Cyan Magenta Black Yellow Offer Document

Transcription

1 Offer Document

2 Table of Contents I. Highlights... 1 II. Definitions and Abbreviations... 2 A. Definitions... 2 B. Abbreviations... 5 C. Interpretation... 5 III Risk Factors and Special Considerations... 5 A. Standard Risk Factors... 5 Scheme specific Risk Factors... 6 B. Risk Factors associated with Derivatives... 6 C. Risk factors associated with Scrip Lending... 7 D. Risk Factors associated with Overseas Investment... 7 E. Special considerations... 7 IV. Constitution of the Fund... 9 A. The Fund... 9 B. The Sponsor... 9 C. The Trustee Company (The Trustee) I. Directors of the Trustee II. Summary of the Substantive Provisions of the Trust Deed III. Trustees - Fees and Expenses IV. Trustee - Supervisory Role D. The Asset Management Company I. Constitution II. Board of Directors of the AMC III. Duties and Responsibilities of the AMC and the material provisions of the Investment Management Agreement IV. Investment Management Fees V. Shareholding Pattern of the AMC VI. Other Activities of AMC VII. Key Employees of the AMC and relevant experience VIII.Fund Manager IX. Compliance Officer X. Investors Relations Officer E. The Registrar and Transfer Agent F. The Custodian G. The Fund Accountant H. The Auditors I. The Collection Banks E. Borrowing Powers F. Investment in the Scheme by the AMC, Sponsor or their affiliates G. Procedure and Recording of Investment Decisions 24 H. Portfolio Turnover I. Investment Restrictions J. Investment of Subscription Money K. Computation of Net Asset Value L. Accrual of expenses and income M. Pricing of Units N. Recording of changes O. Calculation of NAV P. Accounting Policies and Standards VI. Load, Fees and Expenses A. Load Structure of the Scheme B. Fees and Expenses of the Scheme C. New Fund Offer Expenses of Existing/ Past Schemes 33 D. Condensed Financial Information E. Borrowing by the Mutual Fund VII. Units and the Offer A. Units on Offer during the New Fund Offer (NFO) 35 B. Units on Offer General Information C. Purchase of Units D. Note on Anti-Money Laundering, Know-Your- Customer and Investor Protection E. Investors Personal Information F. Facilities offered to the investors under the Scheme 40 G. Redemption of Units H. Suspension of Purchase and Redemption of Units. 45 I. Right to Limit Redemptions VIII.Unit holders Rights and Services A. Unit holders Rights B. Voting Rights of the Unit holders C. Account Statements and Unit Certificates D. NAV Information E. Disclosure of Information under the Regulations.. 46 F. Duration of the Scheme G. Procedure and Manner of Winding up H. Services to the unit holders IX. Tax Benefits of investing in the Scheme V Investment Objectives, Investment Strategy, Investment Pattern and Risk Profile and Limitation of the Scheme A. AIG Infrastructure and Economic Reform Fund B. Investment in Overseas Financial Assets C. Investments in Derivatives D. Fundamental Attributes X. Other Matters A. Transaction with Sponsor/Associates B. Policy on Offshore Investments by the Scheme C. Dividends and Distributions D. Inter-Scheme Transfers E. Disclosure under Regulation 25 (11) F. General Information... 52

3 I. Highlights Sponsor AIG Capital Corporation Name of the Scheme AIG Infrastructure and Economic Reform Fund Structure An open ended equity scheme with two plans: Regular Plan Institutional Plan Both Plans will have a common portfolio. However, the returns under each Plan are expected to vary having regard to specified expense ratio under the relevant Plan. The Scheme does not assure or guarantee any returns. Investment Objective The investment objective of the Scheme is to generate long-term capital appreciation from a diversified portfolio of predominantly (at least 65%) equity and equity-related securities of companies involved in economic development of India as a result of potential investments in infrastructure and unfolding economic reforms. However there can be no assurance that the investment objective of the scheme will be realized as actual market movements may be at variance with anticipated trends. Indicative Asset Allocation Under normal circumstances, it is anticipated that the asset allocation shall be as follows: Instrument Range of Risk Allocation Profile (% of net assets) Equity and equity related securities 80% to 100% High Debt & money market securities/instruments/funds 0% to 20% Low tomedium The fund would remain fully invested upto 95% in equity and equity related securities and will have only 5% in short term debt and money market instruments to meet short term liquidity requirements of the scheme. The above Asset Allocation Pattern is only indicative. The investment manager may, in line with the investment objectives of the Scheme, alter the above pattern for a short term period, of upto 90 days, and on defensive considerations, the intention at all times being to protect the interests of the Unit Holders. Benchmark for performance BSE comparison Purchase Price for New Fund Rs.10/- per Unit plus applicable Entry Load. Offer (NFO) E.g. For purchases attracting an Entry Load (2.25%), the Purchase Price = Rs /-. For purchases not attracting Entry Load, the Purchase Price = Rs. 10/-. Purchase/Redemption Price During the Ongoing Offer period, the price for Purchases and Redemptions will be based on during Ongoing Offer Applicable NAVs subject to applicable Entry and Exit Loads/ CDSC respectively. Options available under each The Scheme offers Growth option and Dividend option. The Dividend option offers Dividend Plan Payout and Dividend Reinvestment facilities. Minimum Application Amount Regular Plan & Minimum Additional For all first time purchases, the application must be for a minimum amount of Rs. 5,000/-. For all Application Amount subsequent purchases, the application must be for a minimum amount of Rs. 5,000/-. In the case of purchases through SIP and STP, the minimum installment amount shall be Rs. 1,000/- The minimum amount in case of inter/ intra scheme (inter plan/inter option) switches shall be the minimum amount required in the respective transferee scheme/plan. Institutional Plan For all first time purchases, the application must be for a minimum amount of Rs. 5 crore. For all subsequent purchases, the application must be for a minimum amount of Rs. 5 lakh. Minimum Amount / Units for The minimum amount for redemption must be Rs. 1000/- or account balance whichever is less. Redemption Expenses The entry load charged will be used to incur the expenses during New Fund Offer. Expenses in excess of the limit prescribed under the Regulations shall be borne by the AMC. Applicable NAV For all purchase, redemption and switch transactions - For valid applications accepted: Upto 3:00 PM (cut-off time) on a Business Day - the NAV of such Business Day. After 3:00 PM (cut-off time) on Business Day, the NAV of the following Business Day. 1

4 Liquidity Transparency Load Structure The above will be applicable only for cheques / drafts / payment instruments payable locally in the city in which ISC is located. Outstation cheques / drafts will not be accepted. The Scheme will offer Units for Purchase and Redemption at NAV related prices on every Business Day on an ongoing basis, commencing not later than 30 days from the closure of the NFO Period. The Mutual Fund will endeavor to dispatch the Redemption proceeds within 3 Business Days but not later than 10 business days from the acceptance of the Redemption request. The AMC will calculate and disclose the first NAV(s) of the Scheme within a period of 30 days from the closure of the NFO Period. Subsequently, the NAVs will be calculated and disclosed on every Business Day. The AMC shall update the NAVs on the website of the Fund - and of the Association of Mutual Funds in India - AMFI ( The AMC will disclose details of the portfolio of the Scheme every 6 months by either sending a complete statement to all the Unit Holders or by publishing such statement, by way of advertisement, in two daily newspapers. The same shall also be displayed on the website of the fund. Particular Purchase Purchase through SIP/ STP Regular Plan Institutional Plan (Applicable only in Regular Plan) Entry Load Where the purchase Nil 1.25% of the (Applicable during amount is less than Applicable NAV. New Fund Offer Rs. 5 crore % and Ongoing Offer) of the Applicable NAV. Where the purchase amount is Rs. 5 crore and above - Nil. By an FOF (irrespective of the amount of Purchase) - Nil. As a result of Dividend Re-investment - Nil. Exit Load For investments less 0.50% of the If the units are (Applicable during than Rs. 5 crores - Applicable NAV if redeemed within 2 New Fund Offer 1.00% of the redeemed within 6 years from the date of and Ongoing Offer) Applicable NAV if months from the allotment % of redeemed within 1 date of allotment. the Applicable NAV. year from the date of allotment. For investments of If the units are held Rs. 5 crores and for 2 years or more above % of the from the date of Applicable NAV if allotment - Nil. redeemed within 6 months from the date of allotment. II. Definitions and Abbreviations A. Definitions In this Offer Document the following terms will have the meanings indicated there against unless the context suggests otherwise: AIG Capital Corporation / The Sponsor of the AIG Global Investment Group Mutual Fund. AIGCC Applicable NAV For applications for Purchases / Redemptions /Switches (along with a local cheque or demand draft payable at par at the place where the application is received), accepted during the Ongoing Offer Period at the Designated Collection Centres of the Fund on a Business Day up to the Cutoff time of the Scheme, the NAV of that day; and 2

5 Application Form / Key Information Memorandum Asset Management Company / AMC / Investment Manager Business Day Contingent Deferred Sales Charge / CDSC Custodian Cut-off time Collection Bank(s) Designated Collection Centres Entry Load Exit Load Foreign Institutional Investors / FII Fund of Funds / FOF Fund For applications for Purchases / Redemptions /Switches (along with a local cheque or demand draft payable at par at the place where the application is received) accepted during the Ongoing Offer Period at the Designated Collection Centres of the Fund on a Business Day after the Cutoff time of the Scheme, the NAV of the next Business Day. A form to be used by an investor to open a folio and/ or Purchase Units in the Scheme. AIG Global Asset Management Company (India) Private Limited, an asset management company set up under the Companies Act 1956, having its registered office at FCH House, Ground Floor, Peninsula Corporate Park, G. K. Marg, Lower Parel, Mumbai and authorised by SEBI to act as the Asset Management Company / Investment Manager to the schemes of the Fund. A day not being: (1) A Saturday or Sunday; (2) A day on which both Bombay Stock Exchange and the National Stock Exchange of India Limited are closed, whether or not the banks in Mumbai are open; (3) A day on which Purchase and Redemption of Units is suspended or a book closure period is announced by the Trustee / AMC; (4) A day on which normal business cannot be transacted due to storms, floods, bandhs, strikes or such other events as the AMC may specify from time to time; (5) A day on which banks in Mumbai or Reserve Bank of India (RBI) is closed; or (6) A day on which there is no RBI clearing or settlement of securities. Provided that the days when the banks in any location where the AMC's Investor Service Centres are located are closed due to a local holiday, such days will be treated as non Business Days at such centres for the purposes of accepting fresh subscriptions. However, if the Investor Service Centre in such locations is open on such local holidays, then redemption and switch requests will be accepted at those centres, provided it is a Business Day for the Scheme on an overall basis. Notwithstanding the above, the AMC reserves the right to change the definition of Business Day and to declare any day as a Business Day or otherwise at any or all ISCs. A charge to the Unit Holder upon exiting (by way of Redemption) based on the period of holding of Units. The Regulations provide that a CDSC may be charged only for a no-load Scheme and only for the first four years after the Purchase and caps the percentage of NAV that can be charged in each year. Citibank, N.A, Mumbai registered under the SEBI (Custodian of Securities) Regulations, 1996, or any other custodian who is approved by the Trustee. Cut off timing, in relation to an investor making an application to a mutual fund for purchase or sale of units, shall mean the outer limits of timings within a particular day as prescribed by SEBI which are relevant for determination of the NAV that is to be applied for the transaction. The bank(s) with which the AMC has entered into/may enter into an agreement, from time to time, to enable investors to deposit their applications for Units during the NFO. During the NFO: ISCs and branches of Collection Bank(s) designated by the AMC where the applications shall be received. During Ongoing Offer: ISCs designated by the AMC where the applications shall be received. The names and addresses of the Designated Collection Centres are mentioned in the Application Form. A Load charged to an investor on Purchase of Units based on the amount of investment or any other criteria decided by the AMC. A Load (other than CDSC) charged to the Unit Holder on exiting (by way of Redemption) based on period of holding, amount of investment or any other criteria decided by the AMC. An entity registered with SEBI under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 as amended from time to time. A mutual fund scheme that invests primarily in other schemes of the same mutual fund or other mutual funds. AIG Global Investment Group Mutual Fund, a Trust settled by AIG Capital Corporation and registered with SEBI under the Regulations, vide Registration No. MF/054/07/02 dated February 9,

6 Investment Management Agreement / IMA Investor Service Centre / ISC Net Asset Value / NAV New Fund Offer / NFO New Fund Offer Period / NFO Period Non Resident Indian / NRI Offer Document Ongoing Offer Ongoing Offer Period Person of Indian Origin Purchase / Subscription Purchase Price Registrar Redemption Redemption Price Scheme SEBI Regulations / Regulations Sponsor Switch Systematic Investment Plan / SIP Systematic Transfer Plan / STP Systematic Withdrawal Plan / SWP Transaction Slip The agreement dated December 15, 2006 entered into between AIG Trustee Company (India) Private Limited and the AIG Global Asset Management Company (India) Private Limited, as amended from time to time. Official points of acceptance of transaction / service requests from investors. These will be designated by the AMC from time to time. Net Asset Value of the Units of the Scheme (including options thereunder) calculated in the manner provided in this Offer Document or as may be prescribed by the Regulations from time to time. The offer for Purchase of Units at the inception of the Scheme, available to the investors during the NFO Period. The period being January 10, 2008 to January 31, 2008 subject to extension, if any. A person resident outside India who is a citizen of India or is a person of Indian origin as per the meaning assigned to the term under the Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, This document issued by AIG Global Investment Group Mutual Fund offering Units of AIG Infrastructure and Economic Reform Fund for subscription. Any modifications to the Offer Document will be made by way of an addendum which will be attached to Offer Document. On issuance of an addendum, the Offer Document will be deemed to be updated by the addendum. Offer of Units under the Scheme when it becomes open ended after the closure of the New Fund Offer Period. The period during which the Ongoing Offer for subscription to the Units of the Scheme is made. 'Person of Indian Origin' means a citizen of any country other than Bangladesh or Pakistan, if (a) he at any time held an Indian passport; or (b) he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or (c) the person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b). Purchase of / Subscription to Units by an investor from the Fund. The price (being Applicable NAV plus Entry Load) at which the Units can be purchased and calculated in the manner provided in this Offer Document. Computer Age Management Services Private Limited ("CAMS"), appointed as the registrar and transfer agent for the Scheme, or any other registrar that may be appointed by the AMC. Repurchase of Units by the Fund from a Unit Holder. The price (being Applicable NAV minus Exit Load / CDSC) at which the Units can be redeemed and calculated in the manner provided in this Offer Document. AIG Infrastructure and Economic Reform Fund, an open ended equity scheme. Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended from time to time, including by way of circulars or notifications issued by SEBI and the Government of India. AIGCC, being the Settlor of AIG Global Investment Group Mutual Fund. Sale of a unit in one Scheme/ Plan/Option against purchase of a unit in another Scheme/ Plan/ Option. A plan enabling investors to save and invest in the Scheme on a monthly or quarterly basis by submitting post-dated cheques/payment instructions. A plan enabling Unit Holders to transfer sums on a weekly/ fortnightly / monthly basis from the Scheme to other schemes launched by the Fund from time to time by giving a single instruction. A plan enabling Unit Holders to withdraw amounts from the Scheme on a monthly or quarterly basis by giving a single instruction. A form meant to be used by Unit Holders seeking additional Purchase or Redemption of Units in the Scheme, change in bank account details, switch-in or switch-out and such other facilities offered by the AMC and mentioned in Transaction Slips. Trustee / Trustee Company AIG Trustee Company (India) Private Limited, a company set up under the Companies Act, 1956 and appointed as the Trustee to AIG Global Investment Group Mutual Fund. Trust Deed The Trust Deed dated December 15, 2006 executed by and between the Sponsor and the Trustee establishing the AIG Global Investment Group Mutual Fund, as amended from time to time. Trust Fund Amounts settled / contributed by the Sponsor towards the corpus of the AIG Global Investment Group Mutual Fund and additions/accretions thereto. Unit The interest of an investor, which consists of one undivided share in the net assets of the Scheme. Unit Holder A person holding Units of the Scheme of AIG Global Investment Group Mutual Fund offered under this Offer Document. Valuation Day Business Day. 4

7 B. Abbreviations In this Offer Document, the following abbreviations have been used: ADR American Depository Receipt AIGCC AIG Capital Corporation, the Sponsor of the AIG Global Investment Group Mutual Fund AIGCI AIG Capital India Private Limited AMC AIG Global Asset Management Company (India) Private Limited AMFI Association of Mutual Funds in India AOP BOI BSE CDSC ECS EFT ETF FII FOF GDR HUF IMA ISC NAV NFO NRI NSE PIO POA RBI RTGS SEBI SEBI Act SEFT SIP STP SWP Association of Persons Body of Individuals Bombay Stock Exchange Limited Contingent Deferred Sales Charge Electronic Clearing System Electronic Funds Transfer Exchange Traded Fund Foreign Institutional Investor Fund of Funds Global Depository Receipt Hindu Undivided Family Investment Management Agreement Investor Service Centre Net Asset Value New Fund Offer Non-Resident Indian National Stock Exchange of India Limited Persons of Indian Origin Power of Attorney Reserve Bank of India Real Time Gross Settlement Securities and Exchange Board of India established under the SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 Special Electronic Funds Transfer Systematic Investment Plan Systematic Transfer Plan Systematic Withdrawal Plan C. Interpretation For all purposes of this Offer Document, except as otherwise expressly provided or unless the context otherwise requires: The terms defined in this Offer Document shall include the plural as well as the singular. Pronouns having a masculine or feminine gender shall be deemed to include the other. All references to "US$" refer to United States Dollars and "Rs." refer to Indian Rupees. A "Crore" means "ten million" and a "Lakh" means a "hundred thousand". 5 References to times of day (i.e. a.m. or p.m.) are to Mumbai (India) times and references to a day are to a calendar day including non-business Day. III. Risk Factors and Special Considerations A. Standard Risk Factors Mutual funds, like securities investments, are subject to market risks and there is no guarantee against loss in the Scheme or that the Scheme's objectives will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on various factors and forces affecting the securities markets. Past performance of the Sponsor or mutual funds managed by the Sponsor or its affiliates does not indicate the future performance of the Scheme. Investors in the Scheme are not being offered a guaranteed or assured rate of return. The Scheme does not guarantee or assure any dividend and also does not guarantee or assure that it will make any dividend distribution, though it has every intention to make the same. All dividend distributions are subject to the investment performance of the Scheme. AIG Infrastructure and Economic Reform Fund is the name of the Scheme and does not, in any manner, indicate the quality of the Scheme, its future prospects or returns. The Scheme and individual Plan(s) with a separate portfolio, if any, under the Scheme shall have a minimum of 20 investors and no single investor shall account for more than 25% of the corpus of the Scheme/Plan(s). However, if such a situation arises during the NFO of the Scheme, in accordance with the SEBI Regulations, the Scheme will endeavour to ensure that within a three months time period or the end of the succeeding calendar quarter from the close of the NFO of the Scheme, whichever is earlier, the Scheme complies with these two conditions failing which the provisions of Regulation 39 (2) (c) of the Regulations would become applicable automatically without any reference from SEBI and accordingly the Scheme / Plan(s) shall be wound up and the units would be redeemed at applicable NAV. The two conditions mentioned above shall also be complied within each subsequent calendar quarter thereafter, on an average basis, as specified by SEBI.SEBI has provided further clarifications with respect to determining the breach of the 25% limit by an investor - The average net assets of the scheme would be calculated daily and any breach of the 25% holding limit by an investor would be determined. At the end of the quarter, the average of daily holding by each such investor will be computed to determine whether that investor has breached the 25 % limit over the quarter. If there is a breach of limit by any investor over the quarter, a rebalancing period of one month would be allowed and thereafter the investor who is in breach of the rule shall be given 15 days notice to redeem his exposure over the 25% limit. Failure on the part of the said investor to redeem his exposure over the 25% limit within the aforesaid 15 days would lead to automatic redemption by the Fund on the applicable Net Asset Value on the 15th day of the notice period. The Scheme shall adhere to the requirements prescribed by SEBI from time to time in this regard.

8 In case Scheme fails to assemble minimum 20 investors at the time of allotment, the Scheme shall be wound up, by following the guidelines prescribed by SEBI and the investor's application money would be refunded. Further, at the time of allotment, no single investor should account for more than 25% of the corpus of such Scheme (i.e. at the portfolio level), accordingly Fund is constrained to reject the application by a single unitholder having exposure of more than 25% at the time of allotment, hence such unitholder could be allotted limited units to such extent. Scheme Specific Risk Factors The value of the Scheme's investments may be affected by factors affecting the securities markets such as price and volume volatility in the capital markets, interest rates, currency exchange rates, changes in law/policies of the Government, taxation laws and political, economic or other developments which may have an adverse bearing on individual securities, a specific sector or all sectors. Consequently, the NAV of the Units of the Scheme may be affected. Equity securities and equity related securities are volatile and prone to price fluctuations on a daily basis. The liquidity of investments made in the Scheme may be restricted by trading volumes and settlement periods. Settlement periods may be extended significantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases due to settlement problems could cause the Scheme to miss certain investment opportunities. Similarly, the inability to sell securities held in the Scheme's portfolio may result, at times, in potential losses to the Scheme, should there be a subsequent decline in the value of securities held in the Scheme's portfolio. Investments in equity and equity related securities involve a degree of risk and investors should not invest in the Scheme unless they can afford to take the risk of losing their investment. The liquidity and valuation of the Scheme's investments due to its holdings of unlisted securities may be affected if they have to be sold prior to the target date of disinvestment. Investments in money market instruments involve a moderate credit risk i.e. risk of an issuer's ability to meet the principal payments. Additionally, money market securities, while fairly liquid, lack a well-developed secondary market, which may restrict the selling ability of the Scheme and may lead to the Scheme incurring losses till the security is finally sold. Money market instruments may also be subject to price volatility due to factors such as changes in interest rates, general level of market liquidity and market perception of credit worthiness of the issuer of such instruments. The NAV of the Scheme's Units, to the extent that the Scheme is invested in fixed income securities, will be affected by changes in the general level of interest rates. When interest rates decline, the value of a portfolio of fixed income securities can be expected to rise. Conversely, when interest rates rise, the value of a portfolio of fixed income securities can be expected to decline. 6 The tax benefits described in this Offer Document are as available under the prevailing taxation laws. Investors / Unit Holders should be aware that the relevant fiscal rules or their interpretation may change. As is the case with any investment, there can be no guarantee that the tax position or the proposed tax position prevailing at the time of an investment in the Scheme will endure indefinitely. In view of the individual nature of tax consequences, each Unit Holder is advised to consult his / her / their own professional tax advisor. The liquidity of the scheme is inherently restricted by trading volumes in securities in which it invest. The Scheme will focus on companies which will benefit from structural changes brought about by continuing liberalization in economic policies by the Government and/or from continuing investments in infrastructure, both by the public and private sector. It is possible that such policies may not fructify or crystalize in a manner commensurate with expectations thereby affecting the prospects of companies held in the portfolio of the Scheme. Since, the NAV of the scheme is linked to the share price performance of such companies, they may outperform or under perform the benchmark index (BSE 100) and/or the constituents of the said benchmark index. Securities which are not quoted on the stock exchanges are inherently illiquid in nature and carry a larger liquidity risk in comparison with securities that are listed on the exchanges or offer other exit options to the investors, including put options. The AMC may choose to invest in unlisted securities that offer attractive yields within the regulatory limit. This may however increase the risk of the portfolio. Investment decisions made by the Investment Manager may not always be profitable. B. Risk Factors Associated with Derivatives Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Even a small price movement in the underlying security could have a large impact on their value. Execution of investment strategies depends upon the ability of the fund manager to identify such opportunities. Identification and execution of the strategies to be pursued by the fund manager involve uncertainty and decision of fund manager may not always be profitable. No assurance can be given that the fund manager will be able to identify or execute such strategies. The risks associated with the use of derivatives are different from or possibly greater than the risks associated with investing directly in securities and other traditional investments. The AMC may use various derivative products, as permitted by SEBI and the RBI from time to time, in an attempt to protect the value of the portfolio and enhance Unit holder's interest/value of the Scheme. As and when the Scheme trades in the derivatives market, there are risk factors and issues concerning the use of derivatives that investors should understand. Derivative products are specialized instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivatives require the maintenance of adequate controls to monitor the

9 transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the "counter party") to comply with the terms of the derivatives contract. The Scheme bears a risk that it may not be able to correctly forecast future market trends or the value of assets, indices or other financial or economic factors in establishing derivative positions for the Scheme. Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate in line with underlying assets, rates and indices. Also, the market for derivative instruments is relatively nascent in India and does not have the volumes which may be seen in other developed markets, which may result in volatility to the values. C. Risk Factors Associated with Scrip Lending The risks in lending portfolio securities, as with other extensions of credit, consist of the failure of another party, in this case, the approved intermediary, to comply with the terms of agreement entered into between the lender of securities i.e. the Scheme and the approved intermediary. Such failure to comply can result in the possible loss of rights in the collateral put up by the borrower of the securities, the inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefits accruing to the lender from the securities deposited with the approved intermediary. The Fund may not be able to sell such lent securities and this can lead to temporary illiquidity. D. Risk Factors Associated with Overseas Investment Subject to necessary approvals and within the investment objectives of the Scheme, the Scheme may invest in overseas markets which carry risks related to fluctuations in the foreign exchange rates, the nature of the securities market of the country, repatriation of capital due to exchange controls and political circumstances. It is the AMC's belief that investment in foreign securities offers new investment and portfolio diversification opportunities into multi-market and multi-currency products. However, such investments also entail additional risks. Such investment opportunities may be pursued by the AMC provided they are considered appropriate in terms of the overall investment objectives of the Scheme. Since the Scheme would invest only partially in foreign securities, there may not be readily available and widely accepted benchmarks to measure performance of the Scheme. To manage risks associated with foreign currency and interest rate exposure, the Fund may use derivatives for efficient portfolio management including hedging and in accordance with conditions as may be stipulated under the Regulations or by RBI from time to time. The Scheme may invest in ADR/GDR/Foreign Securities and / or other securities as may be permissible and described in SEBI Circular Reference No. SEBI/IMD/CIR NO. 7/104753/07 dated September 26, 2007 as may be amended from time to time, within the overall applicable limits. Overseas investments will be made subject to any/all approvals, conditions thereof as may be stipulated under the Regulations or by RBI and provided such investments do not result in expenses to the Scheme in excess of the ceiling on expenses prescribed by and consistent with costs and expenses attendant to international investing. The Fund may, where necessary, appoint other intermediaries of repute as advisors, custodian/subcustodians etc. for managing and administering such investments. The appointment of such intermediaries shall be in accordance with the applicable requirements of SEBI and within the permissible ceilings of expenses. The fees and expenses would illustratively include, besides the investment management fees, custody fees and costs, fees of appointed advisors and sub-managers, transaction costs and overseas regulatory costs. To the extent that the assets of the Scheme will be invested in securities denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by changes in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital to India may also be hampered by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment. E. Special Considerations The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond the initial contribution of an amount of Rs.1,00,000/- (Rupees One Lakh) collectively made by it towards setting up the Fund or such other accretions and additions to the initial corpus set up by the Sponsor. Neither this Offer Document nor the Units have been registered in any jurisdiction. The distribution of this Offer Document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this Offer Document are required to inform themselves about, and to observe, any such restrictions. No person receiving a copy of this Offer Document or any accompanying application form in such jurisdiction may treat this Offer Document or such application form as constituting an invitation to them to subscribe for Units, nor should they in any event use any such application form, unless in the relevant jurisdiction such an invitation could lawfully be made to them and such application form could lawfully be used without compliance of any registration or other legal requirements. Prospective investors should review / study this Offer Document carefully and in its entirety and shall not construe the contents hereof or regard the summaries contained herein as advice relating to legal, taxation, or financial / investment matters and are advised to consult their own professional advisor(s) as to the legal, tax, financial or any other requirements or restrictions relating to the subscription, gifting, acquisition, holding, disposal (by way of sale, switch or Redemption or conversion into money) of Units and to the treatment of income (if any), capitalisation, capital gains, any distribution, and other tax consequences relevant to their subscription, acquisition, holding, capitalisation, disposal (by way of sale, transfer, switch or conversion into money) of Units within their jurisdiction of nationality, residence, incorporation, domicile etc. or under the laws of any 7

10 jurisdiction to which they or any managed funds to be used to Purchase / gift Units are subject and also to determine possible legal, tax, financial or other consequences of subscribing / gifting, purchasing or holding Units before making an application for Units. AIG Global Investment Group Mutual Fund / the AMC have not authorised any person to give any information or make any representations, either oral or written, not stated in this Offer Document in connection with issue of Units under the Scheme. Prospective investors are advised not to rely upon any information or representations not incorporated in this Offer Document as the same have not been authorised by the Fund or the AMC. Any subscription, Purchase or sale made by any person on the basis of statements or representations which are not contained in this Offer Document or which are inconsistent with the information contained herein shall be solely at the risk of the investor. From time to time and subject to the Regulations, funds managed by the affiliates / associates of the Sponsor may invest either directly or indirectly in the Scheme. The funds managed by these affiliates/associates may acquire a substantial portion of the Scheme's Units and collectively constitute a major investment in the Scheme. Accordingly, Redemption of Units held by such funds may have an adverse impact on the value of the Units of the Scheme because of the timing of any such Redemption and may affect the ability of other Unit Holders to redeem their respective Units. As the liquidity of the Scheme's investments may sometimes be restricted by trading volumes, settlement periods and transfer procedures, the time taken by the Scheme for Redemption of Units may be significant in the event of an inordinately large number of Redemption requests or of a restructuring of the Scheme's portfolio. In view of this, the Trustee has the right, in its sole discretion, to limit redemptions (including suspend redemptions) under certain circumstances - please refer to the paragraph "Right to Limit Redemptions" in Chapter VII. Anti Money Laundering and Know Your Customer (KYC): In terms of the Prevention of Money Laundering Act, 2002 ("PMLA") the rules issued there under and the guidelines / circulars issued by SEBI regarding the Anti Money Laundering (AML) Laws, all intermediaries, including Mutual Funds, are required to formulate and implement a client identification programme, and to verify and maintain the record of identity and address(es) of investors. Know Your Client (KYC) The need to "Know Your Customer" is vital for the prevention of money laundering. The AMC may seek information or obtain and retain documentation used to establish identity either on its own or through another agency. It may re-verify identity and obtain any missing or additional information for this purpose. The AMC, under powers delegated by the Trustee, shall have absolute discretion to reject any application, prevent further transactions by a Unit Holder, delay in processing redemption as per applicable laws or regulations if (i) after due diligence, the investor / Unit Holder / a person making the payment on behalf of the investor 8 does not fulfill the requirements of the "Know Your Customer" or the AMC believes that the transaction is suspicious in nature as regards money laundering. In this behalf the AMC reserves the right to reject any application and effect a mandatory Redemption of Units allotted at any time prior to the expiry of 30 Business Days from the date of the application. (ii) The AMC determines in its sole discretion that the application does not or will not comply with any applicable laws or regulations. If the payment for Purchase of Units are made by a third party (e.g. a power of attorney holder, a financing agency, a relative, etc.), the Unit Holder may be required to give such details of such transaction so as to satisfy the AMC of the source and/or consideration underlying the transaction. The Mutual Fund Industry is currently in discussions with an independent agency, CDSL Ventures Limited (to be known as 'Central Agency) inorder to entrust them with the responsibility of collection of documents relating to identity and address and record keeping. As a token of having verified the identity and address and for efficient retrieval of records, the Central Agency will issue an acknowledgement to each investor who submits an application and the prescribed documents to the Central Agency. Investors who have obtained an acknowledgement can invest in the schemes of the mutual fund by referring to /submitting the acknowledgement in lieu of submitting information and documents required under AML Laws. Investors who wish to obtain an acknowledgement have to submit a completed Application Form ('the Form') along with all the prescribed documents listed in the Form, at any of the Point of Service ('POS'). The Form is available at our website ( and AMFI website ( POS are the designated centers appointed by the Central Agency for receiving the Forms, processing data and providing the acknowledgement. List of and location of POS are available at On submission of application, documents and information to the satisfaction of the POS, the investor will be given an acknowledgement across the counter. Subsequently, the Central Agency will scrutinize the information and documents submitted by the investor. In case of any deficiency in the document / information, the form will be rejected. PERMANENT ACCOUNT NUMBER (PAN) As per the Securities and Exchange Board of India (SEBI) circular dated April 27, 2007, with effect from July 02, 2007, Permanent Account Number (PAN) issued by the Income Tax Authorities has been made the sole identification number for all participants transacting in the securities market including mutual funds, irrespective of the amount of transaction. SEBI has further clarified vide letter dated June 25, 2007, that existing and potential investors, who do not have PAN should apply for PAN immediately and applications for investment should be accompanied with the evidence of having applied for PAN until December 31, Further, with effect January 01, 2008, submitting a copy of the evidence of having applied for PAN / Form 60/Form

11 61 will not be valid and it will be mandatory for all investors to provide a certified copy (as aforesaid) of the PAN card for all investments in the schemes of AIG Global Investment Group Mutual Fund. Suspicious Transaction Reporting: If after due diligence, the AMC believes that the transaction is suspicious in nature as regards money laundering, the AMC shall report any suspicious transactions to competent authorities under the PMLA and rules / guidelines issued there under by SEBI and RBI, furnish any such information in connection therewith to such authorities and take any other actions as may be required for the purposes of fulfilling its obligations under the PMLA without obtaining the prior approval of the investor / Unit Holder / a person making the payment on behalf of the investor. Investor Protection: The Scheme is designed to support longer-term investment and active trading is discouraged. Short term or excessive trading into and out of the Scheme may affect its performance by disrupting portfolio management strategies and by increasing expenses. The Fund and the distributors may refuse to accept applications for Purchase, especially where transactions are deemed disruptive, particularly from market timers or investors who, in their opinion, have a pattern of short term or excessive trading or whose trading has been or may be disruptive for the Scheme. If in the opinion of the AMC, a Unit Holder is indulging in short term or excessive trading as above, it shall, under powers delegated by the Trustee, have absolute discretion to reject any application, prevent further transaction by the Unit Holder or redeem the Units held by the Unit Holder at any time prior to the expiry of 30 Business Days from the date of the application. Investors are urged to study the terms of the Offer carefully before investing in the Scheme and to retain this Offer Document for future reference. DUE DILIGENCE CERTIFICATE It is confirmed that: 1. The draft Offer Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time. 2. All legal requirements connected with the launching of the Scheme and also the guidelines, instructions, etc. issued by the Government of India and any other competent authority in this behalf, have been duly complied with. 3. 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. 4. All the intermediaries named in the Offer Document are registered with SEBI and till date such registration is valid. For AIG Global Asset Management Company (India) Private Limited Date : August 31, 2007 Signature : Sd/- Place : Mumbai Name : Sonal Barot Designation : Head-Compliance & Company Secretary Note: The aforesaid Due Diligence Certificate dated August 31, 2007 was submitted to the Securities and Exchange Board of India on September 7, IV. Constitution of the Fund A. The Fund The AIG Global Investment Group Mutual Fund has been constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated December 15, The Fund was registered with SEBI vide registration number MF/054/07/02 dated February 9, The office of the Mutual Fund is at FCH House, Ground Floor, Peninsula Corporate Park, G. K. Marg, Lower Parel, Mumbai , India. The objective of the Fund is to raise monies through the sale of units to the public or a section of the public under one or more schemes for investing in securities. B. The Sponsor The sponsor of the AIG Global Investment Group Mutual Fund is AIG Capital Corporation (AIGCC), a company incorporated under the laws of Delaware, United States of America, having its registered office at Corporation Services Center, 2711 Centerville Road, Suite 400, Wilmington Delaware, USA and its principal office at 70 Pine Street, 17th Floor, New York, New York, USA AIGCC is 100% owned by American International Group, Inc. ("AIG"), which was also incorporated in the State of Delaware, on June 9, 1967, as a successor to a business that was initially started in 1919 in Shanghai, China. AIG is a holding company which, through its subsidiaries, is engaged in a broad range of insurance and insurance-related activities in the United States and abroad. AIG's primary activities include both general insurance and life insurance and retirement services operations. Other significant activities include financial services and asset management. AIG's common stock is listed in the U.S. on the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and Tokyo. AIGCC was incorporated mainly to consolidate all the noninsurance financial services businesses of AIG under one company. Many of AIGCC's direct and indirect subsidiaries are companies engaged in asset management, consumer finance and other non-banking finance activities. These companies are located in the United States and around the world, including the United Kingdom, Ireland, Japan, Hong Kong, Thailand, Brazil and Canada, among other locations. The financial statements of the direct and indirect subsidiaries of AIGCC are consolidated in the audited consolidated financial statements of AIG. AIG Investments and the Sponsor. AIG Investments comprises a group of international companies that provide investment advice and market asset management products and services to clients around the world. AIG Investments is headquartered in New York and has a total of 45 investment offices employing over 2,000 employees as of 30 September Each of its member companies has the capability to provide investment services to clients worldwide. Additionally, the extensive network and resources of the AIG companies, which operate in 130 countries and jurisdictions, complement AIG Investments network. AIG Investments offers a wide range of investment capabilities divided into five major groups - Equity, Fixed Income, Real 9

12 Estate, Private Equity, Hedge funds and Other Alternate asset classes. AIG Investments managed approximately USD 744 billion in assets as of 30 September There are 45 offices operating in regional centers in North America, Europe, South America, Africa and Asia and employing over 2,000 persons. Given below is a brief summary of the Sponsor's (AIG Capital Corporation) audited financial information: (Amount in US $) Description December 31, 2006 December 31, 2005 December 31, 2004 Total Revenue 6,340,947,389 5,310,449,043 4,273,468,908 Profit Before Tax 1,443,568,223 1,338,988,162 1,064,206,129 a Profit After Tax 1,154,060, ,244, ,456,424 a Free Reserves 6,372,035,079 5,751,618,693 4,849,187,815 Net Worth 5,580,997,280 5,159,686,714 4,300,388,754 Earnings per Share 45,103 54,223 52,766 b Book Value per Share 637, , ,920 Dividend (%) Paid Up Capital (Equity) 2,666,402,330 2,393,943,066 1,928,900,306 Share Capital Suspense c Paid Up Capital (Preference) 5,000 5,000 5,000 a This amount represents income before equity in earnings(loss) of affiliated companies and minority interest. (Amount in US $) December 31, 2006 December 31, 2005 December 31, 2004 Profit Before Tax 1,443,568,223 1,338,988,162 1,064,206,129 Taxes 289,508, ,743, ,749,705 Profit After Taxes 1,154,060, ,244, ,456,424 Equity in Earnings (loss) of Affiliated Companies 86,622,942 28,012,158 87,699,575 Minority Interest 789,649, ,022, ,496,344 Net Income 451,033, ,234, ,659,655 b Earnings per Share is calculated as follows: Net Income divided by Number of Shares - Common Stock. All common stock is owned by AIG, Inc. c. There is no additional amount subscribed but not issued. As such subscribed capital and issued capital are the same. Definitions of Financial Terms used above under US Generally Accepted Accounting Principles: Free Reserves is Retained Earnings plus Additional Paid in Capital ("APIC") for Common Stock excluding amounts paid above par for Preferred Stock. Net worth is Common Stock plus APIC plus Retained Earnings less any Deferred Expenses and Intangible Asset, excluding Preferred Stock. Book Value per Share is the sum of Common Stock at par and Free Reserves divided by the number of shares of Common Stock, excluding Preferred Stock. Dividends are required only for Common Stock. Paid Up Capital (Equity) is Common Stock plus APIC. Share Capital Suspense is the additional amount subscribed but not issued if subscribed capital and issued capital are not the same. Paid Up Capital (Preference) is Preferred Stock at par plus the amount paid above par value for Preferred Stock. Value of Preferred Stock is the amount paid at par plus the amount paid above par value for Preferred Stock. Surplus in the Profit and Loss Account is Retained Earnings. C. The Trustee Company (The Trustee) AIG Trustee Company (India) Private Limited (the "Trustee"), a company incorporated under the Companies Act, 1956 on October 30, 2006 vide registration number U MH 2006 PTC , has been appointed as the Trustee to the AIG Global Investment Group Mutual Fund vide Trust Deed dated December 15, The Registered Office of the Trustee is situated at FCH House, Ground Floor, Peninsula Corporate Park, G. K. Marg, Lower Parel, Mumbai