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									                                                                                                  OFFER DOCUMENT




                                                                      INVITES SUBSCRIPTIONS TO




                                                             APPLICATION FORMS ARE AVAILABLE WITH SBIFM
                                                             AGENTS, STOCK EXCHANGE BROKERS, AUTHORIZED
                                                             BRANCHES OF SBI AND HDFC BANK, SBIMF INVESTOR
                                                             SERVICE CENTRES & SBIFM’s OFFICE


                                                            “This offer document sets forth the 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
                                                            (Mutual Funds) 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 (other than a change in the
                                                            fundamental attributes and within the purview of the offer
                                                            document) occurs and thereafter the changes shall be filed with
                                                            SEBI and circulated to the Magnumholders.”
      SBI MUTUAL FUND
           Principal Trustee : State Bank of India,
Assets Management Company : SBI Funds Management Limited,
Magnum TaxGain Scheme

                                                                      I. CONTENTS

 I.      CONTENTS ---------------------------------------------------------------------------------------------------------------------------------    2


 II.     DEFINITIONS AND EXPLANATIONS OF TERMS USED ----------------------------------------------------------------------                             3


 III.    RISK FACTORS ----------------------------------------------------------------------------------------------------------------------------     4


 IV.     HIGHLIGHTS OF THE SCHEME ------------------------------------------------------------------------------------------------------               5


 V.      DUE DILIGENCE CERTIFICATE -------------------------------------------------------------------------------------------------------             5


 VI.     EXPENSES ----------------------------------------------------------------------------------------------------------------------------------   6


 VII.    CONDENSED FINANCIAL INFORMATION ----------------------------------------------------------------------------------------                      8


 VIII.   CONSTITUTION OF THE MUTUAL FUND -----------------------------------------------------------------------------------------                     13


 IX.     INVESTMENT OBJECTIVES & POLICIES ------------------------------------------------------------------------------------------                   16


 X.      MANAGEMENT OF THE FUND -------------------------------------------------------------------------------------------------------                21


 XI.     UNITS AND OFFER -----------------------------------------------------------------------------------------------------------------------       24


 XII.    SALE OF UNITS ---------------------------------------------------------------------------------------------------------------------------     25


 XIII.   INTER-SCHEME TRANSFERS ---------------------------------------------------------------------------------------------------------              27


 XIV.    ASSOCIATE TRANSACTIONS --------------------------------------------------------------------------------------------------------               27


 XV.     BORROWING BY THE MUTUAL FUND --------------------------------------------------------------------------------------------                     28


 XVI.    NAV AND VALUATION OF ASSETS OF THE SCHEME -----------------------------------------------------------------------                             28


 XVII. RETURNS & DISTRIBUTIONS ---------------------------------------------------------------------------------------------------------               30


 XVIII. REDEMPTION AND REPURCHASE --------------------------------------------------------------------------------------------------                   31


 XIX.    ACCOUNTING POLICIES & STANDARDS -----------------------------------------------------------------------------------------                     32


 XX.     TAX TREATMENT OF INVESTMENTS IN MUTUAL FUNDS -----------------------------------------------------------------                                33


 XXI.    INVESTORS’ RIGHTS AND SERVICES ---------------------------------------------------------------------------------------------                  33


 XXII. INVESTOR GRIEVANCES REDRESSAL MECHANISM -------------------------------------------------------------------------                               37


 XXIII. PENDING LEGAL PROCEEDINGS AND OTHER INFORMATION -----------------------------------------------------------                                    37




                                                                                2
Magnum TaxGain Scheme

                            II. DEFINITIONS AND EXPLANATIONS OF TERMS USED
The AMC                 :   The Asset Management Company; refers to “SBI Funds Management Pvt. Ltd (SBIFM)”, a wholly
                            owned subsidiary formed by State Bank of India which manages the assets of investors in various
                            schemes of SBI Mutual Fund.
AMC Fees                :   Investment management & advisory fees charged by the AMC to the scheme as disclosed in the
                            section on “Expenses” in the offer document.
The Auditors            :   The statutory auditors to the scheme whose appointment is approved by the Board of Trustees of
                            SBI Mutual Fund. This is disclosed under the section “Management of the Fund” in the Offer
                            Document.
Business Day/           :   Means (i) a day other than Saturday and Sunday, (ii) a day on which banks in Mumbai are not
Working Day                 required or not obligated by law or executive order to remain closed, (iii) a day on which the sale
                            and redemption of Magnums is not suspended.
The Custodians          :   The custodians to the scheme whose appointment is approved by the Board of Trustees of SBI
                            Mutual Fund. This is disclosed under the section “Management of the Fund” in the Offer Document.
Contingent Deferred     :   CDSC a charge imposed when the Magnums are redeemed within the first four years of Unit
Sales Charge (CDSC)         ownership. Under the SEBI Regulations, the Fund can charge CDSC to Magnumholders exiting
                            from the scheme within 4 years of entry. SEBI Regulations mandate the maximum amount that can
                            be charged in each year.
The Date of Application :   The date of receipt of a valid application complete in all respects for issue or repurchase (depending
                            upon the context) of Magnums of the Scheme by the Registrars, SBIMF Corporate Office, SBIMF
                            Investors Service Center.
The Fund                :   SBI Mutual Fund (SBIMF); constituted as a Trust with SBI as the Principal Trustee, to mobilize
                            savings from a wide cross-section of people and to provide them attractive returns, security and
                            liquidity through investments in capital & money markets.
ISCs                    :   Investor Service Centres opened by SBI Mutual Fund at various locations in India, listed in the
                            section “Investors’ Rights & Services” in the Offer Document.
Magnum                  :   One undivided unit issued under the Scheme by SBI Mutual Fund.
Magnum Holder           :   Any eligible applicant who has been allotted and holds a valid Magnum in his/her/its name.
NAV                     :   The Net Asset Value of the Magnums of the Scheme.
NRI                     :   An Indian who in any previous year has not resided for a period/s amounting in all to 182 days or
                            has not resided within the four years preceding that year for a period or periods more than 365
                            days or for a period or periods more than 60 days in that year.
NSE                     :   The National Stock Exchange, Mumbai.
The Offer               :   The issue of Magnums of the Scheme as per the terms contained in this Offer Document.
Offer Document          :   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.
The Principal Trustee   :   State Bank of India
RBI                     :   Reserve Bank of India, established under Reserve Bank of India Act, 1934.
The Registrars          :   The registrars and transfer agents to the scheme whose appointment is approved by the Board of
                            Trustees of SBI Mutual Fund. This is disclosed under the section “Management of the Fund” in the
                            Offer Document.
SBI                     :   State Bank of India, having its Central Office at State Bank Bhavan, Madame Cama Road,
                            Mumbai - 400 021. Also referred to as the Sponsor or the Settlor or the Principal Trustee.
SBIMF                   :   SBI Mutual Fund (see “the Fund”)
SBIFM                   :   SBI Funds Management Pvt. Ltd. (see “the AMC”)
The Scheme              :   Magnum TaxGain Scheme of SBI Mutual Fund.
SEBI                    :   Securities and Exchange Board of India established under Securities and Exchange Board of India
                            Act, 1992.
SEBI Regulations        :   Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 for the time being in
                            force and as amended from time to time.
The Settlor             :   State Bank of India
The Sponsor             :   State Bank of India, having its Central Office at State Bank Bhavan, Madame Cama Road,
                            Mumbai - 400 021, which has made an initial contribution of Rs. 5 lacs towards the trust fund and
                            has appointed a Board of Trustees to supervise the activities of the Fund.
Switchover              :   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.
The Trustees            :   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 as disclosed in the section “Constitution of
                            the Mutual Fund” in the Offer Document.
Unit Capital            :   The aggregate face value of the Magnums issued and outstanding under the Scheme.

                                                              3
Magnum TaxGain Scheme
                                                           III. RISK FACTORS

1. Standard Risk Factors
a.   Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the Fund’s
     objective will be achieved.
b. As with any investment in securities, the NAV of the units issued under the scheme can go up or down depending on the
   factors and forces affecting the capital markets.
c.   Past performance of the Sponsor / AMC / Mutual Fund does not guarantee the future performance of the schemes of the
     Mutual Fund.
d. Magnum TaxGain Scheme 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.   State Bank of India, 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.
2. Scheme specific Risk Factors
a.   Magnum TaxGain Scheme will be investing in equity & equity related instruments, derivatives as also debt instruments
     (including securitized debt), 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). 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.
b. Subject to necessary approvals, the Scheme may invest in overseas markets, which carry a risk on account of fluctuations in
   the foreign exchange rates.
c.   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.
d. 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 issuer’s 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 values 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 counter-party 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
Magnum TaxGain Scheme
                                                   IV. HIGHLIGHTS OF THE SCHEME
     1      An open-ended scheme offering easy issue & repurchase at NAV related prices on an ongoing basis.
     2      Scheme open for Resident Indians, Trusts, Indian Corporates, on a fully repatriable basis for NRIs and Overseas Corporate
            Bodies
     3      There is a statutory lock-in period of three years for investments in a Tax Saving Scheme (irrespective of the fact whether
            the investors claim the rebate u/s 88 or any other section or not).
     4      On an ongoing basis an entry load of 1.75% of the NAV will be applicable for sale of units under this scheme.
     5      Tax benefit u/s 88: The Fund offers tax benefits on subscription up to Rs. 10,000/- under section 88 of the Income-tax Act,
            1961 in an assessment year. This eligible amount for tax rebate can be raised or reduced as per amendments in the Income-
            tax Act, 1961. There is a statutory lock-in period of three years for claiming rebate under section 88. Liquidity is ensured
            after the expiry of the lock-in period.
     6      Minimum amount per application is Rs. 500/- and in multiples of Rs. 500/- thereafter.
     7      Dividends may be declared depending on distributable profits of the scheme. Facility to reinvest dividend proceeds into the
            scheme at NAV.
     8      Switchover facility to any other open-ended schemes of SBI Mutual Fund at NAV related prices available after the statutory
            lock-in period.
     9      Systematic Withdrawal Plan: A minimum of Rs. 500 can be withdrawn every month or quarter by issuing advance instructions
            to the Registrars at any time. This facility is available only after the lock-in period of three years.
     10     Systematic Investment Plan: A facility (like the bank recurring deposits) available. Minimum investment Rs. 3000 (Rs. 500
            p.m. for 6 months). This facility is available only at the ISC Centres.
     11     Other Tax benefits: As per the prevailing tax laws,
            (a) Income from Mutual Fund is currently remains fully exempt from tax in the hands of investors.
            (b) Tax benefit is available under sections 48 & 112 on capital gains for resident Indians. The Unitholders will have the
                option to pay the long term capital gains tax @ 10% (plus applicable surcharge) without the cost inflation index benefit
                or @ 20% (plus applicable surcharge) with the cost inflation index benefit, whichever is more beneficial.
            (c) Magnums held under this scheme will not be liable to wealth tax and gift tax.
     These tax exemptions will strictly be governed by the relating provisions and the relevant 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 (Mutual Funds)
          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.




                                                                             Signature    :
                                                                             Name         :    R. J. Chand
                                                                                               Managing Director
                                                                                               SBI Funds Management Pvt. Ltd.
                                                                                               (seal)
Date          : 27.02.2002
Place         : Mumbai.




                                                                      5
Magnum TaxGain Scheme
                                                           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                                                                                        % of NAV
   Entry load imposed on purchases of magnums on an ongoing basis                                           1.75%
   Entry load if any on issue of Magnums in lieu of dividends                                               Nil
   Contingent deferred entry load                                                                           Nil
   Redemption/ repurchase/exit load                                                                         Currently Nil
   Switchover/ exchange fee                                                                                   Nil
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, within the overall ceiling of 3.00%
of NAV in case of sales load and repurchase load, 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 entire total initial issue expenditure amounting to Rs. 358.07 lakhs of the (earlier) close-end scheme has been amortised prior to
the scheme being converted to open-end.

(b) Past Schemes :
       Scheme Name           Estimated Issue        Actual Issue                         Remarks
                                Expenses             Expenses
 Magnum Children’s Benefit 4.46% of the Initial Rs. 0.886 cr., i.e., Expenses upto the extent of 6% was borne by the
 Plan                      issue corpus         29.41% of initial Scheme and the balance was borne by the AMC
                                                corpus

Magnum Index Fund              2.00% of the Initial Rs. 0.16 cr., i.e., The initial issue expenses with the exception of brokerage
                               issue corpus         0.55% of initial were borne by the AMC.
                                                    corpus
 Magnum Debt Fund Series 0.15% of the Initial Rs. 0.01 crores i.e. Expenses upto the extent of the Brokerage (Rs. 59,000)
 15 Months, 90 days, 180 issue corpus         0.00027% of Initial was borne by the Scheme and the balance by the AMC
 days &60 days Fund Series                    corpus

 Magnum Monthly Income 5.9% of the Initial Rs. 1.19 cr., i.e. Being a load scheme, the entire issue expense was borne
 Plan                  issue corpus        3.38% of initial by the scheme.
                                           corpus

 Magnum Gilt Fund              2.92% of the Initial Rs. 0.36 cr., i.e., Being a no load scheme, the entire initial issue expenses
                               issue corpus.        0.123% of initial were borne by the AMC.
                                                    corpus


                                                                    6
Magnum TaxGain Scheme
3. Annual Scheme Recurring Expenses :
The category of expenses and the ceilings prescribed by SEBI for the annual recurring expenses are indicated in the table below:
 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,             On actuals, within the overall ceiling mentioned below.
 if any

 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

 Total Expenses Charged to the scheme                                 Subject to the following limits :

                                                                      i)     2.50% on the first Rs. 100 cr. of average weekly net assets.
                                                                      ii)    2.25% on the next Rs. 300 cr. of average weekly net assets
                                                                      iii)   2.00% on the next Rs. 300 cr. of the average weekly net
                                                                             assets
                                                                      iv)    1.75% 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.




                                                                  7
Magnum TaxGain Scheme
                                         VII. CONDENSED FINANCIAL INFORMATION

1. Historical Per Unit Statistics
The data for 2001-2002 pertains to data up to and as on 31st January 2002.
                                                                Magnum Monthly Income Scheme 1998 (II)
 Particulars                                                Monthly             Quarterly               Annual           Cumulative
                                                            Income               Income                Income               Growth
                                                             Option               Option                Option              Option
 (Statistics for the year 1999-2000)
 NAV at the beginning of the year                            10.15                  10.36                 10.36                 10.38
 Net Income per unit (before payout)                         2.771                  2.754                 1.580                 2.950
 Dividends (Payout)                                          1.441                  1.264                 1.325                    —
 Transfer to Reserves (if any)                                  —                      —                     —                     —
 Latest NAV (as on 31.03.2000)                               11.33                  11.49                 11.58                 12.95
 Annualized Return (%) (Since Inception)                   25.82%                 24.45%               24.76%                24.73%
 Net Assets at the end of the year (Rs. Cr.)                 58.04                  20.17                 93.15                 14.31
 Ratio of recurring expenses to Net Assets (%)              1.35%                  1.35%                1.35%                  1.35%
 (Statistics for the year 2000 – 2001)
 NAV at the beginning of the year                            11.33                  11.49                 11.58                 12.95
 Net Income per unit (before payout)                         2.841                  2.777                 3.125                 3.130
 Dividends (Payout)                                          2.311                  2.057                 1.325                    —
 Transfer to Reserves (if any)                                  —                      —                     —                     —
 Latest NAV (as on 31.03.2001)                               10.52                  10.71                 10.81                 13.52
 Annualized Return (%) (Since Inception)                     15 %                 14.46%               14.69%                14.91%
 Net Assets at the end of the year (Rs. Cr.)                 52.65                  18.34                 84.97                 14.51
 Ratio of recurring expenses to Net Assets (%)              1.48%                  1.48%                1.48%                  1.48%
 (Statistics for the year 2001 – 2002)
 NAV at the beginning of the year                            10.52                  10.71                 10.81                 13.52
 Net Income per unit (before payout)                         3.898                  3.825                 4.150                 4.730
 Dividends (Payout)                                          3.418                  3.355                 3.500                    —
 Transfer to Reserves (if any)                                  —                      —                     —                     —
 Latest NAV (as on 31.01.2002)                               10.48                  10.47                 10.65                 14.73
 Annualized Return (%) (Since Inception)                   13.65%                 13.16%               13.55%                13.74%
 Net Assets at the end of the year (Rs. Cr.)                 50.75                  17.26                 68.38                 16.28
 Ratio of recurring expenses to Net Assets (%)              1.40%                  1.40%                 1.40%                 1.40%
(Date of allotment of units: 29th January 1999)
Note: The NAV for 2001-2002 is dated as on 31st January 2002 and for the other years is dated 31 st March 2001. The historical per
unit statistics have been calculated upto the period ending 31st January 2002. 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
Magnum TaxGain Scheme
 Particulars                                                                                     Magnum Income Fund (Growth)
                                                                                   2001-2002           2000-2001         1999-2000
 NAV at the beginning of the period                                                   13.1100             11.8100             10.52

 Net income per unit                                                                     4.870              3.110             1.810

 Dividends per unit                                                                         —                  —                  —

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                         14.8700             13.1100           11.8100

 Annualized return since inception for the period                                     13.32%              12.30%            13.28%

 Net Asset at the end of the period                                                    555.49              453.59            326.46

 Ratio of Recurring expenses to Net Assets                                              1.59%              1.54%             1.97%
                                th
 (Date of allotment of units: 30 November, 1998)
 Particulars                                                                                     Magnum Income Fund (Dividend)
                                                                                   2001-2002           2000-2001         1999-2000
 NAV at the beginning of the period                                                   10.2100             10.3400             10.52

 Net income per unit                                                                     3.715              2.505             1.635

 Dividends per unit                                                                      2.845              2.295             1.295

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                         10.8700             10.2100           10.3400

 Annualized return since inception for the period                                     11.77%              10.91%              12.54

 Net Asset at the end of the period                                                    461.77              280.35            351.59

 Ratio of Recurring expenses to Net Assets                                              1.59%              1.54%             1.97%
                                th
 (Date of allotment of units: 30 November, 1998)
 Particulars                                                                                     Magnum Growth Fund
                                                                                   2001-2002           2000-2001         1999-2000
 NAV at the beginning of the period                                                       7.94              16.36             10.00

 Net income per unit                                                                     4.325              4.065            12.485

 Dividends per unit                                                                      6.125              6.125             6.125

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                             8.20               7.94             16.36

 Annualized return since inception for the period                                     22.64%              29.26%           124.85%

 Net Asset at the end of the period                                                    169.43              164.33            338.20

 Ratio of Recurring expenses to Net Assets                                              0.20%              0.15%             0.41%
 (Date of allotment of units: Magnum Growth Fund – 24th May 1999)
Note: The NAV for 2001-2002 is dated as on 31st January 2002 and for the other years is dated 31st March 2001. The historical per unit
statistics have been calculated upto the period ending 31st January 2002. 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
Magnum TaxGain Scheme
 Particulars                                                                                     Magnum InstaCash (Cash)
                                                                                   2001-2002          2000-2001        1999-2000

 NAV at the beginning of the period                                                   11.8272             10.8389              10.00
 Net income per unit                                                                     2.576              1.827              0.830
 Dividends per unit                                                                         —                  —                  —
 Transfer from Reserves                                                                     —                  —                  —
 NAV at the end of the period                                                         12.5759             11.8272              10.83
 Annualized return since inception for the period                                       9.89%              9.53%            8.30%*
 Net Asset at the end of the period                                                      94.55              47.47               8.35
 Ratio of Recurring expenses to Net Assets                                              0.86%                0.82            0.47%
                                                           th
(Date of allotment of units: Magnum InstaCash Fund – 28 May 1999)
 Particulars                                                                                     Magnum InstaCash (Dividend)
                                                                                   2001-2002           2000-2001         1999-2000
 NAV at the beginning of the period                                                   10.3120               11.01              10.00

 Net income per unit                                                                     2.242             1.6420              1.010

 Dividends per unit                                                                    1.9768              1.3300                 —

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                         10.2647             10.3120              11.01

 Annualized return since inception for the period                                       8.35%                8.82          10.10%*

 Net Asset at the end of the period                                                      96.56               5.59               0.09

 Ratio of Recurring expenses to Net Assets                                              0.94%              1.16%             0.58%
(Date of allotment of units: Magnum InstaCash Fund – 28th May 1999)
 Particulars                                                                                       MSFU (Contra)
                                                                                   2001-2002           2000-2001         1999-2000
 NAV at the beginning of the period                                                       7.88               9.45              10.00

 Net income per unit                                                                    -1.350             -2.120             -0.550

 Dividends per unit                                                                         —                  —                  —

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                             8.65               7.88               9.45

 Annualized return since inception for the period                                      -5.62%             -13.31%           -5.50%*

 Net Asset at the end of the period                                                      11.92              10.93              10.88

 Ratio of Recurring expenses to Net Assets                                              1.63%              1.69%             2.06%

(Date of allotment of units: 31st July 1999)
Note: The NAV for 2001-2002 is dated as on 31st January 2002 and for the other years is dated 31st March 2001. The historical per unit
statistics have been calculated upto the period ending 31st January 2002. 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
Magnum TaxGain Scheme
 Particulars                                                                                          MSFU (IT)
                                                                                   2001-2002          2000-2001          1999-2000
 NAV at the beginning of the period                                                       6.99               40.2               10.0

 Net income per unit                                                                     0.300             0.990             20.800

 Dividends per unit                                                                          4                  4                  4

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                             6.30               6.99               40.2

 Annualized return since inception for the period                                      -1.69%              7.69%          342.00%*

 Net Asset at the end of the period                                                      60.83              65.49            234.93

 Ratio of Recurring expenses to Net Assets                                              1.54%              1.62%             2.06%

(Date of allotment of units: 31st July 1999)
 Particulars                                                                                     MSFU (Pharma)
                                                                                   2001-2002          2000-2001          1999-2000
 NAV at the beginning of the period                                                       8.93             10.97              10.00

 Net income per unit                                                                    -3.870             -1.070             0.970

 Dividends per unit                                                                         —                  —                  —

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                             8.64               8.93             10.97

 Annualized return since inception for the period                                      -5.66%             -6.56%            9.70%*

 Net Asset at the end of the period                                                      20.54              21.48             19.77

 Ratio of Recurring expenses to Net Assets                                              1.51%              1.54%             2.06%
                                st
(Date of allotment of units: 31 July 1999)
 Particulars                                                                                      MSFU (FMCG)
                                                                                   2001-2002          2000-2001          1999-2000
 NAV at the beginning of the period                                                        6.7             10.92              10.00

 Net income per unit                                                                    -3.870             -3.300             0.920

 Dividends per unit                                                                         —                  —                  —

 Transfer from Reserves                                                                     —                  —                  —

 NAV at the end of the period                                                             6.13                6.7             10.92

 Annualized return since inception for the period                                     -17.73%             -9.47%            9.30%*

 Net Asset at the end of the period                                                      10.83              11.87             12.65

 Ratio of Recurring expenses to Net Assets                                              1.75%              2.49%             2.06%
                                st
(Date of allotment of units: 31 July 1999)
Note: The NAV for 2001-2002 is dated as on 31st January 2002 and for the other years is dated 31st March 2001. The historical per unit
statistics have been calculated upto the period ending 31st January 2002. 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
Magnum TaxGain Scheme
 Particular                                                             Magnum Gilt (ST-Div)                 Magnum Gilt (ST-Gr)
                                                                 2001-2002         2000-2001          2001-2002          2000-2001
 NAV at the beginning of the period                                10.0649               10.00            10.2785              10.00

 Net income per unit                                                   1.190             0.285              1.440             0.278

 Dividends per unit                                                     1.04              0.22                 —                  —

 Transfer from Reserves                                                  —                  —                  —                  —

 NAV at the end of the period (as on 31.01.2002)                   10.1503            10.0649             11.4398           10.2785

 Annualized return since inception for the period                   11.48%             2.85%*             13.16%            2.78%*

 Net Asset at the end of the period (as on 31.01.2002)                 32.54             35.13              12.02               5.17

 Ratio of Recurring expenses to Net Assets                            1.20%               1.13             1.20%                1.26
                              rd
(Date of allotment of units: 23 December 2000)
 Particulars                                                            Magnum Gilt (LT- Div)                  Magnum Gilt (LT-Gr)
                                                                 2001-2002         2000-2001          2001-2002          2000-2001
 NAV at the beginning of the period                                10.1264               10.00            10.3258              10.00
 Net income per unit                                                   2.059             0.426              2.565             0.326
 Dividends per unit                                                     1.35              0.30                 —                  —
 Transfer from Reserves                                                  —                  —                  —                  —
 NAV at the end of the period (as on 31.01.2002)                   10.7085            10.1264             12.5653           10.3258
 Annualized return since inception for the period                   19.43%             4.26%*             23.36%            3.26%*
 Net Asset at the end of the period                                   529.28           258.66               46.19              14.13

 Ratio of Recurring expenses to Net Assets                          1.278%              0.62%              1.30%              1.24%
                              rd
(Date of allotment of units: 23 December 2000)
 Particulars                                                                      Magnum Monthly Income Plan (2001-2002)
                                                               Growth Div          Annual Div      Quarterly Div           Monthly
 NAV at the beginning of the period                                    10.00             10.00              10.00              10.00

 Net income per unit                                                   0.911             1.031              0.905              0757

 Dividends per unit                                                       —                 —              0.6050            0.6390

 Transfer from Reserves                                                  —                  —                  —                  —

 NAV at the end of the period (as on 31.01.2002)                   10.9109            11.0308             10.2999           10.1179

 Annualized return since inception for the period                 10.96%*            12.41%*              11.16%*           8.56%*

 Net Asset at the end of the period                                    22.00             12.60              11.18              10.46

 Ratio of Recurring expenses to Net Assets                          1.475%            1.475%              1.475%            1.475%
                              rd
(Date of allotment of units: 23 March 2001)
Note: The NAV for 2001-2002 is dated as on 31st January 2002 and for the other years is dated 31st March 2001. The historical per unit
statistics have been calculated upto the period ending 31st January 2002. 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
Magnum TaxGain Scheme
 Particulars                                                                               Magnum Debt Fund Series
                                                                      15 Months (D)                60 Days (D)           180 Days (D)
 NAV at the beginning of the period                                            10.00                                             10.00
 Net income per unit                                                           0.481                                             0.211
 Dividends per unit                                                               0.4                        —                      —
 Transfer from Reserves                                                            —                         —                      —
 NAV at the end of the period ((as on 31.01.2002)                            10.0806                                           10.2108
 Annualized return since inception for the period                            4.94%*                                            7.03%*
 Net Asset at the end of the period                                            15.42                                              1.12
 Ratio of Recurring expenses to Net Assets                                      0.3%                                            0.46%
 Date of allotment of units                                            7th July, 2001                             12th October, 2001
                                                 st                                                   st
Note: The NAV for 2001-2002 is dated as on 31 January 2002 and for the other years is dated 31 March 2001. The historical per
unit statistics have been calculated upto the period ending 31st January 2002. 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 31st 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)                                     181.17             2.84
 MMPS 93                      State Bank of India (Equity)                                     380.26             1.74
                              SBI Home Finance Ltd. (Equity)                                   0.01               Negligible
 MELS91                       State Bank of India (Equity)                                     0.10               Negligible
 MMIS-97                      State Bank of India (Equity)                                     20.92              0.48
                              State Bank of Hyderabad (Bonds)                                  143.07             3.26
                              State Bank of Travancore (Bonds)                                 105.8              2.41
 Magnum Balanced Fund         State Bank of India (Equity)                                     0.10               Negligible
 (formerly MOEF-95)           State Bank of Hyderabad (Bonds)                                  105.20             0.92
                              State Bank of Travancore (Bonds)                                 105.80             0.93
 MLIF-98                      State Bank of India (Bonds)                                      507.03             0.69
 MMIS 98(II)                  State Bank of Saurashtra (Bonds)                                 105.58             0.66
 MMIS 98(I)                   SBH (Bonds)                                                      105.20             0.87
                              State Bank of Saurashtra (Bonds)                                 52.79              0.44
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, 1996.

                                        VIII. CONSTITUTION OF THE MUTUAL FUND
1. Constitution :
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 AMC.
                                                                 13
Magnum TaxGain Scheme
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 - 400 021, 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 31st                              2001                2000              1999               1998                1997
 Total Income (Rs. Cr.)                             30021              25770             22392              18699              17594
 Profit after Tax (Rs. Cr.)                          1604               2051              1028               1861                1349
 Equity Capital (Rs. Cr.)                            526                 526               526                 526                526
 Free Reserves (Rs. Cr.)                            12935              11620              9876               9082                7451
 Net Worth (Rs. Cr.)                                13461              12147             10402               9608                7977
 Deposits (Rs. Cr.)                              242828              196821             169041             131091             110701
 Earnings per share (Rs.)                           30.48               38.98             19.53              35.36              26.66
 Book Value per share (Rs.)                       255.76               230.93           197.64              182.66             151.65
 Capital Adequacy Ratio (%)                         12.79               11.49             12.51              14.58              12.17
 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                                          Current Directorships
                                                              Principal Occupation
 Prof. A.M. Khusro            5th Floor,                      Economist        1. Chairman and Director, Kohinoor
 Chairman, Board              Guru Angad Bhavan,                                  Cement Ltd.
 of Trustees                  71, Nehru Place,                                 2. Chairman, Transworld Leasing Ltd.
                              New Delhi - 110 079                              3. Chairman, J & K Industrial and
                                                                                  Technical Consultancy Organisation
                                                                               4. Director, Indian Express Newspaper
                                                                               5. Chairman and Director, Mekaster Finlease Ltd.
                                                                               6. Chairman and Director, Mekaster
                                                                                  Securities (P) Ltd.
 Dr. (Mrs.) Malati Anagol     Flat No. 6, Koumari,        Economist            1. Director, Imeco Ultrasonics Pvt. Ltd.
 Trustee                      Ahimsa Marg, Khar (West),                        2. Director, Imeco Cleaning & Welding
                              Mumbai - 400 052                                    Equipments (P) Ltd.
 Prof. S.K. Barua             Indian Institute of         Professor,           1. Indian Oil Corporation
 Trustee                      Management, Vastrapur,      IIM, Ahmedabad       2. Securities Trading Corporation of India
                              Ahmedabad- 380 015                               3. Bombay Stock Exchange
 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 400 057                                   3. Director, Sun Vacuum Formers Ltd.
                                                                               4. Director, E-Serve International Ltd.
                                                                               5. Director, Kopran Ltd.
                                                                               6. Deposit Insurance and Credit
                                                                                  Guarantee Corporation
                                                                               7. ICAI Accounting Research Fundation
 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 400 021
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
Magnum TaxGain Scheme
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, 1996.
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, 1996.
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.




                                                                         15
Magnum TaxGain Scheme
t)          To periodically review the investor complaints received and             (vi) Trustees shall immediately report to Board of any special
            the redressal of the same by the AMC.                                        developments in the Mutual Fund.
u)          To abide by the Code of Conduct as specified in the fifth               B. Specific Due Diligence:
            schedule of SEBI (MF) Regulations, 1996.
v)          To furnish to the SEBI on a half yearly basis :-                        The Trustees shall:

       i        a report on the activities of the Mutual Fund;                      (i)    obtain internal audit reports at regular intervals from
                                                                                           independent auditors appointed by the Trustees.
       ii       a certificate stating that the trustees have satisfied
                themselves that there have been no instances of self                (ii)   obtain compliance certificates at regular intervals from the
                dealing or front running by any of the trustees, directors                 asset management company.
                and Key Personnel of the AMC;                                       (iii) hold meeting of trustees at frequent intervals.
       iii      a certificate to the effect that the AMC has been                   (iv) consider the reports of the independent auditors and
                managing the schemes independently of any other                          compliance reports of asset management company at the
                activities and in case any activities of the nature referred             meetings of trustees for appropriate action.
                to in sub-regulation (2) of regulation 24 of SEBI (MF)
                                                                                    (v)    maintain records of the decisions of the Trustees at their
                Regulations, 1996 have been undertaken by the AMC                          meetings and of the minutes of the meetings.
                and has taken adequate steps to ensure that the
                interests of the Magnumholders are protected.                       (vi) prescribe and adhere to a code of ethics by the Trustees,
                                                                                         asset management company and its personnel.
w)          The independent Trustees referred to in SEBI (MF)
            Regulation 16 shall give their comments on the report                   (vii) communicate in writing to the asset management company
            received from the AMC regarding the investments made                          of the deficiencies and checking on the rectification of
            by the schemes in the securities of group companies of the                    deficiencies.
            Sponsor.
                                                                                    6. Trusteeship Fees
x)          The trustees shall ensure that no change in the fundamental
            attributes of any scheme or the trust or fees and expenses              As per the provisions of the Trust Deed, the Principal Trustee,
            payable or any other change which would modify the                      viz., State Bank of India, is entitled to a trusteeship fee of 0.01%
            scheme and affects the interest of Magnum holders, shall                p.a. of net asset value of each scheme, subject to a minimum
            be carried out unless, a written communication about the                fee of Rs. 15 lakhs to be allocated across schemes in proportion
            proposed change is sent to each Magnum holder and an                    to their weekly average NAVs. Fees, however can be modified
            advertisement is given in one English daily newspaper                   with the approval of the Board of Trustees, within reasonable
            having nationwide circulation as well as in a newspaper                 limits.
            published in the language of the region where the Head                  7. Modifications to the Trust Deed
            Office of the mutual fund is situated; and the Magnum
            holders are given an option to exit at the prevailing Net               No amendments to the Trust Deed will be carried out without
            Asset Value without any exit load.                                      the prior approval of SEBI and the Magnumholders’ approval
                                                                                    would be obtained where it affects the interests of the
Explanation: For the purposes of this clause “fundamental
                                                                                    Magnumholders.
attributes” means the investment objectives and terms of a
scheme as defined later in the offer document under the section
                                                                                           IX. INVESTMENT OBJECTIVES & POLICIES
“Investment Objectives and Policies”.
As per the SEBI (MF) Regulation 18(25), the Trustees shall                          1. The Scheme :
exercise due diligence as under:
                                                                                    Magnum TaxGain Scheme 1993 commenced its operations from
A. General Due Diligence:                                                           1st April, 1993. This scheme was launched as a close-ended
                                                                                    scheme redeeming on 31st March, 2003. The scheme was
(i)         the Trustees shall be discerning in the appointment of the              converted into an open-ended Scheme with effect from 12th
            directors on the Board of the asset management company.                 November, 1999.
(ii)        Trustees shall review the desirability of continuance of the
            asset management company if substantial irregularities are              2. Fundamental Attributes :
            observed in any of the schemes and shall not allow the                  The following attributes will be considered as fundamental
            asset management company to float new schemes.                          attributes :
(iii) The trustee shall ensure that the Trust property is properly                  i. Type of Scheme          :   Open-ended Equity Linked Savings
      protected, held and administered by proper persons and                                                       Scheme.
      by a proper number of such persons.
                                                                                    ii. Investment Objective :     (a) Deliver the benefit of investment
(iv) The trustee shall ensure that all service providers are                                                           in a portfolio of equity shares,
     holding appropriate registrations from the Board or                                                               while offering tax rebate on such
     concerned regulatory authority.                                                                                   investments made in the scheme
(v)         The Trustees shall arrange for test checks of service                                                      under section 88 of the Income
            contracts.                                                                                                 Tax Act, 1961.



                                                                               16
Magnum TaxGain Scheme
                               (b) Distribute income periodically             Investment in FCDs & PCDs will be in securities rated as
                                  depending on distributable                  investment grade by a credit rating agency authorised to carry
                                  surplus.                                    out such activity under the SEBI Act, 1992. In case a debt
iii. Terms of Issue        :   The nature and duration of the                 instrument is not rated, Mutual Funds may constitute committees
                               Scheme, provision for repurchase,              who can approve such proposals for investments in unrated
                               Scheme expenses & fees, as stated              instruments subject to the approval of the detailed parameters
                               elsewhere in the Offer Document.               for such investments by the Board of Directors and the Board of
                                                                              Trustees. The Scheme being open-ended, some portion of the
The fundamental attributes as defined above or fees and                       portfolio will be invested in highly liquid money market
expenses payable or any other change which would modify the                   instruments or government paper so as to meet the normal
scheme and affects the interest of Magnum holders, shall not                  repurchase requirements. The remaining investments will be
be carried out unless, a written communication about the                      made in securities which are either expected to be reasonably
proposed change is sent to each Magnum holder and an                          liquid or of varying maturities. However, the NAV of the Scheme
advertisement is given in one English daily newspaper having                  may be impacted if the securities invested in are rendered illiquid
nationwide circulation as well as in a newspaper published in                 after investment.
the language of the region where the Head Office of the Mutual
                                                                              The above investment pattern is indicative. The fund manager
Fund is situated; and the Magnum holders are given an option
                                                                              may change this on defensive considerations, and such changes
to exit at the prevailing Net Asset Value without any exit load.
                                                                              shall be for short period. The funds raised under the scheme
3. Type, Nature & Duration of the scheme :                                    shall be invested only in transferable securities as per SEBI
                                                                              Regulations, 1996.
Magnum TaxGain Scheme is an open ended scheme. Being open
ended the Scheme will have an unlimited duration.                             5. Portfolio Turnover Policy :

4. Investment Strategy :                                                      The portfolio may be churned in order to take advantage of
                                                                              movements in stock market in order to maximise the average
The broad investment pattern of the scheme will be as follows :               returns on the portfolio while maintaining a desirable risk profile
    Instrument                       % of portfolio Risk Profile              and adequate liquidity. The expenses such as brokerage and
    Equities, Cumulative                80-100%         Medium                transaction costs due to churning will be kept at a level where it
    Convertible Preference                                                    does not impact the earning of the Scheme to any significant
    Shares, and Fully                                                         extent.
    Convertible Debentures (FCDs)
    & Bonds*                                                                  6. Investment limitations
 Money Market Instruments **            00-20%             Low                The investment policies of the scheme comply with the rules,
                                                                              regulations and guidelines laid out in the SEBI (MF) Regulations,
*      Investment shall also be made in Partly Convertible
                                                                              1996. As per the Regulations, specifically the Seventh Schedule,
       Debentures (PCDs) and bonds including those issued on
       rights basis subject to the condition that as far as possible          the following investment limitations are applicable to schemes
       the non-convertible portion of the debentures so acquired              of Mutual Funds.
       or subscribed shall be divested within a period of 12 months.          a.   The scheme shall not invest more than 15% of its NAV in
       The balance funds shall be invested in short term money                     debt instruments issued by a single issuer, which are rated
       market instruments or other liquid instruments or both. The                 not below investment grade by a credit rating agency
       investment process as above will be completed within six                    authorized to carry out such activity under the Act. Such
       months. In the interim period the funds will be invested in                 investment limit may be extended to 20% of the NAV of
       short term money market instruments or other liquid                         the scheme with the prior approval of the Board of Trustees
       instruments or both. After 6 months from the closure of                     and the Board of Asset Management Company. Such limit
       the scheme, the fund may invest an amount not exceeding                     shall not be applicable for investments in government
       15% of the resources mobilised in money market and other                    securities and money market instruments. Also investment
       liquid instruments could go upto 20% of the net assets of                   within such limit can be made in mortgaged-backed
       the scheme.                                                                 securitized debt, which are rated not below investment
**     Money Market Instruments will include Commercial Paper,                     grade by a credit rating agency registered with the Board.
       Certificates of Deposit, Treasury Bills, Bills Rediscounting,
       Repos, short term bank deposits, short-term Government                 b.   The Scheme shall not invest more than 10% of its NAV in
       securities (of maturities less than 1 year) and any other such              unrated debt instruments issued by a single issuer and the
       short-term instruments as may be allowed under the                          total investment in such instruments shall not exceed 25%
       regulations prevailing from time to time.                                   of the NAV of the Scheme. All such investments shall be
                                                                                   made with the prior approval of the Board of Trustees and
The investments may be made in primary as well as secondary                        the board of asset management company.
markets. The portfolio will be sufficiently diversified so as to
reduce the risk of underperformance due to unexpected security-               c.   Debt instruments in which the scheme invests should be
specific factors. If allowed in future, the fund may invest in foreign             rated as not below investment grade by at least one
equities (subject to relevant RBI guidelines and subject to RBI                    recognized credit rating agency authorized under the SEBI
approval).                                                                         Act, 1992. In case a debt instrument is not rated, Mutual


                                                                         17
Magnum TaxGain Scheme
     Funds may constitute committees who can approve such                                of the sponsor; or
     proposals for investments in unrated instruments subject                     ii     any security issued by way of private placement by an
     to the approval of the detailed parameters for such                                 associate or group company of the sponsor; or
     investments by the Board of Directors and the Board of
     Trustees.                                                                    iii    the listed securities of group companies of the sponsor
                                                                                         which is in excess of 25% of the net assets .
d.   The Fund Schemes shall not own more than 10% of any                     p.   The scheme shall not invest more than 10% of its NAV in
     company’s paid up capital carrying voting rights or such                     the equities or equity related instruments of any company
     percentage as may be stipulated by SEBI from time to time;                   and shall not invest more than 5% of its NAV in the unlisted
e.   Transfer of investments from one scheme to another                           equities or equity related instruments
     scheme, including this scheme, under the Mutual Fund shall                   In addition to the above limitations, the Mutual Fund follows
     be allowed only if :                                                         certain internal norms vis-à-vis limiting exposure to a
                                                                                  particular scrip, sector, etc in respect of diversified equity
     (i)   Such transfers are done at the prevailing market price                 funds, which are detailed below:
           for quoted securities on spot basis; explanation – “spot
           basis” shall have the same meaning as specified by                     i)     Initial investment in any single company should not
           the stock exchange for spot transactions, and                                 exceed 7.5% of the net assets. This limited will not
                                                                                         apply to index funds or sector or industry specific
     (ii) The securities so transferred shall be in conformity with                      schemes.
          the investment objective of the relevant scheme to
                                                                                  ii)    Total investment y the Fund in any single company
          which such transfer has been made.
                                                                                         should not exceed 4% of the paid up equity capital of
f.   The scheme may purchase or sell securities to any other                             the Company.
     scheme of the Mutual Fund as stated above.                                   iii)   Sectoral caps linked to the weightages in the BSE 200
g.   The initial issue expenses in respect of any scheme,                                Sector Weight in BSE-200 Proposed Cap in Portfolio
     including this scheme, may not exceed 6% of the funds                                                        Weight
     raised under that scheme.
                                                                                         0-2%                         10%
h.   The Mutual Fund shall buy and sell securities on the basis
     of deliveries and shall in all cases of purchases, take delivery                    2-7.5%                       15%
     of relative securities and in all cases of sale, deliver the                        More than 7.5%               Index Weight + 7.5%
     securities and shall in no case put itself in a position whereby                                                 (subject to a cap of 20%)
     it has to make short sale or carry forward transaction or
                                                                             These exposure limits are being followed with the objective to
     engage in badla finance.
                                                                             ensure diversification of portfolio and risk minimization. These
i.   The scheme shall provide that the securities be purchased               internal norms are subject to periodic review and change
     or transferred in the name of the Mutual Fund for the                   depending on market conditions and in the interest of the
     relevant scheme, wherever the investments are intended                  Magnumholders. Such changes whenever made would be
     to be of a long-term nature.                                            effected without prior notice to the Magnum holders but would
j.   Pending deployment of funds of the scheme in securities                 be reflected in the periodic portfolio disclosures sent to Magnum
     pursuant to the investment objectives of the scheme the                 holders.
     Mutual Fund can invest the funds of the scheme in short-                Notwithstanding the foregoing investment policies, for
     term deposits of scheduled commercial banks.                            temporary defensive purposes (e.g., during periods in which
k.   The assets of the scheme shall not in any manner be used                the Asset Management Company believes changes in the
     in short selling or carry forward transactions.                         securities markets or economic or other conditions warrant),
                                                                             the scheme may invest substantially in Indian Government
l.   The mutual fund under all its schemes will not own more
                                                                             Treasury Bills and or keep cash balances which will be deployed
     than ten per cent of any company’s paid up capital carrying
                                                                             in call markets. The Trustees have the right in their sole discretion,
     voting rights.
                                                                             to limit redemptions under certain circumstances. Please refer
m. The scheme may invest in another scheme under the same                    to the paragraph “Right to Limit Redemptions” in the section
   asset management company or any other Mutual Fund                         “Redemption and Repurchase”. Please refer to the section “NAV
   without charging any fees, provided that aggregate                        and Valuation of Assets of the scheme”.
   interscheme investment made by all schemes under the
   same management or in schemes under the management                        7.Investments in Associate or Group Companies of the
   of any other asset management company shall not exceed                    Sponsor :
   5% of the net asset value of the Mutual Fund.
                                                                             The scheme will not invest more than 25% of net assets of the
n.   The Mutual Fund will enter into derivatives transactions in
                                                                             scheme in the securities of the State Bank Group companies.
     a recognized stock exchange for the purpose of hedging
                                                                             Further, the aggregate investment made by all the SBI Mutual
     and portfolio balancing, in accordance with the guidelines
                                                                             Fund schemes in the securities of State Bank Group companies
     issued by the Board.
                                                                             will not exceed 25% of the net assets of the fund as a whole.
o.   The scheme shall not make any investment in;                            The scheme shall not invest in privately placed or unlisted
     i     any unlisted security of an associate or group company            securities of associates / group companies.


                                                                        18
Magnum TaxGain Scheme
As per Seventh Schedule of SEBI (MF) Regulations, 1996, ‘No            amount as they deem appropriate. But the AMC shall not be
Mutual Fund shall make any investment in :                             entitled to charge any management fees on this investment in
                                                                       the scheme. Investments by the AMC will be in accordance with
(a)   any unlisted security of an associate or group company of
                                                                       Regulation 24(3) of the SEBI(MF) Regulations, 1996 which states
      the sponsor, or
                                                                       that :
(b) any security issued by way of private placement by an
                                                                       “ the asset management company shall not invest in any of its
    associate or group company of the sponsor, or
                                                                       schemes unless full disclosure of its intention to invest has been
(c)   the listed securities of group companies of the sponsor          made in the offer document provided that the asset management
      which is in excess of 30% of the net assets of all the           company shall not be entitled to charge any fees on its
      schemes of the Mutual Fund.’                                     investment in the scheme.”
8. Investment in other schemes :                                       10. Underwriting :
The investment by this scheme in other Mutual Fund schemes             The Scheme may take up underwriting of the securities of other
will be in accordance with Regulation 44(1), Seventh Schedule          issuers subject to the relevant SEBI Regulations and as may be
of the SEBI (MF) Regulations, 1996 according to which :                permitted by the Board of Directors of the AMC.
“ A scheme may invest in another scheme under the same asset           Regulation 46 states that :
management company or any other Mutual Fund without
                                                                       “ Mutual Funds may enter into underwriting agreement after
charging any fees, provided that aggregate inter-scheme
                                                                       obtaining a certificate of registration in terms of the SEBI
investment made by all schemes under the same management
                                                                       (Underwriters) Rules and SEBI (Underwriters) fRegulations, 1993
or in schemes under the management of any other asset
                                                                       authorising it to carry on activities as underwriters.
management company shall not exceed 5% of the net asset
value of the Mutual Fund”.                                             (1)   For the purpose of these regulations, the underwriting
                                                                             obligation will be deemed as if the investments are made
In order to be consistent with the Scheme’s objectives, such an
                                                                             in such securities.
investment may only be in another scheme investing in equity
or equity-linked securities or derivatives based on equity. No         (2)   The capital adequacy norms for the purpose of underwriting
investment management fee will be charged by the AMC on                      shall be the net assets of the scheme. Provided that the
such investments.                                                            underwriting obligation of a Mutual Fund shall not at any
                                                                             time exceed the total net asset value of the scheme.”
9. AMC’s investments in the scheme :
The AMC may invest in the scheme on an ongoing basis, such


11. Trading in Derivatives
a) Use of Derivatives
(i) The Fund may use any hedging techniques that are permissible now or in future, under SEBI regulations, in consonance with the
scheme’s investment objective, including investment in derivatives such as interest rate swaps. As per SEBI guidelines, the Fund’s
trading in derivatives shall be restricted to hedging and portfolio balancing purposes. The Fund shall fully cover its position in the
derivatives market by holding underlying securities / cash or cash equivalents / option and / or obligation for acquiring underlying
assets to honour the obligations contracted in the derivatives market. The Fund shall maintain separate records for holding the cash
and cash equivalents / securities for this purpose. The securities held shall be marked to market by the AMC to ensure full coverage
of investments made in derivative products at all times.
(ii) Illustration: Interest Rate Swap (IRS)
Assume that a Mutual Fund has INR 10 crore, which is to be deployed in overnight products for 7 days. This money will be exposed
to interest rate risk on daily basis. The fund can buy an Interest Rate Swap receiving fixed interest rate and paying NSE MIBOR.
The deal will be as under:


               Counterparty Bank                                                                 Mutual Fund


                                              Floating rate (NSE MIBOR)
               Receives                                                                          Pays


                                                  Fixed rate (8.75%)
               Pays                                                                              Receives




                                                                  19
Magnum TaxGain Scheme
The cash flows on a notional principal amount of Rs. 10 crs. would be-
                                                                                                                               (in Rs. Crore)
                                                                            Principal          NSE MIBOR         Interest            Amount
                                  Day 1                                     10.0000               8.10%         .0022192        10.00221918
                                  Day 2                                     10.00222              8.20%         .0022466        10.00446575
                                  Day 3                                     10.00447              8.30%          .002274        10.00673973
                           Day 4 (for 2 days)            Saturday           10.00674              8.15%         .0044658        10.01120548
                                  Day 5                  Sunday                                  Holiday
                                  Day 6                                     10.01121              8.40%         .0023014        10.01350685
                                  Day 7                                     10.01351              8.50%         .0023288        10.01583562
                        Floating Interest Payable                                                                               .0158356164
                       Fixed Interest Receivable                                                                                .0167808219
         Net Receivable for Mutual Fund receiving fixed rate                                                                    .0009452055

In this example Mutual Fund stands to gain by receiving fixed rates. As the NSE MIBOR floating rate is decided daily, in adverse
scenario, the Mutual Fund may have to pay the difference.
The counter-party providing Swap, Options, Forward Rate Agreements (FRAs) will do the same at a cost.
(iii) The risks involved in derivatives are:                               (vi) Exposure limits: The Mutual Fund will set the exposure limits
1.   The cost of hedge can be higher than adverse impact of                at a future date with the requisite internal approvals.
     market movements.                                                     b) Valuation
2.   The derivatives will entail a counter-party risk to the extent        (i)    The traded derivatives shall be valued at market price in
     of amount that can become due from the party.                                conformity with the stipulations of sub clauses (i) to (v) of
3.   An exposure to derivatives in excess of the hedging                          clause 1 of the Eighth Schedule to the SEBI Regulations.
     requirements can lead to losses.                                      (ii)   The valuation of untraded derivatives shall be done in
4.   An exposure to derivatives can also limit the profits from a                 accordance with the valuation method for untraded
     genuine investment transaction.                                              investments prescribed in sub clauses (i) and (ii) of clause
                                                                                  2 of the Eighth Schedule to the SEBI Regulations.
5.   Efficiency of a derivatives market depends on the
     development of a liquid and efficient market for underlying           c) Reporting
     securities and also on the suitable and acceptable                    The AMC shall cover the following aspects in their reports to
     benchmarks.                                                           trustees periodically, as provided for in the Regulations:
Methods to tackle these risks:                                             (i)    Transactions in derivatives, both in volume and value terms.
1.   Hedging will not be done on a carpet basis but based on a             (ii)   Market value of cash or cash equivalents / securities held
     view about interest rates, economy and expected adverse                      to cover the exposure.
     impact.
                                                                           (iii) Any breach of the exposure limit laid down in the scheme
2.   Limits of appropriate nature will be developed for counter                  offer document.
     parties
                                                                           (iv) Short-fall, if any, in the assets covering investment in
3.   Such an exposure will be backed by assets in the form of                   derivative products and the manner of bridging it.
     cash or securities adequate to meet cost of derivative
                                                                           The Trustees shall offer their comments on the above aspects
     trading and loss, if any, due to unfavourable movements in
                                                                           in the report filed with SEBI under sub regulation (23) (a) of
     the market.
                                                                           regulation 18 of SEBI Regulations.
(iv) The losses that may be suffered by the investors as a
consequence of such investments:                                           12. Procedures followed for Investment decisions
1.   As the use of derivatives is based on the judgement of the            The proposals for investments in equity, debt or money market
     Fund Manger, the view on market taken may prove wrong                 instruments originate from the Fund Manager and are put up to
     resulting in losses.                                                  the Investment Committee for approval. The Managing Director
2.   The upside potential of investments may be limited on                 and in his absence the Executive Vice President presides over
     account of hedging which may cause opportunity losses.                the proceedings of the committee. Each proposal is a written
                                                                           document with reasons for the proposed sale/purchase and
(v) The use of derivatives for hedging will give benefit of:               reasons for rejection (if any) are recorded.
1.   Curtailing the losses due to adverse movement in interest             The performance of all the schemes are reviewed at quarterly
     rates                                                                 intervals by the Committee of Directors and Board of Trustees
2.   Securing upside gains at cost                                         and is benchmarked against the BSE Sensitive Index and also



                                                                      20
Magnum TaxGain Scheme
to comparable schemes in the industry, while the performance             these 12 schemes have been redeemed. Of the 22 schemes still
of the debt schemes are bench marked to the rankings issued              being managed, 13 are open-ended Schemes and the rest are
by CRISIL/Value Research etc.                                            close-ended schemes, with total net assets of approximately
                                                                         Rs.3450 crores (as on 31st January 2002), including offshore
13. Stock lending                                                        funds.
Stock lending means the lending of stock to another person or            2. AMC Fees
entity for a fixed period of time, at a negotiated compensation.
The securities lent will be returned by the borrower on expiry of        For management of the above funds, the AMC at present charges
the stipulated period.                                                   a fee not exceeding 1% of the weekly average NAV of each
The Fund may in future carry out stock-lending activity under            scheme, which is charged to the respective scheme.
any of its schemes, in order to augment its income. Stock-lending        In future, the AMC may modify the fee from scheme to scheme,
may involve risk of default on part of the borrower. However,            within the limits specified in the Regulations and disclosed in
this risk will be substantially reduced as the Fund has opted for        the offer documents of the respective schemes.
the “Principal Lender Scheme of Stock Lending”, where entire
risk of borrower’s default rests with approved intermediary and          3. Board of Directors
not with the Fund. There may also be risks associated with Stock         The Board of Directors of the SBIFM Pvt. Ltd., comprises the
Lending such as liquidity and other market risks.                        following eminent persons:
Any stock lending done by the scheme shall be in accordance
with any Regulations or guidelines regarding the same.                    Shri Janaki Ballabh               Corporate Centre,
                                                                          Chairman                          Nariman Point,
The AMC will apply the following limits, should it desire to              State Bank of India               Mumbai - 400 021.
engage in Stock Lending:
a.   Not more than 20% of the net assets can generally be                 Shri (Prof) S.L. Rao              D-1 Chartered Cottage
     deployed in Stock Lending                                            Writer & Consultant               8- Langford Road
                                                                                                            Bangalore - 560 025
b.   Not more than 5% of the net assets can generally be
     deployed in Stock Lending to any single counter party.               Shri R.G. Kare                    Kare House
The Policy followed for stock lending has been approved by the            Industrialist                     Near Metropol Cinema
Board of Directors of the AMC and the Board of Trustees.                                                     .
                                                                                                            P O. Box No. 739, Margao,
                                                                                                            Goa - 403 601.
            X. MANAGEMENT OF THE FUND
                                                                                   .
                                                                          Shri D. P Roy                     202, Maker Tower ‘E’
The Board of Trustees of SBI Mutual Fund has entrusted the                Chairman                          Cuffe Parade,
management of the Fund to SBI Funds Management Pvt. Ltd.,                 SBI Capital Markets Ltd.          Mumbai - 400 005.
the AMC. Further details regarding the set up are furnished in
the following paragraphs.                                                 Shri R. J. Chand               191, Maker Tower ‘E’
                                                                          Managing Director              Cuffe Parade,
1. About the AMC :                                                        SBI Funds Management Pvt. Ltd. Mumbai - 400 005.
SBI Funds Management Pvt. Ltd. (SBIFM) having its corporate               Shri R. Sundararaman              Corporate Centre,
office at 191, Maker Tower “E”, 19th floor, Cuffe Parade, Mumbai
                                                                          Dy. Managing Director &           Nariman Point
- 400 005, is a wholly owned subsidiary formed by State Bank of
                                                                          Group Executive                   Mumbai - 400 021.
India. As per the audited accounts on 31st March 2001, the
authorized and paid up capital of the AMC was Rs. 50 crores               (Associates & Subsidiaries)
and the net worth of the AMC was Rs. 57.97 crores.                        State Bank of India

SBI Funds Management Pvt. Limited has signed an Investment                Shri Manu Chadha                  Kuthiala Building,
Management Agreement with the Trustees of SBI Mutual Fund                 Chartered Accountant              B-30, Connaught Place,
on 14th May 1993. In terms of this Agreement, SBIFM has                                                     New Delhi 110 001.
assumed the day to day investment management of the fund
and in that capacity makes investment decisions and manages              4. Key Personnel
the SBI Mutual Fund Schemes in accordance with the scheme
objectives, Trust Deed, provisions of Investment Management              The day to day operations of the AMC are looked after by
Agreement and SEBI Regulations & Guidelines.                             experienced and qualified professionals, consisting of senior
                                                                         officials on deputation from the State Bank of India as well as
To date, SBIFM has successfully launched and managed 32                  directly recruited officials of the AMC.
schemes (including 2 offshore funds) of SBI Mutual Fund. Of




                                                                    21
Magnum TaxGain Scheme
a. The top key management personnel of SBI Funds Management Pvt. Ltd. are
  Name & Age             Designation              Educational           Business Experience             Last Assignment
                                                  Qualifications
  Shri R. J. Chand       Managing Director        M.Sc.(Physics)        Experience of over 30 years     CGM-Project Finance - SBU
  58 years                                        C.A.I.I.B.            with SBI, including 12 years    SBI, Corporate Centre,
  (Associated with                                                      as a senior executive.          Mumbai
  SBIMF since
  January 2002)
  Shri K G Ravindran     Executive                M.Sc., C.A.I.I.B.     Experience of over 34 years     D.G.M./G. M. SBI CAG
  58 years               Vice President                                 with SBI including 6 years as   Branch - Chennai
  (Associated with                                                      a Senior Executive.
  SBIMF since
  May 2000)
b. Head Of Investments ( Equity & Debt )
  Name & Age              Designation            Educational            Business Experience             Last Assignment
                                                 Qualifications
  Shri. Pratip Chaudhuri Sr. Vice President      B.Sc.(Hons)            Experience of over 26 years     D.G.M.- Merchant Banking
  48 years                                       Chemistry,             with SBI.                       & International Banking
  (Associated with                               MBA, C.A.I.I.B.                                        Division - Corporate Office
  SBIMF since                                                                                           Mumbai
  November 2001)
c. Fund Manager
  Name & Age             Designation             Qualifications         Experience
  Mr. Sandip Sabharwal Asst. Vice President       B. Tech., P.G.D.M.    Experience of over 6 years with SBI Mutual Fund and
  30 years                                                              presently managing funds with net assets of about
                                                                        Rs. 300 crores.
In absence of the fund manager, one of the other fund managers will look after the operations of the scheme.
The AMC has appointed the following personnel as fund managers for various schemes:
  Name & Age              Designation             Qualifications        Experience
  Mr. Ajay Bodke          Asst. Vice President    B.E. (Mechanical), Experience of over 6 years with SBI Mutual Fund and
  30 years                                        MMS                presently managing funds with net assets of about
                                                                     Rs. 250 crores
  Shri Saravana Kumar     Asst. Vice President    B.E., PGDM (IIM-B) Experience of around 9 years in area of funds management
  35 years                                        C.A.I.I.B          in the mutual fund industry and 4 years in the Software
  (Associated with                                                   industery and presently managing funds with net assets
  SBIMF since                                                        of about Rs.2300 crores.
  January 2001)                                                      Last assignment : A.G.M. (Funds Management) Unit Trust of
                                                                     India from March 1993 to December 2000.
  Mr. Sachin Sawrikar     Asst. Vice President    B.E., PGDM            Experience of over 6 years with SBI Mutual Fund and
  30 years                                                              presently managing funds with net assets of about
                                                                        Rs. 300 crores
  Shri Anil Bamboli       Asst. Vice President    B. Com, Grad     Experience of over 8 years in area of funds management
  30 years                                        ICWA, MMS (Fin), in the Mutual Fund industry
  (Associated with                                CFA              Last assignment : A.G.M. (Funds Management) SBI Treasury
  SBIMF since                                                      Corporate Centre, Mumbai
d. Head of Equity Research
  Name & Age              Designation            Qualifications         Experience
  Ms. Aparna Nirgude      Asst. Vice President B. Com, M.B.A            Experience of over 8 years with SBI Mutual Fund
  30 years                                                              in the area of equity research and funds management
The Research team comprises of 10 junior management professionals having related experience of around 6 months to 1 ½ years.




                                                                   22
Magnum TaxGain Scheme
e. Company Secretary cum Compliance Officer
     Name & Age               Designation           Qualifications                Experience
     Ms Sonal Barot           Asst Vice President B.Com (Hons),                   Over 14 years experience as a Company Secretary in
     35 years                                     FCS                             various reputed companies.
     (Associated with                                                             Last Assignment : Chrysalis Capital.
     SBIMF since
     August 2001)
f. Investor Relation Officer
     Name & Age               Designation           Qualifications                Experience
     Shri. Dinesh Prasad      Vice - President      M.A., C.A.I.I.B.              Experience of over 28 yearswith SBI, including working
     52 years                                                                     as AGM(Region) for 3 ½ years and 2 years in SBI Mutual
                                                                                  Fund.
The Investor Relations Officer will look into investor grievances regarding deficiencies, if any, in the services provided by the
Registrars or the Investor Service Centres. He can be contacted at the address given in the section on ‘Investors’ Rights and
Services’. The AMC will have the discretion to change the Key Personnel depending on operational necessities and in the overall
interest of the fund.

5. Duties and Obligations of the Asset Management                            commission paid is also disclosed in the half yearly/annual
                                                                             accounts of the Mutual Fund *.
Company:
                                                                             *
                                                                               Note: Please note that the AMC utilizes the services of some
Under the SEBI (MF) Regulations, 1996 and the Investment                     branches of the SBI Group as authorized collecting branches
Management Agreement the AMC has the following obligations:                  for the scheme. It may also utilize the services of some of the
a)     to take all reasonable steps and exercise due diligence to            Associate companies of SBI for various transactions. This has
       ensure that the investment of funds pertaining to any                 also been mentioned in the section ‘Associate Transactions’.
       scheme is not contrary to the provisions of SEBI (MF)                 Suitable disclosure as required under SEBI (MF) Regulations
       Regulations 1996 and the Trust Deed.                                  1996 will be made in the half yearly and annual accounts of the
                                                                             Fund.
b)     to exercise due diligence and care in all its investment
       decisions as would be exercised by other persons engaged              i)     to file with the trustees the details of transactions in
       in the same business.                                                        securities by the Key Personnel of the asset management
                                                                                    company in their own name or on behalf of the asset
c)     to be responsible for the acts of commissions or omissions
                                                                                    management company and to also report to the SEBI, as
       by its employees or the persons whose services have been
                                                                                    and when required by the SEBI.
       procured by the AMC.
                                                                             j)     In case the AMC enters into any securities transactions with
d)     to submit to the trustees quarterly reports of each year on
       its activities and the compliance with SEBI (MF) Regulations                 any of its associates, a report to that effect shall be sent to
       1996.                                                                        the trustees at their next meeting.

e)     The trustees at the request of the Asset Management                   k)     In case any company has invested more than 5% of the
       Company may terminate the assignment of the AMC at any                       net asset value of a scheme, the investment made by that
       time provided that such termination shall become effective                   scheme or by any other scheme of the same Mutual Fund
       only after the trustees have accepted the termination of                     in that company or its subsidiaries shall be brought to the
       assignment and communicated their decision in writing to                     notice of the trustees by the AMC and to be disclosed in
       the AMC.                                                                     the half yearly and annual accounts of the respective
                                                                                    schemes with justification for such investment provided
f)     Notwithstanding anything contained in any contract or
                                                                                    the latter investment has been made within one year of the
       agreement or termination, the AMC or its directors or other
                                                                                    date of the former investment calculated on either side..
       officers shall not be absolved of liability to the Mutual Fund
       for their acts of commissions or omissions, while holding             l)     to file with the trustees and the SEBI-
       such position or office.                                                     i     detailed bio-data of all its directors alongwith their
g)     not to deal in securities through any broker associated with                       interest in other companies within fifteen days of their
       the sponsor or a firm which is an associate or a sponsor                           appointment; and
       beyond 5% of the daily gross business of the Mutual Fund.                    ii    any change in the interests of directors every six
h)     not to utilize the services of the sponsor or any of its                           months.
       associates, employees or their relatives, for the purpose of                 iii   A quarterly report to the trustees giving details and
       any securities transaction and distribution and sale of                            adequate justification about the purchase and sale of
       securities.                                                                        the securities of the group companies of the Sponsor
Provided that the AMC may utilize such services if disclosure to                          or the Asset Management Company, as the case
that effect is made to the unit holders and the brokerage or                              maybe, by the Mutual Fund during the said quarter.


                                                                        23
Magnum TaxGain Scheme
m) to file with the trustees a statement of transaction of dealing         except as may otherwise be directed by the Fund. For their
   in securities of the directors of the AMC on annual basis.              services, the Custodians shall be paid a custodial fee as agreed
                                                                           upon by the AMC and the Custodians and within the limits given
n)   not to appoint any person as Key Personnel who has been
                                                                           in the section “Expenses”. The AMC reserves the right to change
     found guilty of any economic offence or involved in violation
                                                                           the Custodians at any time with the approval of the Board of
     of securities laws.
                                                                           Trustees and the Board of Directors of the AMC.
o)   to appoint Registrars and Share Transfer Agents who are
     registered with the SEBI.                                             9. Auditors :
     Provided if the work relating to the transfer of units is             SBIMF has appointed M/s Arthur Anderson and Associates, as
     processed in-house, the charges at competitive market rates           the auditors to the scheme. The Board of Trustees of SBIMF
     may be debited to the scheme and for rates higher than                shall review the appointment of auditors after every two years
     the competitive market rates, prior approval of the trustees          or at such time as may be deemed fit in the opinion of the Board.
     shall be obtained and reasons for charging higher rates shall         The AMC reserves the right to change the Auditors at any time
     be disclosed in the Annual Accounts.                                  with the approval of the Board of Trustees and the Board of
p)   to abide by the Code of Conduct as specified in the Fifth             Directors of the AMC.
     Schedule of SEBI Regulations.                                         10. Collecting Banker(s):
6. Registrars :                                                            SBIMF will utilise the services of State Bank of India as the
SBIMF has appointed M/s Datamatics Financial Services Ltd.                 principal collecting banker (SEBI registration no. INBI00000038)
(SEBI registration number :INR 000000874) located at Plot A-16             for the Scheme. Please note that the AMC may utilise the services
& 17, MIDC, Part-B, Cross Lane, Marol, Andheri (E), Mumbai-500             of branches of the SBI Group or any other banks as authorised
093, as Registrars and Transfer Agents to the scheme. The Board            collecting branches for the scheme. This has also been
of Trustees and the AMC have ensured that the Registrar has                mentioned under the section “Associate Transactions”. The
adequate capacity to discharge responsibilities with regard to             branches will be paid handling charges as per the prevailing
processing of applications and dispatch of Magnum certificates             market rates and/or as negotiated with them. For applications
to investors within the time limit prescribed in the SEBI                  directly solicited and collected by the branches of SBI or its
Regulations and that they have sufficient capacity to handle               associates, they may also be paid an agent commission at a
investor complaints. The AMC reserves the right to change the              rate not exceeding the rate of commission being paid to other
Registrars at any time with the approval of the Board of Trustees          agents for the Scheme.
and the Board of Directors of the AMC.
                                                                                              XI. UNITS AND OFFER
7. Register of Magnum holders :
                                                                           1. Issue Price :
A register of Magnum holders under this scheme containing
the necessary particulars will be maintained at the office of the          On an ongoing basis, Magnums under the scheme will be offered
Registrar to the Scheme and at such place(s) as the Trustees               for sale on any working day at NAV related prices. The number
may decide.                                                                of units allotted will be equal to the amount invested divided by
                                                                           the Public Offering Price (POP) for the same working day for
8. Custodians :                                                            applications received at the collection centres before 2.00 p.m.
                                                                           and POP of next working day for applications received at the
SBI Mutual Fund has appointed Stock Holding Corporation of                 collection centres after 2.00 p.m., viz. for an application received
India Ltd or SHCIL (SEBI registration no. IN/CUS/011), situated            on Tuesday after 2.00 p.m. the POP will be based on the closing
at Mittal Court, B Wing, 2nd floor, Nariman Point, Mumbai 400              NAV of Wednesday. Applications received by post will be
021, as the Custodians for the scheme.                                     deemed to have been submitted on date of receipt at the
                                                                           registrar’s end.
The Custodians will be required to take delivery of all properties
belonging to the scheme and to hold them in separate custody               POP: The POP is based on the applicable NAV and it includes
account and also separately from the assets of the custodians              the sales charge (if any). This is calculated as follows:
and their clients. The Custodians will make efforts to have the            POP = Applicable NAV per Magnum [1 + (applicable sales
properties of the Fund registered in the name of the Fund and              charge)]
will deliver them only as per instructions of the AMC and on
receipt of the consideration. The Custodians shall collect, receive        On an on-going basis the scheme will charge 1.75% of theNAV
and deposit in the account or accounts of the Fund with the                as entry load.
Bank, income, dividend, interest, rights and other payments of             3. Winding up of the Scheme
whatever kind with respect to the securities and other assets
and items of alike nature of the Fund held by or to the order of           The Trustees reserve the right to terminate the scheme at any
the Custodians and shall execute such ownership and other                  time if the corpus of the scheme falls below Rs. 1 crore.
confirmations as are necessary. The Custodians shall be
                                                                           The duration of the schemes is perpetual. However, under
generally authorized to attend to all non-discretionary and
                                                                           regulation 39(2) of the SEBI (MF) Regulations, 1996 provide that
procedural details for discharge of normal custodial functions
                                                                           any scheme of a mutual fund may be wound up, after repaying
in connection with the sale, purchase, transfer and other assets
                                                                           the amount due to the unitholders:
held for the account of the fund by the Custodians as an Agent
                                                                           (a)   on the happening of any event which, in the opinion of the


                                                                      24
Magnum TaxGain Scheme
      Trustees, requires the scheme to be wound up; or                   effect to the provisions of this scheme with power to the AMC
                                                                         to add to, alter or amend all or any of the terms or rules that
(b) if 75% of the unitholders of a scheme pass a resolution
                                                                         may be framed from time to time. However, any alteration
    that the scheme be wound up; or
                                                                         amounting to a change in fundamental attributes of the scheme
(c)   if the SEBI so directs in the interest of the unit holders.        shall be made only after obtaining the approval of
Where a scheme is wound up under the above Regulation, the               Magnumholders in accordance with SEBI Regulations as stated
trustees shall give notice disclosing the circumstances leading          elsewhere in the offer document.
to the winding up of the scheme:
                                                                         9. Power to remove difficulties
(a)   to the SEBI; and
                                                                         In case of any difficulty in giving effect to the provisions of the
(b) in two daily newspapers having circulation all over India, a         scheme, the Trustees may do anything not inconsistent with
    vernacular newspaper circulating at the place where the              such provisions, which appears to them to be necessary,
    Mutual Fund is formed.                                               desirable or expedient, for the purpose of removing such
In case of termination of the scheme, the Trustees shall proceed         difficulty.
as follows:
                                                                         10. Scheme to be binding
From the proceeds of the assets of the scheme, the Trustees
shall first discharge all liabilities of the scheme and make             The Trustees may, from time to time, add to or otherwise vary
provision for meeting the expenses of the winding-up of the              or alter all or any of the features or terms of the scheme, with
scheme, including the fees of the AMC. The balance shall be              prior approval of SEBI and the Magnum holders in accordance
distributed amongst the Magnum holders of the scheme in                  with SEBI Regulations, and the same shall be binding on each
proportion to their respective interest in such balance.                 Magnum holder and any person(s) claiming through or under
                                                                         it, as if each Magnum holder or such person(s) expressly agreed
4. Allotment                                                             that such features or terms should be so binding.

On an ongoing basis, the number of Magnums issued to the                                     XII. SALE OF UNITS
Magnum holder may be in fractions. An account statement will
be issued and will be updated as and when repurchase/reissue             1. How to apply
is undertaken in an account. Despatch of Magnum statement of             Applications complete in all respects together with necessary
account will be made as soon as possible but not later than 30           remittance may be submitted at the SBIFM Investor Service
days from the date of receipt of application.                            Centres, SBIMF Corporate Office, the designated offices of the
Provided that if an applicant so desires, the Asset Management           Registrar or such other collection centres as may be designated
Company shall issue the Magnum certificates to the applicant             by the AMC. The number of units alloted will be equal to the
within 6 weeks of the receipt of request for the same.                                                          .
                                                                         amount invested divided by the POP Applications received by
                                                                         post will be deemed to have been submitted on date of receipt
Reissue may be discontinued if the Trustees feel that increase
                                                                         at the registrar’s end. In case of payment by cheque, the amount
in the size of the fund would be detrimental to the interest of
                                                                         of investment will be deemed to be the amount realised net of
existing investors. Application for reissue of Magnums will not
                                                                         bank charges (if any). In case of applications made by a demand
be binding on the fund and may be rejected.
                                                                         draft, the draft charges may be deducted from the amount to
5. Date of commencement of the scheme                                    be invested, only for applications sent by mail from centres not
                                                                         having a collection account for the scheme.
The Scheme reopened for continuos repurchase and sales from
                                                                         All investors may make the cheque/D.D. for the application
11.11.99, on any working day. However, the Fund may
                                                                         amount payable to “SBIMF- Magnum TaxGain” and crossed
temporarily suspend acceptance of fresh applications at any
                                                                         ‘Account Payee Only’.
time.
                                                                         All investors may make the cheque/D.D. for the application
NOTE : To avail tax rebate under section 88 of the Income Tax
                                                                         amount payable to the Scheme as specified in the application
Act, there is a statutory lock-in-period of 3 years.
                                                                         form. The investors are advised to fill up the details of their
6. Listing & Transfer                                                    bank account numbers on the application form in the space
                                                                         provided. Please refer to the para “Bank Account Numbers” later
The Magnums issued under the Scheme will not be listed on a              in this section. Investors can also opt for Electronic Credit
Stock Exchange. Since the Scheme is open for repurchase, no              Clearing System (ECS) facility and receive direct credit of their
transfer of Magnums is envisaged under ordinary circumstances.           dividend (if the amount is below Rs. 1 lakh) into their bank
7. Jurisdiction                                                          accounts.
                                                                         Investors are advised to retain the acknowledgement slip signed/
The jurisdiction for any matters or disputes arising out of the          stamped by the collection centre where they submit the
scheme shall reside with the Courts in India.                            application.
8. Power to Make Rules                                                   For all payments made by cheques, the date of realisation of a
                                                                         cheque will be taken as the date of investment and the amount
The Trustees may from time to time, with prior approval of SEBI,         invested will be deemed to be the amount realised net of bank
prescribe such terms or make such rules for the purpose of giving        charges (if any).


                                                                    25
Magnum TaxGain Scheme
2. Systematic Investment Plan (SIP)                                                  -     on either / anyone or survivor basis, or

           ,
Under SIP a fixed amount can be invested every month by                              -     on first holder or survivor basis
indicating in the application form or by issuing advance                        (iii) Minors through their parents/ step parents/ guardians
instructions to the Registrars at any time.                                           (applications of minors jointly with adults not allowed)
For individual investors, the fund offers a Systematic Investment          b)   Hindu undivided family (HUF) in the name of karta
Plan (SIP) facility at all our Investor Service Centers. Under this
Facility, an investor can invest a fixed amount – (a) a minimum            c)   An Association of Persons or Body of Individuals, in either
of Rs. 500 and in multiples of Rs. 100 every month for six months               case, consisting only of husband and wife, governed by
(b) a minimum of Rs. 250 and in multiples of Rs. 100 every month                the system of community of property in force in the state
for one year through post-dated cheques at applicable NAV-                      of Goa and the Union territory of Dadra, Nagar Haveli,
related prices. This facility will help the investor to average out             Daman & Diu.
their cost of investment over a period of six months or one year
and thus overcome the short-term fluctuations in the market.               d)   Companies / Bodies corporate registered in India.
Please note that each investment under SIP will have a lock in                  Applications by above should be accompanied by their
period of 3 years.                                                              Memorandum / Articles of Association, certified copy of
                                                                                the Board Resolution authorizing the investment, and
Investors must indicate their choice on their application form in
the box provided for the purpose. The post-dated cheques must                   list of authorised signatories with specimen signatures.
be dated the 5th of every month and drawn in favour of the                 e)   Religious / charitable / other trusts, wakfs and societies
scheme as specified in the application form and crossed                         registered under the applicable laws and authorized to
“Account Payee Only”. . The cheque maybe drawn on a local                       invest in Mutual Funds. Applications by above should be
branch of a bank located at the Investor Service Centre location.               accompanied by their Trust Deed, certified copy of the Board
The application may be submitted at the Investor Service Centre.
                                                                                Resolution authorizing the investment, and list of
The amount will be invested in the scheme at the closing NAV
of the date of realization of the cheque. The number of Magnums                 authorised signatories with specimen signatures.
allotted to the investor will be equal to the amount invested              Note : i)      Investment by Non-Resident Indians shall be on a
during the month divided by the POP for that day. An intimation                          non-repatriation basis. This Scheme has no tax
of the allotment will be sent to the investor. The facility may be                       implications for them under section 88 of the Income
terminated by the investor after giving at least three weeks’                            Tax Act.
written notice to the Registrar or the local Investor Service
Centre.                                                                            ii) Companies, Bodies Corporates, Trusts and Societies
                                                                                       may also apply but will not qualify for tax
For all payments made by cheques, the date of realization of a                         concessions under section 88 of the Income Tax,
cheque will be taken as the date of investment and the amount                          1961 on their investments in this scheme.
invested will be deemed to be the amount realized net of bank
charges (if any).                                                          6. Defective applications liable for rejection

3. Minimum amount of subscription per application                          Applications not complete in any respect are liable to be rejected.
                                                                           In the event of non-allotment of Magnums, no interest will be
Minimum amount per application is Rs. 500/- each, and in                   paid on the money refunded. In case of any representation to
multiples of Rs.500/- thereafter.                                          the Trustees against the disqualification of any application, the
                                                                           decision of the Trustees will be final.
4. Maximum amount of subscription per application
No upper limit. However, as per prevailing tax-laws, investments           7. Bank Account Numbers
of upto Rs. 10,000/- under the scheme would qualify for tax                SEBI has made it mandatory for investors in Mutual Funds to
rebate under section 88 of the Income Tax Act, 1961. This eligible         state their bank account numbers in their applications. Investors
amount for tax rebate can be raised or reduced as per                      are requested to provide these details in the space provided in
amendments in the Income Tax Act, 1961.                                    the application form. This measure is intended to avoid fraud /
                                                                           misuse or theft of warrants in transit. Kindly note that applications
5. Who can invest                                                          not containing these details may be rejected.
Magnums under this scheme can be purchased by:
                                                                           8. Permanent Account Number (PAN)
a)   Indian Nationals / Non-Resident Indians who are:
                                                                           Applicant’s PAN / GIR Number and I.T. Circle / Ward / District (if
     (i) Adult individuals                                                 available) are to be mentioned if the amount invested is Rs.
     (ii) Adult individuals, not exceeding three, either                   50,000/- or more. In case the applicant is not alloted a PAN / GIR
                                                                           No., please state “Not Alloted”.
         -    jointly, or




                                                                      26
Magnum TaxGain Scheme
                XIII. INTER-SCHEME TRANSFERS                                 Markets Ltd. The details of these are as follows:
                                                                              Name of the           Type          Quantity   Quantity    Amount
Policy on Inter-scheme Transfers                                              Company                             Applied    Allotted (Rs. Lakhs)

The scheme, or any other scheme of the Mutual Fund, may make                  Corporation Bank      Equity (PP)   2000000      98000       78.40
investments or effect a sale of some of its investments by means              ICICI Banking
of transfers from one scheme to another in the same mutual                    Corporation           Equity        4150000     525500      183.92
fund. Such transfers will be done in accordance with clause 3 of              Gujarat Gas
seventh schedule to SEBI Regulations and subject to the                       Company Ltd.          Debentures         20         20      200.00
following conditions:
                                                                              Krishna Baghya
i)     such transfers are done at the prevailing market price for             Jala Nigam Ltd.       Debentures        500        500      500.00
       quoted instruments on spot basis. (Where such a spot price
                                                                              National Aluminum
       is not available or if the market is closed, the inter-scheme          Co. Ltd.              Debentures     500000     450000     4500.00
       transfer may be done at the latest closing price available).
                                                                              Deepak Fertilizers    Debentures        500        500      500.00
ii)    the securities so transferred would be in accordance with
                                                                              State Bank of
       the investment objective of the transferee scheme.
                                                                              Bikaner & Jaipur      Equity          30000       5595       30.21
iii)   the registration and accounting of the transaction is effected
                                                                              TOTAL                                                      5992.53
       on a spot basis so that the NAV of the schemes is impacted,
       and the transaction is reported to the Board of Trustees in           However, these investments may or may not stand in the books
       their next meeting.                                                   of concerned schemes at present.

                XIV. ASSOCIATE TRANSACTIONS                                  5. Associate Broker
                                                                             At present, SBI Mutual Fund has empanneled SBI Capital Markets
1. Who is an Associate?                                                      Limited as Associate Broker.
For the purpose of this section, an Associate or group company               6. Collecting Banker(s) and Distributors
shall include State Bank of India (SBI), its subsidiaries (including
the AMC), joint ventures and the associate banks of SBI.                     SBIMF may utilize the services of State Bank of India as the
                                                                             collecting banker for the scheme. SBIMF has appointed SBI
2. Investments in Associate or Group Companies of the
                                                                             Capital Markets Ltd. as a Distributor for its products.
Sponsor
                                                                             7. Collecting Branches
As per SEBI Regulation, the scheme will not invest more than
25% of net assets of the scheme in the securities of the State               The AMC may utilize the services of some branches of the SBI
Bank Group companies. Further, the aggregate investment made                 Group as authorized collecting branches for the scheme. The
by all the SBI Mutual Fund schemes in the securities of State                list of collecting branches will be printed in the application form.
Bank Group companies will not exceed 25% of the net assets of                They will be paid handling charges at such a rate as may be
the fund as a whole. No investment shall be made in any unlisted             prevalent in the market at the time of the issue and/or as
security of an associate or group company of the Sponsor, any                negotiated with the concerned banks.
security issued by way of private placement by an associate or
group company of the Sponsor.                                                8. Agent Commission
           st
As on 31 March 2001, all the schemes of the Mutual Fund have                 For applications directly solicited and collected by the branches
Rs. 18.13 crores invested in the various equity instruments of               of SBI or by any associates or subsibiaries, they may also be
State Bank Group Companies. The scheme shall not invest in                   paid an agent commission at a rate not exceeding the rate of
privately placed or unlisted securities of associates / group
                                                                             commission being paid to other agents for the scheme.
companies.
                                                                             9. Other Associate Transactions
3. Underwriting Obligations of SBI Mutual Fund
                                                                             Individual schemes of SBI Mutual Fund lend in the Call Money
As on date, SBIMF has no underwriting obligations.
                                                                             Market from time to time in order to continuously earn returns
4. Subscription in Issues Lead Managed by Associates of                      on their short-term surplus cash. This is in accordance with the
Sponsor                                                                      applicable Regulations. SBI, SBI Commercial & International
                                                                             Bank, any of SBI’s associate banks or SBI Gilts Ltd. may be some
In the last three fiscal years, different schemes of the Fund have           of the players who may borrow from SBI Mutual Fund at market
subscribed to some of the issues lead managed by SBI Capital                 rates.




                                                                        27
Magnum TaxGain Scheme
SBI or any associates of SBI (including SBI Capital Markets, SBI Gilts Ltd. and/or SBI Securities Ltd.) may be entrusted the work of
marketing, book-building, distribution or any other activity connected with the scheme or any other schemes of SBI Mutual Fund, as
may be allowed by SEBI or any other competent authority, and within the relevant provisions of Regulations prevailing from time to
time. SBI Capital Markets Ltd. was appointed as the Principal Marketing Advisors for Magnum Gilt Fund.

                                           XV. BORROWING BY THE MUTUAL FUND

1. Borrowing by the scheme
Under Regulation 44(2) of SEBI (MF) Regulations, 1996, the Fund is allowed to borrow to meet its temporary liquidity need of the
Scheme for the purpose of repurchase, redemption of Magnums or payment of interest or dividend to the Magnum Holders.
Further, as per the Regulation, the Fund shall not borrow more than 20% of the Net Assets of the Scheme and the duration of such
borrowing shall not exceed a period of six months.
If the scheme decides to borrow, it may borrow either from SBI Group banks and / or any other bank(s) or from any other sources
as may be decided by the AMC. The loans may be without collateral or may consider using a part of the scheme’s assets as
collateral with the prior approval of the Board of Directors of the AMC and the Board of Trustees of the scheme.
The following table provides the details of borrowings by other schemes during the last fiscal year (01.04.2000 – 31.03.2001)
     Scheme                   Amount              Date of             Amounts                Date of          Purpose of       Amount as
     Name                    Borrowed          Borrowing               Repaid             Repayment           Borrowing        % of NAV at
                                                                                                                                the time of
                                                                                                                                 borrowing
     Magnum GIFTS - A         9,04,000         23/08/2000             21,51,000               8/9/2000        Funding of             0.00263
                             12,47,000         26/08/2000                                                   Repurchases


2. Potential risk of loss to the AMC / Magnum holders
The borrowing by the scheme will not involve any potential loss to the AMC or to the Magnumholder. However, it will involve a
certain cost on account of interest paid on borrowing at market rates as may be negotiated with the concerned lender. In any case,
the scheme may resort to borrowings only if the possible benefit from borrowings exceeds the cost of immediate liquidation of its
assets for meeting repurchase needs / dividend payments / interest payments.

     XVI. NAV AND VALUATION OF ASSETS OF THE                               d)     When on a particular valuation day, a security has not been
                                                                                  traded on the selected stock exchange, the value at which
                     SCHEME
                                                                                  it is traded on another stock exchange may be used.
1. Valuation of Assets pertaining to the scheme                            e)     When a security is not traded on any stock exchange on a
                                                                                  particular valuation day, the value at which it was traded on
Valuation of Assets, computation of NAV, repurchase price and                     the selected stock exchange or any other stock exchange,
their frequency of disclosure will be in accordance with the                      as the case may be, on the earliest previous day may be
provisions of SEBI (MF) Regulations 1996/Guidelines/Directives                    used Provided such date is not more than thirty days prior
issued by SEBI from time to time. The assets of the scheme will                   to the valuation date.
be valued based on the following valuation norms.
                                                                           B. Thinly Traded Securities
A. Traded Securities
                                                                           (i)    Thinly Traded Equity/Equity Related Securities:
a)    The securities shall be valued at the last quoted price on
      the stock exchange.                                                         When trading in an equity/equity related security (such as
                                                                                  convertible debentures, equity warrants, etc.) in a month is
b)    When the securities are traded on more than one recognized                  less than Rs. 5 lacs and the total volume is less than 50,000
      stock exchange, the securities shall be valued at the last                  shares, it shall be considered as a thinly traded security
      quoted closing price on the stock exchange where the                        and valued accordingly.
      security is principally traded. It would be left to the Asset
      Management Company to select the appropriate stock                          In case trading in an equity security is suspended upto 30
      exchange, but the reasons for the selection should be                       days, then the last traded price would be considered for
      recorded in writing. There should however be no objection                   valuation of that security. If an equity security is suspended
      for all scrips being valued at the prices quoted on the stock               for more than 30 days, then the Asset Management
      exchange where a majority in value of the investments are                   Company/Trustees will decide the valuation norms to be
      principally traded.                                                         followed and such norms would be documented and
                                                                                  recorded.
c)    Once a stock exchange has been selected for valuation of
                                                                           (ii)   Thinly Traded Debt Securities:
      a particular security, reasons for change of the exchange
      shall be recorded in writing by the Asset Management                        A debt security (other than Government Securities) that has
      Company.                                                                    a trading volume of less than Rs. 15 crores for a period of


                                                                      28
Magnum TaxGain Scheme
      30 days prior to the valuation date shall be considered as a                purchased with residual maturity of upto 182 days are to
      thinly traded security based upon information provided by                   be valued at cost (including accrued interest till the
      the relevant stock exchange on the volume of debt                           beginning of the day) plus the difference between the
      securities traded.                                                          redemption value (inclusive of interest) and cost spread
                                                                                  uniformly over the remaining maturity period of the
      A thinly traded debt security as defined above would be
                                                                                  instrument. In case of a debt security with maturity greater
      valued as per the norms set for non-traded debt security.
                                                                                  than 182 days at the time of purchase, the last valuation
C. Non-Traded Securities                                                          price plus accrued interest should be used instead of
When a security is not traded on any stock exchange for a period                  purchase cost. All other non traded Non Government debt
of thirty days prior to the valuations date, the scrip must be                    instruments shall be valued using the method suggested
treated as a ‘non-traded’ scrip.                                                  in (ii)(b) hereof”

D. Valuation of Non-traded/Thinly traded securities                          (ii)(b) Non Traded/ Thinly Traded Debt Securities of Over 182
                                                                                   Days to Maturity:
Non-traded/Thinly traded securities shall be valued “in good
faith” by the asset management company on the basis of                            For the purpose of valuation, all Non Traded Debt Securities
appropriate valuation methods used based on the principles                        would be classified into “Investment grade” and “Non
approved by the Board of the Asset Management Company.                            Investment grade” securities based on their credit ratings.
                                                                                  The non-investment grade securities would further be
For the purpose of valuation of non-traded/thinly traded
                                                                                  classified as “Performing” and “Non Performing” assets
securities, the following principles will be adopted:
                                                                                  All Non Government investment grade debt securities,
(a)   Based on the latest available i.e. Balance Sheet, net worth
                                                                                  classified as not traded, shall be valued on yield to maturity
      shall be calculated as follows:
                                                                                  basis as described below.
      networth per share = [share capital + Reserves (excluding
                                                                                  All Non Government non-investment grade performing debt
      revaluation Reserves) – Misc. expenditure and Debit Balance                 securities would be valued at a discount of 25% to the face
      in P&L A/c] Divided by No. of Paid up Shares.                               value
(b) Average capitalization rate (P/E ratio) for the industry based                All Non Government non-investment grade non performing
    upon either BSE or NSE data shall be taken and discounted                     debt securities would be valued based on the provisioning
    by 75% i.e. only 25% of the Industry average P/E shall be                     norms.
    taken as capitalization rate (P/E ratio). Earnings per share of
    the latest audited annual accounts will be considered for                     The approach in valuation of non traded debt securities
    this purpose.                                                                 will be based on the concept of using spreads over the
                                                                                  benchmark rate to arrive at the yields for pricing the non
(c)   The value as per the net worth value per share and the                      traded security.
      capital earning value calculated as above shall be averaged
      and further discounted by 10% for ill-liquidity so as to arrive             The Yields for pricing the non traded debt security would
      at the fair value per share.                                                be arrived at using the process as defined below.

(d)    In case the EPS is negative, EPS value for that year shall                 Step A
      be taken as zero for arriving at capitalized earning.                       A Risk Free Benchmark Yield is built using the government
(e)   In case where the latest balance sheet of the company is                    securities (GOI Sec) as the base. GOI Secs are used as the
      not available within nine months from the close of the year,                benchmarks as they are traded regularly; free of credit risk;
      unless the accounting year is changed, the shares of such                   and traded across different maturity spectrums every week.
      companies shall be valued at zero.                                          Step B
(f)   In case an individual security accounts for more than 5%                    A Matrix of spreads (based on the credit risk) are built for
      of the total assets of the scheme, an independent valuer                    marking up the benchmark yields. The matrix is built based
      shall be appointed for the valuation of the said security. To               on traded corporate paper on the wholesale debt segment
      determine if a security accounts for more than 5% of the                    of an appropriate stock exchange and the primary market
      total assets of the scheme, it should be valued by the                      issuances. The matrix is restricted only to investment grade
      procedure above and the proportion which it bears to the                    corporate paper.
      total net assets of the scheme to which it belongs would
                                                                                  Step C
      be compared on the date of valuation
                                                                                  The yields as calculated above are Marked-up/Marked-
(ii)(a) Non Traded /Thinly Traded Debt Securities of upto 182
                                                                                  down for ill-liquidity risk
      Days to Maturity:
                                                                                  Step D
      As the money market securities are valued on the basis of
      amortization (cost plus accrued interest till the beginning                 The Yields so arrived are used to price the portfolio
      of the day plus the difference between the redemption value            E. Valuation of securities with Put/Call Options
      and the cost spread uniformly over the remaining maturity
      period of the instruments) a similar process should be                 The option embedded securities would be valued as follows:
      adopted for non-traded debt securities with residual                   a.   Securities with call option:
      maturity of upto 182 days, in the absence of any other
      standard benchmarks in the market. Debt securities                          The securities with call option shall be valued at the lower


                                                                        29
Magnum TaxGain Scheme
      of the value as obtained by valuing the security to final            outstanding on the valuation date, as follows:
      maturity and valuing the security to call option.
                                                                                      Total unit capital + Reserves + Income (net of
      In case there are multiple call options, the lowest value               expenses)+ Appreciation / -depreciation in investments
      obtained by valuing to the various call dates and valuing to
                                                                           NAV = ———————————————————————
      the maturity date is to be taken as the value of the
                                                                                      Total no. of Magnums outstanding
      instrument.
                                                                           Any changes in securities and in the number of units will be
b.    Securities with Put option
                                                                           recorded in the books not later than the first valuation date
      The securities with put option shall be valued at the higher         following the date of transaction. If this is not possible given the
      of the value as obtained by valuing the security to final            frequency of the NAV disclosure, the recording may be delayed
      maturity and valuing the security to put option                      upto a period of seven days following the date of the transaction,
                                                                           provided that as a result of the non-recording, the NAV
      In case there are multiple put options, the highest value            calculations shall not be affected by more than 2%.
      obtained by valuing to the various put dates and valuing to
      the maturity date is to be taken as the value of the                 The NAV will be calculated every day and will be published
      instruments.                                                         atleast in two daily newspapers at such intervals as are
                                                                           prescribed by SEBI.
c.    Securities with both Put and Call option on the same day
      The securities with both Put and Call option on the same                       XVII. RETURNS AND DISTRIBUTION
      day would be deemed to mature on the Put/Call day and
      would be valued accordingly.                                         1. Returns to the Investors
(ii)(c) Government securities (not traded for more than 30 days            Dividends may be declared depending on distributable profits
      or one which would qualify as a thinly traded security) shall        of the scheme. Despatch of dividend warrants would not be
      be valued at yield to maturity based on the prevailing market        later than 30 days from the declaration of dividend (if any).
      rate, in accordance with item (cc) of Clause 2 of the Eighth         Investors may refer to the next section “Redemption and
      Schedule of SEBI (MF) Regulations, 1996.                             Repurchase” for further information.
F. Illiquid Securities:                                                    Refer to the section “Tax Treatment of Investments in Mutual
                                                                           Funds” for further information. Please note that past performance
(a)   Aggregate value of “illiquid securities” of scheme, which
      are defined as non-traded, thinly traded and unlisted equity         does not neccessarily indicate the future performance.
      shares, shall not exceed 15% of the total assets of the              2. Mode of Distribution
      scheme and any illiquid securities held above 15% of the
      total assets shall be assigned zero value.                           The dividends declared will be distributed to the investors
                                                                           through warrants mailed to them within 30 days of declaration
(b) The Mutual Fund will disclose as on March 31 and
                                                                           of dividends. Investors residing in such places where Electronic
    September 30, the scheme-wise total illiquid securities in
                                                                           Clearing Facility is available will have the option of receiving
    value and percentage of the net assets while making
                                                                           their dividend directly into their specified bank account through
    disclosures of half yearly portfolios to the Magnum holders.
                                                                           ECS. In such a case, only an advice of such a credit will be
    In the list of investments, an asterisk mark shall also be
                                                                           mailed to the investors.
    given against all such investments, which are recognized
    as illiquid securities.                                                3. Electronic Credit Clearing Service (ECS)
2. Determination of Net Asset Value                                        ECS is a facility offered by the Reserve Bank of India for
The value determined as above, will be adjusted for the                    facilitating better customer service by direct credit of dividend
    following:                                                             amount to an investor’s bank account through electronic credit.
                                                                           This helps in avoiding loss of dividend warrants in transit or
a)    all income and expenditure accrued.
                                                                           fraudulent encashment. This facility is optional for the investors
b)    major expenses like management fees and other periodic               in the Scheme.
      expenses to accrue on a day to day basis.
                                                                           Dividends proceeds (if any) may be distributed through the ECS
c)    The basis for calculation of NAV will be subject to
      regulations and guidelines of the SEBI issued from time to           facility to investors residing in any of the cities where such a
      time.                                                                facility is available. Payments of upto Rs.1,00,000/- per
                                                                           transaction can be made through the ECS.
Minor expenses, if any, will not be accrued on a day to day
basis if they do not affect the NAV by more than 1%.                       All investors will have to provide the additional details required
The Mutual Fund shall comply with the investment valuation                 in the space provided on the application form. If they have also
norms spelt out in the Eighth Schedule of SEBI Regulations.                opted for the ECS facility, their bank branch will directly credit
                                                                           the amount due to them to their account wherever the payment
The Net Asset Value per Magnum shall be calculated by dividing             is through ECS. The Registrars will send a separate advice to
the Net Assets of the scheme by the total number of Magnums                the investors informing them of the direct credit.




                                                                      30
Magnum TaxGain Scheme
The ECS facility will be offered by the Fund in any centre only if           3. How to Repurchase
there is sufficient demand for the facility. In places where such
a facility is not available or if the facility is discontinued by the        The application for repurchase can be made on a pre-printed
Scheme for any reason, or in cases where the dividends or                    repurchase application form on the Magnum Statement of
redemption proceeds exceed Rs. one lakh, the dividend /                      Account provided to the investor. In this connection, the
redemption warrants will be mailed to the investors.                         repurchase applications along with the Magnum certificates (if
                                                                             any) should be submitted to the Registrars.
        XVIII. REDEMPTION AND REPURCHASE                                     For applications made on either / anyone or survivor basis, only
                                                                             one of the holders needs to sign on the repurchase application.
1. Repurchase facility                                                       However, the repurchase warrant will normally be issued in the
An option will be given to the existing unitholders for redemption           name of the first holder only. In the event of death of the
at NAV without any discount.                                                 assessee, the legal heir shall be able to withdraw the investment
                                                                             only after completion of one year from the date of allotment of
Currently, the repurchase price for the above will be based on               the units to the assessee or any time thereafter.
the day’s NAV and there will be no exit load. Repurchase
requests may be submitted at the Investor Service Centres of                 4. Repurchase Schedule and Service Standards
SBIMF/ designated office of the Registrar, SBIMF Corporate
                                                                             The redemption will be permitted to the extent of credit balance
Office. Repurchase requests received upto 2:00 PM on any
                                                                             in the Magnumholders account. The repurchase warrant will be
business day will be considered at the repurchase price
                                                                             despatched to investor within 10 working days from the date of
applicable on that day. Repurchase requests received after 2:00              repurchase, as prescribed by SEBI. In case the investor has opted
PM will be considered at the repurchase price applicable on the              for receipt of proceeds through ECS, the credit advice will be
next business day. Repurchase request received by post will be               mailed to the investor within 3 working days.
considered at the repurchase price of the day following the day
on which the request is received. In case the offices of the AMC             5. Right to Limit Repurchases
or the registrars or the Banks are closed for any reason the
                                                                             The Mutual Fund reserves the right to temporarily suspend
repurchase date will be taken as the date of the next working
                                                                             further issues or repurchases under the Scheme in case of any
day.                                                                         of the following :
The repurchase price for the above will be based on the closing              -   a natural calamity or
NAV of the prospective day and it will incorporate the applicable
repurchase load. In case the offices of the AMC or the registrars            -   in case of conditions leading to a breakdown of the normal
or the Banks are closed for any reason the repurchase date will                  functioning of securities markets or
be taken as the date of the next working day. In calculating the             -   periods of extreme volatility or illiquidity
repurchase price, SBI Mutual Fund shall take into account atleast
60% of the unrealised appreciation besides realised profits net              -   under a SEBI directive
of expenses etc.
                                                                             6. Switchover facility
In case of investors, who wants :
                                                                             Investors under the scheme have the facility of switchover, on
*    Rebate under section 88 of the Income Tax Act, 1961,then                completion of lock in period, to other open-ended funds of SBI
     the repurchase facility will be available only after completion         Mutual Fund such as Magnum Balanced Fund, Magnum
     of statutory lock-in-period of 3 years, at NAV related price.           Multiplier Plus ‘93, Magnum Equity Fund, Magnum Gilt Fund,
*    Exemption from Tax on capital gains u/s 54-EA of the                    Magnum Income Fund, Magnum Sector Funds Umbrella,
     Income Tax Act, 1961, then the repurchase facility will be              Magnum Monthly Income Plan, Magnum InstaCash Fund,
     available only at the end of three years from the                       Magnum Children’s Benefit Plan and Magnum Index Fund at
     commencement of the scheme, at NAV related price.                       NAV related prices. The terms of switchover may change from
                                                                             time to time. Investors may contact the nearest ISC for further
*    Exemption from tax on capital gains u/s 54-EB of the Income             details on switchover facility.
     Tax Act, 1961, then the repurchase facility will be available
     only at the end of seven years from the commencement of                 At the time of switchover, the investors will be required to
     the scheme, at NAV related price.                                       surrender Magnum certificates / Statement of Accounts.
The repurchased Magnums will be extinguished and will not be                 This facility of switchover is not available to NRIs/OCBs/FIIs.
reissued.
                                                                             7. Loan facility
2. Minimum Amount of Repurchase per Application                              Magnumholders shall be entitled to obtain a loan against their
The minimum amount of redemption would be equivalent to 25                   Magnums from any bank, subject to relevant RBI regulations,
Magnums or Rs 250/-, whichever is lower. If as a result of                   Income Tax Act 1961, and the respective bank’s instructions, by
repurchase the balance in the account of an investor falls below             getting a lien registered / recorded with the Registrars.
Rs. 500/- or 50 Magnums, whichever is lower, the fund will                   Investors who have opted for tax rebate under section 88 of the
reserve the right to compulsorily redeem the account completely              Income Tax Act, 1961, cannot pledge these Magnums as eligible
at applicable repurchase price, after giving him 30 days’ notice             security for receiving any loan during three years from the
requesting him to enhance the balance by making fresh                        deemed date of allotment. Magnums under this scheme cannot
investments.

                                                                        31
Magnum TaxGain Scheme
be transferred, assigned or pledged during statutory lock-in-              approval from SEBI. An option was granted to all the investors
period of three years.                                                     to exit, if they so chose, at the assured return price of Rs. 100
Investors who have opted for exemption from tax on capital                 per Magnum. Simple yield p.a. as on 30.06.1997 was 14.13%.
gains under section 54EA of the Income tax Act, 1961, cannot               Three other equity schemes – Magnum Equity Fund (previously
offer their Magnums as security for obtaining loans before the             known as Magnum Multiplier Scheme 1990 (MMS’90)), Magnum
end of three years from the date of commencement of the                    Multiplier Plus Scheme 1993 (MMPS’93) and Magnum TaxGain
scheme.                                                                    Scheme 1993 (MTGS (93) - have also been converted to open-
Similarly, investors who have opted for exemption from tax on              end schemes w.e.f. 1st January 1998 and 1st April 1998 and 11th
capital gains under section 54EB of the Income tax Act, 1961,              November 1999 respectively, after giving the existing investors
cannot offer their Magnums as security for obtaining loans before          an option to redeem their Magnums, if they so chose, at NAV
the end of seven years from the date of commencement of the                related prices. Magnum Global Fund, an equity scheme,
scheme.                                                                    launched on 24th August 1994, with redemption date of 30th
Magnum holders who have borrowed against their Magnums                     September 1999, has also been converted into an open-end
by recording a lien against their holding can avail of repurchase          scheme w.e.f. 1st October 1999, after giving the existing investors
facility only after the receipt of instructions from the concerned         an option to redeem their Magnums, if they so chose, at NAV
lender that the loan has been repaid in full and the lien can be           related prices.
discharged. In case such an instruction is not received, the lender
can apply for redemption in his favour.                                                  XIX. ACCOUNTING POLICIES
9. Nomination facility/ succession                                         1. Accounting year end
Nomination facility is available only for individuals applying on          The accounts of the scheme shall be closed every year as on
their own behalf, either single or jointly upto three. Applicants          31st March. The Trustees shall cause the accounts of the scheme
can nominate only one person. Minors and NRIs can also be                  to be maintained in such form and manner as may be decided
nominated. In case the nominee is an NRI, then the repurchase/             by them and in accordance with the Mutual Fund Regulations,
redemption proceeds will be payable on a repatriable basis. This           1996. The Trustees and the AMC shall, at the close of each half
will however be subject to change, if any, in the guidelines of            year, i.e., 30th September and 31st March, publish the financial
RBI/other Regulators. Applicants may change their nomination               results of the scheme, as provided in SEBI (MF) Regulations,
at any time during the currency of the scheme.                             1996.
10. Redemption Record                                                      2. Other Accounting Policies and Standards
Till date SBI Mutual Fund has redeemed 12 schemes. The                     a)   For the purposes of the financial statements, Mutual Fund
redemption details for these schemes are given below:                           shall mark all investments to market.
 Scheme                  Redeemed on              Compounded               b)   In respect of all interest-bearing instruments, income will
                                                    Annualized                  be accrued on a day to day basis as it is earned.
                                                    Yield (p.a.)
                                                                           c)   Average cost method will be followed in determining the
 MRIS 87                 30th June 1993                  15.26%                 holding cost of investments and the gains or losses on sale
 MTSS 88-89              31st Mar 1994                   21.89%                 of investments.
                                                                           d)   Transactions for sale or purchase of investments will be
 MRIS 89                 31st Mar 1994                   15.73%
                                                                                recognized on the transaction date.
 MTSS 90                 31st Mar 1995                   15.38%
                                                                           e)   Income accrued on an investment but not received for 12
 MRIS 90                 31st July 1995                  11.46%                 months beyond the due date shall be provided for and no
 MMIS 89                 31st Dec 1996                   13.99%                 further accrual shall be made for income in respect of such
                                                                                an investment.
 MEX 91                  19th Nov 1997                    2.60%
                                                                           f)   When the units are sold, an appropriate part of the sale
 MTPL 91                 19th May 1999                   15.78%                 proceeds will be credited to an equalization account and
 MBF                     31st Jan 2000                   17.17%                 when units are repurchased, an appropriate part will be
                                                                                debited to the equalization account. The net balance on
 MMIS 91                 30th June 2000                  14.13%                 this account will be credited or debited to the revenue
 MRIS93                  14th Dec. 2000                   4.82%                 account as an adjustment to the distributable surplus.
 MELS 91                 31st Mar 2001                   12.30%            g)   The cost of investment acquired or purchased shall include
                                                                                brokerage, stamp duty and any other charge customarily
However, please note that past performance is not necessarily                   included in the broker’s purchase note. In respect of any
indicative of the future results.                                               privately placed debt instruments any front-end discount
                                                                                offered should be reduced from the cost of the investment.
10. Extension record
                                                                           h)   Underwriting commission, if any, shall be recognized as
The Magnum Monthly Income Scheme 1991 (MMIS’91) has been                        revenue only when there is no devolvement on the scheme.
extended by 3 years from its original redemption on 30.06.1997                  Otherwise the entire commission received will be reduced
to 30.06.2000. The extension was done after obtaining an                        from the cost of investment. The Mutual Fund shall comply

                                                                      32
Magnum TaxGain Scheme
    with the accounting policies and standards spelt out in the             112 of the Income-tax Act, 1961 are as follows :
    Ninth Schedule of SEBI Regulations.
                                                                            -    20% for Resident Individuals & HUFs
     XX. TAX TREATMENT OF INVESTMENTS IN                                    -    20% for domestic companies.
                MUTUAL FUNDS                                                -    20% in case of other residents
                                                                            -    20% for non-residents (not being a company) and foreign
1. Information on Tax Benefits                                                   companies
The following paragraphs in this section give information on                The capital gains may be arrived at after adjusting the following
various tax benefits available to the Magnumholders.                        from the sale consideration:
The provisions mentioned in the following paras are based on                -    Expenditure incurred wholly and exclusively in connection
the law and practice as on the date of this offer document, i.e.,                with such a sale,
the Income-tax Act, 1961 as amended by the Finance Act 1999.
                                                                            -    Cost of investments as inflated by the Cost Inflation Index
Prospective investors should not treat the contents of this section              notified by CBDT.
of the offer document as advice relating to legal, taxation,
investment or any other matter and are recommended to consult               There will be no TDS on capital gains for resident investors.
their own professional advisors concerning the acquisitions,
                                                                            6. Wealth Tax Benefits
holding or disposal of the Magnums.
All tax benefits will be available only to the Magnum holder or             Mutual fund units are not considered as “assets” liable to wealth
the first named holder in case the Magnums are held in the                  tax u/s 2(ea) of the Wealth-tax Act, 1957. Consequently Magnums
names of more than one person.                                              held under the scheme will not be liable to wealth tax under the
                                                                            Wealth-tax Act, 1957.
Where a partition has taken place among the members of a Hindu
Undivided Family or when an Association of Persons has been                 7. Tax Benefits to Religious / Charitable Trusts
dissolved after a deduction has been allowed under this scheme,
the first name holder will be in receipt of the amount withdrawn            Investments in these Magnums by Religious / Charitable Trusts
and will be deemed to be the assessee.                                      will qualify for tax benefits under section 11(5) of the Income
                                                                            Tax Act, 1961.
2. Tax Benefits Related to Rebate
                                                                                  XXI. INVESTORS’ RIGHTS AND SERVICES
Under section 88 of the Income Tax Act, 1961, any eligible
applicant who invests in Magnum TaxGain Scheme will be                      1. Rights of beneficiaries
currently eligible for a maximum tax rebate of Rs. 2,000/- i.e.
20% of Rs. 10,000 (25% in case of authors, playwrights, artists,            a)   After closing of the annual accounts, SBI Mutual Fund shall
musicians, actors or sportsmen) in a financial year. If investment               provide for depreciation on investments and also make a
of a lower amount is made, tax rebate would be available at                      provision for bad and doubtful debts to the satisfaction of
20% of the amount invested, subject to fulfillment of prescribed                 its auditors and shall disclose the method of depreciation
conditions. This eligible amount for tax rebate can be raised or                 in the notes to the accounts. After making such provisions
reduced as per amendments in Income Tax Act, 1961.                               the profits of the scheme , if any, may be distributed to the
                                                                                 investors either as a dividend payout or plough back to the
3. Tax Benefits Related to Income Distribution                                   scheme as may be decided by the Board of Trustees.
As per the provisions of Finance Act, 1999, income from Mutual              b)   SBI Mutual Fund will publish-
Fund is currently fully exempt in the hands of the investors.                    i)     the schemes’ audited annual accounts or an abridged
                                                                                        summary of the same within six months from the date
4. Tax Benefits Related to Capital Gains
                                                                                        of closure of the relevant financial year.
Any capital gain arising on withdrawal of part or whole of the                   ii)    six monthly unaudited accounts or an abridged
investment made as under the scheme after the completion of                             summary of the same before the expiry of one month
the lock-in-period, will be considered as long term capital gain                        from the close of each half year i.e. on 31st March and
and will get taxed u/s 48(2) of the Income Tax Act, 1961, if the                        on 30th Sept.
Magnums have been held for a continous period of over three
years.                                                                           iii)   the scheme portfolio before the expiry of one month
                                                                                        from the close of each half year i.e. on 31st March
5. Tax Benefits Related to Repurchase/ Redemption/                                      and on      30th Sept. or send a copy to all
Transfer                                                                                Magnumholders.
                                                                                 This will be published in one national English daily
Magnums held for a period of more than 1 year will be treated
                                                                                 newspaper and in a Marathi newspaper. These shall also
as long-term capital assets and will qualify for taxation at a lower
                                                                                 be displayed on the web site of the Mutual Fund and that
rate as laid down in section 112 of the Income-tax Act, 1961.
                                                                                 of AMFI. The investors have a right to call for the above
The investor concerned will be entitled to the benefit of
                                                                                 information, including the full annual report, at the SBI
indexation of the cost for the purposes of computing capital
                                                                                 Mutual Fund’s office or its Investors Service Centres and if
gains as laid down in section 48 of the Income-tax Act, 1961.
                                                                                 so desired, they can receive a copy of the above information
The rates of taxation on long-term capital gains as per section                  on payment of a nominal fee.

                                                                       33
Magnum TaxGain Scheme
      The Fund will also issue for publication the NAV and the                     iii.   The Magnumholders are given an option to exit on
      sale and the repurchase prices of this scheme on a daily                            the prevailing Net Asset Value without any exit load.
      basis in at least two newspapers in accordance with SEBI
      Regulations.                                                          3. Documents available for inspection
c)    an abridged schemewise annual report will be mailed to all            Following documents are available for inspection by investors
      the Magnum holders not later than six months from the                 at their office of the SBI Funds Management Pvt. Ltd., 191, Maker
      date of closure of the relevant accounting year, containing           Tower E, Cuffe Parade, Mumbai - 400 005:
      also the details of group company investments.                        i)     Trust Deed
d)    The investors have the right to ask the Trustees about any            ii)    Memorandum and Articles of Association of SBI Funds
      information which may have an adverse bearing on their                       Management Pvt. Ltd. and the State Bank of India Act &
      investments and the trustees shall be bound to make                          Regulations.
      disclosures about such information to the investors.
                                                                            iii)   Copy of Annual Reports including Auditors Report of SBI
      The investors are also advised to see the relevant provisions
      of the Indian Trust Act, 1882, in this regard.                        iv)    Scheme Rules and Regulations
                                                                            v)     Auditors Reports, Audited Annual Accounts & Offer
2. Other significant rights of the Magnumholders                                   Documents of all the existing schemes of the SBIMF.
(a)   The fundamental attributes or fees and expenses payable               vi)    Agreements with Custodians, Registrars & Transfer Agents,
      or any other change which would modify the scheme and                        Bankers, if any.
      affects the interest of unitholders, shall not be carried out
                                                                            vii) Investment Management Agreement with the Trustees.
      unless, a written communication about the proposed
      change is sent to each unitholder and an advertisement is             viii) Securities & Exchange Board (MF) Regulations 1996
      given in one English daily newspaper having nationwide                ix)    Indian Trust Act, 1882.
      circulation as well as in a newspaper published in the
      language of the region where the Head Office of the mutual            x)     Consent letters of Auditors and Legal Advisors
      fund is situated; and the unitholders are given an option to
      exit at the prevailing Net Asset Value without any exit load.         4. For your convenience and help

(b) Suspension or restriction of repurchase/redemption facility             SBI Mutual Fund has opened 26 Investor Service Centres (ISCs)
    under any scheme of the Mutual Fund shall be made                       and 3 Investor Service Desk all over the country. The addresses
    applicable only after the approval from the Board of                    of these ISCs and the name of the contact person are given
    Directors of the Asset Management Company and the                       below:
    Trustee. The approval from the AMC Board and the Trustees               1.     AHMEDABAD
    giving details of circumstances and justification for the
    proposed action shall also be informed to SEBI in advance.                     Manager
                                                                                   SBIMF Investor Service Centre,
(c)   The Appointment of the AMC for the scheme can be
                                                                                   C/o SBI, Ahmedabad Main Branch,
      terminated by a majority of the Trustees or by not less than
                                                                                   1st Floor, Bhadra,
      75% of the Magnumholders of the scheme.
                                                                                   Ahmedabad - 380 001,
(d) The dispatch of dividend warrants shall be made within 30                      Tel. (079) 5507442.
    days of the declaration of the dividend and dispatch of
    redemption/repurchase proceeds will be made within 10                   2.     BANGALORE
    business days from the date of redemption/repurchase.                          Shri R. S. Srinivas
(e)   No amendments to the Trust Deed will be carried out                          Vice President & Regional Head (South)
      without the prior approval of SEBI and the Magnumholders’                    SBIMF Investor Service Centre
      approval would be obtained where it affects the interests                    SBI LHO Bldg, 4th Floor,
      of the Magnumholders.                                                        65, St. Marks Road,
(f)   No change in the controlling interest of the asset                           Bangalore - 560 001,
      management company shall be made unless, -                                   Tel. (080) 2272284, 2212507.
      i.    prior approval of the trustees and the SEBI is obtained;        3.     BHILAI
      ii.   a written communication about the proposed change                      Shri A.K. Mitra,
            is sent to each Magnumholder and an advertisement                      Manager
            is given in one English daily newspaper having                         SBIMF Investor Service Centre
            nationwide circulation and in a newspaper published
                                                                                   F-7, Commercial Complex,
            in the language of the region where the Head Office of
                                                                                   Uttar Gangotri,
            the Mutual Fund is situated; and
                                                                                   G.E. Road, Supela,
                                                                                   Bhilai-490 023,
                                                                                   Tel. (0788) 410955, 273261.



                                                                       34
Magnum TaxGain Scheme
4.   BHOPAL                                  10   GOA
     Shri V.V.K.Rao,                              Shri. Rajesh Singh
     Manager                                      Sr. Marketing Executive
     SBIMF Investor Service Centre                SBIMF Investor Service Centre
     C/o SBI LHO, Hoshangabad Road,               203, Kamat Centre,
     Bhopal - 462 011,                            Opp. Neptune Hotel,
     Tel. (0755) 557341, 273983                   Panjim, Goa
5.   BHUBANESHWAR                                 Tel : 842475

     Shri N.Tripathi,                        11   GUWAHATI
     Asst. Vice President                         Shri Utpal Baruah,
     SBIMF Investor Service Centre                Manager
     SBI LHO Bldg., Ground Floor,                 SBIMF Investor Service Centre
     Pt. Jawaharlal Nehru Marg,                   C/o SBI Local Head Office
     Janpath,                                     (Applo Bldg. Annex),
     Bhubaneshwar - 751 001,                      Bharalumukh,
     Tel. (0674) 402401.                          Guwahati - 781 009.
                                                  Tel. (0361) 521993.
6.   CHANDIGARH
                                             12. HYDERABAD
              .
     Shri D.P Singh,
     Asst. Vice President                         Shri D. S. Prashanth Rao
     SBIMF Investor Service Centre                Area Manager
     C/o SBI LHO, 1st Floor,                      SBIMF Investor Service Centre
     Sector 17-B,                                 C/o SBI LHO, 6th Floor,
     Chandigarh - 160 017,                        Koti, Hyderabad - 500 195,
     Tel. (0172) 709728.                          Tel. (040) 4756241.

7.   CHENNAI                                 13. INDORE

     Shri Ramkumar                                Shri Ujjwal Sharma,
     Marketing Executive                          Sr. Marketing Executive,
     SBIMF Investor Service Centre                SBIMF Investor Service Centre
     SBI Bldg., 8th Floor,                        C/o. State Bank of India,
     157, Annasalai,                              Main Branch, Near GPO,
     Chennai - 600 002,                           Indore - 452001,
     Tel. (044) 8523797, 8418061.                 Tel. (0731) 541141.

8.   COIMBATORE                              14. JAIPUR

     Shri Rajesh Ramnarayan,                      Shri Sameer Saxena
     Asst. Manager,                               Sr. Marketing Executive
     SBIMF Investor Service Centre                SBIMF Investor Service Centre
     State Bank of India,                         C/o SBI, Sanganeri Gate,
     Main Branch, Bank Road,                      Jaipur - 302 001,
     Coimbatore - 641 018.                        Tel. (0141) 567354.
     Tel : (0422) 303863,                    15. KOLKATA
9    ERNAKULAM                                    Shri G.J. Tully,
     Shri. A. Sree Kumar                          Asst. Vice President & Regional Head (East)
     Manager                                      SBIMF Investor Service Centre
     SBIMF Investor Service Centre                Nagaland House, 10th Floor,
     C/o. SBI Ernakulam South Branch,             11 & 13 Shakespeare Sarani,
     28/218, 2nd Floor,                           Calcutta - 700 071,
     Manorama Junction,                           Tel. (033) 2821471, 2822816.
     Panampilly Nagar,
     Ernakulam,
     Kerala - 682 036,
     Tel. (0484) 318886, 320107.



                                        35
Magnum TaxGain Scheme
16. LUDHIANA                                         22. PUNE
    Shri Anil Verma                                                   .
                                                          Shri Arun P Joshi,
    Deputy Manager                                        Manager
    SBIMF Investor Service Centre                         SBIMF Investor Service Centre
    C/s. SBI, Civil Lines,                                C/o SBI Service Branch,
    Ludhiana - 141 001                                    ‘Grace’, Dhole Patil Road,
    Tel. (0161) 449849, 09814228415                       Pune - 411 001,
17. LUCKNOW                                               Tel. (9520) 6113974, 6053836.

    Shri S. Bose,                                    23. RANCHI
    Asst. Vice President                                  Shri Rajneesh Kumar Singh
    SBIMF Investor Service Centre                         Sr. Marketing Executive
    C/o SBI LHO,                                          SBIMF Investor Service Centre
    6th Floor, A-Wing,                                    C/o SBI Service Branch,
    Moti Mahal Marg,                                      Kutchery Road,
    Hazratganj,                                           Ranchi - 834 001,
    Lucknow - 226 001,                                    Tel. (0651) 315212.
    Tel. (0522) 215668.
                                                     24. SILIGURI
18. MANGALORE
                                                          Shri Arindam Roy
    Shri Ashok Kumar,                                     Sr. Marketing Executive
    Deputy Manager                                        SBIMF Investor Service Centre
    SBIMF Investor Service Centre                         C/o SBI Siliguri Branch,
    C/o SBI, Arya Samaj Road,                             Hill Cart Road,
    Bellamatta,                                           Siliguri - 734 401,
    Mangalore - 575 003,                                  Distt. Darjeeling,
    Tel. (0824) 445892.                                   Tel. (0353) 537065.
19. MUMBAI                                           25. VADODARA
    Shri Santanu Ray,
    Manager                                               Shri Debashish Parui,
    SBIMF Investor Service Centre                         Asst. Manager
    42, Rajgir Chambers, 5th Floor,                       SBIMF Investor Service Centre,
    Saheed Bhagat Singh Road,                             C/o. SBI, Zonal Office,
    Fort, Mumbai - 400 023.                               6th Floor, Paradise Complex,
    Tel. (022) 2658302, 2658303.                          Sayaji Gunj, Vadodara- 390 005.
                                                          Tel. (0265) 224628.
20. NEW DELHI
                                                     26. VIJAYAWADA
    Shri Sameer Bhargava,
    Vice President & Regional Head (North)                Shri W. V. Kumar,
    SBIMF Investor Service Centre                         Manager
    5th Floor, Ashoka Estate,                             SBIMF Investor Service Centre
    24, Barakhamba Road, New Delhi - 110 001,             C/o SBI Station Road Branch,
    Tel. (011) 3315058.                                   Station Road,
                                                          Vijayawada - 520016.
21. PATNA                                                 Tel. (0866) 574113.
    Shri Sudanshu Mohan                              Investor Service Desks
    Asst. Manager
    SBIMF Investor Service Centre                    1.   AJMER
    1st Floor, Chamber Bhavan,                            Mr. Rohit Raj Mathur,
    J.C. Road,                                            Investor Service Desk,
    Patna - 800 001,                                      SBI Fund Management Pvt. Ltd.,
    Tel. (0612) 685 665.                                  C/o. SBI Main Branch, Ajmer.
                                                          Cell : 09829067357




                                                36
Magnum TaxGain Scheme
2.   KOTA                                                                      XXIII. PENDING LEGAL PROCEEDINGS AND
     Mr. Vivek Shringi,                                                                  OTHER INFORMATION
     Investor Service Desk,
     SBI Fund Management Pvt. Ltd.,                                        1. Pending Legal Proceedings
     C/o. SBI Main Branch, Kota.                                           Any pending material litigation proceedings incidental to the
     Cell : 09829067358                                                    business of the Mutual Fund to which the Sponsor of the Mutual
3.   RAIPUR                                                                Fund or any company associated with the Sponsor in any
                                                                           capacity including the AMC, Board of Trustees /Trustee Company
     Mr. Deepak Mishra                                                     or any of the directors or Key Personnel is a party. Any pending
     Investor Service Desk,                                                criminal cases against the Sponsor or any company associated
     SBI Fund Management Pvt. Ltd.,                                        with the Sponsor in any capacity including the AMC, Board of
     C/o. SBI Main Branch, Raipur.                                         Trustees/Trustee Company or any of the directors or Key
                                                                           Personnel should also be disclosed separately.
5. Investor Relations Officer
                                                                           Apart from the ordinary routine litigations incidental to the
The AMC has appointed an Investor Relations Officer to look                business of the Fund, the following petition / summary suit
into investor grievances regarding deficiencies, if any, in the            against the Fund is pending in the Court:
services provided by the Registrars or the Investor Service
Centres.                                                                   @   Summary Suit No. 3799 of 1996, filed by M/s Morarka
                                                                               Finance Limited is pending in the High Court of Juridicature
Name of the Investor   Shri Dinesh Prasad                                      at Bombay. The Plaintiff has filed the suit for recovery of
Relations Officer    : Vice President, Customer Service                        Rs. 8.44 lakhs together with interest being the excess price
Address                 : SBI Funds Management Pvt. Ltd.                       paid by them in equity buyback transaction relating to the
                          191, Maker Tower “E”, 19th floor,                    shares of M/s Pumpsar Distilleries Ltd.
                          Cuffe Parade, Mumbai - 400 005.                  AMC’s perception: The AMC has received advice that the case
Telephone Number        : 218 0244 / 218 0221                              is likely to be decided in its favour.
The AMC will have the discretion to change the Investor                    Our Sponsor, the State Bank of India is India’s largest bank with
Relations Officer depending on operational necessities and in              9026 branches in India and 52 offices in 31 countries worldwide.
the overall interest of the fund.                                          In addition to this, SBI also has 7 associates and 1 banking
                                                                           subsidiary in addition to other non-banking subsidiaries in India.
     XXII. INVESTOR GRIEVANCES REDRESSAL                                   To the best of our knowledge there are no criminal cases against
                  MECHANISM                                                the Sponsor, its Directors or Key Personnel, which will have any
                                                                           impact on the operations of SBI Mutual Fund.
The Customer Service Department at SBI Mutual Fund functions
under the supervision of a Vice President. The investor                    2. Penalties Awarded by SEBI or Any Other Regulatory Body
grievances are redressed by the AMC directly and also by our               All cases of penalties awarded by SEBI under the SEBI Act or
26 Investor Service Centres (ISC) and 3 Investor Services Desk             any of its regulations against the Sponsor of the Mutual Fund or
all over the country. All grievances are redressed within the time         any company associated with the Sponsor in any capacity
stipulated by SEBI. Our ISCs are equipped with upgraded                    including the Asset Management Company, Trustee Company/
technological facilities to respond to the investor queries.               Board of Trustees, or any of the directors or Key Personnel
The statistical data for investor complaints received are as under:        (specifically the fund managers) of the Asset Management
                                                                           Company and Trustee Company. The nature of the penalty must
 From                             01.04.01              01.04.00
 To                               31.01.02              31.03.01           be disclosed. for Sponsor and its associates, other than the
                                                                           penalties as mentioned above, the penalties awarded by any
 Complaints Received                 34960                 37666           financial regulatory body, including stock exchanges, for defaults
 Complaints Redressed                35801                 36860           in respect of shareholders, debenture holders and depositors
                                                                           shall also be disclosed. Additionally, penalties awarded for any
 Balance                               15*                   856
                                                                           economic offence and violation of any securities laws shall be
* Complaints were received at the fag end of January 2002.                 disclosed.
  These complaints have since been redressed.




                                                                      37
Magnum TaxGain Scheme
As on date, there are no cases of penalties awarded by SEBI             Personnel of the Asset Management Company are being
under the SEBI Act or any of the Regulations against the Sponsor        disclosed below.
or any company in any capacity associated with the Sponsor              As on date, there are no enquiry/adjudication proceedings under
including the AMC, the Board of Trustees or any of the directors        the SEBI Act and the Regulations made thereunder, in progress
or Key Personnel of the AMC.                                            against the Sponsor of the Mutual Fund or any company
                                                                        associated with the Sponsor in any capacity including the AMC,
3. Deficiency in Systems or Operations                                  Board of Trustees/Trustee Company or any of the Directors or
Any deficiency in the systems and operations of the Sponsor of          Key Personnel of the Asset Management Company.
the Mutual Fund or any company associated with the sponsor              Date of Approval by the Board of Trustees for conversion of
in any capacity including the AMC or the Trustee Company which
                                                                        scheme: 22.05.1999
SEBI has specifically advised to be disclosed in the offer
document, or which has been notified by any other regulatory                               For and on behalf of the Board of Directors,
agency, shall be disclosed.                                                                          SBI Funds Management Pvt. Ltd.
                                                                               (the Asset Management Company for SBI Mutual Fund)
There is no deficiency in the systems or operations of the
Sponsor or any company associated with the Sponsor (including
the AMC), which SEBI or any other regulatory agency has
specifically advised to be disclosed in the offer document.
4. Enquiry or Adjudication
                                                                        Place : Mumbai              Name        : R. J. Chand
Any enquiry/adjudication proceedings under the SEBI Act and             Date : 27.02.2002           Designation : Managing Director
the Regulations made thereunder, that are in progress against
the Sponsor of the Mutual Fund or any company associated                (Notwithstanding anything contained in the offer document the
with the Sponsor in any capacity including the AMC, Board of            provisions of the SEBI (MF) Regulations, 1996 and the Guidelines
Trustees/Trustee Company or any of the Directors or Key                 thereunder shall be applicable.)
                                                                        Drafted as per SEBI’s Standard Observations dated 22.10.2001.




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