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NFO: Reliance Index Fund
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T bl Of C t tIndia Opportunity
Table Of Contents
What are Index Funds
Why Invest in Index Funds
S&P CNX Nifty – Best Representative of India Growth Story
Performance of S&P CNX NiftyPerformance of S&P CNX Nifty
Reliance Index Fund – Nifty Plan
Positioning
Product Features
I di Th N t T illi D ll O t itIndia – The Next Trillion Dollar Opportunity
INDIA’S GDP IN USD TRILLION
India took 60 years to get to its first USD 1 Trillion GDP in FY08 but the move to USD 2India took 60 years to get to its first USD 1 Trillion GDP in FY08, but the move to USD 2Trillion GDP will be in next 5-6 years, similar to that of ChinaDue to the huge consumption and savings/investment boom, USD 2 Trillion GDP is not adestination, but a milestone in India’s ongoing journey towards USD 4 Trillion GDP in the
Estimated for 2010-2014Source: CMIE, MOSL, RCAM Estimates
g g j ysubsequent 5-7 years, and so on
I di M i T d Hi h G th T j tIndia Moving Towards Higher Growth Trajectory
...despite concerns of coalition politics, bureaucracy & poor infrastructure
Estimated for 2009-2011Source: CIEC, RCAM Estimates
E i M k t T Att t Hi h I flPeriod 1995-99 2000-04 2005-09 2009
Avg World GDP $Bn 30 292 35 291 53 583 57 228
Growing size of EM economy andfading distinction between EM and
Emerging Markets To Attract Higher Inflows
Avg. World GDP $Bn 30,292 35,291 53,583 57,228
Proportion of the World Average GDP level (%)
DM countries 80.4 79.5 72.2 69.3
US 27.6 30.5 25.7 24.9
UK 4 4 4 9 4 6 3 8
gDM economies should lead toincreased capital allocation to EMeconomies
UK 4.4 4.9 4.6 3.8
Euro area 23.2 21.4 22.1 21.5
Japan 14.8 12.2 8.7 8.8
EM countries 19.6 20.5 27.8 30.7
Brazil 2.6 1.7 2.4 2.6
Period 1995-99 2000-04 2005-09 2009
Avg.World M-Cap 14,047,039 17,734,308 25,689,296 24,630,640
Proportion of the Average World M-Cap (%)
DM markets 94.1 95.3 90.1 86.8
Russia 1.0 1.1 2.2 2.2
India 2.2 1.5 1.9 2.2
China 3.1 4.3 6.5 8.3
South Africa 0.5 0.4 0.5 0.5
United States 46.6 51.9 44.3 42.5
United Kingdom 9.7 10.4 9.6 9.0
Europe (ex-EM) 30.0 29.1 29.0 27.3
Japan 13.8 9.0 9.5 8.6
EM markets 5 9 4 7 9 9 13 2
Presently, EM economies hold over 30%share in Global GDP, while their share inGlobal market cap is only 13%
EM markets 5.9 4.7 9.9 13.2
Brazil 0.7 0.4 1.3 2.2
Russia 0.2 0.2 0.8 0.8
India 0.4 0.3 0.7 1.0
China 0.0 0.3 1.5 2.4
Source: IMF GDP data, MSCI m-cap data, RCAM Estimates, DM : Developed Markets, EM: Emerging Markets
Korea 0.6 0.8 1.4 1.7
MSCI Indices used as proxy for market-cap data (Units: USD million)
I t t Will Fl T I di
USD (Trillion) CY2008 CY2014
Investments Will Flow To India
BRIC
GDP 8.29 16.36
Market Cap 5.61 16.36
FII Investments* 1.00 ??US
GDP 14.20 16.47
Market Cap 12.09 16.47
FII Investments* 10.64 ??
In 2014 BRIC’s combined GDP will be equal to US GDPIn 2014, BRIC s combined GDP will be equal to US GDPAt Market Cap GDP ratio of 1, BRIC countries will have a market cap of USD 16.36TrillionSignificant FII money will flow into the BRIC markets – India will gets its share of
Source - RCAM Estimates, *FII numbers are approximations, BRIC – Brazil, Russia, India, China
Significant FII money will flow into the BRIC markets India will gets its share ofinvestments
G th D i I Pl F Th N t D dGrowth Drivers In Place For The Next DecadeIndia has emerged stronger from the global slump and is back on track to grow in excess
of 7-8% per annum
For a sustained long term growth, the 3 growth drivers are in place:
Savings – Domestic savings are the highest in the world
Consumption – Set to explode
Investments – At 34% of the GDP, again among the highest in the world
India’s unique position :
A domestic story – Relatively low dependence on global economy
Scale
From a global investor’s perspective, India is one of the large growing economies
St F d t l L d T St M k t R t
Indian Economy & Markets (INR)
Strong Fundamentals Lead To Strong Market Returns
Year-end Real GDP growth (%yoy) S&P CNX Nifty Returns (%yoy)
Mar 03 3.8 -13.14
Mar 04 8.5 81.14
Mar05 7.5 14.89
Mar 06 9.5 67.15
Mar 07 9.7 12.31
Mar 08 9.0 23.88
Mar 09 6.7 -36.19
Mar-10 7.4 73.80
Mar-11E * 8.2 ?
Source: www.RBI.org.in, CMIE, Bloomberg, RCAM estimates *Estimated Figures
Why Invest In Index Funds ???
I d F d Wh t D It M ?Index funds are mutual fund schemes that endeavors to track/replicate the constituents of
Index Funds – What Does It Mean?
the target index
Index Funds generally hold securities in the same proportion as the target index
Index Funds are passively managed funds :
There is no active selection of stocks by the Fund Manager
The portfolio is rebalanced periodically only when companies enter/exit the index
The expense ratio of index funds are generally less than actively managed equity funds
Index funds in India, generally track S&P CNX Nifty & BSE Sensex Indices
Wh O Sh ld I t I I d F d ?Index funds are the simplest of the mutual fund products to understand, even for a
Why One Should Invest In Index Funds?
layman who just has a vague idea about the equity markets
Provides an opportunity to participate in India growth story by investing in well-diversified
portfolio of fundamentally strong, highly liquid, well known companies
Index funds aims to minimize unsystematic risk(risk pertaining to companies, sectors etc)
f i t ’ tf li t t i t tof an investor’s portfolio to a certain extent
Performance of the portfolio is generally in tune with the performance of the target index
Any variation in performance (known as tracking error) is generally due to the % of
cash allocation & expenses of the fund
Lower management fees & lower portfolio turnover makes it cost efficient
S&P CNX Nift O f th B t R t ti f I di G th St
S&P CNX Nifty is a true representative of Indian Economy, since the constituents are
S&P CNX Nifty – One of the Best Representative of India Growth Story
blue chip companies which are the most liquid, biggest & widely owned companies
S&P CNX Nifty is a well diversified 50 stock index accounting for 19 sectors of they g
economy & representing almost 62% of free float market cap of NSE
It is widely accepted among the Indian & Global Investors
It is professionally maintained & provides the time series data over a fairly long period ofp y p y g p
time, thus, capturing all heightened activities of bull & bear runs, in the most judicial
manner
Source: www.nseindia.com, 31st Aug 2010
P f f S&P CNX NiftPerformance of S&P CNX Nifty
Index values have been rebased at 100
Performance As On 31st August 2010
Absolute (%) CAGR(%)
SIP Performance As On 31st August 2010
XIRR(%)
Index values have been rebased at 100
Indices 6 Months 1 Year 3 Years 5 Years 10 Years
S&P CNX Nifty 9.75 15.88 6.56 17.76 14.50
Indices 1 Year 3 Years 5 Years 10 Years
S&P CNX Nifty 13.37 14.82 13.25 19.40
Source: www.nseindia.com, Past Performance may or may not be sustained in future, The above table and graph gives an illustration of the performance of S & P CNX Nifty on the basis ofhistorical data, if invested directly or through Systematic Investment Plan. The same should not be construed as a indication, promise, guarantee or a forecast of any returns. The details may notnecessarily provide a basis for comparison with any other investment avenues. Readers are advised to seek independent professional advice and arrive at an informed investment decisionbefore making any investments. Please refer slide 21 for SIP disclaimers
I d C tit t f S&P CNX NiftConstituents of S&P CNX NIFTY Weightage in
Index (%)ABB INDIA 0 25
Constituents of S&P CNX NIFTY Weightage in Index (%)
LARSEN & TOUBRO 6 17
Index Constituents of S&P CNX Nifty
ABB INDIA 0.25ACC 0.55AMBUJA CEMENTS 0.62AXIS BANK 2.18BHARAT HEAVY ELECTRICALS 2.46BHARAT PETROLEUM CORP 0.62
LARSEN & TOUBRO 6.17MAHINDRA & MAHINDRA 1.65MARUTI SUZUKI INDIA 1.02NTPC 1.55ONGC 2.69POWER GRID CORP OF INDIA 0.37
BHARTI AIRTEL 2.47CAIRN INDIA 0.96CIPLA 1.01DLF 0.73GAIL INDIA 1.28HCL TECHNOLOGIES 0 60
PUNJAB NATIONAL BANK 0.99RANBAXY LABORATORIES 0.47RELIANCE CAPITAL 0.55RELIANCE COMMUNICATIONS LTD 0.69RELIANCE INDUSTRIES 10.31RELIANCE INFRASTRUCTURE 0 90HCL TECHNOLOGIES 0.60
HDFC BANK 4.86HERO HONDA MOTORS 1.13HINDALCO INDUSTRIES 1.37HINDUSTAN UNILEVER 1.77HDFC BANK 5.04ICICI BANK 7 00
RELIANCE INFRASTRUCTURE 0.90RELIANCE POWER 0.35SIEMENS INDIA 0.68STATE BANK OF INDIA 4.60STEEL AUTHORITY OF INDIA 0.70STERLITE INDUSTRIES INDIA 1.51SUN PHARMACEUTICAL INDUSTRIES 0 84ICICI BANK 7.00
IDEA CELLULAR 0.34IDFC 1.34INFOSYS TECHNOLOGIES 8.35ITC 5.24JAIPRAKASH ASSOCIATES 0.85
SUN PHARMACEUTICAL INDUSTRIES 0.84SUZLON ENERGY 0.26TATA CONSULTANCY SERVICES 2.76TATA MOTORS 2.02TATA POWER 1.30TATA STEEL 1.96
JINDAL STEEL & POWER 1.70KOTAK MAHINDRA BANK 0.93
UNITECH 0.70WIPRO 1.28
Source: www.nseindia.com, 24th Aug 2010
I d t Cl ifi ti f S&P CNX NiftIndustry Classification of S&P CNX Nifty
Source: www.nseindia.com, 31st Aug 2010
Reliance Mutual FundPresentsPresents
Reliance Index Fund – Nifty PlanPassively Managed Large Cap Oriented Fund
Which Aims To Provide Regular Income In Form Of Defined Dividend Frequency
The Mutual Fund is 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 distributable surplus in the Scheme. Pursuant to payment of dividend the NAV of the scheme would fall to the extent of payout and statutory levy, if any.
P iti i f R li I d F d Nift PlPositioning of Reliance Index Fund – Nifty Plan
A Conservative Large Cap Oriented Index Linked Fund which endeavors to provideregular income in form of defined dividend frequencyThe fund will aim to charge relatively low expense as compared to other actively managedg y p p y gequity funds
Investment Management Fee will not be charged for the first calendar quarter, oncethe Scheme re opens for continuous sale & repurchase (i.e. till December 31, 2010)*
Passively managed funds which aims to mirror S&P CNX Nifty so as to commensuratewith the performance of the underlying Index, subject to tracking errorsIdeal for those investors who would like to participate in the India growth story byinvesting in well diversified portfolio of well known large cap companiesinvesting in well-diversified portfolio of well known large cap companies*However for further periods, investors will be notified (through our website) about the Investment Management Fee that will be charged to the Scheme on a quarterly basis atthe beginning of the quarter in case of any change.
S h F t
Investment ObjectiveThe primary investment objective of the scheme is to replicate thecomposition of the NIFTY, with a view to generate returns that are
Scheme Features
j
Nature of Scheme An Open Ended Index Linked Scheme
commensurate with the performance of the NIFTY, subject to tracking errors
E iti & it l t d iti d b Nift 95% 100%
Benchmark S&P CNX NIFTY INDEXFor disclaimers please refer slide no 21
Equities & equity related securities covered by Nifty - 95%-100%Cash/CBLO/Repo & Reverse Repo & Money Market instruments (CPs,CDs,
Tbills, Mibor linked instruments with daily Put/Call options & overnight Interest rate Reset Linked Instruments)but excluding Subscription and
Redemption Cash Flow # - 0%-5%
Proposed Asset Allocation
p#Subscription Cash Flow is the subscription money in transit before deployment and Redemption Cash Flow is the moneykept aside for meeting redemptions.
Fund Manager Krishan Daga
New Fund Offer Price: Rs.10/- per unit
S h F t
Load Structure : During New Fund Offer & Continuous Offer
Choice of Plans/Options
Scheme Features
During New Fund Offer & Continuous Offer including SIP Installments
Entry Load: Nil
(a) Growth Plan(1) Growth Option(2) Bonus Option
(b) Dividend Plan (Payout Option & Reinvestment Option)
Exit Load:
• 1% of the applicable NAV if redeemed or switched out on or before
completion of 1 year from the date of allotment of units
( y )(1) Quarterly Dividend Option(2) Half Yearly Dividend Option(3) Annual Dividend Option
Minimum Application Amount completion of 1 year from the date of allotment of units
• There shall be no exit load after completion of 1 year from the date
of allotment of unitsI d ith th i t ifi d b th SEBI i l SEBI/IMD/CIR
Minimum Application Amount
Rs.5000 & in multiples of Re. 1 thereafter
Additional Purchase AmountIn accordance with the requirements specified by the SEBI circular no. SEBI/IMD/CIR
No.4/168230/09 dated June 30, 2009 no entry load will be charged for purchase / additional
purchase / switch-in accepted by the Fund with effect from August 01, 2009. Similarly, no
entry load will be charged with respect to applications for registrations under systematic
investment plans/ systematic transfer plans accepted by the Fund with effect from August
Rs.1000 (plus in the multiple of Re.1)
SIP01, 2009.Mode of Payment : Auto Debit/ECS/PDCs
Ri k F tThe views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the readers. This information ismeant for general reading purpose only and is not meant to serve as a professional guide for the readers. This document has been prepared on the basis of publiclyavailable information internally developed data and other sources believed to be reliable The Sponsor The Investment Manager The Trustee or any of their respective
Risk Factors
available information, internally developed data and other sources believed to be reliable. The Sponsor, The Investment Manager, The Trustee or any of their respectivedirectors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information.Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given fair andreasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information shouldrely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed investment decisionbefore making any investments. None of The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall beliable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in thisy p q p p y g g p g y ymaterial.The Sponsor, The Investment Manager, The Trustee, any of their respective directors, employees including the fund managers, affiliates, representatives including personsinvolved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specificsectors mentioned herein.Reliance Index Fund - Nifty Plan (An Open Ended Index Linked Scheme): The primary investment objective of the scheme is to replicate the composition of the Nifty,with a view to generate returns that are commensurate with the performance of the Nifty, subject to tracking errors. Asset Allocation Pattern: Equities and equity relatedsecurities covered by Nifty – 95% to 100% Cash/CBLO/Repo & Reverse Repo & Money Market instruments (CPs,CDs, Tbills, Mibor linked instruments with daily Put/Calloptions & overnight Interest rate Reset Linked Instruments)but excluding Subscription and Redemption Cash Flow# – 0% to 5%. #Subscription Cash Flow is the subscriptionmoney in transit before deployment and Redemption Cash Flow is the money kept aside for meeting redemptions.Terms of issue and mode of sale and redemption of units: The units of Scheme are available at Rs. 10/- per unit during NFO & thereafter at applicable NAV basedprices. The Scheme will offer for Subscription/ Switch-in and Redemption / Switch-out of Units on every Business Day on an ongoing basis, within five business days ofallotment. The redemption or repurchase proceeds shall be dispatched to the unitholders within 10 Business Days from the date of redemption or repurchase.I t b fit d l i ff d Th S h ff S t ti I t t Pl A t S it h f ilit O li T ti d R li A Ti MInvestor benefits and general services offered: The Scheme offers Systematic Investment Plan, Auto Switch facility, Online Transactions and Reliance Any Time MoneyCard during the NFO period. The NAV of Scheme shall be published on a daily basis by the Mutual Fund at least in two daily newspapers and will also uploaded on theAMFI site www.amfiindia.com and Reliance Mutual Fund site i.e. www.reliancemutual.com.
Statutory Details: Reliance Mutual Fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882. Sponsor: Reliance CapitalLimited. Trustee: Reliance Capital Trustee Company Limited. Investment Manager: Reliance Capital Asset Management Limited (Registered Office of Trustee &Investment Manager: “Reliance House” Nr Mardia Plaza Off C G Road Ahmedabad 380 006) The Sponsor the Trustee and the Investment Manager are incorporatedInvestment Manager: Reliance House Nr. Mardia Plaza, Off. C.G. Road, Ahmedabad 380 006). The Sponsor, the Trustee and the Investment Manager are incorporatedunder the Companies Act 1956. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakhtowards the setting up of the Mutual Fund and such other accretions and additions to the corpus.
Ri k F tRisk Factors: Mutual Funds and securities investments are subject to market risks, and there is no assurance or guarantee that the objectives of the Schemewill 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 forcesaffecting the securities market. Reliance Index Fund – Nifty Plan is only the name of the Scheme and does not in any manner indicates either the quality of the
Risk Factors
Scheme; its future prospects or returns. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The MutualFund is 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 ofdistributable surplus in the Scheme. The NAV of the Scheme may be affected, interalia, by changes in the market conditions, interest rates, trading volumes, settlementperiods and transfer procedures. There are various risks associated with investing in Equities, Bonds, Derivatives, Securitised Debt and Short Selling & Securities Lending.For Scheme specific risk factors, please refer to the Scheme Information Document & Key Information Memorandum, which is available at all the DISC, Distributors andwww.reliancemutual.com. Investors can also call at our call centre 1800-300-11111 (toll free) for more details. Please read the Scheme Information Document andStatement of Additional Information carefully before investing.
SIP DisclaimersReturns on SIP are annualised and cumulative investment return for cash flows resulting out of uniform and regular monthly subscriptions on 1st of every month have beenworked out on excel spreadsheet function known as XIRR. It is assumed that a SIP of Rs. 1000/- each executed on 1st of every month has been taken into considerationincluding the first installment. It may please be noted that load has not been taken into consideration. The amounts invested in SIP and the market values of suchinvestments at respective periodic intervals thereof are simulated for illustrative purposes for understanding the concept of SIP. This illustration should not be construed asa promise, guarantee on or a forecast of any minimum returns. The Mutual Fund or the Investment Manager does not assure any safeguard of capital and the illustrated
t t il i di ti f f t lt d t il id b i f i ith th i t t SIP d t treturns are not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. SIP does not guarantee or assureany protection against losses in declining market conditions.
S&P CNX Nifty Disclaimers : S&P®” and “Standard and Poor’s®” are trademarks of the “S&P”, and have been licensed for use by India Index Services & ProductsLimited in connection with the S&P CNX Nifty Index. “The Product(s) are not sponsored, endorsed, sold or promoted by India Index Services & Products Limited ("IISL") orStandard and Poor’s Financial Services LLC (“S&P”).. Neither IISL nor S&P makes any representation or warranty, express or implied, to the owners of the Product or anymember of the public regarding the advisability of investing in securities generally or in the Product Please read the full Disclaimers in relation to the S&P CNX Nifty Indexmember of the public regarding the advisability of investing in securities generally or in the Product. Please read the full Disclaimers in relation to the S&P CNX Nifty Indexin the Scheme Information Document.
Thank youy
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