MAGNUM CHILDREN S BENEFIT PLAN

Transcription

1 OFFER DOCUMENT Principal Trustee : State Bank of India, Assets Management Company : SBI Funds Management Limited, 191, Maker Tower E, Cuffe Parade, Mumbai INVITES SUBSCRIPTIONS TO MAGNUM CHILDREN S BENEFIT PLAN Asset Management Company: SBI Funds Management Limited Initial Issue of Magnums of face value of Rs. 10 /- each for cash at par. APPLICATION FORMS ARE AVAILABLE WITH SBIMF AGENTS, STOCK EXCHANGE BROKERS, AUTHORIZED BRANCHES OF SBI AND SBIMF INVESTOR SERVICE CENTRES & SBIMF CORPORATE OFFICE AND ARE AVAILABLE FOR DOWNLOAD AT This offer document sets forth information about the scheme that a prospective investor ought to know before investing. The scheme particulars have been prepared in accordance with the Securities and Exchange Board of India (MF) Regulations, 1996, as amended till date, and filed with SEBI. The units being offered for public subscription have not been approved or disapproved by the SEBI nor has the SEBI certified the accuracy or adequacy of the offer document. The investors are required to read the terms of offer carefully before investing. The offer document should be retained by the investors for future reference. The offer document shall remain effective till a material change occurs and thereafter the changes shall be filed with SEBI and circulated to the Magnumholders or as maybe publicly notified by advertisement in the newspapers subject to the applicable regulations.

2 I. CONTENTS PAGE NO I. CONTENTS II. DEFINITIONS AND EXPLANATIONS OF TERMS USED III. RISK FACTORS IV. HIGHLIGHTS OF THE SCHEME V. DUE DILIGENCE CERTIFICATE VI. EXPENSES VII. CONDENSED FINANCIAL INFORMATION VIII. CONSTITUTION OF THE MUTUAL FUND IX. INVESTMENT OBJECTIVES & POLICIES X. MANAGEMENT OF THE FUND XI. UNITS AND OFFER XII. SALE OF UNITS XIII. INTER-SCHEME TRANSFERS XIV. ASSOCIATE TRANSACTIONS XV. BORROWING BY THE MUTUAL FUND XVI. NAV AND VALUATION OF ASSETS OF THE SCHEME XVII. REDEMPTION AND REPURCHASE XVIII. ACCOUNTING POLICIES XIX. TAX TREATMENT OF INVESTMENTS IN MUTUAL FUNDS XX. INVESTORS RIGHTS AND SERVICES XXI. INVESTOR GRIEVANCES REDRESSAL MECHANISM XXII. PENDING LEGAL PROCEEDINGS AND OTHER INFORMATION

3 II. DEFINITIONS AND EXPLANATIONS OF TERMS USED The AMC means SBI Funds Management Pvt. Ltd. (SBIFM), set up under the Companies Act, 1956, and authorized by SEBI to act as Asset Management Company to the schemes of SBIMF. SBIFM is a wholly owned subsidiary formed by State Bank of India. AMC Fees means Investment management & advisory fees charged by the AMC to the Scheme as disclosed in the section on Expenses in the offer document. The Auditors means M/s. P.C. Hansotia & Co., Auditors to the Scheme. Business Day/Working Day means a day other than (i) Saturday and Sunday, (ii) a day on which banks in Mumbai are not required or not obligated by law or executive order to remain closed, (iii) a day on which the sale and redemption of Magnums is suspended. The Custodians means ABN AMRO Bank N.V., Custodians to the Scheme. Contingent Deferred means contingent sales deferred charge Under the SEBI Regulations, the Fund can charge CDSC Sales Charge (CDSC) to Magnum Holders exiting from the Scheme within 4 years of entry. SEBI Regulations mandate the maximum amount that can be charged in each year. The Fund means SBI Mutual Fund (SBIMF); constituted as a Trust with SBI as the Principal Trustee under the provisions of Indian Trusts Act, 1882, and registered with SEBI. Investor means such person or persons who apply for Magnums by contributing to the initial investment amount and or making periodic investments so as to gift the Magnums of the Scheme to the Magnum Holder in accordance with the procedure stated in this Offer Document ISCs means Investor Service Centers opened by SBI Mutual Fund at various locations in India, listed in the section Investors Rights & Services in the Offer Document. Magnum means the interest of the Magnum Holder which consists of one undivided share in the Magnum Capital of the Scheme offered under this Offer Document. Magnum Holder means any eligible applicant who has been allotted and holds a valid Magnum in his/her name under the Scheme based on a valid application made by the Investor. A Magnum Holder till attaining the age of Majority shall be represented by his/her parent or legal guardian. Majority means the age at which a person is deemed to attain majority under the provisions of the Indian Majority Act, 1875, as amended from time to time. Maturity means the attainment of 18 years of age by the Magnum Holder. NAV means Net Asset Value of one Magnum of the Scheme calculated in the manner provided in this Offer Document or as maybe prescribed by the Regulations from time to time NAV related price The Repurchase Price and the Sale Price are calculated on the basis of NAV and are known as NAV related prices. The repurchase price is calculated by deducting the exit load factor (if any) from the NAV and the sale price is calculated by adding the entry load factor (if any) to NAV. NRI means a Non-Resident Indian or Persons of Indian Origin as defined by the Reserve Bank of India or under the Foreign Exchange Management Act, NSE MIBOR means NSE MIBOR is an acronym for National Stock Exchange (NSE) Mumbai Inter Bank Offer Rate. This rate is computed by NSE on basis of indication by various market participants and published daily. Offer Document means this document issued by SBI Mutual Fund, containing the terms of offering Magnums of the scheme of SBI Mutual Fund for subscription as per the terms contained herein. Principal Trustee means State Bank of India RBI means Reserve Bank of India, established under Reserve Bank of India Act, Registrars means M/s Computronics Financial Services (I) Ltd., Registrars to the Scheme. SBI means State Bank of India, having its Corporate Office at State Bank Bhavan, Madame Cama Road, Mumbai Also referred to as the Sponsor or the [Principal Trustee] SBIMF means SBI Mutual Fund (see the Fund ) SBIFM means SBI Funds Management Pvt. Ltd. (see the AMC ) Scheme means Magnum Children s Benefit Plan of SBI Mutual Fund. SEBI means Securities and Exchange Board of India established under Securities and Exchange Board of India Act, SEBI Regulations means Securities and Exchange Board of India (MF) Regulations, 1996 for the time being in force and as amended from time to time. Sponsor means State Bank of India Switchover means simultaneous application by a Magnum holder for repurchase of Magnums under one scheme (or a plan under the scheme) of SBI Mutual Fund and, through the repurchase proceeds, for the purchase of fresh/ additional Magnums under another scheme (or another plan under the same scheme) of SBI Mutual Fund which is open for issue at the time. Trustees means the Principal Trustee, i.e., State Bank of India, and one or more member(s) of the Board of Trustees appointed by SBI to supervise the activities of the Fund. Unit Capital means the aggregate face value of the Magnums issued and outstanding under the scheme. 3

4 1. Standard Risk Factors (a) Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee that the scheme s objective will be achieved. (b) The NAV of the Scheme may be affected by changes in the general market conditions, factors and forces affecting capital markets in particular, level of interest rates, various market related factors and trading volumes. (c) Past performance of the Sponsor / AMC / Mutual Fund is not necessarily indicative of the future performance of the schemes of the Mutual Fund. (d) Magnum Children s Benefit Plan (MCBP) is only the name of the scheme and does not, in any manner, indicate either the quality of the scheme or its future prospects and returns. (e) The Sponsor, is not responsible or liable for any loss resulting from the operation of the scheme beyond the initial contribution made by it of an amount of Rs. 5 lacs. towards setting up of the mutual fund or such other accretions and additions that may be made to the initial corpus set up by the Sponsors. 2. Scheme-Specific Risk Factors a. Redemption by the Magnum Holder due to change in the fundamental attributes of the Scheme or due to any other reasons may entail tax consequences. The Trustees, AMC, Fund their directors or their employees shall not be liable for any tax consequences that may arise. b. The Scheme has two options for Premature repurchases. Premature repurchase in cases of donor investing through parents where the lock-in facility has been exercised, will be permitted only on a joint request from both the donor & the parent/legal guardian. Repurchase without the lock-in will be permitted on a request from parent/legal guardian. The other terms and conditions for repurchases are same under both options as detailed in the section on redemption and repurchases. c. The tax benefits described in this Offer Document are as available under the present taxation laws and are available subject to relevant condition. The information given is included only for general purpose and is based on advice received by the AMC regarding the law and practice currently in force in India and the Investors and Magnum Holders should be aware that the relevant fiscal rules or their interpretation may change. As in the case with any investment, there can be no guarantee that the tax position or the proposed tax position prevailing at the time of the investment in the Scheme will endure indefinitely. In view of the individual nature of tax consequences, each Investor / Magnum Holder is advised to consult his/her own professional tax advisor. d. Magnum Children s Benefit Plan will be investing in debt instruments (including securitized debt), Government Securities and money market instruments (such as call money market, term/notice money market, repos, reverse repos and any alternative to the call money market as may be directed by the RBI) as also equity & equity related instruments. The liquidity of the scheme s investments is inherently restricted by trading volumes and settlement periods. In the event of an inordinately large number of redemption requests, or of a restructuring of the scheme s investment portfolio, these periods may become significant. In view of the same, the Trustees have the right in their sole discretion to limit III. RISK FACTORS redemptions (including suspending redemptions) under certain circumstances. e. Subject to necessary approvals, the Scheme may invest in overseas markets, which carry a risk on account of fluctuations in the foreign exchange rates. f. There are risks inherent to securities lending, including the risk of failure of the other party, in this case the approved intermediary, to comply with the terms of the agreement. Such failure can result in the possible loss of rights to the collateral, the inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefits accruing thereon. g. Investments under the scheme may also be subject to the following risks: i) Credit risk: Credit risk is risk resulting from uncertainty in counterparty s ability or willingness to meet its contractual obligations. This risk pertains to the risk of default of payment of principal and interest. Government Securities have zero credit risk while other debt instruments are rated according to the issuers ability to meet the obligations. ii) Liquidity Risk pertains to how saleable a security is in the market. If a particular security does not have a market at the time of sale, then the scheme may have to bear an impact depending on its exposure to that particular security. iii) Interest Rate risk is associated with movements in interest rate, which depend on various factors such as government borrowing, inflation, economic performance etc. The value of investments will appreciate/depreciate if the interest rates fall/rise. iv) Equity and equity related risk: Equity instruments carry both company specific and market risks and hence no assurance of returns can be made for these investments. v) Derivative risks: The derivatives will entail a counterparty risk to the extent of amount that can become due from the party. The cost of hedge can be higher than adverse impact of market movements. An exposure to derivatives in excess of the hedging requirements can lead to losses. An exposure to derivatives can also limit the profits from a genuine investment transaction. Efficiency of a derivatives market depends on the development of a liquid and efficient market for underlying securities and also on the suitable and acceptable benchmarks. vi) Reinvestment risk: This risk arises from uncertainty in the rate at which cash flows from an investment may be reinvested. This is because the bond will pay coupons, which will have to be reinvested. The rate at which the coupons will be reinvested will depend upon prevailing market rates at the time the coupons are received. Investors should study the Offer Document carefully in its entirety and should not construe thereof as advise relating to legal, taxation, investment or any other matters. Investors are advised to consult their legal, tax, investment and other professional advisors to determine possible legal, tax, financial or other considerations of subscribing to or redeeming Magnums, before making a decision to invest/redeem Magnums. 4

5 IV. HIGHLIGHTS OF THE SCHEME 1. Magnum Children s Benefit Plan will be available for sale throughout the year after the scheme goes open-ended. The scheme will endeavour to provide long term capital appreciation to the Magnum holders through an actively managed portfolio of equity, debt instruments, Government Securities and Money Market instruments. 2. Units will be available at par (Rs. 10/-) during the initial offer period and at NAV related prices when the scheme goes open ended. 3. The scheme will be open for initial subscription from to The scheme will reopen for continuous sale/repurchase from Parents/Guardians/Relatives/Institutions and NRIs can invest on behalf of the child. The child should be above 3 months and below 15 years of age as on the date of investment. Proof of age is not required. However, the Trustees and/or the AMC may, if considered necessary, in their sole discretion ask for proof of the same. 5. The initial issue expenses to be charged to scheme will not exceed 6%, and the rest will be borne by the AMC. 6. Minimum amount of investment: Rs only and in multiples of Rs No maximum limit. 7. The scheme will provide for a Systematic Investment Facility under which periodic investments can be made in the name of the child. This facility is available only at ISC centres. 8. Magnums under the scheme can be repurchased on any business day on an ongoing basis at NAV related prices. For repurchases within the first three years of investment, an exit load not exceeding 3% will be applicable. However for investors or donors investing through the parent who desire that the investment be locked-in till the magnum holder attains the age of 18 years, they may do so by indicating it at the appropriate place in the application form at the time of application. 9. The funds collected under the scheme shall generally be invested in equity, debt and money market instruments consistent with the objective of the scheme. 10. On reaching 18 years of age, Magnum holders will have an option to withdraw their holdings either as a lumpsum amount or staggered over a period of five years on annual/semiannual basis. In case the Magnum holder opts for the staggered redemption option, the corpus on maturity will be frozen and will be invested in instruments which seeks to provide capital protection such as bank deposits, Government Securities (the maturities of which will not exceed the residual maturity of the corpus) or in the call money market. In the case of the staggered redemption option, it is deemed that the Magnum holder has redeemed his investment under the scheme and will no longer be eligible for any benefits under the scheme. Alternatively, Magnum holders may also be permitted to continue their investment under the scheme even on completion of 18 years of age. 11. The scheme will provide group accident insurance cover to the Magnum holders or either parent against accidental death or permanent total disability relating to these accidents. In addition to this, on the accidental death of either parent the Magnum holder will stand to receive an additional 10% of the claim amount towards educational expenses. The cost of providing the insurance cover would be borne by the AMC. This cover will be available only for Resident Indian Magnum holders. 12. At the time of application or subsequently, the investor may nominate an alternate child not exceeding 15 years of age. 13. The NAV, sale price, repurchase price will be calculated on a daily basis and announced every business day. The scheme will disclose its complete portfolio every quarter. 14. Tax Benefits (a) Tax benefits to the unit holders: The tax benefits that will be available to the scheme s investors will be as per the prevailing laws thus: i. Tax benefit is available under sections 48 & 112 on capital gains for resident Indians. The Magnumholders will have the option to pay the long term capital gains 10% (plus applicable surcharge) without the cost inflation index benefit 20% (plus applicable surcharge) with the cost inflation index benefit, whichever is more beneficial. ii. Magnums held under this scheme will not be (b) liable to wealth tax and gift tax. Benefits to the Mutual Fund The entire income of the Mutual Fund is exempt from income tax under section 10(23D) of the Income Tax Act. The fund will, however, have to pay an income distribution 10% (plus applicable surcharge) on the dividends distributed by it. These tax exemptions will strictly be governed by the relevant provision of the existing tax laws. V. DUE DILIGENCE CERTIFICATE It is confirmed that: I. The draft offer document forwarded to SEBI is in accordance with the Securities and Exchange Board of India (MF) Regulations, 1996, and the guidelines and directives issued by SEBI from time to time; II. All legal requirements connected with the launching of the scheme as also the guidelines, instructions, etc., issued by the Government and any other competent authority in this behalf, have been duly complied with. III. The disclosures made in the offer document are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the proposed scheme; IV. All the intermediaries named in the offer document are registered with SEBI and till date such registration is valid. Place: Mumbai Date : Signature : Name : Niamatullah Managing Director SBI Funds Management Pvt. Ltd. 5

6 VI. EXPENSES 1. Magnum holder transaction expenses or Sales Load The following table illustrates the expenses that the investors will incur on their purchases/ sales of Magnums under this scheme: Nature of expense % Expense Maximum sales load that maybe imposed on purchases of Magnums l During Initial Offer Nil l On an on-going basis Upto 3.00% : Currently 1.25% Sales load if any on issue of Not applicable Magnums in lieu of dividends Exit load on redemption of Within 1 year: 3.00% Magnums within 3 years from Within 2 years: 2.00% the date of investment Within 3 years: 1.00% Switchover load At Applicable entry/exit load. l Interscheme switches Transactions will be at NAV related price. The AMC reserves the right to introduce a load structure, levy a different load structure or remove the load structure in the scheme. Sales load, repurchase load and / or switchover load may be increased or decreased by the AMC at any time after giving notice to that effect to the investors through an advertisement in an English language daily that circulates all over India as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated. In any case, should the load structure change in future, such changes in load will be applicable only to prospective investors who invest after the date specified in the advertisement and not to the existing investors on the amounts already invested by them. The Mutual Fund will also endeavour to keep the investors informed through the following measures: i) An addendum detailing the changes will be attached to the offer documents and abridged offer documents. The addendum will also be available with the distributors/brokers and will also be sent alongwith the newsletter sent to the magnumholders immediately after the changes. ii) The Mutual Fund will display the changes/modifications in the offer document in the form of a notice at all ISCs and distributors/brokers office. iii) The introduction of the exit load/cdsc alongwith the details will be stamped in the acknowledgement slip issued to the investors on submission of the application form and will also be disclosed in the statement of accounts issued after the introduction of such load/cdsc. iv) Any other measures which the Mutual Fund considers necessary in the interest of the magnumholders. All loads including CDSC are intended to enable the AMC to recover expenses incurred for promotion or distribution and sales (including agents commission) of the schemes. All loads including CDSC for each scheme shall be maintained in separate accounts and may be utilized towards meeting the selling and distribution expenses. Any surplus in these accounts may be credited to the scheme, whenever felt appropriate by the AMC. In accordance with SEBI Regulations, the repurchase price will not be lower than 93% of the NAV and the sale price will not be higher than 107% of the NAV, and the difference between sale price and repurchase price shall not exceed 7% of the sale price. 2. Initial Issue Expenses (a) Present scheme The initial issue expenses charged to the scheme will be up to 6% of the corpus collected and the rest will be borne by the AMC. For the information of the investors, the initial issue expenses are estimated on a target amount of Rs. 25 crores and would approximately be 4.46% of the resources mobilized. The details are as follows: Category of Expense % of Initial Collection Advertisement 2.80% Brokerage Fees & other Marketing expenses 1.22% Registrars & Handling expenses 0.04% Printing & Mailing expenses 0.40% Total 4.46% The above expenses are subject to change as per actuals. The entire initial issue expenses for this scheme are within those allowed under SEBI (MF) Regulations, 1996, which allow initial issue expenses of up to 6% of the initial resources raised and require that any excess over 6% be borne by the Asset Management Company. The total initial issue expenses is estimated to be around Rs crores which is 4.46% for a target corpus of 25 crores. This is an indicative figure only and the initial issue expenses will change in proportion to the initial issue corpus as indicated in the table below: Target Amount Amount Amount Corpus subscribed available available by the for for Initial investor investment Issue Expense (Rs.) (Rs.) (Rs.) 25 crores crores crores

7 (b) Past schemes Scheme Name Estimated Issue Expenses Actual Issue Expenses Remarks Magnum Debt Fund Series 15 Months, 90 days, 180 days &60 days Fund Series 0.15% of the Initial issue corpus Rs crores i.e % of Initial corpus Expenses upto the extent of the Brokerage (Rs. 59,000) was borne by the Scheme and the balance by the AMC Magnum Monthly Income Plan Magnum Gilt Fund Magnum Sector Funds Umbrella 5.9% of the Initial issue corpus 2.92% of the Initial issue corpus. Rs cr., i.e. 3.38% of initial corpus Rs cr., i.e., 0.123% of initial corpus 6% of corpus collected Rs cr., i.e., 4.24% of initial corpus Magnum InstaCash Fund 6% of corpus collected Rs , i.e. 0.01% of initial corpus Magnum Income Fund 6% of corpus collected Rs cr., i.e., 3.69% of initial corpus Being a load scheme, the entire issue expense was borne by the scheme. Being a no load scheme, the entire initial issue expenses were borne by the AMC. Rs lac. borne by the AMC Being a no load scheme, the entire initial issue expenses were borne by the AMC. Fully borne by the AMC. 3. Annual scheme recurring expenses The fees and expenses of operating the scheme on an annual basis, expressed as a percentage of the amount of the scheme s average daily net assets, are estimated as follows: Expense Item % of NAV Investment Management Fee 0.65% Marketing & Selling expenses & Agent s commission 0.624% Registrar & Transfer Agent s fees and Stamp duty 0.169% Custodial fees & expenses 0.032% Costs related to Investor communication 0.172% Audit fees 0.073% Trustee fees 0.01% Miscellaneous expenses 0.019% Total expenses to be charged to the scheme 1.75% The AMC reserves the right to increase and decrease the fee within the ceilings prescribed under SEBI Regulations. The above annual recurring expenses are only the estimates and the actual expenses may vary from the above estimates but will be restricted to the ceilings of recurring expenses prescribed in the SEBI Regulation, which are as follows: Category of expense Ceilings as per SEBI Investment management & advisory fee to be Subject to the following ceilings : charged by the AMC. i) Not exceeding 1.25% of the average weekly net assets of the scheme outstanding in the year as long as the net assets do not exceed Rs. 100 crores and ii) 1% of the amount in excess of Rs. 100 crores where net assets so calculated exceed Rs. 100 crores Fees and expenses of Trustees 0.01% of the average weekly net assets, subject to a minimum of Rs. 15 lakhs to be allocated across all schemes of the fund. Custodian fee On actuals, within the overall ceiling mentioned below Registrar Services for transfer of units sold On actuals, within the overall ceiling mentioned below Brokerage & Transaction cost On actuals, within the overall ceiling mentioned below Audit fees On actuals, within the overall ceiling mentioned below Marketing & selling expenses, including agent commission, if any On actuals, within the overall ceiling mentioned below. Cost of investor communication & statutory advertising On actuals, within the overall ceiling mentioned below Cost of providing account statements & redemption warrants On actuals, within the overall ceiling mentioned below Insurance premium paid by the fund On actuals, within the overall ceiling mentioned below Winding up costs On actuals, within the overall ceiling mentioned below 7

8 Total Expenses Charged to the scheme Subject to the following limits : i) 2.25% on the first Rs. 100 cr. of average weekly net assets. ii) 2.00% on the next Rs. 300 cr. of average weekly net assets iii) 1.75% on the next Rs. 300 cr. of the average weekly net assets iv) 1.50% on the balance of the average weekly net assets The purpose of the table is to assist the investor in understanding the various costs and expenses that an investor in the scheme will bear directly or indirectly. Any expenses incurred in excess of the above overall limits will be borne by the AMC. 1. Historical Per Unit Statistics VII. CONDENSED FINANCIAL INFORMATION The data for pertains to data up to and as on 30 th November Magnum Monthly Income Scheme 1998 (II) Particulars Monthly Quarterly Annual Cumulative Income Income Income Growth Option Option Option Option (Statistics for the year ) NAV at the beginning of the year Net Income per unit (before payout) Dividends (Payout) Transfer to Reserves (if any) Latest NAV (as on ) Annualized Return (%) (Since Inception) 25.82% 24.45% 24.76% 24.73% Net Assets at the end of the year (Rs. Cr.) Ratio of recurring expenses to Net Assets (%) 1.35% 1.35% 1.35% 1.35% (Statistics for the year ) NAV at the beginning of the year Net Income per unit (before payout) Dividends (Payout) Transfer to Reserves (if any) Latest NAV (as on ) Annualized Return (%) (Since Inception) 15 % 14.46% 14.69% 14.91% Net Assets at the end of the year (Rs. Cr.) Ratio of recurring expenses to Net Assets (%) 1.48% 1.48% 1.48% 1.48% (Statistics for the year ) NAV at the beginning of the year Net Income per unit (before payout) Dividends (Payout) Transfer to Reserves (if any) Latest NAV (as on ) Annualized Return (%) (Since Inception) % 13.63% 14.27% 14.21% Net Assets at the end of the year (Rs. Cr.) Ratio of recurring expenses to Net Assets (%) 1.40% 1.40% 1.40% 1.40% (Date of allotment of units: 29 th January 1999) Note: The NAV for is dated as on 30 th November 2001 and for the other years is dated 31 st March The historical per unit statistics have been calculated upto the period ending 30 th November The compounded annualized returns have been calculated since inception of the schemes, taking adjusted NAV, i.e., after adjusting dividends paid out on initial NAV of Rs. 10/- per Magnum. * - indicates the returns for periods less than one year are in absolute terms only and not annualized. 8

9 Particulars Magnum Income Fund (Growth) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period 13.66% 12.30% 13.28% Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.59% 1.54% 1.97% (Date of allotment of units: 30 th November, 1998) Particulars Magnum Income Fund (Dividend) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period 11.98% 10.91% Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.59% 1.54% 1.97% (Date of allotment of units: 30 th November, 1998) Particulars Magnum Growth Fund NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period 23.33% 29.26% % Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 0.20% 0.15% 0.41% (Date of allotment of units: Magnum Growth Fund 24 th May 1999) Note: The NAV for is dated as on 30 th November 2001 and for the other years is dated 31 st March The historical per unit statistics have been calculated upto the period ending 30 th November The compounded annualized returns have been calculated since inception of the schemes, taking adjusted NAV, i.e., after adjusting dividends paid out on initial NAV of Rs. 10/- per Magnum. * - indicates the returns for periods less than one year are in absolute terms only and not annualized. 9

10 Particulars Magnum InstaCash (Cash) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period 9.35% 9.53% 8.30%* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 0.86% % (Date of allotment of units: Magnum InstaCash Fund 28 th May 1999) Particulars Magnum InstaCash (Dividend) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period 8.45% %* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 0.94% 1.16% 0.58% (Date of allotment of units: Magnum InstaCash Fund 28 th May 1999) Particulars MSFU (Contra) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period -8.05% % -5.50%* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.63% 1.69% 2.06% (Date of allotment of units: 31 st July 1999) Note: The NAV for is dated as on 30 th November 2001 and for the other years is dated 31 st March The historical per unit statistics have been calculated upto the period ending 30 th November The compounded annualized returns have been calculated since inception of the schemes, taking adjusted NAV, i.e., after adjusting dividends paid out on initial NAV of Rs. 10/- per Magnum. * - indicates the returns for periods less than one year are in absolute terms only and not annualized. 10

11 Particulars MSFU (IT) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period -3.31% 7.69% %* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.54% 1.62% 2.06% (Date of allotment of units: 31 st July 1999) Particulars MSFU (Pharma) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period -4.36% -6.56% 9.70%* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.51% 1.54% 2.06% (Date of allotment of units: 31 st July 1999) Particulars MSFU (FMCG) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period Annualized return since inception for the period % -9.47% 9.30%* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.75% 2.49% 2.06% (Date of allotment of units: 31 st July 1999) Note: The NAV for is dated as on 30 th November 2001 and for the other years is dated 31 st March The historical per unit statistics have been calculated upto the period ending 30 th November The compounded annualized returns have been calculated since inception of the schemes, taking adjusted NAV, i.e., after adjusting dividends paid out on initial NAV of Rs. 10/- per Magnum. * - indicates the returns for periods less than one year are in absolute terms only and not annualized. 11

12 Particular Magnum Gilt (ST-Div) Magnum Gilt (ST-Gr) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period (30/11/2001) Annualized return since inception for the period 12.47%* 2.85%* 14.22%* 2.78%* Net Asset at the end of the period (30/11/2001) Ratio of Recurring expenses to Net Assets 1.20% % 1.26 (Date of allotment of units: 23 rd December 2000) Particulars Magnum Gilt (LT- Div) Magnum Gilt (LT-Gr) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period (30/11/2001) Annualized return since inception for the period 21.82%* 4.26%* 25.62%* 3.26%* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.278% 0.62% 1.30% 1.24% (Date of allotment of units: 23 rd December 2000) Particulars Magnum Monthly Income Plan ( ) Growth Div Annual Div Quarterly Div Monthly NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period (30/11/2001) Annualized return since inception for the period 11.64%* 13.31%* 12.42%* 10.23%* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 1.475% 1.475% 1.475% 1.475% (Date of allotment of units: 23 rd March 2001) Note: The NAV for is dated as on 30 th November 2001 and for the other years is dated 31 st March The historical per unit statistics have been calculated upto the period ending 30 th November The compounded annualized returns have been calculated since inception of the schemes, taking adjusted NAV, i.e., after adjusting dividends paid out on initial NAV of Rs. 10/- per Magnum. * - indicates the returns for periods less than one year are in absolute terms only and not annualized. 12

13 Particulars Magnum Debt Fund Series 15 Months (D) 60 Days (D) 180 Days (D) NAV at the beginning of the period Net income per unit Dividends per unit Transfer from Reserves NAV at the end of the period (30/11/2001) Annualized return since inception for the period 9.56%* 7.78%* 6.04%* Net Asset at the end of the period Ratio of Recurring expenses to Net Assets 0.3% 0.46% 0.46% Date of allotment of units 7th July, th November, th October, 2001 Note: The NAV for is dated as on 30 th November 2001 and for the other years is dated 31 st March The historical per unit statistics have been calculated upto the period ending 30 th November The compounded annualized returns have been calculated since inception of the schemes, taking adjusted NAV, i.e., after adjusting dividends paid out on initial NAV of Rs. 10/- per Magnum. * - indicates the returns for periods less than one year are in absolute terms only and not annualized. 2. Disclosure under Regulation 25(11) As on 31 st March 2001, SBI Mutual Fund has made the following investments in companies that hold units in excess of 5% of the Net Asset Value of any scheme of SBI Mutual Fund: Scheme Name Investments by the respective schemes in Companies Value % of holding to or its subsidiaries where that Company or its (Rs. Lakhs) NAV subsidiaries have invested more than 5% of the NAV in any scheme Gifts-B State Bank of India (Equity) MMPS 93 State Bank of India (Equity) SBI Home Finance Ltd. (Equity) 0.01 Negligible MELS91 State Bank of India (Equity) 0.10 Negligible MMIS-97 State Bank of India (Equity) State Bank of Hyderabad (Bonds) State Bank of Travancore (Bonds) Magnum Balanced Fund State Bank of India (Equity) 0.10 Negligible (formerly MOEF-95) State Bank of Hyderabad (Bonds) State Bank of Travancore (Bonds) MLIF-98 State Bank of India (Bonds) MMIS 98(II) State Bank of Saurashtra (Bonds) MMIS 98(I) SBH (Bonds) State Bank of Saurashtra (Bonds) These investments comprise debt, equity and money market instruments. SBI Mutual Fund is of the opinion that the said companies are fundamentally strong and possess a high potential for growth and are market leaders in their respective fields. Accordingly, investments were made in the said companies. The investments made by some schemes of SBIMF in bonds issued by associate companies including State Bank of India and its subsidiaries are in compliance with the investment restrictions contained in clause 9 of the seventh schedule to the SEBI (MF) Regulations, Constitution VIII. CONSTITUTION OF THE MUTUAL FUND SBI Mutual Fund has been constituted as a Trust, sponsored by SBI. SBI has made an initial contribution of Rs. 5 lacs towards setting up of the Trust fund. SBI has been designated as the Principal Trustee, and has appointed a Board of Trustees to supervise the activities of the Fund. The Board of Trustees has entrusted the work of management of the Fund to SBI Funds Management Pvt. Ltd., an Asset Management Company. 13

14 2. Objective of SBI Mutual Fund The basic objective of SBI Mutual Fund is to mobilize savings from a wide cross-section of people and to provide them attractive returns, security and liquidity through investments in capital and money markets. 3. The Sponsor The State Bank of India or SBI having its Corporate Office at State Bank Bhavan, Madame Cama Road, Mumbai , is the largest public sector bank in India with 9026 branches in India and 52 offices in 31 countries worldwide. In addition to this, SBI also has 7 associates and 1 banking subsidiary in addition to other non-banking subsidiaries in India and abroad. SBI Funds Management Pvt. Ltd. is a 100% subsidiary of State Bank of India. The financial performance of SBI is summarized below: Year ended March 31 st Total Income (Rs. Cr.) Profit after Tax (Rs. Cr.) Equity Capital (Rs. Cr.) Free Reserves (Rs. Cr.) Net Worth (Rs. Cr.) Deposits (Rs. Cr.) Earnings per share (Rs.) Book Value per share (Rs.) Capital Adequacy Ratio (%) Dividend paid (%) 50% 50% 40% 40% 40% Source: SBI Annual Reports 4. Board of Trustees The Trust is administered by a Board of Trustees comprising the following eminent persons: Name Address Principal Occupation Current Directorships Prof. A.M. Khusro B-11, Formerly 1. Chairman, Kohinoor Cement Ltd. Chairman, Board Chirag Enclave, Chairman, 2. Director, Transworld Leasing Ltd. of Trustees New Delhi Finance 3. Director, Hi-Tech Security Prints Ltd. Commission 4. Director, CT Cotton Yarn Ltd. 5. Director, Indian Express Newspaper 6. Director, Traders Ltd. 7. Director, Mekaster Finlease Ltd. 8. Chairman, Mekaster Securities (P) Ltd. Dr. (Mrs.) Malati Anagol Konark Villa No.22, Former Bank of India 1. Director, Imeco Ultrasonics Pvt. Ltd. Trustee Telera Co-op. Hsg, Professor of Banking; 2. Director, Imeco Cleaning & Welding Society, Kalyani Nagar, Head Dept. of Equipments (P) Ltd. Pune Commerce University of Mumbai Prof. S.K. Barua Indian Institute of Professor, None Trustee Management, Vastrapur, IIM, Ahmedabad Ahmedabad Shri M. M. Chitale 205, Agarwal Shyamkamal - A Chartered Accountant 1. Director, IDBI Bank Ltd. Trustee Vile Parle (E) 2. Director, Investor Services of India Ltd. Mumbai Director, Sun Vacuum Formers Ltd. Shri Y. Radhakrishnan State Bank of India Managing Director & 1. Director, SBI California Trustee Corporate Centre Group Executive (CB) 2. Director, SBI Capital Markets Ltd. Madame Cama Rd Nariman Point Mumbai Apart from one nominee member of SBI no other trustee is an associate of the Sponsor or of the AMC. SBIMF has been complying with SEBI regulations stipulating that two third members must be independent. 14

15 5. Duties and Obligations of Trustees and Substantial Provisions of the Trust Deed: The Board of Trustees monitors the activities of the AMC. In the last financial year, the Board of Trustees met 4 times. Periodic reports, including quarterly reviews of each scheme, are submitted by the AMC to the Trustees. Specific approval of the Trustees is obtained on important matters such as a new scheme design and launch. Under the Trust Deed constituting the Mutual Fund and SEBI (MF) Regulations, 1996, the Trustees have several rights, duties and obligations including the following: a) To enter into an investment management agreement with the AMC with the prior approval of SEBI. b) To ensure that the investment management agreement contains such clauses as are mentioned in the Fourth Schedule of SEBI (MF) Regulations, 1996 and such other clauses as are necessary for the purpose of making investment. c) To ensure before the launch of any scheme that the AMC has:- i systems in place for its back office, dealing room and accounting; ii appointed all key personnel including fund manager(s) for the scheme(s) and submitted their bio-data which shall contain the educational qualifications, past experience in the securities market with the trustees, within 15 days of their appointment; iii appointed auditors to audit its accounts; iv appointed a compliance officer to comply with regulatory requirements and to redress investor grievances; v appointed registrars and laid down parameters for their supervision; vi prepared a compliance manual and designed internal control mechanisms including internal audit systems; vii specified norms for empanelment of brokers and marketing agents. d) To ensure that the AMC has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker. e) To ensure that the AMC has not given any undue or unfair advantage to any associates or dealt with any of the associates of the asset management company in any manner detrimental to the interest of the magnumholders. f) To ensure that the transactions entered into by the asset management company are in accordance with SEBI (MF) Regulations, 1996 and the scheme. g) To ensure that the AMC has been managing the mutual fund schemes independently of other activities and have taken adequate steps to ensure that the interests of investors of one scheme are not being compromised with those of any other scheme or of other activities of the asset management company. h) To ensure that all activities of the AMC are in accordance with the provisions of SEBI (MF) Regulations, i) Where the trustees have reason to believe that the conduct of business of the mutual fund is not in accordance with SEBI (MF) Regulations, 1996 and the scheme they shall forthwith take such remedial steps as are necessary by them and shall immediately inform the SEBI of the violation and the action taken by them. j) To file the details of his/her holdings in securities on a quarterly basis with the trust. k) To be accountable for, and be the custodian of, the funds and property of the respective schemes and to hold the same in trust or the benefit of the unit holders in accordance with SEBI (MF) Regulations, 1996 and the provisions of trust deed. l) To take steps to ensure that the transactions of the mutual fund are in accordance with the provisions of the trust deed. m) To be responsible for the calculation of any income due to be paid to the mutual fund and also of any income received in the mutual fund for the holders of the units of any scheme in accordance with SEBI (MF) Regulations, 1996 and the trust deed. n) To obtain the consent of the magnumholders :- i whenever required to do so by the SEBI in the interest of the magnumholders; or ii whenever required to do so on the requisition made by three fourths of the magnumholders of any scheme; or iii when the majority of the trustees decide to wind up or prematurely redeem the units; o) To call for the details of transactions in securities by the key personnel of the AMC in his own name or on behalf of the AMC and shall report to the SEBI, as and when required. p) To quarterly review all transactions carried out between the mutual fund, asset management company and its associates. q) To continuously review the net worth of the AMC and in case of any shortfall, ensure that the AMC make up for the shortfall as per clause (f) of sub-regulation (1) of regulation 21 of SEBI (MF) Regulations, r) To periodically review all service contracts such as custody arrangements, transfer agency of the securities and satisfy itself that such contracts are executed in the interest of the magnumholders. s) To ensure that there is no conflict of interest between the manner of deployment of its net worth by the AMC and the interest of the magnumholders. t) To periodically review the investor complaints received and the redressal of the same by the AMC. u) To abide by the Code of Conduct as specified in the fifth schedule of SEBI (MF) Regulations, v) To furnish to the SEBI on a half yearly basis :- i a report on the activities of the mutual fund; ii a certificate stating that the trustees have satisfied themselves that there have been no instances of self dealing or front running by any of the trustees, directors and key personnel of the AMC; iii a certificate to the effect that the AMC has been managing the schemes independently of any other activities and in case any activities of the nature referred to in sub-regulation (2) of regulation 24 of SEBI (MF) Regulations, 1996 have been undertaken by the AMC and has taken adequate steps to ensure that the interests of the magnumholders are protected. 15