offaaer document

8/13/2019 Offaaer Document

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OFFER DOCUMENT

RELIANCE MUTUAL FUND

Reliance Diversified Power Sector Fund

An open-ended Power Sector Scheme

Sale of units at applicable NAV based prices during the continuous offer

SPONSOR

Corporate Office:

Reliance Capital Limited

Fosbery Road,Off Reay Road Station (E),Mumbai 400 033Tel : 022 30411000Fax : 022 30411067

REGISTRAR

Karvy Computershare (P) Limited

Karvy Plaza, 21, Road No.4,Street No.1, Banjara HillsHyderabad 500 034Tel: 040- 2331 2454Fax: 040 2331 1968

TRUSTEECorporate Office:

Reliance Capital Trustee Co. LimitedKamala Mills Compound, Trade World,B Wing, 7th Floor, S. B. Marg,Lower Parel (W)Mumbai 400 013Tel. 022 3041 4800Fax. 022 3041 4899

CUSTODIANDeutsche Bank

Kodak House,Ground Floor,Mumbai 400 001

INVESTMENT MANAGER

Corporate Office:

Reliance Capital Asset Management LimitedKamala Mills Compound, Trade World,B Wing, 7th Floor, S. B. Marg,Lower Parel (W)Mumbai 400 013Tel. 022 3041 4800Fax. 022 3041 4899

E-mail : [email protected] Customer service center at 30301111

AUDITORS TO THE SCHEMEHaribhakti & Co.

42, Free Press House,Nariman Point,Mumbai - 400 021

INVESTORS SHOULD NOTE THAT

This Offer Document sets forth concisely the information that a prospective investor ought to knowbefore investing. Investors should carefully read the Offer Document before making an investmentdecision.

This Offer Document remains effective until a material change (other than a change inFundamental Attributes and within the purview of the offer document) occurs. Material changes willbe filed with Securities and Exchange Board of India (SEBI) and circulated to the Unitholders ormay be publicly notified by advertisements in the newspapers, subject to the applicable Regulations.The Scheme particulars have been prepared in accordance with the Securities and Exchange Board ofIndia (Mutual Funds) Regulations, 1996, as amended till date and the Offer Document has been filed


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with SEBI. The Units being offered for public subscription have neither been approved nordisapproved by SEBI, nor has SEBI certified the accuracy or adequacy of this Offer Document.No person has been authorized to give any information or to make any representations not confirmedin this Offer Document, in connection with the Offer Document or the issue of Units, and anyinformation or representations not contained herein must not be relied upon as having beenauthorized by the Mutual Fund or the Asset Management Company.

This Offer Document is updated as on February 10, 2006 and was approved by the Board of AMCand the Trustees on December 23, 2003.

PLEASE RETAIN THIS OFFER DOCUMENT FOR FUTURE REFERENCE.


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I. 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.1,437.92 crores as on March 31, 2005.

2. Choice of Investment Plans: Reliance Diversified Power Sector Fund offers the following plans:(a) Growth Plan: The Growth Plan is designed for investors interested in capital appreciation ontheir investment and not regular income. Accordingly, the Fund will not declare dividends under theGrowth Plan. The income earned on the Growth Plan's corpus will remain invested in the GrowthPlan.The Growth Plan has two options:(i) Growth Option: The Growth Plan has a Growth Option. Under this Option, there will be nodistribution of income and the returns to the investor are only by way of capital gains/ appreciation, ifany, through redemption at applicable NAV of the units held by them.

(ii) Bonus Option: The Growth Plan has a Bonus Option. Guided by the philosophy of value-oriented returns, the Trustees may decide to periodically capitalise the sums from reserves includingthe amount of distributable surpluses of the scheme by way of allotment/ credit of bonus units to theunitholders accounts, the intent being to enhance the unitholders interests

(b) Dividend Plan: The Dividend Plan has been designed for investors who require regularincome in the form of dividends. Under the Dividend Plan, the Fund will endeavor to make regulardividend payments to the unit holders.Dividend will be distributed from the available distributable surplus after the deduction of dividenddistribution tax 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 Re-investment Option wherebythe dividend distributed under the plan will be automatically re-invested at the ex-dividend NAV onthe transaction day following the date of declaration of dividend and additional units will be allottedaccordingly. Investors desirous of opting for the same should indicate the same in the space providedin 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 ofNAV, may be suspended temporarily or indefinitely under any of the circumstances as stated underthe 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 orreinvestment) is indicated, the applicant will be deemed to have applied for the Dividend Re-investment Option under the plan. If no Option is indicated under the Growth Plan, the applicant willbe deemed to have applied for the Growth Option under the Growth Plan. The unit holder issubsequently 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 seek to generatecontinuous returns by actively investing in equity / equity related securities or fixed income securitiesof power and other associated companies.


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4. Transparency:

? The NAV will be calculated and disclosed at the close of every working day which shall bepublished in at least two daily newspapers and also uploaded on the AMFI website and RelianceMutual Fund website i.e. www.reliancemutual.com.

? Publication of Abridged Half-yearly Un-audited / Audited Financial Results in thenewspapers 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 thePublications 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 asrequired under the Regulations.

5. Liquidity: As per SEBI Regulations, the Mutual Fund shall despatch redemption proceedswithin 10 Working Days of receiving a valid Redemption request. A penal interest of 15% or suchother rate as may be prescribed by SEBI from time to time, will be paid in case the redemptionproceeds 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 - 4 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: Full Repatriation benefits would be available to NRIs/FIIs subject to applicableconditions.

RISK FACTORS AND SPECIAL CONSIDERATIONS

GENERAL RISK FACTORS

? Mutual Funds and securities investments are subject to market risks and there is no assurance orguarantee 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 ordown depending on the factors and forces affecting the capital markets.

? Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performanceof the Scheme.

? Reliance Diversified Power Sector Fund is only the name of the Scheme and does not in anymanner indicate either the quality of the Scheme; its future prospects or returns.

? The Sponsor is not responsible or liable for any loss resulting from the operation of the Schemebeyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and suchother accretions and additions to the corpus.

? The Mutual Fund is not guaranteeing or assuring any dividend/ bonus. The Mutual Fund is alsonot assuring that it will make periodical dividend/bonus distributions, though it has everyintention of doing so. All dividend/bonus distributions are subject to the investment performanceof 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, interestrates, trading volumes, settlement periods and transfer procedures.


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? 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 ofredemption requests, or of a re-structuring of the Scheme's investment portfolio, these periodsmay become significant. Please read the Sections of this Offer Document entitled "SpecialConsiderations" and "Right to Limit Redemptions".

? As per SEBI circular dated December 12, 2003 ref SEBI/IMD/CIR No.10/22701/03 and datedJune 14, 2005 ref SEBI/IMD/CIR NO.1/42529/05, each scheme and individual plan(s) under theschemes should have a minimum of 20 investors and no single investor should account for morethan 25% of the corpus of such scheme/ plan(s) at portfolio level within a period of three monthsor at the end of the succeeding calendar quarter, whichever is earlier from the close of the NewFund Offer (NFO). After the NFO and the 3 months balancing period, in each subsequent quarterthereafter, on an average basis, the scheme shall meet with both the conditions of minimumnumber of investor and holding as a percentage of the corpus. Determining the breach of 25%limit - The average net assets of the scheme would be calculated daily and any breach of the25% holding limit by an investor would be determined. At the end of the quarter, the average ofdaily holding by each such investor is computed to determine whether that investor has breachedthe 25% limit over the quarter. If there is a breach of limit by any investor over the quarter, a

rebalancing period of one month would be allowed and thereafter the investor who is in breach ofthe rule shall be given 15 days notice to redeem his exposure over the 25 % limit. Failure on thepart of the said investor to redeem his exposure over the 25 % limit within the aforesaid 15 dayswould lead to automatic redemption by the Mutual Fund on the applicable Net Asset Value onthe 15th day of the notice period.

? The Fund may invest in overseas equities / ADR's / GDR's with the approval of RBI/SEBI,subject to such guidelines as may be issued by RBI/SEBI. The net assets, distributions andincome of the scheme may be affected adversely by fluctuations in the value of certain foreigncurrencies relative to the Indian Rupee to the extent of investments in these securities.Repatriation of such investment may also be affected by changes in the regulatory and politicalenvironments. The scheme's NAV may also be affected by a fluctuation in the general andspecific level of interest rates internationally, or the change in the credit profiles of the issuers.

? Although, the objective of the Fund is to generate optimal returns, the objective may or may notbe achieved. The investors may note that if the AMC/Investment Manager is not able to makeright decision regarding the timing of increasing exposure in debt securities in times of fallingequity market, it may result in negative returns. Given the nature of scheme, the portfolioturnover ratio may be on the higher side commensurate with the investment decisions and AssetAllocation of the Scheme. At times, such churning of portfolio may lead to losses due tosubsequent negative or unfavorable market movements.

? The tax benefits described in this Offer Document are as available under the present taxationlaws and are available subject to relevant conditions. The information given is included only forgeneral purpose and is based on advice received by the AMC regarding the law and practicecurrently 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 guaranteethat the tax position or the proposed tax position prevailing at the time of an investment in theScheme will endure indefinitely. In view of the individual nature of tax consequences, each Unitholder is advised to consult his / her own professional tax advisor.

RISK FACTOR ASSOCIATED WITH OVERSEAS INVESTMENT:

Subject to necessary approvals and within the investment objectives of the Scheme, the Scheme mayinvest in overseas markets which carry a risk on account of fluctuations in foreign exchange rates,


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nature of securities market of the country concerned, repatriation of capital due to exchange controland political circumstances.

SPECIAL CONSIDERATIONS

The Mutual Fund is not assuring or guaranteeing that it will be able to make regular periodicaldistributions/distribute bonus units to its Unit holders though it has every intention to manage theportfolio so as to make periodical income/bonus distributions to Unit holders. Periodical distributionswill be dependent on the returns achieved by the Asset Management Company through the activemanagement of the portfolio. Periodical distributions may therefore vary from period to period, basedon investment results of the portfolio.

Risks attached with the use of derivatives:

RCAM may use various derivative products, as permitted by SEBI from time to time, in an attemptto protect the value of the portfolio and enhance Unit holder's interest/value of the Scheme. As andwhen 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 thatrequire investment techniques and risk analyses different from those associated with stocks andbonds. The use of a derivative requires an understanding not only of the underlying instrument butalso of the derivative itself. Derivatives require the maintenance of adequate controls to monitor thetransactions entered into, the ability to assess the risk that a derivative adds to the portfolio and theability to forecast price or interest rate movements correctly. There is the possibility that a loss maybe 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 derivativesinclude the risk of mispricing or improper valuation of derivatives and the inability of derivatives tocorrelate perfectly with underlying assets, rates and indices. Thus, derivatives are highly leveragedinstruments. Even a small price movement in the underlying security could have a large impact ontheir 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 circumstancesmentioned elsewhere in the Offer Document.

Investors should study this Offer Document carefully in its entirety and should not construe thecontents hereof as advise relating to legal, taxation, investment or any other matters. Investors areadvised 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 adecision 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.


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DUE DILIGENCE CERTIFICATE

It is confirmed that:

? The Draft Offer Document of Reliance Power Fund, forwarded to SEBI, is in accordance with theSEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI fromtime to time.

? All the legal requirements in connection with the launch of the Scheme as also the guidelines,instructions etc., issued by the 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 investorsto make a well-informed decision regarding investment in the Scheme.

? The intermediaries named in the offer document are registered with SEBI, untill the date, suchregistrations are valid.

? The contents of the Offer Document including figures, data, yields etc. have been checked andare factually correct.

Signature

Name: K. Suresh BabuDesignation: Compliance Officer

Place:Mumbai

Date: December 23, 2003

Note: The Due Diligence Certificate as stated above was submitted to the Securities and ExchangeBoard of India on December 23, 2003.


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II. DEFINITIONS AND ABBREVIATIONS

In this Offer Document, the following words and expressions shall have the meaningspecified below, unless the context otherwise requires:

Applicable NAV: Applicable NAV is the Net Asset Value per Unit at the close of theWorking Day on which the application for purchase or redemption is received at thedesignated investor service centre and is considered accepted on that day. An application isconsidered accepted on that day, subject to it being complete in all respects and receivedprior to the cut-off time on that Working Day.

Asset Management Company/AMC/Investment Manager/RCAM: RelianceCapital Asset Management Limited, the Asset Management Company incorporated under the

Companies Act 1956, and authorized by SEBI to act as the Investment Manager to theSchemes of Reliance Mutual Fund (RMF).

Bonus Unit :Bonus Unit means and includes, where the context so requires, a unit issuedas fully paid-up bonus unit by capitalizing a part of the amount standing to the credit of theaccount of the reserves formed or otherwise in respect of this scheme.

CDSC: Contingent Deferred Sales Charge, a charge imposed when the units are redeemedwithin the first four years of unit ownership. The SEBI (Mutual Fund) Regulations, 1996direct that a CDSC may be charged only for the first four years after purchase and mandatesthe maximum amount that can be charged in each year.

Collecting Bank: Branches of Banks for the time being authorized to receiveapplication(s) for units, as mentioned in this document.

Continuous Offer: Offer of the Units when the Scheme becomes open ended, afterclosure of the New Fund Offer.

Custodian: Deutsche Bank, Mumbai, acting as Custodian to the Scheme, or any othercustodian 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 switchingof units etc.

Entry Load: Load on subscriptions / switch in. However no entry loads shall be applicableon investments made by a Fund of Funds scheme in Reliance Diversified Power SectorScheme.

Exit Load: Load on redemptions / switch out.

Equity related instruments: Such instruments like Convertible bonds and debenturesand warrants carrying the right to obtain equity shares and derivative instruments.


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FII:Foreign Institutional Investors, registered with SEBI under the Securities and ExchangeBoard of India (Foreign Institutional Investors) Regulations, 1995.

Investment Management Agreement (IMA): The Agreement entered into betweenReliance Capital Trustee Co. Limited and Reliance Capital Asset Management Limited bywhich RCAM has been appointed the Investment Manager for managing the funds raised byRMF 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 thescheme/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 ofthe banker's clearing house located at the place where the application form is submitted.

Regulations/ Mutual Fund Regulations: Securities and Exchange Board of India(Mutual Funds) Regulations as amended from time to time and such other regulations as maybe in force from time to time to regulate the activities of Mutual Funds.

NAV / Net Asset Value: Net Asset Value of the Units in each plan of the Scheme iscalculated in the manner provided in this Offer Document or as may be prescribed byRegulations 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 ofReliance Diversified Power Sector Fund (An open-ended Power Sector Scheme) for

subscription.

PIO:Person of Indian Origin

Purchase Price: Purchase Price to the investor of Units of any of the plans computed inthe manner indicated in this offer document.

RBI / Reserve Bank of India: Reserve Bank of India, established under the ReserveBank of India Act, 1934.

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 videregistration number MF/022/95/1 dated June 30, 1995.

RCTC/Trustee/Trustee Company: Reliance Capital Trustee Co. Limited, a Companyincorporated under the Companies Act, 1956, and authorized by SEBI and by the Trust Deedto 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 computedin the manner indicated in this offer document.


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Registrar /Karvy: Karvy Computershare Pvt Ltd., who have been appointed as the Registraror any other Registrar who is appointed by RCAM.

Scheme: Reliance Diversified Power Sector Fund ("An open-ended Power Sector Scheme")

SEBI: The Securities and Exchange Board of India.

SEBI Regulations/ Regulations: SEBI (Mutual Fund) Regulations, 1996, including anysubsequent amendments or modifications therto.

Plans: The Scheme offers two Plans, Growth Plan and Dividend Plan

Trigger Facility: Value & NAV Trigger to introduce a Stop loss or a Gain Cap.

Trust Deed: The Trust Deed entered into on April 25, 1995 between the Sponsor and theTrustee, and all amendments thereof.

Trust Fund: The corpus of the Trust, unit capital and all property belonging to and/or vestedin the Trustee.

Unit: The interest of the investors in any of the plans, of the scheme which consists of eachUnit 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, subject to realization of thecheque.

Working Day: Any day, provided such day is not a Saturday or Sunday or any day on whichBanks in Mumbai are Closed for commercial transactions and The Stock Exchange, Mumbaiand/or National Stock Exchange are closed for transactions or a day on which banks are openbut The Stock Exchange, Mumbai and/or The National Stock Exchange are closed fortransactions or a day on which sale of units is suspended by the AMC or a day on whichnormal business could not be transacted due to storms, floods, bandhs, strikes or any othercalamities, etc, subject to modifications by RCAM from time to time.

Words and Expressions used in this Offer Document and not defined: Samemeaning as in Regulations.


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Cut off time: 3:00 p.m. on working days as defined in the Offer Document

Recurring / Systematic Investment Plan (RIP/SIP): Available as detailed

elsewhere in the Offer Document

Regular Withdrawal Plan (RWP): Available as detailed elsewhere in the OfferDocument

Regular Investment Option for corporate employees (RICE): Available asdetailed elsewhere in the Offer Document.

Switch Facility: Available, subject to minimum Rs. 5000/- & any amount thereafter inswitch in scheme (for opening a new folio/account) & minimum Rs 1000 & any amount

thereafter for additional switch in. No load applicable for switches between the equity / sectorspecific schemes. However, differential load shall be charged for switching from RelianceIndex to any other equity/sector specific scheme and switching from any other equity / sectorspecific scheme to Reliance NRI Equity Fund.

Nomination Facility: Available

Systematic Transfer Plan (STP): Available

Dividend Transfer Plan (DTP): Available

Mode of Holding: Single, Joint or Anyone or Survivor

Benchmark Index: India Power Index

Switching Option: Investors may opt to switch Units between the Dividend Plan andGrowth Plan of the Scheme at NAV based prices. Switching will also be allowed into/fromany other eligible open-ended Schemes of the Fund either currently in existence or aScheme(s) that may be launched / managed in future, as per the features of the respectivescheme and as per the applicable loads.

Recurring Expenses

Investment Management Expenses 1.25 %Marketing Expenses .75%Operational Expenses 0.25%

Total 2. 25%

The above expenses are estimates only and are subject to change as per actuals. While theAMC fees remains the same, other expenses, namely, Marketing Expenses and OperationalExpenses may change inter se and the total expenses shall not exceed 2.50% of the amount ofthe Scheme's average daily net assets. Subject to SEBI Regulations, the AMC reserve theright to modify the above estimate for recurring expenses on a prospective basis.


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Allotment of Units: Allotment of units in respect of applications received during NFOwill be made within one month from date of closure of the NFO (subject to realization ofcheque/draft). For Subscriptions received after re-opening for continuous offer,at the DISC's

within the cut-off timings and considered accepted for that day, the units will be allotted asper the applicable NAV on the T day, Where the T day is the transaction day, provided theapplication is received within the cut-off timings for the transaction day.

RCAM, in consultation with the Trustees reserves the right to discontinue/ add more plans/options at a later date subject to complying with the prevailing SEBI guidelines andRegulations. RCAM, in consultation with the Trustees, reserves the right to change the Loadstructure 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

1. THE FUND

Reliance Mutual Fund Reliance Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882 withReliance 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, 1995. The name of the MutualFund has been changed from Reliance Capital Mutual Fund to Reliance Mutual Fundeffective March 11, 2004 vide SEBI's letter no. IMD/PSP/4958/2004 date March 11, 2004.

Reliance Mutual Fund was formed to launch various schemes under which units are issued tothe public with a view to contribute to the capital market and to provide investors theopportunities 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 andabroad 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 theirsavings; and

iii. To take such steps as may be necessary from time to time to realise the effects withoutany limitation.

2. SPONSOR COMPANY

Reliance Capital LimitedReliance Capital Asset Management Limited is a wholly owned subsidiary of RelianceCapital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital AssetManagement Limited is held by Reliance Capital Limited.


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Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd. (RCL). RCL hasbeen promoted by Reliance Industries Limited (RIL), one of India's largest private sectorenterprise and AAA Enterprises (P) Limited. RIL has a net worth of Rs.40,483 crores as on

March 31, 2005 and currently has a large family of shareholders. Reliance Capital Limited isa Non Banking Finance Company engaged in leasing, investment and other fund basedactivities. The networth of RCL is Rs. 1,437.92 crores as on March 31, 2005. Given below isa summary of RCL's financials:

(Rs. in crores)

Particulars 2004-2005 2003-04 2002-03

Total Income 295.69 356.79 458.78Profit Before Tax 111.21 105.79 102.63

Profit After Tax 105.81 105.79 102.63Reserves & Surplus 1310.08 1271.84 1208.50

Ne t Wort h 1437 .92 1399.81 1336 .33

Earnings per Share (Rs.) 8.31 8.31 8.06(Basic + Diluted) (Basic+ Diluted)

Book Value per Share (Rs.) 112.95 109.96 104.54

Dividend (%) 30% 29% 29%Paid up Equity Capital 127.84 127.84 127.83

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 responsibilitiestowards the Fund in accordance with the SEBI Regulations. The Sponsor is not responsibleor liable for any loss resulting from the operation of the Scheme beyond the contribution ofan amount of Rupees one lakh made by them towards the initial corpus for setting up theFund and such other accretions and additions to the corpus.

3. THE TRUSTEE

Reliance Capital Trustee Co. Limited

Regd. Office:

EO1, Reliance GreensVillage Motikhavdi,Digvijaygram,District Jamnagar 361140Gujarat

Corporate Office :Kamala Mills Compound,Trade World,B Wing,7th Floor,Lower Parel (West),Mumbai-400 013.

Reliance Capital Trustee Co. Limited (RCTC), a company incorporated under the CompaniesAct, 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.

RCTC has been appointed as the Trustee to Reliance India Power Fund, a Venture CapitalFund registered with the SEBI vide registration number IN/VCF/05-06/062 dated June 16,2005 but this activity is yet to commence. An application has also been filed for registrationof Reliance Venture Capital Fund with SEBI.


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1. The Directors

Directors of RCTC are:

Name and Address Other Directorships

Mr. S. P. Talwar*

Limited,162, Kshitij, 16th Floor,Limited,47, Nepean Sea Road,Mumbai 400036

(Former Deputy Governor

of Reserve Bank of India)

Director: Venragiri Power GenerationReliance General Insurance CompanyReliance Life Insurance Company Limited,M/s. Crompton Greaves Limited

Mr. S. S. Bhandari

P-7, Tilak Marg, C; Scheme, Jaipur 302005

Chartered Accountant

Director: M/s Vaibhav Gems Limited, JaipurSenior Partner: M/s S. Bhandari & Co.Chartered Acountants, Jaipur

Mr. A. N. Shanbhag*96/11, Mohini Mansion, 2nd Floor,Near D. S. High School, Sion(W),Mumbai-400 022

Tax & Investment Consultant

Director:CanBank Mutual Fund, MCS LtdProprietor: Wonderland InvestmentsConsultants

Mr. Sujal Shah

9, Ganesh Bhuvan,Natwar Nagar, Road No. 2Jogeshwari (East),Mumbai 400 060


Director: i-Process Services (India)Private Limited, Gitanjali Gems Limited,Partner : M/s N. M. Raiji & Co.

* Associate Director

Note: As per Regulation 16(5) of the SEBI (Mutual Funds) Regulations, 1996, two-thirds ofthe trustees shall be independent persons and shall not be associated with the sponsors or beassociated with them in any manner whatsoever. As per SEBI Circular dated October 28,2002, Trustee Company must appoint independent director(s) in place of the resigning

director(s) within a period of three months from the date of resignation. Further, in view ofthe above, the composition of the Board of Directors of Reliance Capital Trustee Co. Limitedshall be re-aligned as per the directions of SEBI.


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2. Duties and Obligations of the TrusteesIn accordance with SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed

constituting the Mutual Fund, the Trustees are required to fulfill several duties andobligations, 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 clausesas are necessary for the purpose of making investments.

c. The Trustees shall have a right to obtain from the Asset Management Company suchinformation as is considered necessary by the Trustees.

d. The Trustee shall ensure before the launch of any scheme that the AssetManagement 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) andsubmitted their bio-data which shall contain the educational qualifications, pastexperience in the securities market to SEBI, within 15 days of theirappointment;

(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 inempanelling the brokers, in monitoring securities transactions with brokers andavoiding undue concentration of business with any broker.

f. The Trustee shall ensure that the Asset Management Company has not given anyundue or unfair advantage to any associate or dealt with any of the associates of theAsset Management Company in any manner detrimental to interest of unitholders.

g. The Trustee shall ensure that the transactions entered into by the Asset ManagementCompany are in accordance with the SEBI (Mutual Funds) Regulations, 1996 andthe 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 compromisedwith those of any other scheme or of other activities of the Asset ManagementCompany.

i. The Trustee shall ensure that all the activities of the Asset Management Companyare in accordance with the provisions of SEBI (Mutual Funds) Regulations, 1996.

j. Where the Trustees have reason to believe that the conduct of the business of theMutual Fund is not in accordance with the Regulations and the Scheme, they shallforthwith take such remedial steps as deemed necessary by them and shallimmediately 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 Lac pertransaction) with the Mutual Fund on a quarterly basis.


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l. The Trustees shall be accountable for and be the Custodian of the funds and propertyof the respective Schemes and shall hold the same in trust for the benefit of theunitholders 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 theunitholders 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 prematurelyredeem 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 wouldmodify 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 nationwidecirculation as well as in a newspaper published in the language of the regionwhere the head office of the Mutual Fund is situated; and

(b) The unitholders are given an option to exit at the prevailing net asset valuewithout any exit load.

q. The Trustee shall call for the details of transactions in securities by the key personnelof the Asset Management Company in his own name or on behalf of the AssetManagement Company and shall report to SEBI, as and when required.

r. The Trustee shall quarterly review all transactions carried out between the MutualFund, Asset Management Company and its associates.

s. The Trustee shall quarterly review the net worth of the Asset Management Companyand shall ensure that the same is in accordance with the clause (f) of sub-regulation(1) of regulation 21 of SEBI (Mutual Funds) Regulations, 1996.

t. The Trustee shall periodically review all service contracts such as custodyarrangements, 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 ofdeployment of the net worth by the Asset Management Company and the interest ofthe unitholders.

v. The Trustee shall periodically review the investor complaints received and theredressal of the same by the Asset Management Company.

w. The Trustee shall abide by the Code of Conduct as specified in the Fifth Schedule ofthe SEBI (Mutual Funds) Regulations, 1996.

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 bythe directors and key personnel of the Asset Management Company; and


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(iii) A certificate to the effect that the Asset Management Company has beenmanaging the Scheme independently of any other activities and in case anyactivities of the nature referred to in regulation 24(2) of the SEBI (Mutual

Funds) Regulations, 1996 have been undertaken by the Asset ManagementCompany, adequate steps to ensure that the interest of the unitholders areprotected, have been taken.

y. The independent Trustees referred to in sub-regulation (5) of Regulation 16 shallgive their comments on the report received from the Asset Management Companyregarding the investments by the Mutual Fund in the securities of group companiesof 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 ManagementCompany if substantial irregularities are observed in any of the Schemes and shallnot allow the Asset Management Company to float new Schemes.

iii) The Trustee shall ensure that the trust property is properly protected, held andadministered by proper persons and by a proper number of such persons.

iv) The Trustee shall ensure that all the service providers are holding appropriateregistrations 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.

Specific Due Diligence:The Trustees shall:

i) Obtain internal audit reports at regular intervals from independent auditors appointedby the Trustees.

ii) Obtain compliance certificates at regular intervals from the Asset ManagementCompany.

iii) Hold meetings of the Trustees once in two calendar months and atleast six suchmeetings shall be held in every year.

iv) Consider the reports of the independent auditor and compliance reports of AssetManagement Company at the meetings of Trustees for appropriate action.

v) Maintain records of the decisions of the Trustees at their meetings and of the minutesof 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 andchecking 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 sameservices.

iii) Selection of the Asset Management Company s independent directors


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iv) Securities transactions involving affiliates to the extent such transactions arepermitted by Regulations.

v) Selecting and nominating individuals to fill independent directors vacancies.

vi) Code of ethics must be designed to prevent fraudulent, deceptive ormanipulative practices by insiders in connection with personal securitiestransactions.

vii) The reasonableness of fees paid to Sponsors, Asset Management Companyand others for services provided.

viii) Principal underwriting contracts and renewalsix) 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 theinterest of unitholders.

Where SEBI Regulations provide for seeking the approval of the UnitHolders for any purpose, the Trustee may adopt any of the followingprocedures:

(i) Seeking approval by postal ballot or

(ii) Approval of the Unit-holders present and voting at a meeting to bespecifically convened by the Trustee for the purpose. For this purpose, theTrustees shall give 21 days notice to the Unit Holders and the Trustees maylay down guidelines for the actual conduct and accomplishment of the votingat 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 maintainarms length relationship with other companies, or institutions or financialintermediaries or any body corporate with which they may be associated.ii) The Directors of the Trustee shall not participate in any decision-makingprocess/resolutions of its board meetings for any investment in which they maybe interested.iii) All the Trustees shall furnish to the Board of Trustees or Trustee Companyparticulars of interest which he may have in any other company, or institution orfinancial 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 unlimitedliability 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 incontravention of SEBI Regulations except with the prior approval of SEBI norshall it allow the AMC to do so.

However, as and when there is an addition / modification / deletion in the duties andresponsibilities 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 exercisedadequate due diligence honestly.The Trustees shall meet at least once in two calendar months and at least six suchmeetings shall be held in every year to review the information / reports submitted by the


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AMC in accordance with the Regulations. As per Regulations prevailing during the yearended March 31, 2005, six meetings of the Board of Directors of the Trustee Companywere held.

The Trustees have also appointed the statutory auditors to verify the books of accountsand to ascertain the true and fair representation of the state of affairs as on a particularday 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 independentTrustee. The Committee meets periodically to discuss the internal control systems, thescope of audit of the internal auditors, as well as the observations made by them. It alsoreviews the half-yearly and annual financial accounts. Recommendations, if any, of theaudit committee on any matter relating to financial management etc. are considered inthe subsequent Board meeting of AMC and Trustees.

3. Trusteeship Fees

Pursuant to the Trust Deed constituting the Fund, the Fund is authorised to pay theTrustee, a fee for their services, in addition to the reimbursement of all costs, charges andexpenses, sum computed at the rate of 0.05% of the amount, being the aggregate of theTrust Fund and Unit Capital of all the Schemes put together on 1st April each year or asum of Rs.5 Lacs, which ever is lower or such other sum as may be agreed upon betweenthe Settlor and the Trustee from time to time. The Trustee may charge further fees aspermitted from time to time under the Trust Deed and the Regulations.

D. ASSET MANAGEMENT COMPANY (AMC)

Reliance Capital Asset Management Limited

Reliance Capital Asset Management Limited (RCAM), a company registered under theCompanies Act, 1956 was appointed to act as the Investment Manager of RelianceMutual Fund.Reliance Capital Asset Management Limited is a wholly owned subsidiary of RelianceCapital Limited, the sponsor. The entire paid-up capital (100%) of Reliance CapitalAsset Management Limited is held by Reliance Capital Limited.Reliance Capital Asset Management Limited was approved as the Asset ManagementCompany for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June30, 1995. 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, 1996. Pursuant to this IMA, RCAM is authorised

to act as Investment Manager of the Mutual Fund. The networth of the AssetManagement Company including Preference shares as on March 31, 2005 is Rs. 30.13crores. The Mutual Fund has launched twenty-four Schemes till date, namely: RelianceVision Fund (September 1995), Reliance Growth Fund (September 1995), RelianceIncome Fund (December 1997), Reliance Liquid Fund (March 1998), Reliance MediumTerm Fund (August 2000), Reliance Short Term Fund (December 2002) and RelianceFixed Term Scheme (March 2003), Reliance Banking Fund (May 2003), Reliance GiltSecurities Fund (July 2003), Reliance Monthly Income Plan (December 2003), RelianceDiversified Power Sector Fund (March 2004) Reliance Pharma Fund ( May 2004),Reliance Floating Rate Fund (August 2004), Reliance Media & Entertainment Fund(September 2004), Reliance NRI Equity Fund (October 2004), Reliance NRI IncomeFund (October 2004), Reliance Index Fund, Reliance Equity Opportunities Fund


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(February 2005), Reliance Fixed Maturity Fund Series I (March 2005), Reliance FixedMaturity Fund Series II (April 2005), Reliance Regular Savings Fund (May 2005),Reliance Liquidity Fund (June 2005), Reliance Tax Saver (ELSS) Fund (July 2005),

Reliance Fixed Tenor Fund (November 2005) and Reliance Equity Fund(February 2006)

RCAM has been registered as a portfolio manager vide SEBI Registration No.INP000000423 and renewed effective 1st August, 2003.

RCAM has commenced these activities. It has been ensured that key personnel of theAMC, the systems, back office, bank and securities accounts are segregated activity wiseand there exists systems to prohibit access to inside information of various activities. Asper SEBI Regulations, it will further ensure that AMC meets the capital adequacyrequirements, if any, separately for each such activity.

RCAM has been appointed as the Investment Manager of Reliance India Power Fund,a Venture Capital Fund registered with the SEBI vide registration number IN/VCF/05-06/062 dated June 16, 2005 but this activity is yet to commence. However, there is noconflict of interest between various business activities carried on by Asset ManagementCompany.

1. Name and Address of the Asset Management Company for the Mutual FundReliance Capital Asset Management Limited

Regd. Office:

EO1, Reliance GreensVillage Motikhavdi,

Digvijaygram,District Jamnagar 361140Gujarat

Corporate Office :Kamala Mills Compound,Trade World,

B Wing,7th Floor,Lower Parel (West),Mumbai-400 013.

2. Shareholders of AMC

Reliance Capital Asset Management Limited is a wholly owned subsidiary ofReliance Capital Limited, the sponsor. The entire paid-up capital (100%) of RelianceCapital Asset Management Limited is held by Reliance Capital Limited.

3. Directors

The Directors of RCAM are:

Mr. Amitabh Jhunjhunwala*

Flat A-212, NCPA ApartmentsNariman Point

Mumbai, 400 021

Senior Corporate Executi ve

Director:Reliance Capital LimitedAnil Dhirubhai AmbaniFoundationReliance AssetManagement(Mauritius) LimitedReliance Capital Ventures

LimitedReliance General Insurance


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Company LimitedReliance Life InsuranceCompany Limited

Anil Dhirubhai AmbaniEnterprises Limited

Mr. Amitabh Chaturvedi *Raheja Empress, Flat No. 1201/1202,12th Floor, Veer Savarkar Marg,Opp. Siddhi Vinayak Temple,Prabhadevi, Mumbai - 400 025

Senior Corporate Executive

Director:Reliance AssetManagement(Singapore) Pte Limited;Reliance Asset Management(Mauritius) Limited,Reliance Infoinvestments Limited

Ms. Sulajja Firodia MotwaniC3, Lane 5, AbhimanshreeHousing Society, Pashan Road,Pune - 411 007

Senior Corporate Executive

Joint Managing Director:Kinetic Engineering Limited,Pune,

Director:Kinetic Motor Company Limited,Pune,Kinetic Marketing and ServicesLtd., Pune

Mr. Kanu Doshi

102, Shivala, Khatau Road,Cuffe Parade, Mumbai 400 005


Chairman:

Matrix Advisors (India) PrivateLimited

Director:BOB Capital Markets Limited,Peoples Financial ServicesLimited,

Alphaplus InvestmentManagement Private Limited

Mr. Manu Chadha

C-35, Malcha Marg,Chankyapuri, New Delhi 110 021


Director:

TRC Financial Services Limited,Himalayan Crest Power Limited,GIC Housing Finance Limited,Kotla Hydro Power Limited, IspatIndustries Limited, TRC

Corporate Consulting (P)Limited, SBI Funds ManagementPvt. Ltd.

Partner:

M/s T. R. Chadha & Co.,Chartered Accountants

*Associate Director


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4. Duties and Obligations of the Asset Management CompanyIn accordance with SEBI (Mutual Funds) Regulations, 1996, the Trust Deed and the

Investment Management Agreement, the Investment Manager has several duties andobligations, including the following:

1. The Asset Management Company shall take all reasonable steps and exercise duediligence to ensure that the investment of funds pertaining to any scheme is notcontrary to the provisions of SEBI (Mutual Funds) Regulations, 1996 and theTrust Deed.

2. The Asset Management Company shall exercise due diligence and care in all itsinvestment decisions as would be exercised by other persons engaged in the samebusiness.

3. The Asset Management Company shall be responsible for the acts ofcommissions 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 reportson 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 terminatethe assignment of the Asset Management Company at any time provided thatsuch termination shall become effective only after the Trustees have accepted thetermination of assignment and communicated their decision in writing to theAsset 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 beabsolved 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 theFund Managers are in the interest of the Unitholders and shall also be responsiblefor the overall risk management function of the Fund.

8. The Fund Manager shall ensure that the funds of the Scheme are invested toachieve the objectives of the Scheme and are in the interest of the Unitholders.

9. An Asset Management Company shall not, through any broker associated withthe sponsor, purchase or sell securities, which is average of 5% or more of theaggregate purchases and sale of securities made by the mutual fund in all its

schemes. Provided that for the purposes of the relevant sub-regulation, aggregate

purchase and sale of securities shall exclude sale and distribution of units issuedby the mutual fund. Provided further that the aforesaid limit of 5% shall apply fora block of any three months. An Asset Management Company shall not purchaseand 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 securitiesmade by the mutual fund in all its Schemes, unless the Asset ManagementCompany 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 orany of its associates, employees or their relatives, for the purpose of anysecurities transaction and distribution and sale of securities, provided that an


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Asset Management Company may utilise such services if disclosure to that effectis made to the unitholders and the brokerage or commission paid is also disclosedin the half yearly annual accounts for the Mutual Fund.

11.As per the SEBI Circular dated May 24, 2001 no brokerage will be payable forinvestments made by Sponsors of the Mutual Fund in any of the Schemes of theFund, on a prospective basis.

12.The Asset Management Company shall file with the Trustee the details oftransactions in securities by the key personnel of the Asset ManagementCompany in their own name or on behalf of the Asset Management Company andshall also report to SEBI, as and when required by SEBI.

13.In case the Asset Management Company enters into any securities transactionwith any of its associates, a report to that effect shall be sent to the Trustee attheir 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 samemutual fund in that company or its subsidiaries, if any, shall be brought to thenotice of the Trustees by the Asset Management Company and be disclosed in thehalf-yearly and annual accounts with justification for such investment providedthat the latter investment has been made within one year of the date of the formerinvestment 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 theMutual Fund during the said quarter.

16.A statement of holding in securities of the directors of the Asset ManagementCompany shall be filed with the Trustees, with the dates of acquisition of suchsecurities at the end of each financial year.

17.The Asset Management Company shall not appoint any person as a key personnelwho has been found guilty of any economic offence or involved in violation ofsecurities laws.

18.The Asset Management Company shall appoint Registrars and Transfer Agentswho 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 higherrates shall be disclosed in the annual accounts.

19.The RCAM shall not undertake any other business except that permitted underthe Regulations. The RCAM shall meet with the capital adequacy requirements, ifany, separately for each of the separate activity, if any undertaken by the AMCand obtain separate approval, if necessary under the Regulations.

20.The RCAM shall not invest in any of its schemes unless full disclosure of itsintention to invest has been made in the offer documents.

21.The RCAM shall not charge any fees on its investment in that scheme.22.The RCAM does not face any contingent interest in connection with the business

activities carried on by it.


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23.The Asset Management Company shall abide by the Code of Conduct asspecified in the Fifth Schedule to the SEBI (Mutual Funds) Regulations, 1996.

24.The independent directors of the AMC 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 whether the Asset Management Company

has charged higher fees than outside contractors for the same services.(iii)Selection of the Asset Management Companys independent directors(iv)Securities transactions involving affiliates to the extent such transactions

are permitted.(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 securitiestransactions.(vii) The reasonableness of fees paid to Sponsors, Asset ManagementCompany and others for services provided.(viii)Principal underwriting contracts and the renewals.(ix) Any service contract with the associates of the Asset Management

Company.Under the Investment Management Agreement, the duties and obligationsalso include the following:a) RCAM will be responsible for making, floating, issuing Schemes for the

Trust after approval of the same by the Trustees and SEBI as well asinvesting and managing the funds mobilised under various Schemes, in

accordance with the provisions of the Trust Deed and SEBI Regulations.b) RCAM must disclose the basis of calculating the repurchase/redemption

price and Net Asset Value of the various Schemes of the Fund to theinvestors, at such intervals as may be specified by SEBI and/or theTrustees and in accordance with the SEBI Regulations.

c) RCAM must maintain books and records about the operation of variousSchemes of the Fund to ensure compliance with the Regulations andguidelines for Mutual Funds as may be issued by SEBI from time totime, and shall submit a Scheme wise quarterly report on functioning ofthe Fund to the Trustee or at such intervals and in such manner as may

be required or called for by the Trustee or SEBI.

d) RCAM shall exercise all due diligence and vigilance in carrying out itsduties and in protecting the rights and interest of the unitholders.e) RCAM will at all times ensure that the Trust Fund is segregated from

assets of RCAM and assets of any other funds for which RCAM isresponsible.

f) RCAM shall submit to the Trustee all information concerning theoperation of the various Schemes of the Fund managed by RCAM atsuch intervals and in such manner as required by the Trustee to ensurethat RCAM is complying with the provisions of the Trust Deed andSEBI Regulations.


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RCAM shall observe the above-mentioned powers, duties and obligations. Notwithstandingthis, the powers, duties and obligations as stated in the regulations, from time to time, shallprevail upon the powers stated above.

As and when there is an addition/deletion/modification in the duties and responsibilities ofthe AMC due to a change in the Regulations, such additions/deletions/modifications shall bemade here, accordingly.The AMC shall not be liable to the Trustee in the event that the Mutual Fund suffers a declinein its Net Asset Value or fails to achieve any increase therein; unless such decline or failure iscaused by any acts of commission or omission or by the default or negligence of the AMC, abonafide error of judgement not being regarded as default or negligence nor as an act ofcommission or omission.Investment Decisions: The investment decisions are taken by a team comprising of theChief Investment Officer and Fund Managers based on research reports, market intelligence,analysis of macro and micro economic indicators, market trends etc. Detailed discussions

take place among the team members before investments are finally made. Such discussions/meetings occur more than once during a day if situations warrant viz. major economic orpolitical events for a review of earlier decisions. The Fund Managers along with theirrationale record all such investment decisions.

The Chief Executive Officer shall be responsible for compliances of all statutoryrequirements including SEBI Regulations and will supervise investments decisions of FundManagers taking into consideration the overall interest of the Unitholders and assumeresponsibility for the day to day and overall Risk Management function of Mutual Fund.

Under him Fund Manager(s) will look after investment of the funds of the Scheme(s) in amanner to achieve the investment objective of the Scheme and in the interest of Unitholders.

The performance of the Schemes is reviewed by the Board of AMC and Trustees in theirperiodical meetings. The trustee will review the performance of the scheme on a periodicalbasis and submit a half yearly report to SEBI on various matters related to compliance andperformance of the scheme. They may also compare the performance of the scheme against abenchmark index. The Benchmark Index for Reliance Diversified Power Sector Fund iscurrently India Power Index managed by IISL as the comparable indices. This benchmarkindice may be decided by the AMCs and trustees and any change at a later date shall berecorded and reasonably justified.

India Power Index provides regulators, investors and the market intermediaries with an

appropriate benchmark that captures the performance of the power segment of the

market. Companies selected in the Index have to be Power stocks, which should rankhigh in terms of market value represented by their market capitalisation and tradingfrequency. As an example, we provide hereunder the weightage of the Power Scrips in

the India Power Index as on February 6, 2004

Scrip Name Industry Market Cap on

06-Feb-2004

Weightage

Bharat Heavy ElectricalsLtd.

ElectricalEquipment

138705.49 28.32

Reliance Energy Limited(BSES Ltd.)

Power 88401.43 18.05


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Neyveli Lignite CorporationLtd.

Power 85227.65 17.40

Tata Power Co. Ltd. Power 74142.43 15.14

Siemens Ltd. ElectricalEquipment

29701.95 6.07

ABB Limited (Asea BrownBoveri Ltd.)

ElectricalEquipment

27376.44 5.59

Thermax Ltd. ElectricalEquipment

8515.32 1.74

Alstom Power India Ltd. Power 7429.63 1.52

CESC Ltd. Power 7272.71 1.49

Crompton Greaves Ltd. ElectricalEquipment

7103.54 1.45

Ahmedabad Electricity Co.

Ltd.

Power 6295.88 1.29

Gujarat Industries PowerCo. Ltd.

Power 5291.18 1.08

KEC International Ltd. TransmissionTower

2265.39 0.46

Havell's India Ltd. ElectricalEquipment

1165.48 0.24

Jyoti Structures Ltd. TransmissionTower

824.47 0.17

Total 489718.99 100.00

The abovementioned India Power Index is only for performance comparison purposes and shouldnot be construed as investment pattern of the Scheme. The scheme shall have the flexibility toinvest in stocks that are outside the composition of the index but are within the investment focusof the scheme. The scheme may broadly follow the composition of the index without necessarilytracking it. The Scheme at any point of time will not invest more than 10% of the NAV of thescheme in a single Company. We also submit that the proposed scheme is a sectoral scheme, theinvestment universe is limited to companies that are operating in the power sector. The scope fordiversification could be limited at times. However, given the nature of the scheme, the MutualFund may invest upto 100 % of the corpus into debt / money market instruments of Power Sectorfor a short term period on a defensive consideration."

The trustees reserve the right to change the index if any other appropriate/suitable index is available at a future date, in accordance with the Regulations.In case of change in the index, it will amount to change in the fundamentalattributes of the Scheme. Accordingly, as per Regulation 18(15)(A) of SEBI(Mutual Funds) Regulations, 1996 as amended from time to time, the Trusteesshall ensure that no such change shall be carried out unless: -

i) A written communication about the proposed change is sent to each unitholder and an

advertisement is given in one English daily newspaper having nationwide circulationas well as in the newspaper published in the language of the region where the HeadOffice of the Mutual Fund is situated and


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ii) The unitholders are given an option to exit at the prevailing Net Asset Value withoutany exit load.

5. In terms of the Investment Management Agreement and the Regulations, the AMC isentitled to a management and advisory fee at the rate of 1.25% of the average daily net assetsfor net assets upto Rs.100 crore and at the rate of 1.00% for the net assets in excess of Rs.100

crore. For Schemes launched on a No- Load basis, the AMC is entitled to collect anadditional management fee of upto 1% of the average net assets outstanding in each financialyear and the total management fee shall not exceed the limit stated under the Regulation52(6) of SEBI. RCAM, in consultation with the Trustees, reserves the right to chargeadditional management fees. Such additional management fee shall be chargeable only tillthe actual initial expenses borne by the AMC, limited to the maximum extent of 6% of theinitial mobilisation , are recovered.

6. Key Personnel of AMC & their relevant experience:

Name Age Des ignation Educational Qualification Type and Nature

of pastexperience

including

assignments held

during the past

10 years Mr. Amitabh Chaturvedi 37 Chief Executive Officer B.Com, F.C.A. Over 16 yrs

of experience inBanking &

Finance 1998-2003 ICICI BankLimited Head -Retail Channels& LiabilitiesGroup1994-1998Lloyds FinanceLimited Head ofMerchantBanking1992-1994 AppleFinance Limited

MerchantBanking Division

Mr. Vikrant Gugnani 35 President B.Com (Hons.), C.A. Over 10 years ofexperience in diversefunctions such asProduct Management,Research,Infrastructure, Sales andMarketing. Prior to

joining Reliance CapitalAsset Management


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Limited he was withCitibank N A as VicePresident, Product Head

Indonesia InvestmentProducts. Hisexperience of Citibankin India also includesProduct Head India -Investment Products,Investment Counsellor -

North, Y2K ProjectTeam Leader andBranch Cash Officer.Prior to this he was anIndependent Consultant

on Project Consulting &Advisory.

Mr. K. Rajagopal 56 Chief Investment Officer M.A. CAIIB Over 33 yearsexperience incommercialBanking, treasuryand investmentoperations 2001 tilldate -RelianceCapital AssetManagementLimited ChiefInvestment OfficerFund Management,1971-2001StateBank of India -ProbationaryOfficer-InternationalBanking & LoansSyndicationRegionalAdministration ofBranches &BusinessDevelopmentGeneral Manager -Treasury- TreasuryOperations includingLiquidityManagement,InvestmentOperations, Trading,


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ComplianceFunctions

Mr. Madhusudan Kela 36 Head - Equity B.Com, MMS. Over 13 yearsexperience in EquitySales &Dealing2001-03VicePresident - RelianceCapital Ltd.Contributing to thedevelopment of theMutual Fund (100%owned by RCL)1998-99 PeregrineSecurities VicePresident - Equity &

Sales Dealing 1996-98UBS Securities -Asst Vice PresidentEquity Sales &Dealing 1994-96Motilal Oswal -Equity Sales

Mr. Ashwani Kumar 35 Fund Manager-Equity B.Sc., MBA Finance Over 10years ofexperience1992 -2003Zurich Assetmanagement Co.India P.LtdSeniorResearch Analyst

Sunil Singhania 38 Fund Manager-Equity B.Com. CFA, FCA Over 11 Years ofexperience inCapital Markets1997 - 2003AdvaniShare Brokers PLtdDirector -Institutional Sales &Research, Equity

Derivatives1994-97MotisonsSecurities PLtd.PresidentInstrumental insetting up the

brok ing business ,NSE Trad ingmembership,developing thesystems.


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Mr. Amit Tripathi 30 Fund Manager-Debt B.Com(H), PGDM Over 7 yearsexperience1999-2003The New India

Assurance Co.Limited AssistantAdmin Officer -InvestmentDept.1998-1999SunInvest AssociatesLimited Analyst -Equity MarketOperations1997-1998CFS FinancialServices Pvt.Limited Equity

DealerMr Balkrishna Kini 49 Investor Relations B.Sc. (Hons), LL.B, March 2004 till date

Officer Master of Administrative handling

Managment Customer Relations& web initiatives.April 2003 to

November 2003UTIAMCLtd. Head ofCentralizedMonitoring of

schemes &Administration ofUTI Vashi Office.April 2000 to April2003 Branch Head -UTI Mumbai Main/JVPD Branches

Mr. Ashutosh Vaidya 31 Company Secretary B.Com, B. L, ACS Over 6 years of

& Compliance Officer experience inCorporateSecretarial,Compliance and

Legal functions.Prior to joiningReliance CapitalAsset ManagementLimited he was withKotak MahindraAsset ManagementLimited as Asso-Vice President,Compliance. 2004.WithCholamandalam


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Asset ManagementLimited. 2002 04.Compliance Officer

with Bank of BarodaAMC Ltd. 1999 -2002, with GodrejIndustries Limited.

Ms. Geeta Chandran 53 Associate Vice President - B A -Economics,

Operations & Settlement Bachelor of Law June 2002 till date

Reliance CapitalAsset ManagementLtd.Handling Day to day

operations includingInvestor RelationsDepartment &settlement July 1993to May2002RelianceIndustries Ltd.Heading TreasuryOperationsSeptember 1973 toJune 1993Bank ofAmerica NT &

SAOfficer in Chargeof Treasuryoperations

Ms. Sangya Nigam 33 Head- Risk Management B Com (Hons) From

MIBM April 2004 till date

Certified Financial Risk Manager RelianceCertified Treasury Manager Capital Asset

Management Ltd.From September2000 to October2003Pricewaterhouse

Coopers DeputyManager From June1998 to August 20002000MecklaiCommercial &Financial ServicesLtd.

AnalystMr. Sailesh Raj Bhan 32 Fund Manager-Equity MBA (Finance) CFA

(ICFAI)Over 9years experience


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in EquitySecuritiesresearch and

analysis 2001-2003Emkay Share& Stock BrokerPvt. Ltd Head -Research1996-2001Shah &Sequeira Invst.Pvt. Ltd Analyst -Equity research1995-1996ICFAI-SecuritiesResearch Center

Analyst - Equityresearch

Mr. Prashant Pimple 28 Fund Manager Debt MBA (Finance) CTM (ICFAI)Over 5 yearsexperience inTreasury 2003-2004ICICI BankLtd Manager-TreasuryInvestmentAdvisoryServices 2002-

2003Bank OfBahrain andKuwait, B.S.CAsst Manager-Treasury (DealingRoom) 2000-2002The Saraswat Co-op Bank LtdDealer- T reasury

Mr. Ramesh Rachuri 35 Fund Manager-Debt PGDM, IIM Over 7 yearsexperience in

InvestmentTrading andFinancial Markets,September 2004till date, RelianceCapital AssetManagementLimited, April2001-August2004, STCILimited - Dealer ,Trading in the


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Indian DebtMarket, July 1995- September 1998,

Business ManagerWorld Index PTELimited , GlobalSpot Forex MarginTrading , April1992-June 1992,Assistant ManagerMagus Mark etingCredit cardAuthorisation

Mr. AmitabhMohanty

33 Head Fixed Income MBA, IIMAhmedabad

BE (Electrical), IITRoorkee

Over 9 years experience inFixed Income Function

1999 2005

Alliance Capital Asset

Management (India) Private

LimitedHead- Fixed Income

1996 1999

SBI Funds Management

LimitedManaging Fixed IncomePortfolios

Chief Executive Officer : Mr. Amitabh Chaturvedi

President: Mr. Vikrant GugnanaiChief Investment Officer: Mr. K. RajagopalHead - Equities : Mr. Madhusudhan KelaHead Fixed Income : Mr. Amitabh MohantyCompliance Officer: Mr. Ashutosh VaidyaInvestor Relations Officer: Mr. Balkrishna Kini

Fund Management Team:Mr. K. Rajagopal*Mr. Madhusudhan Kela*Mr. Amitabh Mohanty *

Fund Managers:Equity - Mr. Sunil Singhania*, Mr. Ashwani Kumar*, Sailesh Raj Bhan*Debt - Mr. Amit Tripathi*, Mr. Prashant Pimple*, Mr. Ramesh Rachuri** Specific details mentioned under Section on Key Personnel above.


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E. AUDITORS:

Statutory Auditors to the Scheme

Haribhakti & Co.Chartered Accountants42, Free Press House, Nariman Point, Mumbai - 400 021.

Auditors to the Asset Management Company

C.C. Chokshi & Co. Chartered Accountants12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate,Worli Mumbai - 400 018

Auditors to the Trustee CompanyM/s. Malpani & Associates

Chartered Accountants307, Chartered House, Dr. C.H. Street, Near Marine Lines Church,Mumbai - 400 002.

F. THE CUSTODIAN

The Trustee has appointed Deutsche Bank located at Kodak House, Mumbai-400 023, as theCustodian of the securities that are bought and sold under the Scheme. A Custody Agreementhas been entered with Deutsche Bank in accordance with SEBI Regulations. The Custodian isapproved by SEBI under registration no. IN/CUS/003 to act as Custodian for Mutual Funds.In terms of Custody Agreement dated September 6, 1995 between the Mutual Fund andDeutsche Bank, the Custodian shall, inter alia: Provide post-trading and custodial services to the Mutual Fund; Keep securities and other instruments belonging to the Scheme in safe custody; Ensure smooth inflow/outflow of securities and such other instruments as and whennecessary, in the best interests of the unitholders; Ensure that the benefits due to the holdings of the Mutual Fund are recovered; and Be responsible for loss of or damage to the securities due to negligence on its part or on thepart of its approved agents.

The Custodian will charge the Mutual Fund, portfolio fee, transaction fee and out-of -pocketexpenses in accordance with the terms of the Custody Agreement and as per any modification

made thereof from time to time.

G. THE REGISTRAR

RCAM has appointed M/s. Karvy Computershare Pvt. Limited to act as the Registrar andTransfer Agent to the Scheme. M/s. Karvy Computershare Pvt. Limited (KCSPL) havingtheir office at Karvy Plaza, 21, Road No. 4, Street No.1, Banjara Hills, Hyderabad 500 034, isa Registrar and Transfer Agent registered with SEBI under registration no. INR000000221.RCAM and the Trustee have satisfied themselves, after undertaking appropriate due diligencemeasures, that they can provide the services required and have adequate facilities, including

systems facilities and back up, to do so. The Trustee has also laid down broad parameters forsupervision of the Registrar. As Registrar to the Scheme, KCSPL will accept and process


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investor's applications, handle communications with investors, perform data entry services,despatch Account Statements and also perform such other functions as agreed, on an ongoingbasis.

The Registrar is responsible for carrying out diligently the functions of a Registrar andTransfer Agent and will be paid fees as set out in the agreement entered into with it and asper any modification made thereof from time to time.

V. INVESTMENT FOCUS, OBJECTIVES, POLICIES & LIMITATIONS

OF THE SCHEME

1. INVESTMENT OBJECTIVE:

The primary investment objective of the Scheme is to generate consistent

returns by investing in equity / equity related or fixed income securities ofpower and othe r compan ies associated wi th the power sector .

Power is the critical infrastructure on which modern economic activity is fully dependent. InIndia, only around 55% of the households in India have access to electricity. Most of thosewho have access do not get uninterrupted reliable supply. With the Indian economy poisedfor a healthy growth rate going ahead, the Indian power sector will have to serve as thebedrock for supporting this growth.

The recently introduced Electricity Supply Act, 2003 passed in June 2003 seeks

to bring about a qualitative transformation of the electricity sector by creating a

liberal framework to enable swift development of the Indian power sector byconsolidating and replacing a number of older legislations on electricity. Someof the main objectives of the Act are to consolidate the laws relating togeneration, transmission, distribution, trading and use of electricity andgenerally for taking measures conducive to development of the electricityindustry, promoting competition therein, protecting interest of consumers andsupply of electricity to all areas, rationalization of electricity tariff, ensuringtransparent policies regarding subsidies, promotion of efficient andenvironmentally benign policies.

Reliance Power Fund proposes to invest in various segments of the Indian power sector.Broadly, power sector companies can be segregated into those operating in the following

genres:

1. Power Generation, including those companies that are engaged in renovation andmodernization of existing plants'.

2. Power Transmission3. Power Distribution, including retail supply of power4. Power Trading5. Financing / Funding power projects6. Power Equipment7. Power Technology8. Emerging genres that will evolve as the Indian power sector develops


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The AMC will have the discretion to completely or partially invest in any of the type ofsecurities stated above with a view to maximize the returns or on defensive considerations.

However, there can be no assurance that the investment objective of the Scheme will berealized, as actual market movements may be at variance with anticipated trends.

However the debt part of the portfolio will not necessarily be invested in the power sector, itwould include other debt and money market instruments as specified in investment strategy.

2 ASSET ALLOCATION PATTERN:

InstrumentAsset Allocation

Risk

Minimu

m

Most

Likely

Maximum

Equities and Equity relatedSecurities

0 % 80% 100 % Medium toHigh

Debt and Money MarketInstrumentswith an average maturity of5-10 yrs

0 % 20% 100 % Low toMedium

Securitised debt upto 100% of the corpus.

The above Asset Allocation Pattern is only indicative. The investment manager in line withthe investment objective may alter the above pattern for short-term period and on defensiveconsideration.

The Fund will invest in equity securities whenever the equity market and shares from thepower sector are expected to do well. However, whenever the equity market is not expectedto do well, the Fund will shift its focus in debt, which in extreme cases of bearish equitymarket can go upto 100%. The samples of situations for asset allocation could be:

1. Equity market is performing reasonable well and power sector shares are available atattractive valuations, then the asset allocation could be as follows:

Equity Debt

80% 20%

2. Equity market is lackluster. There is no clarity of movement of market and participation

is low. power Sector shares are not attracting much attention, then the asset allocation couldbe as follows:

Equity Debt

50% 50%

3. Equity market is trading at stretched valuations. Shares from power sector have risensharply and there is likelihood of a fall in equity market due to social, political or economicadverse development, then the asset allocation could be as follows:

Equity Debt


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Money market securities includes but are not limited to treasury bills,commercial paper of public sector undertakings and private sector corporateentities, inter bank call and notice money, certificates of deposit of scheduled

commercial banks and Financial Institutions, securitised debt, bills ofexchange/promissory notes of public and private sector entities (co-accepted bybanks) and any othe r money market se curi ti es as may be pe rmit ted bySEBI/RBI. From time to time, it is possible that the portfolio may hold cash.

The Scheme may also enter into repurchase and reverse repurchase obligationsin all securities held by them as per the guidelines and regulations applicable tosuch transactions. Further, the Scheme intends to participate in securitieslending as permitted within the Regulations. It is the intention of the scheme totrade in the derivatives market as per the Regulations. Further, the Schemeintends to participate in Securities lending as per the Regulations. The scheme

also intends to invest in foreign debt securities, as and when permitted by SEBIand in accordance with the Regulations then prevailing.

Exposure to foreign securities:

The scheme may have an exposure of upto 90% of its net assets in foreign

securities. The AMC with a view to protecting the interests of the investors mayincrease exposure in foreign securities upto 100% as deemed fit from time totime. However, the exposure in foreign securities would not exceed themaximum amount permitted from time to time.

Investment in overseas financial assets

SEBI vide its circular nos. MFD/CIR/17/419/02 dated March, 30, 2002 andMFD/CIR/18/21826/2002 dated November 7, 2002 has permitted mutual funds to invest inoverseas financial assets. It is the investment managers belief that overseas securities offernew investment and portfolio diversification opportunities into multi-market and multi-currency products. However, such investments also entail additional risks.Offshore investment will be made subject to any/ all approvals / conditions thereof as may bestipulated by SEBI/ RBI/ other regulatory authorities. The fund may, where necessary,appoint other intermediaries of repute as advisors, sub-custodians, etc. for managing andadministering such investments. The appointment of such intermediaries shall be inaccordance with the applicable requirements of SEBI and within the permissible ceilings ofexpenses. The fees and expenses would illustratively include, besides the investmentsmanagement fees, custody fees and costs, fees of appointed advisors and sub managers,transaction costs and overseas regulatory costs.

Risk factors of investment in overseas financial assets

To the extent that the assets of the schemes will be invested in securities denominated inforeign currencies, the Indian rupee equivalent of the net assets, distributions and incomemay be adversely affected by changes in the value of certain foreign currencies relative to the

Indian rupee (if Indian rupee appreciates against these foreign currencies). The repatriation ofcapital to India may also be hampered by changes in regulations concerning exchangecontrols or political circumstances as well as the application to it of other restrictions oninvestment. The scheme may have to pay applicable taxes on gains from such investment.

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