Reliance Infrastructure Fund

An Open Ended Equity Scheme

NFO Dates
NFO opens: 25th May 09
NFO closes: 23rd June 09

Indian Equity Markets – Visible Change

Oct 2008 Now

Major global banks failed, more probable Looks remote

Liquidity evaporated Liquidity all around

Risk aversion Risk appetite returning

Companies facing capital shortage Equity raising easier, change in B/S

Election uncertainty in India Biggest verdict since 1984

FIIs major sellers Becoming big buyers

Equity Markets- Our View

The catapult
‰ Election - A big positive game changer
‰ Accompanied by improving monetary and economic conditions
‰ Governance, infrastructure and inclusive growth looks to be key goals of incumbent
Government
‰ FII/FDI inflows can be very strong
‰ Earnings upgrades may follow
‰ Sustainable attractive returns from Indian equities look possible
What can go wrong?
‰ Another global financial catastrophe
‰ Big disappointment in pace of Govt. actions over next 6 months

Everything going for India

‰ Youngest population in the world
‰ Largest middle-class and consuming population
‰ Domestic focused economy
‰ Banking system proved to be amongst the healthiest
‰ Global leader in services

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 ‰ Lowest cost producer in metals
‰ Huge savings and investment rates

Source: Internal - RMF Research

HOWEVER…..

Infrastructure... Miles to Go

Comparision of Infrastructure Facilities

Particulars India US China
Electric consumption per capita (KwH) 618 14240 1684
Roads per mn people (km) 2983 21443 1471
Steel Consumption per capita (kg) 34 357 244
Rail route per mn people (km) 56 755 57
Cargo handled at ports per capita (kg) 572 7953 4265
No. of passengers handled at airports per 1,000 persons 71 4780 151
Source: Published Media, Global Research 2007-08

World Bank’s “Global Competitiveness Report 2007-08”

‰ ‘Inadequate supply of infrastructure’
- Most problematic factor for doing business in India.
‰ India ranked 48th out of 131 counties in the Global Competitive Index 2007.
- Ranked 67th on the quality of infrastructure.
‰ India lags behind in infrastructure facility usage compared to US, UK & China.

Infrastructure Investment – China Vs India

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Factors driving demand for better Infrastructure
1. Economic Factors
2. Demographic Factors
3. Global Integration

Congress Manifesto- Makes intentions clear

‰ Increase public investment in infrastructure
‰ Ensure that India adds at least 12000-15000 MW of power capacity every year.
‰ Rural electrification & reduction in distribution losses.
‰ Implement a scheme to supply energy to poor families at affordable prices.
‰ Promises a very significant increase in the share of nuclear power.
‰ Connect villages through broadband network within 3 years

Source: Congress Manifest 2009

Intentions evident in Interim Budget 2009

‰ Government accorded approval to 37 infrastructure projects worth Rs.70,000 crore from
August, 2008 to January, 2009 alone.
‰ Under PPP mode, 54 Central sector infrastructure projects in-principal or final approval
and 23 projects approved for viability gap funding in 2008-09.
‰ India Infrastructure Finance Company Ltd. (IIFCL) to refinance up to 60 % of commercial
bank loans for PPP projects involving total investment of Rs.1,00,000 crore in
infrastructure over the next eighteen months.

Source: http://indiabudget.nic.in

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Planned Infrastructure Expenditure in XIth FYP …..

th
Sector 2007-08 2008-09 2009-10 2010-11 2011-12 Total XI FYP

Power 74,205 92,829 116,541 146,914 186,038 616,527

Roads 51,352 54,318 58,729 67,901 79,516 311,816
Telecom 33,075 39,834 50,293 63,408 80,390 267,000
Railway 33,207 39,964 48,626 59,738 76,466 258,001
Irrigation 27,002 33,839 42,625 53,946 65,718 223,130
Water Supply & Sanitation 25,840 31,110 37,868 46,555 57,754 199,127
Ports 9,691 11,740 14,271 17,397 20,841 73,940
Airports 6,223 6,459 6,814 7,296 7,956 34,748
Storage 3,777 4,098 4,446 4,824 5,234 22,379
Gas 2,984 3,454 4,005 4,651 5,407 20,500
Total Investment 267,356 317,645 384,218 472,630 585,320 2,027,168
Total (USD Billion) 65 77 94 115 143 494
Investment as % of GDP 6.0 6.5 7.2 8.1 9.2 7.5

Rs. Crore (At 2006-07 prices), Exchange Rate of Rs.41/$(2006-07)

Source: Planning Commission of India

…With much bigger outlay of USD 1,128 Billion in XIIth FYP

Question marks on infrastructure spending:

‰ Huge budgetary and fiscal deficit
‰ Past record on foreign flows so-so and not very robust
However, future looks brighter
‰ Avenues to control deficit in sight
‰ PPP
‰ Foreign investments
Source: Internal - RMF Research

Funding Pattern(XIth FYP):

‰ Private Funding gains importance- 30% of planned expenditure
‰ FDI
‰ Private Equity

Infrastructure Fund – why now?

‰ Despite recent spurt, still attractive
‰ Political stability for five years
‰ Some stability. Investors will move to higher growth economies
‰ Interest rates plunge, debt available, investors looking for equity investments
‰ Attractive Valuations

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 Introducing Reliance Infrastructure Fund (an open ended equity scheme)
Investment Strategy
The investment focus would be guided by the growth potential and other economic factors of the
country. The Fund aims to maximize long-term total return by investing in equity and equity-
related securities which have their area of primary activity in India
The Fund intends to invest in -
(i) Companies in sectors related to infrastructure;
(ii) Companies operating and listed in India engaged in Infrastructure Sector and
(iii) In diversified companies, where a major portion of their revenues (primary activity) is
derived from the infrastructure related activities.

If the Fund Manager decides to invest in ADRs / GDRs issued by Indian / foreign companies and
in foreign Securities in accordance with SEBI Regulations in the Scheme, it is the intention of the
Fund Manager that such investments will not normally exceed 20% of the net assets of the
Scheme.
Following areas/sectors of the economy listed below are covered in infrastructure sector;
1. Airports
2. Banks, Financial Institutions & Term lending Institutions
3. Cement & Cement Products
4. Coal
5. Construction
6. Electrical & Electronic components
7. Engineering
8. Energy including Coal, Oil & Gas, Petroleum & Pipelines
9. Industrial Capital Goods & Products
10. Metals & Minerals
11. Ports
12. Power and Power equipment
13. Road & Railway initiatives
14. Telecommunication
15. Transportation
16. Urban Infrastructure including Housing & Commercial Infrastructure
17. Mining,
18. Aluminum
Please note that the list provided is indicative and the Investment Manager may add such other
sectors/ group of industries which broadly satisfy the category of being under Infrastructure

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Sector or are related to the Infrastructure growth depending on the relevance of that sector to the
investment objective of the scheme

The Scheme will purchase securities in the public offerings and rights issues, as well as those
traded in the secondary markets. On occasions, if deemed appropriate, the Scheme will invest in
securities sold directly by the issuer, or acquired in a negotiated transaction or issued by way of
private placement. The moneys collected under this scheme shall be invested only in transferable
securities.
Thus looking at a multi cap strategy with a medium to long term investment horizon

Product Features
Type of Scheme – An Open-ended Equity Scheme

Investment Objective -The primary investment objective of the scheme is to generate long term
capital appreciation by investing predominantly in equity and equity related instruments of
companies engaged in infrastructure and infrastructure related sectors and which are
incorporated or have their area of primary activity, in India and the secondary objective is to
generate consistent returns by investing in debt and money market securities.

Asset Allocation
Under normal circumstances, the proposed asset allocation would be:

Indicative asset allocation (%

Instruments of total assets) Risk Profile
Minimum Maximum
Equities and equity related securities including
derivatives engaged in infrastructure sectors and
infrastructure related sectors# 65% 100% Medium to High
Debt and Money market securities** (including
investments in securitised debt) 0% 35% Low to Medium
** including securitised debt upto 30%
Atleast 65% of investment would be made in equity /equity related securities of companies
engaged in infrastructure sectors and infrastructure related sectors.
If the Fund Manager decides to invest in ADRs / GDRs issued by Indian / foreign companies and
in foreign Securities in accordance with SEBI Regulations in the Scheme, it is the intention of the
Fund Manager that such investments will not normally exceed 20% of the net assets of the
Scheme.

#an overall limit of 100% of the portfolio value has been introduced for the purpose of equity
derivatives in the scheme. The margin money requirement for the purpose of derivative exposure

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will be as per the SEBI Regulations. The derivate exposure will be restricted to such limit so that
the scheme does not leverage upon margin requirements.

The Scheme may take derivatives position based on the opportunities available subject to the
guidelines issued by SEBI from time to time and in line with the overall investment objective of the
Scheme. These may be taken to hedge the portfolio, rebalance the same or to undertake any other
strategy as permitted under the SEBI Regulations.

The fund will also invest in Pre IPO Placement, lock-in non transferable securities and up to 5% or
max permissible limit in Unlisted Securities.

The above Asset Allocation Pattern is only indicative. The investment manager in line with the
investment objective may alter the above pattern for short term and on defensive consideration.

Plans Available: The scheme will have the following plans /options
‰ Retail Plan
‰ Institutional Plan
Each of the above plans will have Growth & Dividend Plans respectively as specified below
‰ Growth Plan: Growth Option & Bonus Option
‰ Dividend Plan: Dividend Payout Option & Dividend Reinvestment Option

Benchmark Index
BSE 100
Considering the investment in the fund made in equity /equity related securities of companies
engaged in infrastructure sectors and infrastructure related sectors, we propose to have BSE 100
as a benchmark since majority of the stocks relate to the sectors which would contribute to the
infrastructure growth or to diversified companies, where a major portion of their revenues (primary
activity) is derived from the infrastructure related activities.

Minimum Application Amount:

For Retail Plan: Rs 5,000/-
For Institutional Plan: Rs 5, 00, 00,000/-

Load Structure (During new fund offer and continuous offer including SIP installments)
For Retail Plan
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 and above- Nil
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Exit Load:
For subscriptions of less than Rs 5 Crs per purchase transactions
‰ 1% if redeemed/switched on or before completion of 1 year from the date of allotment
‰ Nil if redeemed/switched after completion of 1 year from the date of allotment
For subscriptions of more than Rs 5 Crs - nil

For Institutional Plan

‰ Entry Load: Nil
‰ Exit Load: Nil

Pursuant to SEBI Circular No. SEBI/IMD/CIR No. 10/112153/07 dated December 31, 2007, with effect from January 4,
2008, no entry load shall be charged in respect of direct applications received by Reliance Mutual Fund (RMF) i.e.
applications received through internet or submitted to the AMC or any designated collection centre/Investor Service
Centre of RMF that are not routed through any distributor/agent/broker.

Reliance Any Time Money Card: It shall be issued only to investors subscribing in this fund
through Self Cheque

New Fund Offer expenses:

The Scheme shall meet the entire sales, marketing and such other expenses connected with
sales and distribution of scheme during the new fund offer from the entry load in accordance with
SEBI Circular dated April 4, 2006, being an open-ended scheme. Any expenses over & above the
entry load amount shall be borne by the AMC.

SIP: Available – Retail Plan (for details, please refer to Scheme Information Document)

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__________________________________________________________________________
The information herein constitutes only an opinion.. Readers are advised to seek independent professional advice and
arrive at an informed investment decision before making any investments. The information contained herein has been
prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable.
None of The Sponsor, The Sponsor, The Investment Manager, The Trustee or any of their respective directors,
employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness,
adequacy and reliability of such information.

Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited. Investment Manager: Reliance
Capital Asset Management Limited. Statutory Details: The Sponsor, the Trustee and the Investment Manager are
incorporated under the Companies Act 1956.
___________________________________________________________________________

Reliance Infrastructure Fund (An open-ended Equity Scheme): The primary investment objective of the scheme is to
generate long term capital appreciation by investing predominantly in equity and equity related instruments of companies
engaged in infrastructure and infrastructure related sectors and which are incorporated or have their area of primary
activity, in India and the secondary objective is to generate consistent returns by investing in debt and money market
securities. Asset Allocation: Equities and equity related securities including derivatives – 65% -100%. Debt and Money
market securities** (including investments in securitised debt) – 0-35%. ** including securitised debt upto 30%. Load
Structure: For Retail Plan: 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 and above- Nil Exit Load For subscriptions of less than Rs 5
Crs per purchase transactions: 1% if redeemed/switched on or before completion of 1 year from the date of allotment; Nil
if redeemed/switched after completion of 1 year from the date of allotment. For Institutional Plan: Entry Load - NIl Exit
Load – Nil. Pursuant to SEBI Circular No. SEBI/IMD/CIR No. 10/112153/07 dated December 31, 2007, with effect from
January 4, 2008, no entry load shall be charged in respect of direct applications received by Reliance Mutual Fund (RMF)
i.e. applications received through internet or submitted to the AMC or any designated collection centre/Investor Service
Centre of RMF that are not routed through any distributor/agent/broker.
Terms of Issue: The Units are available at Rs. 10/- per unit plus applicable load during the New Fund Offer Period and
thereafter at applicable NAV based prices. The AMC will calculate and disclose the first NAV not later than 30 days from
the closure of the New Fund Offer Period. Subsequently, the NAV will be calculated and disclosed at the close of every
working day which shall be published in at least in two daily newspapers and also uploaded on AMFI site i.e.
www.amfiindia.com and Reliance Mutual Fund website i.e. www.reliancemutual.com.
General Risk Factors: Mutual Funds and securities investments are subject to market risks and there is no assurance or
guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units
issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. Past
performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. Reliance
Infrastructure Fund is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme;
it's future prospects or returns. The Sponsor is not responsible or liable for any loss resulting from the operation of the
Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions
and additions to the corpus. The Mutual Fund is not guaranteeing or assuring any dividend. The Mutual Fund is also not
assuring that it will make periodical dividend distributions, though it has every intention of doing so. All dividend
distributions are subject to the availability of the distributable surplus in the Scheme. For details of scheme features apart
from those mentioned above and scheme specific risk factors, please refer to the provisions of the Scheme Information
Document. Scheme Information Document and KIM cum application form is available at all the DISCs/ Distributors of
RMF/www.reliancemutual.com. Please read the Scheme Information Document carefully before investing.

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