7-D, Lands End, Reliance Industries Limited.

29-D, Doongersey Road, . Director : Reliance

Malabar Hill, Mumbai – 400 006 Enterprises Limited,

Senior Corporate Executive Reliance Welfare

Mr. P.S.V. Mallya Director : : I.C.D.S Limited,

5/197-A, Earthwise Overseas Pvt. Ltd.;

Vibhudapriya Nagar Manipal Housing Finance Syndicate

Indrali, Udupi – 576102. Limited; Manipal Properties Private

Former Chairman & Limited; Chennai, Sacred Hospitality

Managing Director of Company Private Limited, Chennai,

Syndicate Bank Manipal Prakashana Pvt. Ltd.

Ms. Kalpana Merchant Partner : Kanga & Company

C/o Kanga & Company Advocates & Solicitors.

Advocates & Solicitors Director: Citigate Dewe

43, Veer Nariman Road Pvt. Ltd.

Mumbai 400 023.

Dr. A.C. Shah Director : Smart Bridges,

Lloyds Garden ‘C’ Wing, Singapore; National

1st Floor, Flat No.2, Organic Chemical Inds. Limited;

Appa Saheb Marathe Marg, UTI Bank Limited;

Prabhadevi, Mumbai- 400 025. Gujarat Petro Synthesis;

Former Chairman & Managing S. Kumars Nationwide Limited;

*Associate Director : Shri D. Chaturvedi is Chairman of Reliance Capital Limited, the Sponsor. Shri Vinod Ambani is President and Company Secretary of Reliance Industries Limited and the Director with the AMC Board from 27/03/1997 to 20/02/2001.

In accordance with SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed constituting the Mutual Fund, the Trustees are required to fulfil several duties and obligations, including the following:

1. The Trustee and the Asset Management Company shall with the prior approval of SEBI enter into an Investment Management Agreement ( IMA ) .

 

 

2. The Investment Management Agreement shall contain such clauses as are mentioned in the Fourth Schedule of the SEBI (MFs) Regulations, 1996 and other such clauses as are necessary for the purpose of making investments.
3. The Trustees shall have a right to obtain from the Asset Management Company such information as is considered necessary by the Trustee/s.
4. The Trustee shall ensure before the launch of any scheme that the Asset Management Company possesses/has done the following:

(i) Systems in place for its back office, dealing room and accounting;

(iii) Appointed auditors to audit its accounts;

(v) Appointed registrars and laid down parameters for their supervision;

(vii) Specified norms for empanelment of brokers and marketing agents.

e. The Trustee shall ensure that the Asset Management Company has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker.

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

g. The Trustee shall ensure that the transactions entered into by the Asset Management Company are in accordance with the SEBI (MFs) Regulations, 1996 and the Scheme.

h. The Trustee shall ensure that the Asset Management Company has been managing the Mutual Fund Scheme independent of other activities and have taken adequate steps to ensure that the interest of investors of one Scheme are not compromised with those of any other scheme or of other activities of the Asset Management Company.

i. The Trustee shall ensure that all the activities of the Asset Management Company are in accordance with the provisions of SEBI (MFs) Regulations, 1996.

j. Where the Trustees have reason to believe that the conduct of the business of the Mutual Fund is not in accordance with these regulations and the Scheme, they shall forthwith take such remedial steps as deemed necessary by them and shall immediately inform SEBI of the violation and the action taken by them.

k. Each Trustee shall file the details of his transactions in securities (above Rs.1 Lac per transaction) with the Mutual Fund on a quarterly basis.

l. The Trustees shall be accountable for and be the Custodian of the funds and property of the respective Schemes and shall hold the same in trust for the benefit of the unit holders in accordance with the SEBI (MFs) Regulations, 1996 and the provisions of the Trust Deed.

m. The Trustees shall take steps to ensure that the transactions of the Mutual Fund are in accordance with the provisions of the Trust Deed.

n. The Trustees shall be responsible for the calculation of any income due to be paid to the Mutual Fund and also of any income received in the Mutual Fund for the unitholders of any Scheme in accordance with the SEBI (MFs) Regulations, 1996 and the Trust Deed.

w. The Trustee shall furnish to SEBI on a half-yearly basis the following:

(i) A report on the activities of the Mutual Fund;

i) The Trustees shall be discerning in the appointment of the directors on the Board of the Asset Management Company.

(ii) The Trustees shall review the desirability or continuance of the Asset Management Company if substantial irregularities are observed in any of the Schemes and shall not allow the Asset Management Company to float new Schemes.

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

iv) The Trustee shall ensure that all the service providers are holding appropriate registrations from SEBI or concerned regulatory authority.

v) The Trustees shall arrange for test checks of service contracts.

vi) The Trustees shall immediately report to SEBI of any special developments in the Mutual Fund.

The Trustees shall:

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

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

iii) Hold periodical meetings of the Trustees.

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

v) Maintain records of the decisions of the Trustees at their meetings and of the minutes of the meetings.

vi) Prescribe and adhere to a code of ethics by the Trustees, Asset Management Company and its personnel.

(vii) Communicate in writing to the Asset Management Company of the deficiencies and checking on the rectification of deficiencies.

z. The independent directors of the trustees shall pay specific attention to the following, as may be applicable, namely:-

i) The Investment Management Agreement and the compensation paid under the agreement.

ii) Service contracts with affiliates as to whether the Asset Management Company has charged higher fees than outside contractors for the same services.

iii) Selection of the Asset Management Company 's independent directors

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

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

vi) Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions.

(vii) The reasonableness of fees paid to sponsors, Asset Management Company and others for services provided.

(viii) Principal underwriting contracts and renewals

(ix) Any service contract with the associates of the Asset Management Company.

aa. The Trust Deed shall not be amended without obtaining the prior approval of SEBI, and the unitholders approval would be obtained where it affects the interest of unitholders.

Under the Trust Deed, duties and obligations also include the following:

i) In carrying out its responsibility, the Trustee and it’s directors shall maintain arms length relationship with other companies, or institutions or financial intermediaries or any body corporate with which they may be associated.

ii) The Directors of the Trustee shall not participate in any decision making process/resolutions of it’s board meetings for any investment in which they may be interested.

iii) All the Trustees shall furnish to the Board of Trustees or Trustee Company particulars of interest which he may have in any other company, or institution or financial intermediary or any corporate by virtue of his position as Director, partner or with which he may be associated in any other capacity.

iv) The Trustee shall not acquire or allow the AMC to acquire any asset out of the Trust Fund and/or Unit Capital, which involves the assumption of unlimited liability or results in encumbrance of Trust Fund and/or Unit Capital in any way.

v) The Trustee shall not make or guarantee loans or take up any activity in contravention of SEBI Regulations except with the prior approval of SEBI nor shall it allow the AMC to do so.

However, as and when there is an addition / modification / deletion in the duties and responsibilities of the Trustee, due to a change in the SEBI Regulations, such addition / modification / deletion shall be applicable here, accordingly.

The Trustee shall not be held liable for acts done in good faith if they have exercised adequate due diligence honestly.

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

Reliance Capital Asset Management Limited, a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Capital Mutual Fund. It is a wholly owned subsidiary of Reliance Capital Limited.

Reliance Capital Asset Management Limited was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/265/95 dated February 1, 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 Asset Management Company as on March 31, 2001 is Rs.1118.79 lacs. The Mutual Fund has launched five Schemes till date, namely: Reliance Vision Fund (September 1995), Reliance Growth Fund (September 1995) Reliance Income Fund (December 1997), Reliance Liquid Fund (March 1998) and Reliance Monthly Income Plan (August 2000).

Reliance Capital Asset Management Limited has been registered as a Portfolio Manager vide certificate dated July 25, 2000 and as a Foreign Institutional Investor vide certificate dated October 23, 2000 with SEBI vide Registration No. INP000000423 and IN-IN-FA – 0670 00 respectively. RCAM has not yet commenced these activities. However, as and when the same are undertaken, it will ensure that the key personnel of the AMC, the systems, back office, bank and securities accounts are segregated activity-wise and there exists systems to prohibit access to inside information of various activities. As per SEBI Regulations, it will further ensure that AMC meets the capital adequacy requirements, if any, separately for each such activity and obtain separate approval, if necessary, under the relevant regulations.

Reliance Capital Asset Management Limited

1203-06, Arcadia,

195, NCPA Road,

Nariman Point,

Mumbai - 400 021.

The Directors of RCAM are:

A/13, Sterling Apartments Reliance Capital Limited.

Peddar Road, Director : Reliance Transport

Mumbai 400 026. & Travels Limited,

Business Tally Solutions Pvt. Limited,

Mr. D.J.Kapadia* Director : Reliance Capital

32, "Sangita" Limited, Reliance Shares

27 / 28 Arthur Bunder Road, & Stock Brokers Limited.

Colaba, Mumbai 400 005.

Mr. Shailesh S. Vaidya Partner : Kanga & Company,

Kanga & Co. Advocates & Solicitors.

Advocates & Solicitors Member : Managing

Readymoney Mansion Committee, WIAA., Law Committee

43, Veer Nariman Road - Indian Merchants Chamber

Mumbai 400 023. Director :

Solicitor Dwarikesh Sugar Industries Limited,

Mr. P. S. Chairman : Shriram Tower

Gopalakrishnan Tech Limited, Mega

Apartment International Limited.

No.B-202&203, Director :

Keshav Dugar, XS Financial Services

1, East Avenue, Keshav Limited, Appu Hotels

Perumalpuram, R.A.Puram, Limited, Kothari Sugars &

Mr.V.H. Pandya Chairman: North Eastern

Flat 1202, 12th Floor Industrial and Tech. Consultancy

Parkside -II Bldg. Wing ‘B’Raheja Estate, Limited Guwahati, North

Kulupwadi Road No. 1 Eastern Industries Tech.

Ex- SEBI Executive Director Director : GIC Asset

*Associate Director: Shri Anand Jain is the Managing Director and Shri D.J. Kapadia is a Director of Reliance Capital Limited, the Sponsor.

In accordance with SEBI (Mutual Funds) Regulations, 1996, the Trust Deed and the Investment Management Agreement, the Investment Manager has several duties and obligations, including the following:

1. The Asset Management Company shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed.

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

3. The Asset Management Company shall be responsible for the acts of commissions or omissions by its employees or the persons whose services have been procured by the Asset Management Company.

4. The Asset Management Company shall submit to the Trustees quarterly reports on its activities and the compliance with SEBI (MFs) Regulations, 1996, amended up-to-date.

5. The Trustees, at the request of the Asset Management Company, may terminate the assignment of the Asset Management Company at any time provided that such termination shall become effective only after the Trustees have accepted the termination of assignment and communicated their decision in writing to the Asset Management Company.

6. Notwithstanding anything contained in any contract or agreement or termination, the Asset Management Company or its directors or other officers shall not be absolved of any liability to the Mutual Fund for their acts of commission or omission, while holding such position or office.

7. An Asset Management Company shall not, through any broker associated with the sponsor, purchase or sell securities, which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes. Provided that for the purposes of the relevant sub-regulation, aggregate purchase and sale of securities shall exclude sale and distribution of units issued by the mutual fund. Provided further that the aforesaid limit of 5% shall apply for a block of any three months. An Asset Management Company shall not purchase and sell through any broker (other than an associated broker referred to above ) which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its Schemes, unless the Asset Management Company has recorded in writing the justification for exceeding the limit of 5% and reports of all such investments are sent to the Trustees on a quarterly basis. Provided that the aforesaid limit shall apply for a block of three months.

8. An Asset Management Company shall not utilise the services of the Sponsor or any of its associates, employees or their relatives, for the purpose of any securities transaction and distribution and sale of securities, provided that an Asset Management Company may utilise such services if disclosure to that effect is made to the unitholders and the brokerage or commission paid is also disclosed in the half yearly annual accounts for the Mutual Fund.
9. As per the SEBI Circular dated May 24, 2001 no brokerage will be payable for investments made by Sponsors of the Mutual Fund in any of the Schemes of the Fund, on a prospective basis.
   

10. The Asset Management Company shall file with the Trustee the details of transactions in securities by the employees of the Asset Management Company in their own name or on behalf of the Asset Management Company and shall also report to SEBI, as and when required by SEBI.

11. In case the Asset Management Company enters into any securities transaction with any of its associates, a report to that effect shall be sent to the Trustee at their next meeting.

12. In case any company has invested more than 5% of the net asset value of a scheme, the investment made by that scheme or by any other scheme of the same mutual fund in that company or its subsidiaries, if any, shall be brought to the notice of the Trustees by the Asset Management Company and be disclosed in the half-yearly and annual accounts with justification for such investment provided that the latter investment has been made within one year of the date of the former investment calculated on either side.

13. The Asset Management Company shall file with the Trustees and SEBI:-

(i) Detailed bio-data of all its directors along with their interest in other companies within 15 days of their appointment;

(ii) Any change in the interest of directors every six months and

(iii) A quarterly report to the Trustees giving details and adequate justification about the purchase and sale of securities of the group companies of the Sponsor or the Asset Management Company as the case may be, by the Mutual Fund during the said quarter.

14. A statement of holding in securities of the directors of the Asset Management Company shall be filed with the Trustees, with the dates of acquisition of such securities at the end of each financial year.

15. The Asset Management Company shall not appoint any person as a key personnel who has been found guilty of any economic offence or involved in violation of securities laws.

16. The Asset Management Company shall appoint registrars and transfer agents who are registered with SEBI. Provided if the work relating to the transfer of Units is processed in-house, the charges at competitive market rates may be debited to the Scheme and for rates higher than the competitive market rates, prior approval of the Trustees shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts.

17. The Asset Management Company shall abide by the Code of Conduct as specified in the Fifth Schedule of the SEBI (MFs) Regulations, 1996.

18.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 company 's 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 securities transactions.

vii ) The reasonableness of fees paid to Sponsors, Asset Management Company 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 obligations also 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 as investing 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 the investors, at such intervals as may be specified by SEBI and/or the Trustees and in accordance with the SEBI Regulations.

c) RCAM must maintain books and records about the operation of various Schemes of the Fund to ensure compliance with the Regulations and guidelines for Mutual Funds as may be issued by SEBI from time to time, and shall submit a Scheme wise quarterly report on functioning of the 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 its duties 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 is responsible.

f) RCAM shall submit to the Trustee all information concerning the operation of the various Schemes of the Fund managed by RCAM at such intervals and in such manner as required by the Trustee to ensure that RCAM is complying with the provisions of the Trust Deed and SEBI Regulations.

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

As and when there is an addition/deletion/modification in the duties and responsibilities of the AMC due to a change in the Regulations, such additions/deletions/modifications shall be made here, accordingly.

The AMC shall not be liable to the Trustee in the event that the Mutual Fund suffers a decline in its net asset value or fails to achieve any increase therein; unless such decline or failure is caused by any acts of commission or omission or by the default or negligence of the AMC, a bona fide error of judgement not being regarded as default or negligence nor as an act of commission or omission.

Haribhakti & Co.

42, Free Press House,

Nariman Point,

Mumbai - 400 021.

Price Waterhouse

1102 / 1107 Raheja Chambers,

Nariman Point,

Mumbai 400 021

C.C. Chokshi & Co.,

Mafatlal House,

Backbay Reclamation,

Mumbai –400 020.

M/s. Malpani & Associates

307, Chartered House,

Dr. C.H. Street,

Near Marine Lines Church,

Mumbai – 400 002.

The Trustee has appointed Deutsche Bank, AG located at Kodak House, Ground Floor, 222, Dr. D.N. Road, Mumbai-400 001, as the Custodian of the securities that are bought and sold under the Scheme. A Custody Agreement has been entered with Deutsche Bank in accordance with SEBI Regulations. The Custodian is approved by SEBI under registration no. IN/CUS/003 to act as Custodian for the Fund.

In terms of Custody Agreement dated September 6, 1995 between the Mutual Fund and 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 in safe custody;

• Ensure smooth inflow/outflow of securities and such other instruments as and when necessary, 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 the part of its approved agents.

The Custodian will charge the Mutual Fund, portfolio fee, transaction fee and out-of -pocket expenses in accordance with the terms of the Custody Agreement and as per any modification made thereof from time to time.

RCAM has appointed M/s. Karvy Consultants Limited to act as the Registrar and Transfer Agent to the Scheme. M/s. Karvy Consultants Limited (KCL) having their office at 21, Road No. 4, Street No.1, Banjara Hills, Hyderabad 500 034, is a Registrar and Transfer Agent registered with SEBI under registration no. INR000000221. RCAM and the Trustee have satisfied themselves, 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 broad parameters for supervision of the Registrar. As Registrar to the Scheme, KCL will accept and process investors applications, handle communications with investors, perform data entry services, despatch 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 a Registrar and Transfer Agent and will be paid fees as set out in the agreement entered into with it and as per any modification made thereof from time to time.

The primary investment objective of the Scheme is to seek to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the respective plans; with the objective of limiting the interest rate volatility.

Currently the Scheme will launch a series of:

• Short Term plans in the Monthly, Quarterly, Half Yearly and Annual categories:

• Long Term plans which comprise of

• Gilt Plans in the 2 year, 3 year, 4 year and 5 year categories:

• Balanced Bond Plans in the 2 year, 3 year, 4 year and 5 year categories:

However, there can be no assurance that the investment objectives of the Plans will be achieved. The Plans of the Scheme do not guarantee any returns.

Income may be generated through the receipt of coupon payments, the amortization of the discount on debt instruments, receipt of dividends or the purchase and sale of securities in the underlying portfolio. The Scheme will, under normal market conditions, invest its assets primarily in fixed income securities, money market instruments, cash and cash equivalents. The following table provides the asset allocation of the scheme's portfolio.

Investment policies of the Fund shall reflect restrictions for Mutual Fund investments established by SEBI. Under normal circumstances, the anticipated Asset Allocation is as under:

The Fund may also enter into "Repo", "Stock Lending" or such other transactions as may be allowed to Mutual Funds from time to time.

For purposes of the Offer Document, fixed income securities includes, but is not confined to debt obligations of the Government of India, state and local governments, government agencies, statutory bodies, public sector undertakings, Financial Institutions, public and private sector banks and corporate entities. The scheme reserves the right to invest it’s entire allocation in debt and money market securities in any one of the fixed income security classes. Investments in rated fixed income securities will be in securities rated by at least one recognized rating agency. Investments in unrated securities will be made with the approval of the Investment Committee of RCAM, within the parameters laid down by the Board of Directors of the AMC & the Trustees. Securitised Debt can be a part of the debt securities, and the Fund will normally endeavor to keep it upto 40 percent of corpus of the Scheme.

Money market instrument include but are not limited to treasury bills, commercial papers of public sector undertakings and private sector corporate entities, inter-bank call and notice money, Mibor linked corporate papers, fixed deposits with scheduled commercial

banks, certificates of deposit of scheduled commercial banks and Financial Institutions,

securitised debt, bills of exchange/promissory notes of public and private sector entities (co-accepted by banks) and any other money market securities as may be permitted by SEBI / RBI. From time to time, it is possible that the portfolio may hold cash. Short-term debt considerations for this Scheme includes maintaining an adequate float to meet anticipated levels of redemptions, expenses, and other liquidity needs. A portion of funds may also be kept in cash or cash equivalents.

The schemes may also enter into repurchase and reverse repurchase obligations in all securities held by them as per the guidelines and regulations applicable to such transactions. Further, the scheme intends to participate in securities lending as permitted within the Regulations. It is the intention of the scheme to trade in the derivatives market as per the Regulations. Further, the Scheme intends to participate in Securities lending as per the Regulations. The scheme also intends to invest in foreign debt securities, as and when permitted by SEBI and in accordance with the Regulations then prevailing.

The above-mentioned securities could be listed, unlisted, secured, unsecured, rated or unrated and may be acquired through initial public offerings, secondary market offerings, private placements, rights offers or negotiated deals.

To avoid duplication of portfolios and to reduce expenses, the Scheme may invest in any other schemes of the Fund to the extent permitted by the Regulations. In such an event, the AMC will not charge management fees on the amounts of the Schemes so invested, unless permitted by the Regulations.

The asset allocation indicated above may change from time to time keeping in view the market conditions, legislative and regulative amendments and political and economic factors, subject to Regulations. It must be clearly understood that the percentages stated above are purely indicative and can change substantially depending on the perception of the Investment Manager with the sole intention of protecting the interests of the Unit Holders.

The Fund shall seek Unitholders’ approval if necessary and in accordance with the Regulations, if there is any change in the Fundamental Attributes, pursuant to the change in Investment Pattern.

While it is the intention of the Scheme to maintain the maximum exposure guidelines provided in the table above, there may be instances when these percentages may be exceeded. Typically, this may occur while the Scheme is new and the corpus is small thereby causing diversification issues.

Investments may be in listed or unlisted debt instruments, as permitted under SEBI Regulations. These would cover secondary market purchases, Initial Public Offers (IPOs), other public offers, placements, rights offers, negotiated deals,etc.

Investments in debentures and bonds will usually be in instruments which have been

assigned investment grade ratings by an approved rating agency. The instruments may be rated / unrated and listed / unlisted. In cases where the debt instrument is unrated, specific approval from the Investment Committee of RCAM shall be obtained.

The fund management team will endeavor to maintain a consistent performance in the scheme by maintaining a balance between safety, liquidity and profitability aspects of various investments. The fund manager will try to achieve an optimal risk return balance for management of the fixed income portfolios.

The investments in debt instruments carry various risks like interest rate risk, liquidity risk, default risk, purchasing power risk etc. While they cannot be done away with, they can me minimized by diversification and effective use of hedging techniques.

The fund management team will take an active view of the interest rate movement by keeping a close watch on various parameters of the Indian economy, as well as developments in global markets.

Investment views / decisions will be taken on the basis of the following parameters:

1. Prevailing interest rate scenario

2. Quality of the security / instrument (including the financial health of the issuer)

3. Maturity profile of the instrument

4. Liquidity of the security

5. Growth prospects of the company / industry

6. Any other factors in the opinion of the fund management team

Risk Measurement / Control: The Fund Management propose to use analytic risk management tools like VAR / convexity/ modified duration for effective portfolio management.

The Indian debt market has undergone a major transformation in recent times. The substantial growth in Mutual Fund collections in the past few years have provided an easy route for the investors to channelise their savings into the debt market, which otherwise is largely dominated by Banks and other Institutional investors.