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CHAPTER -1

Introduction to Mutual funds

WHAT IS MUTUAL FUND?

Mutual Fund is a trust that pools the savings of a number of investors who sharea common financial goal. The money thus collected is then invested in capitalmarket instruments such as shares, debentures and other securities.

The income earned through these investments are shared by its unit holders inproportion to the number of units owned by them

A MUTUAL fund i s a pool o f money, col lected from

investor, which is then invested by the professional managers

according to certain investment objective .

The Mutual Fund industry in India started in 1963 with the formation of

Unit Trust of India.

In the year 1992, Securities and exchange Board of India (SEBI) Act waspassed. As far as Mutual funds are concerned, SEBI formulates policies andregulates the mutual funds to protect the interest of the investors.

A mutual fund is created when investor put their money together. Itis therefore a pool of the investors fund. The most importantcharacteristic of a mutual fund is that the contribution and the

beneficiaries of the fund are the same class of people, namely theinvestor. The term mutual fund means that investor contribute to thepool, and also benefit from t he pool. There are no other claimants tothe fund. The fund held Mutually by investors is the mutual fund.

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How Does Mutual funds Work:

The Above diagram shows the Working of all mutual funds:

INVESTORS (All those who want to save) deposit their money with theMutual fund Company.

FUND MANAGERS (Professionals in financial sector, appointed by theMutual fund Company) invest the money collected from all the investors aroundthe world in the listed securities of different corporates after analyzing theeffect of market changes on the performance of different companies.

RETURNS the profit earned by the different companies in which fundmanagers has invested the funds is distributed among the investors (in

proportion to the amount invested by them) in the form of Returns.

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Terminologies used in Mutual funds

Some Basic terminologies used in mutual funds are:

Net Asset Value (NAV):

Net Asset Value is the market value of the assets of the scheme minus itsliabilities divided by the units outstanding. Simply put, if the fund is dissolvedor liquidated, by selling off all the assets in the fund, this is the amount that theunitholder would collectively own. The NAV is used to calculate the value ofyour investments and to determine the price of per unit for buying or selling.

i.e. NAV= Portfolio value liabilities / No of Shares outstanding

Portfolio:

Combined holdings of many kinds of financial securities like shares, debenturesand bonds. The objective is risk diversification and maximization of gain ofgroup of assets.

Corpus:

The total amount of money that a fund has at any point of time.

Unit:

A Unit Represents an investors share in the assets of the scheme s/he hasinvested.

Load:A load is a one-time sales charge paid by an investor while buying or sellingunits of a scheme. Load can be charged by two ways:

Entry Load: An entry load is an additional cost that an investor pays atthe point of entry. Example: your proposed investment is Rs.10, 000/-.Also assume that the current NAV of the fund is Rs.12.00 and that the

entry load is Rs.0.50. Then you will receive 10000/12.50 = 800 units.

Exit Load: An exit load is levy that an investor pays at the point of exit.This is levied to dissuade investors from exiting the fund. Example:Assume that the current NAV of the fund is Rs.12.00 and that the exitload is Rs.0.50. Now if you sell 800 units then you stand to receive800X11.5 = Rs. 9200.

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Expense ratio:

Expense Ratio is defined as the ratio of total expenses to the net assets of thefund. It is the annual percentage of the funds assets that is paid out in expenses.Expenses include management fees and all the fees associated with the fundsdaily operations. The ratio is listed in a funds offer document. The expenseallowed for a fund is a percentage of the weekly average net assets outstanding:

Equity Schemes upto 2.5%

Debt Schemes up to 2.25%

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TYPES OF MUTUAL FUND SCHEMES

Mutual fund schemes can be

classified as follows:

By Structure

Open-ended schemes

Close-ended schemes

By Investment Objective

Growth schemesIncome schemesBalance schemes

Money Market schemes

By Structure

Open Ended Schemes You can invest orredeem in these schemes at any time

Closed Ended Schemes You can invest during the initial issue period (NFO-New Fund Offer) and your money is locked in for a stipulated period (rangingfrom 3 months to 5 years or before the completion with CDSC- Contingentdeferred Sales Charge)

By Investment Objective

Growth Schemes/Equity Schemes Invest in share of companies. Have thepotential to deliver better returns over the long term as compared to othermutual fund schemes.

Types of Growth funds

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I. Diversified funds Such funds have the mandate to invest in theentire universe of stocks. Although by definition, such funds aremeant to have a diversified portfolio (spread across industries andcompanies), the stock selection is entirely the prerogative of the fund

manager.

This discretionary power in the hands of the fund manager can work both waysfor an equity fund. On the one hand, astute stock picking by a fund manager canenable the fund to deliver market-beating returns; on the other hand, if the fundmanagers picks languish, the returns will be far lower.

The crux of the matter is that your returns from a diversified fund depend a loton the fund managers capabilities to make the right investment decisions. Onyour part, watch out for the extent of diversification prescribed and practiced by

your fund manager. Understand that a portfolio concentrated in a few sectors orcompanies is a high risk, high return proposition. If you dont want to take on ahigh degree of risk, stick to funds that are diversified not just in name but also inappearance.

II. Sector funds The riskiest among equity funds, sector funds invest only instocks of a specific industry, say IT or FMCG. A sector funds NAV willzoom if the sector performs well; however, if the sector languishes, theschemes NAV too will stay depressed.

Barring a few defensive, evergreen sectors like FMCG and IT, most otherindustries alternate between periods of strong growth and bouts of slowdowns.The way to make money from sector funds is to catch these cyclesget in whenthe sector is poised for an upswing and exit before it slips back. Therefore,unless you understand a sector well enough to make such calls, and get themright, avoid sector funds

III. Index funds These funds track a key stock market index, like the BSE(Bombay Stock Exchange) Sensex (Sen- Sensitive & sex- Index) or the

NSE (National Stock Exchange) S&P CNX Nifty (N-National, I-Index &FTY- fifty). Hence, their portfolio mirrors the index they track, both interms of composition and the individual stock weightages. For instance,an index fund that tracks the Sensex will invest only in the Sensex stocks.The idea is to replicate the performance of the benchmarked index to nearaccuracy. Index funds dont need expertise of fund managers, as there isno stock selection involved.

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Investing through index funds is a passive investment strategy, as a funds performance will invariably mimic the index concerned, barring a minor"tracking error". Usually, theres a difference between the total returns given

by a stock index and those given by index funds benchmarked to it. Termed as

tracking error, it arises because the index fund charges management fees,marketing expenses and transaction costs (impact cost and brokerage) to itsunitholders. So, if the Sensex appreciates 10 per cent during a particular periodwhile an index fund mirroring the Sensex rises 9 per cent, the fund is said tohave a tracking error of 1 per cent.

To illustrate with an example, assume you invested Rs 1,00,000 in an indexfund based on the Sensex on 1 April 1978, when the index was launched (base:100). In 14 August 2006, when the Sensex was at 11312.99, your investmentwould be worth Rs 11312990, which works out to an annualised return of 18.2

per cent. A tracking error of 1 per cent would bring down your annualised returnto 17.2 per cent. Obviously, the lower the tracking error, the better the indexfund.

IV. Tax Saving funds Also known as ELSS or equity-linked savingsschemes, these funds offer benefits under Section 80-C. Contribution outof your taxable income, will be deduct from your taxable income subjectto overall limit of Rs.1,00,000. (ONE LAKH)The only drawback toELSS is that you are locked into the scheme for three years.

In terms of investment profile, tax-saving funds are like diversified funds. Theone difference is that because of the three year lock-in clause, tax-saving fundsget more time to reap the benefits from their stock picks, unlike plain diversifiedfunds, whose portfolios sometimes tend to get dictated by redemptioncompulsions.

Income Schemes/Debt Schemes Such funds attempt to generate a steadyincome while preserving investors capital. Therefore, they invest exclusively infixed-income instruments securities like bonds, debentures, Government ofIndia securities, and money market instruments such as certificates of deposit

(CD), commercial paper (CP), Treasury Bills (TB) and call money. There arebasically three types of debt funds.

Income funds By definition, such funds can invest in the entire gamut of debtinstruments. Most income funds park a major part of their corpus in corporate

bonds and debentures, as the returns there are the higher than those available ongovernment-backed paper. But there is also the risk of default (depending upon

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the credit quality of paper i.e. AAA, AA, A, BBB, BB, B, C & D)a companycould fail to service its debt obligations.

Gilt funds/G-Sec funds They invest only in government securities and T-billsinstruments on which repayment of principal and periodic payment of interest isassured by the government. So, unlike income funds, they dont face the spectreof default on their investments. This element of safety is why, in normal marketconditions, gilt funds tend to give marginally lower returns than income funds.

Liquid funds/Floater schemes They invest in money market instruments(duration of up to one year) such as treasury bills, call money, CPs and CDs.Among debt funds, liquid funds are the least volatile. They are ideal forinvestors seeking low-risk investment avenues to park their short-termsurpluses.

Balanced/Hybrid Schemes Lastly, there are balanced funds, whose investmentportfolio includes both debt and equity. As a result, on the risk ladder, they fallsomewhere between equity and debt funds. Balanced funds are the ideal

MUTUAL FUND ITS BENEFITS TO INVESTORS

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The Benefits are plenty, and some of them are as follow:

Professional management:Mutual funds essentially collect money from many investors, which are theninvested by professional managers, these Fund Managers, who are highlyqualified in the area of Investment and have a thorough knowledge of thecapital market, manage mutual funds.

Diversification and Lowered Risks:

Since a mutual fund is a trust that pools the savings of a number of investorssharing a common financial goal, the associated risks are greatly reduced.

This is also because a fund will invest your money in different types ofinstruments like shares and bonds. Hence, loss in one sphere will not greatlyaffect your overall investment status.

Low Costs:

When compared to direct investments in the capital market, mutual fundscost less. This is due to savings in brokerage costs; demat costs, depositorycosts, etc.

Liquidity:

Investments in mutual funds are quite liquid and hence can be redeemed atthe Net Assets Value (NAV)-related price on any working day.

Transparency:

All that you invest in a scheme is made known to you and you areperiodically informed about all the updates and changes taking place.

Flexibility:

Mutual funds offer flexibility in their options and schemes to match

individual needs. Also, with features like regular withdrawals plans andsystematic investment plans, you can withdraw or invest funds according toyour needs and convenience.

Choice of schemes:

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Mutual funds offer a vast variety of well-designed schemes and options thatyou can choose from depending on your risk appetite.

Tax benefits:

Mutual Funds offer a host of Tax benefits. Dividend income received frominvesting in equity and debt schemes of a mutual fund is tax free in the handsof the investor.

Regulations:

Mutual funds are regulated by SEBI and function within the provisions andregulations that protect the interests of investors. SEBI acts as a watchdog toensure fair market practices.

Buying Mutual Funds

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How do I buy Mutual Funds?

When a fund is launched for the first time, you can buy its units at face valueplus applicable load, if any, through the New Fund Offer (NFO), which is for astipulated period of time.

After the NFO period, the fund is not available for buying/selling till itreopens, generally, within a month. Once the scheme reopens for regular tradingyou can buy units at the prevailing NAV by filling afresh application form.

So should I invest in NFOs or existing schemes?

It should not matter when you invest as long as the funds objective matchesyours. In an existing scheme you have the advantage of knowing the funds

performance.

Should I time my purchase of Mutual Funds?

Although, the principal rule is to buy low and sell high, do not try to time themarket. However, if you have to time your buying, opt for triggers. A triggersets off your buying when the NAV comes down to a level specified by you.

Are there any final checks I need to do before I buy a fund?

Check whether the funds objectives match yours. Go through the fact sheet tocheck its performance. Also, check expense ratios and the load structures. Highexpense ratio and load structures eat away your returns.

How long should I stay Invested?Mutual funds cater to investors with different horizons. Based on your need youcan determine the time for which you want to stay invested. Generally,investments over a longer period of time may reap good returns.

Where do I go to buy a mutual fund scheme?

You can approach the mutual fund or any of its investor service centers.Alternatively, you can also route your investments through intermediaries(agents, banks, certified financial planners and share markets for close-endedschemes). Nowadays, you can also transact on the Internet.

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What are the different Plans?

The different Plans available are:

Growth- where the income generated by way of capital appreciation stays in thefund and is reflected by rise in NAV.

Bonus- Where the unit holder receives additional units as bonus when the valueof the fund appreciates.

Dividend Payout- Where the capital appreciation is passed on to the unit holderby way of Dividends.

Dividend Reinvestment- Where the dividends are reinvested into the fund bybuying additional units on the request of unit holders.

In addition, there are host of investor-friendly features that you can avail

of:

Systematic Withdrawal plan (SWP) SWP enables you to withdraw a fixedamount according to a predetermined frequency that you specify to the fund.

Systematic Transfer Plan (STP) An STP allows you to transfer a fixed

amount of money from one scheme to the other.

Switch Between Schemes- a Switch lets you exit from one scheme and enterinto another scheme without filling in the redemption request and issuing acheque. All you have to do is fill a form informing the fund about which schemeyou wish to redeem and which other scheme you wish to buy.

Systematic Investment Plan (SIP)- an SIP lets you invest in parts instead ofsingle lump sum amount. All you have to do is issue post-dated cheques to thefund, which will be presented to your bank on the specified dates. Nowadays,SIPs come with another convenient feature, an auto debit facility. The AutoDebit facility does away with post-dated cheques. The fund debits the moneydirectly from your bank account.

How do I calculate the returns on my mutual funds investments?

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Lets assume that you had purchased mutual fund units worth Rs 10,000 at anNAV of Rs 10 per unit on 1 February 2005. The entry load on the mutual fundswas 2%. On 5 June 2005, you sold all the units at an NAV of Rs 20. The exitload was 0.5%.

Then Your Growth/Return is calculated as under:

1. Calculation of Applicable NAV and no. Of units purchased:

a) Amount of Investment = Rs 10,000b) Market NAV = Rs 10c) Entry Load = 2% = 2% of Rs 10 = Rs 0.20d) Applicable NAV (purchase price) = (b) + (c) = Rs 10.20e) Actual Units Purchased = (a) / (d) = 980.392 units

2. Calculation of NAV at the time of Sale

a) NAV at the time of Sale = Rs 20b) Exit Load = 0.5% of Rs 20 or Rs 0.10c) Applicable NAV = (a) (b) = Rs 19.90

3. Growth/Returns on Mutual Funds

a) Applicable NAV at the time of Redemption = Rs 19.90b) Applicable NAV at the time of Purchase = Rs 10.20c) Growth/Return on Investment = {(a) (b)/(b) *100} = 95.30%

= Rs 9,530 (Absolute returns in Rupees)

Selling Mutual Funds:

When Do I sell my Mutual Fund Investments?

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When the investment objective is met, or when you wish to rebalance your assetallocation. What this essentially means is that if you had allocated say 50% ofyour total investments to a debt fund and the other 50% to an equity fund. Now,

because of the change in NAV, the proportion of Investments in each of these

funds is different. In order to rebalance this, you need to sell some and buysome units accordingly.

Alternately, you should sell your investments if the fund isconsistently under performing, or if it is not adhering to the investmentobjective.

So, can I sell part of my investments?

Of course, you can sell in parts provided you keep the bare minimum prescribedby the fund in order to continue your account with the same folio (a uniquenumber to identify your holdings) allotted to you.

Mutual funds also offer some value-added services

Triggers: If you do not have the time to track your investments, you can set atrigger. Informing the fund beforehand that you wish to withdraw if yourinvestments reach a certain level is a trigger. This way, you dont have to worryabout tracking the markets or your investments regularly.A trigger can be set on many parameters, for example:Time: Redeem my units on____/____/____.Value: Redeem when my investments reach the value of Rs_______/-

Benchmark: Redeem my units when the Sensex reaches__________/-Alerts: Unlike a trigger, an alert only intimates you of a certain event; say thevalue of your investments reaching a certain level. The alerts can be set on

parameters similar to that used for triggers.

Investor Rights

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How do I know where the mutual fund has invested my money?

Mutual funds are required to disclose full portfolios of all of their schemes on ahalf-yearly basis, which are normally published in newspapers. Some mutualfunds send the portfolios to their unit holders. This disclosure helps an investor

in understanding the manner in which his / her investment is chanellelled by thefund. It shows investments made by the scheme in each security, i.e., equity,debentures, money market instruments, government securities, etc. and theirquantity, market value and % to NAV. These portfolio statements are alsorequired to disclose illiquid securities in the portfolio, investment made in ratedand unrated debt securities, non performing assets (NPAs), etc.

I dont want to sound paranoid, but what happens to my money if the

mutual fund scheme winds up?

In case of winding up of a scheme, unit holders receive a report from the fundgiving all the necessary details. Also, the mutual funds pay a sum to the unitholders, based on the prevailing NAV after adjustment of expenses.

Rights of Unitholders: -

A unit holder in a mutual fund scheme governed by the SEBI (Mutual Funds)Regulations is entitled to:

1. Receive unit certificates or statements of accounts confirming the titlewithin 6 weeks from the date of closure of the subscription or within 6weeks from the date that the request for a unit certificate is received by a

mutual fund.2. Receive information about the investment policies, investment objectives,

financial position and general affairs of the scheme.3. Receive dividend within 30 days of its declaration and receive the

redemption proceeds within 10 working days from the date ofredemption.

4. Inspect the documents as specified in the schemes offer documents.

Dos and Donts

1. Mutual Funds are subject to market risk. The first rule before investing isto read the offer document carefully before actally investment.

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2. Invest in your scheme after carefully deciding your investment objectiveand risk appetite. Dont invest just because someone is offering you acommission or because the name of the scheme sounds good.

3. Ask for the copy of the offer document before investing. Be sure to

receive an account statement for the money youve invested.4. Past performance of a scheme does not indicate its future performance.

Also, be aware that the NAV keeps changing everyday, but you mustkeep track of it nevertheless.

5. Dont deal with a company/broker/agent that has not been registered withthe association of Mutual funds in India (AMFI). Be aware of dishonestdealers who will try to lure you by promising very high returns.

6. Dont hesitate to approach the concerned people or authorities if yoususpect a problem.

7. Dont always follow the crowd. The most important rule is to diversifyproperly. You cant scatter your funds everywhere and expect stability.

CHAPTER -2

History of Indian Mutual fund industry

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The mutual fund industry in India started in 1963 with the formation of

Unit Trust of India, at the initiative of the Government of India and Reserve

Bank. The history of mutual funds in India can be broadly divided into four

distinct phases

First Phase 1964-87

An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set

up by the Reserve Bank of India and functioned under the Regulatory and

administrative control of the Reserve Bank of India. In 1978, UTI was de-linked

from the RBI and the Industrial Development Bank of India (IDBI) took over

the regulatory and administrative control in place of RBI. The first scheme

launched by UTI was Unit Scheme 1964.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by publicsector banks and Life Insurance Corporation of India (LIC) and General

Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI

Mutual Fund established in June 1987. LIC established its mutual fund in June

1989 while GIC had set up its mutual fund in December 1990.

Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund

families. Also, 1993 was the year in which the first Mutual Fund Regulations

came into being, under which all mutual funds, except UTI were to be registered

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and governed. The erstwhile Kothari Pioneer (now merged with Franklin

Templeton) was the first private sector mutual fund registered in July 1993. The

number of mutual fund houses went on increasing, with many foreign mutual

funds setting up funds in India and also the industry has witnessed several

mergers and acquisitions.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI

was bifurcated into two separate entities. One is the Specified Undertaking of

the Unit Trust of India with assets under management of Rs.29, 835 crores as atthe end of January 2003, representing broadly, the assets of US 64 scheme,

assured return and certain other schemes. The Specified Undertaking of Unit

Trust of India, functioning under an administrator and under the rules framed by

Government of India and does not come under the purview of the Mutual Fund

Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB andLIC. It is registered with SEBI and functions under the Mutual Fund

Regulations. With the bifurcation of the erstwhile UTI which had in March

2000 more than Rs.76, 000 crores of assets under management and with the

setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund

Regulations, and with recent mergers taking place among different private

sector funds, the mutual fund industry has entered its current phase of

consolidation and growth. As at the end of September 2004, there were 29

funds, which manage assets of Rs.153108 crores under 421 schemes.

As at the end of July, 2006, there were 30 funds, which manage assets of Rs.2,

88,680 crores.

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The graph indicates the growth of assets over the years.

GROWTH IN ASSETS UNDER MANAGEMENT

CHAPTER -3

Objectives and Research Methodology

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OBJECTIVES OF STUDY

To know about the Mutual Funds (sector) and what are the future

growth in mutual funds in India .

To see the factor which are important for investor to invest .

Whether or not they are right for investors.

It's benefits for its agents

To know about the strategies use by the Reliance Mutual Fund to

attract the investors.

To examine the various types of funds use by Reliance Mutual Fund

and what is the importance of each fund in the eyes of investor.

Competition between various institution are vary high in this sector so

perception regarding this must be known

RESEARCH METHODOLOGY

DATA COLLECTION:

PRIMARY DATA

It is collected through interview and questionnaire method.

SECONDARY DATA

It is collected through Broachers of the company, company websites and

booklets of company.

CHAPTER -4

Scope and Limitations of Study

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SCOPE OF THE PROJECT

Scope of the project is quite wide.

Geographical area covered -- Jalandhar city.

Franklin Templeton deals in twenty seven type of funds which are

categorized as

Sector Equity Schemes, Diversified Equity Schemes, Hybrid Schemes,

Income Schemes, Money Market Schemes.

LIMITATION OF THE STUDY

Although while collecting data full precaution are taken to get the correct data,

but the collected data may have same biasness in it. The biases in the data may

be due to following reason:

Due to limitation of time, sample size was limited.

The area covered was limited thus result may vary.

Some of the respondents does not replied properly and given false

details.

Some of the respondents were not interested in filling the

questionnaires due to lack of time. Some of the respondents hide the true information.

CHAPTER 5

Company profile

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Overview

The Reliance Anil Dhirubhai Ambani Group is among Indias top three

private sector business houses on all major financial parameters, with a market

capitalization of Rs 100,000 crore (US$ 22 billion), net assets in excess of Rs

31,500 crore (US$ 7 billion), and net worth to the tune of Rs 27,500 crore (US$

6 billion)

Across different companies, the group has a customer base of over 50 million,

the largest in India, and a shareholder base of over 8 million, among the largest

in the world.

Through its products and services, the Reliance - ADA Group touches the life of

1 in 10 Indians every single day. It has a business presence that extends to over

4,500 towns and 300,000 villages in India, and 5 continents across the world.

The interests of the Group range from communications (Reliance

Communications) and financial services (Reliance Capital Ltd), to

generation, transmission and distribution of power (Reliance Energy),

infrastructure and entertainment.

Structure

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Our Founder About Shri Dhirubhai Ambani

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Few Men in history have made as dramatic a contribution

to their countrys economic fortunes as did the founder of Reliance, Sh.

Dhirubhai H Ambani. Fewer still have left behind a legacy that is more enduring

and timeless.

As with all great pioneers, there is more than one unique way of describing thetrue genius of Dhirubhai: The corporate visionary, the unmatched strategist, the

proud patriot, the leader of men, the architect of Indias capital markets, the

champion of shareholder interest.

But the role Dhirubhai cherished most was perhaps that of Indias greatest

wealth creator. In one lifetime, he built, starting from the proverbial scratch,

Indias largest private sector enterprise.

When Dhirubhai embarked on his first business venture, he had a seed capital of

barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he

converted this fledgling enterprise into a Rs 60,000 crore colossusan

achievement which earned Reliance a place on the global Fortune 500 list, the

first ever Indian private company to do so.

Dhirubhai is widely regarded as the father of Indias capital markets. In 1977,

when Reliance Textile Industries Limited first went public, the Indian stock

market was a place patronized by a small club of elite investors which dabbled

in a handful of stocks.

Undaunted, Dhirubhai managed to convince a large number of first-time retail

investors to participate in the unfolding Reliance story and put their hard-earned

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money in the Reliance Textile IPO, promising them, in exchange for their trust,

substantial return on their investments. It was to be the start of one of great

stories of mutual respect and reciprocal gain in the Indian markets.

Under Dhirubhais extraordinary vision and leadership, Reliance scripted one of

the greatest growth stories in corporate history anywhere in the world, and went

on to become Indias largest private sector enterprise.

Through out this amazing journey, Dhirubhai always kept the interests of the

ordinary shareholder uppermost in mind, in the process making millionaires out

of many of the initial investors in the Reliance stock, and creating one of the

worlds largest shareholder families.

Sh. Dhirubhai Ambanis Stamp

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On 28th December 2002, Ministry of Communications, Government of India

released a commemorative postage stamp on industrialist and founder of the

Reliance Group of Industries, Shri Dhirubhai Ambani in Mumbai. Issued by the

Department of Posts, the stamp is in the denomination of Rs. 5.

Chairmans Profile About Shri Anil Ambani

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Regarded as one of the foremost corporate leaders of

contemporary India, Anil Dhirubhai Ambani is the Chairman of all listed Group

companies, namely: Reliance Communications, Reliance Capital, Reliance

Energy and Reliance Natural Resources Limited.

He is also Chairman of the Board of Governors of Dhirubhai Ambani Instituteof Information and Communication Technology, Gandhi Nagar, Gujarat.

Till recently, he also held the post of Vice Chairman and Managing Director inReliance Industries Limited (RIL), Indias largest private sector enterprise.

Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and wascentrally involved in every aspect of the companys management over the next22 years.

He is credited with having pioneered a number of path-breaking financial

innovations in the Indian capital markets. He spearheaded the countrys first

forays into the overseas capital markets with international public offerings of

global depositary receipts, convertibles and bonds. Starting in 1991, he directed

Reliance Industries in its efforts to raise over US$ 2 billion. He also steered the

100-year Yankee bond issue for the company in January 1997.

He is a member of:

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Wharton Board of Overseers, The Wharton School, USA

Central Advisory Committee, Central Electricity Regulatory Commission

Board of Governors, Indian Institute of Management, Ahmedabad

Board of Governors Indian Institute of Technology, Kanpur

In June 2004, he was elected for a six-year term as an independent member of

the Rajya Sabha, Upper House of Indias Parliament a position he chose to

resign voluntarily on March 25, 2006.

Awards and Achievements

Conferred the CEO of the Year 2004 in the Platts Global Energy

Awards

Rated as one of Indias Most Admired CEOs for the sixth consecutive

year in the Business Barons TNS Mode opinion poll, 2004

Conferred The Entrepreneur of the Decade Award by the Bombay

Management Association, October 2002

Awarded the First Wharton Indian Alumni Award by the Wharton India

Economic Forum (WIEF) in recognition of his contribution to the

establishment of Reliance as a global leader in many of its business areas,

December 2001

Selected by Asia week magazine for its list of Leaders of the Millennium

in Business and Finance and was introduced as the only new hero inBusiness and Finance from India, June 1999

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Sponsors

Reliance Capital Limited:

Registered Office:

Reliance Capital Ltd, Village Meghpar, Padana Taluka Lalpur, DistrictJamnagar - 361280 - Gujarat.

Corporate Office:

Reliance Capital Ltd. Old ICI Godown, Fosbery Road, Off Reay Road Station(East), Mumbai - 400033.

Reliance Capital Asset Management Ltd. is a wholly owned subsidiary of

Reliance Capital Limited, the sponsor. The entire paid-up capital (100%) ofReliance Capital Asset Management Ltd is held by Reliance Capital Ltd.

Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd(RCL). RCL has been promoted by Reliance Industries Ltd., one of India'slargest private sector enterprise. Reliance Industries Ltd. has a net worth ofRs.40, 483 crores as on March 31, 2005 and currently has a large family ofshareholders. Reliance Capital Limited is a Non Banking Finance Companyengaged in leasing, investment and other fund based activities. The net worth of

Reliance Capital Ltd. is Rs. 1,437.92 crores as on March 31, 2005. Given belowis a summary of Reliance Capital Ltd.'s financials:

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Particulars

(Rs.in crores) 2005-06 2004-05 2003-04 2002-03

Total Income 652.02 295.69 356.79 458.78

Profit Before Tax 550.61 111.21 105.79 102.63

Profit After Tax 537.61 105.81 105.79 102.63

Reserves & Surplus 3849.58 1310.08 1271.84 1208.5

Net Worth 4122.46 1437.92 1399.81 1336.33

Earnings per Share

(Rs.)

29.74(Basic +Diluted)




Book Value per Share

(Rs.) 112.95 112.95 109.96 104.54

Dividend (%) 30% 30% 29% 29%

Paid up Equity

Capital 223.4 127.84 127.84 127.83

Reliance Capital Ltd. has contributed Rupees One Lac as the initial contributionto the corpus for the setting up of the Mutual Fund. Reliance Capital Ltd. is

responsible for discharging its functions and responsibilities towards the Fund inaccordance with the Securities and Exchange Board of India (SEBI)Regulations.

The Sponsor is not responsible or liable for any loss resulting from the operationof the Scheme beyond the contribution of an amount of Rupees one Lac made

by them towards the initial corpus for setting up the Fund and such otheraccretions and additions to the corpus.

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The AMC

About Reliance Capital Asset Management Ltd.

Reliance Capital Asset Management Limited (RCAM), a company registeredunder the Companies Act, 1956 was appointed to act as the Investment Managerof Reliance Mutual Fund.

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

Limited.

Reliance Capital Asset Management Limited was approved as the AssetManagement Company for the Mutual Fund by SEBI vides their letter noIIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into anInvestment Management Agreement (IMA) with RCAM dated May 12, 1995and was amended on August 12, 1997 in line with SEBI (Mutual Funds)Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act asInvestment Manager of Reliance Mutual Fund. The net worth of the AssetManagement Company including preference shares as on March 31, 2005 is

Rs.30.13 crores. Reliance Mutual Fund has launched twenty five Schemes tilldate, namely: Reliance Vision Fund (September 1995), Reliance Growth Fund(September 1995) Reliance Income Fund (December 1997), Reliance LiquidFund (March 1998), Reliance Medium Term Fund (August 2000), RelianceShort Term Fund (December 2002), Reliance Fixed Term Scheme (March2003), Reliance Banking Fund (May 2003), Reliance Gilt Securities Fund (July2003), Reliance Monthly Income Plan (December 2003), Reliance DiversifiedPower Sector Fund (March 2004) Reliance Pharma Fund ( May 2004), RelianceFloating Rate Fund (August 2004), Reliance Media & Entertainment Fund

(September 2004), Reliance NRI Equity Fund (October 2004), Reliance NRIIncome Fund (October 2004), Reliance Index Fund (January 2005), RelianceEquity Opportunities Fund (February 2005), Reliance Fixed Maturity Fund -Series I (March 2005), Reliance Fixed Maturity Fund - Series II (April 2005),Reliance Regular Saving Fund (May 2005), Reliance Liquidity Fund (June2005), Reliance Tax Saver (ELSS) Fund (July 2005), Reliance Fixed TenorFund (November 2005) and Reliance Equity Fund (Feb 2006).

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

RCAM has commenced these activities. It has been ensured that key personnelof the AMC, the systems, back office, bank and securities accounts aresegregated activity wise and there exists systems to prohibit access to insideinformation of various activities. As per SEBI Regulations, it will further ensurethat AMC meets the capital adequacy requirements, if any, separately for eachsuch activity.

RCAM has been appointed as the Investment Manager of "Reliance India PowerFund", a Venture Capital Fund registered with SEBI vide Registrationno.IN/VCF/05-06/062 dated June 16, 2005 but this activity is yet to commence.

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Name and Address Other Directorships

Mr. Amitabh Jhunjhunwala

Flat A-212,NCPA Apartments Nariman Point,

Mumbai 400 021.

Senior Corporate Executive

Director:

Reliance Capital Limited.

Harmony Foundation.

Reliance Asset Management (Mauritius)

Limited.

Reliance General Insurance Company

Limited.

Reliance Life insurance Company Limited.

Anil Dhirubhai Ambani Enterprises 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 Asset Management (Singapore) Pte

Limited,

Reliance Asset Management (Mauritius)

Limited,

Reliance Info investments Limited.

Financial Planning Standards Board of India

Mr. Kanu Doshi

102, Shivala, Khatau Road,

Cuffe Parade, Mumbai - 400 005.

Chartered Accountant

Chairman:

Matrix Advisors (India) Pvt. Ltd.

Director :

BOB Capital Markets Limited,

Peoples Financial Services Limited

Alpha plus Investment Mgt Pvt.Ltd

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The Mutual Fund

About Reliance Mutual Fund

Reliance Mutual Fund (RMF) has been established as a trust under the IndianTrusts Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsorand Reliance Capital Trustee Co. Limited (RCTCL), 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 ofReliance Capital Mutual Fund has been changed to Reliance Mutual Fundeffective 11th. March 2004 vide SEBI's letter no. IMD/PSP/4958/2004 date11th. March 2004. Reliance Mutual Fund was formed to launch variousschemes under which units are issued to the Public with a view to contribute to

the capital market and to provide investors the opportunities to makeinvestments in diversified securities.

The main objectives of the Trust are:

To carry on the activity of a Mutual Fund as may be permitted atlaw and formulate and devise various collective Schemes of savings andinvestments for people in India and abroad and also ensure liquidity ofinvestments for the Unit holders;

To deploy Funds thus raised so as to help the Unit holders earnreasonable returns on their savings and

To take such steps as may be necessary from time to time to realisethe effects without any limitation.

Auditors

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Statutory Auditor to the Schemes of Reliance Mutual Fund:

Haribhakti & Co.

Chartered Accountants42, Free Press House,

Nariman Point, Mumbai - 400 021.

Internal Auditor to the Schemes of Reliance Mutual Fund :

Price Waterhouse Coopers.

Chartered Accountants252, Veer Savarkar Marg,Shivaji Park, Dada,Mumbai - 400 028.

Statutory Auditors to the Asset Management Company

Dalal & Shah

Chartered Accountants'The Regency', Office No. 11., 1st Floor,

National Library Road, Bandra (W),Mumbai - 400 050.

Statutory Auditors to the Trustee Company

M/s. Malpani & Associates

Chartered Accountants

307, Chartered House,Dr. C.H. Street,

Near Marine Lines Church,Mumbai - 400 002.

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The Custodian

Deutsche Bank, AG

The Trustee has appointed Deutsche Bank, AG located at Kodak House, GroundFloor, 222 Dr. D.N.Road, Mumbai-400 001, as the Custodian of the securitiesthat are bought and sold under the Scheme. A Custody Agreement has beenentered with Deutsche Bank in accordance with SEBI Regulations. TheCustodian is approved by SEBI under registration no. IN/CUS/003 to act asCustodian for the Fund.Deutsche Bank AG, the Custodian shall, inter alia:

Provide post-trading and custodial services to the Mutual Fund.

Keep Securities and other instruments belonging to the Scheme insafe custody.

Ensure smooth inflow/outflow of securities and such otherinstruments as and when necessary, in the best interests of theunitholders.

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 tonegligence on its part on the part of its approved agents.

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The Registrar

Reliance Capital Asset Management Limited has appointed M/s. KarvyComputer share Pvt. Limited to act as the Registrar and Transfer Agent to theSchemes of Reliance Mutual Fund. M/s. Karvy Computer share Pvt. Limited(KCL) having their office at No.21, Avenue 4, Street No.1, Adjacent toRainbow Hospital, Banjara Hills, Hyderabad - 500 034, is a Registrar andTransfer Agent registered with SEBI under registration no. INR000000221.

Reliance Capital Asset Management Ltd. and the Trustee have satisfiedthemselves, after undertaking appropriate due diligence measures, 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 broadparameters for supervision of the Registrar. As Registrar to the Schemes, KCLwill accept and process investor's applications, handle communications withinvestors, perform data entry services, dispatch Account Statements and also

perform such other functions as agreed, on an ongoing basis.

The Registrar is responsible for carrying out diligently the functions of aRegistrar and Transfer Agent and will be paid fees as set out in the agreemententered into with it and as per any modification made thereof from time to time.

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Our Service Providers

Registrar to the schemes of Reliance Capital Asset Management:

Karvy Computershare Pvt. Ltd

Custodians to the schemes of Reliance Capital Asset Management

Deutsche Bank AG

Bankers to the Schemes of Reliance Capital Asset Management

HDFC Bank Ltd. ICICI Bank Ltd.

Reliance Fixed Maturity FundReliance Monthly Income PlanReliance Income FundReliance Medium Term FundReliance Liquid FundReliance Short Term FundReliance Gilt Securities Fund

Reliance Fixed Term SchemeReliance Floating Rate FundReliance NRI Income FundReliance Growth FundReliance Vision FundReliance NRI Equity FundReliance Index FundReliance Equity Opportunities FundReliance Banking FundReliance Diversified Power SectorFundReliance Pharma FundReliance Media & Entertainment Fund

Reliance Fixed Maturity FundReliance Monthly Income PlanReliance Income FundReliance Medium Term FundReliance Liquid FundReliance Short Term FundReliance Gilt Securities Fund

Reliance Fixed Term SchemeReliance Floating Rate FundReliance NRI Income FundReliance Growth FundReliance Vision FundReliance NRI Equity FundReliance Index FundReliance Equity Opportunities FundReliance Banking FundReliance Diversified Power Sector Fund

Reliance Pharma FundReliance Media & Entertainment Fund

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http://www.karvy.com/http://www.db.com/http://www.karvy.com/http://www.db.com/


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ABN Amro Bank Citibank N.A.

Reliance Liquid Fund

Reliance Income FundReliance Medium Term FundReliance Vision FundReliance Growth FundReliance Short Term FundReliance Gilt Securities Fund(Long Term)Reliance Gilt Securities Fund(Short Term)

Reliance Fixed Maturity FundReliance Fixed Term SchemeReliance Floating Rate FundReliance Fixed Maturity Fund

Reliance Income Fund

Reliance Liquid FundReliance Short Term FundReliance Gilt Securities Fund(Long Term)Reliance Gilt Securities Fund(Short Term)Reliance Vision Fund (Dividend &Redemption)Reliance Growth Fund (Dividend

& Redemption)Reliance Monthly Income Plan(Redemption)Reliance Medium Term Fund(Redemption)Reliance Banking Fund(Redemption

Standard Chartered Bank Deutsche Bank Ltd.

Reliance Income FundReliance Liquid FundReliance Short Term FundReliance Fixed Term Scheme-IPOA/CReliance Floating Rate Fund

Reliance Liquid Fund

HSBC Bank UTI Bank

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Reliance Income FundReliance Liquid FundReliance Vision Fund

Reliance Growth FundReliance Medium Term FundReliance Short Term FundReliance Banking FundReliance Gilt Securities Fund(Long Term)Reliance Gilt Securities Fund(Short Term)Reliance Monthly Income PlanReliance Income Fund

Reliance Medium Term FundReliance Gilt Securities Fund(Long Term)Reliance Gilt Securities Fund(Short Term)Reliance Banking FundReliance Fixed Term SchemeReliance Floating Rate FundReliance Media & Entertainment

Sector SchemeReliance NRI Equity FundReliance NRI Income FundReliance Index Fund

Reliance Liquid FundReliance Short Term Fund

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IDBI Bank Ing Vysya Bank

Reliance Liquid FundReliance Vision FundReliance Growth FundReliance Short Term FundReliance Medium Term Fund(Redemption)Reliance Monthly Income Plan(Redemption)Reliance Income Fund

(Redemption)Reliance Banking Fund(Redemption

Reliance Liquid FundReliance Short Term FundReliance Income Fund

CHAPTER 6

Schemes Offered by Reliance Mutual Fund

Equity/Growth schemes

The aim of growth funds is to provide capital appreciation over the medium tolong- term. Such schemes normally invest a major part of their corpus inequities. Such funds have comparatively high risks. These schemes providedifferent options to the investors like dividend option, capital appreciation, etc.

and the investors may choose an option depending on their preferences. Theinvestors must indicate the option in the application form. The mutual fundsalso allow the investors to change the options at a later date. Growth schemesare good for investors having a long-term outlook seeking appreciation over a

period of time.

Debt/Income Schemes

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The aim of income funds is to provide regular and steady income to investors.Such schemes generally invest in fixed income securities such as bonds,corporate debentures, Government securities and money market instruments.

Such funds are less risky compared to equity schemes. These funds are notaffected because of fluctuations in equity markets. However, opportunities ofcapital appreciation are also limited in such funds. The NAVs of such funds areaffected because of change in interest rates in the country. If the interest ratesfall, NAVs of such funds are likely to increase in the short run and vice versa.However, long term investors may not bother about these fluctuations.

Sector Specific Schemes

These are the funds/schemes which invest in the securities of only those sectorsor industries as specified in the offer documents. e.g. Pharmaceuticals,Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. Thereturns in these funds are dependent on the performance of the respectivesectors/industries. While these funds may give higher returns, they are morerisky compared to diversified funds.

Equity/Growth schemes

The primary investment objective of the scheme is to seek to generate capitalappreciation & provide long-term growth opportunities by investing in a

portfolio constituted of equity & equity related securities of top 100 companies

by market capitalization & of companies which are available in the derivativessegment from time to time and the secondary objective is to generate consistentreturns by investing in debt and money market securities.

Reliance Mutual Fund creates history with the Reliance Equity Fund NFO

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The recently concluded Reliance Equity Fund NFO has created history withcollections of over Rs. 5700 crores from over 9.29 lac applications. The fundhas received a tremendous response from investors across the length and

breadth of the country. A diversified equity fund with derivative strategies that

aim to minimize risk and take advantage of both the rising and falling marketconditions, the Reliance Equity Fund was launched at a time when the marketswere at an all time high and there was a need for such an innovative product.

RELIANCE EQUITY FUND

Scheme Features

Type: An open-ended diversified Equity Scheme

Investment Pattern: 75-100% in equity and equity related instruments, up to

25% in debt and money market instruments.

Net Asset Value : Calculated & declared every Working day

Plans / Options :

Growth Plan : Growth Option & Bonus Option;Dividend Plan : Dividend Pay-out Option & Dividend Re-investment Option

Application Amount : Rs. 5,000/- and in multiples of Re. 1 thereafter undereach option

Min. Additional Investment (During Continuous offer) : Rs. 1000/- and inmultiples of Re. 1 thereafter (*including switch in after opening a folio withminimum of Rs 5000)

Portfolio Disclosures : Half-yearly

Entry Load :

For Subscription below Rs. 2 crs - 2.25%

For subscription of Rs. 2 crs & above and below Rs 5 crs - 1.25%

For Subscription of Rs. 5 crs & above - Nil

However there will be no Entry load during the New Fund Offer (NFO)

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Exit Load :

For Fresh subscription during the NFO including the 1 st installment of RIP /SIP and for switch-in applications to Reliance Equity Fund from any otherscheme - an exit load of 2.00% shall be levied if redeemed/switched before 6

months and 1.00% if redeemed / switched before 1 year from the date ofallotment for amount up to Rs. 5 crores. There shall be no exit load for amountof Rs. 5 Crs & above

Contingent Deferred Sales Charge: Nil

Redemption Cheques Issued : Mutual Fund shall endeavor to issue within 3 to4 Working days

Minimum Redemption Amount : Any amount or any number of units

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

Recurring / Systematic Investment Plan (RIP / SIP):

Available only through ECS / Direct Debit mode during the NFO. However,RIP / SIP is available through ECS / Direct Debit, Cheques and any other modesas may be prescribed by the AMC from time to time during the continuousoffer.Trigger Facility: Value & NAV Trigger to introduce a Stop loss or a Gain Cap.

Switch Facility :

Available, subject to minimum Rs. 5000/- & any amount thereafter in switch inscheme (for opening a new folio/account) & minimum Rs 1000 & any amountthereafter for additional switch in. No load applicable for switches between theequity / sector specific schemes. However, differential load shall be charged forswitching from Reliance Index Fund to any other equity/sector specific schemeand switching from any other equity / sector specific scheme to Reliance NRIEquity Fund.

Systematic Transfer Plan / Dividend Transfer Plan: Available

Nomination Facility : Available

Mode of Holding : Single, Joint or Anyone or Survivor

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Benchmark Index : S&P CNX Nifty

Switching Option :

Investors may opt to switch Units between the Dividend Plan and Growth Planof the Scheme at NAV based prices. Switching will also be allowed into/fromany other eligible open-ended Schemes of the Fund either currently in existenceor a Scheme(s) that may be launched / managed in future, as per the features ofthe respective scheme and as per the applicable loads.

Recurring Expenses:

Investment Management Expenses 1.25 %

Operational Expenses 0.25 %

Marketing Expenses 1.00 %

Total 2. 50%

The primary objective of the scheme is to generate long-term capital

appreciation from a portfolio that is invested predominantly in equity

and equity related instruments.

RELIANCE TAX SAVER (ELSS) FUND

Scheme Features

Type: An Open-ended Equity Linked Savings Scheme.

Investment Pattern:

80-100% in equity and equity related securities.

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Up to 20% in Debt and Money Market Instruments.

Net Asset Value: Calculated & declared every working day

Plans / Options:Growth OptionDividend Pay-out Option & Dividend Reinvestment Option

Application Amount:

The minimum amount for all category of investors is Rs. 500/- and in multiplesof Rs. 500 thereafter. There is no cap on the maximum amount. Howeverinvestments only up to Rs. 1 lakh by the eligible investor in the scheme willqualify for deduction under the Act.

Min. Additional Investment: Minimum additional purchases of Rs. 500.

Portfolio Disclosures: Half-yearly

Entry Load: During New Fund Offer: NIL

Exit Load: During New Fund Offer: NIL


Inter-Scheme Switch:Unit holders will have the flexibility to alter the allocation of their investmentsamong the scheme(s) offered by the Mutual Fund, in order to suit their changinginvestment needs, by easily switching between all the scheme(s)/plans/optionsof the Mutual Fund, after the statutory lock-in period of 3 Years. No loadapplicable for switches between the equity schemes. However, differential loadshall be charged for switching from Reliance Index Fund and switching toReliance NRI Equity Fund.

Inter Plan/Inter Option Switch:

Unit holders will have the flexibility to alter the allocation of their investmentsamong the scheme(s) offered by the Mutual Fund, in order to suit their changinginvestment needs, by easily switching between all the scheme (s)/plans/optionsof the Mutual Fund, after the statutory lock-in period of 3 Years.

Redemption Cheques Issued: Will be allowed only after the expiry of the lock

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in period of 3 years.

Minimum Redemption Amount: Will be allowed only after the expiry of thelock in period of 3 years.

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

Recurring Investment Plan (RIP): Available

Trigger Facility: Value & NAV Trigger to introduce a Stop loss or a Gain Cap.Available only after the expiry of the lock in period of 3 years.

Switch Facility: Available after the statutory lock-in period of 3 Years.

Systematic Transfer Plan / Dividend Transfer Plan: Available. However, thescheme cannot become a transferor scheme before 3 year lock-in-period.

Nomination Facility: Available

Mode of Holding: Single, Joint or Anyone or Survivor

Benchmark Index: BSE 100

Switching Option: Available only after the expiry of the lock in period of 3years.

Recurring Expenses:

AMC Fees 1.25%



Total 2.50%

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Special Benefit under this Scheme:

Accident Death Insurance Cover: All eligible investments would qualify forPersonal Accident Death Insurance Cover up to the maximum cover of Rs.

5 lac. (The term accidental death would cover death occurring out of any Roador Rail accident only). (Please read the terms & conditions carefully beforeinvesting).The insurance cover will be linked to the investment value of the individual (at

NAV related prices) & will not be linked to the capital appreciation on hisinvestment. i.e.: if his capital appreciates on account of market conditions, hisinsurance cover will not change.

Insurance Cover:For investment amount Level of Cover

Less than or equal to Rs 10,000 Rs 50,000

Between Rs 10,001 to Rs 25,000 Rs 2,00,000

Between Rs 25,001 to Rs 50,000 Rs 3,00,000

Greater than Rs 50,001 Rs 5,00,000

Tax Benefits:

Investment in this fund would enable you to avail the benefitsunder clause (xiii) of Sub-section (2) of Section 80C of the Income-

tax Act, 1961. Investment made upto Rs 1 lakh by the eligibleinvestor being an Individual or a Hindu Undivided Family in thescheme will qualify fordeduction under this Section of the Act.

Dividends received will be absolutely TAX FREE in the hands ofinvestors

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The dividend distribution tax (payable by the AMC) for equityschemes is also NIL

Attractive Capital Gains Tax on Equity Schemes, shown as

under :

Long term Capital

Gains

Short term Capital

Gains

Equity Schemes Nil *10%

*plus surcharge & education cessPS: STT is levied at the time of redemption of units. It is applicable only in

Equity Funds.

The primary investment objective of the Scheme is to achieve long-term growthof capital by investment in equity and equity related securities through aresearch based investment approach.

RELIANCE GROWTH FUND

Scheme Features

Type : An Open-ended equity growth Scheme

Investment Pattern :

Equity and Equity related Instruments - 65% - 100%.Debt and Money Market Instruments - Upto 35%.

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Net Asset Value : Calculated & declared every working day

Plans / Options :

Growth Plan : Growth Option & Bonus OptionDividend Plan : Dividend Pay-out Option & Dividend Reinvestment Option

Application Amount : Rs.5,000/- for Resident Indians and Non-ResidentIndians and in multiples of Rs.1/- thereafter for both plans.

Min. Additional Investment : Rs.1000/- and in multiples of Rs.1/- thereafterfor both plans


Entry Load :

For Subscription below Rs. 2 crs - 2.25%For subscription of Rs. 2 crs & above and below Rs 5 crs - 1.25%For Subscription of Rs 5 crs & above - Nil

Exit Load : Nil.


Inter-Scheme Switch:

At applicable loads in the respective schemes. No load applicable for switchesbetween the equity / sector specific schemes and Reliance Growth Fund andvice-versa except Reliance NRI Equity Scheme.

Inter Plan/ Inter Option Switch : Nil

Redemption Cheques Issued : Mutual Fund shall endeavour to issue within 3Working days



Recurring Investment Plan (RIP) : Available

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Regular investment option for corporate employees (RICE) : Available

Regular withdrawal Plan (RWP) : Available

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

Switch Facility : Available

Systematic Transfer Plan / Dividend Transfer Plan : Available



Benchmark Index : BSE 100 Index

Switching Option :

Investors may opt to switch Units between the Dividend Plan and Growth Planof 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 belaunched / managed in future, as per the features of the respective scheme.

Recurring Expenses




Total 2.50%

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The primary investment objective of the Scheme is to achieve long term growthof capital by investment in equity and equity related securities through aresearch based investment approach.

RELIANCE VISION FUND

Scheme Features

Type : An Open-ended equity growth Scheme


Equity and Equity related Instruments - Atleast 60%Debt Instruments - Upto 30%Money Market Instruments - Upto 10%

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Investment Objective :

The primary investment objective of the Scheme is to achieve long term growthof capital by investment in equity and equity related securities through aresearch based investment approach.


Plans / Options :


Application Amount : Rs.5,000/- for Residents and Non-Resident investorsand in multiples of Rs.1/- thereafter for both plans.

Min. Additional Investment : Rs.1000/- and in multiples of Rs.1/- thereafterfor both plans.


Entry Load :

For Subscription below Rs. 2 crs - 2.25%For subscription of Rs. 2 crs & above and below Rs.5 crs - 1.25%

For Subscription of Rs 5 crs & above - Nil

Exit Load : Nil.


Inter-Scheme Switch:

At applicable loads in the respective schemes. No load applicable for switchesbetween the equity schemes and Reliance Vision Fund and vice-versa exceptReliance NRI Equity Fund




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Regular investment option for corporate employees (RICE) : Available




Systematic Transfer Plan/ Dividend Transfer Plan : Available




Switching Option :

Investors may opt to switch Units between the Dividend Plan and Growth Planof 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-endedSchemes of the Fund either currently in existence or a Scheme (s) that may belaunched / managed in future, as per the features of the respective scheme.

Recurring Expenses:




Total 2.50%

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The primary investment objective of the scheme is to seek to generate capitalappreciation & provide long-term growth opportunities by investing in a

portfolio constituted of equity securities & equity related securities and thesecondary objective is to generate consistent returns by investing in debt andmoney market securities

RELIANCE EQUITTY OPPORTUNITIES FUND

Scheme Features

Type : An open-ended Diversified Equity Scheme


75-100% in equity and equity related instruments, upto 25% in debt and money

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market instruments**including upto 25% of the corpus in securitised debt.


Plans / Options :


Application Amount : Rs. 5,000/- and in multiples of Re. 1, thereafter for bothplans.

Min. Additional Investment : Any amount


Entry Load :

For Subscription below Rs. 2 crs - 2.25%For subscription of Rs. 2 crs & above and below Rs 5 crs - 1.25%For Subscription of Rs 5 crs & above - Nil

Exit Load : Nil.

Contingent Deferred Sales Charge : Nil

Inter-Scheme Switch :

At the applicable loads on the respective schemes. No load applicable forswitches between the equity /sector specific schemes and Reliance EquityOpportunity Fund and vice-versa except Reliance NRI Equity Fund.

Inter Plan/Inter Option Switch: Nil

Redemption Cheques Issued: Mutual Fund shall endeavour to issue within 3Working days



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Regular investment option for corporate employees : Available




Systematic Transfer Plan / Dividend Transfer Plan : Available




Switching Option :

Investors may opt to switch Units between the Dividend Plan and Growth Planof 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-endedSchemes of the Fund either currently in existence or a Scheme (s) that may belaunched / managed in future, as per the features of the respective scheme.

Recurring Expenses:




Total 2. 50%

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The objective of Nifty Plan is to replicate the composition of the Nifty, with aview to endeavor to generate returns, which could approximately be the same asthat of Nifty.

RELIANCE INDEX FUND

Scheme Features

Type:An Open Ended Index Linked Scheme

Investment Pattern:

NiftyPlan Equity Securities covered By NIFTY

95-100%

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Cash And Money Market Instruments,including money at call but excluding subscription and

redemption Cash Flow.0-5%

SensexPlan

Equity Securities covered By SENSEX 95-100%

Cash And Money Market Instruments,including money at call but excluding subscription and

redemption Cash Flow.0-5%


Plans / Options:

Nifty Plan and Sensex Plan

Growth Plan :

o Growth Option

o Bonus Option

Dividend Plan :

o Dividend (Pay-out) Option

o Dividend (Reinvestment) Option

Application Amount: Rs.5, 000/- for Resident Indians and Non-Resident

Indians and in multiples of Rs.1/- thereafter for both plans.

Min. Additional Investment: Any amount


Entry (Sales) Load: 1%

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Exit Load: Nil


Inter-Scheme Switch:At the applicable loads on the respective schemes. No load applicable forswitches between the equity /sector specific schemes and Reliance Index Fundand vice-versa except Reliance NRI Equity Fund.

Inter Plan/Inter Option Switch : Nil


Minimum Redemption Amount : Any amount


Systematic Transfer Plan and Dividend Transfer Plan : Available





Benchmark Index :S&P CNX NIFTY for Nifty Plan and BSE SENSEX forSensex Plan

Switching Option :

Investors may opt to switch Units between the Dividend Plan and Growth Planof 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-endedSchemes of the Fund either currently in existence or a Scheme (s) that may belaunched / managed in future, as per the features of the respective scheme.

Recurring Expenses:

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Investment Management Expenses 1.25%

Operational Expenses 0.75%

Marketing Expenses 0.50%

Total 2.50%

The Primary investment objective of the scheme is to generate optimal returnsby investing in equity or equity related instruments primarily drawn from theCompanies in the BSE 200 Index.

RELIANCE NRI EQUITY FUND

Scheme Features

Type:An open ended diversified equity scheme.

Asset Allocation Pattern:

Instrument Asset Allocation Risk

Equity and Equity related Instruments65-100% Medium to

High

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Debt and Money Market Instruments* Up to 35% Low to Medium

Choice of Plans:

Growth Plan: The Growth Plan is designed for investors interested in capitalappreciation on their investment and not in regular income. Accordingly, theScheme will not declare dividends under the Growth Plan. The income earnedon the Growth Plan's corpus will remain invested in the Growth Plan.

The Growth Plan has two options:

Growth Option : Under this option, there will be no distribution ofincome and the returns to the investor is only by way of capitalgains/ appreciation, if any, through redemption at applicable NAV ofthe units held by them.

Bonus Option : Under this plan Bonus in the form of additionalunits will be allotted.

Dividend Plan: The Dividend Plan has been designed for investors who requireregular income in the form of dividends. Under the Dividend Plan, the Schemewill endeavour to make regular dividend payments to the unit holders. Dividendwill be distributed from the available distributable surplus.

Dividend Plan has two options:

Dividend Payout Option: Under this option the Dividend declaredunder the Dividend Plan will be paid to the unit holders within 30days from the declaration of the dividend.

Dividend Reinvestment Option: The Dividend Plan has a

Reinvestment Option whereby the dividend distributed under theplan will be automatically reinvested at the ex-dividend NAV on thetransaction day following the date of declaration of dividend andadditional units will be allotted accordingly.

Minimum Application Amount

Rs. 50,000/-and in multiples of Re. 1 thereafter

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Load Structure

Entry Load For Amount below Rs. 2 crore3%

For Amount of Rs. 2 crore 2%

& above but below Rs. 5 crore

For Amount of Rs. 5 crore & above Nil

Exit Load

Nil

Benchmark Index:

BSE 200

Investor Friendly Features:

Redemption

we endeavour to issue the redemption cheque within 3-4 working days

Minimum Redemption Amount

Any amount or any number of units.

Systematic Investment Plan

you can invest on a Monthly or Quarterly basis, a minimum sum of Rs. 500/- orRs. 1500/- respectively and in multiples of Re. 1/- thereafter.

Systematic Withdrawal PlanYou can withdraw from your investments on a Monthly or Quarterly basis, aminimum sum of Rs. 500/- and in multiples of Rs. 100/- thereafter.

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The primary investment objective of the scheme is to seek to generate long termcapital appreciation & provide long-term growth opportunities by investing in a

portfolio constituted of equity & equity related securities and Derivatives andthe secondary objective is to generate consistent returns by investing in debt andmoney market securities.

RELIANCE LONG TERM EQUITY FUND

Scheme Features

Type: A 36-months close ended diversified equity fund with an automaticconversion into an open ended scheme on expiry of 36-months from the date ofallotment

Asset Allocation/Investment pattern

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Under normal circumstances, the anticipated asset allocation would be

Instruments

Indicative

asset Risk Profileallocation

Equity and Equity related Securities 70% to100%

Medium toHigh

Debt and Money market securities (includinginvestments in securitized debt 0% to 30% Low to Medium

An overall limit of 100% of the portfolio value has been introduced for thepurpose of equity derivatives in the scheme.

Options Available:

Growth Option

Dividend: Only Dividend payout

Benchmark Index: BSE - 200

Application Amount: Rs 5000 and in multiples of Re. 1 thereafter

Dates of Launch

NFO Opens: 14th Nov06

NFO Closes: 11th Dec06

Earliest Closing Date: 28th Nov06

Liquidity

The Scheme will offer for Redemption / Switch-out of Units on an ongoingbasis at half yearly intervals at NAV based prices. The Redemption / Switch-outof Units will be available only during the Specified Redemption Period i.e. thefirst five Business Days immediately after the end of each calendar half year.After the conversion of Scheme into an open-ended scheme, the Scheme willoffer for Sale/Switch-in and Redemption/Switch-out of Units at NAV based

prices on every Business Day on an ongoing basis.

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Load Structure (During the New Fund Offer)

Entry Load: Nil

Exit Load

For subscription If redeemed/switched beforecompletion 12

months from thedate of allotment

If redeemed/switched between12 months - 1 dayand on or beforecompletion of 24month from the

date of allotment

If redeemed/switched between24 months - 1 dayand on or beforecompletion of 36month from the

date of allotment

Exit Load 4% 3% 2%

Debt/ Income Schemes

The primary investment objective of the scheme is to generate optimal returnsconsistent with moderate levels of risks. This income may be complimented bycapital appreciation of the portfolio. Accordingly, investments shall

predominantly be made in debt instruments.

Reliance NRI Income Fund

Main Features

Type An open ended Income scheme

Investment Pattern:

Debt Instruments - 100%** Investment in securitized debts upto 40% may be undertaken.

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Net Asset Value: Calculated on daily basis

Plans And Options:

Growth Plan: Growth OptionDividend Plan: Dividend Payout and Dividend Reinvestment Option

Application Amount: Rs.50, 000, and in multiples of Re.1 thereafter for allplans.

Min. Additional Investment: Rs.1000 and in multiples of Rs.1 thereafter, forall plans.


Entry Load: NIL

Exit Load:

For subscription upto Rs. 5 Lacs, the exit load will be 0.50%, if the units areredeemed within 6 months from thedate of allotment of units. No exit load is applicable for subscription above Rs. 5Lacs.


Inter-Scheme Switch: Available at the applicable loads in the respectiveschemes.

Inter Plan/ Inter Option Switch: Nil

Redemption Cheques Issued: Mutual Fund shall endeavour to issue within 3working days.

Minimum Redemption Amount: Any amount or any number of units

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

Facilities Available:

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Recurring Investment Plan (RIP)

Regular WithdrawalPlan (RWP)

Regular Investment Option for Corporate Employees (RICE)

Switch Facility

Nomination Facility

Mode of Holding: : Single, Joint or Anyone or Survivor

Benchmark Index : CRISIL Composite Bond Fund Index

Switching Option:

Investors may opt to switch Units between the Growth Plan & Dividend Plan ofthe 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 schemesof the Fund either currently in existence or a scheme that may be launched /managed in future, after the completion of the lock-in period.

EXPENSES OF THE SCHEME

RECURRING EXPENSES

As per SEBI (Mutual Funds) Regulations, the maximum expenses that can becharged to an equity scheme are as follows:

Recurring Expenses Estimated expenses of the scheme

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First Rs. 100crores

2.50% AMC Fees 0.75%

Next Rs. 300crores

2.25% Operational andOther Expenses

0.25%

Next Rs. 300

crores

2.00% Marketing

Expenses

0.25%

Balance 1.75% Total 1.25%

The primary objective of the Scheme is to generate optimal returns consistentwith moderate levels of risk. This income may be complemented by capitalappreciation of the portfolio. Accordingly, investments shall predominantly bemade in Debt & Money Market Instruments

Reliance Income Fund

Main Features

The Scheme: Open-ended Income Scheme

Investment Pattern:

Types of Instruments Allocation

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(% of Net Assets)

Debt Instruments 50 - 100%

Money Market Instruments 0 - 50%


Choice of Plans:

Retail Plan

Growth & Bonus Options

Dividend plans available Dividend options available

Monthly Dividend Plan

Dividend Payout Option

&

Dividend Re-investment Option

Quarterly Dividend Plan

Half-Yearly Dividend Plan

Annual Dividend Plan

Application Amount:

Retail Plan:

For Resident Indians and Non-Resident Indians:

Growth Plan : Rs. 5000Monthly Dividend Plan : Rs. 25,000Quarterly Dividend Plan : Rs. 10,000Half Yearly Dividend Plan : Rs.5,000Annual Dividend Plan : Rs. 5,000And in multiples of Re.1/- thereafter for all plans.

Min. Additional Investment:

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Rs.1000 and in multiples of Rs.1 thereafter, for all categories of investors underall Plans.

Portfolio Disclosures : Half-yearly.

Entry Load : NILExit Load :

0.5% if redeemed within 6 months for subscription upto Rs. 5lacs; 0.10% ifredeemed within 7 working days from the date of allotment of units forsubscription amounts exceeding Rs. 5 lacs.Contingent Deferred Sales Charge: Nil

Inter-Scheme Switch: Available at applicable loads in the respective schemes.


Redemption Cheques Issued : Mutual Fund shall endeavour to issue within 3working days



Facilities Available :Recurring Investment Plan (RIP)

Regular Withdrawal lan (RWP)

Regular Investment Option for corporate employees (RICE)

Systematic Transfer Plan

Dividend Transfer Plan

Switch Facility

Nomination Facility

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Benchmark Index : CRISIL Composite Bond Fund Index

Switching Option: :

Investors may opt to switch units between the Growth Plan and Monthly/Quarterly / Half Yearly and Annual Dividend Plans of the Scheme applicable

NAV based prices after completion of the lock-in period, if any.

Recurring Expenses:

Retail Plan:

Investment Management Fees 1.25%

Marketing & Selling Expenses 0.25%

Custody Fees 1.00%

Registrar & Transfer Agents Fees 0.15%

Trustee Fees 0.03%

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Other Expenses 0.06%

Total 1.80%

The primary objective of the scheme is to generate regular income throughinvestment in a portfolio comprising substantially of Floating Rate Debt

Securities (including floating rate securitized debt and Money MarketInstruments and Fixed Rate Debt Instruments swapped for floating rate returns).

Reliance Floating Rate Fund

Main Features

Type : An Open-ended Income Scheme


0-30% in Fixed Rate Debt Securities (including fixed rate securitised debt,Money Market Instruments and Floating Rate Debt Instruments swapped forfixed rate returns).70% - 100% in Floating Rate Debt Securities (including floating rate securitiseddebt, Money Market Instruments and Fixed Rate Debt Instruments swapped forfloating rate returns). (For details on investment allocation, please refer to theOffer Document)

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Choice of Plans/Options:

Growth Plan:

o Growth Option

Dividend Plan:

o Monthly Dividend payout Option

o Daily Dividend Reinvestment Option

o Weekly Dividend Reinvestment Option

o Monthly Dividend Reinvestment Option

Application Amount: Rs. 25,000/- for Resident and Non-Resident investorsand in multiples of Re. 1, thereafter for all plans.

Additional Subscription/Investment Amount: Rs.1000 and in multiples ofRe.1 thereafter for all plans

Portfolio Disclosures: Half Yearly

Entry (Sales) Load: Nil

Exit Load: Nil


Inter-Scheme Switch : At the applicable loads in the respective scheme/s

Inter Plan/Inter Option Switch : Nil

Redemption Cheques Issued : Mutual Fund shall endeavour to issue within 3working days.

Minimum Redemption Amount: Any Amount

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Cut-off time: 3.00 pm on working days as defined in the Offer Document

Facilities Available :

Recurring Investment Plan (RIP)

Systematic Transfer Plan

Dividend Transfer Plan

Switch Facility

Nomination Facility

Mode of Holding : Single, Joint or Anyone or SurvivorBenchmark Index : CRISIL Liquid Fund Index

Switching Option :

Investors may opt to switch Units between the Growth Plan & Dividend Plan ofthe Scheme at NAV based prices after completion of lock-in period, if any.Switching

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