investment consultancy on analysis of mutual fund industry

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SUMMER TRANING PROJECT ON

ANALYSIS OF MUTUAL FUND INDUSTRY

For

INVESTMENT CONSULTANCY

SERVICES

Submitted for partial fulfillment of award of degree of Masters of

business Administration 2010-11

UNDER THE GUIDANCE

Mr. Dinesh Shukla

Director ICS

SUBMITTED TO: SUBMITTED BY:

Mrs. Shilpee Adhikari Deepak Mishra

Lecturer Dpt. Of Management MBA IIIrd Sem

Roll No.0912370036

SAROJ INSTITUTE OF TECHNOLOGY &

MANAGEMENT, LUCKNOW

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PREFACE

World is now global village and India has good opportunities to show the world through

increasing International trade.

We are being student of Foreign Trade. It is necessary to fill this field as full of opportunities for

International Trade and try to contribute our part to become India as a super power.

For this purpose we are required to take a month internship in organization engaged in the said

field.

Due to above reason I pursue my training at INVESTMENT CONSULTANCY

SERVICES to serve the said purpose to feel the experience of practical world. I have tried

my best to prepare this report based on my experience, understanding exposure and within my

limitation and help from many persons.

Deepak Mishra

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ACKNOWLEDGEMENT

No presentation is the work only of the author. I owe much to the people who have played

significant role in the development of the project. I have immensely benefited from the

comments, observations made by several individuals including Mrs.Shilpee Adhikari, Head of

Department.

My special thanks to Mrs. Shilpee Adhikari for the guidance in preparing this project report.

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Declaration

I Deepak Mishra, a student of MBA IIIrd Semester, at Saroj institute of Technology &

Management Lucknow hereby solemnly declare that the Research project titled ANALYSIS

OF MUTUAL FUND INDUSTRY from INVESTMENTCONSULTANCY SERVICES

, is the outcome of my own Research prepared by me and the same has not been submitted

to any university or institute for the award of any degree .

Date: Deepak Mishra

Place: Roll No.0912370036

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TABLE OF CONTENT

1. Preface

2. Acknowledgement

3. Declaration

4. Certificate of Company

5. Introduction of Industry

6. Macro

7.

1. Introduction of industry

a. Scope company external environment

2. Macro

a. Govt. laws, rules

b. macro economics indicators supporting industry (time element)

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3. Political Environment

a. Social consideration (value, culture, and life style)

b. Demographics

c. Present status

4. Micro

a. Competitors

b. Suppliers

c. Buyers

d. Substitute / by product

e. New entrants

5. Internal analysis

6. Structure

7. Culture

a. Resources, value chain, competencies

8. Scanning

a. Swot analysis

b. Mission, vision, objective (review)

9. Strategies

a. Business

b. Corporate

c. Functional

10.Execution

a. Reconstruction of facilities behavioural and functional issues

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11.Evaluation and analysis

a. Final data (3years)

12.Recommendations

13.Future of industry

14.Conclusions

INTRODUCTION OF INDUSTRY

Mutual Fund

Evolution of Mutual Fund

The first investment trust (now called mutual fund) began in the Netherlands in the early 1800s. The

first in the U.S. was the New York Stock Trust, which started in 1889. Since Boston was the economic

center of the nation until the turn of the century, the majority of funds started thereFidelity, Pioneer

and Putnum Fund, to name a few. A fund that was comprised of both stocks and bonds (the Wellington

Fund) started in 1928 and is still part of Vanguard. As the 20's crashed to a close, there were 10 mutual

funds in the nation.

The Sixties saw the growth in aggressive (high risk) funds that were labeled, in the vernacular of the

times, "hot-shot" or "go-go" funds. They were sexy and fast, there were a hundred of them by the late

Sixties and a lot of people dumped a lot of money in them until the bearish times of 1969 freaked

everybody out: investors yanked out their money and have been kicking themselves ever since, because

some funds increased in value by more than 9,000%.

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Until this time, people had been paying sales commissions on their funds. In the '70s, no-load funds

were invented, and the biggest today. Vanguard Funds, wasfounded in 1977. At the end of the Sixties,

there were nearly 250 different mutual funds;today, they number over 6,000. But here's the thing: the

last time a mutual fund went bankrupt was 1940. And mutual funds often outperform the stock market.

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of the 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, which are as follows:

Phase I (Monopoly of UTI) 1964-87:

This period was marked by the operational of a single institution, UTI, which prepared ground for

the future mutual fund industry.

The first and still most popular, product launched by UTI was unit64. Due to the immense

popularity of unit64, UTI launched was unit64. Another popular scheme, Unit Linked Insurance

Plan (ULIP), was launched in 1971. By the end of June 1974 there were 6-lakh unit holder with

UTI.

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An act of parliament established Unit Trust of India (UTI) in 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 delinked 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. At the end of 1988 UTI had Rs 6700 crores of assets

management.

Phase II (Public Sector Competition) 1987-199

This period was marked by the entry of non-UTI public Sector mutual funds in the market,

bringing in competition. With the opening up of the economy many public sector financial

institutions established mutual funds in India. However, the mutual funds industry remained the

exclusive domain of public sector in this period.

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector 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 followed by Can bank

Mutual fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund

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(Nov 89), Bank of India (Jan 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its

mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of

1993, the mutual fund industry had assets under management of Rs 4700 crores.

Phase III (Entry of Private Sector Fund) 1993-2003:

A new era in the mutual fund industry began with entry of private sector funds in 1993, posing a

serious competition to the existing public sector funds. The first private sector mutual fund to

launch a scheme was the Madras based Kothari pioneer Mutual fund. It launched the open-ended

prima fund in November 1993.

With the entry of private 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 and governed. The erstwhile Kothari pioneer (now merged with Franklin templton)

was the private sector mutual fund registered in July 1993. The 1993 SEBI (mutual Fund)

Regulations were substituted by a more comprehensive and revised mutual fund regulations in

1996. The industry now functions under the SEBI (Mutual Fund) regulations 1996. The number of

mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India

and also the industry was witnessed several mergers and acquisitions. As at the end of January

2003, there were 33 mutual funds with total asset of Rs 1, 21,805 crores.

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Phase IV (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 at the end of January 2003.

The second is the UTI mutual fund LTD, sponsored by SBI, PNB, BOB and LIC. It is registered

with SEBI and functions under the mutual fund regulations. At the end of October 31,2003, there

were 31 funds, which manage asset of Rs 126726 crores under 386 scheme.

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STRUCTURE OF INDIAN MUTUAL FUND

INDUSTRY

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SCOPE OF MUTUL FUND INDUSTRY

A big boom has been witnessed in Mutual Fund Industry in resent times. A large number of

new players have entered the market and trying to gain market share in this rapidly

improving market.

Scope of Mutual Funds has grown enormously over the years. In the first age of mutual

funds,when the investment management companies started to offer mutual funds, choices

were few. Even though people invested theirmoneyin mutual funds as these funds offered

them diversified investment option for the first time. By investing in these funds they were

able to diversify their investment in common stocks, preferred stocks, bonds and other

financial securities. At the same time they also enjoyed the advantage of liquidity. With

Mutual Funds, they got the scope of easy access to their invested funds on requirement.

But, in todays world, Scope of Mutual Funds has become so wide, that people sometimes

take long time to decide the mutual fund type, they are going to invest in. Several

Investment Management Companies have emerged over the years who offer various types

of Mutual Funds, each type carrying unique characteristics and different beneficial features.

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COMPANY EXTERNAL ENVIRONMENT

MACRO

GOVERNMENT LAW, RULES

Rule of regulators in India for Mutual fund

Regulation

The set up of a mutual fund is similiar to that of a corporation, except that they receive more

favorable tax exclusions under the U.S. Internal Revenue Code of 1986. Pursuant to the Investment

Company Act (ICA) of 1940, U.S. mutual funds are required to register with the Securities and

Exchange Commission (SEC) and to price daily the net asset value (NAV) of their assests. The

ICA also requires that a mutual fund investment be redeemable upon demand by an investor.

Disclosure is regulated by the SEC, which mandates that investors be provided with a prospectus

prior to investing and also receive periodic reports and an annual proxy ballot. Under the

Investment Advisors Act of 1940, investment advisors of mutual funds are required to register with

the SEC. Sales and marketing practices of mutual funds by the investment management company

are regulated by the National Association of Securities Dealers (NASD).SEBI-The Capital Market

Regulator. The Government of India constituted Securities and exchange board of India ,by an act

of Parliament in 1992.SEBI requires all mutual funds to be registered with them.

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RBI the Money Market regulators

RBI as supervisor of Bank owned Mutual Fund.

Ministry of Finance ,Securities Appellate Tribunal

Company law Board Department of Company Affairs and Registrar Of Company

Stock Exchanges

Office of the Trustee

SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

Mumbai, the June 5, 2009

SECURITIES AND EXCHANGE BOARD OF INDIA

(MUTUAL FUNDS) (SECOND AMENDMENT) REGULATIONS, 2009

No. LAD- NRO/GN/2009-10/07/165404.- In exercise of the powers conferred by section

30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby

makes the following regulations to further amend the Securities and Exchange Board of India

(Mutual Funds) Regulations, 1996, namely :-

1. These regulations may be called the Securities and Exchange Board of India (Mutual

Funds) (Second Amendment) Regulations, 2009.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996

(i) in Seventh Schedule,-

(a) in item (1), in the first Proviso, the words and money market instruments shall

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be omitted;

(b) after item 1A, a new item 1B shall be inserted, namely:-

1B. No mutual fund scheme shall invest more than thirty percent of its net assets in

money market instruments of an issuer:

Provided that such limit shall not be applicable for investments in Government

securities, treasury bills and collateralized borrowing and lending obligations.

C. B. BHAVE

CHAIRMAN

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Macro economics indicators supporting industry

The macroeconomic factors are the major determinant of the growth of an economy. Analyzing the

macroeconomic factors gives an idea of the current economy position and a projection of the future

of the economy based on which we decide the future of a particular industry. The various

macroeconomic factors responsible for mutual fund industry in India are as follow:

Population

India's population is young, with 54% under the age of 25 and 80% under 45 and the percentage of

working population is rising rapidly.

Source: UN, CLSA Global Growth in Working-Age Population (15-64) over next 5 Yrs(bn)

A younger and working age population means

* Income levels to rise

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* Higher savings and consequent flows into equity markets

* Increased household consumption

* Significant increase of labor supply

* Large population and favourable demographics

Movement in Global Markets

If we see the position of BSE Senex as compared to other major indexes in the world then we find

that BSE has been the best performer.

Source: www.Bloomberg.com

This is the major factor which has contributed to mutual fund emerging as a great investment

vehicle for every category of investors and made mutual fund one of the most preferable way to

generate return. Mutual fund invest in equity of various companies for long time and long

investment in equities can help investors in generating good returns If we look the graph then we

can say that equities have the potential to deliver good return if we invest for long term.

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India Potential 'Services Capital' of the World

With services becoming increasingly tradable, India is well placed in terms of costs and skill

sets and over the past 13 years. From 1991-2005, India's services sector growth has averaged

7.6% year compared with 5.7% for manufacturing. Figure-3 shows the composition of GDP from

which it is clear that composition of service and industry sector has increased in GDP over the

years.

Source: www.rbi.org.in

Inflation affects the Return

Inflation has always been one of the most important macroeconomic factor affection the country. It

represents the general price level of the country Inflation has always lowered the actual return from

bank savings except the year 2002

* Returns on safe fixed income options such as bank deposits have been moderating.

*Assured' return products are being phased out.

* Inflation and taxes are impacting returns.

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Source: Bankdeposit rate-RBI Inflation- CitiGroup

Impact of Various Changes

With the increase in global trade and finance, there is a need for level playing field as the WTO

has laid down common rules to facilitate smooth trade among member countries irrespective of

their size. Fall out of globalization is the increase in volatility and vulnerability of markets. This

environment crisis also spreads quickly and there is a greater danger of contagion than even before.

In order to detect timely fault lines in the global financial markets and put in place appropriate

corrections, the adoption of international standards and global benchmark becomes important. It is

in this context, effective management of risks assumes critical importance to all the constituents of

the financial sector and Indian mutual funds industry is not an exception. Mutual funds have been a

significant source of investment in both government and corporate securities. It has been for

decades the monopoly of the state with UTI being the key player, with invested funds exceeding

Rs.300 bn.(US$ 10 bn.). The state-owned insurance companies also hold a portfolio of stocks.

Presently, numerous mutual funds exist, including private and foreign companies.

Banks-mainly state-owned too have established Mutual Funds (MFs). Foreign participation in

mutual funds and asset management companies is permitted on a case by case basis. UTI, the

largest mutual fund in the country was set up by the government in 1964, to encourage small

investors in the equity market. UTI has an extensive marketing network of over 35,000 agents

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spread over the country. The UTI scrips have performed relatively well in the market, as compared

to the Sensex trend. However, the same cannot be said of all mutual funds. But Indian households

seem uncomfortable with the concept of market-related returns which is clear from Table-1 which

shows the composition of financial savings among Indian household.

From Table-1 it is clear that Indian households save 4.9% of their financial savings on shares,

debentures and mutual fund. If we find saving on mutual fund then it will come around 2% which

is very less as compared to mutual fund investors in USA who save around 30% of their financial

savings on mutual fund. This is because of their less risk appetite nature.

In parallel if we see Figure-1 above then it shows that mutual fund business is growing

tremendously in India. This is only because some AMCs have done very well in the market. So it

is clear that if AMCs do well in the market then the mindset of Indian investors could be change

who think stock market investment very risky and who are still saving around 47% of their

financial savings on fixed deposit.

Table-1

Area of Investment Rs. Crs. % to Financial Saving

Deposits (banks & others) 278985 47.4

Shares, debentures & mutual funds 29008 4.9

Investments in small savings 72364 12.3

Insurance 83340 14.2

Others (Investments in Government Securities (2.4%),Currency (8.8%), Provident and Pension Funds 10%)

124959 21.23

Source: www.rbi.org.in

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Source: RBI, 2005-06Annual Report

There are four phases of mutual fund industry in India, first from 1964-1987, second from 1987 to

1993 when public sector companies entered into the business and the fourth phase is 2003

onwards. The graph shows that there is a tremendous increase in the amount of assets managed

through mutual fund and with the entry of more and more foreign AMCs in India; this industry has

a bright future in India. In fourth phase of the mutual fund industry there is a sharp increase in the

business of AMCs Now investors have so many schemes with different objective and thus getting

schemes according to their investment objective.

Table-2 and Table-3 show the pattern of worldwide total net assets of mutual fund and worldwide

number of mutual fund from 1998 to 2005 respectively. From Table-2 it is clear that total net

assets of mutual fund has grown by 366.85% in India between 1998-2005 as compared to 85.22%

growth in worldwide, 66.42% in America, 118.85% in Europe and 99.525% in Asia and pacific

total net assets of mutual fund in same time period. Although the total figure is very less as

compared to other developed countries but the growth rate if high. This is because of less

knowledge about mutual fund among Indian investors. Similarly from Table-3 it is clear that total

number of mutual funds has increased by 358.76% in India from 1998-2005.

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Political Environment

Changes in government policy and political decision can change the investment environment. They

can create a favorable environment for investment or vice versa.

Social consideration (value, culture, and life style)

Socially responsible investing, also known as socially-conscious or ethical investing, describes an

investmentstrategy which seeks to maximize both financial returnand social good.

In general, socially responsible investors favor corporate practices that promote environmental

stewardship,consumer protection, human rights, and diversity. Some (but not all) avoid businesses

involved in alcohol, tobacco, gambling, weapons, the military, and/or abortion. The areas of

concern recognized by the SRI industry can be summarized as environment, social justice, and

corporate governance (ESG).

Modern applications

Socially responsible investing (SRI) is a booming market in both the US and Europe. Assets in

socially screened portfolios climbed to $2.71 trillion in 2007, an increase over the $2.16 trillion

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counted in 2003 according to the Social Investment Forums 2007 Report on Socially Responsible

Investing Trends in the United States. From 2005-2007 alone, SRI assets increased more than 18

percent while the broader universe of professionally managed assets increased less than 3 percent.

As of 2007 about one out of every nine dollars under professional management in the United States

is involved in socially responsible investing11 percent of the $25.1 trillion in total assets under

management tracked in Nelson Informations Directory of Investment Managers.

Research estimates by financial consultancy Celent predict that the SRI market in the US will

reach $3 trillion by 2011. The European SRI market grew from 1 trillion in 2005 to 1.6 trillion

in 2007.[

Government-controlled funds

Government-controlled funds such aspension funds are often very large players in the investment

field, and are being pressured by the citizenry and by activist groups to adopt investment policies

which encourage ethical corporate behavior, respect the rights of workers, take environmental

concerns into account, and generally avoid violations of human rights. One outstanding

endorsement of such policies is The Government Pension Fund of Norway, which is mandated to

avoid "investments which constitute an unacceptable risk that the Fund may contribute to unethical

acts or omissions, such as violations of fundamental humanitarian principles, serious violations of

human rights, gross corruption or severe environmental damages." [14]

Many pension funds are currently under pressure to disinvest from the arms company BAE

Systems, partially due to a campaign run by the Campaign Against Arms Trade (CAAT).[15]

Liverpool council has passed a successful resolution to disinvest from the company,[16] however a

similar attempt by the Scottish Green Party in Edinburgh was blocked by the Liberal Democrats

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Mutual funds

Socially responsible mutual funds counted by the 2003 Trends Report increased in number to 200

in 2003, up from 181 in 2001, 168 in 1999, and 139 in 1997. Assets in socially screened mutual

funds identified by the Trends Report grew by 19 percent, to $162 billion, up from $136 billion in

2001. More than half (51 percent) of this growth is attributed to both newly identified and newly

created funds, and 49 percent represents growth in existing assets. In terms of attracting investor

assets, socially screened mutual funds grew on a net basis in 2002 while the rest of the mutual fund

industry contracted. According to Lipper, socially responsible mutual funds saw net inflows of

$1.5 billion during 2002. Over the same time, US diversified equity funds posted outflows of

nearly $10.5 billion. According to the Social Investment Forum, socially responsible mutual funds

have grown from $12 billion in 1995 to $179 billion, far outpacing the overall growth of mutual

funds in the US.]

Social Investment Forum maintains charts describing the socially responsible mutual funds offered

by its member firms.

The socially responsible screening criteria of SFI member firms' mutual funds:

Separately managed accounts

According to the 2007 Report on Socially Responsible Investing Trends in the United States, there

are more than $1.9 trillion in socially screened separate accounts, a 28 percent increase since 2005.

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Assets managed for institutional investors comprise $1.88 trillion of this amount, and assets for

high-net-worth clients comprise $39.5 billion.

Shareholder advocacy

Between 2001 and 2003, shareholder advocacy activity increased by 15 percent, growing from 269

social and crossover resolutions (which combined aspects of both social and traditional corporate

governance issues) filed in 2001 to 310 in 2003. Likewise, the average percentage of votes

received on these resolutions increased from 8.7 percent in 2001 to 11.4 percent in 2003. Of the

total $2.15 trillion in all socially screened portfolios, $441 billion are in portfolios controlled by

investors who are also involved in shareholder advocacy on various social issues.

Shareholder resolutions are filed by a wide variety of institutional investors, including public

pension funds, faith-based investors, socially responsible mutual funds, and labor unions. In 2004,

faith-based organizations filed 129 resolutions, while socially responsible funds filed 56

resolutions

Regulations governing shareholder resolutions vary from country to country. In the United States

they are determined by the Securities and Exchange Commission, which also requires mutual

funds to disclose how they voted on behalf of their investors[36]. U.S. shareholders have organized

various groups to facilitate jointly filing resolutions. These include the Council of Institutional

Investors, the Interfaith Center on Corporate Responsibility, and the Social Investment Forum.

Community investing

Community investing, a subset of Socially Responsible Investing, allows for investment directly

into community based organizations. Community investing institutions use investor capital to

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finance or guarantee loans to individuals and organizations that have historically been denied

access to capital by traditional financial institutions. These loans are used for housing, small

business creation, and education or personal development in the U.S., or are made available to

local financial institutions abroad to finance international community development. The

community investing institution typically provides training and other types of support and

expertise to ensure the success of the loan and its returns for investors.

Community investing climbed 84 percent between 2001 and 2003. Assets held and invested locally

by community development financial institutions (CDFIs) based in the United States totaled $14

billion in 2003, up from $7.6 billion in 2001.

Demographics

The demographics of India are remarkably diverse. India is the second-largest populated country

in the world with over 1.18 billion people (estimate for April, 2010) and consists of more than one-

sixth of the world's population. It contributes 17.31% of the world's population and projected that

India will be the largest populated countryby 2025 surpassing China, and by 2050 it will have over

1.6 billion people.[1][2] India has more than two thousandethnic groups, and every majorreligion is

represented, as are four major families of languages (Indo-European, Dravidian, Austro-Asiatic

and Tibeto-Burman languages) as well as a language isolate (theNihali language spoken in parts

ofMaharashtra).

Further complexity is lent by the great variation that occurs across this population on social

parameters such as income and education. Only the continent of Africa exceeds the linguistic,

genetic and cultural diversity of the nation of India.

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India occupies 2.4% of the world's land area and supports over 17.5% of the world's population.

India has more arable land area than any country except the United Statesand more water area than

any country except Canada and the United States. Indian life revolves mostly around agriculture

and allied activities in small villages, where the over whelming majority of Indians live. As per the

2001 census, 72.2% of the population lives in about 638,000 villages and the remaining 27.8%

lives in more than 5,100 towns and over 380 urban agglomerations.

MICRO

Competitors

Suppliers

Buyers

Substitute / by product

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New entrants

Micro

Competitors, Suppliers, Buyers , Substitute / by product, New entrants

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Buyers

In the context of general equities, "Prepare for a very large buyer." Backdating In the context of

mutual funds,

NEW ENTRANTS

- Many of the new entrants, who got their licenses in 2008 and 2009, took advantage of this

downturn, by attracting available talent at a substantially lower cost. However, the period

witnessed large scale resistance and apprehension from candidates to experience untested waters

and move into new ships.

- The mutual fund industry in India today is at a threshold of some sorts. While the outlook

continues to be extremely positive in terms of AUM growth; ability to maintain profitability,

building investor trust, evolving innovative systems and products, devising smarter strategies to

reach out to a wider customer base through continuous customer engagement, enhancing financial

literacy and most importantly, building a respectable brand would distinguish the front-runners

from the also-rans.

Going forward, with pressure on capital, growth is going to be lower. As a result, retaining key

talent and motivating them would be a challenge the industry has to contend with. As the CEO of

one of the leading AMCs puts it "Talent always comes as a result of the organisation being able to

show both professional and financial growth to an employee. With expansion plans being put on

hold, it may be a challenge for the AMCs to show growth on both fronts to the people in near

term."

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Talent Engagement Key Drivers

With economic activity coming back to it's normal state, businesses all over are feverishly

competing for people. Not even companies with established global experience can depend on past

success in meeting their staffing needs.

Therefore, companies should understand the factors that differentiate the successful from the rest

in retaining the talent in a state of deep engagement.

Brand

Employees are more attuned to brand especially when brand is associated with leadership, the kind

that challenges employees to develop themselves as leaders and to help build a great company that

plays a global stage.

Opportunity

Opportunity implies accelerated career track to senior positions. High potential employees often

make lateral moves as long as skills and experience, is in sync with market growth.

Purpose

Candidates / Employees prefer a company with a new business model, which can contribute

towards new growth and economy

Culture

Employees must be rewarded for reasons of merit. The ability of an organisation to identify,

develop, engage and grow the right talent is central to inculcating a high potential culture. This

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ensures healthy competition as people in the organisation become aware they are critical to the

company's success.

Brand, opportunity and purpose can create competing promises but in such a competitive market

the temptation is to over promise just to get people in the door. Failure to deliver will hurt current

employees and have an adverse impact in attracting potential employee.

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INTERNAL ANALYSIS

THE MUTUAL FUND INDUSTRY:

INTERNAL AND EXTERNAL FACTORS OF PERFORMANCE

Due to the great transparency and quality of financial reporting, the mutual fund industry has been

subject to a large amount of research, which has over time considerably extended our knowledge

of the main elements of the industry. Issues like performance measurement, style, managers

compensation have been explored by many contributions. In some cases the overall picture is clear.

Some issues, however, remain obscure due to contrasting theoretical results. This conference

brings together original pieces of research, which propose new interpretations of known facts and

at the same time raise new questions. Some of the most relevant questions discussed: Are enhanced

index funds efficient? How do we efficiently and effectively measure style by using portfolio data?

What is the relevance of learning? How are hedge funds different from mutual funds? How do

managers financial incentives affect portfolio and performance? Are there economies of scale?

What is the relevance of factors like past performance, industry competition and location in

financial centres? These are among the most important questions under discussion by investors,

researchers, practitioners and regulators. This conference is likely to provide points of interest to

most people looking at this industry from various perspectives.

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Structure

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COMPANY PROFILE

RELIANCE MUTUAL FUND

Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Assets Under

Management (AUM) of Rs. 93,532 crore (AUM as on 29th Feb 08) and an investor base of over

65.73 Lakhs. Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one

of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio

of products to meet varying investor requirements and has presence in 115 cities across the

country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer

service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by

Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which

holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority

shareholders."Reliance Capital Ltd. is one of Indias leading and fastest growing private sector

financial services companies, and ranks among the top 3 private sector financial services and

banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management,

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life and general insurance, private equity and proprietary investments, stock broking and other

financial services.

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Vision Statement

To be a globally respected wealth creator with an emphasis on customer care and a culture of good

corporate governance.

Mission Statement

To create and nurture a world-class, high performance environment aimed at delighting our

customers.

Corporate Governance

Our Corporate Governance Policy:

Reliance Capital Asset Management Ltd. has a vision of being a leading player in the Mutual Fund

business and has achieved significant success and visibility in the market. However, an imperative

part of growth and visibility is adherence to Good Conduct in the marketplace.

At Reliance Capital Asset Management Ltd., the implementation and observance of ethical

processes and policies has helped us in standing up to the scrutiny of our domestic and

internationalinvestors.

Management :

The management at Reliance Capital Asset Management Ltd. is committed to good Corporate

Governance, which includes transparency and timely dissemination of information to its investors

and unit holders. The Board of Directors of RCAM is a professional body, including well-

experienced and knowledgeable Independent Members. Regular Audit Committee meetings are

conducted to review the operations and performance of the company.

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Employees :

Reliance Capital Asset Management Ltd. has at present, a code of conduct for all its officers. It has

a clearly defined prohibition on insider trading policy and regulations. The management believes in

the principles of propriety and utmost care is taken while handling public money, making proper

and adequate disclosures. All personnel at Reliance Capital Asset Management Ltd are made

aware of their rights, obligations and duties as part of the Dealing Policy laid down in terms of

SEBI guidelines. They are taken through a well-designed HR program, conducted to impart work

ethics, the Code of Conduct, information security, Internet and e-mail usage and a host of other

issues. One of the core objectives of Reliance Capital Asset Management Ltd. is to identify issues

considered sensitive by global corporate standards, and implement policies/guidelines in

conformity with the best practices as an ongoing process. Reliance Capital Asset Management Ltd.

gives top priority to compliance in true letter and spirit, fully understanding its fiduciary

responsibilities.

Sponsors

Reliance Capital limited:

Corporate & Registered Office:

Reliance Capital Ltd. H Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairne, Navi

Mumbai - 400 710.Tel. 022 30327000, Fax. 022 30327202."Reliance Mutual Fund schemes

are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital

Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being

held by minority shareholders.", the sponsor. Reliance Mutual Fund (RMF) has been sponsored by

Reliance Capital Ltd (RCL). The promoter of RCL is AAA Enterprises Private Limited. Reliance

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Capital Limited is a Non Banking Finance Company. Reliance Capital Limited is one of the

Indias leading and fastest growing financial services companies, and ranks among the top three

private sector financial services and banking companies, in terms of networth. Reliance Capital has

interests in asset management and mutual funds, life and non-life insurance, private equity and

proprietary investments, stock broking and other activities in the financial services sector. The net

worth of RCL is Rs. 5,161.23 crore as on March 31, 2007. Given below is a summary of RCLs

financials:

Particulars

(Rs.in crores)

2006-07 2005-06 2004-05 2003-04

Total Income 883.86 652.02 295.69 356.79

Profit Before Tax 733.18 550.61 111.21 105.79

Profit After Tax 646.18 537.61 105.81 105.79

Reserves & Surplus 4915.07 3849.58 1310.08 1271.84

Net Worth 5161.23 4122.46 1437.92 1399.81

Earnings per Share (Rs.) 28.39

(Basic + Diluted)

29.74

(Basic + Diluted)

8.31

(Basic + Diluted)

8.31

(Basic + Diluted)

Book Value per Share

(Rs.)

210.12 112.95 112.95 109.96

Dividend (%) 35% 30% 30% 29%

Paid up Equity Capital 246.16 223.40 127.84 127.84

Reliance Capital Ltd. has contributed Rupees One Lac as the initial contribution to the corpus for

the setting up of the Mutual Fund. Reliance Capital Ltd. is responsible for discharging its functions

and responsibilities towards the Fund in accordance with the Securities and Exchange Board of

India (SEBI) Regulations. The Sponsor is not responsible or liable for any loss resulting from the

operation of 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 other accretions and additions to the

corpus.

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THE ASSET MANAGEMENT COMPANY

Reliance Capital Asset Management Limited (RCAM), a company registered under the Companies

Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.Reliance

Capital Asset Management Limited (RCAM) was approved as the Asset Management Company

for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 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 authorized to act as Investment Manager of

Reliance Mutual Fund. The networth of the Asset Management Company including preference

shares as on September 30, 2007 is Rs.152.02 crores. Reliance Mutual Fund has launched thirty-

five Schemes till date, namely :"Reliance Mutual Fund schemes are managed by Reliance Capital

Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the

paid-up capital of RCAM, the balance paid up capital being held by minority

shareholders."Reliance Capital Asset Management Limited (RCAM) was approved as the Asset

Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated

June 30, 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 Reliance Mutual Fund. The networth of the Asset Management Company including

preference shares as on March 31, 2005 is Rs.113.59 crores. Reliance Mutual Fund has launched

thirty-two Schemes till date, namely :

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Reliance Growth Fund (September 1995) Reliance Vision Fund (September 1995)

Reliance Income Fund (December 1997) Reliance Liquid Fund (March 1998)

Reliance Medium Term Fund (August 2000) Reliance Short Term Fund (December 2002)

Reliance Gilt Securities Fund (July 2003) Reliance Banking Fund (May 2003)

Reliance Monthly Income Plan (December 2003) Reliance Diversified Power Sector Fund (March

2004)

Reliance Pharma Fund ( May 2004) Reliance Floating Rate Fund (August 2004)

Reliance Media & Entertainment Fund

(September 2004)

Reliance NRI Equity Fund (October 2004)

Reliance NRI Income Fund (October 2004) Reliance Index Fund (February 2005)

Reliance Equity Opportunities Fund (February

2005)

Reliance Regular Savings Fund (May 2005)

Reliance Liquidity Fund (June 2005) Reliance Tax Saver (ELSS) Fund (July 2005)

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

Reliance Fixed Horizon Fund I (August 2006) Reliance Fixed Horizon Fund (April 2006)

Reliance Fixed Horizon Fund III (March 2007) Reliance Fixed Horizon Fund II (November

2006)

Reliance Liquid Plus Fund (March 2007) Reliance Long Term Equity Fund (November

2006)Reliance Long Term Equity Fund (Nov 2006) Reliance Interval Fund (March 2007)

Reliance Fixed Horizon Fund - IV (August 2007) Reliance Fixed Horizon Fund - V (September

2007)

Reliance Gold Exchange Traded Fund (October

2007)

RCAM has been registered as a portfolio manager vide SEBI Registration No. INP000000423 and

renewed effective 1st August, 2003.RCAM has commenced these activities. It has been ensured

that key personnel of 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

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activities. As per SEBI Regulations, it will further ensure that AMC meets the capital adequacy

requirements, if any, separately for each such activity.RCAM has been appointed as the Investment

Manager of "Reliance India Power Fund", a Venture Capital Fund registered with SEBI vide

Registration no.IN/VCF/05-06/062 dated June 16, 2005. However, there is no conflict of interest

between various business activities carried on by Asset Management Company.

Custodian

Deutsche Bank, AG

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.

Deutsche Bank AG, the Custodian shall, inter alia:

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

b) Keep Securities and other instruments belonging to the Scheme in safe custody.

c) Ensure smooth inflow/outflow of securities and such other instruments as and when necessary,

in the best interests of the unitholders.

d) Ensure that the benefits due to the holdings of the Mutual Fund are recovered and

e) Be responsible for loss of or damage to the securities due to negligence on its part on the part of

its approved agents.

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Registrar

Reliance Capital Asset Management Limited has appointed M/s. Karvy Computershare Pvt.

Limited to act as the Registrar and Transfer Agent to the Schemes of Reliance Mutual Fund. M/s.

Karvy Computershare Pvt. Limited (KCL) having their office at Karvy Plaza .21, Road No. 4,

Street No.1, Adjacent to Rainbow Hospital, Banjara Hills, Hyderabad - 500 034, is a Registrar and

Transfer Agent registered with SEBI under registration no. INR000000221. Reliance Capital Asset

Management Ltd. 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 Schemes, KCL will accept and process

investor's 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.

Trustees

Reliance Capital Trustee Co. Limited

Regd. Office : Reliance House, Near Mardia Plaza, Off CA Road, Ahmedabad 380006.

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Corporate Office : Express Building, 4th & 6th Floor, 14-'E' - Road, Above Satkar Hotel, Opp.

Churchgate Station, Churchgate, Mumbai 400 020. Tel: 30414800 Fax: 30414818.

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

Act, 1956, has been appointed as the Trustee to the Fund vide the Trust Deed dated April 25, 1995

executed between the Sponsor and the Trustee.

The Management Team

Board of Directors

Mr. Amitabh Chaturvedi

Mr. Kanu Doshi

Mr. Manu Chadha

Mr. Sushil Tripathi

Management Team

Mr. Vikrant Gugnani

Mr. Sundeep Sikka

Mr. Madhusudan Kela

Mr. Amitabh Mohanty

Equity Fund Manager

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Mr. Sunil B. Singhania

Mr. Ashwani Kumar

Mr. Shailesh Raj Bhan

Mr. Shiv Chanani

Debt Fund Manager

Ms. Anju Chhajer

Mr. Arpit Malaviya

Head of Departments

Marketing Communication

Mr.Rajat Johiri

Finance and Accounts

Mr.Sanjay Wadhwa

Human Resource Development

Mr.Rajesh Derhgawen

Sales and Distribution

Mr.Himanshu Vyapak

Auditors

Statutory Auditor to the Schemes of Reliance Mutual Fund :

Haribhakti & Co. (Chartered Accountants)

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INTERNAL AUDITOR TO THE SCHEMES OF RELIANCE MUTUAL FUND:

Price Waterhouse Coopers. (Chartered Accountants)

Statutory Auditors to the Asset Management Company

Dalal & Shah.( Chartered Accountants)

Statutory Auditors to the Trustee Company

M/s. Malpani & Associates .(Chartered Accountants)

Bankers to the Schemes of Reliance Capital Asset Management

HDFC Bank Limited

ABN Amro Bank

ICICI Bank Limited

Citibank N. A.

CITI Channel & Citi Wealth - only for online

Deutsche Bank AG

Standard Chartered Bank

UTI Bank

IDBI Bank

HSBC Bank

Ing Vysya Bank

Kotak Mahindra Bank

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http://www.hdfcbank.com/http://www.abnamro.co.in/http://www.icicibank.com/http://www.citibank.com/us/index.htmhttp://www.citibank.com/us/index.htmhttp://www.db.com/http://www.standardchartered.com/in/http://www.utibank.com/http://www.idbibank.com/http://www.hsbc.co.in/in/home2.htmhttp://www.ingvysyabank.com/http://www.hdfcbank.com/http://www.abnamro.co.in/http://www.icicibank.com/http://www.citibank.com/us/index.htmhttp://www.db.com/http://www.standardchartered.com/in/http://www.utibank.com/http://www.idbibank.com/http://www.hsbc.co.in/in/home2.htmhttp://www.ingvysyabank.com/


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Awards and Achievements

Reliance Mutual Fund won the prestigious "Fund House of the Year" award in the

Equity category according to a survey by ICRA Online Ltd.

Reliance Capital Asset Management Ltd. won the Asia Asset Management Award

2007.

Reliance Capital Asset Management Ltd. won the Social & Corporate Governance

Award 2007.

Reliance Mutual Fund has been awarded the "NDTV Business Leadership Award

2007" in the Mutual Fund category.

Reliance Mutual Fund has been awarded Best Fund House" (Runners up) for 2007.

CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2007.

CNBC TV18 - CRISIL Mutual Fund of the Year Awards 2006 .

ICRA Mutual Funds Awards 2007.

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Reliance Media & Entertainment Fund

Type of the scheme :An open-ended Media and Entertainment Sector Scheme.

Investment Objective :The primary investment objective of the scheme is to seek to generate

consistent returns by investing in equity/equity related or fixed income securities of media &

entertainment and other associated companies

Assets Allocation Pattern of the schemes :

Types of Instruments Assets Allocation ( % of Net Assets )

Minimum Most Likely Maximum

Equity and Equity

related Securities

0 % 80 % 100 %

Debt & Money Market

Instruments with

average Maturity of 5

to 10 years.

0 % 20 % 100 %

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Plans and Options

Growth Plan Dividend Plan

Growth & Bonus Option Dividend Payout & Re-investment Option

Bench Mark Index : S & P CNX Media & Entertainment Index

Name of the Fund Manager : Mr. Sailesh Raj Bhan

Minimum Application Amount/Number of units :

Resident Indians Rs 5000

Non Resident Indians Rs 5000

Performance of the schemes: data as on 30 March 2007

Period Schemes Returns

%

Benchmark Return

%

Last 1 year 29.02 42.68

Return Since

Inception

43.28 43.07

Past Performances may or may not be sustained in future

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Expenses of the schemes :

Load Structure:

Entry Load %

For Subscription below Rs 2

crore

2.25 %

For Subscription of Rs 2 Cr &

above but below Rs 5 Cr

1.25 %

For Subscription of Rs 5 Cr &

above

Nil

Exit Load Nil

Reliance Banking Fund

Type of the scheme :An open-ended Banking Sector Scheme.


continuous returns by actively investing in equity/equity related or fixed income securities of

banks.

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Types of instruments Allocation

(% of Net Assets)

Equity and Equity Related Instruments 0-100 %

Debt and Money Market Instruments 0-100 %

Plans and Options



Bench Mark Index : S & P CNX Banks Index

Name of the Fund Manager : Mr. Sunil Singhania




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Period Schemes

Returns %

Benchmark

Return %

Last 1 year 14.60 15.20

Last 3 year 26.17 23.98

Return Since

Inception

39.23 37.64


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Load Structure:

Entry Load %

For Subscription below Rs 2 crore 2.25 %For Subscription of Rs 2 Cr & above but

below Rs 5 Cr

1.25 %

For Subscription of Rs 5 Cr & above Nil

Exit Load Nil

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RELIANCE VISION FUND

Type of the scheme :An open-ended Equity Growth Scheme.

Investment Objective :The primary investment objective of the scheme is to achieve long term

growth of capital by investment in equity related securities through based investment approach.

Assets Allocation Pattern of the schemes:


(% of Net Assets)

Equity and Equity Related Instruments At least 60 %

Debt and Money Market Instruments Up to 40 %

Plans and Options


Growth & Bonus Option Dividend Payout & Re-

investment Option

Bench Mark Index : BSE 100

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Name of the Fund Manager :


Resident Indians Rs 5000Non Resident Indians Rs 5000

And in multiples of Re 1/-thereafter for both plans.



%

Benchmark Return

%

Last 1 year 10.04 11.70

Last 3 year 39.49 30.91

Last 5 year 54.35 30.81

Return Since

Inception

27.97 12.88


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Load Structure:

Entry Load %

For Subscription below

Rs 2 crore

2.25 %

For Subscription of Rs 2

Cr & above but below Rs

5 Cr

1.25 %


Cr & above

Nil

Exit Load Nil

Reliance NRI Equity Fund

Type of the scheme: Anopen-ended Diversified Equity Scheme.

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Investment Objective: The primary investment objective of the scheme is to seek to generate

optimal returns by investing in an equity or equity related instruments primarily drawn from the

Companies in the BSE 200 index.



(% of Net Assets)


Debt and Money Market Instruments 0-35 %

Plans and Options



Bench Mark Index : BSE 200 Index

Name of the Fund Manager : Mr. Ashwani Kumar





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%

Benchmark Return

%

Last 1 year 25.11 10.58

Return Since

Inception

42.92 33.59



Load Structure:

Entry Load %


Rs 2 crore

3.00 %



5 Cr

2.00 %

For Subscription of Rs 5 Nil

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Cr & above

Exit Load Nil

Reliance Equity Opportunities Fund

Type of the scheme :An open-ended Diversified Equity Scheme.


capital appreciation & provide long-tem growth opportunities by investing in a portfolio

constituted of equity securities & equity related securities and the secondary objective to generate

consistent returns by investing in debt and money market securities.



(% of Net Assets)


Debt and Money Market Instruments* Up to 25 %

*include up to 25 % of the corpus in securitized debt

Plans and Options



Bench Mark Index : BSE 100 Index

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%

Benchmark Return

%

Last 1 year 11.51 11.70

Return Since

Inception

42.71 37.61


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Load Structure:

Entry Load %


Rs 2 crore

2.25 %



5 Cr

1.25 %


Cr & above

Nil

Exit Load Nil

Reliance Tax Savers (ELSS) Fund

Type of the scheme :

An open-ended equity linked savings Scheme.

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Investment Objective :

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

appreciation form a portfolio that is invested predominantly in equity and equity related

instruments.



(% of Net Assets)


Debt and Money Market Instruments Up to 20 %

Plans and Options





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Rs 500 /- and in multiple of Re 500 /- thereafter.



%

Benchmark Return

%

Last 1 year 0.53 11.70

Return Since

Inception

21.01 31.42

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Load Structure:

Entry Load %For Subscription below

Rs 2 crore

2.25 %



5 Cr

1.25 %


Cr & above

Nil

Exit Load Nil

Reliance Growth Fund

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Type of the scheme :

An open-ended Equity Growth Scheme.

Investment Objective :

The primary investment objective of the scheme is to achieve long term growth of capital by

investment in equity and equity related securities through a research based investment approach.



(% of Net Assets)


Debt and Money Market Instruments Up to 35 &

Plans and Options





Minimum Application Amount/Number of units:

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Period Schemes Returns % Benchmark

Return %

Last 1 year 14.11 11.70

Last 3 year 51.81 30.91

Last 5 year 60.72 30.81

Return Since

Inception

32.79 12.88

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Past Performances may or may not be sustained in future.

Expenses of the schemes:

Load Structure:

Entry Load %

For Subscription below Rs

2 crore

2.25 %

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5 Cr

1.25 %


Cr & above

Nil

Exit Load Nil

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MUTUAL FUND AND HEDGE FUND ACT, 2008

Minimum Competency Requirements

1. Introduction

The Mutual Fund and Hedge Fund Act requires that license applicants are fit and proper to

undertake the activities requiring a license under the Act.

The Fit and Proper Guidelines issued by the Central Bank outlines the criteria the bank will take

into account in determining the fitness and propriety of an applicant. Paragraph 5.1 of the Fit and

Proper Guidelines provides that an applicant has to demonstrate that it is competent to carry out the

licensed activity efficiently and effectively. One component of the competency criteria is the

possession of necessary qualification, knowledge and experience by key personnel of applicant

entities.

This Guidance Note is an elaboration of the Central Banks policy on the educational and

experience requirements expected of individuals employed by applicants to carry out the regulated

activities for and on its behalf.

This Guidance Note is not intended to be comprehensive nor replace or override any legislative

provisions. Applicants are advised to read the guidance note in conjunction with the Act, the Fit

and Proper Guidelines and any other guidelines the Central Bank may issue from time to time.

Unless the context precludes such construction, guidance applicable to a license applicant should

be construed to apply to a license holder.

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2. Application

These guidelines are to be applied by the Central Bank when determining the competency of;

(a) The directors and officers of an entity applying to be licensed as a mutual fund;

(b) The directors and officers of an entity applying to be licensed as a mutual fund

administrator.

3. Qualification and Experience Requirements

The individuals mentioned above must be able to demonstrate that he/she has the minimum

competencies set out in Annex .

To prove that an individual has the necessary competence one of the following options must be

met:

Option 1

Individuals must meet (a) and (b).

Possess an industry qualification recognized by the Central Bank ; and

Have the equivalent of two years relevant industry experience.

Option 2


Possess a degree in a relevant field of study such as finance, business, economics, accounting,

commerce etc from institutions recognized by the Seychelles

(a) Qualification

(a) Qualification

(b) Experience

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Qualification Authority or a recognized industry qualification; and

Have the equivalent of two years relevant industry experience.

Option 3


Possess a degree in areas not directly related to financial services; and

Have the equivalent of five years relevant industry experience.

Option 4

Individuals who do not have formal qualifications as required by Options 1 and 2 may demonstrate

that they are competent if they have at least 10 years relevant industry experience.

(b) Experience

(b) Experience

(a) Qualification

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NOTES:

Relevant industry experience

In assessing the relevance of the individuals experience the Central Bank will take into account

the duties and functions to be performed. The Central Bank will recognize experience that is

closely related to the functions to be performed.

Relevant experience obtained overseas will be recognized.

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Annex 1 Minimum Competency

SUBJECT MATTER MINIMUM COMPETENCIES

1. Collective Investment

Knowledge of the different legal structures of,

regulatory provisions applying to, and the main

features, benefits, charges and risks of collective

investments.

A good understanding of the investments area of

the funds administered.

2. Financial services market

Knowledge and understanding of the main

functions of the financial system.

Knowledge of the key participants of the

financial services system.

Knowledge of the main financial services which

financial institutions provide.

Knowledge and understanding of capital

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markets.

3. Investment

Knowledge of the main investment asset

classes.

Understanding the concept of the volatility of

investment returns and how this volatility varies

by the main investment classes.*

Understanding of the concept of the correlation

of investment returns between different

investments.

Knowledge of the main advantages and

disadvantages of collective investment over

individual direct investment.*

Knowledge of the main features of the different

generic forms of mutual funds, including the

difference between open ended and closed ended

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funds.

Knowledge and understanding of the difference

between active, passive and consensus investment

management styles.*

Knowledge and understanding of the potential

impact of different forms of risk associated with

investment.*

Knowledge of how investment risk can be

reduced by diversification.*

4. Company Law and Accounting

Clear understanding of the role and

responsibilities associated with the position.

Knowledge of the basic accounting principles

which apply to the accounts of a fund.

Knowledge of the type of information contained

in a Balance Sheet, Profit and Loss Account and

Cash Flow Statements and how the information

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may aid the assessment of the value of the

company.

SWOT ANALYSIS

SWOT ANALYSIS

A type of fundamental analysis of the health of a company by examining its strengths(S),

weakness (W), business opportunity (O), and any threat (T)

investment consultancy on analysis of mutual fund industry

Documents