OFFER DOCUMENT Principal Trustee : State Bank of India Asset Management Company : SBI Funds Management Ltd. 191, Maker Tower ‘E’ Cuffe Parade, Mumbai 400 005. INVITES SUBSCRIPTIONS TO An Open-ended Liquid Scheme Asset Management Company : SBI Funds Management Limited APPLICATION FORMS ARE AVAILABLE WITH SBIMF AGENTS, STOCK EXCHANGE BROKERS, AUTHORIZED STATE BANK GROUP BRANCHES, SBIMF INVESTOR SERVICE CENTRES & SBIMF CORPORATE OFFICE. APPLICATION FORMS ARE ALSO AVAILABLE FOR DOWNLOAD AT www.sbimf.com. “This offer document sets forth information about the scheme that a prospective investor ought to know before investing. The scheme particulars have been prepared in accordance with the Securities and Exchange Board of India (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.” Initial offer opened for 7 days from 13th May, 1999 to 19th May, 1999 and thereafter reopened for continuous sales and repurchases on 24th May, 1999. MAGNUM SBI MUTUAL FUND Income Fund I. CONTENTS PAGE NO. I. CONTENTS ............................................................................................................................................................. 2 II. DEFINITIONS AND EXPLANATIONS OF TERMS USED .............................................................................................. 3 III. RISK FACTORS ....................................................................................................................................................... 4 I V. HIGHLIGHTS OF THE SCHEME ............................................................................................................................... 4 V.. DUE DILIGENCE CERTIFICATE ............................................................................................................................. 5 VI. EXPENSES .............................................................................................................................................................. 5 VII. CONDENSED FINANCIAL INFORMATION ................................................................................................................ 6 VIII. CONSTITUTION OF THE MUTUAL FUND ................................................................................................................. 7 IX. MANAGEMENT OF THE FUND ................................................................................................................................ 9 X. INVESTMENT OBJECTIVES & POLICIES .................................................................................................................. 12 XI. UNITS AND OFFER ................................................................................................................................................. 14 XII. SALE OF UNITS ...................................................................................................................................................... 14 XIII. RETURNS AND DISTRIBUTION ............................................................................................................................... 15 XIV. REDEMPTION AND REPURCHASE .......................................................................................................................... 15 XV. TAX TREATMENT OF INVESTMENTS IN MUTUAL FUNDS ........................................................................................ 17 XVI. INTER-SCHEME TRANSFERS ................................................................................................................................. 17 XVII. ASSOCIATE TRANSACTIONS .................................................................................................................................. 18 XVIII. BORROWING BY THE MUTUAL FUND ..................................................................................................................... 18 XIX. STOCK LENDING BY THE MUTUAL FUND ............................................................................................................... 19 XX. NAV AND VALUATION OF ASSETS OF THE SCHEME ............................................................................................... 19 XXI. ACCOUNTING POLICIES ......................................................................................................................................... 19 XXII. INVESTORS’ RIGHTS AND SERVICES ..................................................................................................................... 20 XXIII. INVESTOR GRIEVANCES REDRESSAL MECHANISM ............................................................................................... 22 XXIV. PENDING LEGAL PROCEEDINGS AND OTHER INFORMATION ................................................................................. 22 2 MAGNUM SBI MUTUAL FUND Income Fund II. DEFINITIONS AND EXPLANATIONS OF TERMS USED The AMC : The Asset Management Company; refers to “SBI Funds Management 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. 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. 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. 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 one Magnum of the Scheme. NAV related price : The Repurchase Price and the Sale Price are calculated on the basis of NAV and are known as NAV related prices. The repurchase price is calculated by deducting the exit load factor (if any) from the NAV and the sale price is calculated by adding the entry load factor (if any) to NAV. NRI : An Indian will be treated as a non-resident in any previous year if he fulfills any of the following two conditions: (a) he/she has not resided in India in that year for period or periods amounting in all to 182 days or more, or (b) Having within the four years preceding that year has not resided in India for a period or periods amounting in all to 365 days or more, and has not resided in India for 60 days or more 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 Corporate 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 Ltd (see “the AMC”) The Scheme : Magnum InstaCash Fund 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 Corporate 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 SBI MUTUAL FUND Income Fund III. HIGHLIGHTS OF THE SCHEME IV. RISK FACTORS a) An open-ended scheme, offering high degree of liquidity on 1. Standard Risk Factors investment and superior returns consistent with such high liquidity. a) Mutual funds and securities investments are subject to market The initial offer was open from13th May 1999 to 19th May 1999 risks and there is no assurance or guarantee that the Fund’s objective will be achieved. and the scheme re-opened for ongoing sales and repurchases b) As with any investment in securities, the NAV of the units issued from 24th May 1999. under the scheme can go up or down depending on the factors b) Following Plans are available to the investors: and forces affecting the capital markets. (i) Plan A - Dividend Plan (ii) Plan B - Cash Plan c) Past performance of the Sponsor / AMC / Mutual Fund does not guarantee the future performance of the schemes of the Mutual c) Both Plans will invest their entire corpus in debt (Corporate Fund. debentures & bonds, PSU/FI/Govt. guaranteed bonds), Govt. d) Magnum InstaCash Fund is only the name of the scheme and securities, call money and money market instruments (commercial does not, in any manner, indicate either the quality of the scheme paper, certificates of deposit, T-bills, bills rediscounting, repos, or its future prospects and returns. short-term bank deposits etc). 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 d) Dividend Plan will make payment of weekly dividends, subject to contribution made by it of an amount of Rs. 5 lacs towards availability of distributable surplus. Dividends declared will be setting up of the mutual fund. automatically reinvested on the next day’s NAV. The periodicity of 2. Scheme-Specific Risk Factors payment of dividend may be changed by the Mutual Fund. a) As in the case of any fund investing in debt, the NAV of the e) Cash Plan is intended for investors who do not want to be paid scheme will be sensitive to changes in interest rate. In case of an periodic dividend. The Cash Plan provides relatively higher liquidity increase in interest rates, the market value of existing debt instruments may fall, leading to a fall in the NAV. The sensitivity of and the returns will depend on the short-term interest rates. This the NAVs of either of the Plans to interest rate movements cannot Plan will invest in debentures and bonds maturing not later than 3 be entirely eliminated and investment in the either Plan is not years, in Govt. securities, in money-market instruments and in call guaranteed to protect the value of the investment completely from unfavourable changes in the interest rates. However, the NAV of money. the Cash Plan is expected to be less sensitive to the long-term f) Both Plans will declare separate daily NAVs and the switchovers interest rate movements. between the two Plans will be at NAV related prices. The scheme b) AMC’s perception: The impact of a rise in interest rates will be reduced through good fund management practices. In anticipation will endeavour to declare NAVs on Saturday and Sunday also of any rise in interest rates, the Scheme will attempt to move the under both Plans. funds in from long-term instruments into short-term debt & money g) No entry or exit load for initial investors and no lock-in period for market instruments where the impact on the NAV will be much lower. Also, if the interest rates at any point of time are expected to the investment. However the Fund reserves the right to increase or ease, the Scheme can move back into long-term debt to take decrease the load or completely remove it. advantage of appreciation in the market value of its investments. h) Total recurring expenses to be limited to 1.00% of weekly average c) In an open ended fund, any disruption in the normal functioning of the markets for debt instruments or extreme illiquidity in any of NAV in case of Cash Plan & within SEBI limits in case of Dividend the debt instruments may affect the ability of the fund manager to Plan. buy or sell freely in the market. In the event of inordinately large number of redemption requests or of a restructuring of the i) Minimum subscription: Rs. 10,000/- only. No maximum limit. Scheme’s portfolio, the time taken by the Fund for redemption j) AMC has borne the initial issue expenses and every rupee invested may become significant. Please see para “Right to Limit by the investor was fully invested in the scheme. Redemptions” in section “Redemptions and Repurchase”. k) Tax benefits are available under sections 48 & 112 on capital d) AMC’s perception: Such situations may be extremely rare and gains for resident Indians. temporary in nature. Although the debt market in India is not very liquid, there is always demand for debt instruments having a high l) Switchover facility at NAV related prices to other open-ended rating & issued by good companies, at appropriate yields. At schemes of SBI Mutual Fund, viz., Magnum Balanced Fund, times, the fund may choose to hold such instruments till maturity and meet redemption needs through temporary borrowing within Magnum Equity Fund, Magnum Multiplier Plus Scheme 1993, permissible limits. The fund will keep a sufficient amount of the Magnum LiquiBond Income Fund, Magnum Gilt Fund and funds in cash, call money and liquid money market instruments Magnum Sector Funds Umbrella. to take care of the normal redemption needs. 4 MAGNUM SBI MUTUAL FUND Income Fund after giving notice to that effect to the investors through an advertisement V. DUE DILIGENCE CERTIFICATE in an English language daily that circulates all over India as well as in a It is confirmed that : newspaper published in the language of the region where the Head Office of the Mutual Fund is located. In any case, the increase will be I. The draft offer document forwarded to SEBI is in accordance with applicable only to investors who invest after the date specified in the the Securities and Exchange Board of India (Mutual Funds) advertisement and not to the existing investors on the amounts already Regulations, 1996, and the guidelines and directives issued by invested by them. The loads can also be decreased or altogether removed SEBI from time to time; by the Mutual Fund. The loads, if any, will be credited to the scheme and/ II. All legal requirements connected with the launching of the scheme or used for paying selling and marketing expenses as permissible under as also the guidelines, instructions, etc., issued by the Government SEBI regulations. and any other competent authority in this behalf, have been duly In any case, should the load structure change in future, such changes complied with. in load will be applicable only to prospective investors who invest after III. The disclosures made in the offer document are true, fair and the date specified in the advertisement and not to the existing investors adequate to enable the investors to make a well informed decision on the amounts already invested by them. The Mutual Fund will also regarding investment in the proposed scheme; endeavour to keep the investors informed through the following measures: i) An addendum detailing the changes will be attached to the offer IV. All the intermediaries named in the offer document are registered documents and abridged offer documents. The addendum will with SEBI and till date such registration is valid. also be available with the distributors/brokers and will also be sent alongwith the newsletter sent to the magnumholders immediately Signature : after the changes. ii) The Mutual Fund will display the changes/modifications in the offer Name : Niamatullah document in the form of a notice at all ISCs and distributors/ Managing Director brokers office. SBI Funds Management Limited iii) The introduction of the exit load/CDSC alongwith the details will be Date : stamped in the acknowledgement slip issued to the investors on Place : Mumbai submission of the application form and will also be disclosed in the statement of accounts issued after the introduction of such load/ VI. EXPENSES CDSC. 1. Magnum holder transaction expenses or sales load : iv) Any other measures which the Mutual Fund considers necessary in the interest of the magnumholders. The following table illustrates the expenses that the investors will incur on their purchases / sales of Magnums under this scheme : In accordance with SEBI Regulations, the repurchase price cannot be lower than 93% of the NAV and the sale price will not be higher than Nature of expense % of NAV 107% of the NAV, and the difference between sale price and repurchase Maximum sales load imposed on price shall not exceed 7% of the sale price. purchases of Magnums NIL 2. Initial issue expenses: Sales load if any on issue of (a) Present scheme Magnums in lieu of dividends Not applicable The initial issue expenses associated with the launch of this scheme Contingent deferred sales load NIL were fully borne by SBI Funds Management Ltd. The initial issue expenses Repurchase load NIL were estimated at 6% of corpus collected. The actual initial expenses were Rs. 32,785, i.e. 0.01% of initial corpus. Switchover load NIL Any investment made by the investors during the initial issue period was The sales load and/or the repurchase load and/or the switchover load fully invested in the scheme. may be increased by the AMC at any time to a maximum of 3% of NAV 5 MAGNUM SBI MUTUAL FUND Income Fund (b) Past Schemes Registrar Services for On actuals, within the overall ceiling Scheme Name Estimated Actual Issue Remarks transfer of units sold mentioned below Issue Expenses or redeemed Expenses Brokerage & Transaction On actuals, within the overall ceiling Magnum Gilt Fund 2.92% of the Rs. 0.36 cr., Being a no load cost mentioned below Initial issue i.e., 0.123% of scheme, the initial corpus entire initial Audit fees On actuals, within the overall ceiling corpus. issue expenses mentioned below were borne by Marketing & selling On actuals, within the overall ceiling the AMC. expenses, including mentioned below. Magnum Sector 6% of corpus Rs. 0.49 cr., Rs. 1.25 lac agent commission, if any Funds Umbrella collected i.e., 4.24% of borne by the Cost of investor On actuals, within the overall ceiling initial corpus AMC communication & mentioned below Magnum 6% of corpus Rs. 32785, i.e. Being a no load statutory advertising InstaCash Fund collected 0.01% of initial scheme, the Cost of providing On actuals, within the overall ceiling corpus entire initial account statements mentioned below issue expenses were borne by & redemption warrants the AMC Insurance premium On actuals, within the overall ceiling paid by the fund mentioned below M a g n u m Fund 1998 Rs. 1.23 cr., Fully borne by LiquiBond Income 6% of i.e., 3.69% of the AMC. Winding up costs On actuals, within the overall ceiling corpus initial corpus mentioned below collected Total Expenses Charged Subject to the following limits : Magnum Monthly Being a no load Rs. 5.06 cr., Being a no load to the scheme Cash Plan Income Scheme scheme, no i.e., 4.35% of scheme, the 1.00% of the average weekly net assets 1998 (I) estimates were initial corpus entire initial Dividend Plan given in the offer issue expenses document. were borne by i) 2.25% on the first Rs. 100 cr. of average the AMC. weekly net assets. ii) 2.00% on the next Rs. 300 cr. of average Magnum Monthly 6% of corpus 5.33 crs., i.e. Fully borne by weekly net assets Income Scheme collectedR s . 2.88% of initial the scheme. 1998 (II) corpus iii) 1.75% on the next Rs. 300 cr. of the average weekly net assets 3. Annual Scheme Recurring Expenses: iv) 1.50% on the balance of the average The following expenses will be charged to the scheme on a recurring weekly net assets basis: Category of expense Ceilings as per SEBI 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 Investment management Subject to the following ceilings : & advisory fee to be i) Not exceeding 1.25% of the average directly or indirectly. The total expenses charged to the Scheme (Cash charged by the AMC. weekly net assets of the scheme Plan) will be restricted to 1% of the weekly average NAV. Expenses outstanding in the year as long as the net incurred in excess of the above overall limits will be borne by the assets do not exceed Rs. 100 crores and AMC. The AMC reserves the right to revise this limit upwards to 1.5% in ii) 1% of the amount in excess of Rs. 100 case of unforeseen expenses in the future, after giving at least 30 days’ crores where net assets so calculated notice to the investors through an English language daily circulating all exceed Rs. 100 crores over India. Fees and expenses of 0.01% of the average weekly net assets, In case of the Dividend Plan, the total expenses charged to the Scheme Trustees subject to a minimum of Rs. 15 lakhs to be will be restricted to (i) 2.25% on the first 100 crores of average working allocated across all schemes of the fund. net assets, (ii) 1.75% on the next Rs. 300 crores of average working net Custodian fee On actuals, within the overall ceiling assets and (iii) 1.25% on the balance of average working net assets. mentioned below 6 MAGNUM SBI MUTUAL FUND Income Fund Magnum LiquiBond (Growth) VII. CONDENSED FINANCIAL INFORMATION Particulars 2000-2001 1999-2000 1998-1999 1. Historical Per Unit Statistics NAV at the beginning The data for 2000-2001 pertains to data up to and as on 30th December of the period 11.9378 10.52 - 2000. Net income per unit 2.6420 1.810 - (* - Indicates the returns for periods less than one year are in absolute Dividends per unit - - - terms only and not annualized.) Transfer from Reserves - - - Magnum Monthly Income NAV at the end of the period 12.6420 11.8100 10.52 Scheme 1998 (II) Annualized return since Particulars Monthly Quarterly Annual Cumulative Income Income Income Growth inception for the period 8.81% 13.28% 5.20%* Option Option Option Option Net Asset at the end (Statistics for the year 1998-99) of the period 396.74 326.46 58.55 NAV at the beginning of the year Ratio of Recurring expenses Net Income per unit to Net Assets 1.69% 1.97% 1.43% th (Before payout) 0.404 0.400 0.400 0.400 (Date of allotment of units: 30 November1998) Dividends (payout) 0.104 - - - Particulars Magnum LiquiBond (Dividend) Transfer to Reserves (if any) - - - - 2000-2001 1999-2000 1998-1999 Latest NAV 10.404 10.400 10.400 10.400 NAV at the beginning Annualised Return (%) 3.60%* 3.60%* 3.60%* 3.80%* of the period 10.4098 10.52 - Net Assets at the end of the year (Rs. Cr.) 58.84 20.68 100.47 11.54 Net income per unit 2.2060 1.635 - Ratio of recurring expenses Dividends per unit - 1.295 - to Net Assets (%) 0.12% 0.12% 0.12% 0.12% Transfer from Reserves - - - (Statistics for the NAV at the end of the period 10.5610 10.3400 10.52 year 1999-2000) Annualized return since NAV at the beginning of the year 10.404 10.400 10.400 10.400 inception for the period 8.00% 12.54 5.20%* Net Income per unit Net Asset at the end (before payout) 2.771 2.754 1.580 2.950 of the period 301.51 351.59 58.55 Dividends (Payout) 1.441 1.264 1.325 - Ratio of Recurring expenses Transfer to Reserves (if any) - - - - to Net Assets 1.69% 1.97% 1.43% Latest NAV 11.33 11.49 11.58 12.95 (Date of allotment of units: 30th November1998) Annualised Return (%) 25.82% 24.45% 24.76% 24.73% (* - Indicates the returns for periods less than one year are in absolute Net Assets at the end of terms only and not annualized.) the year (Rs. Cr.) 58.04 20.17 93.15 14.31 Particulars Magnum Growth Fund Ratio of recurring expenses to Net Assets (%) 1.35% 1.35% 1.35% 1.35% 2000-2001 1999-2000 (Statistics for NAV at the beginning of the period 15.51 - the year 2000 – 2001) Net income per unit 5.8050 12.485 NAV at the beginning of the year 11.39 11.58 11.67 13.05 Dividends per unit 6.125 6.125 Net Income per unit Transfer from Reserves - - (before payout) 2.841 2.777 3.125 3.130 NAV at the end of the period 9.68 16.36 Dividends (Payout) 2.311 2.057 1.325 - Transfer to Reserves (if any) - - - - Annualized return since inception for the period 32.07% 133.47%* Latest NAV 10.53 10.72 11.80 13.13 Net Asset at the end of the period 200.02 338.20 Annualised Return (%) 18.82% 17.84% 18.07% 18.04% Ratio of Recurring expenses to Net Assets 0.43 % 0.41% Net Assets at the end (Date of allotment of units: Magnum Growth Fund – 24th May 1999) of the year (Rs. Cr.) 52.65 18.34 84.97 14.51 Ratio of recurring expenses to Net Assets (%) 1.40% 1.40% 1.40% 1.40% (Date of allotment of units: 29th January 1999) 7 MAGNUM SBI MUTUAL FUND Income Fund Magnum InstaCash Magnum InstaCash Note: The latest NAV is dated as on 30th December 2000. The Particulars (Cash) (Dividend) compounded annualized returns have been calculated since inception 2000-2001 1999-2000 2000-2001 1999-2000 of the schemes, taking adjusted NAV, i.e., after adjusting dividends paid out on initial NAV of Rs. 10/- per Magnum. NAV at the beginning of the period 10.8389 - 11.01 - * - indicates the returns for periods less than one year are in absolute terms only and not annualized. Net income per unit 1.565 0.830 1.4909 1.010 Dividends per unit - - 0.7850 - 2. Details of borrowings by other schemes : Scheme Name Amount Date of Amounts Date of Purpose of Interest Transfer from Reserves - - - - Borrowed Borrowing Repaid Repayment Borrowing Rate NAV at the end of Magnum Bond 250,00,000 24/6/98 100,00,000 30/7/98 Funding of 14.79% the period 11.5646 10.83 10.7059 11.01 Fund 1994 125,00,000 4/8/98 Repurchases 25,00,000 6/8/98 A/c. Annualized return since 12,76,366 27/8/98 12,76,366 1/9/98 inception for the period 7.08% 8.30%* 6.32% 10.10%* 11,21,657 23/2/99 11,21,657 31/3/99 Magnum Monthly 150,00,000 4/8/98 150,00,000 24/8/98 Funding of 14.79% Net Asset at the end Income Scheme Repurchases of the period 6.00 8.35 4.64 0.09 1997 A/c. Ratio of Recurring Magnum Monthly 45,67,368 31/7/98 45,67,368 6/8/98 Funding for 14.79% Income Scheme Monthly expenses to 1998 (I) payout Net Assets 0.70% 0.47% 1.5% 0.58% Magnum GIFTS - A 40,00,000 18/7/98 40,00,000 28/7/98 Funding of 14.79% (Date of allotment of units: Magnum InstaCash Fund – 28th May 1999) 10,33,441 16/3/99 10,33,441 31/3/99 Repurchases 1,80,00,000 21/7/99 1,00,00,00 28/7/99 A/c. 14.50% (* - Indicates the returns for periods less than one year are in absolute 80,00,000 5/8/99 14.50% terms only and not annualized.) 26,07,099 28/10/99 93,14,005 30/11/99 13.50% 45,06,906 1/11/99 Particulars MSFU (Contra) MSFU (IT) 22,00,000 22/11/99 2000-2001 1999-2000 2000-2001 1999-2000 9,04,000 23/08/2000 12,47,000 26/08/2000 21,51,000 8/9/2000 NAV at the beginning Magnum Equity 100,00,000 18/9/98 100,00,000 7/10/98 Funding of 14.79% of the period 9.21 - 24.67 - Linked Savings Repurchases Net income per unit -1.660 -0.550 5.410 20.800 Scheme 1995 A/c. Magnum Tax 2243905.5 16/7/99 2243905.5 19/7/99 Funding of 14.79% Dividends per unit - - 4 4 Gain 1993 10204262 18/8/99 Repurchases Transfer from Reserves - - - - 8238072 2/9/99 1,84,42,334 15/9/99 A/c. 43,23,727 28/10/99 30/11/99 13.50% NAV at the end of 75,00,000 1/11/99 1,99,23,727 the period 8.34 9.45 11.41 26.80 81,00,000 5/11/99 Annualized return since 3. Disclosure under Regulation 25(11) inception for the period -9.16% -5.50%* 31.50% 347.51%* Net Asset at the end During the last financial year (1st April 1999 up to 31st March 2000), SBI of the period 11.57 10.88 121.16 234.93 Mutual Fund has made the following investments in companies which Ratio of Recurring hold units in excess of 5% of the Net Asset Value of any scheme of SBI expenses to Net Assets 2% 2.06% 1.74% 2.06% Mutual Fund: (Date of allotment of units: 31st July 1999) Scheme Name Investments by the respective schemes in Particulars MSFU (FMCG) MSFU (Pharma) Companies or its subsidiaries where that Company or its subsidiaries have invested 2000-2001 1999-2000 2000-2001 1999-2000 more than 5% of the NAV in any scheme NAV at the beginning of the period 10.68 - 10.91 - Gifts-B ITC Bhadrachalam Paper Boards (Equity), Net income per unit -1.530 0.920 -0.110 0.970 TISCO (Equity) and State Bank of India Dividends per unit - - - (Equity) Transfer from Reserves - - - - MMPS 93 ITC Bhadrachalam Paper Boards (Equity), NAV at the end of TISCO (Equity), State Bank of India (Equity), the period 8.47 10.92 9.89 10.97 Annualized return since SBI Home Finance Ltd. (Equity), State Bank inception for the period -8.41% 9.30%* -0.58% 9.70%* of Bikaner & Jaipur (Equity), Thermax Ltd. Net Asset at the end (Equity) and HDFC Bank Ltd. (Equity) of the period 15.05 12.65 24.97 19.77 MELS91 State Bank of India (Equity), State Bank of Ratio of Recurring India (Equity – Demat) and TISCO (Equity) expenses to Net Assets 2.25% 2.06% 2.22% 2.06% MGLF-94 TISCO (Equity) (Date of allotment of units: 31st July 1999) 8 MAGNUM SBI MUTUAL FUND Income Fund MMIS-97 State Bank of India (Equity), TISCO, State VIII. CONSTITUTION OF THE MUTUAL FUND Bank of Hyderabad (Bonds) and State Bank of Travancore (Bonds) 1. Constitution MMIS-91 State Bank of India (Equity), TISCO (Equity), SBI Mutual Fund has been constituted as a Trust, sponsored by SBI. SBI TISCO (Bonds) and TISCO (NCDs) has made an initial contribution of Rs. 5 lacs towards setting up of the Magnum Equity Fund State Bank of India (Equity) and TISCO Trust fund. SBI has been designated as the Principal Trustee, and has (formerly MMS-90) (Equity) appointed a Board of Trustees to supervise the activities of the Fund. The Board of Trustees have entrusted the work of management of the Fund to Magnum Balanced Fund State Bank of India (Equity), TISCO (Equity), SBI Funds Management Ltd., an Asset Management Company. (formerly MOEF-95) State Bank of Hyderabad (Bonds & NCD), State Bank of Travancore (Bonds & NCD) 2. Objective of SBI Mutual Fund and ICICI Bank (Equity) The basic objective of SBI Mutual Fund is to mobilize savings from a wide MTPL (redeemed on State Bank of India (Equity) and cross-section of people and to provide them attractive returns, security 19th May 1999) TISCO (Equity) and liquidity through investments in capital and money markets. MELS96 TISCO (Equity) 3. The Sponsor MGF 99 HDFC Bank Ltd. (Equity) and TISCO (Equity) The State Bank of India or SBI having its Corporate Office at State Bank MSFU-Contra TISCO (Equity) Bhavan, Madame Cama Road, Mumbai - 400 021, is the largest public MLIF-98 State Bank of India (Bonds) and TISCO (Bonds sector bank in India with 8,836 branches all over India. SBI is the leader & NCD) in providing loans to trade & industry. It also provides related services which generate significant fee-based income. It has also identified project MMIS 98(II) State Bank of Saurashtra (Bonds) finance and consumer banking as key areas. MBF 94 State Bank of India (Equity) and TISCO The financial performance SBI is summarized below: (Bonds) MMIS 98(I) TVS-SUZUKI Ltd. (Equity) and TISCO (Bonds Year ended March 31st 2000 1999 1998 1997 1996 & NCD) Turnover / MRIS 93 TISCO (NCD), State Bank of India (Equity), Total Income (Rs. cr.) 25770 22392 18699 17594 15716 SBI Home Finance (Equity), State Bank of Profit after Tax (Rs. cr.) 2051 1028 1861 1349 832 Hyderabad (Bonds) and SBS (Bonds) Equity Capital (Rs. cr.) 526 526 526 526 474 MTP 94 State Bank of India (Equity) and TVS-SUZUKI Free Reserves (Rs. cr.) 11620 9876 9082 7451 4989 Ltd. (Equity) Net Worth (Rs. Cr.) 12147 10402 9608 7977 5463 MTGS 93 Thermax (Equity) Deposits (Rs. cr.) 196821 169041 131091 110701 96395 Earnings These investments comprise debt, equity and money market instruments. per share (Rs.) 38.98 19.53 35.36 26.66 17.54 SBI Mutual Fund is of the opinion that the said companies are fundamentally Book Value strong and possess a high potential for growth and are market leaders in per share (Rs.) 230.93 197.64 182.66 151.65 115.25 their respective fields. Accordingly, investments were made in the said Capital Adequacy companies. The investments made by some schemes of SBIMF in bonds Ratio (%) 11.49 12.51 14.58 12.17 11.60 issued by associate companies including State Bank of India and its Dividend paid (%) 50% 40% 40% 40% 35% subsidiaries are in compliance with the investment restrictions contained in clause 9 of the seventh schedule to the SEBI (MF) Regulations, 1996. source : SBI Annual Reports 9 MAGNUM SBI MUTUAL FUND Income Fund 4. Board of Trustees The Trust is administered by a Board of Trustees comprising the following eminent persons: Name Address Principal Current Occupation Directorships Prof. A.M. Khusro B-11, Formerly Chairman, 1. Chairman, Kohinoor Cement Ltd. Chairman, Chirag Enclave, Finance Commission 2. Director, Transworld Leasing Ltd. Board of Trustees New Delhi - 110 048 3. Director, Hi- Tech Security Prints Ltd 4. Director, CT Cotton Yarn Ltd. 5. Director, Indian Express Newspaper 6. Director, Traders Ltd. 7. Director, Mekaster Finlease Ltd. 8. Chairman, Mekaster Securities (P) Ltd. Dr. (Mrs.) Malati Anagol Flat No. 6, Koumari, Formerly Professor, 1. Director, Imeco Ultrasonics Pvt. Ltd. Trustee Ahimsa Marg, Khar (West), UGC, University of 2. Director, Imeco Cleaning & Mumbai - 400 052 Bombay Welding Equipments (P) Ltd. Prof. S. K. Barua Indian Institute of Professor, None Trustee Management, IIM, Vastrapur, Ahmedabad Ahmedabad- 380 015 Shri Mukand 205, Agarwal Chartered 1. Director, IDBI Bank Ltd. M. Chitale Shyamkamal Accountant 2. Director, Investor Services of India Ltd. Trustee Ville Parel (E) 3. Director, Sun Vacuum Formers Ltd. Mumbai 400 057 All the above dignitaries are independent persons. SBI, the sponsor, is in the educational qualifications, past experience in the the process of appointing one of its senior officials as a Trustee to the securities market with the trustees, within 15 days of their Board in place of Shri S. K. Mukherji who has retired from service appointment; Apart from one nominee member of SBI (to be nominated) no other iii appointed auditors to audit its accounts; trustee is an associate of the Sponsor or of the AMC. SBIMF has been iv appointed a compliance officer to comply with regulatory complying with SEBI regulations stipulating that two third members must requirements and to redress investor grievances; be independent. v appointed registrars and laid down parameters for their 5. Duties and Obligations of Trustees and Substantial Provisions supervision; of the Trust Deed: vi prepared a compliance manual and designed internal control The Board of Trustees monitors the activities of the AMC. In the last mechanisms including audit systems; financial year, the Board of Trustees met 4 times. Periodic reports, including vii specified norms for empanelment of brokers and marketing quarterly reviews of each scheme, are submitted by the AMC to the agents. Trustees. Specific approval of the Trustees is obtained on important matters such as a new scheme design and launch. d) To ensure that the AMC has been diligent in empanelling the Under the Trust Deed constituting the Mutual Fund and SEBI (Mutual brokers, in monitoring securities transactions with brokers and Fund) Regulations, 1996, the Trustees have several rights, duties and avoiding undue concentration of business with any broker. obligations including the following: e) To ensure that the AMC has not given any undue or unfair a) To enter into an investment management agreement with the AMC advantage to any associates or dealt with any of the associates of with the prior approval of SEBI. the asset management company in any manner detrimental to the interest of the magnumholders. b) To ensure that the investment management agreement contains such clauses as are mentioned in the Fourth Schedule of SEBI f) To ensure that the transactions entered into by the asset (Mutual Fund) Regulations, 1996 and such other clauses as are management company are in accordance with SEBI (Mutual Fund) necessary for the purpose of making investment. Regulations, 1996 and the scheme. c) To ensure before the launch of any scheme that the AMC has :- g) To ensure that the AMC has been managing the mutual fund schemes independently of other activities and have taken adequate i systems in place for its back office, dealing room and steps to ensure that the interests of investors of one scheme are accounting; not being compromised with those of any other scheme or of ii appointed all key personnel including fund manager(s) for the other activities of the asset management company. scheme(s) and submitted their bio-data which shall contain 10 MAGNUM SBI MUTUAL FUND Income Fund h) To ensure that all activities of the AMC are in accordance with the iii a certificate to the effect that the AMC has been managing the provisions of SEBI (Mutual Fund) Regulations, 1996. schemes independently of any other activities and in case any i) Where the trustees have reason to believe that the conduct of business activities of the nature referred to in sub-regulation (2) of of the mutual fund is not in accordance with SEBI (Mutual Fund) regulation 24 of SEBI (Mutual Fund) Regulations, 1996 have Regulations, 1996 and the scheme they shall forthwith take such been undertaken by the AMC and has taken adequate steps remedial steps as are necessary by them and shall immediately to ensure that the interests of the magnumholders are inform the SEBI of the violation and the action taken by them. protected. j) To file the details of his/her holdings in securities on a quarterly basis w) The independent Trustees referred to in regulation 16 shall give their with the trust. comments on the report received from the AMC regarding the investments made by the schemes in the securities of group k) To be accountable for, and be the custodian of, the funds and companies of the Sponsor. property of the respective schemes and to hold the same in trust or the benefit of the unit holders in accordance with SEBI (Mutual x) The trustees shall ensure that no change in the fundamental attributes Fund) Regulations, 1996 and the provisions of trust deed. of any scheme or the trust or fees and expenses payable or any other change which would modify the scheme and affects the l) To take steps to ensure that the transactions of the mutual fund are interest of unitholders, shall be carried out unless, a written in accordance with the provisions of the trust deed. communication about the proposed change is sent to each m) To be responsible for the calculation of any income due to be paid unitholder and an advertisement is given in one English daily to the mutual fund and also of any income received in the mutual newspaper having nationwide circulation as well as in a newspaper fund for the holders of the units of any scheme in accordance with published in the language of the region where the Head Office of the SEBI (Mutual Fund) Regulations, 1996 and the trust deed. mutual fund is situated; and the unitholders are given an option to n) To obtain the consent of the magnumholders :- exit at the prevailing Net Asset Value without any exit load. i whenever required to do so by the SEBI in the interest of the Explanation: For the purposes of this clause “fundamental attributes” magnumholders; or means the investment objectives and terms of a scheme as defined later ii whenever required to do so on the requisition made by three in the offer document under the section “Investment Objectives and fourths of the magnumholders of any scheme; or Policies”. iii when the majority of the trustees decide to wind up or As per the sub-regulation (25), the Trustees shall exercise due prematurely redeem the units. diligence as under: o) To call for the details of transactions in securities by the key personnel A. General Due Diligence: of the AMC in his own name or on behalf of the AMC and shall (i) The Trustees shall be discerning in the appointment of the directors report to the SEBI, as and when required. on the Board of the asset management company. p) To quarterly review all transactions carried out between the mutual (ii) Trustees shall review the desirability of continuance of the asset fund, asset management company and its associates. management company if substantial irregularities are observed in q) To continuously review the net worth of the AMC and in case of any any of the schemes and shall not allow the asset management shortfall, ensure that the AMC make up for the shortfall as per company to float new schemes. clause (f) of sub-regulation (1) of regulation 21 of SEBI (Mutual (iii) The trustee shall ensure that the trust property is properly protected, Fund) Regulations, 1996. held and administered by proper persons and by a proper number r) To periodically review all service contracts such as custody of such persons. arrangements, transfer agency of the securities and satisfy itself that (iv) The trustee shall ensure that all service providers are holding such contracts are executed in the interest of the magnumholders. appropriate registrations from the Board or concerned regulatory s) To ensure that there is no conflict of interest between the manner of authority. deployment of its net worth by the AMC and the interest of the (v) The Trustees shall arrange for test checks of service contracts. magnumholders. (vi) Trustees shall immediately repor t to Board of any special t) To periodically review the investor complaints received and the developments in the mutual fund. redressal of the same by the AMC. B. Specific Due Diligence: u) To abide by the Code of Conduct as specified in the fifth schedule The Trustees shall: of SEBI (Mutual Fund) Regulations, 1996. (i) obtain internal audit reports at regular intervals from independent v) To furnish to the SEBI on a half yearly basis :- auditors appointed by the Trustees. i a report on the activities of the mutual fund; (ii) obtain compliance certificates at regular intervals from the asset ii a certificate stating that the trustees have satisfied themselves management company. that there have been no instances of self dealing or front (iii) hold meeting of trustees at frequent intervals. running by any of the trustees, directors and key personnel of the AMC; 11 MAGNUM SBI MUTUAL FUND Income Fund (iv) consider the reports of the independent auditors and compliance 3. Board of Directors: reports of asset management company at the meetings of trustees The Board of Directors of the SBIFM comprises the following eminent for appropriate action. persons: (v) maintain records of the decisions of the Trustees at their meetings Shri Janaki Ballabh D-7, Kinellan Tower and of the minutes of the meetings. Chairman 100A, Napean Sea Road, (vi) prescribe and adhere to a code of ethics by the Trustees, asset State Bank of India management company and its personnel. Mumbai - 400 006. (vii) communicate in writing to the asset management company of the Shri S.L. Rao A-165, Defence Colony, deficiencies and checking on the rectification of deficiencies. Chairman, New Delhi-110 024. Central Electricity 6. Trusteeship Fees: Regulatory Commission As per the provisions of the Trust Deed, the Principal Trustee, viz., State New Delhi Bank of India, is entitled to a trusteeship fee of 0.01% p.a. of net asset Shri R.G. Kare Kare House value of each Scheme, subject to a minimum fee of Rs. 15 lakhs to be Industrialist Near Metropol Cinema allocated across schemes in proportion to their weekly average NAVs. Margao, Goa - 403 601. 7. Modifications to the Trust Deed: . Shri D. P Roy D-11, Kinellan Tower No amendments to the Trust Deed will be carried out without the prior Dy. Managing Director 100A, Napean Sea Road, approval of SEBI and the Magnumholders’ approval would be obtained State Bank of India Mumbai - 400 006. where it affects the interests of the magnumholders. Shri Birendra Kumar C-6, Kinellan Tower Managing Director 100A, Napean Sea Road, IX. MANAGEMENT OF THE FUND SBI Capital Markets Ltd. Mumbai - 400 006. The Board of Trustees of SBI Mutual Fund have entrusted the management Shri Niamatullah C-2, Kinellan Tower of the Fund to SBI Funds Management Ltd., the AMC. Further details Managing Director 100A, Napean Sea Road, regarding the set up are furnished in the following paragraphs. SBI Funds Management Ltd. Mumbai - 400 006. 1. About the AMC: Shri Ajay Shah Santosh Nagar, SBI Funds Management Ltd. (SBIFM) having its corporate office at 191, Asst. Professor General Arun Kumar Vaidya Marg Maker Tower “E”, 19th floor, Cuffe Parade, Mumbai - 400 005, is a wholly Indira Gandhi Institute of Film City Road, Goregaon (E) owned subsidiary formed by State Bank of India. As per the audited Development Research Mumbai-400065 accounts on 31st March 2000, the authorized and paid up capital of the Shri Manu Chadha B-30 Connaught Place AMC was Rs. 50 crores and the net worth of the AMC was Rs. 47.72 Chartered Accountant Kuthiala Building crores. New Delhi 110 001. SBI Funds Management Limited has signed an Investment Management 4. Key Personnel: Agreement with the Trustees of SBI Mutual Fund on 14th May 1993. In The day to day operations of the AMC are looked after by experienced terms of this Agreement, SBIFM has assumed the day to day investment and qualified professionals, consisting of senior officials on deputation management of the fund and in that capacity makes investment decisions from the State Bank of India as well as directly recruited officials of the and manages the SBI Mutual Fund Schemes in accordance with the AMC. scheme objectives, Deed of Trust, provisions of Investment Management a. The top key management personnel of SBI Funds Management Ltd. Agreement and SEBI Regulations. are To date, SBIFM has successfully launched and managed 30 schemes Name Designation Business Experience (including 2 offshore funds) of SBI Mutual Fund. Of these 10 schemes have been redeemed. Of the 18 schemes still being managed, 9 are Shri Niamatullah Managing Experience of over 35 years open-ended schemes and the rest are close-ended schemes, with total Director with SBI, including 11 years net assets of approximately Rs.3, 400 crores, including offshore funds as a senior executive. (as on 30st December, 2000). SBI Funds Management is already Y2K Shri K. G. Ravindran Executive 33 years of experience with compliant. The expenditure that has been incurred by the Mutual Fund Vice SBI including 5 years as a for the same purpose is Rs. 80,000 and no further expenses are expected President senior executive. to be incurred for the same. 5. Head of Debt and Fund Manager 2. AMC Fees: Name Qualifications Experience For management of the above funds, the AMC at present charges a fee Shri Pijush Das B.Sc., M.A, 13 years of experience in the not exceeding 1% of the weekly average NAV of each scheme, which is Economics treasury at the State Bank of charged to the respective scheme. In future, the AMC may modify the fee India. Served as Head of from scheme to scheme, within the limits specified in the Regulations Treasury at SBI Singapore from and disclosed in the offer documents of the respective schemes. 1995-99 12 MAGNUM SBI MUTUAL FUND Income Fund 6. Chief Investment Officer d) to submit to the trustees quarterly reports of each year on its activities Name Qualifications Experience and the compliance with SEBI (Mutual Fund) Regulations 1996. e) The trustees at the request of the Asset Management Company may Ms. Divya Krishnan B.Com., Experience of over 8 years in terminate the assignment of the AMC at any time. P.G.D.M. area of funds management in the mutual fund industry. f) Provided that such termination shall become effective only after the trustees have accepted the termination of assignment and In absence of the fund manager, one of the other fund managers will look communicated their decision in writing to the AMC. after the operations of the scheme. The AMC will have the discretion to change the Chief Investment Officer/Fund Manager depending on g) Notwithstanding anything contained in any contract or agreement operational necessities and in the overall interest of the fund. or termination, the AMC or its directors or other officers shall not be absolved of liability to the mutual fund for their acts of commissions The AMC has appointed the following people as fund managers for or omissions, while holding such position or office. various schemes: h) not to deal in securities through any broker associated with the Name Qualifications Experience sponsor or a firm which is an associate or a sponsor beyond 5% of Ms. Sonia Sharma B.A., MFC Experience of over 6 years in the daily gross business of the mutual fund. the mutual fund industry and i) not to utilize the services of the sponsor or any of its associates, presently managing funds with employees or their relatives, for the purpose of any securities net assets of about transaction and distribution and sale of securities. Rs. 500 crores. Provided that the AMC may utilize such services if disclosure to that Mr. Ajay Bodke B.E. Experience of over 5 years in effect is made to the unit holders and the brokerage or commission (Mechanical), the mutual fund industry and paid is also disclosed in the half yearly/annual accounts of the MMS presently managing funds with net assets of about mutual fund *. * Rs. 350 crores. Note: Please note that the AMC utilizes the services of some branches of the SBI Group as authorized collecting branches for Mr. Sandip Sabharwal B. Tech., Experience of over 5 years in P.G.D.M. the mutual fund industry and the scheme. It may also utilize the services of some of the Associate presently managing three funds companies of SBI for various transactions. This has also been with net assets of about mentioned in the section ‘Associate Transactions’. Suitable disclosure Rs. 400 crores. as required under SEBI (MF) Regulations 2000 will be made in the half yearly and annual accounts of the Fund. Mr. Sachin Sawrikar B.E., PGDM Experience of over 5 years in the mutual fund industry and j) to file with the trustees the details of transactions in securities by the presently managing funds with key personnel of the asset management company in their own net assets of about name or on behalf of the asset management company and to also Rs. 400 crores. report to the SEBI, as and when required by the SEBI. 7. Investor Relations Officer: k) In case the AMC enters into any securities transactions with any of its associates, a report to that effect to be sent immediately to the The AMC has appointed Shri Dinesh Prasad, Vice President, as the Investor trustees. Relations Officer to look into investor grievances regarding deficiencies, if any, in the services provided by the Registrars or the Investor Service l) In case any company has invested more than 5% of the net asset Centres. He can be contacted at the address given in the section on value of a scheme, the investment made by that scheme or by any ‘Investors’ Rights and Services’. The AMC will have the discretion to other scheme of the same mutual fund in that company or its change the Investor Relations Officer depending on operational necessities subsidiaries to be brought to the notice of the trustees by the AMC and in the overall interest of the fund. and to be disclosed in the half yearly and annual accounts of the 8. Duties and obligations of the Asset Management Company: respective schemes with justification for such investment. Under the SEBI (Mutual Fund) Regulations, 1996, the AMC has the m) to file with the trustees and the SEBI- following obligations: i detailed bio-data of all its directors alongwith their interest in a) to take all reasonable steps and exercise due diligence to ensure that other companies within fifteen days of their appointment; and the investment of funds pertaining to any scheme is not contrary to ii any change in the interests of directors every six months. the provisions of SEBI (Mutual Fund) Regulations 1996 and the n) to file with the trustees a statement of holdings in securities of the Trust Deed. directors of the AMC with the dates of acquisition of such securities b) to exercise due diligence and care in all its investment decisions as at the end of each financial year. would be exercised by other persons engaged in the same business. o) not to appoint any person as key personnel who has been found c) to be responsible for the acts of commissions or omissions by its guilty of any economic offence or involved in violation of securities employees or the persons whose services have been procured by laws. the AMC. 13 MAGNUM SBI MUTUAL FUND Income Fund p) to appoint registrars and share transfer agents who are registered g) No application form, or sales literature or any other printed matter with the SEBI. issued to the prospective buyers or advertisements or reports and Provided if the work relating to the transfer of units is processed in- or announcement (other than that of price or yields) addressed to house, the charges at competitive market rates may be debited to the general body of Magnum holders, or to the public or to the the scheme and for rates higher than the competitive market rates, press or other communications media, is issued or published prior approval of the trustees shall be obtained and reasons for without the prior approval of the Board of Trustees. Such application charging higher rates shall be disclosed in the annual accounts. forms, sales literature or other printed matter shall not contain any statement or material extraneous to the Trust Deed or scheme offer q) to abide by the Code of Conduct as specified in the fifth schedule of document and the contents there of shall first be approved by the SEBI Regulations. Trustees. 9. Substantive Provisions of the Investment Management 10. Registrars: Agreement between the Board of Trustees of SBI Mutual Fund and the Asset Management Company (AMC) : SBIMF will utilize the services of M/s MCS Ltd. (SEBI registration number: INR000000056) located at Sri Padmavathi Bhavan, Plot No. 93, Road a) The AMC shall be permitted to invest only in transferable securities No. 16, M.I.D.C Area, Andheri (E), Mumbai – 400 093 as Registrars and either in the money market or in the capital market, including any Transfer Agents to the scheme. The Board of Trustees and the AMC have privately placed debentures or securitised debt. ensured that the Registrar has adequate capacity to discharge b) i) The Trustees have the right to decide the percentage of AMC’s responsibilities with regard to processing of applications and dispatch of investment in privately placed debentures, securitised debt Magnum certificates to investors within the time limit prescribed in the and other unquoted debt instruments. SEBI Regulations and that they have sufficient capacity to handle investor ii) The AMC shall ensure that all debt instruments have been complaints. The AMC reserves the right to change the Registrars at any rated as investment grade by an approved credit rating agency. time with the approval of the Board of Trustees. In case a debt instrument is not rated, mutual funds may 11. Register of Magnum holders: constitute committees who can approve such proposals for A register of Magnum holders under this scheme containing the necessary investments in unrated instruments subject to the approval of particulars will be maintained at the office of the Registrar to the scheme the detailed parameters for such investments by the Board of and at such place(s) as the Trustees may decide. Directors and the Board of Trustees. c) The AMC shall not give or guarantee any loans or take up any 12. Custodians: activity in contravention of the SEBI regulations. SBIMF Mutual Fund has appointed ABN AMRO Bank N.V. (SEBI registration no. IN/CUS/013) situated at Raheja Chambers, Ground Floor, Nariman d) i) The AMC shall ensure that : i) the mutual fund under all its Point, Mumbai 400 021, as the Custodians for the scheme. schemes put together shall not own more than 10% of any one company’s paid up capital carrying voting rights. The Custodians will be required to take delivery of all properties belonging to the scheme and to hold them in separate custody account and also ii) a scheme may invest in another scheme under the AMC of separately from the assets of the custodians and their clients. The any other mutual fund without charging any fees, provided Custodians will make efforts to have the properties of the Fund registered that aggregate inter-scheme investment made by all schemes in the name of the Fund and will deliver them only as per instructions of under the same management or in schemes under the the AMC and on receipt of the consideration. The Custodians shall management of any other AMC shall not exceed 5% of the collect, receive and deposit in the account or accounts of the Fund with Net Asset Value of the mutual fund. the Bank, income, dividend, interest, rights and other payments of whatever iii) delivery of scrips purchased is taken and that delivery is given kind with respect to the securities and other assets and items of alike in the case of scrips sold and shall in no case engage in short nature of the Fund held by or to the order of the Custodians and shall selling or carry forward transactions or badla finance. execute such ownership and other confirmations as are necessary. The e) Transfers from one scheme to another in the same mutual fund shall Custodians shall be generally authorized to attend to all non-discretionary be allowed only if: - and procedural details for discharge of normal custodial functions in i) such transfers are done at the prevailing market price for quoted connection with the sale, purchase, transfer and other assets held for the instruments on spot basis. account of the fund by the Custodians as an Agent except as may otherwise be directed by the Fund. For their services, the Custodians shall ii) the securities so transferred would be in accordance with the be paid a custodial fee as agreed upon by the AMC and the Custodians investment objective of the transferee scheme. and within the limits given in the section “Expenses”. The AMC reserves iii) the registration and accounting of the transaction is completed the right to change the Custodians at any time with the approval of the and is ratified in the next meeting of the Trustees. Board of Trustees. f) The AMC shall not acquire any property out of the Funds under its 13. Auditors: management which results in the mutual fund assuming any SBIMF has appointed M/s. Bharat S. Raut & Co., located at The unlimited liability or which may have the effect of encumbering any Metropolitan, Floor III, Bandra-Kurla Complex (E Block), Mumbai 400 of the assets of the Mutual Fund in any way. 14 MAGNUM SBI MUTUAL FUND Income Fund 051, as the auditors to the scheme. The Board of Trustees of SBIMF shall instruments also tends to move up or down with a change in the interest review the appointment of auditors after every two years or at such time rates. Accordingly, the scheme will have two investment plans for the as may be deemed fit in the opinion of the Board. The AMC reserves the investors’ convenience: right to change the Auditors at any time with the approval of the Board of Plan A: Dividend Plan Trustees. Plan B: Cash Plan 14. Collecting Banker(s): Both Plans will invest their entire corpus in debt (Corporate debentures & SBIMF will utilize the services of State Bank of India as the collecting bonds, PSU/FI/Govt. guaranteed bonds), Govt. securities and money banker (SEBI registration no. INBI00000038) for the Scheme. Please market instruments (commercial paper, certificates of deposit, T-bills, note that the AMC may utilize the services of branches of the SBI Group bills rediscounting, repos, short-term bank deposits, call money etc.). or branches of any other Bank as maybe decided at a later date, as The Dividend Plan will invest in debt instruments of longer maturities as authorized collecting branches for the scheme. This has also been well as money market instruments. The returns from long maturity mentioned under the section “Associate Transactions”. The branches instruments will be higher while the money market instruments will lend will be paid handling charges as per the prevailing market rates and/or as liquidity to the portfolio. The returns will however vary according to negotiated with them. For applications directly solicited and collected by interest rate changes. The Mutual Fund reserves the right to suitably alter the branches of SBI or its associates, they may also be paid an agent the frequency of the dividend payments under the Plan depending on the commission at a rate not exceeding the rate of commission being paid to performance and any change in the tax laws. other agents for the Scheme. The Cash Plan is intended for investors who want to invest in shorter maturity instruments. The Cash Plan provides relatively higher liquidity X. INVESTMENT OBJECTIVES & POLICIES and the returns will depend on the movement in short-term interest rates. This Plan will invest in debentures and bonds maturing not later than 3 1. The scheme: years, in Govt. securities and in money-market instruments. The fundamental attributes and salient features of Magnum InstaCash Both Plans will declare separate daily NAVs (including Saturday and Fund are set out below for the purpose of inviting subscriptions to the Sunday) and the switchover between the two Plans and to the other scheme from the public. schemes of the mutual fund will be at NAV related prices. 2. Fundamental Attributes: 4. Objective of the scheme The following attributes will be considered as fundamental attributes: The objective of the scheme is to provide investors an investment 1. Type of Scheme : Open-ended liquid scheme investing in opportunity to earn returns that are likely to be superior to the returns debt, Government Securities, money offered by comparable investment avenues, through investment in debt market instruments including call money. & money market securities, while retaining a very high level of liquidity to 2. Investment Objective : To provide the investors an opportunity to meet unexpected needs for cash. earn returns through investment in debt & money market securities, while having the 5. a. Investment strategy benefit of a very high degree of liquidity. The funds collected under the scheme shall be invested, consistent with The investment objective is given in the the objective of the scheme. The investment pattern of the scheme will following paragraphs in this section. be as follows: 3. Terms of Issue : The nature & duration of the scheme, Instrument % of portfolio % of portfolio Risk provision for repurchase, scheme Dividend Plan Cash Plan Profile expenses & fees, as stated elsewhere in the Offer Document. Cash & Call Money Upto 100% Upto 100% Low Changes in the fundamental attributes of the scheme as defined above or Money Market Instruments * Upto 100% Upto 100% Low any other change which would modify the scheme and affects the Government Securities Upto 100% Upto 100% Low interest of unitholders, shall be carried out only after – (i) a written Corporate debentures & Upto 80% Upto 80% Low to communication about the proposed change is sent to each unitholder Bonds / PSU / FI / Govt medium and an advertisement is given in one English newspaper having nationwide Guaranteed Bonds /others circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; and (ii) the including Securitised debt unitholders will be given an option to exit at the prevailing Net Asset Value (less than 3 year maturity) without any exit load. Corporate debentures & Upto 60% NIL Low to Bonds / PSU / FI / Govt medium 3. Type, Nature & Duration of the scheme: Guaranteed Bonds / others Magnum InstaCash Fund is an open ended highly liquid scheme investing including securitised debt in debt & money market instruments. Being open-ended the scheme will (greater than 3 year maturity) have an unlimited duration. In general, a fall in the long term interest rates leads to higher capital Units of other mutual funds Upto 5% Upto 5% Low appreciation on debt investments, and similarly, if there is an increase in (debt & money market funds) long term interest rates, the market prices of debt instruments tend to fall. * Money Market Instruments will include Commercial Paper, Certificates The change in prices of debt instruments is higher for instruments with of Deposit, Treasury Bills, Bills Rediscounting, Repos, short term longer maturity. Thus the NAV of a debt fund which invests in these bank deposits, short-term Government Securities (of maturities less 15 MAGNUM SBI MUTUAL FUND Income Fund than 1 year) and any other such short-term instruments or investment (ii) The securities so transferred shall be in conformity with the options as may be allowed under the regulations prevailing from investment objective of the relevant scheme to which such time to time. transfer has been made. The investments may be made in primary as well as secondary markets. e. The scheme may purchase or sell securities to any other scheme of The portfolio will be sufficiently diversified so as to reduce the risk of the Mutual Fund as stated above. underperformance due to unexpected scrip-specific factors. If allowed f. The Mutual Fund shall buy and sell securities on the basis of deliveries in future, the fund may invest in foreign debt (subject to relevant RBI and shall in all cases of purchases, take delivery of relative securities guidelines and subject to SEBI and RBI approval). Any investment in and in all cases of sale, deliver the securities and shall in no case put Government securities may be in securities supported by ability to borrow itself in a position whereby it has to make short sale or carry forward from the Treasury, or sovereign or state government guarantee, or transaction or engage in badla finance. supported by the Government of India / a State Government in any other g. The scheme shall provide that the securities be purchased or manner. transferred in the name of the Mutual Fund for the relevant scheme, 5. b. Investment Limitations wherever the investments are intended to be of a long-term nature. The scheme being open-ended, some portion of the portfolio will be h. Pending deployment of funds of the scheme in securities pursuant invested in highly liquid money market instruments or government paper to the investment objectives of the scheme the Mutual Fund can so as to meet the normal repurchase requirements. The remaining invest the funds of the scheme in short-term deposits of scheduled investments will be made in securities which are either expected to be commercial banks. reasonably liquid or of varying maturities. However, the NAV of the scheme i. The assets of the scheme shall not in any manner be used in short may be impacted if the securities invested in are rendered illiquid after selling or carry forward transactions. investment. The investment policies of the scheme comply with the rules, regulations and guidelines laid out in the SEBI (MF) Regulations, j. The scheme may invest in another scheme under the same asset 1996. As per the Regulations, specifically the Seventh Schedule, the management company or any other mutual fund without charging following investment limitations are applicable to schemes of Mutual any fees, provided that aggregate interscheme investment made by Funds. all schemes under the same management or in schemes under the management of any other asset management company shall not a. The scheme shall not invest more than 15% of its NAV in debt exceed 5% of the net asset value of the mutual fund. instruments issued by a single issuer which are rated not below investment grade by a credit rating agency authorized to carry out k. The mutual fund will enter into derivatives transactions in a recognized such activity under the Act. Such investment limit may be extended stock exchange for the purpose of hedging and portfolio balancing, to 20% of the NAV of the scheme with the prior approval of the in accordance with the guidelines issued by the Board. Board of Trustees and the Board of Asset Management Company. l. The scheme shall not make any investment in; Such limit shall not be applicable for investments in government i any unlisted security of an associate or group company of the securities and money market instruments. Also investment within sponsor; or such limit can be made in mortgaged-backed securitized debt, which are rated not below investment grade by a credit rating agency ii any security issued by way of private placement by an associate registered with the Board. or group company of the sponsor; or b. The scheme shall not invest more than 10% of its NAV in unrated ii the listed securities of group companies of the sponsor which debt instruments issued by a single issuer and the total investment is in excess of 25% of the net assets . in such instruments shall not exceed 25% of the NAV of the scheme. The above investment pattern is indicative and may be changed by the All such investments shall be made with the prior approval of the fund manager on defensive considerations. The funds raised under the Board of Trustees and the Board of AMC. scheme shall be invested only in transferable securities as per Regulation c. Debt instruments in which the scheme invests should be rated as 44(1), Schedule 7 of the SEBI (Mutual Funds) Regulations, 1996. The not below investment grade by at least one recognized credit rating Trustees have the right in their sole discretion, to limit redemptions under agency authorized under the SEBI Act, 1992. In case a debt certain circumstances. Please refer to the paragraph “Right to Limit instrument is not rated, mutual funds may constitute committees Redemptions” in the section “Redemption and Repurchase”. Please who can approve such proposals for investments in unrated refer to the section “NAV and Valuation of Assets of the scheme”. instruments subject to the approval of the detailed parameters for such investments by the Board of Directors and the Board of 6. Portfolio Turnover Policy Trustees. The portfolio may be churned in order to take advantage of anticipated d. Transfer of investments from one scheme to another scheme, interest rate movements or market opportunities in order to maximize the including this scheme, under the Mutual Fund shall be allowed only average yield on the portfolio while maintaining a desirable risk profile and if : adequate liquidity. The impact of any rise in interest rates will be reduced (i) Such transfers are done at the prevailing market price for quoted through good fund management practices. In anticipation of an imminent securities on spot basis; explanation – “spot basis” shall have rise in interest rates, the scheme will attempt to move the funds from the same meaning as specified by the stock exchange for long-term instruments into short-term debt & money-market instruments spot transactions, and where the impact on the NAV will be much lower. Also, if the interest rates 16 MAGNUM SBI MUTUAL FUND Income Fund at any point of time are expected to ease, the scheme can move back into 11. Hedging & Derivatives long-term debt to take advantage of appreciation in the market value of its The fund may use any hedging techniques that are permissible or in investments. future may become permissible under SEBI regulations, in consonance 7. Investments in Associate or Group Companies of the Sponsor with the scheme’s investment objective, including investment in derivatives The scheme will not invest more than 25% of net assets of the scheme in such as interest rate derivatives. the securities of the State Bank Group companies. Further, the aggregate Trading in derivatives has the following risks: investment made by all the SBI Mutual Fund schemes in the securities of (a) An exposure to derivatives in excess of the hedging requirements State Bank Group companies will not exceed 25% of the net assets of the can lead to losses. fund as a whole. The scheme shall not invest in privately placed or (b) An exposure to derivatives can also limit the profits from a genuine unlisted securities of associates / group companies. investment transaction. 8. Investment in other schemes (c) Efficiency of a derivatives market depends on the development of a The investment by this scheme in other mutual fund schemes will be in liquid and efficient market for underlying securities. accordance with Regulation 44(1), Schedule 7 of the SEBI (MF) Any loss on derivative transaction is sought to be prevented by taking Regulations, 1996 according to which: exposure to derivatives only for the purpose of hedging and not for “ A scheme may invest in another scheme under the same asset speculative purposes. Such an exposure will be backed by assets in the management company or any other mutual fund without charging any form of cash or securities adequate to meet cost of derivative trading and fees, provided that aggregate inter-scheme investment made by all loss, if any, due to unfavourable movements in the market. There will be schemes under the same management or in schemes under the no investment in derivatives based on equity or equity index. The investment management of any other asset management company shall not exceed in derivatives will be based only on derivatives related to debt such as 5% of the net asset value of the mutual fund”. interest rate derivatives. Any transaction in derivatives will be strictly in In order to be consistent with the scheme’s objectives, such an investment compliance with relevant SEBI Regulations and guidelines for trading in may only be in another scheme investing in debt and / or money market derivatives. instruments and / or derivatives based on these, and will not be in any scheme which invests in equity or equity-linked securities or derivatives XI. UNITS AND OFFER based on equity. No investment management fee will be charged by the 1. Issue Price AMC on such investments. Initial Issue: Rs. 10/- per Magnum for cash at par. 9. AMC’s investments in the scheme Ongoing Basis: Magnums under the scheme are on offer for sale on any The AMC may invest in the scheme, either in the initial issue or on an working day at NAV. In case payment is by cheque/draft, the date of ongoing basis, such amount, as they deem appropriate. But the AMC realization of the cheque/draft will be considered as the date of application shall not be entitled to charge any management fees on this investment and NAV as on the date of realization of the cheque/draft will be applicable in the scheme. Investments by the AMC will be in accordance with for allotment of magnums. The number of units allotted will be equal to Regulation 24(3) of the SEBI (MF) Regulations, 1996 which states that: the amount invested divided by the prospective NAV for the same working “ the asset management company shall not invest in any of its schemes day for applications received at the collection centre before 11 a.m. and unless full disclosure of its intention to invest has been made in the offer cleared on the same day and prospective NAV of the following day for document provided that the asset management company shall not be applications received at the collection centre after 11 a.m. and cleared on entitled to charge any fees on its investment in the scheme.” the following day. For e.g. an application received on Tuesday after 11 10. Underwriting a.m. the sale price will be the closing NAV, with an appropriate discount, of Wednesday, subject to realization of the proceeds of the cheque/draft The Scheme may take up underwriting of the securities of other issuers in our collection account on Wednesday. Applications received by post subject to the relevant SEBI Regulations and as may be permitted by the will be deemed to have been submitted on date of receipt at the registrar’s Board of Directors of the AMC. end. Regulation 46 states that: 2. Date of opening of subscription list “ Mutual Funds may enter into underwriting agreement after obtaining a certificate of registration in terms of the SEBI (Underwriters) Rules and 13th May, 1999. SEBI (Underwriters) Regulations, 1993 authorizing it to carry on activities 3. Period for which subscription is open as underwriters. Initial Issue: The subscription was open to the public for 7 days from the (1) For the purpose of these regulations, the underwriting obligation will commencement of banking hours on 13th May, 1999 to the close of be deemed as if the investments are made in such securities. banking hours on the 19th May, 1999. The AMC had also reserved the (2) The capital adequacy norms for the purpose of underwriting shall right to suspend the issue at any time after a day’s notice. be the net assets of the scheme. Provided that the underwriting On Ongoing Basis: The scheme is open for fresh subscription on a daily obligation of a mutual fund shall not at any time exceed the total net basis, on any working day. However, the Fund may temporarily suspend asset value of the scheme.” acceptance of fresh applications at any time. 17 MAGNUM SBI MUTUAL FUND Income Fund 4. Allotment (ii) Adult individuals, not exceeding three, either Allotment was made to all applicants in the initial offer in respect of the - jointly, or applications that were complete in all respects and were in order. The - on either / anyone or survivor basis, or allotment was made as on 20th May 1999. - on first holder or survivor basis On an ongoing basis issue of Magnums may be discontinued or suspended if the trustees feel that increase in the size of the fund would (iii) Minors through their parents/ step parents/ guardians (applications be detrimental to the interest of existing investors. Application for issue of of minors jointly with adults not allowed) Magnums will not be binding on the fund and may be rejected. (iv) Hindu undivided family (HUF) in the name of karta Investors will be issued a Magnum Statement of Account in lieu of (v) Companies/ Bodies corporate/ PSUs/ Banks/ Financial Institutions Magnum Certificates. Despatch of Magnum statements of account will registered in India. Applications by above should be accompanied be made as soon as possible but not later than 6 weeks from the date of by their Memorandum /Articles of Association, and a copy of the investment. If an investor specifically requests the Registrars in writing for Resolution authorizing the investment. issue of a Magnum Certificate, the Magnum Certificates shall be sent to (vi) Religious/ charitable/ other trusts, wakfs and societies registered the investor within 6 weeks of receipt of request as stipulated under SEBI under the applicable laws and authorized to invest in mutual funds. Regulation 36. (vii) Partnership firms. 5. Interest on application money (viii) An association of persons or body of individuals, in either case, No interest will be paid on the application amount. consisting only of husband and wife, governed by the system of 6. Listing & Transfer community of property in force in the state of Goa and the Union territory of Dadra, Nagar Haveli, Daman & Diu. The Magnums issued under the scheme will not be listed on a Stock Exchange. Since the scheme is open for repurchase, no transfer of (ix) Army/ air force/ navy/ paramilitary funds and other eligible institutions. Magnums is envisaged under ordinary circumstances. 5. Defective applications liable for rejection XII. SALE OF UNITS Applications not complete in any respect are liable to be rejected. In the event of non-allotment of Magnums, no interest will be paid on the 1. How to apply money refunded. In case of any representation to the Trustees against the Applications complete in all respects together with necessary remittance disqualification of any application, the decision of the Trustees will be may be submitted at the SBIMF Investor Service Centres, the designated final. offices of the Registrar or such other collection centres as may be 6. Bank Account Numbers designated by the AMC. The number of units allotted will be equal to the SEBI has made it mandatory for investors in mutual funds to state their amount invested divided by the applicable NAV. Applications received by bank account numbers in their applications and in redemption requests. post will be deemed to have been submitted on date of receipt at the registrar’s end. In case of payment by cheque, the date of realization of Investors are requested to provide these details in the space provided in the cheque will be considered as the date of application and the amount the application form. This measure is intended to avoid fraud / misuse or of investment will be deemed to be the amount realized net of bank theft of warrants in transit. Kindly note that applications not containing charges. In case of applications made by a demand draft, the draft these details may be rejected. charges are not reimbursable and the date of allotment of units will be as 7. Permanent Account Number (PAN) on the date of clearance of the demand draft. Applicant’s PAN / GIR Number and I.T. Circle / Ward / District (if available) All investors may make the cheque/D.D. for the application amount payable are to be mentioned, since minimum amount to be invested will be to “SBI A/c SBIMF – MICF – Dividend Plan” or “SBI A/c SBIMF – greater than Rs. 50,000/- . In case the applicant is not allotted a PAN / MICF – Cash Plan” as the case maybe. The investors are advised to fill GIR No., please state “Not Allotted”. up the details of their bank account numbers on the application form in the space provided. Please refer to the para “Bank Account Numbers” XIII. RETURNS AND DISTRIBUTION later in this section. Investors are advised to retain the acknowledgement slip signed/stamped 1. Returns to the Investors by the collection centre where they submit the application. The Dividend Plan of the scheme will distribute income in the form of 2. Minimum amount of subscription per application weekly dividends, subject to availability of distributable surplus. The rate Minimum Rs. 10,000/-. of dividend will be decided by the Fund Manager with the approval of the Managing Director. Although the scheme will strive to declare a regular 3. Maximum amount of subscription per application dividend, the declaration of dividends and the quantum of dividend to be No upper limit. distributed will depend upon the availability of distributable surplus at that 4. Who can invest time and no returns are assured. Dividend will be declared as on the Friday of every week and will be compulsorily reinvested at the NAV as on The following categories of Indian nationals are eligible to invest in the Saturday. scheme: Cash Plan will not distribute any income in the form of dividend. The (i) Adult individuals return to the investors will be realized at the time of redemption or 18 MAGNUM SBI MUTUAL FUND Income Fund switchover. Investor can choose to redeem all or part of his holdings at working day of the date of repurchase. The list of designated centres any time at the applicable repurchase price. Refer to the section where this facility is available is provided in the application form “Redemption and Repurchase” for further details. In all other cases, the repurchase warrant will be mailed to the investor within 3 working days of the date of repurchase. XIV. REDEMPTION AND REPURCHASE 5. Right to Limit Repurchases 1. Repurchase facility In an open ended fund, any disruption in the normal functioning of the The repurchases commenced from 24th May 1999. markets for debt or money market instruments or extreme illiquidity in any For applications received by the Registrars before 11 a.m. the repurchase of the debt instruments may affect the ability of the fund manager to buy price will be based on the closing NAV of the same day and for applications or sell freely in the market. The fund shall strive to maintain an adequate & received at the registrar’s end after 11 a.m., the repurchase price will be desirable level of liquidity for both the Plans. However, in the event of an calculated based on the closing NAV of the next working day. e.g. for an inordinately large number of redemption requests or of restructuring of application received on Tuesday before 11 a.m., the repurchase price will the scheme’s portfolio, the time taken by the Fund for redemption of be calculated based on Tuesday’s closing NAV and for a repurchase Magnums may become significant. application received on Tuesday after 11 a.m., the repurchase price will The fund reserves the right to limit repurchases to 5% of the units issued be based on the closing NAV of Wednesday, with an appropriate exit per day for the fund as a whole. In case such a limit is imposed on any load, if applicable. Applications received by post will be deemed to have day, Magnums will be redeemed on a pro-rata basis in proportion to the been submitted on date of receipt at the registrar’s end. total amount of redemption sought per folio on that day. Any Magnums The scheme will declare NAV on Saturday and Sunday also. Redemption which are not redeemed due to this limitation will be carried forward to the requests submitted before the cutoff time on Saturday will be governed next day and redeemed at the applicable repurchase price in the order of by the Sunday NAV while redemption requests submitted after the cutoff receipt. This limit may be changed from time to time. time on Saturday will be governed by Monday NAV. This limit is not expected to be enforced in general, and may be enforced The repurchase price for the above will be based on the closing NAV of only when any redemptions above the limit are prejudicial to the interest the prospective day and it will incorporate the applicable repurchase load. of the investors or in case of lack of sufficient liquidity in the debt market. In case the offices of the AMC or the registrars or the Banks are closed for The Mutual Fund also reserves the right to temporarily suspend further any reason the repurchase date will be taken as the date of the next reissues or repurchases under the scheme in case of any of the following: working day. - a natural calamity or The repurchased Magnums will be extinguished and will not be reissued. - in case of conditions leading to a breakdown of the normal 2. Minimum Amount of Repurchase per Application functioning of securities markets or The minimum amount of redemption would be Rs 1000/-. If as a result - periods of extreme volatility or illiquidity of repurchase the balance in the account of an investor falls below Rs. - under a SEBI directive 10,000/-, the fund will reserve the right to compulsorily redeem the 6. Switchover facility account completely at applicable repurchase price, after giving him 30 days’ notice requesting him to enhance the balance by making fresh The investor in any of the Plans under the scheme will have the option of investments. switching over to the other Plan of the scheme at NAV related price. 3. How to Repurchase Investors may also have the facility of switchover to some other open- ended funds of SBI Mutual Fund such as Magnum Balanced Fund, The application for repurchase can be made on a pre-printed repurchase Magnum Multiplier Plus ’93, Magnum Equity Fund, Magnum Gilt Fund or application form available in the Magnum Statement of Account provided Magnum LiquiBond Income Fund at NAV related price, if they so desire. to the investor. In this connection, the repurchase applications along The terms of switchover may change from time to time. Investors may with the Magnum certificates (if any) should be submitted to the Registrars. contact the nearest ISC for further details on switchover facility. For applications made on either / anyone or survivor basis, only one of the At the time of switchover, the investors will be required to surrender along holders needs to sign on the repurchase application. However, the with the Magnum certificates, if any have been issued. repurchase warrant will normally be issued in the name of the first holder The facility of switchover is not available to NRIs. only. A complete list of the ISCs is given in the section ‘Investors’ Rights & 7. Loan facility Services’. SBIMF may appoint additional centres for acceptance of Magnumholders shall be entitled to obtain a loan against their Magnums applications, if required. from any bank, subject to relevant RBI regulations and the respective 4. Repurchase Schedule and Service Standards bank’s instructions, by getting a lien registered / recorded with the Registrars. The redemption will be permitted to the extent of credit balance in the Magnum holders who have borrowed against their Magnums by recording magnumholders account. The repurchase proceeds exceeding Rs. 1 a lien against their holding can avail of repurchase facility only after the lakh will be delivered to the investor by Hand delivery or Courier wherever receipt of instructions from the concerned lender that the loan has been such a service is available. In four metro cities and other designated repaid in full and the lien can be discharged. In case such an instruction cities, such repurchase warrants will be sent to the investor within 1 19 MAGNUM SBI MUTUAL FUND Income Fund is not received and the lender can apply for redemption in his favour. In However, please note that past performance is not necessarily indicative such a case, the Mutual Fund reserves the right to redeem the Magnums of the future results. in favour of the concerned lender after giving 15 days notice to the 10. Extension Record Magnumholder. The Magnum Monthly Income Scheme 1991 (MMIS’91) was extended 8. Termination of the scheme by 3 years from its original redemption on 30.06.1997 to 30.06.2000. The Trustees reserve the right to terminate the Scheme at any time if the The extension was done after obtaining an approval from SEBI. An option corpus of the Scheme falls below Rs. 1 crore. was granted to all the investors to exit, if they so chose, at the assured Regulation 39(2) of the SEBI Regulations provides that any scheme of a return price of Rs. 100 per Magnum. Simple yield p.a. as on 30.06.1997 mutual fund may be wound up after repaying the amount due to the was 14.13%. unitholders: Two other equity schemes – Magnum Equity Fund (previously known as (a) on the happening of any event which, in the opinion of the Trustees, Magnum Multiplier Scheme 1990 (MMS’90)) and Magnum Multiplier requires the scheme to be wound up; or Plus Scheme 1993 (MMPS’93) - have also been converted to open- (b) if 75% of the unitholders of a scheme pass a resolution that the ended schemes w.e.f. 1st January 1998 and 1st April 1998 respectively, scheme be wound up; or after giving the existing investors an option to redeem their Magnums, if (c) if SEBI so directs in the interest of the unit holders. they so chose, at NAV related prices. Magnum Global Fund, an equity Where a scheme is wound up under the above Regulation, the trustees scheme, launched on 24th August 1994, with redemption date of 30th shall give a notice disclosing the circumstances leading to the winding September 1999, has also been converted into an open-ended scheme up of the scheme: w.e.f. 1st October 1999, after giving the existing investors an option to (a) to SEBI; and redeem their Magnums, if they so chose, at NAV related prices. (b) in two daily newspapers having circulation all over India & a vernacular newspaper circulating at the place where the mutual fund is formed. XV. TAX TREATMENT OF INVESTMENTS In case of termination of the scheme, the Trustees shall proceed as IN MUTUAL FUNDS follows: 1. Information on Tax Benefits From the proceeds of the assets of the scheme, the Trustees shall first discharge all liabilities of the scheme and make provision for meeting the This section gives information on various tax benefits available to the expenses of the winding-up of the scheme, including the fees of the Magnumholders. AMC. The Trustees shall distribute the proceeds to the Magnumholders, The provisions mentioned in the following paragraphs are based on in proportion to their respective interest, all proceeds derived from the the law and practice as on the date of this offer document, i.e., the realization of the investments, after recovering all costs, charges, expenses, Income-tax Act, 1961 and as amended by the changes approved as claims, liabilities, whether actual or contingent, incurred, made or per the Finance Bill 2000. apprehended by the Trustees in connection with or arising out of the Prospective investors should not treat the contents of this section of termination of the scheme. It will be ensured that the redemption proceeds the offer document as advice relating to legal, taxation, investment are dispatched to the Magnumholder within a maximum period of 10 or any other matter and are recommended to consult their own working days from the date of redemption for the holders of Statement of professional advisors concerning the acquisitions, holding or disposal Account, or from the date he/ she has tendered the Magnum certificates of the Magnums. to the Registrars. 1. Tax benefits to magnumholders 9. Redemption Record All tax benefits will be available only to the Magnum holder or the first Till date SBI Mutual Fund has redeemed 10 schemes. The redemption named holder in case the Magnums are held in the names of more than details for these schemes are given below: one person. Scheme Redeemed on Compounded Where a partition has taken place among the members of a Hindu Annualized Yield (p.a.) Undivided Family or when an Association of Persons has been dissolved MRIS 87 30th June 1993 15.26% after a deduction has been allowed under this scheme, the first name MTSS 88-89 31st Mar 1994 21.89% holder will be in receipt of the amount withdrawn and will be deemed to MRIS 89 31st Mar 1994 15.73% be the assessee. MTSS 90 31st Mar 1995 15.38% 2. Tax benefits related to Income Distribution MRIS 90 31st July 1995 11.46% As per the provisions, income from mutual fund is fully exempt in the MMIS 89 31st Dec 1996 13.99% hands of the investors. However, any income distributed by a mutual MEX 91 19th Nov 1997 2.60% fund to its magnumholders will be subject to an income tax of 20% (plus MTPL 91 th 19 May 1999 15.78% applicable surcharge) of such income distributed. MBF 31st Jan 2000 17.17% MMIS 91 30th June 2000 14.13% 20 MAGNUM SBI MUTUAL FUND Income Fund 3. Tax benefits related to Capital Gains Tax benefit is available under sections 48 & 112 on capital gains for XVI. INTER-SCHEME TRANSFERS resident Indians. 1. Policy on Inter-scheme Transfers 4. Tax benefits related to Repurchase/ Redemption/ Transfer The Scheme, or any other scheme of the Mutual Fund, may make Magnums held for a period of more than 1 year will be treated as long- investments or effect a sale of some of its investments by means of term capital assets and will qualify for taxation at a lower rate as laid down transfers from one scheme to another in the same mutual fund. Such in section 112 of the Income-tax Act, 1961. The investor concerned will transfers will be done in accordance with clause 3 of seventh schedule to be entitled to the benefit of indexation of the cost for the purposes of SEBI Regulations and subject to the following conditions: computing capital gains as laid down in section 48 of the Income-tax i) such transfers are done at the prevailing market price for quoted Act, 1961. instruments on spot basis. (Where such a spot price is not available or if the market is closed, the inter-scheme transfer may be done at As “Units” are proposed to be included in the provision to the subsection the latest closing price available). (1) to Section 112 of the Act and hence Magnumholders can opt for ii) the securities so transferred would be in accordance with the being taxed at 10% (plus applicable surcharge) without the cost inflation investment objective of the transferee scheme. index benefit or 20% (plus applicable surcharge) with the cost inflation index benefit whichever is beneficial. iii) the registration and accounting of the transaction is effected on a spot basis so that the NAV of the Scheme is impacted, and the The rates of taxation on long-term capital gains as per section 112 of the transaction is ratified in the next meeting of the Trustees. Income-tax Act, 1961 are as follows : - 10%* or 20%** for Resident Individuals & HUFs XVII. ASSOCIATE TRANSACTIONS - 10%* or 20%** for domestic companies. 1. Who is an Associate - 10%* or 20%** in case of other residents For the purpose of this section, an associate or group company shall - 10%* or 20%** for non-residents (not being a company) include State Bank of India (SBI), its subsidiaries (including the AMC), and foreign companies joint ventures and the associate banks of SBI. Note: * indicates without indexation benefit and ** indicates with 2. Investments in Associate or Group Companies of the Sponsor indexation benefit The scheme will not invest more than 25% of net assets of the scheme in The capital gains may be arrived at after adjusting the following from the the securities of the State Bank Group companies. Further, the aggregate sale consideration: investment made by all the SBI Mutual Fund schemes in the securities of - Expenditure incurred wholly and exclusively in connection with State Bank Group companies will not exceed 25% of the net assets of the such a sale, fund as a whole. As on 30th September 2000, all the schemes of the Mutual Fund have Rs. - Cost of investments as inflated by the Cost Inflation Index notified 14.40 crores invested in the various equity instruments of State Bank by CBDT. Group Companies. The scheme shall not invest in privately placed or There will be no TDS on capital gains for resident investors. unlisted securities of associates / group companies. 5. Wealth Tax benefits 3. Underwriting Obligations of SBI Mutual Fund Mutual fund units are not considered as “assets” liable to wealth tax u/s As on date, SBIMF has no underwriting obligations. 2(ea) of the Wealth-tax Act, 1957. Consequently Magnums held under 4. Subscription in Issues Lead Managed by Associates of Sponsor the scheme will not be liable to wealth tax under the Wealth-tax Act, 1957. In the last three fiscal years, different schemes of the Fund have subscribed to some of the issues lead managed by SBI Capital Markets Ltd. The 6. Tax benefits to Religious / Charitable Trusts details of these are as follows: Investments in these Magnums by Religious / Charitable Trusts will rank Name of the Company Type Quantity Quantity Amount as eligible investments and will qualify for tax benefits under section Applied Allotted (Rs. Lakhs) 11(5) of the Income Tax Act, 1961. Corporation Bank Equity (pp) 2000000 98000 78.40 7. Tax benefits to Mutual Fund ICICI Banking Corporation Equity 4150000 525500 183.92 a) As the Mutual Fund has been registered with SEBI under the SEBI Gujarat Gas Company Ltd. Debentures 20 20 200.00 Regulations, the entire income of the Fund is exempt from income Krishna Baghya Jala tax under Section 10 (23D) of the Act. Nigam Ltd. Debentures 500 500 500.00 b) The Finance Act, 1999 has inserted section 15R in the Income Tax National Aluminum Co. Ltd. Debentures 500000 450000 4500.00 Act, 1961 w.e.f. Assessment Year 2000-2001. As per said section, Deepak Fertilizers Debentures 500 500 500.00 the Mutual Fund will have to now pay tax @ 20% on amount of State Bank of Bikaner income distributed to the magnumholders. Further, surcharge @ & Jaipur Equity 30000 5595 30.21 10% of the amount of tax would also be payable. TOTAL 5992.53 5. Associate 21 MAGNUM SBI MUTUAL FUND Income Fund Broker 2. Potential Risk of Loss to the AMC / Magnum holders At present, SBI Mutual Fund has no transactions with any associate The borrowing by the Scheme will not involve any potential loss to the broker in any of its schemes. AMC or to the Magnumholder. However, it will involve a certain cost on 6. Collecting Banker(s) 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 SBIMF will utilize the services of State Bank of India as the collecting borrowings only if the possible benefit from borrowings exceeds the cost banker or branches of any other Bank as maybe decided at a later date, as of immediate liquidation of its assets for meeting redemption / repurchase authorized collecting branches for the scheme. needs / dividend payments / interest payments. 7. Collecting Branches The AMC may utilize the services of some branches of the SBI Group as XIX. STOCK LENDING BY THE MUTUAL FUND authorized collecting branches for the scheme. The list of collecting The Fund may in future carry out stock-lending activity under any of its branches will be printed in the application form. They will be paid handling schemes, in order to augment its income. Stock lending may involve the charges at such a rate as may be prevalent in the market at the time of the risk of default on part of the borrower. However, this is unlikely to happen issue and/or as negotiated with the concerned banks. if the stock lending is carried out for stocks which are in dematerialized 8. Agent Commission form and through an authorized stock-lending scheme which is subject For applications directly solicited and collected by the branches of SBI or to appropriate regulation. Any stock lending done by the Scheme shall be by any associates, they may also be paid an agent commission at a rate in accordance with any Regulations or guidelines regarding the same. not exceeding the rate of commission being paid to other agents for the The policy followed for stock lending shall be approved by the Board of Scheme. Directors of the AMC as well as by the Board of Trustees. 9. Other Associate Transactions XX. NAV AND VALUATION OF ASSETS OF THE Individual schemes of SBI Mutual Fund lend in the Call Money Market SCHEME from time to time in order to continuously earn returns on their short-term surplus cash. This is in accordance with the applicable Regulations. SBI, 1. Valuation of Assets pertaining to the Scheme SBI Commercial & International Bank, any of SBI’s associate banks or SBI Valuation of Assets, computation of NAV, repurchase price and their Gilts Ltd may be some of the players who may borrow from SBI Mutual frequency of disclosure will be in accordance with the provisions of SEBI Fund at market rates. (MF) Regulations 1996/Guidelines/Directives issued by SEBI from time to SBI or any associates of SBI (including SBI Capital Markets, SBI Gilts Ltd time. The assets of the scheme will be valued based on the following and/or SBI Securities Ltd) may be entrusted the work of marketing, book- valuation norms. building, distribution or any other activity connected with the Scheme or A. Traded Securities 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 a) The securities shall be valued at the last quoted price on the prevailing from time to time. stock exchange. b) When the securities are traded on more than one recognized XVIII. BORROWING BY THE MUTUAL FUND stock exchange, the securities shall be valued at the last quoted closing price on the stock exchange where the security 1. Borrowing by the Scheme is principally traded. It would be left to the Asset Management The scheme may borrow upto 20% of the net assets managed for a Company to select the appropriate stock exchange, but the maximum tenure of 6 months for the purpose of meeting outflows on reasons for the selection should be recorded in writing. There account of repurchase / redemption or dividend / interest payments. should however be no objection for all scrips being valued at In terms of Regulation 44(2) of SEBI (MF) Regulations, 1996: the prices quoted on the stock exchange where a majority in “ The mutual fund shall not borrow except to meet temporary liquidity value of the investments are principally traded. needs of the mutual fund for the purpose of repurchase, redemption of c) Once a stock exchange has been selected for valuation of a units or payment of interest or dividend to the unit holders. particular security, reasons for change of the exchange shall provided that the mutual fund shall not borrow more than 20% of the net be recorded in writing by the Asset Management Company. assets of the scheme and the duration of such a borrowing shall not d) When on a particular valuation day, a security has not been exceed a period of six months.” traded on the selected stock exchange, the value at which it If the Scheme decides to borrow, it may borrow either from SBI Group is traded on another stock exchange may be used. banks and / or any other bank(s) or from any other sources as may be e) When a security is not traded on any stock exchange on a decided by the AMC. The loans may be without collateral or may consider particular valuation day, the value at which it was traded on using a part of the Scheme’s assets as collateral with the prior approval of the selected stock exchange or any other stock exchange, as the Board of Directors of the AMC and the Board of Trustees of the the case may be, on the earliest previous day may be used Scheme. provide such date is not more than thirty days prior to the valuation date. 22 MAGNUM SBI MUTUAL FUND Income Fund B. Thinly Traded Debt Securities Step B A debt security (other than Government Securities) that has a trading A Matrix of spreads (based on the credit risk) are built for marking up volume of less than Rs. 5 crores in the previous calendar month the benchmark yields. The matrix is built based on traded corporate shall be considered as a thinly traded security based upon information paper on the wholesale debt segment of an appropriate stock provided by the relevant stock exchange on the volume of debt exchange and the primary market issuances. The matrix is restricted securities traded. only to investment grade corporate paper. A thinly traded debt security as defined above would be valued as Step C per the norms set for non-traded debt security. The yields as calculated above are Marked-up/Marked-down for ill- C. Non-Traded Securities liquidity risk. When a security is not traded on any stock exchange for a period of Step D thirty days prior to the valuations date, the scrip must be treated as The Yields so arrived are used to price the portfolio a ‘non-traded’ scrip. E. Valuation of securities with Put/Call Options D. Valuation of Non-traded/Thinly traded securities The option embedded securities would be valued as follows: Non-traded/Thinly traded securities shall be valued “in good faith” a. Securities with call option: by the asset management company on the basis of appropriate The securities with call option shall be valued at the lower of valuation methods used based on the principles approved by the the value as obtained by valuing the security to final maturity Board of the Asset Management Company. and valuing the security to call option. (i) (a) Non Traded /Thinly Traded Debt Securities of Upto 182 Days In case there are multiple call options, the lowest value obtained to Maturity: by valuing to the various call dates and valuing to the maturity As the money market securities are valued on the basis of amortization date is to be taken as the value of the instrument. (cost plus accrued interest till the beginning of the day plus the b. Securities with Put option difference between the redemption value and the cost spread uniformly over the remaining maturity period of the instruments) the The securities with put option shall be valued at the higher of same process should be adopted for non-traded debt securities the value as obtained by valuing the security to final maturity with residual maturity of upto 182 days, in the absence of any other and valuing the security to put option. standard benchmarks in the market. All other non traded Non In case there are multiple put options, the highest value obtained Government debt instruments should be valued using the method by valuing to the various put dates and valuing to the maturity suggested in (ii)(b) hereof. date is to be taken as the value of the instruments. (i)(b) Non Traded/ Thinly Traded Debt Securities of Over 182 Days to c. Securities with both Put and Call option on the same day Maturity: The securities with both Put and Call option on the same day would For the purpose of valuation, all Non Traded Debt Securities would be deemed to mature on the Put/Call day and would be valued be classified into “Investment grade” and “Non Investment grade” accordingly. securities based on their credit ratings. The non-investment grade (ii)(c) Government securities (not traded for more than 30 days or securities would further be classified as “Performing” and “Non one which would qualify as a thinly traded security) will be valued at Performing” assets cost plus accrual and amortizing the discount or premium over the All Non Government investment grade debt securities, classified as like of the security. not traded, shall be valued on yield to maturity basis as described F. While investments in call money, bills purchased under rediscounting below. scheme and short term deposits with banks shall be valued at cost All Non Government non investment grade performing debt securities plus accrual; other money market instruments shall be valued at the would be valued at a discount of 25% to the face value. yield at which they are currently traded. For this purpose non-traded instruments that is instruments not traded for a period of seven days All Non Government non investment grade non performing debt will be valued at cost plus interest accrued at the beginning of the securities would be valued based on the provisioning norms. day plus the redemption value and the cost spread uniformly over The approach in valuation of non traded debt securities will be the remaining maturity period of the instruments; based on the concept of using spreads over the benchmark rate to G. Government securities will be valued at yield to maturity based on arrive at the yields for pricing the non traded security. the prevailing market rate. The Yields for pricing the non traded debt security would be arrived H. Where instruments have been bought on ‘repo’ basis, the instrument at using the process as defined below. must be valued at the resale price after deduction of applicable Step A interest up to date of resale. Where an instrument has been sold on A Risk Free Benchmark Yield is built using the government securities a ‘repo’ basis, adjustment must be made for the difference between (GOI Sec) as the base. GOI Secs are used as the benchmarks as the repurchase price (after deduction of application interest up to they are traded regularly; free of credit risk; and traded across different date of repurchase) and the value of the instrument. If the repurchase maturity spectrums every week. price exceeds the value, the depreciation must be provided for and 23 MAGNUM SBI MUTUAL FUND Income Fund if the repurchase price is lower than the value, credit must be taken for the appreciation. XXI. ACCOUNTING POLICIES I. All expenses and incomes accrued up to the valuation date shall be 1. Accounting year end considered for computation of net asset value. For this purpose, while major expenses like management fees and other periodic The accounts of the scheme shall be closed every year as on 31st expenses should be accrued on a daily basis, other minor expenses March. The Trustees shall cause the accounts of the scheme to be and income need not be so accrued, provided the non-accrual maintained in such form and manner as may be decided by them and in does not affect the NAV calculations by more than 1%. accordance with the Mutual Fund Regulations, 1996. The Trustees and J. Any changes in securities and in the number of units be recorded in the AMC shall, at the close of each half year, i.e., 30th September and the books not later than the first valuation date following the date of 31st March, publish the financial results of the scheme, as provided in transaction. If this is not possible given the frequency of the Net SEBI (MF) Regulations, 1996. Asset Value disclosure, the recording may be delayed up to a period 2. Other Accounting Policies and Standards of seven days following the date of the transaction, provided that as a) For the purposes of the financial statements, mutual fund shall mark a result of the non-recording, the Net Asset Value calculations shall all investments to market. not be more than 2%. b) Dividend income earned by the scheme shall be recognized on an K. Illiquid Securities : ex-dividend basis for quoted investments and on the date of (a) Aggregate value of “illiquid securities” of scheme, which are declaration for unquoted investments. defined as non-traded, thinly traded, shall not exceed 15% of the total assets of the scheme and any illiquid securities held c) In respect of all interest-bearing instruments, income will be accrued above 15% of the total assets shall be assigned zero value. on a day to day basis as it is earned. (b) The Mutual fund will disclose as on March 31 and September d) Average cost method will be followed in determining the holding 30, the scheme-wise total illiquid securities in value and cost of investments and the gains or losses on sale of investments. percentage of the net assets while making disclosures of half e) Transactions for sale or purchase of investments will be recognized yearly portfolios to the unitholders. In the list of investments, on the transaction date. an asterisk mark shall also be given against all such investments, f) Bonus shares and rights entitlements on investments will be which are recognized as illiquid securities. recognized on the ex-bonus and ex-rights dates respectively. 2. Determination of Net Asset Value g) Income accrued on an investment but not received for 12 months The value determined as above, will be adjusted for the following: beyond the due date shall be provided for and no further accrual a) all income and expenditure accrued. shall be made for income in respect of such an investment. b) major expenses like management fees and other periodic expenses h) When the units are sold, an appropriate part of the sale proceeds will to accrue on a day to day basis. be credited to an equalization account and when units are repurchased, an appropriate part will be debited to the equalization c) The basis for calculation of NAV will be subject to regulations and account. The net balance on this account will be credited or debited guidelines of the SEBI issued from time to time. to the revenue account as an adjustment to the distributable surplus. Minor expenses, if any, will not be accrued on a day to day basis if they i) The cost of investment acquired or purchased shall include do not affect the NAV by more than 1%. brokerage, stamp duty and any other charge customarily included The Mutual Fund shall comply with the investment valuation norms spelt in the broker’s purchase note. In respect of any privately placed out in the Eighth Schedule of SEBI Regulations. debt instruments any front-end discount offered should be reduced The Net Asset Value per Magnum shall be calculated by dividing the Net from the cost of the investment. Assets of the scheme by the total number of Magnums outstanding on j) Underwriting commission, if any shall be recognized, as revenue the valuation date, as follows: only when there is no devolvement on the scheme. Otherwise the Total unit capital + Reserves + Income (net of expenses) entire commission received will be reduced from the cost of + Appreciation / -depreciation in investments investment. NAV = ————————————————————————— The Mutual Fund shall comply with the accounting policies and standards Total no. of Magnums outstanding spelt out in the Ninth Schedule of Securities and Exchange Board of India Any changes in securities and in the number of units will be recorded in (Mutual Funds) Regulations, 1996. the books not later than the first valuation date following the date of transaction. If this is not possible given the frequency of the NAV XXII. INVESTORS’ RIGHTS AND SERVICES disclosure, the recording may be delayed upto a period of seven days following the date of the transaction, provided that as a result of the non- 1. Rights of Beneficiaries: recording, the NAV calculations shall not be affected by more than 2%. i) After closing of the annual accounts, SBI Mutual Fund shall provide The NAV will be calculated every day (including Saturday and Sunday) for depreciation on investments and also make a provision for bad and will be published atleast in two daily newspapers at such intervals as and doubtful debts to the satisfaction of its auditors and shall disclose are prescribed by SEBI. the method of depreciation in the notes to the accounts. After 24 MAGNUM SBI MUTUAL FUND Income Fund making such provisions the profits of the scheme together with the 3. Documents Available for Inspection capital appreciation, if any, may be distributed to the investors either Following documents are available for inspection by investors at their as a dividend payout or plough back to the scheme as may be office of the SBI Funds Management Ltd., 191, Maker Tower E, Cuffe decided by the Board of Trustees. Parade, Mumbai - 400 005: ii) SBI Mutual Fund will publish- i) Trust deed a) the schemes’ audited annual accounts or an abridged ii) Memorandum and Articles of Association of SBI Funds Management summary of the same within six months from the date of Ltd and the State Bank of India Act & Regulations. closure of the relevant financial year. iii) Copy of Annual Reports including Auditors Report of SBI b) six monthly unaudited accounts or an abridged summary of iv) Scheme Rules and Regulations the same before the expiry of two months from the close of each half year i.e. on 31st March and on 30th Sept. v) Auditors Reports, Audited Annual Accounts & Offer Documents of all the existing schemes of the SBIMF. This will be published in one national English daily newspaper and in a Marathi newspaper. The investors have a right to call for the above vi) Agreements with Custodians, Registrars, Bankers, if any. information, including the full annual report, at the SBI Mutual Fund’s vii) Investment Management Agreement with the Trustees. office or its Investors Service Centres and if so desired, they can viii) Securities & Exchange Board (Mutual Fund) Regulations 1996 receive a copy of the above information on payment of a nominal ix) Indian Trust Act, 1882. fee. The Fund will also publish the NAVs of all its schemes on a weekly 4. For Your Convenience and Help basis and the NAVs of its open-ended schemes on a daily basis in SBI Mutual Fund has opened 21 Investor Service Centres (ISCs) all over at least two newspapers. The sale and repurchase prices shall also the country. The addresses of these ISCs and the name of the contact be published in a daily newspaper at least once a week in accordance person are given below with SEBI Regulations. 1. Ahmedabad iii) an abridged schemewise annual report will be mailed to all the Shri. S. G. Bengali Magnum holders, containing also the details of group company Manager investments. SBIMF Investor Service Centre C/o SBI, Ahmedabad Main Branch iv) The investors have the right to ask the Trustees about any information 1st floor, Bhadra which may have an adverse bearing on their investments and the Ahmedabad - 380 001 trustees shall be bound to make disclosures about such information Tel. (079) 550 7442 to the investors. 2. Bangalore The investors are also advised to see the relevant provisions of the Indian Shri S.S.Narayanswamy Trust Act, 1882, in this regard. Asst. Vice President 2. Other Significant Rights of the Magnumholders: SBIMF Investor Service Centre (a) Changes in the fundamental attributes of the scheme as defined SBI LHO Bldg, 4th floor, above or any other change which would modify the scheme and 65, St. Marks Road affects the interest of unitholders, shall be carried out only after – (i) Bangalore - 560 001 a written communication about the proposed change is sent to Tel. (080) 227 2284 each unitholder and an advertisement is given in one English 3. Bhilai newspaper having nationwide circulation as well as in a newspaper Shri A.K. Mitra published in the language of the region where the Head Office of the Manager mutual fund is situated; and (ii) the unitholders will be given an SBIMF Investor Service Centre option to exit at the prevailing Net Asset Value without any exit load. F – 7 Uttar Gangotri, G.E. Road, (b) The Appointment of the AMC for the scheme can be terminated by Supela a majority of the Trustees or by not less than 75% of the Bhilai 490 023 Magnumholders of the Scheme. Tel. (0788) 410955, 273 261 (c) The dispatch of dividend warrants shall be made within 30 days of 4. Bhopal the declaration of the dividend and despatch of redemption/ Shri V.V. K. Rao repurchase proceeds will be made within 10 working days from the Manager date of redemption/repurchase. SBIMF Investor Service Centre C/o SBI LHO, Hoshangabad Road Bhopal - 462 011 Tel. (0755) 557 341 25 MAGNUM SBI MUTUAL FUND Income Fund 5. Bhubaneshwar 11. Hyderabad Shri N. Tripathy Shri A. Subramaniyam Asst. Vice President Asst. Vice President SBIMF Investor Service Centre SBIMF Investor Service Centre SBI LHO BLDG, ground floor, C/o SBI LHO Pandit Jawaharlal Nehru Marg, 6th floor, Koti Janpath, Hyderabad - 500 195 Bhubaneshwar - 751 001 Tel. (040) 475 6241 Tel. (0674) 512 473 12. Jaipur 6. Calcutta Shri Lalit Mehta Shri A. K. Sarkar Asst. Vice President Asst. Vice President SBIMF Investor Service Centre SBIMF Investor Service Centre C/o SBI, Nagaland House, 10th floor, Sanganeri Gate 11 & 13 Shakespeare Sarani Jaipur - 302 001 Calcutta - 700 071 Tel. (0141) 567 354. Tel. (033) 282 2816 / 282 1471 13. Lucknow 7. Chandigarh Shri S. Bose Shri D.P.Singh Asst. Vice President Manager SBIMF Investor Service Centre SBIMF Investor Service Centre C/o SBI LHO, C/o SBI LHO, 1st floor 6th floor, A-wing Sector 17-B, Moti Mahal Marg, Hazratganj Chandigarh - 160 017 Lucknow - 226 001 Tel. (0172) 709 728 Tel. (0522) 215 668 8. Chennai 14. Managalore Shri V. Sukumar Shri Ashok Kumar Manager Deputy Manager SBIMF Investor Service Centre SBIMF Investor Service Centre SBI Bldg., 8th floor, C/o SBI, Arya Samaj Road 103 A Annasalai Bellamatta, Chennai - 600 002 Mangalore - 575 003 Tel. (044) 852 3797, 8418061 Tel. (0824) 445 892 9. Ernakulam 15. Mumbai Shri T. Mohan Kumar Shri Santanu Ray Manager Deputy Manager SBIMF Investor Service Centre SBIMF Investor Service Centre C/o SBI, Ernakulam South Branch, C/o SBI Funds Management Ltd. Manorama Junction, 191, Maker Tower ‘E’ Panampilly Nagar Cuffe Parade, Cochin, Kerala - 682 036 Mumbai - 400 005 Tel. (0484) 318 886 / 320 107 Tel. (022) 218 2187 10. Guwahati 16. New Delhi Shri Utpal Baruah Shri Sudhir Kumar Manager Asst. Vice President SBIMF Investor Service Centre SBIMF Investor Service Centre C/o SBI Local Head Office Guwahati 5th floor, Ashoka Estate (Applo Building Anex.) 24, Barakhamba Road Bharalumukh New Delhi - 110 001 Guwahati - 781 001 Tel. (011) 331 5058 Tel. (0361) 521 993 26 MAGNUM SBI MUTUAL FUND Income Fund 17. Patna Shri S. K. Dey XXIII. INVESTOR GRIEVANCES REDRESSAL Manager MECHANISM SBIMF Investor Service Centre 1st floor, Chamber Bhavan The Customer Service Department at SBI Mutual Fund has been established J.C. Road under the supervision of Vice President. The investor grievances are Patna - 800 001 redressed by the AMC directly and also by our 21 Investor Service Centres. Tel. (0612) 685 665 All grievances are redressed within the time stipulated by SEBI. Our ISCs are equipped with upgraded technological facilities to respond to the 18. Pune investor queries. . Shri Arun P Joshi The statistical data for investor complaints received are as under: Manager SBIMF Investor Service Centre From 01.04.00 01.04.99 01.04.98 01.04.97 01.04.96 C/o SBI Service Branch To 31.12.00 29.03.00 31.03.99 31.03.98 31.03.97 ‘Grace’, Dhole Patil Road Complaints Pune - 411 001 Received 13771 26081 21535 21430 5488 Tel. (020) 6113974, 6053208 Complaints 19. Ranchi Redressed 13821 26031 21535 21430 5488 Shri A.K. Jain Balance nil 50 nil nil nil Asst. Vice President SBIMF Investor Service Centre C/o SBI Service Branch XXIV. PENDING LEGAL PROCEEDINGS AND Kutchery Road Ranchi - 834 001 OTHER INFORMATION Tel. (0651) 315 212 1. Pending Legal Proceedings 20. Siliguri Apart from the ordinary routine litigations incidental to the business of the .T. Shri P Sherpa Fund, the following petition / summary suit against the Fund is pending Asst. Vice President in the Court: SBIMF Investor Service Centre Summary Suit No. 3799 of 1996, filed by M/s Morarka Finance Limited is C/o SBI Siliguri Branch pending in the High Court of Juridicature at Bombay. The Plaintiff has Hill Cart Road, filed the suit for recovery of Rs. 8.44 lakhs together with interest being the Siliguri - 734 401 excess price paid by them in equity buyback transaction relating to the Distt. Darjeeling shares of M/s Pumpsar Distilleries Ltd. Tel. (0353) 537 065 AMC’s perception: The AMC has received advice that the case is likely to 21. Vijayawada be decided in its favour. Shri B. Gopikrishna No criminal cases are pending against the AMC or any of its Directors or Asst. Vice President key personnel. No criminal cases incidental to the business of mutual SBIMF Investor Service Centre funds are pending against the Sponsor or any company associated with C/o SBI Station Road Branch the Sponsor in any capacity or against the Board of Trustees. Station Road Vijayawada - 520 016 Our Sponsor, the State Bank of India is India’s largest commercial bank Tel. (0866) 574 113 with 8930 branches in India and 52 offices in 34 countries worldwide. In addition to this, SBI also has 7 associates and 1 banking subsidiary in 5. Investor Relations Officer: addition to other non-banking subsidiaries in India. To the best of our The AMC has appointed an Investor Relations Officer to look into investor knowledge there are no criminal cases against the Sponsor, Directors or grievances regarding deficiencies, if any, in the services provided by the Key Personnel, which will have any impact on the operations of SBI Registrars or the Investor Service Centres. Mutual Fund. Name of the Investor : Shri Dinesh Prasad 2. Penalties awarded by SEBI or any other Regulatory Body Relations Officer Vice President, Customer Service As on date, there are no cases of penalties awarded by SEBI or any Address : SBI Funds Management Ltd. financial regulatory body against the Sponsor or any company in any 191, Maker Tower “E”, 19th floor capacity associated with the Sponsor including the AMC, the Board of Cuffe Parade, Mumbai - 400 005. Trustees or any of the directors or key personnel of the AMC. Further, Telephone Number : 218 0244 / 218 0221 there is no deficiency in the systems or operations of the Sponsor or any The AMC will have the discretion to change the investor relations officer company associated with the Sponsor (including the AMC), which SEBI depending on operational necessities and in the overall interest of the or any other regulatory agency has specifically advised to be disclosed in fund. the offer document. 27 MAGNUM SBI MUTUAL FUND Income Fund 3. Enquiry or Adjudication 6. Power to remove difficulties SEBI has appointed an Adjudicating Officer to inquire into the alleged In case of any difficulty in giving effect to the provisions of the scheme, violations by SBIFM Ltd. These violations relate to the reported delay in the Trustees may do anything not inconsistent with such provisions, dispatch of unit certificates/account statements to investors in case of which appears to them to be necessary, desirable or expedient, for the two schemes viz. MMIS – 98(I) and MMIS 98(II). As per regulation 36 of purpose of removing such difficulty. SEBI (MF) Regulations, 1996, the AMC is required to issue a unit certificate 7. Scheme to be binding to an applicant as soon as possible but not later than six weeks from the The Trustees may, from time to time, add to or otherwise vary or alter all or date of closure of the initial subscription list. any of the features or terms of the scheme, with prior approval of SEBI We have represented the reasons for the delay in despatch of the unit and the Magnum holders in accordance with SEBI Regulations, and the certificates with the Adjudicating Officer. We have since taken necessary same shall be binding on each Magnum holder and any person(s) claiming steps against such reported delays, by effectively monitoring the operations through or under it, as if each Magnum holder or such person(s) expressly of our registrars and transfer agents, Investor service centers and collecting agreed that such features or terms should be so binding. centers. Date of Approval of the scheme by the Board of Trustees: 11th September 4. Jurisdiction 1998. The jurisdiction for any matters or disputes arising out of the scheme shall reside with the Courts in Mumbai or such other place as may be For and on behalf of the Board of Directors, decided by the AMC with the approval of the Trustees. SBI Funds Management Limited 5. Power to make Rules (the Asset Management Company for SBI Mutual Fund) The Trustees may from time to time, with prior approval of SEBI, prescribe such terms or make such rules for the purpose of giving 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 may be framed from time to time. However, any alteration amounting to a change in fundamental Place : Mumbai Name : Niamatullah attributes of the scheme shall be made only after obtaining the approval Date : 1st , February, 2000 Designation : Managing Director of unitholders in accordance with SEBI Regulations as stated elsewhere in the offer document. (Notwithstanding anything contained in the offer document the provisions of the SEBI (Mutual Funds) Regulations, 1996 and the Guidelines thereunder shall be applicable.) 28 FOR YOUR CONVENIENCE AND HELP LIST OF SBIMF INVESTOR SERVICE CENTRES (ISC) 1. Ahmedabad : Shri. S. G. Bengali, Manager, SBIMF ISC, C/o SBI, Ahmedabad Main Branch, 1st floor, Bhadra, Ahmedabad - 380 001. Tel. (079) 550 7442 REGISTRARS KARVY CONSULTANTS LTD. Unit : SBI Mutual Fund-INSTACASH FUND Karvy House, 46, Avenue 4, Street No. 7, Banjara Hills, Hyderabad 500 034.