Record : Unitholders whose names appear on the unitholders register of the concerned plan/(s) on the date of determination of Dividend/Bonus, subject to realisation of the cheque. 1

2 Working Day : Any day, provided such day is not a Saturday or Sunday or any day on which Banks in Mumbai are Closed for commercial transactions and The Stock Exchange, Mumbai and/or National Stock Exchange of India Limited are closed for transactions or a day on which banks are open but The Stock Exchange, Mumbai and/or The National Stock Exchange of India Limited are closed for transactions or a day on which sale of units is suspended by the AMC or a day on which normal business could not be transacted due to storms, floods, bandhs, strikes etc, subject to modifications by RCAM from time to time. Words and Expressions used in this Offer Document and not defined : Same meaning as in Regulations II. HIGHLIGHTS, RISK FACTORS AND DUE DILIGENCE HIGHLIGHTS 1. The Sponsor of the Fund is Reliance Capital Limited (RCL) having a net worth of over Rs.1, crores as on March 31, 2004 and is a member of the Reliance Group. 2. Choice of Investment Plans : Reliance Vision Fund offers the following plans: Growth Plan: The Growth Plan is designed for investors interested in capital appreciation on their investment and not in regular income. Accordingly, the Fund will not declare dividends under the Growth Plan. The income earned on the Growth Plan's corpus will remain invested in the Growth Plan. The Growth Plan has two options: (i) Growth Option: The Growth Plan has a Growth Option. Under this Option, there will be no distribution of income and the returns to the investor is only by way of capital gains/ appreciation, if any, through redemption at applicable NAV of the units held by them. (ii) Bonus Option: The Growth Plan has a Bonus Option. Dividend Plan: The Dividend Plan has been designed for investors who require regular income in the form of dividends. Under the Dividend Plan, the Fund will endeavor to make regular dividend payments to the unit holders. Dividend will be distributed from the available distributable surplus after the deduction of TDS and applicable surcharge, if any. Dividend Plan has two options: (i) Dividend Payout Option: Under this option the Dividend declared under the Dividend Plan will be paid to the unit holders within 30 days from the declaration of the dividend (ii) Dividend Re-investment Option: The Dividend Plan has a Reinvestment Option whereby the dividend distributed under the plan will be automatically reinvested at the ex-dividend NAV on the transaction day following the date of declaration of dividend and additional units will be allotted accordingly. Investors desirous of opting for the same should indicate the same in the space provided in the application form. The Fund, however, does not assure any targeted annual return/ income nor any capitalisation ratio. Accumulation of earnings and/ or capitalisation of bonus units and the consequent determination of NAV, may be suspended temporarily or indefinitely under any of the circumstances as stated under the para on 'Suspension of Purchases and/or Redemption of units' of the Offer Document. Please note that if no Plan is mentioned / indicated in the Application form, the units will, by default, be allotted under the Growth Plan. Similarly, under the Dividend Plan, if no choice (payout or reinvestment) is indicated, the applicant will be deemed to have applied for the dividend reinvestment option under the plan. If no Option is indicated under the Growth Plan, the applicant will be deemed to have applied for the Growth Option under the Growth Plan. The unit holder is subsequently free to switch the units from the default plan/option to any other eligible plans/ options of the Scheme, at the applicable NAV. 3. Investment Objective : The primary investment objective of the Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach. 4. Transparency The AMC will calculate and disclose the first NAV not later than 30 days from the closure of Initial Offer Period. Subsequently, the NAV will be calculated and disclosed at the close of every Working Day which shall be published in at least two daily newspapers and also uploaded on the AMFI site and Reliance Mutual Fund site i.e. Publication of Abridged Half-yearly Financial Extracts in the Publications or as may be prescribed under the Regulations from time to time. Communication of Portfolio on a half-yearly basis to the Unit holders directly or through the Publications or as may be prescribed under the Regulations from time to time. Despatch of the Annual Reports of the respective Schemes within the stipulated period as required under the Regulations. 5. Liquidity : As per SEBI Regulations, the Mutual Fund shall despatch Redemption proceeds within 10 Working Days of receiving a valid Redemption request. A penal interest of 15% or such other rate as may be prescribed by SEBI from time to time, will be paid in case the Redemption proceeds are not made within 10 Working Days of the date of receipt of a valid Redemption request. However, under normal circumstances, the Mutual Fund will endeavor to despatch the Redemption cheque within 3 Working Days from the acceptance of a valid Redemption request. 6. Flexibility : Unit holders will have the flexibility to alter the allocation of their investments among the scheme(s) offered by the Mutual Fund, in order to suit their changing investment needs, by easily switching between the scheme(s) / plans of the Mutual Fund. 7. Repatriation : Repatriation benefits would be available to NRIs/FIIs subject to applicable conditions/regulations. 2

3 RISK FACTORS AND SPECIAL CONSIDERATIONS GENERAL RISK FACTORS Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. Reliance Vision Fund is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme; it's future prospects or returns. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. The Mutual Fund is not guaranteeing or assuring any dividend/ bonus. The Mutual Fund is also not assuring that it will make periodical dividend bonus distributions, though it has every intention of doing so. All dividend/bonus distributions are subject to the investment performance of the Scheme. 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 liquidity of the Scheme's investments may be inherently restricted by trading volumes, settlement periods and transfer procedures. In the event of an inordinately large number of redemption requests, or of a re-structuring of the Scheme's investment portfolio, these periods may become significant. Please read the Sections of this Offer Document entitled "Special Considerations" and "Right to Limit Redemptions". As per SEBI circular dated December 12, 2003 ref SEBI/IMD/CIR.10/22701/03, Open ended schemes/plan(s) already in existence would also be required to comply with the following conditions as soon as possible but not later than December 31, 2004: i. Each scheme and individual plan(s) under the schemes should have a minimum of 20 investors and no single investor should account for more than 25% of the corpus of the scheme/plan(s). ii. In each subsequent calendar quarter thereafter, on an average basis, the schemes/plans should meet with both the conditions i.e. a minimum of 20 investors and no single investor should account for more than 25% of the corpus of the scheme/plan(s). failing which the provisions of Regulation 39 (2) (c) of SEBI (Mutual Funds) Regulations, 1996 would become applicable automatically without any reference from SEBI. Accordingly, schemes /plans shall be wound up by following the guidelines laid down by SEBI. Although, the objective of the Fund is to generate optimal returns, the objective may or may not be achieved. The investors may note that if the AMC/Investment Manager is not able to make right decision regarding the timing of increasing exposure in debt securities in times of falling equity market, it may result in negative returns. Given the nature of scheme, the portfolio turnover ratio may be on the higher side and the AMC may change the full portfolio from equity to debt and vice-versa commensurate with the investment decisions and Asset Allocation of the Scheme. At times, such churning of portfolio may lead to losses due to subsequent negative or unfavorable market movements. The tax benefits described in this Offer Document, are as available under the present taxation laws and are available subject to relevant conditions. The information given is included only for general purpose and is based on advise received by the AMC regarding the law and practise currently in force in India and the Unit holders should be aware that the relevant fiscal rules or their interpretation may change. As is the case with any investment, there can be no guarantee that the tax position or the proposed tax position prevailing at the time of an investment in the Scheme will endure indefinitely. In view of the individual nature of tax consequences, each Unit holder is advised to consult his / her own professional tax advisor. SPECIAL CONSIDERATIONS: The Mutual Fund is not assuring or guaranteeing that it will be able to make regular periodical distributions/ distribute bonus units to its Unit holders though it has every intention to manage the portfolio so as to make periodical income/bonus distributions to Unit holders. Periodical distributions will be dependent on the returns achieved by the Asset Management Company through the active management of the portfolio. Periodical distributions may therefore vary from period to period, based on investment results of the portfolio. Risks associated with stock lending: The risks in lending portfolio securities, as with other extensions of credit, consist of the failure of another party, in this case the approved intermediary, to comply with the terms of agreement entered into between the lender of securities i.e. the Scheme and the approved intermediary. Such failure to comply can result in the possible loss of rights in the collateral put up by the borrower of the securities, the inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefits accruing to the lender from the securities deposited with the approved intermediary. Risks attached with the use of derivatives: RCAM may use various derivative products, from time to time, for purposes of hedging and portfolio rebalancing in an attempt to protect the value of the portfolio and enhance Unit holder's interest of the Scheme. As and when the schemes trade in the derivatives market there are risk factors and issues concerning the use of derivatives that investors should understand derivative products are specialized instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the "counter party") to comply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices. Thus, derivatives are highly leveraged instruments. Even a small price movement in the underlying security could have a large impact on their value. Also, the market for derivative instruments is nascent in India. The Trustees have the right in their sole discretion; to limit redemptions under certain circumstances mentioned elsewhere in the Offer Document. Investors should study this Offer Document carefully in its entirety and should not construe the contents hereof as advise relating to legal, taxation, investment or any other matters. Investors are advised to consult their legal, tax, investment and other professional advisors to determine possible legal, tax, financial or other considerations of subscribing to or redeeming units, before making a decision to invest / redeem Units. Investors are urged to study the terms of the Offer carefully before investing in this Scheme, and to retain this Offer Document for future reference. 3

4 DUE DILIGENCE CERTIFICATE It is confirmed that: The updated Offer Document of Reliance Vision Fund, forwarded to SEBI, is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time. All the legal requirements in connection with the launch of the Scheme as also the guidelines, instructions etc., issued by t he Government and any other competent authority in this behalf, have been duly complied with. The disclosures made in the Offer Document are true, fair and adequate to enable the investors to make a well-informed decision regarding investment in the Scheme. The intermediaries named in the offer document are registered with SEBI, and till the date, such registrations are valid. The contents of the Offer Document including figures, data, yields etc. have been checked and are factually correct. Place: Mumbai Name: O.V.Ravi Date: November 22, 2004 Designation: Compliance Officer III. SUMMARY OF THE SCHEME SCHEME FEATURES: Scheme : Reliance Vision Fund Type: Open-ended equity growth Scheme Investment Pattern : Equity and Equity related Instruments - Atleast 60% Debt Instruments - Upto 30% Money Market Instruments - Upto 10% (For details on investment allocation, please refer to Section V of the Offer Document) Investment Objective : The primary investment objective of the Scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a research based investment approach. Net Asset Value : Calculated & declared every working day Choice of Plans/Options: Growth Plan: Growth Option & Bonus Option Dividend Plan : Dividend Re-investment Option and Dividend Payout Option Application Amount : Rs. 5,000/- for Resident and Rs. 25,000/- for Non-Resident investors, and in multiples of Re. 1, thereafter Additional Subscription/Investment Amount: Any amount Subscription cheques payable to : Reliance Vision Fund Portfolio Disclosures : Half-yearly Entry (Sales) Load : For Subscription below Rs. 2 crores 2.25% For Subscription below Rs. 2 crores & above but below Rs.5 crores 1.25% For Subscription of Rs. 5 crores & above Nil Exit Load : Nil Contingent Deferred Sales Charge : Nil Inter-Scheme Switch : At the applicable loads in the respective Scheme/s. No loads between equity schemes. Inter Plan/Inter Option Switch : Nil Redemption Cheques Issued : Mutual Fund shall endeavour to issue within 3 working days Minimum Redemption Amount : Any Amount or any no of units. Cut off time : 3.00 pm on working days as defined in the Offer Document Recurring Investment Plan (RIP) : Monthly/Quarterly : Rs. 500/- and in multiples of Rs. 100/- thereafter. Recurring Withdrawal Plan (RWP) : Monthly/Quarterly : Rs. 500/- and in multiples of Rs. 100/- thereafter. Recurring Investment Plan for corporate employees (RICE) available. STP & DTP available. Switch Facility : Available No load applicable for switches between the equity schemes. Trigger facility : Available Nomination Facility : Available Mode of Holding : Single, Joint or Any one or survivor. Recurring Expenses Estimated : Investment Management Fees 1.25% Marketing Expenses 1.00% Operational Expenses 0.25% Total 2. 50% 4

5 Benchmark Index : BSE 100 Index. Switching Option : Investors may opt to switch Units between the Plans of the Scheme at NAV based prices after completion of lock in period, if any. Switching will also be allowed into/from any other eligible open-ended Schemes of the Fund either currently in existence or a Scheme(s) that may be launched / managed in future, as per the features of the respective scheme. The Trustee reserves the right to change the Load structure if it so deems fit in the interest of smooth and efficient functioning of the Fund on a prospective basis. Allotment of Units : For Subscriptions received at the DISC s within the cut-off timings and considered accepted for that day, the units will be allotted on the T day at applicable NAV, where the T day is the transaction day, provided the application is received within the cut-off timings for the transaction day. RCAM, in consultation with the Trustee reserves the right to discontinue/ add more plans/ options at a later date subject to complying with the prevailing SEBI Regulations. RCAM, in consultation with the Trustees, reserves the right to change the Load structure if it so deems fit in the interest of smooth and efficient functioning of the Scheme, on a prospective basis. IV. CONSTITUTION AND MANAGEMENT OF THE FUND A. THE FUND Reliance Mutual Fund (RMF) : Reliance Mutual Fund has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited, as the Settlor/Sponsor and Reliance Capital Trustee Co. Limited, as the Trustee. RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th March, 2004 vide SEBI s letter no. IMD/PSP/4958/2004 dated 11th March, Reliance Mutual Fund was formed to launch various schemes under which units are issued to the public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities. The main objects of the Trust are: - i) To carry on the activity of a Mutual Fund as may be permitted by law and formulate and devise various collective Schemes of savings and investments for people in India and abroad and also ensure liquidity of investments for the Unitholders; ii) To deploy Funds thus raised so as to help the Unitholders earn reasonable returns on their savings; and iii) To take such steps as may be necessary from time to time to realise the effects without any limitation. B. SPONSOR COMPANY Reliance Capital Limited : Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited. Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd. (RCL). RCL has been promoted by Reliance Industries Limited (RIL), one of India s largest private sector enterprise. RIL has a net worth of Rs.34,452 crores as on March 31, 2004 and currently has a large family of shareholders. Reliance Capital Limited is a Non Banking Finance Company engaged in leasing, investment and other fund based activities. The networth of RCL is Rs. 1, crores as on March 31, Given below is a summary of RCL s financials: (Rs. in crores) Particullars Total Income Profit Before Tax Profit After Tax Reserves & Surplus Net Worth Earnings per Share (Rs.) (Basic + Diluted) (Basic + Diluted) Book Value per Share (Rs.) Dividend (%) 29% 29% 29% Paid up Equity Capital RCL has contributed Rupees One Lac as the initial contribution to the corpus for the setting up of the Mutual Fund. RCL is responsible for discharging its functions and responsibilities towards the Fund in accordance with the SEBI Regulations. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond the contribution of an amount of Rupees one lakh made by them towards the initial corpus for setting up the Fund and such other accretions and additions to the corpus. C. THE TRUSTEE Reliance Capital Trustee Co. Limited Regd. Office: Corporate Office : EO1, Reliance Greens, Kamala Mills Compound, Village Motikhavdi, P.O. Digvijaygram, Trade World, B Wing, 7th Floor, District Jamnagar S. B. Marg, Lower Parel (West), (Gujarat) Mumbai

6 Reliance Capital Trustee Co. Limited (RCTC), a company incorporated under the Companies Act, 1956, has been appointed as the Trustee to the Fund vide the Trust Deed dated April 25, 1995 executed between the Sponsor and the Trustee. 1. The Directors Directors of RCTC are: Name and Address Other Directorships Mr. D. Chaturvedi * Partner: 273, Tahinee Heights, Chaturvedi & Shah, Chartered Accountants. 'D' Building, Petit Hall, Chairman: 66, Napeansea Road, Reliance Capital Limited Mumbai Chartered Accountant Mr. Vinod M. Ambani * President & Company Secretary 7-D, Lands End, Reliance Industries Limited. 29-D, Doongersey Road, Director: Malabar Hill, Reliance Enterprises Limited, Reliance Welfare Mumbai Association, Reliance Logistics Limited Senior Corporate Executive Ms. Kalpana Merchant Partner: Advocates & Solicitors Kanga & Company, Advocates & Solicitors. C/o Kanga & Company Readymoney Mansion, 43, Veer Nariman Road, Mumbai Solicitor Dr. A.C. Shah Director: Lloyds Garden 'C' Wing, Gujarat Petro Synthesis; S. Kumars Nationwide 1st Floor, Flat No.2, Limited; Elcon Engineering Ltd. Adani Exports Appa Saheb Marathe Marg, Prabhadevi, Limited; Kopran Limited Mumbai Standard Chartered Asset Management Company Limited; Former Chairman & Managing Director of Bank of Baroda Benchmark MF Trustee Company Private Limited Mr. Pradyumna N. Shah Director: P.I. Industries Limited, Udaipur; Secure Meters Shantiniketan, Block No.51 Limited, Udaipur; Prabhat Colony, Road No.1 Lipi Data Systems, Mumbai; Taparia Tool Limited, Santacruz (E), Indo Count Industries Limited, Mumbai Standard Tea Processing Company Limited Ahmedabad, Chartered Accountant 6 Wolkem India Limited, Udaipur. LIC Mutual Fund Trustee Co. Pvt. Ltd. Partner : Shah & Co., Chartered Accountants, Mumbai Shah & Associates, Chartered Accountants, Mumbai * Associate Director: Shri D. Chaturvedi is the Chairman of Reliance Capital Limited, the Sponsor. Shri Vinod Ambani is President and Company Secretary of Reliance Industries Limited. He was the Director on the AMC Board from 27/03/1997 to 20/02/ Duties and Obligations of the Trustee : In accordance with SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed constituting the Mutual Fund, the Trustees are required to fulfill several duties and obligations, including the following: a. The Trustee and the Asset Management Company shall with the prior approval of SEBI enter into an Investment Management Agreement (IMA). b. The Investment Management Agreement shall contain such clauses as are mentioned in the Fourth Schedule of the SEBI (MFs) Regulations, 1996 and other such clauses as are necessary for the purpose of making investments. c. The Trustees shall have a right to obtain from the Asset Management Company such information as is considered necessary by the Trustees. d. The Trustee shall ensure before the launch of any scheme that the Asset Management Company possesses/has done the following: (i) Systems in place for its back office, dealing room and accounting; (ii) Appointed all key personnel including fund manager(s) for the Scheme(s) and submitted their bio-data which shall contain the educational qualifications, past experience in the securities market to SEBI, within 15 days of their appointment; (iii) Appointed Auditors to audit its accounts; (iv) Appointed a Compliance Officer to comply with regulatory requirement and to redress investor grievances; (v) Appointed Registrars and laid down parameters for their supervision; (vi) Prepared a compliance manual and designed internal control mechanisms including internal audit systems; and (vii) Specified norms for empanelment of brokers and marketing agents. e. The Trustee shall ensure that the Asset Management Company has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker.

7 f. The Trustee shall ensure that the Asset Management Company has not given any undue or unfair advantage to any associate or dealt with any of the associates of the Asset Management Company in any manner detrimental to interest of unitholders. g. The Trustee shall ensure that the transactions entered into by the Asset Management Company are in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the Scheme. h. The Trustee shall ensure that the Asset Management Company has been managing the Mutual Fund Scheme independent of other activities and have taken adequate steps to ensure that the interest of investors of one Scheme are not compromised with those of any other scheme or of other activities of the Asset Management Company. i. The Trustee shall ensure that all the activities of the Asset Management Company are in accordance with the provisions of SEBI (Mutual Funds) Regulations, j. Where the Trustees have reason to believe that the conduct of the business of the Mutual Fund is not in accordance with the Regulations and the Scheme, they shall forthwith take such remedial steps as deemed necessary by them and shall immediately inform SEBI of the violation and the action taken by them. k. Each Trustee shall file the details of his transactions in securities (above Rs.1 Lakh per transaction) with the Mutual Fund on a quarterly basis. l. The Trustees shall be accountable for and be the Custodian of the funds and property of the respective Schemes and shall hold the same in trust for the benefit of the unitholders in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the provisions of the Trust Deed. m. The Trustees shall take steps to ensure that the transactions of the Mutual Fund are in accordance with the provisions of the Trust Deed. n. The Trustees shall be responsible for the calculation of any income due to be paid to the Mutual Fund and also of any income received in the Mutual Fund for the unitholders of any Scheme in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. o. The Trustees shall obtain the consent of the unitholders of the Scheme: (i) Whenever required to do so by SEBI in the interest of the unitholders; (ii) Whenever required to do so, on the requisition made by three-fourths of the unitholders of any Scheme under the Mutual Fund; (iii) When the majority of the Trustees decide to wind up the Scheme or prematurely redeem the Units; p. The Trustees shall ensure that no change in the fundamental attributes of any Scheme or the Trust or fees and expenses payable or any other change which would modify the Scheme and affects the interest of unitholders, shall be carried out unless :- (a) A written communication about the proposed change is sent to each unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the head office of the Mutual Fund is situated; and (b) The unitholders are given an option to exit at the prevailing net asset value without any exit load. q. The Trustee shall call for the details of transactions in securities by the key personnel of the Asset Management Company in his own name or on behalf of the Asset Management Company and shall report to SEBI, as and when required. r. The Trustee shall quarterly review all transactions carried out between the Mutual Fund, Asset Management Company and its associates. s. The Trustee shall quarterly review the net worth of the Asset Management Company and shall ensure that the same is in accordance with the clause (f) of sub-regulation (1) of regulation 21 of SEBI (Mutual Funds) Regulations, t. The Trustee shall periodically review all service contracts such as custody arrangements, transfer agency of the securities and satisfy itself that such contracts are executed in the interest of the unitholders. u. The Trustee shall ensure that there is no conflict of interest between the manner of deployment of the net worth by the Asset Management Company and the interest of the unitholders. v. The Trustee shall periodically review the investor complaints received and the redressal of the same by the Asset Management Company. w. The Trustee shall abide by the Code of Conduct as specified in the Fifth Schedule of the SEBI (Mutual Funds) Regulations, x. The Trustee shall furnish to SEBI on a half-yearly basis the following: (i) A report on the activities of the Mutual Fund; (ii) A certificate stating that the Trustees have satisfied themselves that there have been no instances of self-dealing or front-running by any of the Trustees and by the directors and key personnel of the Asset Management Company; and (iii) A certificate to the effect that the Asset Management Company has been managing the Scheme independently of any other activities and in case any activities of the nature referred to in regulation 24(2) of the SEBI (Mutual Funds) Regulations, 1996 have been undertaken by the Asset Mana gement Company, adequate steps to ensure that the interest of the unitholders are protected, have been taken. y. The independent Trustees referred to in sub-regulation (5) of Regulation 16 shall give their comments on the report received from the Asset Management Company regarding the investments by the Mutual Fund in the securities of group companies of the Sponsor. z. The Trustees shall exercise due diligence as under: General Due Diligence: i) The Trustees shall be discerning in the appointment of the directors on the Board of the Asset Management Company. ii) The Trustees shall review the desirability or continuance of the Asset Management Company if substantial irregularities are observed in any of the Schemes and shall not allow the Asset Management Company to float new Schemes. iii) The Trustee shall ensure that the trust property is properly protected, held and administered by proper persons and by a proper number of such persons. iv) The Trustee shall ensure that all the service providers are holding appropriate registrations from SEBI or concerned regulatory authority. v) The Trustees shall arrange for test checks of service contracts. vi) The Trustees shall immediately report to SEBI of any special developments in the Mutual Fund. 7

8 Specific Due Diligence: The Trustees shall: i) Obtain internal audit reports at regular intervals from independent auditors appointed by the Trustees. ii) Obtain compliance certificates at regular intervals from the Asset Management Company. iii) Hold meetings of the Trustees once in two calendar months and atleast six such meetings shall be held in every year. iv) Consider the reports of the independent auditor and compliance reports of Asset Management Company at the meetings of Trustees for appropriate action. v) Maintain records of the decisions of the Trustees at their meetings and of the minutes of the meetings. vi) Prescribe and adhere to a code of ethics by the Trustees, Asset Management Company and its personnel. vii) Communicate in writing to the Asset Management Company of the deficiencies and checking on the rectification of deficiencies. aa. The independent directors of the trustees shall pay specific attention to the following, as may be applicable, namely:- i) The Investment Management Agreement and the compensation paid under the agreement. ii) Service contracts with affiliates as to whether the Asset Management Company has charged higher fees than outside contractors for the same services. iii) Selection of the Asset Management Company 's independent directors iv) Securities transactions involving affiliates to the extent such transactions are permitted by Regulations. v) Selecting and nominating individuals to fill independent directors vacancies. vi) Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions. vii) The reasonableness of fees paid to Sponsors, Asset Management Company and others for services provided. viii) Principal underwriting contracts and renewals ix) Any service contract with the associates of the Asset Management Company. ab. The Trust Deed shall not be amended without obtaining the prior approval of SEBI, and the unitholders approval would be obtained where it affects the interest of unitholders. Where SEBI Regulations provide for seeking the approval of the Unit Holders for any purpose, the Trustee may adopt any of the following procedures: (i) Seeking approval by postal ballot or (ii) Approval of the Unit-holders present and voting at a meeting to be specifically convened by the Trustee for the purpose. For this purpose, the Trustees shall give 21 days notice to the Unit Holders and the Trustees may lay down guidelines for the actual conduct and accomplishment of the voting at the meeting and announcement of the results. Under the Trust Deed, duties and obligations also include the following: i) In carrying out its responsibility, the Trustee and its directors shall maintain arms length relationship with other companies, or institutions or financial intermediaries or any body corporate with which they may be associated. ii) The Directors of the Trustee shall not participate in any decision-making process/resolutions of its board meetings for any investment in which they may be interested. iii) All the Trustees shall furnish to the Board of Trustees or Trustee Company particulars of interest which he may have in any other company, or institution or financial intermediary or any corporate by virtue of his position as Director, partner or with which he may be associated in any other capacity. iv) The Trustee shall not acquire or allow the AMC to acquire any asset out of the Trust Fund and/or Unit Capital, which involves the assumption of unlimited liability or results in encumbrance of Trust Fund and/or Unit Capital in any way. v) The Trustee shall not make or guarantee loans or take up any activity in contravention of SEBI Regulations except with the prior approval of SEBI nor shall it allow the AMC to do so. However, as and when there is an addition / modification / deletion in the duties and responsibilities of the Trustee, due to a change in the SEBI Regulations, such addition / modification / deletion shall be applicable here, accordingly. The Trustee shall not be held liable for acts done in good faith if they have exercised adequate due diligence honestly. The Trustees shall meet at least once in two calendar months and at least six such meetings shall be held in every year to review the information / reports submitted by the AMC in accordance with the Regulations. As per Regulations prevailing during the year ended March 31, 2004, six meetings of the Board of Directors of the Trustee Company were held. The Trustees have also appointed the statutory auditors to verify the books of accounts and to ascertain the true and fair representation of the state of affairs as on a particular day and to ascertain profit/ loss of the Mutual Fund, as at the end of the financial year. The Board of Trustees has constituted an Audit Committee, chaired by an independent Trustee. The Committee meets periodically to discuss the internal control systems, the scope of audit of the internal auditors, as well as the observations made by them. It also reviews the half yearly and annual financial accounts. Recommendations, if any, of the audit committee on any matter relating to financial management etc. are considered in the subsequent Board meeting of AMC and Trustees. 3. Trusteeship Fees : Pursuant to the Trust Deed constituting the Fund, the Fund is authorised to pay the Trustee, a fee for their services, in addition to the reimbursement of all costs, charges and expenses, sum computed at the rate of 0.05% of the amount, being the aggregate of the Trust Fund and Unit Capital of all the Schemes put together on 1st April each year or a sum of Rs.5 Lakhs, which ever is lower or such other sum as may be agreed upon between the Settlor and the Trustee from time to time. The Trustee may charge further fees as permitted from time to time under the Trust Deed and the Regulations. 8

9 D. ASSET MANAGEMENT COMPANY (AMC) Reliance Capital Asset Management Limited : Reliance Capital Asset Management Limited ("RCAM"), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited. Reliance Capital Asset Management Limited was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, Pursuant to this IMA, RCAM is authorised to act as Investment Manager of the Mutual Fund. The networth of the Asset Management Company as on March 31, 2004 is Rs crores. The Mutual Fund has launched sixteen Schemes till date, namely: Reliance Vision Fund (September 1995), Reliance Growth Fund (September 1995) Reliance Income Fund (December 1997), Reliance Liquid Fund (March 1998), Reliance Medium Term Fund (August 2000), Reliance Short Term Fund (December 2002) and Reliance Fixed Term Scheme (March 2003), Reliance Banking Fund (May 2003), Reliance Gilt Securities Fund (July 2003), Reliance Monthly Income Plan (December 2003), Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma Fund ( May 2004), Reliance Floating Rate Fund (August 2004) and Reliance Media & Entertainment Fund (September 2004), Reliance NRI Equity Fund and Reliance NRI Income Fund.(October 2004). RCAM has been registered as a portfolio manager vide SEBI Registration No. INP and renewed effective 1st August, RCAM has commenced these activities. It has been ensured that key personnel of the AMC, the systems, back office, bank and securities accounts are segregated activity wise and there exists systems to prohibit access to inside information of various activities. As per SEBI Regulations, it will further ensure that AMC meets the capital adequacy requirements, if any, separately for each such activity. 1. Name and Address of the Asset Management Company for the Mutual Fund Reliance Capital Asset Management Limited Regd. Office: Corporate Office: EO1, Reliance Greens, Kamala Mills Compound, Village Motikhavdi, P.O. Digvijaygram, Trade World, B Wing, 7th Floor, S. B. Marg, District Jamnagar (Gujarat) Lower Parel (West), Mumbai Shareholders of AMC : Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited. 3. Directors The Directors of RCAM are: Mr. Amitabh Jhunjhunwala * Director: Flat A-212, NCPA Apartments Reliance Energy Limited (formerly known as BSES Limited), Nariman Point Reliance Capital Limited Mumbai, Senior Corporate Executive Director: Mr. D.J.Kapadia * Reliance Capital Limited 32, "Sangita" 27 / 28 Arthur Bunder Road, Colaba, Mumbai Finance Consultant Director: Mr. Shailesh S. Vaidya Prabhukripa Overseas Limited, Kanga & Co. Advocates & Solicitors Dwarikesh Sugar Industries Limited, Readymoney Mansion Partner: Kanga & Company, Advocates & Solicitors 43, Veer Nariman Road Member: Mumbai Law Committee - Indian Merchants Chamber Solicitor Mr. P.S. Gopalakrishnan Chairman: Apartment No.B-202&203 Mega International (P) Limited, New Delhi. 1, Keshav Dugar East Avenue, Shriram Overseas Finance Limited, Chennai Keshav Perumalpuram, R.A.Puram, Chennai Director: Former Chairman of IFCI Kothari Sugars & Chemicals Limited, Chennai Mr. V.H. Pandya Flat 1202, 12th Floor Chairman: Parkside -II Bldg. IFCI Financial Services Ltd., New Delhi, Wing 'B' Raheja Estate Srei Capital Markets Limited, Kolkata Kulupwadi Road No. 1 Borivali (East), Mumbai Director: Hindustan Aegis LPG Bottling Co. Limited Ex- SEBI Executive Director GIC Asset Management Co. Limited, Mumbai Pranav Financial Services Pvt. Limited. Mumbai Libord Infotech Limited., Mumbai, Srei International Finance Limited, Kolkata * Associate Directors: Shri D.J. Kapadia, and Shri Amitabh Jhunjhunwala are Directors of Reliance Capital Limited, the Sponsor. 9

10 4. Duties and Obligations of the Asset Management Company : In accordance with SEBI (Mutual Funds) Regulations, 1996, the Trust Deed and the Investment Management Agreement, the Investment Manager has several duties and obligations, including the following: 1. The Asset Management Company shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. 2. The Asset Management Company shall exercise due diligence and care in all its investment decisions as would be exercised by other persons engaged in the same business. 3. The Asset Management Company shall be responsible for the acts of commissions or omissions by its employees or the persons whose services have been procured by the Asset Management Company. 4. The Asset Management Company shall submit to the Trustees quarterly reports on its activities and the compliance with SEBI (Mutual Funds) Regulations, 1996, amended up-to-date. 5. The Trustees, at the request of the Asset Management Company, may terminate the assignment of the Asset Management Company at any time provided that such termination shall become effective only after the Trustees have accepted the termination of assignment and communicated their decision in writing to the Asset Management Company. 6. Notwithstanding anything contained in any contract or agreement or termination, the Asset Management Company or its directors or other officers shall not be absolved of any liability to the Mutual Fund for their acts of commission or omission, while holding such position or office. 7. The Chief Executive Officer of the AMC shall ensure that the Fund complies with the provisions of the SEBI Regulations and that the investments made by the Fund Managers are in the interest of the Unitholders and shall also be responsible for the overall risk management function of the Fund. 8. The Fund Manager shall ensure that the funds of the Scheme are invested to achieve the objectives of the Scheme and are in the interest of the Unitholders. 9. An Asset Management Company shall not, through any broker associated with the sponsor, purchase or sell securities, which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes. Provided that for the purposes of the relevant subregulation, aggregate purchase and sale of securities shall exclude sale and distribution of units issued by the mutual fund. Provided further that the aforesaid limit of 5% shall apply for a block of any three months. An Asset Management Company shall not purchase and sell through any broker (other than an associated broker referred to above) which is average of 5% or more of the aggregate purchases and sale of secur ities made by the mutual fund in all its Schemes, unless the Asset Management Company has recorded in writing the justification for exceeding the limit of 5% and reports of all such investments are sent to the Trustees on a quarterly basis. Provided that the aforesaid limit shall apply for a block of three months. 10. An Asset Management Company shall not utilise the services of the Sponsor or any of its associates, employees or their relatives, for the purpose of any securities transaction and distribution and sale of securities, provided that an Asset Management Company may utilise such services if disclosure to that effect is made to the unitholders and the brokerage or commission paid is also disclosed in the half yearly annual accounts for the Mutual Fund. 11. As per the SEBI Circular dated May 24, 2001 no brokerage will be payable for investments made by Sponsors of the Mutual Fund in any of the Schemes of the Fund, on a prospective basis. 12. The Asset Management Company shall file with the Trustee the details of transactions in securities by the key personnel of the Asset Management Company in their own name or on behalf of the Asset Management Company and shall also report to SEBI, as and when required by SEBI. 13. In case the Asset Management Company enters into any securities transaction with any of its associates, a report to that effect shall be sent to the Trustee at their next meeting. 14. In case any company has invested more than 5% of the net asset value of a scheme, the investment made by that scheme or by any other scheme of the same mutual fund in that company or its subsidiaries, if any, shall be brought to the notice of the Trustees by the Asset Management Company and be disclosed in the half-yearly and annual accounts with justification for such investment provided that the latter investment has been made within one year of the date of the former investment calculated on either side. 15. The Asset Management Company shall file with the Trustees and SEBI: - (i) Detailed bio-data of all its directors along with their interest in other companies within 15 days of their appointment; (ii) Any change in the interest of directors every six months and (iii) A quarterly report to the Trustees giving details and adequate justification about the purchase and sale of securities of the group companies of the Sponsor or the Asset Management Company as the case may be, by the Mutual Fund during the said quarter. 16. A statement of holding in securities of the directors of the Asset Management Company shall be filed with the Trustees, with the dates of acquisition of such securities at the end of each financial year. 17. The Asset Management Company shall not appoint any person as a key personnel who has been found guilty of any economic offence or involved in violation of securities laws. 18. The Asset Management Company shall appoint Registrars and Transfer Agents who are registered with SEBI. Provided if the work relating to the transfer of Units is processed in-house, the charges at competitive market rates may be debited to the Scheme and for rates higher than the competitive market rates, prior approval of the Trustees shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts. 19. The RCAM shall not undertake any other business except that permitted under the Regulations. The RCAM shall meet with the capital adequacy requirements, if any, separately for each of the separate activity, if any undertaken by the AMC and obtain separate approval, if necessary under the Regulations. 20. The RCAM shall not invest in any of its schemes unless full disclosure of its intention to invest has been made in the offer documents. 21. The RCAM shall not charge any fees on its investment in that scheme. 10