Mutual Fund Tax Saving in India by ivp13205

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									IDBI MUTUAL FUND
Bajaj Bhavan, 2nd Floor, Nariman Point, Mumbai 400 021
Tel: (91 22) 204 4988 Fax: (91 22) 204 4990
Visit us at www.idbiprincipal.com
E-mail: customer@idbiprincipal.com


SPONSORS
Industrial Development Bank of India
IDBI Tower, Cuffe Parade, Mumbai 400 005
Principal Financial Services Inc.
711 High Street, Des Moines,
Iowa 50392-0200, USA


TRUSTEE
Board of Trustees with IDBI as Principal Trustee


INVESTMENT MANAGER
IDBI - PRINCIPAL Asset Management Company Limited
Bajaj Bhavan, 2nd Floor,
Nariman Point, Mumbai 400 021
Tel: (91 22) 204 4988 Fax: (91 22) 204 4990
Visit us at www.idbiprincipal.com
E-mail: customer@idbiprincipal.com


REGISTRAR AND TRANSFER AGENT
Karvy Consultants Limited.
21, Avenue 4, Street No. 1,
Banjara Hills, Hyderabad 500 034


CUSTODIAN
Citi Bank N.A.
Ramnord House,
77 Dr Annie Besant Road,
Worli, Mumbai 400 018


AUDITORS
N.M. Raiji and Co., Chartered Accountant
Universal Insurance Building,
Sir P.M. Road Mumbai 400 001


LEGAL ADVISORS
CRAWFORD BAYLEY & CO.,
4th Floor, State Bank of India Bldg.,
Fort, Mumbai 400 023

LEX INDE
B, Hargovindas Bldg.,
1st Floor, 18/20, K. Dubash Marg,
Fort, Mumbai 400 001




                                                   2
TABLE OF CONTENTS                                                                                                   Investment in Overseas Financial Assets .................................. 16

I     Highlights ...................................................................................... 4       X   Transacting in the Units of IDBI-PRINCIPAL

II    Risk Factors .................................................................................. 4             Tax Savings Fund ....................................................................... 16

III   Special Considerations ............................................................... 5                      The Offer ...................................................................................... 16

IV    Due Diligence Certificate ............................................................ 6                      Tax Benefit ................................................................................... 16

V     Abbreviations & Definitions ........................................................ 6                        Special Benefit - Personal Accident Insurance .......................... 16

VI    Scheme Features ......................................................................... 8                         Limit of Insurance Cover ....................................................... 17

VII   Constitutions of the Mutual Fund .............................................. 9                                   Other terms of Insurance Cover ........................................... 17

      The Fund ........................................................................................ 9                 Assignee for Insurance ......................................................... 17

      The Sponsors ................................................................................. 9              Who Can Subscribe ..................................................................... 17

            Industrial Development Bank of India .................................... 9                             How to Subscribe ......................................................................... 18

            Principal Financial Services, Inc. ........................................... 9                              Subscription by Residents .................................................... 18

      Trustees of IDBI Mutual Fund ....................................................... 9                              Subscription by NRIs and OCBs .......................................... 18

            Members ................................................................................. 9                   Unitholder’s Bank Account Details ....................................... 18

            Duties & Responsibilities of Trustees ................................... 10                                  Documents to be Submitted ................................................. 18

            Unitholders Consent ............................................................. 11                    Sale of Units on Ongoing Basis .................................................. 19

            Trusteeship Fees .................................................................. 11                        Ongoing Sale Price ............................................................... 19

VIII Management of the Fund .......................................................... 11                           Allotment & Account Statement .................................................. 19

      Investment Manager - IDBI - PRINCIPAL Asset                                                                         Allotment ............................................................................... 19

      Management Company Limited ............................................... 11                                       Account Number ................................................................... 19

            Investment Management Fees ............................................. 11                                   Common Account Number ................................................... 19

            Duties and Responsibilities of AMC ..................................... 12                                   Account Statement ............................................................... 19

            Board of Directors ................................................................. 12                       Unit Certificates ..................................................................... 19

            Key Personnel and Their Relevant Experience ................... 13                                            Refunds ................................................................................. 19

      Custodian ..................................................................................... 13            Rematerialisation of Demat Units ................................................ 19

      Registrar & Transfer Agent .......................................................... 13                      Dematerialisation of Existing Physical Units ............................... 19

      Statutory Auditors ........................................................................ 13                Systematic Investment Plan (SIP) .............................................. 20

IX    Investment Policy & Strategy ................................................... 13                           Systematic Investment Plan (SIP) for Corporate Employees .... 20

      Investment Policies ...................................................................... 13                 Switch Facility .............................................................................. 20

      Investment Strategies .................................................................. 14                   Gift Facility ................................................................................... 20

      Investment Limitations ................................................................. 14                   All Settlements to Follow Settlement Cycle in Mumbai .............. 20

      Depository .................................................................................... 14            Mode Of Holding .......................................................................... 20

      Underwriting ................................................................................. 14             Nomination Facility ...................................................................... 21

      Policy and Special Consideration on                                                                           Appointment Of Beneficiary ......................................................... 21

      Investment in Derivative and Hedging Products ........................ 15                                     Pledge Of Units ............................................................................ 21

      Investment by AMC ..................................................................... 15                    Listing ........................................................................................... 21

      Investment by the Fund ............................................................... 16                     Transfer ........................................................................................ 21

      Portfolio Turnover Rate ................................................................ 16                   Units With Depository .................................................................. 22

      Inter Fund Transfers .................................................................... 16                  Repurchase Of Units ................................................................... 22

      Borrowing by The Mutual Fund ................................................... 16                                 Repurchase Procedure ......................................................... 22

      Stock Lending by the Mutual Fund .............................................. 16                                  Repurchase Price ................................................................. 22




                                                                                                            3
            Repurchase By NRIs/OCBs/FIIs .......................................... 22                       XIII Loads, Expenses and Fees ....................................................... 29

            Payment Of Repurchase Proceeds ...................................... 22                               Load .............................................................................................. 29

      Electronic Credit Clearing Services (ECS) ................................. 22                               Expenses ..................................................................................... 29

      Systematic Withdrawal /Switch Plan(S)/ (SWP)/ (SSP) ............. 22                                               Initial Issue Expenses ........................................................... 29

      Closure Of Unitholder’s Account ................................................. 23                               Annual Recurring Expense ................................................... 30

      Right to Limit Repurchases ......................................................... 23
                                                                                                             XIV Unitholders’ Rights And Services ........................................... 31
      Possible Deferral Of Redemption/ Repurchase Request ........... 23
                                                                                                                   Fundamental Attributes ............................................................... 31
      Suspension Of Sale/Repurchase/
                                                                                                                   Rights Of Unitholders ................................................................... 31
      Switching Options Of The Units .................................................. 23
                                                                                                                   Dividends and Distributions ......................................................... 31
            Suspension of Sale/Repurchase of Demat Units ................ 23
                                                                                                                   Voting Rights of the Unitholders .................................................. 31
      Payment to Alternate Payee ........................................................ 23
                                                                                                                   Disclosures ................................................................................... 31
      Issue Of Bonus Units And /Or Dividend Distribution .................. 23
                                                                                                                         NAV Information .................................................................... 31
            Dividend Options ................................................................... 23
                                                                                                                         Financial Results ................................................................... 31
      Split in the Face Value of Units ................................................... 23
                                                                                                                         Portfolio Disclosure ............................................................... 31
XI    Sale And Repurchase of Demat Units Through
                                                                                                                   Unclaimed Distribution Amount ................................................... 31
      Designated Stock Exchanges .................................................. 24
                                                                                                                   Duration of the Scheme and of Winding Up ............................... 32
      Procedure For Purchase of Demat Units
                                                                                                                         Effect of Winding Up ............................................................. 32
      OverThe Stock Exchange(s) ....................................................... 24
                                                                                                                         Procedure and Manner of Winding Up ................................. 32
            Purchase of Demat Units by Investors ................................. 24
                                                                                                                   Services to Unitholders ................................................................ 32
            Sale Price of Demat Units by Investors ............................... 24
                                                                                                                   Investor Services ......................................................................... 32
            Allotment of Demat Units ...................................................... 24
                                                                                                                         Facilitating Enquiries And Transactions ............................... 32
      Procedure For Repurchase of Demat Units ................................ 24
                                                                                                                         Telephone Transaction Services .......................................... 32
            Minimum amount / Units for repurchase of demat Units ..... 24
                                                                                                                         Signature Verification/Indemnity ........................................... 32
            Repurchase of Demat Units ................................................. 24
                                                                                                                   Register of Unitholders ................................................................ 33
            Repurchase Price of demat Units ........................................ 24
                                                                                                             XV Historical Information ................................................................ 33
            Payment of Repurchase Proceeds ...................................... 24
                                                                                                                   Existing Schemes of The Mutual Fund ....................................... 33
      Other Information ......................................................................... 24
                                                                                                                   Condensed Financial Information ............................................... 33
XII   Valuation Policy and Determination of Net Asset Value ....... 25
                                                                                                                   Investor Complaints and Redressal ............................................ 35
      Guidelines for Valuation of Securities for Mutual Funds ............ 25
                                                                                                                   Associate Transactions ............................................................... 36
            Traded Securities .................................................................. 25
                                                                                                                   Borrowing by the Mutual Fund ..................................................... 38
            Thinly Traded Securities ....................................................... 25

            Non-Traded Securities .......................................................... 25              XVI Tax Treatment of Investments in Mutual Funds ..................... 38

            Valuation of securities with Put/Call Options ....................... 26                         XVII General Information ................................................................... 39

            Government Securities ......................................................... 26                     Utilisation of Services of Associates ........................................... 39

            Illiquid Securities ................................................................... 26             Scheme Rights and Additions / Amendments

            Valuation of rights ................................................................. 27               to the Scheme .............................................................................. 40

            Expense and Income Accrual ............................................... 27                          Power to Remove Difficulties ...................................................... 40

            Changes in the Securities and Units .................................... 27                            Power to Make Rules ................................................................... 40

      Determination of NAV .................................................................. 27                   Documents for Inspection ............................................................ 40

            Determination of NAV For Demat Units ............................... 27                                Penalties and Pending Litigations ............................................... 40

      Accounting Policies and Standards ............................................ 27                            Miscellaneous Clause .................................................................. 40




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                                                                                        assured rate of return and the actual returns of an Investor will be
    I HIGHLIGHTS
                                                                                        based on the actual NAV which may go up or down depending on
SPONSORS                                                                                the market conditions
The Mutual Fund is sponsored by two leading names in the financial                  •   The Fund proposes to invest in equity, fixed income and money
services industry - Industrial Development Bank of India (IDBI) and                     market securities. Trading volumes, settlement periods and transfer
Principal Financial Services Inc.. IDBI is a premier financial institution of           procedures may restrict the liquidity of some of these investments.
India and one of the largest development banks in the World. IDBI’s main                Different segments of the Indian financial markets have different
business is medium to long term project financing, venture capital funding,             settlement periods, and such periods may be extended significantly
merchant banking, leasing and other types of financial services in India.               by unforeseen circumstances. The length of time for settlement may
As Principal Trustee of IDBI Mutual Fund, it has contributed Rs. 25 Crores              affect the scheme in the event it has to meet an inordinately large
as the trust corpus, which is at present the highest in the entire Mutual               number of redemption or of restructuring of the Scheme’s investment
Fund industry. Principal Financial Services Inc. is a member of the Principal           portfolio.
Financial Group - a leading provider of financial products and services             •   The AMC has the right to limit repurchases, under certain
globally to businesses and individuals including retirement and investment              circumstances. Please read the Section of the Offer Document titled
services, Mutual Funds, life and health insurance, annuities and mortgage               “Right to Limit Repurchases”.
banking. Established in 1879, the Principal Financial Group has more
                                                                                    •   Investments made by an unitholder in foreign currency in the Scheme
than $117 billion in assets under management and serves more than 11
                                                                                        are subject to the risk of fluctuation in the value of the Rupee.
million customers worldwide through operations in the United States, Asia,
Australia, Europe and Latin America.                                                •   An unitholder may invest in the scheme and acquire a substantial
                                                                                        portion of the scheme’s units. The repurchase of units by the
THE SCHEME                                                                              unitholder may have an adverse impact on the units of the scheme,
The Scheme - IDBI-PRINCIPAL Tax Savings Fund was initially launched                     because the timing of such repurchase may impact the ability of
as a close-ended ELSS scheme on January 1, 1996 and is now being                        other unitholders to repurchase their units.
converted into an open-ended scheme as per Ministry of Finance,                     •   In case of Fixed Income Investment, changes, in the prevailing rates
Department of Economic Affairs (Capital Markets Division) Government                    of interest will likely affect the value of the Scheme’s holdings and
of India, Notification dated 22nd December, 1998.                                       thus the value of the Scheme’s Units. Increased rates of interest,
                                                                                        which frequently accompany inflation and /or a growing economy,
TAX BENEFIT
                                                                                        are likely to have a negative effect on the value of the Units. The
Investment made by the eligible investor in the scheme will qualify for                 value of securities held by a Scheme generally will vary inversely
income tax rebate @20% (25% in case of an author, playwright, artist,                   with changes in prevailing interest rates.
musician, actor or sportsman) on investment upto Rs. 10,000/- within
                                                                                    •   The Scheme may also invest in overseas financial assets as and
overall limit of Rs. 80,000/- under section 88 of the Income Tax Act, 1961.
                                                                                        when permitted by the concerned regulatory authorities in India. To
LIQUIDITY                                                                               the extent that the assets of the Scheme will be invested in securities
                                                                                        denominated in foreign currencies, the Indian Rupee equivalent of
•     Anytime repurchase at NAV based prices after expiry of lock-in period
                                                                                        the net assets, distributions and income may be adversely affected
•     Facility to move from/to other open ended Schemes of the Fund                     by changes in the value of respective foreign currencies relative to
                                                                                        the Indian Rupee. The repatriation of capital to India may also be
TRANSPARENCY
                                                                                        hampered by changes in the regulations concerning exchange
•     Announcement of NAV on all Business Days                                          controls or political circumstances as well as the application to it of
•     Portfolio disclosure each six months                                              other restrictions on investment.
                                                                                    •   The securities lending activity by the Scheme will have the inherent
UNITHOLDER SERVICE
                                                                                        probability of collateral value drastically falling in time of strong
•     Repurchase proceeds paid by at-par cheques/demand drafts/pay                      downward market trends or due to it being comprised of tainted/
      orders                                                                            forged securities, resulting in inadequate value of collateral until such
•     Facility of Dividend Reinvestment/Dividend Sweep                                  time as that diminution in value is replenished by additional security.
                                                                                        It is also possible that the borrowing party and/or the approved
•     Investment / Redemption of Demat units through designated Stock
                                                                                        intermediary may suddenly suffer severe business setback and
      Exchange(s)
                                                                                        become unable to honor its commitments. This along with a
•     Systematic Investment Plan for planned and regular investment                     simultaneous fall in value of collateral would render potential loss to
•     Systematic Withdrawal/Switch Plan for planned and regular                         the Scheme.
      withdrawal after expiry of lock-in period                                     •   The Scheme may invest in derivative instruments, which carry a
•     Systematic Switching Plan for planned and regular shifting between                high-risk return ratio. In case of investments in derivative instruments
      various open ended Schemes within the Fund after expiry of lock-in                like index futures, the risk/reward would be the same as investments
      period                                                                            in portfolio of shares representing an index. However, there may be
                                                                                        a cost attached to buying an index future. Besides in case of IRS
•     Updated Account Statement ordinarily mailed within three Business
                                                                                        and FRA, there exist credit and market risks. Further there could be
      Days for new financial transactions
                                                                                        an element of settlement risk, which could be different from the risk
•     Investor Service Centres at major cities across the country                       in settling physical shares and there is a risk attached since the
•     Investment by NRIs /OCBs/FIIs fully repatriable                                   Indian market for derivative instruments is untried and untested
•     Facility for nomination.                                                      •   Investors /unitholders are also urged to read the detailed clause(s)
                                                                                        titled "Special Considerations".
    II RISK FACTORS                                                                 •   The demat Units being offered/sold/repurchased/redeemed through
                                                                                        the stock exchange, have neither been approved/disapproved by
•     Mutual Funds and Securities investments are subject to market risks
                                                                                        NSEIL/NSCCL and/or the Designated Stock Exchange/Designated
      and there can be no assurance and no guarantee that the objectives
                                                                                        Clearing Corporation nor has NSEIL/NSCCL and/or the Designated
      of the Mutual Fund will be achieved.
                                                                                        Stock Exchange/Designated Clearing Corporation certified the
•     As with any investment in securities, the NAV of the units issued                 accuracy or adequacy of this Offer Document. NSEIL/NSCCL and /
      under the schemes can go up or down depending on the factors and                  or the Designated Stock Exchange/Designated Clearing Corporation
      forces affecting the capital markets.                                             does not provide any assurance that the demat Units will continue to
•     Past performance of the Sponsors /AMC/ Mutual Fund/this scheme                    be offered/sold/repurchased/redeemed on MFSS of NSEIL/NSCCL
      (as a close-ended Scheme) does not indicate or guarantee the future               and/or on the Designated Stock Exchange(s) in the future. The
      performance of the Scheme, of the Mutual Fund and may not                         investment risk of the demat Units offered/sold/ repurchased/
      necessarily provide a basis of comparison with other investments.                 redeemed through MFSS of NSEIL/NSCCL or through the Designated
                                                                                        Stock Exchange/Designated Clearing Corporation shall solely rest
•     IDBI-PRINCIPAL Tax Savings Fund is only the name of the scheme
                                                                                        with the investor and the investor shall have no claim against NSEIL/
      and do not in any manner indicates either the quality of the scheme,
                                                                                        NSCCL and/or the Designated Stock Exchange/Designated Clearing
      its future prospects or the returns. Investors therefore are urged to
                                                                                        Corporation in respect thereof.
      study the terms of the offer carefully and consult their Investment
      Advisor before they invest in the Scheme.                                     •   A prospective investor purchasing/repurchasing/redeeming demat
                                                                                        Units, which are offered /sold/repurchased/redeemed through MFSS
•     The Sponsors are not responsible or liable for any loss resulting
                                                                                        of NSEIL/NSCCL or through the Designated Stock Exchange/
      from the operations of the Mutual Fund beyond the contribution of
                                                                                        Designated Clearing Corporation shall be dealing with the concerned
      an amount of Rs. 25 Crores towards setting up IDBI Mutual Fund.
                                                                                        participants (Trading/Clearing Member/Broker) and not with the
•     Investors in the Scheme are not being offered a guaranteed or                     representative of the Fund or NSEIL/NSCCL and/or the Designated

                                                                                5
      Stock Exchange / Designated Clearing Corporation.                              for Units, nor should they in any event use any such application form,
•     The Fund and its Trustee shall stand discharged of their sale/                 unless in the relevant jurisdiction such an invitation could lawfully be made
      repurchase obligation to the unitholders on credit of demat Units/             to them and such application form could lawfully be used without
      payment of funds, as the case may be, to the NSCCL of NSEIL and/               compliance with any registration or other legal requirements. Accordingly
      or the Designated Clearing Corporation of the Designated Stock                 this Offer Document does not constitute an offer or solicitation by anyone
      Exchange, and for this purpose, the Investor shall have constituted            in any jurisdiction in which such offer or solicitation is not lawful or in
      the Participant/ Trading Member/Broker of NSEIL and/or the                     which the person making such offer or solicitation is not qualified to do so
      Designated Stock Exchange as his/her/its authorised agent.                     or to anyone to whom it is unlawful to make such offer or solicitation. It is
                                                                                     the responsibility of any persons in possession of this Offer Document
•     For the demat Units purchased through MFSS of NSEIL and/or                     and any persons wishing to apply for Units pursuant to this Offer Document
      through the Designated Stock Exchange, the investor pays the                   to inform themselves of and to observe, all applicable laws and Regulations
      Participant/ Trading Member/Broker, and relies on the Participant/             of such relevant jurisdiction.
      Trading Member/Broker for receiving the credit of demat Units into
      his/her/its demat account. For demat Units offered for repurchase/             Prospective investors should review / study this Offer carefully and in its
      redemption through MFSS of NSEIL and/or through the Designated                 entirety and shall not construe the contents hereof or regard the summaries
      Stock Exchange, the Investor transfers the demat Units from his/               contained herein as advice relating to legal, taxation, or financial/
      her/its demat account to the Participant/ Trading Member/Broker’s              investment matters and are advised to consult their own professional
      demat account, and relies upon the Participant/ Trading Member/                advisor(s) as to the legal or any other requirements or restrictions relating
      Broker for receiving payment of the repurchase/redemption proceeds             to the subscription, gifting, acquisition, holding, disposal (sale, transfer,
      received by the Participant/ Trading Member/Broker through NSEIL/              switch or redemption or conversion into money) of Units and to the
      NSCCL and/or the Designated Clearing Corporation of the                        treatment of income (if any), capitalization, capital gains, any distribution,
      Designated Stock Exchange.                                                     and other tax consequences relevant to their subscription, acquisition,
•     Neither NSEIL/NSCCL and/or the Designated Stock Exchange or                    holding, capitalization, disposal (sale, transfer, switch or redemption or
      the Designated Clearing Corporation nor the Fund guarantees or                 conversion into money) of Units within their jurisdiction / of nationality,
      assures performance of the aforesaid obligations of the Participant/           residence, domicile etc. or under the laws of any jurisdiction to which they
      Trading Member/Broker either for delivery of demat units purchased             or any managed Funds to be used to purchase/gift Units are subject, and
      by the Investor through MFSS of NSEIL and/or through the                       (also) to determine possible legal, tax, financial or other consequences of
      Designated Stock Exchange or of payment of repurchase/redemption               subscribing / gifting to, purchasing or holding Units before making an
      proceeds to the investor in respect of demat Units repurchased/                application for Units.
      redeemed through NSEIL/NSCCL and/or the Designated Stock                       No person has been authorized to give any information or to make any
      Exchange / Designated Clearing Corporation. Investor Grievance                 representations not confirmed in this Offer Document in connection with
      Redressal in the case of NSEIL /NSCCL                                          the Initial Offer or the Offer of Units, and any information or representations
•     In the event of non-performance of the aforesaid obligations by a              not contained herein must not be relied upon as having been authorized
      Trading Member registered with NSEIL/NSCCL, the investor is not                by the Mutual Fund or the AMC or the Trustees. Statements made in this
      entitled to claim any compensation either from the Investor Protection         Offer Document are based on the law and practice currently in force in
      Fund or from any other fund of NSEIL/NSCCL. Any dispute between                India and are subject to change therein. Neither the delivery of this Offer
      the investor and such Trading Member in respect of orders for sale             Document nor any sale made hereunder shall, under any circumstances,
      / repurchase of demat Units shall be submitted to the Investor                 create any impression that the information herein is correct as of any time
      Grievance Mechanism prescribed by NSEIL/NSCCL from time to                     subsequent to the date hereof.
      time. If the dispute between the investor and the Trading Member
      could not be resolved through such mechanism, any one of the                   PERFORMANCE RISK :
      aggrieved parties shall refer such dispute to the arbitration/dispute          The value of and income from, an investment in the Scheme can decrease
      resolution mechanism prescribed by NSEIL/NSCCL from time to time.              as well as increase, depending on a variety of factors which may affect
      The order confirmation slip generated by the system and issued by              the values and income generated by the Scheme’s portfolio of securities.
      the Trading Member to the investor shall be conclusive evidence of             The returns of the Scheme’s investments are based on the current yields
      the order being put on the system on behalf of the Investor by the             of the securities, which may be affected generally by factors affecting
      Trading Member in this regard.                                                 capital markets such as price and volume, volatility in the stock markets,
•     Prospective investors should consider utilising the facility for sale          interest rates, currency exchange rates, foreign investment, changes in
      and repurchase of demat Units through Designated Stock Exchanges               government and Reserve Bank of India policy, taxation, political, economic
      only after fully understanding and comprehending the aforesaid risks           or other developments and closure of the stock exchanges. Investor’s
      of dealing through Brokers. In case demat units are sold under the             should understand that the investment composition indicated, inline with
      physical mode directly to the fund, the unitholder shall pay applicable        prevailing market conditions, is only a hypothetical example as all
      off market trading charges.                                                    investments involve risk and there can be no assurance that the Scheme’s
                                                                                     investment objective will be attained nor will the Scheme be in a position
    III SPECIAL CONSIDERATIONS                                                       to maintain the model percentage of investment pattern/composition
                                                                                     particularly under exceptional circumstances such that the interest of the
Investment in the Scheme should be viewed by an Investor/unitholder as               unitholders are protected.
a medium to long-term investment as Mutual Funds carry normal market
risks and there can be no assurance and no guarantee that the Scheme                 The Investment Manager will endeavor to invest in highly researched
will achieve its objective. It is recommended that an investment in the              growth companies, however the growth associated with equities is
Scheme should not constitute a substantial proportion of an investment               generally high as also the erosion in the value of the investments/portfolio
portfolio and may not be appropriate for all, as investment decisions made           in the case of the capital markets passing through a bearish phase is a
by the Investment Manager will not always be profitable or prove to have             distinct possibility. Changes in the prevailing rates of interest is likely to
been correct. As with any investment in stocks, shares and securities,               affect the value of the Scheme’s investments and thus the value of the
the NAV of the Units under the Scheme can go up or down, depending on                Scheme’s Units. The value of Money Market/debt instruments held by
the factors and forces affecting the capital markets. Past performance of            the Scheme generally will vary inversely with the changes in prevailing
this Scheme (as a closed-ended scheme), of the previous Schemes, the                 interest rates. AMC, while investing in fixed-income instruments like debt,
Sponsors or its Group affiliates is not indicative of and does not guarantee         etc., shall consider and evaluate the risk of an issuer’s ability to meet
the future performance of the Scheme. The name of the Scheme does                    principal and interest payments (credit risk) and also the price volatility
not in any manner indicate either the quality of the Scheme, its future              due to such factors as interest sensitivity, market perception or the
prospects or the returns. Investors are urged to study the terms of this             creditworthiness of the issuer and general market liquidity (market risk).
offer carefully and consult their Investment Advisor before they invest in           While it is the intent of the Investment Manager to invest primarily in more
the Scheme. Investors’/ unitholders’ attention is drawn to the risk factors          highly rated debt securities and highly researched growth companies, the
set out in the beginning of this Offer Document and also to the following            Scheme may from time to time invest in high yielding / growth, lower rated
specific risks:                                                                      and / or privately placed / unlisted /securitised securities. Lower rated or
                                                                                     unrated securities are more likely to react to developments affecting market
REGULATORY RISKS:                                                                    and credit risk than highly rated securities. The credit risk factors pertaining
Neither this Offer Document nor the Units have been registered in any                to lower rated securities also apply to lower rated zero coupon, deferred
jurisdiction. The distribution of this Offer Document in certain jurisdictions       interest bonds.
may be restricted or subject to registration requirements and, accordingly,
persons who come into possession of this Offer Document are required                 FOREX RISK :
to inform themselves about, and to observe, any such restrictions. No                The Scheme may also invest in overseas financial assets as and when
persons receiving a copy of this Offer Document or any accompanying                  permitted by the concerned regulatory authorities in India. To the extent
application form in such jurisdiction may treat this Offer Document or               that the assets of the Scheme will be invested in securities denominated
such application form as constituting an invitation to them to subscribe             in foreign currencies, the Indian Rupee equivalent of the net assets,

                                                                                 6
distributions and income may be adversely affected by changes in the                  deregulation has been taking place over recent years. This process has
value of respective foreign currencies relative to the Indian rupee. The              involved the removal of trade barriers and other protectionist measures,
repatriation of capital to India may also be hampered by changes in                   which could adversely affect the value of investments. It is possible that
regulations concerning exchange controls or political circumstances as                future changes in the Indian political situation, including political, social,
well as the application to it of other restrictions on investment. In addition,       or economic instability, diplomatic developments and changes in laws or
country risks would include events such as introduction of extraordinary              regulations could have an effect on the value of investments. Expropriation,
exchange controls, economic deterioration and bi-lateral conflict leading             confiscatory taxation, or other relevant developments could also affect
to immobilisation of the overseas financial assets.                                   the value of investments.
TECHNIQUES RISK :                                                                      IV DUE DILIGENCE CERTIFICATE
The Scheme may use techniques (including derivatives, futures and
options, warrants, etc) and instruments that may be permitted and / or                It is confirmed that:
that may become permissible under SEBI/RBI Regulations and / or
Regulations and / or statutory modification or re-enactment thereof for
                                                                                      1.   the Offer Document forwarded to SEBI is in accordance with the
efficient portfolio management and to attempt to hedge or reduce the risk
                                                                                           SEBI (Mutual Funds) Regulations, 1996 and the guidelines and
of such fluctuation. However, these techniques and instruments, if
                                                                                           directives issued by SEBI from time to time.
imperfectly used have the risk of the Scheme incurring losses due to
mismatches particularly in a volatile market. The Fund’s ability to use               2.   all legal requirements connected with the launching of the Scheme
these techniques may be limited by market conditions, regulatory limits                    as also the guidelines, instructions, etc., issued by the Government
and tax considerations (if any). The use of these techniques is dependent                  and any other competent authority on its behalf, have been duly
on the ability to predict movements in the prices of securities being hedged               complied with.
and movements in interest rates. There exists an imperfect correlation                3.   the disclosures made in the Offer Document are true, fair and
between the hedging instruments and the securities or market sectors                       adequate to enable the unitholders to make a well informed decision
being hedged. Besides, the fact that skills needed to use these instruments                regarding investment in the proposed Scheme
are different from those needed to select the Fund’s / Scheme’(s) securities.
                                                                                      4.   the intermediaries named in the Offer Document are registered with
There is a possible absence of a liquid market for any particular instrument
                                                                                           SEBI and till date such registration is valid.
at any particular time even though the futures and options may be bought
and sold on an organized exchange. The use of these techniques involves
                                                                                                   For IDBI-PRINCIPAL Asset Management Company Ltd.
possible impediments to effective portfolio management or the ability to
                                                                                      Place: Mumbai                                    UPESH SHAH
meet repurchase /redemption requests or other short-term obligations
                                                                                      Date : January 4, 2001                       Compliance Officer
because of the percentage of the Scheme’s assets segregated to cover
its obligations.                                                                      Note : The Due Diligence Certificate as stated above was submitted to
                                                                                      Securities and Exchange Board of India on January 4, 2001
LIQUIDITY AND SETTLEMENT RISKS :
The liquidity of the Scheme’s investments may be inherently restricted by              V ABBREVIATIONS AND DEFINITIONS
trading volumes, transfer procedures and settlement periods. From time
to time, the Scheme will invest in certain securities of certain companies,           AMC / Asset Management Company / Investment Manager / IDBI -
industries, sectors, etc based on certain investment parameters as adopted            PRINCIPAL: IDBI - PRINCIPAL Asset Management Company Limited
internally by AMC. While at all times the Trustees and the AMC will
endeavor that excessive holding/ investment in certain securities of                  Applicable NAV : Applicable NAV for the Scheme is the Net Asset Value
industries, sectors, etc. by the Scheme be avoided, the assets invested               (NAV) per unit at the close of business day on which the application for
by the Scheme in certain securities of industries, sectors, etc. may acquire          sale / repurchase of units is received (subject to it being complete in all
a substantial portion of the Scheme’s investment portfolio and collectively           respects). The date of receipt of application will be the actual business
may constitute a risk associated with non-diversification and thus could              day of either the mail receipt at a Registrar’s/AMC’s Service Centre /
affect the value of investments. The Scheme may have difficulty in                    collection centre or of actual receipt of an in-person / mail application
disposing of certain securities because the security may be unlisted, due             after 10.30 am but before 3:30 pm on such business day. Any in-person/
to greater price fluctuations there may be a thin trading market, different           mail application received after 3:30 pm on such Business Day will be
settlement periods and transfer procedures for a particular security at               deemed to be received on the next Business Day. The above can be
any given time. Settlement if accomplished through physical delivery of               explained as follows: 10.30 am. - 3.30 pm. : Same business day’s NAV
stock certificates is labour and paper intensive and may affect the liquidity.        After 3.30 pm. : Next business day’s NAV
It should be noted that the Fund bears the risk of purchasing fraudulent or           Business Day : A day other than : (i) Saturday and Sunday, (ii) a day on
tainted papers. The secondary market for money market/debt securities                 which the Banks in Mumbai and /or RBI are closed for business / clearing,
does exist, but is generally not as liquid as the secondary market for other
                                                                                      (iii) a day on which the Bombay Stock Exchange and/ or National Stock
securities. Reduced liquidity in the secondary market may have an adverse             Exchange are closed, (iv) a day which is a public and/or bank holiday at a
impact on market price and the Scheme’s ability to dispose of particular              collection centre where the application is received, (v) a day on which
securities, when necessary, to meet the Scheme’s liquidity needs or in                sale and repurchase of units is suspended by the AMC, (vi) a day on
response to a specific economic event, such as the deterioration in the               which normal business could not be transacted due to storms, floods,
creditworthiness of the issuer, etc. or during restructuring of the Scheme’s          bandhs, strikes etc. The AMC reserves the right to declare any day as a
investment portfolio. Furthermore, from time to time, the AMC, the
                                                                                      Business Day or otherwise at any or all collection centres.
Custodian, the Registrar, any Associate, any distributor, dealer, any
company, corporate bodies, trusts, any scheme / Mutual Fund managed                   Business Hours : Presently 10.30 a.m. to 3.30 p.m. on any Business
by the AMC or by any other AMC may invest in the Scheme. While at all                 Day (AMC may change the business hours without giving prior notice to
times the Trustees and the AMC will endeavor that excessive holding of                the Unitholders) For sale / repurchase of demat Units through the
Units in the Scheme among a few unitholders is avoided, however, the                  Designated Stock Exchange / Designated Clearing Corporation the
amounts invested by these aforesaid persons may acquire a substantial                 Business Hours of the scheme will be as per the trading hours in the
portion of the Scheme’ outstanding Units and collectively may constitute              relevant stock exchange(s) or as decided by the AMC from time to time.
a majority unitholder in the Scheme. Accordingly, redemption of Units
held by such persons may have an adverse impact on the value of the                   Calendar Year : A Calendar Year shall be full English Calendar months
redemption and may impact the ability of the unitholders to redeem their              viz. 12 months commencing from 1st January and ending on 31st December.
respective Units.
                                                                                      Collection Centre : Branches of Banks and/or Registrar’s/AMC’s service
SECURITIES LENDING RISKS :                                                            centres/ISC authorized to receive application forms for subscription to
It may be noted that Securities Lending activity would have the inherent              the Units of the scheme and also redemption/switch requests as mentioned
probability of collateral value drastically falling in times of strong downward       in this Offer Document or appointed from time to time.
market trends or due to it being comprised of tainted/forged securities,
                                                                                      Credit Risk : Risk of default in payment of principal or interest or both.
resulting in inadequate value of collateral until such time as that diminution
in value is replenished by additional security. It is also possible that the          Custodian : Means a Custodian appointed for holding of the securities
borrowing party and /or the approved intermediary may suddenly suffer                 and other assets of the Fund which for the time being is Citi Bank NA
severe business setback and become unable to honor its commitments.
This alongwith a simultaneous fall in value of collateral would render                Day : Any day (including Saturday, Sunday and holiday) as per English
potential loss to the Scheme. Besides, there can also be temporary                    Calendar viz 365 days in a year.
illiquidity of the securities that are lent out and the Scheme may not be
able to sell such lent out securities.                                                Debt Instruments : Government securities, corporate debentures, bonds,
                                                                                      promissory notes, money market instruments, pass - through obligations,
POLITICAL RISK :                                                                      asset backed securities/Securitised debt and other possible similar
Whereas the Indian market was formerly restrictive, a process of                      securities.

                                                                                  7
Depository : Depository as defined in the Depository Act, 1996 (22 of                   person resident in India.
1996)
                                                                                        Person Resident Outside India : A person who is not resident in India.
Dividend : Income distributed by the Mutual Fund on the units.
                                                                                        Permissible Investments or Investments : Collective or group
Eligible Investor : Following category of investors who are entitled to                 investments made on account of the unitholders of the Scheme in
claim income tax benefit under section 88 of the Income Tax Act, 1961 by                Securities and other assets in accordance with the SEBI Regulations and
investing in the units of the scheme (i) an individual; or (ii) a Hindu undivided       amendments thereto.
family; or (iii) an association of persons or body of individuals consisting,
                                                                                        Portfolio : Portfolio at any time shall include all Permissible Investments
in either case, only of husband and wife governed by the system of
                                                                                        and Cash.
community of property in force in the state of Goa and union territories of
Dadra and Nagar Haveli and Daman and Diu by whom, or on whose                           RBI : Reserve Bank of India, established under the Reserve Bank of
behalf, investment is made.                                                             India Act, 1934, as amended from time to time.
Entry Load : Load on sale of units.                                                     Registrars / Registrar and Transfer Agent : Registrar for the time being
Exit Load : Load on repurchase of units.                                                of the Mutual Fund which, at present, is Karvy Consultants Ltd., or such
                                                                                        agency appointed by the AMC.
FII(s) : Foreign Institutional Investor(s), registered with SEBI under
Securities and Exchange Board of India (Foreign Institutional Investors)                Regulations : Regulations imply SEBI Regulations and the relevant rules
Regulation, 1995.                                                                       and provisions of the Securities and Exchange Board of India (Depositories
                                                                                        and Participants) Regulations 1996; Public Debt Act, 1944; The Income
Financial Year : A Financial Year shall be full English Calendar months                 Tax Act, 1961; Wealth Tax Act, 1957; Gift Tax Act, 1958, the Foreign
viz. 12 months commencing from 1st April and ending on 31st March.                      Exchange Management Act, 1999, the Indian Trusts Act, 1882 as amended
Fund / Mutual Fund / IDBIMF: IDBI Mutual Fund, a trust set up under the                 from time to time and shall also include any Circulars, Press releases or
provisions of the Indian Trust Act, 1882 and registered with SEBI bearing               Notifications that may be issued by SEBI or the Government of India or
Registration No. MF/019/94/0 dated December 13, 1994                                    the Reserve Bank of India including the notifications dated 28.12.1992 &
                                                                                        22.12.1998 issued by the Ministry of Finance, Department of Economic
Gilts / Government Securities : As defined under Section 2 (b) of the                   Affairs (Capital Markets Division) Government of India governing Equity
Securities Contract (Regulation) Act, 1956, Government Security means                   Linked Savings Scheme.
a security created and issued, whether before or after the commencement
of the Act, by the Central Government or a State Government for the                     Repo / Reverse Repo : Sale/ Purchase of Securities as may be allowed
purpose of raising a public loan and having one of the forms specified in               by RBI from time to time with simultaneous agreement to Repurchase/
clause (2) of Section 2 of the Public Debt Act, 1944 (18 of 1944).                      resell them at a later date.

GOI : Government of India                                                               Repurchase / Redemption : The units of Scheme under IDBI-PRINCIPAL
                                                                                        Tax Savings Fund which will be bought back by the Fund on an ongoing
Group : As defined in sub-clause (ef) of clause 2 of MRTP Act                           basis subsequent to the expiry of applicable lock-in period.
Investor : An investor means any resident or non-resident person whether                Sale / Subscription : The units of Scheme under IDBI-PRINCIPAL Tax
individual or not (legal entity), who is eligible to subscribe for units under          Savings Fund which will be offered for sale to the unitholders on an ongoing
the laws of his/her/their state/country of incorporation, establishment,                basis.
citizenship, residence or domicile and under the Income Tax Act, 1961
including amendments thereto from time to time and who has made an                      Scheme : IDBI-PRINCIPAL Tax Savings Fund being offered by IDBI Mutual
application for subscribing units under the scheme. Under normal                        Fund.
circumstances, a Unitholder shall be deemed to be the investor.                         SEBI : Securities and Exchange Board of India, established under the
Investment Management Agreement / IMA : Investment Management                           Securities and Exchange Board of India Act, 1992, as amended from
Agreement dated November 25, 1994 as amended from time to time,                         time to time.
between the Trustees and AMC.                                                           SEBI Regulations / Mutual Fund Regulations : The Securities and
ISC : Investor Service Centre of the Mutual Fund.                                       Exchange Board of India (Mutual Funds) Regulations, 1996, or such other
                                                                                        Regulation in force from time to time including any amendment thereto or
Load : A sum of money deducted from the value received or paid to the                   any replacement or re-enactment thereof / clarification and guidelines in
unitholder towards Sale / Repurchase of units.                                          the form of notes or circulars or notifications etc. issued from time to time
Money Market Instruments : Commercial Papers, Commercial Bills,                         for regulating Mutual Funds in India, by SEBI.
Treasury Bills, Debt/ Government Securities having an unexpired maturity                Securities : Include shares, scrips, stocks, etc., Debt instruments like
up to one year, call, notice or term money, certificate of deposit, bills               notes, bonds, debentures, debenture stock, warrants, etc., futures, options,
rediscounting scheme, repos/ reverse repos and any other like instruments               derivatives etc or other transferable securities of a like nature in or of any
as specified from time to time.                                                         incorporated company or other body corporate, Gilts/ Government
NAV : Net Asset Value of the units of the Scheme calculated in the manner               securities, Mutual Fund units, Money Market Instruments like Call Deposit,
provided in this Offer Document by dividing the net assets by the number                Commercial Paper, Treasury Bills etc. such other instruments as may be
of outstanding units (on any valuation day) or as may be prescribed by                  declared by GOI and/or SEBI and /or RBI and/or any other regulatory
the SEBI Regulations from time to time.                                                 authority to be securities; and rights or interest in securities, mortgage/
                                                                                        Asset backed securities, securitised receivables, auto loans, etc.
Net Assets : Net Assets of the Scheme at any time shall be the total
value of the Schemes’ assets, less its liabilities taking into consideration            Sponsors : The Sponsors of IDBI Mutual Fund - Industrial Development
the accruals and the provision.                                                         Bank Of India and Principal Financial Services Inc..
OCB : Overseas Corporate Bodies, partnership firms and societies which                  Switch : Transfer of units of IDBI-PRINCIPAL Tax Savings Fund to another
are held directly or indirectly but ultimately to the extent of at least 60% by         scheme of IDBI Mutual Fund.
non-resident individuals of Indian nationality or origin, as also an overseas           Tax Act : Income Tax Act, 1961, Wealth Tax Act 1957 and Gift Act, 1958,
trust in which at least 60% of the beneficial interest is irrevocably held by           or such other legislation in force from time to time including any amendment
such persons.                                                                           thereto or any replacement or re-enactment thereof / rules, regulations
Offer Document : This document issued by IDBI Mutual Fund, inviting to                  any clarification and guidelines issued from time to time by the GOI.
subscribe to the units of IDBI-PRINCIPAL Tax Savings Fund
                                                                                        Total Assets : Total Assets of the Scheme at any time shall be the total
Person Resident in India : (1) a person residing in India for more than                 value of the Scheme’s assets, taking into consideration the accruals.
one hundred and eighty-two days during the course of the preceding
                                                                                        Trust Deed : The Trust Deed of the Mutual Fund dated November 25,
Financial year but does not include :- a) a person who has gone out of
                                                                                        1994 made by and between the Sponsor and the Trustees as amended
India or who stays outside India, i) for or on taking up employment outside
                                                                                        from time to time or any replacement or substitution thereof.
India, or ii) for carrying on outside India a business or vocation outside
India, or iii) for any other purpose, in such circumstances as would indicate           Trustees : Board of Trustees consisting of eminent personalities and
his intention to stay outside India for an uncertain period; b) a person who            IDBI represented as Principal Trustee.
has come to or stays in India, otherwise than i) for or on taking up
employment in India, or ii) for carrying on in India a business or vocation             Unitholder : Means any resident or non-resident person whether individual
in India, or iii) for any other purpose, in such circumstances as would                 or not (legal entity), who being eligible to subscribe in the scheme and to
indicate his intention to stay in India for an uncertain period; (2) any person         whom units has been allotted under the scheme based on a valid
or body corporate registered or incorporated in India, (3) an office, branch            application and thus hold units in the scheme.
or agency in India owned or controlled by a person resident outside India,              Units : Undivided Share of a unitholder in the assets of the Scheme (& of
(4) an office, branch or agency outside India owned or controlled by a                  the option(s) (if any) within the plan(s), if any) as evidenced by any letter/

                                                                                    8
advice or any other statement/certificate/instrument.
                                                                                       Example : Let us take an example of an unitholder who invests Rs. 100 per
Year : A Year shall be full English Calendar months viz. 12 months.                    month into a scheme that had a unit price of Rs. 10 initially. Over the next
                                                                                       few months, the market falls (causing the unit price to drop) before recovering
 VI SCHEME’S FEATURES                                                                  to its original value. At the end of 5 months the unitholder would have 65
                                                                                       units each worth Rs. 10. He would therefore have Rs. 650 worth of units
Name of the scheme : IDBI-PRINCIPAL Tax Savings Fund
                                                                                       after investing Rs. 500 and therefore have a profit of Rs. 150.
Type of scheme : Open ended equity linked savings scheme
                                                                                        Month       NAV       Investment (Rs.)      No. of Units     Average Cost
Investment Objective : The objective of the scheme is to build a high
quality growth-oriented portfolio to provide long-term capital gains to the                1         10             100                10.00             10.00
investors. The scheme aims at providing returns through capital appreciation.
                                                                                           2         8              100                12.50              8.89
Income Tax Benefit : Eligible investors can claim income tax rebate 20%
(25% in case of eligible investor being an author, playwright, artist,                     3         5              100                20.00              7.06
musician, actor or sportsman) on investment upto Rs.10,000/- under
Section 88 of the Income Tax Act 1961.                                                     4         8              100                12.50              7.27

Lock-in Period : Units issued to the eligible investors, who wish to claim                 5         10             100                10.00              7.69
income tax benefit under section 88 of the Income Tax Act, 1961, will be
                                                                                                  TOTAL             500                65.00              7.69
locked-in for a period of three years from the date of allotment. Such units
can not be repurchased /switched /pledged /transferred /gifted before the              Rupee cost averaging does not guarantee a profit or protect against a loss.
expiry of lock-in period. However, in the event of the death of the sole               Rupee cost averaging can smooth out the market’s ups and downs and
applicant or the first applicant in case of joint holding, the nominee or              reduce the risk of investing in volatile markets. The unitholder can select
legal heir or the applicant stated next in the order (in case of joint holding)        which day the sale is to be made from a set of dates (if no date is selected,
as the case may be, may encash the units after the completion of one                   the sale will be made on the 15th of the month). If the selected date is not
year from the date of allotment.                                                       a business day, the sale will take place on the next business day.
Investment Strategy : The scheme will invest its assets in a portfolio of
equity and equity related instruments. The focus of the investment strategy            Systematic Withdrawal Plan : After the expiry of relevant lock-in period,
would be to identify stocks which can provide capital appreciation in the              the unitholder may set up a Systematic Withdrawal Plan on a monthly,
long term. Companies selected for the portfolio would possess some of                  quarterly or semi-annual or annual basis to:
the characteristics mentioned below : - superior management quality -                  - Redeem a fixed number of units
distinct and sustainable competitive advantage - good growth prospects
and - strong financial strength The aim will be to build a diversified portfolio       - Redeem enough units to provide a fixed amount of money Once the
                                                                                          unitholder sets up a Systematic Withdrawal Facility the plan would
across major industries and economic sectors by using “Fundamental
                                                                                          continue until: -
Analysis” approach of research, valuation and stock selection.
                                                                                          - The unitholder instructs the Fund to stop periodic withdrawal in writing;
Investment Composition : Equity and equity related instruments (Medium                      or
to High Risk) Not less than 80 % Debt (including securitised Debt) and                    - The unitholder’s account balance is zero.
Money Market instruments (Low to Medium Risk) Upto 20%
                                                                                       The unitholder can select which day the repurchase is to be made from a
Minimum Application /Resale Amount : Rs. 500 and in multiples of Re.                   set of dates (if no date is selected, the repurchase will be made on the 11th
1 with subsequent investment of Rs.500 & in multiples of Re.1 thereafter.              of the month). If the selected date is not a business day, the repurchase will
Minimum Repurchase Amount : Rs. 500 and in multiples of Re.1 or 50                     take place on the next business day. Withdrawal payments will be
units and in multiples of 1 unit. The Trustee /AMC may, however, change                endeavored to be sent within 3 business days after the repurchase date.
and or stipulate a different minimum amount per application for resale &/              Systematic Switching Plan : After the expiry of relevant lock-in period,
or repurchase for group investment etc.                                                the unitholder may set up a Systematic Switching Plan on a monthly,
Initial Issue Expenses : During the initial launch of scheme in 1996, the              quarterly , semi-annual or annual basis to exchange a fixed number of
initial issue expenses incurred were Rs.4.96 crore out of which 6% of the              units and /or amount in one scheme to another scheme within the Fund
                                                                                       Family. Once the unitholder sets up a Systematic Switching Plan the
amount mobilized i.e. Rs.3.20 crore were charged to the scheme and
                                                                                       plan would continue until:
balance Rs.1.76 crore were borne by the AMC. Entire initial issue expenses
of Rs.3.20 crore charged to the Scheme were amortised during the first                 - the unitholder instructs the Fund to stop periodic switching in writing; or
three years of the operation of the scheme i.e. during F.Y. 1996-97, 1997-             - the unitholders account balance is zero.
98 and 1998-99. Therefore no unamortised initial issue expenses is
                                                                                       The unitholder can select which day the switch is to be made from a set of
currently outstanding pending for amortisation.
                                                                                       dates (if no date is selected, the exchange will be made on the 15th of the
Annual Recurring Expenses : Upto 2.50% of weekly average Net Assets                    month). If the selected date is not a business day, the switch will take
not exceeding Rs.One Hundred crores.                                                   place on the next business day. A switch instruction received from any
Investments by NRI’s /FII’s / OCB’s : Investments by NRI’s/FII’s/OCB’s                 joint owner in case the mode of holding is “anyone or survivor” is binding
are allowed on full repatriation basis, if invested through NRE/FCNR A/C.              on all joint owners. All switches are subject to the minimum investment
                                                                                       and eligibility requirements of the scheme being acquired. If a certificate
Switch Option : After expiry of relevant lock-in period investors are allowed          has been issued, it must be returned to the Fund before the switch can
switching into/from other select open ended Scheme(s) managed under                    take place. The switch privilege is not intended for short-term trading.
the Fund, either currently in existence or a Scheme(s) that may be launched            Excessive switching activity may interfere with portfolio management and
in the future at NAV based prices.
                                                                                       have an adverse impact on all unitholders. In order to limit excessive
Liquidity : Liquidity will be available through sale and repurchase of units           switching activity, the Fund reserves the right to revise or terminate the
on an ongoing basis. Unitholders can subscribe to and get their units                  exchange privilege, limit the units/amount or number of exchanges, reject
repurchased after expiry of lock-in period (as applicable) on all business             any exchange or close any account. The unitholders would be notified of
days at NAV related prices. The Fund will ordinarily dispatch the repurchase           any such change to the extent required by SEBI regulations
proceeds, as per the Regulations, within ten business days. Further, the
Fund will endeavor to dispatch the repurchase proceeds within 3 business               Triggers : Under this facility, the unitholders after expiry of relevant lock-
days from the date of acceptance of a valid repurchase request.                        in period may opt for withdrawal and/or switch either in the normal manner
                                                                                       or under systematic manner based on the unit balance attaining/on
Transparency : The NAV of the Scheme will normally be determined on                    minimum balance, capital appreciation/ gains realisation, events, dates
all business days. The Fund shall also make available at the AMFI web-                 etc (with or without lock in for a particular period). Trigger thus acts as a
site & also to AMFI for publishing the Scheme NAV, Sale/Repurchase                     financial planning tool for information and the unitholder may subsequently
price in at least two/one daily newspaper/s (of all India circulation) on all          continue in the Scheme or otherwise withdraw/ switch. For e.g. an account
business days. In addition the ISC and/or collection centre would also                 may be monitored and no redemption permitted (if under lock-in) and the
display the NAV’s and the NAV related prices. The scheme performance                   unitholder either informed or account redeemed as and when the balance
and also a full portfolio would be mailed to the unitholders once in six               reaches a desired value or after certain period of time etc. In case of
months. The Fund would publish the half yearly and annual results as per               triggers linked with events/dates, on realisation of gains, a specified
SEBI Regulations.                                                                      amount/full amount/gains/appreciation etc would be redeemed and paid
                                                                                       either on the investment attaining a particular value or after a particular
Systematic Investment Plan : Systematic Investment Plan is available                   period of time In case of triggers linked with gains/appreciation, at the
for planned and regular investments. Under this plan, unitholders can                  option of the unitholder either the amount equivalent to gains/appreciation
benefit by investing specified rupee amounts periodically for a continuous             would be redeemed or the full original investment amount would be
period. This concept is called Rupee Cost Averaging. This program allows               redeemed and the gain/appreciation component paid to the unitholder/
unitholders to save a fixed amount of rupees every month / quarterly by                switched into other scheme, and the original investment amount would
purchasing additional units of the Scheme.                                             be reinvested either in the same scheme or any other scheme.

                                                                                   9
Special Facilities /Plans : The Fund reserves the right to amend or                   financial institution in the country and one of the largest development
terminate or introduce the special facilities in this Offer Document. Such            bank in the world with an asset base of over Rs. 72,000 crores (US$ 17
facilities for the time being include Triggers, Switch Facility, Systematic           Billion) and net worth of over Rs. 9,000 crores (US$ 2 billion). It currently
Investment Plan, Systematic Withdrawal Plan, Systematic Switch Plan,                  has an investor base of 3.3 million. It has played a pioneering role in the
Dividend Reinvestment Option, Dividend Sweep Option and any such                      industrial development in the country. It is involved in Project Finance,
facility/plan that may be introduced in the future.                                   Merchant Banking and Venture Funds, in addition to setting up subsidiaries
                                                                                      in commercial banking and capital market services. It has also played a
Main Risk : Prices of equity securities rise and fall in response to a number
                                                                                      major role in institution building by setting up various specialized institutions
of factors including events that impact entire financial markets or industries
                                                                                      to cater to the changing needs of Indian industry and capital market.
(for example, changes in inflation or consumer demand) as well as events
                                                                                      Financial Performance of IDBI
impacting a particular issuer (for example, news about the success or
failure of a new product). The Securities purchased by the Scheme present                                                                                   (All figures in Rs. Crores)
greater opportunities for growth because of high potential earnings growth,
                                                                                       Particulars                            1997-98                 1998-99              1999-2000
but may also involve greater risks than securities that do not have the
same potential. The Scheme may invest in companies with limited product                Total Income                               6932                      7464               7860
lines, markets or financial resources. As a result, these securities may
change in value more than those of larger, more established companies.                 Profit After Tax                           1501                      1259                 947
As the value of the securities owned by the Scheme changes, the Scheme
                                                                                       Equity Capital                              660                       660                 660
unit price changes. In the short-term, the price can fluctuate dramatically.
As with all Mutual Funds, as the value of the scheme’s assets rise and                 Free Reserves                              7344                      8034               8366
fall, the Scheme unit price changes. If the units are redeemed when their
value is less than the price paid for, money may be lost by the unitholder.            Net Worth                                  8003                      8693               9025
Investor Profile : The Scheme is generally a suitable investment for an                Earnings per Share (Rs.)                  22.30                   18.70                 14.10
investor seeking income tax rebate along with long-term growth. The
investor must be willing to accept the risks of investing in Equities that             Book Value per Share (Rs.)               118.90                 129.15                 134.10
may have greater risks than stocks of companies with lower potential for               % of Dividend paid                              45                     45                  45
earnings growth.
                                                                                      Principal Financial Services Inc.
 VII CONSTITUTION OF THE MUTUAL FUND                                                  Principal Financial Services Inc. holds 50% of paid-up equity capital of
The Fund                                                                              IDBI-PRINCIPAL Asset Management Company Limited through its
                                                                                      subsidiary Principal Financial Group (Mauritius) Limited. Principal Financial
IDBI Mutual Fund has been constituted as a Trust in accordance with the
                                                                                      Services Inc is a member of the Principal Financial Group. Established in
provisions of the Indian Trusts Act, 1882 (2 of 1882). The Mutual Fund is
registered with SEBI under registration no. MF/019/94/0 dated December                1879, the Principal Financial Group has more than US$117 billion in assets
13, 1994. The underlying objective of IDBI Mutual Fund is to mobilise                 under management and serves more than 11 million customers worldwide
savings from the public, provide investment expertise to achieve optimal              through operations in the United States, Asia, Australia, Europe and Latin
returns on their investments.                                                         America. The Principal Financial Group, a U.S. authority in 401k and
                                                                                      retirement plans, is a leading provider of a wide range of financial products
The Fund was set up by Industrial Development Bank of India (IDBI) in                 and services globally to businesses and individuals including retirement
1994 by execution of a Trust Deed dated November 25, 1994, under
                                                                                      and investment services, Mutual Funds, life and health insurance and
which IDBI was the sole Sponsor, Settler and Principal Trustee. IDBI as
                                                                                      mortgage banking. Its flagship and largest member, Principal Life Insurance
Sponsor to the Fund has irrevocably settled a sum of Rs. 25 Crores as
the Trust Corpus which is held and managed as per the provisions of the               Company (The Principal®), is the ninth largest U.S. life insurance company
Trust Deed. The Board of Trustees with IDBI as Principal Trustee                      in assets under management and a member of the Fortune 500. The
discharges the Trusteeship functions of IDBI Mutual Fund. The Trustees                PRINCIPAL provides services to more 401K ( Defined contributions) Plans
have the exclusive ownership of the Trust Fund and are vested with the                (Pension Plans) than any other Mutual Fund, Bank or Insurance Company
general powers of superintendence, direction and management of the                    in North America. More employers choose the Principal for their 401k
affairs of the Trust.                                                                 plans than any other provider in the U.S.
The Trustees had appointed IDBI Investment Management Company                         CONDENSED FINANCIAL POSITION OF PRINCIPAL FINANCIAL
limited (IIMCO) as the Investment Manager to IDBI Mutual Fund, since                  SERVICES, INC. (HOLDING COMPANY OF PRINCIPAL FINANCIAL
inception. IIMCO was a wholly owned subsidiary of IDBI and is registered              GROUP (MAURITIUS) LTD.)
under the Companies Act, 1956.                                                                                                                      (Amount in millions, US $)
IDBI Mutual Fund has been notified under Section 10(23D) of the Income
                                                                                       Particulars                               1997               1998           1999         2000
Tax Act by Central Board of Direct Taxes (Gazette Notification No.S.O.52
(E) dated January 18, 1995) vis-a-vis exemption from income tax of the                 Total Income                          8,661.60           8,196.80       8,701.40      8,884.80
entire income of the Fund in India and therefore all such income received
by the Fund will be without any deduction of tax at source.                            Net Profit After Tax                    453.50             695.30         742.30       620.20
Principal Financial Services Inc. has from March 31, 2000 acquired 50%                 Dividend                                        -                -              -             -
stake in the paid up equity capital of IIMCO through its subsidiary Principal
Financial Group (Mauritius) Limited. With Principal Financial Services,                Retained Earnings                     4,257.20           4,946.30       5,688.60      6,308.80
Inc. acquiring 50% stake in IIMCO the name of the company has been                     Paid up Capital and
changed to IDBI-PRINCIPAL Asset Management Company Limited (IDBI-                      Free Reserves
PRINCIPAL) to reflect the change in ownership.                                         (Total Stockholder’s Equity)          5,284.20           5,665.80       5,551.60      6,251.20
As AMC to the Fund, IDBI-PRINCIPAL will frame, float and issue schemes
                                                                                      Trustees of IDBI Mutual Fund (Board of Trustees)
from time to time after seeking approval from the Trustees and SEBI as
                                                                                      Members of the Board of Trustees are:
well as manage the Funds mobilized under the various schemes, in
accordance with the provisions of the Trust Deed and the SEBI                          Name of Trustees                                     Other Directorships
Regulations. IDBI - PRINCIPAL is also responsible for coordination with
the registrar, brokers, and agents, ensuring compliance with regulatory                Mr. B. G. DESHMUKH                                   -   Tata Housing Development Co. Limited
and statutory provisions and submitting necessary compliance reports to                Chairman,                                            -   Siporex India Limited
regulatory bodies. The Trustees have appointed CitiBank N.A as the                     Board of Trustees                                    -   Venkateshwara Hatcheries Limited
Custodian and Karvy Consultants Ltd as the Registrar for the Scheme                    41, Buena Vista Apartments, General                  -   Finolex Cables Limited
being offered through this Offer Document.                                             J. Bhosle Marg, Opposite Chavan                      -   Tata Sons Limited
The Trustees shall ensure compliance of all legal regulations and                      Prathistan, Colaba, Mumbai 400 021.                  -   Nhava Sheva Tank Terminal Limited
guidelines applicable to Mutual Funds. They shall also ensure that the                 Former Cabinet Secretary, Government of India        -   Venky’s (India) Ltd
AMC adheres to all SEBI and other regulations with respect to                                                                               -   IDBI-PRINCIPAL Trustee Company Ltd
management of Funds raised by the Mutual Fund under various                            INDUSTRIAL DEVELOPMENT BANK OF INDIA*                - Gujarat Power Gen. Energy Corp.
Scheme(s).
                                                                                       Principal Trustee, Represented By                       Limited (GPEC)
The Sponsors                                                                           Mr. V. P. SINGH                                      - IDBI Capital Market Services Limited
Industrial Development Bank of India                                                   IDBI Tower, Cuffe Parade, Mumbai 400 005.            - National Securities Depository Ltd.
Industrial Development Bank of India (IDBI) was established in 1964 by                 Executive Director                                    - IDBI-PRINCIPAL Trustee Co Ltd
the Government of India under the IDBI Act. It is the premier development              Industrial Development Bank of India

                                                                                 10
 Name of Trustees                            Other Directorships                                      market with the Trustees, within 15 days of their appointment;
                                                                                                 -    appointed auditors to audit its accounts;
 Mr. J. COELHO                                - Asian Peroxide Ltd
 65 IV Cross, HIG Colony RMU Ext.,           - Practical Financial Services Pvt. Ltd             -    appointed a compliance officer to comply with regulatory
 2nd Stage Bangalore 560 004.                 - National Thermal Power Corporation                    requirement and to redress investor grievances;
 Indian Administrative Service (Retd.)          Limited                                          -    appointed registrars and laid down parameters for their
                                             - Essar Power Limited                                    supervision;
 Dr. J.C. SANDESARA                                                                              -    prepared a compliance manual and designed internal control
 11/2, Rupal Apartments, 98, Dadasaheb                                                                mechanisms including internal audit systems;
 Phalke Road, Dadar, Mumbai 400 014.                                                             -    specified norms for empanelment of brokers and marketing
 Former Professor, University of Mumbai                                                               agents.
 Former Director, Small Industries                                                          5.   The Trustees shall ensure that an AMC has been diligent in
 Development Bank of India                                                                       empanelling the brokers, in monitoring securities transactions with
 Mr. PHILIP THOMAS                           - Muthoot Capital Services Limited                  brokers and avoiding undue concentration of business with any
 Abhilasha Sadan, 43, Nargis Dutt Road,      - Muthoot APT Ceramics Ltd                          broker.
 Pali Hill, Bandra, Mumbai 400 052.          - Association of Leasing and Financial         6.   The Trustees shall ensure that the AMC has not given any undue or
 Former Executive Director,                     Services.                                        unfair advantage to any associates or dealt with any of the associates
 Industrial Development Bank of India        - Centrum Finance Limited                           of the AMC in any manner detrimental to interest of the unitholders.
 Former Chairman, Stockholding Corporation   - Devon Plastics Limited                       7.   The Trustees shall ensure that the transactions entered into by the
 of India Limited                             - Devon Innovations (P) Ltd                        AMC are in accordance with the SEBI Regulations and the scheme.
                                             - SICOM Trustee Company Limited
                                             - Indus Venture Management Ltd                 8.   The Trustees shall ensure that the AMC has been managing the
                                             - IDBI-PRINCIPAL Trustee Company Ltd                Mutual Fund schemes independently of other activities and have
                                                                                                 taken adequate steps to ensure that the interest of investors of one
* Sponsor                                                                                        scheme are not being compromised with those of any other scheme
                                                                                                 or of other activities of the AMC.
The Trustee discharges the supervisory role by having a number of checks                    9.   The Trustees shall ensure that all the activities of the AMC are in
and balances besides having continuous feedback from the AMC on                                  accordance with the provisions of the SEBI Regulations.
matters of importance and a review of the Mutual Fund’s operations at
the Trustee meetings.                                                                       10. Where the Trustees have reason to believe that the conduct of
                                                                                                business of the Mutual Fund is not in accordance with the SEBI
The Trustees have met eight times in the previous financial year and                            Regulations and the scheme, they shall forthwith take such remedial
thrice till date of Offer Document during the current financial year. The                       steps as are necessary by them, and shall immediately inform SEBI
performance reports of all the schemes are placed before the Trustees at                        of the violation and the action taken by them.
such meetings. The reports on statutory compliance and investor servicing
                                                                                            11. Each Trustee shall file the details of his transactions (exceeding Rs.
are also regularly placed at such meetings by AMC. The quarterly
                                                                                                1 lac) of dealing in securities with the Mutual Fund on a quarterly
compliance test report in respect of the Fund which is filed with SEBI by
                                                                                                basis.
the AMC is also placed/adopted before/after, by the Trustees. Audit
committee of the Trustees has been constituted to review the internal                       12. The Trustees shall be accountable for, and be the custodian of, the
audit systems and the recommendations of the internal and statutory                             property of the respective schemes and shall hold the same in trust
auditors and to ensure that the measures as suggested by internal and                           for the benefit of the unitholders in accordance with the SEBI
external auditors are acted upon.                                                               Regulations and the provisions of trust deed.
                                                                                            13. The Trustees shall take steps to ensure that the transactions of the
OBLIGATIONS OF TRUSTEES
                                                                                                Mutual Fund are in accordance with the provisions of the trust deed.
As per the Trust Deed, the Trustee shall have the following obligations:
                                                                                            14. The Trustees shall be responsible for the calculation of any income
1.    The Trustees shall take reasonable care to ensure that the schemes                        due to be paid to the Mutual Fund and also of any income received
      floated under the Fund and managed by the AMC are in accordance                           in the Mutual Fund for the holders of the units of any scheme in
      with the Trust Deed and SEBI Regulations.                                                 accordance with the SEBI regulations and the trust deed.
2.    The Trustees shall not acquire nor allow the AMC to acquire any                       15. The Trustees shall obtain the consent of the unitholders -
      assets out of the Trust Fund and/or unit capital, which involves the
      assumption of unlimited liability or results in the encumbrances of                        a)   whenever required to do so by SEBI in the interest of the
      Trust Fund, and/or Unit Capital in any way.                                                     unitholders; or
3.    The Trustees shall maintain arms’ length relationship with companies,                      b)   whenever required to do so on the requisition made by three-
      institutions, financial intermediaries or bodies corporate with which                           fourths of the unitholders of any scheme; or
      the Trustees may be associated in any capacity in carrying out their                       c)   when the majority of the Trustees decide to wind up or
      responsibilities as the Trustees of the Mutual Fund.                                            prematurely redeem the units;
4.    The Trustees shall not participate in any decision-making process/                    15A. The trustees shall ensure that no change in the fundamental attributes
      resolution of its Board for any investment in which they may be                            of any scheme or the trust or fees and expenses payable or any
      interested.                                                                                other change which would modify the scheme and affects the interest
5.    All of the Trustees shall furnish to SEBI, the interest which they may                     of unitholders, shall be carried out unless, -
      have in any other company, or institution or financial intermediary or                     1.   a written communication about the proposed change is sent to
      any corporate by virtue of his/her position as Director, partner or with                        each unitholder and an advertisement is given in one English
      which he/she may be associated in any other capacity.                                           daily newspaper having nationwide circulation as well as in a
No amendments to the trust deed shall be carried out without the prior                                newspaper published in the language of the region where the
approval of SEBI and unitholder’s approval would be obtained where it                                 Head Office of the Mutual Fund is situated; and
affects the interests of unitholder.                                                             2.   the unitholders are given an option to exit at the prevailing Net
                                                                                                      Asset Value without any exit load.”
DUTIES AND RESPONSIBILITIES OF TRUSTEES
                                                                                                 Explanation:
1.    The Trustees and the AMC shall, with the prior approval of SEBI,
      enter into an Investment Management Agreement.                                             For the purposes of this clause “fundamental attributes” means the
                                                                                                 type of a scheme, investment objective and terms of a scheme.
2.    The Investment Management Agreement shall contain such clauses
      as are mentioned in the fourth Schedule of SEBI Regulations and                       16. The Trustees shall call for the details of transactions in securities by
      such other clauses as are necessary for the purpose of making                             the key personnel of the AMC in his own name or on behalf of the
      investments.                                                                              AMC and shall report to SEBI, as and when required.
3.    The Trustees shall have a right to obtain from the AMC such                           17. The Trustees shall quarterly review all transactions carried out
      information as is considered necessary by the Trustees.                                   between the Mutual Fund, AMC and its associates.
4.    The Trustees shall ensure before the launch of any scheme that the                    18. The Trustees shall review the net worth of the AMC on a quarterly
      AMC has -                                                                                 basis and in case of any shortfall, ensure that the AMC make up for
                                                                                                the shortfall as per clause (f) of sub-regulation (1) of regulation 21 of
      -      systems in place for its back office, dealing room and accounting;
                                                                                                SEBI Regulations
      -      appointed all key personnel including Fund manager(s) for the
                                                                                            19. The Trustees shall periodically review all service contracts such as
             Scheme and submitted their bio-data which shall contain the
                                                                                                custody arrangements, transfer agency of the securities and verify it
             educational qualifications, past experience in the securities
                                                                                       11
     that such contracts are executed in the interest of the unitholders.                h)    Principal underwriting contracts and the renewals.
20. The Trustees shall ensure that there is no conflict of interest between              i)    Any service contract with the associates of the AMC.
    the manner of deployment of its networth by the AMC and the interest
    of the unitholders.                                                             UNITHOLDERS’ CONSENT
                                                                                    Pursuant to clause 15 of regulations 18 of the SEBI Regulations, the
21. The Trustees shall periodically review the investor complaints
                                                                                    Trustees shall obtain the consent of the unitholders of the Scheme, entirely
    received and the redressal of the same by the AMC.
                                                                                    at the option of the Trustees, either at a meeting of the unitholders or
22. The Trustees shall abide by the Code of Conduct as specified in the             through postal ballot or any other mode of communication in conformity
    Fifth Schedule of SEBI Regulations.                                             with the Regulations and /or SEBI Regulations, in the interest of unitholders.
23. The Trustees shall furnish to SEBI on a half yearly basis -                     Unitholders are entitled to one vote per unit held on all matters to be
                                                                                    voted upon by unitholders.
     a)    a report on the activities of the Mutual Fund;
     b)   a certificate stating that the Trustees have satisfied themselves         TRUSTEESHIP FEES
          that there have been no instances of self dealing or front running        Pursuant to the Deed of Trust constituting the Mutual Fund, the Mutual
          by any of the Trustees, directors and key personnel of the AMC;           Fund is authorized to pay to the Board of Trustees which, in turn, pays to
     c)   a certificate to the effect that the AMC has been managing the            its members a fee for their services in such capacity.
          schemes independently of any other activities and in case any             Trusteeship fees to the Trustees are payable as under:
          activities of the nature referred to in sub-regulation (2) of
          regulation 24 have been undertaken by the AMC and has taken               Principal Trustee Fee
          adequate steps to ensure that the interest of the unitholders             Pursuant to the Trust Deed the Principal Trustee is entitled to receive a
          are protected.                                                            sum of 0.10% of the unit capital of all the schemes and the trust fund at
24. The independent Trustees referred to in sub-regulation (5) of                   the beginning of each financial year or Rs. 5 lacs, whichever is higher.
    regulation 16 of SEBI Regulations shall give their comments on the              Other Trustees’ Fees
    report received from the AMC regarding the investments by the
    Mutual Fund in the securities of group companies of the sponsor.                Rs. 15,000/- each per annum.

25. Trustees shall exercise due diligence as under:                                  VIII MANAGEMENT OF THE FUND
     General Due Diligence                                                          INVESTMENT MANAGER -
     a)   The Trustees shall be discerning in the appointment of the Board          IDBI-PRINCIPAL ASSET MANAGEMENT COMPANY LIMITED
          of Directors of the AMC.
                                                                                    In terms of the Investment Management Agreement dated November 25,
     b)   The Trustees shall review the desirability of continuance of AMC          1994 the Trustees appointed IDBI Investment Management Company
          if substantial irregularities are observed in any of the schemes
                                                                                    Limited (now known as IDBI-PRINCIPAL Asset Management Company
          and shall not allow the AMC to float new schemes.
                                                                                    Limited), as the AMC to manage the Mutual Fund. The AMC shall operate
     c)   The Trustees shall ensure that the trust property is properly             and manage the Funds of IDBI Mutual Fund from day to day in accordance
          protected, held and administered by proper persons and by a               with the scheme’s Objectives, the Trust Deed, the Investment Management
          proper number of such persons.                                            Agreement provisions and SEBI Regulations and shall submit quarterly
     d)   The Trustees shall ensure that all service providers are holding          report on the functioning of the Trust Fund to the Trustees.
          appropriate registrations from SEBI or concerned regulatory
          authority.                                                                Previously IIMCO was a wholly owned subsidiary of IDBI. Principal
                                                                                    Financial Services Inc. acquired 50% stake in the paid up equity capital
     e)   The Trustees shall arrange for test checks of service contracts.          of IIMCO on March 31, 2000 through its subsidiary Principal Financial
     f)   The Trustees shall immediately report to SEBI of any special              Group (Mauritius) Limited. Subsequently the name of the AMC has been
          developments in the Mutual Fund.                                          changed to IDBI-PRINCIPAL Asset Management Company Limited (IDBI-
                                                                                    PRINCIPAL AMC). The current net worth of the AMC as on February 28,
     Specific Due Diligence
                                                                                    2001 is around Rs. 61 Crores.
     The Trustees shall
                                                                                    The AMC may be changed by a majority of the Trustees or 75% of the
     a)   Obtain internal audit reports at regular intervals from                   unitholders in the Fund opting so, subject to scrutiny and approval of
          independent auditors appointed by the Trustees
                                                                                    SEBI. The AMC at present is managing ten schemes of IDBI Mutual Fund,
     b)   Obtain compliance certificates at regular intervals from the AMC.         namely IDBI-PRINCIPAL Growth Fund, IDBI-PRINCIPAL Balanced Fund,
     c)   Hold meetings of Trustees more frequently.                                IDBI-PRINCIPAL Income Fund, IDBI-PRINCIPAL Cash Management
     d)   Consider the reports of the independent auditor and compliance            Fund, IDBI-PRINCIPAL Equity Fund, Tax I-Nit’96 now renamed as IDBI-
          reports of AMC at the meetings of Trustees for appropriate                PRINCIPAL Tax Savings Fund & which is being made open-ended,
          action.                                                                   IDBIPRINCIPAL Money Market Fund, IDBI-PRINCIPAL Deposit Fund,
                                                                                    Child I-Nit ’97 and IDBI-PRINCIPAL Index Fund. The total assets under
     e)   Maintain records of the decisions of the Trustees at their
                                                                                    management from all these schemes as of February 28, 2001 is
          meetings and of the minutes of the meetings.
                                                                                    approximately Rs. 1378 Crores from close to 148000 unitholders.
     f)   Prescribe and adhere to a code of ethics by the Trustees, AMC
          and its personnel.                                                        AMC has been granted approval by SEBI to function as an AMC of the
                                                                                    Mutual Fund, and shall be responsible, inter alia, for the following:
     g)   Communicate in writing to the AMC of the deficiencies and
          checking the removal of deficiencies.                                     1.   Launching and operating the various schemes of the Mutual Fund
26. Notwithstanding anything contained herein above from points (1) to              2.   Performing Investment Management functions for various schemes
    (25) the Trustees shall not be held liable for acts done in good faith               of the Fund.
    if they have exercised adequate due diligence honestly.
                                                                                    3.   Ensuring that the investment of the assets pertaining to any scheme
27. The Trustees shall pay specific attention to the following as may be                 is made in accordance with the provisions of the SEBI Regulations
    applicable, namely -                                                                 and the Trust Deed.
     a)   The Investment Management Agreement and the compensation
                                                                                    4.   Ensuring that adequate disclosures are made to the unitholders and
          paid under the agreement.
                                                                                         to SEBI regarding the performance of the Fund, in accordance with
     b)   Service contracts with affiliates whether the AMC has charged                  SEBI Regulations.
          higher fees than outside contractors for the same services.
     c)   Selection of the AMC independent directors.                               Besides the offering and management of Schemes offered by IDBI Mutual
                                                                                    Fund, the AMC may undertake activities in the nature of management
     d)   Securities transactions involving affiliates to the extent such           and advisory services to any entity, Pension Funds, Provident Funds,
          transactions are permitted.                                               venture capital Funds; administration and record keeping of provident
     e)   Selecting and nominating individuals to fill independent directors        Funds; developing and marketing pension and pension related products
          vacancies.                                                                and financial consultancy and exchange of research on a commercial
     f)   Code of ethics must be designed to prevent fraudulent,                    basis.
          deceptive or manipulative practices by insiders in connection
          with personal securities transactions,                                    INVESTMENT MANAGEMENT FEES

     g)   The reasonableness of the fees paid to the sponsors, AMC                  The AMC shall be entitled to fees as permitted under SEBI Regulations
          and any other for services provided.                                      which is presently as under:

                                                                               12
-    1.25% of the weekly average net assets outstanding in each                           has been made within one year of the date of the former investment
     accounting year for the scheme concerned as long as the net assets                   calculated on either side.
     do not exceed Rs. 100 Crores, and
                                                                                     12. The AMC shall file with the Trustees and SEBI :
-    1% of the excess amount over Rs. 100 Crores, where net assets                        -     Detailed bio-data of all its directors along with their interest in
     exceed Rs. 100 Crores.                                                                     other companies within fifteen days of their appointment; and
DUTIES AND RESPONSIBILITIES OF THE AMC                                                    -     Any change in the interest of Directors every six months.
1.   The AMC shall take all reasonable steps and exercise due diligence                   -     A quarterly report to the Trustees giving details and adequate
     to ensure that the investment of money pertaining to any scheme is                         justification about the purchase and sale of the Securities of
     not contrary to the provisions of the SEBI Regulations and the Trust                       the group companies of the sponsor or the AMC as the case
     Deed.                                                                                      may be, by the Mutual Fund during the said quarter.
2.   The AMC shall exercise due diligence and care in all its investment             13. A statement of holdings in securities of the Directors of the AMC
     decisions as would be exercised by other persons engaged in the                     shall be filed with the Trustees with dates of acquisitions of such
     same business.                                                                      Securities at the end of each financial year.
3.   The AMC shall be responsible for the acts of commissions or                     14. The AMC shall not appoint any person as key personnel who has
     omissions by its employees or the persons whose services have                       been found guilty of any economic offence or involved in violation of
     been procured by the AMC.                                                           securities laws.
4.   The AMC shall submit to the Trustees quarterly reports of each year             15. The AMC shall appoint Registrars and Share Transfer Agents who
     on its activities and the compliance with SEBI Regulations.                         are registered with SEBI. Provided if the work relating to the transfer
                                                                                         of units is processed in-house, the charges at competitive market
5.   The Trustees at the request of the AMC may terminate the assignment                 rates may be debited to the scheme and for rate higher than the
     of the AMC at any time. Provided that such termination shall become                 competitive market rates, prior approval of the Trustees shall be
     effective only after the Trustees have accepted the termination of                  obtained and reasons for charging higher rates shall be disclosed in
     assignment and communicated their decision in writing to the AMC.                   the annual accounts.
6.   Notwithstanding anything contained in any contract or agreement of              16. The AMC shall abide by the Code of Conduct as specified in the
     termination, the AMC or its Directors or other officers shall not be                Fifth Schedule of SEBI Regulations.
     absolved of liability to the Mutual Fund for their acts of commission
     or omission, while holding such position or office.                             BOARD OF DIRECTORS
7.   a)   The AMC shall not through any broker associated with the                   The Board of Directors of the AMC consists of eminent persons from the
          Sponsor, purchase or sell securities, which on an average is               fields of finance, investments, civil service, law and economics.
          5% or more of the aggregate purchases and sale of securities
          made by the Mutual Fund in all its schemes.                                 Name of Director                       Other Directorships
          Provided that for the purpose of this sub-regulation, aggregate             Mr. T. M. NAGARAJAN                    Essar Steel Ltd.
          purchase and sale shall exclude sale and distribution of units
          issued by the Mutual Fund.                                                  Chairman,                              IDBI Intech Ltd.

          Provided further that the aforesaid limit of 5% shall apply for a           Executive Director                     National Securities Depository Ltd.
          block of any three months.                                                  Industrial Development Bank of India   Small Industries Development Bank of India
     b)   The AMC shall not purchase or sell securities through any broker            IDBI Towers                            Reliance Petroleum Ltd
          (other than a broker referred to in clause (a) of sub-regulation            Cuffe Parade, Mumbai 400 005           PPN Power Generating Co. Ltd.
          (7) which is on an average of 5% or more of the aggregate                                                          IFCI Ltd
          purchase and sale of securities made by the Mutual Fund in all
          its Schemes, unless the AMC has recorded in writing the                     Mr. JITENDER BALAKRISHNAN            Iridium India Telecom Ltd
          justification for exceeding the limit of 5% and reports of all such
          Investments are sent to the Trustees on a quarterly basis.                  Chief General Manager                Southern Petrochemical Industries Corp. Ltd.
          Provided that the aforesaid limit of 5% shall apply for a block of          Industrial Development Bank of India SPIC Petrochemicals Ltd.
          3 months.                                                                   IDBI Towers                          Reliance Ports & Terminals Ltd.
8.   The AMC shall not utilize the services of the Sponsor or any of its              Cuffe Parade, Mumbai 400 005
     associates, employees or their relatives, for the purpose of any
     securities transaction and distribution and sale of securities: Provided         Mr. P.C PARMAR                         Kabra Extrusiontechnik Ltd
     that an AMC may utilize such services if disclosure to that effect is
     made to the unitholders and the brokerage or commission paid is                  Chartered Accountant                   Plastibends India Ltd
     also disclosed in the half yearly annual accounts of the Mutual Fund.            P.C. Parmar and Co.                    Kolsite Maschine Fabrik Ltd
     Provided further that the Mutual Fund shall disclose at the time of              Parmar House                           Kabra George Sahm Winders Ltd
     declaring half-yearly and yearly results:                                        2413, Gen. Thimayya Road,              Ganges Urethane Pvt Ltd
     -    any underwriting obligations undertaken by the schemes of the               East street, Pune 411 001              Parmar Softech Systems Pvt Ltd
          Mutual Fund with respect to issue of securities of associate of
          companies,                                                                  Mr. SANJAY SACHDEV                     Principal Consulting (India) Private Limited
     -    devolvement, if any,                                                        Chief Executive Officer                Principal Financial Group (Mauritius) Limited
     -    subscription by the schemes in the issues lead managed by                   2nd Floor, Bajaj Bhavan,
          associate companies.                                                        Nariman Point,
     -    Subscription to any issue of equity or debt on private placement            Mumbai 400 021
          basis where the sponsor or its associate companies has acted
          as arranger or manager.                                                     Mr. REX AUYEUNG                        Principal Consulting (India) Private Limited
9.   The AMC shall file with the Trustees the details of transactions in              Managing Director - Asia,              Principal International (Asia) Limited
     securities by the key personnel of the AMC in their own name or on               Principal International (Asia) Limited
     behalf of the AMC and shall also report to SEBI, as and when required            Unit 1002, Central Plaza,
     by SEBI.
                                                                                      18 Harbour Road,
10. In case the AMC enters into any Securities transactions with any of               Wanchai Hongkong
    its associates a report to that effect shall be sent to the Trustees at
    its next meeting.                                                                 Dr. AMIT MITRA                         IFCI
11. In case any company has invested more than 5 percent of the NAV                   Secretary General                      GAIL
    of a scheme, the investment made by that scheme or by any other                   Federation of Indian Chambers of       Advisory Board of the India Fund of UTI
    scheme of the Mutual Fund in that company or its subsidiaries shall
                                                                                      Commerce and Industry (FICCI)
    be brought to the notice of the Trustees by the AMC and be disclosed
    in the half yearly and annual accounts of the respective schemes                  Federation House Tansen Marg,
    with justification for such investment, provided the latter investment            New Delhi 110 001

                                                                                13
                                                                                                           REGISTRAR AND TRANSFER AGENT
    Name of Director                             Other Directorships
                                                                                                           Karvy Consultants Limited
    Mr. Akshay Chudasama                         Mid-Town Projects & Consultants Limited
                                                                                                           Karvy Consultants Limited, Hyderabad has been appointed as the
    Alternate Director                           Balaji Telefilms Ltd
                                                                                                           Registrar and Transfer Agent for the Fund. The Registrar is registered
    to Mr. Rex Auyeung Partner,                                                                            with SEBI vide registration no. INR000000221.
    Lex Inde (Solicitor Firm)                                                                              The AMC and the Trustees have satisfied themselves that the Registrar
    18/20, Hargovindas Building                                                                            has adequate Capacity to discharge responsibilities with regard to
    K Dubhash Marg,                                                                                        processing of applications and despatching Account Statement, etc. to
                                                                                                           unitholders within the time limit as per SEBI Regulations and can also
    Fort Mumbai 400 001                                                                                    provide other services required, including handling investor complaints
                                                                                                           and have adequate facilities to do so and discharge responsibilities. As
KEY PERSONNEL AND THEIR RELEVANT EXPERIENCE                                                                Registrar to the Scheme, the Registrar will accept and process unitholders
                                                                                                           applications and advise the AMC as to the amounts received for
Sr. No. Employee                   Designation         Qualifications Experience                           subscriptions (duly reconciled) during the ongoing subscription period.
      1     Mr. Sanjay Sachdev Chief Executive         LLB, F.L.M.I.      Over 14 years in                 They will also handle communications with unitholders, unitholder’s
                               Officer                 (USA), MIM         international arena              grievances, perform data entry services and dispatch Account Statement,
                                                       (USA)              mainly in Pension and            or any instrument, received on processing redemption/repurchase/switch
                                                                          Mutual Fund operations           requests on a continuous basis. They will also maintain an updated,
                                                                                                           accurate form for the register of unitholders of the Fund and other records
      2     Mr. V. Narayana        Chief Financial     B.Com, MA,         Over 12 years experience
                                                                                                           as may be required by SEBI Regulations and the laws of India.
            Murthy                 Officer             MFM                in development banking
      3     Mr. Rajat Jain         Chief Investment    B.E. PGDM          Over 11 years experience         The Registrar is thus responsible for carrying out the functioning of
                                   Officer                                in investment                    Registrar and Transfer Agent set out in the agreement entered into with it
                                                                          Management                       and as per any modifications from time to time. The Registrar will be
                                                                                                           entitled to remuneration for its services as per the terms of the Registrars’
      4     Mr. Jimmy Patel        Chief Administrative B.Com, LLB,       Over 11 yrs experience in        Agreement. The AMC reserves the right to change the Registrar. The
                                   Officer              FCA               Finance, accounting and          unitholders will then be informed accordingly. The Registrar Agreement
                                                                          operations.                      may be terminated upon 90 days prior written notice or earlier upon certain
      5     Mr. Prakash Diwan      Head - Sales &      B.E., MBA,         Over 9 yrs experience in         breaches.
                                   Distribution        FMS                Sales, Distributions &
                                                                          Services                         STATUTORY AUDITORS
                                                                                                           M/s. N.M.Raiji and Co.
FUND MANAGER
Mr. Rajat Jain whose details are given above shall be the Chief Investment                                 M/s. N.M.Raiji and Co., Chartered Accountants, 206, T. V. Industrial Estate,
Officer. Mr. Rajat Jain will be assisted by Mr. Tridip Pathak whose details                                248/A, S. K. Ahire Marg, Worli, Mumbai 400 025 have been appointed as
is given below , and who shall manage the Scheme.                                                          the auditors for IDBI Mutual Fund. The Trustees have the right to appoint,
                                                                                                           or change the Auditors for any or all of the Schemes that may be floated
    Employee                 Designation       Qualifications          Experience                          by the Fund.
                                                                                                           COLLECTION CENTRES
    Mr. Tridib Pathak        Fund Manager      B.Com, ACA              10 yrs experience in equity
                                                                       research and Fund                   As mentioned on last page of this offer document.
                                                                       management.
                                                                                                            IX INVESTMENT POLICIES AND STRATEGY
Compliance Officer                                                                                         INVESTMENT POLICIES
Mr. Upesh Shah
IDBI - PRINCIPAL Asset Management Co. Ltd.,                                                                IDBI-PRINCIPAL Tax Savings Fund is a Scheme within the family of
2nd Floor, Bajaj Bhavan,                                                                                   Scheme(s) of IDBI Mutual Fund managed as a separate investment
Mumbai 400 021.                                                                                            objective. The Scheme will be managed through a separate investments
Telephone No: 204 4988                                                                                     portfolio. All investments will be made in accordance with SEBI regulations.
                                                                                                           Any change in the investment composition of the Scheme and amounting
CUSTODIAN                                                                                                  to a change in the fundamental attributes of the Scheme will be in
Citi Bank NA                                                                                               accordance with sub regulation 15A of regulation 18 of SEBI Regulations.
Citi Bank NA, a custodian approved by SEBI having registration number                                      However, the AMC may from time to time, for a short term, alter the asset
IN / CUS /4 dated 7/4/98 has been appointed by the Trustees as the                                         composition on defensive consideration and may also invest upto 100%
Custodian to the scheme. The Custodian shall hold the custody and                                          of the assets in overnight bank call, the primary motive being to protect
possession of the securities and investments of the scheme and will                                        the Net Asset Value of the Scheme and protect unitholders interest so
discharge all functions as are ordinarily discharged by a depository                                       also to earn reasonable returns on liquid assets maintained for redemption
institution. It does not have any power or authority to sell or dispose of or                              of units.
deal with the securities/investments held by it on behalf of the Fund except                               In the normal course all income earned & realized profits in respect of a
as instructed by the AMC.                                                                                  unit will continue to remain invested until repurchased & shall be deemed
The AMC reserves the right to change the custodian, if required.                                           to have remained invested, which will be reflected in the NAV.

The Salient features of the custodial agreement and the responsibilities                                   Short-term surpluses, pending deployment can be deployed in the inter-
of the Custodian include:                                                                                  bank call money market, repurchase obligations (repos) or short term
                                                                                                           corporate papers. The Scheme may also invest a part of its assets in
•         Keeping in safe custody all the securities and such other instruments                            financial derivatives such as options and futures that are permitted or
          belonging to the Scheme segregated from the other assets of the                                  may become permissible under SEBI/RBI Regulations. The proportion of
          custodian and from the assets of other clients of the Custodian and                              assets to be so invested would be decided by the AMC at the appropriate
          shall be held in the name of the Trustee(s) a/c Fund or Scheme or                                time and would be done in accordance with the relevant guidelines to be
          custodian a/c Scheme or in such other manner as may be mutually                                  issued by SEBI and other authorities.
          agreed.
                                                                                                           The Scheme may also invest a part of its assets in overseas markets in
•         Ensuring the smooth inflow/outflow of securities and such other                                  American Depository Receipts (ADRs), Global Depository Receipts
          instruments as and when necessary, in the best interests of the                                  (GDRs), overseas Equity, Bonds, Mutual Funds and the like instruments.
          unitholders.                                                                                     Such investments would be made as and when approvals for the same
•         Ensuring that the benefits due to the holdings are recovered.                                    are received from appropriate authorities and proportion of moneys to be
                                                                                                           so invested within the investment composition would also be decided by
•         Responsibility for loss of /or damage to the securities due to fraud,                            the AMC at the appropriate time.
          bad faith, negligence, willful neglect, default or willful default on its
          part or on the part of its approved agents.                                                      CHANGE IN INVESTMENT PATTERN:
The Custodian will charge the Fund a fee in accordance with the terms of                                   The overall portfolio structuring would aim at moderate to low levels of
the Custodian Service Agreement entered into between the Custodian                                         risk while there is no assurance that the objective of the Scheme may be
and the Mutual Fund. The Custodian Agreement may be terminated upon                                        achieved. The Trustees may from time to time modify the investment
30 days prior written notice or earlier upon certain breaches.                                             composition provided such modification is in accordance with the Scheme

                                                                                                      14
objective and Regulations and as amended from time to time including by                      carry forward transaction or engage in badla finance.
way of Circulars, Press Releases, Notification issued by SEBI or the
                                                                                             Provided that the Mutual Funds shall enter into derivatives
Government of India to regulate the activities and growth of Mutual Funds,
                                                                                             transactions in a recognized stock exchange for the purpose of
the intent being to protect the Net Asset Value of the Scheme and
                                                                                             hedging and portfolio balancing in accordance with the guidelines
unitholders’ interest.
                                                                                             issued by SEBI.
INVESTMENT STRATEGIES                                                                   8.   Every Mutual Fund shall get the securities purchased or transferred
The scheme is part of the family of Scheme(s) of IDBI Mutual Fund, having                    in the name of the Mutual Fund on account of the concerned scheme,
a distinct investment strategy. The scheme will be managed with a strategy                   wherever investments are intended to be of long-term nature.
best suited for the Scheme and investing in securities as stated in the
clause “SCHEME FEATURES”. As the Scheme would be investing in                           9.   Pending deployment of Funds of a scheme in securities in terms of
securities having distinct features as regards to its position in the market                 investment objective of the scheme a Mutual Fund can invest the
availability, listing, yields, liquidity, risk etc. Unitholders are requested to             Funds of the scheme in short term deposits of scheduled commercial
refer to the various clauses under “Special Considerations” before taking                    banks.
any decision for investment in the Scheme.                                              10. No Mutual Fund scheme shall make any investment in :
The Scheme seeks to achieve its objective by investing in equities and                       -     any unlisted security of an associate or group company of the
other equity related securities. In selecting securities for investment, the                       sponsor; or
Investment Manager would look at securities it believes have prospects
for above average growth over an extended period of time. The Investment                     -     any security issued by way of private placement by an associate
Manager uses an approach described as “fundamental analysis” as its                                or group company of the sponsor; or
selection process.                                                                           -     the listed securities of group companies of the sponsor which
The three basic steps of fundamental analysis are:                                                 is in excess of 25% of the net assets
                                                                                        11. No Mutual Fund scheme shall invest more than 10% of its NAV in
1)   Research - consideration of economic prospects over the next one
                                                                                            the equity shares or equity related instruments of any company.
     to two years rather than focusing on near term expectations. This
     approach is designed to provide insight into a company’s real growth                    Provided that the limit of 10% shall not be applicable for investments
     potential.                                                                              in index scheme or sector or industry specific scheme.
2)   Valuation - use of the research to allow the Investment Manager to                 12. A Mutual Fund scheme shall not invest more than 5% of its NAV in
     identify segments of the market for investment. The Investment                         the unlisted equity shares or equity related instruments in case of
     Manager would consider various factors including sustainable,                          open ended scheme and 10% of its NAV in case of close ended
     superior earnings growth and above average or accelerating rates                       scheme.
     of growth.                                                                         13. Aggregate value of “Illiquid Securities” of the Scheme, which are
3)   Securities selection - The Investment Manager would buy and sell                       defined as non-traded, thinly traded and unlisted equity share, shall
     securities using its research and valuation as the basis. It attempts                  not exceed 15% of the total assets of the Scheme.
     to identify the individual issuers that it considers to have high growth           These investment limitations / parameters (as expressed / linked to the
     potential, that are market share leaders and/or have high quality                  net asset / NAV / capital) shall in the ordinary course apply as of the date
     management with consistent track records and solid balance sheets.                 of the most recent transaction or commitment to invest, and changes do
INVESTMENT LIMITATIONS                                                                  not have to be effected merely because, owing to appreciation or
                                                                                        depreciation in value, or by reason of the receipt of any rights, bonuses or
Pursuant to SEBI Regulations the following investment limitations are                   benefits in the nature of capital, or of any scheme of arrangement, or for
applicable:                                                                             amalgamation, reconstruction or exchange, or at any repayment or
                                                                                        repurchase or other reason outside the control of the Fund, any such
1.   A Mutual Fund scheme shall not invest more than 15% of its NAV in
                                                                                        limits would thereby be breached. If these limits are exceeded for reasons
     debt instruments issued by a single issuer which are rated not below
                                                                                        beyond its control, the AMC shall adopt as a priority objective the
     investment grade by a credit rating agency authorized to carry out
                                                                                        remedying of that situation, taking due account of the interests of the
     such activity under the Act. Such investment limit may be extended
                                                                                        unitholders.
     to 20% of the NAV of the scheme with the prior approval of the
     Board of Trustees and the Board of the AMC. Provided that such                     In addition, certain investment parameters (like limits on exposure to
     limit shall not be applicable for investments in government securities             sectors, industries, issuers, etc.) may be adopted internally by the AMC,
     and money market instruments.                                                      as amended from time to time, to ensure appropriate diversification /
                                                                                        security for the Fund. The AMC may alter these above stated limitations
2.   A Mutual Fund scheme shall not invest more than 10% of its NAV in
                                                                                        from time to time, and also to the extent the SEBI Regulations change, so
     unrated debt instruments issued by a single issuer and the total
                                                                                        as to permit the Fund to make its investments in the full spectrum of
     investment in such instruments shall not exceed 25% of the NAV of
                                                                                        permitted investments for Mutual Funds to achieve its investment
     the scheme. All such investments shall be made with the prior
                                                                                        objective. As such all investments of the Fund will be made in accordance
     approval of the Board of Trustees and the Board of the AMC.
                                                                                        with SEBI Regulations including Schedule VII thereof.
3.   No Mutual Fund under all its schemes taken together should own
     more than ten per cent of any company’s paid up capital carrying                   DEPOSITORY
     voting rights.                                                                     Securities of the Scheme will be held either in physical or dematerialised
                                                                                        form. In case the securities are held in dematerialized (electronic) mode,
4.   Transfers of investments from one scheme to another scheme in                      the rules of the Securities and Exchange Board of India (Depositories
     the same Mutual Fund shall be allowed only if -                                    and Participants) Regulations 1996 would apply. The service charges
     -     Such transfers are done at the prevailing market price for quoted            payable to the Depository Participant will form a part of the annual recurring
           instruments on spot basis.                                                   expenses.
           Explanation - “Spot basis” shall have same meaning as                        UNDERWRITING
           specified by stock exchange for spot transactions.                           The scheme may also undertake underwriting and sub-underwriting
     -     The securities so transferred shall be in conformity with the                activities in order to augment its income, after complying with the approval
           investment objective of the scheme to which such transfer has                and compliance process specified in the SEBI (Underwriters) Rules and
           been made.                                                                   Regulations, 1993 and/or Reserve Bank of India and further subject to
                                                                                        the following norms:
5.   A scheme may invest in another scheme under the same AMC or                        •     The capital adequacy of the Mutual Fund for the purposes of SEBI
     any other Mutual Fund without charging any fees, provided that                           (Underwriters) Rules and Regulations, 1993 shall be the net assets
     aggregate interscheme investment made by all schemes under the                           of the Scheme.
     same management or in schemes under the management of any                          •     The total underwriting obligation of the Scheme shall not exceed
     other AMC shall not exceed 5% of the NAV of the Mutual Fund.                             50% of the total net asset value of the Scheme, or such limit as may
6.   The initial issue expenses in respect of any scheme may not exceed                       be stipulated by the AMC and/or Trustees from time to time.
     six per cent of the Funds raised under that scheme.                                •     The decision to take up any underwriting commitment shall be made
                                                                                              as if the Scheme is actually investing in that particular security.
7.   Every Mutual Fund shall buy and sell securities on the basis of                    •     As such, all investment restrictions and prudential guidelines relating
     deliveries and shall in all cases of purchases, take delivery of relative                to investments, individually and in far as may be applicable, apply to
     securities and in all cases of sale, deliver the securities and shall in                 underwriting commitments which may be undertaken under the
     no case put itself in a position whereby it has to make short sale or                    Scheme.

                                                                                   15
These underwriting norms/parameters (as expressed/linked to the net                    the market instead rises, the Fund loses part or all of the benefit of the
asset/net asset value/capital) shall in the ordinary course apply as at the            increase in securities prices on account of the offset losses in index futures.
date of the most recent transaction of commitment to underwrite, and                   Imperfect co-relation between the price movements in the securities index
changes do not have to be effected merely because, owing to appreciation               on the one hand and the stocks held by the Fund or the futures contracts
or depreciation in value or by reason of the receipt of any rights, bonuses            itself on the other hand may result in trading losses. The Fund may not be
or benefits in the nature of capital or of any scheme of arrangement or for            able to close an open futures position due to insufficient liquidity in the
amalgamation, reconstruction or exchange, or at any repayment or                       futures market. Under such circumstances, the Fund would be required
redemption or other reason outside the control of the Fund, any such                   to make daily cash payments of variation margin in the event of adverse
limits would thereby be breached. If these limits are exceeded for reasons             price movements. If the Fund has insufficient cash, the Fund may be
beyond its control, AMC shall adopt as a priority objective the remedying              required to sell portfolio securities to meet daily variation margin
of that situation, taking due account of the interests of the unitholders.             requirement at a time when it may be disadvantageous to do so.
As such all underwriting and sub-underwriting activities of the Fund will              Interest Rate Swaps (IRS)
be undertaken in accordance with SEBI (Underwriters) Rules and
                                                                                       An IRS is an agreement between two parties to exchange stated interest
Regulations, 1993, and the norms as laid down by SEBI Circular dated
                                                                                       obligations for an agreed period in respect of a notional principal amount.
June 30, 1994, and as amended from time to time.
                                                                                       The most common form is a fixed to floating rate swap where one party
POLICY AND SPECIAL CONSIDERATION ON INVESTMENT IN                                      receives a fixed (pre-determined) rate of interest while other receives a
DERIVATIVE AND HEDGING PRODUCTS                                                        floating (variable) rate of interest.
As part of the Fund management exercise, Trustees may permit the use                   Forward Rate Agreement (FRA)
of any hedging techniques, including trading in derivative products, futures
                                                                                       A FRA is basically a forward starting IRS. It is an agreement between two
and options, warrants, swaps etc. which are permissible or in the future
                                                                                       parties to pay or receive the difference between an agreed fixed rate (the
may become permissible under SEBI / RBI Regulations. The Fund shall
                                                                                       FRA rate) and the interest rate (reference rate) prevailing on a stipulated
adhere to the following guidelines of the SEBI Regulations etc. for trading
                                                                                       future date, based on a notional principal amount for an agreed period.
in derivatives:
                                                                                       The only cash flow is the difference between the FRA rate and the reference
•    Trading in derivatives by the Mutual Fund shall be restricted to                  rate. As is the case with IRS, the notional amounts are not exchanged in
     hedging and portfolio balancing purposes.                                         FRAs.
•    The Mutual Fund shall be required to fully cover its positions in the             Example :
     derivatives market by holding underlying securities / cash or cash                Let us assume that a scheme has an investment of Rs.10 crore in an
     equivalents / option and / or obligation for acquiring underlying assets          instrument which pays interest linked to NSE Mibor. Since the NSE Mibor
     to honour the obligations contracted in the derivatives market.                   would vary daily, the scheme is running an interest rate risk on its
•    Separate records shall be maintained for holding the cash and cash                investment and would stand to lose if rates go down. To hedge itself against
     equivalents / securities for this purpose.                                        this risk, the scheme could do an IRS where it receives a fixed rate (assume
                                                                                       10%) for the next 5 days on the notional amount of Rs. 10 crore and pay
•    The securities held shall be marked to market by the AMC to ensure                a floating rate (NSE Mibor ). In doing this, the scheme would effectively
     full coverage of investments made in derivative products at all time.             lock itself into a fixed rate of 10% for the next five days. The steps would
•    The Scheme may also use various derivatives and hedging products                  be.
     from time to time, as would be commensurate with the scheme                       1.   The scheme enters into an IRS on Rs. 10 crore from April 1, 2000 to
     objectives, in an attempt to protect the value of the portfolio and                    April 6, 2000. It receives a fixed rate of interest at 10% and the
     enhance unitholders interest. Derivative and hedging strategies may                    counter party receives the floating rate (NSE Mibor). The Scheme
     be used:                                                                               and the counter party exchange a contract of having entered into
     (a)   for the purpose of hedging against a decline in value of the                     this IRS.
           scheme’(s) NAV, and / or                                                    2.   On a daily basis, the NSE Mibor will be tracked by the counterparties
     (b)   to seek to enhance the returns                                                   to determine the floating rate payable by the scheme.
The Scheme may write (sell) and purchase call and put options in securities            3.   On April 6, 2000, the counter parties will calculate the following;
in which it invests and on securities indices based on securities in which                  •     The scheme will receive interest on Rs. 10 crore at 10% p.a.
the scheme invests. Through the purchase and sale of futures contracts                            for 5 days i.e. Rs. 136986/-
and related options on those contracts the Fund would seek to hedge
against a decline in securities owned by the Fund or an increase in the                     •     The scheme will pay the compounded NSE Mibor for 5 days
prices of securities which the Fund plans to purchase. The Fund would                       •     Effectively, the scheme has earned interest at 10% p.a. for 5
sell futures contracts on securities indices in anticipation of a fall in stock                   days by converting its floating rate asset into a fixed rate through
prices, to offset a decline in the value of its equity portfolio. When this                       the IRS.
type of hedging is successful, the futures contract increase in value while
the Fund’s investment portfolio declines in value and thereby keep the                      •     If the total interest on the compounded NSE Mibor rate is lower
Fund’s net asset value from declining as much as it otherwise would.                              that Rs. 136986/- , the scheme will receive the difference from
Similarly, when the Fund is not fully invested, and an increase in the price                      the counterparty and vice-versa. In case the interest on
of equities is expected, the Fund would purchase futures contracts to                             compounded NSE Mibor is higher, the scheme would make a
gain rapid market exposure that may partially or entirely offset increase in                      lower return than what it would have made had it not undertaken
the cost of the equity securities it intends to purchase. An interest rate                        IRS.
swap agreement (as per guidelines issued by RBI on July 7, 1999 and                    The Scheme will not invest more than 50% of its assets in the purchase
November 1, 1999) from fixed rate to floating rate will be an effective                of securities indices, financial futures contracts, etc. The Fund shall take
hedge for portfolio in a rising interest rate environment.                             exposure on a non-leveraged basis.
Example 1 : Hedging against an anticipated rise in equity prices                       A hedge is designed to offset a loss on a portfolio with a gain in the hedge
The scheme has a corpus of Rs.100 crores and has cash of Rs.15 crores                  position. The Scheme may use derivative instruments primarily to hedge
available to invest. The Fund may buy index futures of a value of Rs.15                the value of portfolio against potential adverse movements in securities
crores. The scheme may reduce the exposure to the future contract by                   prices. At the same time, however, a properly correlated hedge will result
taking an offsetting position as investments are made in the equities, the             in a gain in the portfolio position being offset by a loss in the hedge position.
scheme wants to invest in. Here, if the market rises, the scheme gains by              As a result the use of derivatives could limit any potential gain from an
having invested in the index futures.                                                  increase in value of the position hedged. In addition, an exposure to
                                                                                       derivatives in excess of the hedging requirement can lead to losses. IRS
Example 2 : Hedging against anticipated fall in equity prices:-                        and FRAs do also have inherent credit and settlements risks. However,
If the Fund has a negative view on the market and would not like to sell               these risks are substantially reduced as they are limited to the interest
stocks as the market might be weak, the scheme of the Fund can go                      streams and not the notional principal amounts.
short on index futures. Later, the scheme can sell the stocks and unwind
                                                                                       INVESTMENT BY AMC
the future positions. A short position in the future would offset the long
position in the underlying stocks and this can curtail potential loss in the           The AMC, and investment companies managed by the Sponsor(s), their
portfolio.                                                                             affiliates, their associate companies and subsidiaries may invest either
                                                                                       directly or indirectly in the Scheme. The money managed by these affiliates,
The Fund’s successful use of futures contracts is subject to the Fund                  associates, the Sponsor, subsidiaries of the Sponsor and/or the AMC
Manager’s ability to predict correctly the market factor affecting the market          may acquire a substantial portion of the Scheme units and collectively
value of the Fund’s portfolio securities. For example if a Fund is hedged              constitute a major investment in the Scheme. Accordingly, repurchase of
against a fall in the securities using a short position in index futures, and          units held by such affiliates/associates and Sponsor may have an adverse

                                                                                  16
impact on the units of the Scheme, because the timing of such repurchase                (and consequently the performance) of the scheme.
may impact the ability of other unitholders to repurchase their units. The
AMC shall not at any given time invest more than 40% of the Scheme net                  INVESTMENT IN OVERSEAS FINANCIAL ASSETS
assets in the units of the schemes. The AMC shall not charge any fees on                In accordance with RBI Policy announced in October 1997 and the
investment by the AMC in the units of the Scheme in accordance with sub                 guidelines of SEBI announced on September 30, 1999 (including any
regulation 3 of regulation 24 of the Regulations and shall charge fees on               subsequent instructions/guidelines that may be issued by SEBI and/or
such amounts in future only if the SEBI Regulations so permit.                          RBI in this regard) on overseas investment, it is the AMC belief that
                                                                                        overseas markets offer new investment and portfolio diversification
INVESTMENT BY THE FUND                                                                  opportunities into multi-market and multi-currency products. The Scheme
The Scheme may invest in another scheme under the management of                         shall (after obtaining approval from RBI) invest in ADR’s, GDR’s etc and
the AMC or any other AMC. The aggregate inter-scheme investment by                      other overseas financial assets including securities issued by Governments
the Fund under all its schemes [including the present Scheme] taken                     of the G-7 nations, etc, which in the judgement of the AMC is eligible for
together, in another scheme managed by the AMC or in any other scheme                   investment as part of the Scheme portfolio and is consistent with the
of any other Mutual Fund, shall not be more than 5% of the Net Asset                    investment strategy. The investment in such overseas Financial Assets
Value of the Fund. The AMC shall not charge any fees on the investment                  shall not exceed the limit as may be imposed by SEBI/RBI from time to
by the scheme in another scheme under the management of the AMC or                      time and shall be within the investment composition. As per guidelines of
any other Asset Management Company.                                                     SEBI announced on September 30, 1999 investments in ADRs/GDRs by
                                                                                        all the Mutual Funds are permitted initially within an overall limit of
PORTFOLIO TURNOVER RATE
                                                                                        US$500mn with a sub-ceiling for individual Mutual Fund not to exceed
“Portfolio Turnover” is the term used by any Mutual Fund for measuring                  10% of the net assets managed as on the date of the last audited
the amount of trading that occurs in a Scheme’s portfolio during the year.              balancesheet subject to a maximum of US$50 mn. The investment shall
The Scheme is an open-ended scheme. It is expected that there would                     also take into consideration the county rating assigned by credit rating
be a number of subscriptions and repurchase on a daily basis.                           agencies of international repute such as Standard and Poor or Moody
Consequently, it is difficult to estimate with any reasonable measure of                etc. as investment grade. To manage risks associated with Foreign
accuracy, the likely turnover in the portfolio. However, a high turnover                currency and interest rate exposure the Fund may use derivatives for
would not significantly affect the brokerage and transaction costs. This                efficient portfolio management including hedging and in accordance with
will exclude the turnover caused on account of :                                        conditions as may be stipulated by the Regulations/RBI. The Fund may
                                                                                        also utilize services of a global custodian and/or consultant to manage
-    investing the initial subscription,                                                such investment, the costs of which would be within the expense limits
-    subscriptions and redemption undertaken by the unit holders.                       laid down under SEBI Regulations.
The AMC will endeavor to balance the increased cost on account of higher                To the extent that the assets of the Scheme will be invested in securities
portfolio turnover with the benefits derived there of a high portfolio turnover         denominated in Foreign currencies, the Indian Rupee equivalent of the
rate is not necessarily a drag on portfolio performance and may be                      net assets, distribution and income may be adversely affected by changes
representative of arbitrate opportunities that exist for scrips/securities held         in the value of certain foreign currencies relative to the Indian Rupee. The
in the portfolio rather than an indication of a change in AMC’s view on a               repatriation of capital to India may also be hampered by changes in
scrip, etc.                                                                             Regulations or political circumstances as well as the application to it of
INTER FUND TRANSFERS                                                                    other restrictions on Investment
Transfers of investments from one Scheme to another Scheme in the                        X TRANSACTING IN THE UNITS OF IDBI-PRINCIPAL TAX
same Mutual Fund shall be allowed only if -                                                SAVINGS FUND
-    Such transfers are done at the prevailing market price for quoted
                                                                                        THE OFFER
     instruments on spot basis.
                                                                                        IDBI-PRINCIPAL Tax Savings Fund (earlier called Tax INIT’96) was
     Explanation - “spot basis” shall have same meaning as specified by                 launched as a close ended Scheme on January 1, 1996. The initial offering
     stock exchange for spot transactions.                                              period ended on March 31, 1996 & a sum of Rs. 53.41 crores were
-    The securities so transferred shall be in conformity with the investment           collected. Based on the Notification dated December 22, 1998 by the
     objective of the scheme to which such transfer has been made.                      Ministry of Finance Department of Economic Affairs, (Capital Market
                                                                                        Division), Government of India, the Trustees have been permitted to
BORROWING BY THE MUTUAL FUND                                                            operate the Scheme as an open-ended scheme with the prior approval of
In terms of Regulations as presently prevailing, the Scheme shall have                  SEBI. Accordingly, the Trustees have converted the Tax INIT’96 into an
power to borrow up to 20% of its net assets outstanding as on the date of               open ended scheme and have also changed its name to IDBI-PRINCIPAL
borrowing for a period of up to six months or as may be permitted by the                Tax Savings Fund. The offer is being made for subscription of units on
prevailing regulations. This borrowing shall be used only for the purpose               an ongoing basis. The Fund shall issue units each of the face value of
of paying repurchase proceeds or payment of interest or dividend to the                 Rs.10/- by means of Account/Transaction statement to the unitholders in
unitholders. The Mutual Fund may tie up with various banks / institutions               accordance with the rules framed thereunder, at the prevailing NAV based
for the above mentioned facility for which it may have to give a guarantee              unit price. This Offer Document replaces the previous Offer Document
or the delivery of the shares/other securities held by it as collateral. The            dated December 11, 1995.
limit of 20% may be revised by the Fund and to the extent the Regulations
hereafter permit. Borrowing by the Fund on account of the Scheme will                   Tax Benefit
tend to increase the impact of investment gains and losses on the NAV of                Investment made by the eligible investor in the scheme will qualify for
the Scheme.                                                                             income tax rebate @20% (25% in case of an author, playwright, artist,
                                                                                        musician, actor or sportsman) on investment upto Rs. 10,000/- within
STOCK LENDING BY THE MUTUAL FUND
                                                                                        overall limit of Rs. 80,000/- under section 88 of the Income Tax Act, 1961.
The Scheme may to augment revenue generation, lend the securities
held by it to eligible brokers, dealers, financial institutions through approved        Units issued to the eligible investors, who wish to claim income tax benefit
intermediaries, in amounts up to 75% of its total net assets at the time of             under section 88 of the Income Tax Act, 1961, will be locked-in for a
lending, in accordance with the terms of the Securities Lending Scheme                  period of three years from the date of allotment. Such units can not be
announced by SEBI. The Fund may enter into an agreement with the                        repurchased /switched /pledged /transferred /gifted before the expiry of
approved intermediary for depositing the securities for the purpose of                  lock-in period. However in the event of the death of the sole applicant or
lending through the approved intermediary on satisfactory terms as to                   the first applicant in case of joint holding, the nominee or legal heir or the
security.                                                                               applicant stated next in the order (in case of joint holder) as the case may
                                                                                        be, may encash the units after the completion of one year from the date
The Scheme would limit its exposure, with regard to securities lending,                 of allotment. (Please refer to the clause “Appointment of Beneficiary”)
for a single intermediary, other than the National Securities Clearing
Corporation Ltd (NSCCL), to the extent of 25% of the total net assets of                Special Benefit - Personal Accident Insurance
the Scheme at the time of lending. For NSCCL such exposure limit would                  Following category of resident investors under the Scheme will be covered
be up to 75% of the total net assets of the Scheme. Collateral must be                  under an accident insurance cover for death by accident till the units are
obtained by the approved intermediary for the lending transactions and                  transferred (under the circumstances stated in this offer document) or are
this collateral must exceed in value, the value of the Securities lent. The             repurchased by the Fund whichever is earlier;
collateral can be in the form of cash, bank guarantee, govt. securities or
                                                                                        1.   Sole / First applicant only, in case of individual applicant
certificate of deposits or other securities as may be agreed upon with the
approved intermediary.                                                                  2.   Karta in case of HUF
It should be noted that any default/delay by the parties to return the                  3.   First applicant in case of Association of Persons (AOP) / Body of
securities lent to them may have an adverse impact on the net assets                         Individuals (BOI)

                                                                                   17
Limit of Insurance Cover                                                                            of private Trusts authorized to invest in Mutual Fund, property
The Insurance arrangement is with New India Assurance Company Limited.                              under their trust deeds
The insurance cover will be available not later than three months from the                      -   Scientific and Industrial Research Organizations
date of allotment of units in the Scheme. Hence during first three months
from the date of allotment, benefit of personal accident insurance may                          -   Association of Persons/Body of Individuals, whether incorporated
not be available to the investors. However the Fund will endeavor to cover                          or not
the investor under the insurance policy within three months from the date                       -   Army/Air Force/Navy, other paramilitary units and bodies created
of allotment. The Value of insurance cover is shown in the table below :                            by such institutions besides other eligible institutions
     Total Maximum Level of Investment at NAV Related Prices *   Level of Cover                 -   Mutual Funds registered with SEBI
                                                                                         ii)    Foreign Institutional Investors registered with SEBI
     Upto Rs. 6,000                                              Rs.1,00,000
     Rs.6,001 & above and upto Rs.11,000                         Rs.3,00,000             iii)   Multilateral Funding Agencies /Bodies Corporate incorporated outside
                                                                                                India with the permission of Government of India/ Reserve Bank of
     Rs.11,001 & above                                           Rs.5,00,000                    India
* The insurance cover will be available to eligible resident investors (as               iv)    Overseas Financial Organizations which have entered into an
stated above) based on their total maximum level of investment (at NAV                          arrangement for investment in India, inter-alia with a Mutual Fund
related price) whether invested through one application or more on the                          registered with SEBI and which arrangement is approved by the
date of investment or on subsequent dates.                                                      Central Government.
Other Terms of the Insurance Cover                                                       v)     NRIs, OCBs, FIIs and persons of Indian origin residing abroad, on a
The insurance cover is worldwide on 24 hour basis All insurance claims                          full repatriation basis/non-repatriation basis
will be settled in India and shall be payable in Indian Rupees only. The                 vi)    Such other individuals/ institutions /body corporate, etc. as may be
insurance will cover only accidental death. Insurance will not cover natural                    decided by the Fund from time to time, so long as wherever applicable
death, suicide, accidental injuries, loss of limbs and other normal                             they are in conformity with Regulations.
exclusions as stipulated in standard accident insurance policies.Insurance               vii) Other Schemes of IDBI Mutual Fund subject to the conditions and
will be available for individuals above five years and below 70 years.                        limits prescribed by SEBI Regulations.
The cover will be over and above other insurances against accidental
deaths held by the unitholder.                                                           viii) The Trustees/ Trust, AMC or Sponsor or their affiliates, their associate
                                                                                               companies & subsidiaries may also subscribe to the units under this
The insurance premium in respect of this cover will be borne by the Scheme                     Fund.
and will form part of its annual recurring expenses which are subject to
ceiling of 2.50% of weekly average net assets of the scheme. The                         ix)    Provident / Pension / Gratuity / Superannuation and such other
modalities and procedure for making claim under the above provision will                        retirement and employee benefit and other similar Funds.
be advised to the unitholders at the time of mailing account statement.                  The Trustees may, accept an application from an unincorporated body of
The rules and regulations of the insurance company regarding insurance                   persons/trusts. The Trustees may from time to time add and review the
cover and claims shall be binding on the unitholders. As on date 24 claims               persons eligible for making application for purchase of units under the
aggregating to Rs. 82.89 lacs have been pending with insurance company.                  Scheme.
IMPORTANT NOTE
                                                                                         Note : As per the present tax laws only following category of
Fund reserves right to review the level of insurance cover or remove the                 individuals are eligible to claim rebate @ 20% (25% in case of an
insurance cover offered to investors under the scheme. However any                       author, playwright, artist, musician, actor or sportsman) under section
change in the level of insurance cover or removal of insurance cover will                88 of the Income Tax Act 1961 on investment upto Rs.10000/- in the
be on the prospective basis and will be applicable to new investors only                 scheme;
subsequent to the date of change. Insurance cover is a fundamental
attribute of the scheme. Insurance cover will be provided to eligible resident           1. an individual; or
investors for a minimum period of three years from the date of allotment.                2. Karta of a Hindu undivided family; or
Assignee for Insurance                                                                   3. an association of persons or body of individuals consisting, in
To facilitate settlement of insurance claims, applicant must nominate a                     either case, only of husband and wife governed by the system of
person for claiming the insurance proceeds. Settlement procedures will                      community of property in force in the state of Goa and union
be as stipulated by the insurance company.                                                  territories of Dadra and Nagar Haveli and Daman and Diu by whom,
                                                                                            or on whose behalf, investment is made.
IT IS COMPULSORY FOR THE APPLICANTS TO FURNISH DETAILS
OF THE ASSIGNEE FOR THIS INSURANCE COVER IN THE SPACE                                    A person resident of India at the time of subscription becomes a person
PROVIDED FOR IN THE APPLICATION FORM. INVESTOR MAY NOT                                   resident outside India subsequently, shall have the option to either be
GET COVERED UNDER INSURANCE IF THE ASSIGNEE IS NOT                                       paid repurchase value of Units only after expiry of relevant lock-in
APPOINTED.                                                                               period, or continue into the Scheme if he/she so desires and is otherwise
                                                                                         eligible. However, the person who desires to continue in the Scheme shall
Who can Subscribe ?                                                                      not be entitled to any interest or any compensation during the period it
The following persons (subject wherever relevant to, purchase of Units                   takes for the Fund to record the change in Address and the Residential
being permitted under their respective constitutions and relevant State                  Status. Notwithstanding the aforesaid, the Trustees reserve the right to
Regulations) are eligible to apply for purchase of units under the Scheme:               close the unitholder account after expiry of relevant lock-in period and
                                                                                         to pay the repurchase value of Units, subsequent to his becoming a person
i)       Indian Nationals who are:                                                       resident outside India, should the reasons of expediency, cost, interest of
         -   Adult individuals as sole holder,                                           unitholders and other circumstances make it necessary for the Fund to
                                                                                         do so. In such an event, no resident unitholders who have subsequently
         -   Adult individuals not exceeding three jointly or on an either/anyone
                                                                                         become residents outside India shall have a right to claim the growth in
             or survivor basis.
                                                                                         capital and /or income distribution.
         -   Parents/Lawful guardians on behalf of Minors.
                                                                                         The Scheme has not been and will not be registered in any country outside
         -   Partner(s) of partnership firms / Partnership Firms, in the name
                                                                                         India. To ensure compliance with any Laws, Acts, Enactment, etc. including
             of the partners
                                                                                         by way of Circulars, Press Releases, or Notifications of Government of
         -   Hindu Undivided Families(HUF), by the Karta acting or on behalf             India, or to facilitate direct credit of any distributions into a bank account,
             of the HUF                                                                  the Fund may require/give verification of identity/any special/additional
         -   Institutions/Companies/Bodies Corporate, Public Sector                      subscription-related information from/ of the unitholders (which may result
             Undertakings                                                                in delay in dealing with the applications, Units, benefits, distribution, etc./
                                                                                         giving subscription details, etc.). Each unitholder must represent and
         -   Banks( including Co-operative Banks and Regional Rural Banks),              warrant to the Trustees/AMC that, among other things, he is able to acquire
             Funds, Financial and Investment Institutions and Societies                  Units without violating applicable laws. The Trustees will not knowingly
             registered under the Societies Registration Act 1860, or Co-                offer or sell Units to any person to whom such offer or sale would be
             operative Societies subject to their bye-laws permitting them to            unlawful, or might result in the Fund incurring any liability or suffering any
             invest in the units of the Fund                                             other pecuniary disadvantages which the Fund might not otherwise incur
         -   Religious and Charitable Trusts, drafts or endowments and Private           or suffer. Units may not be held by any person in breach of the law or
             Trusts, under the provisions of Section 11(5) of Income tax Act,            requirements of any governmental, statutory authority including, without
             1961 read with Rule 17(c) of Income tax Rules 1962 registered               limitation, exchange control Regulations. The Trustees may, compulsorily
             under the Societies Registration Act/Indian Trusts Act, Trustees            redeem any Units held directly or beneficially in contravention of these

                                                                                    18
prohibitions. In view of the individual nature of investment portfolio and its             channels or out of balances held in their NRE/FCNR accounts
consequence, each unitholder is advised to consult his/her own                             maintained with authorized dealers in India. Payment may be made
professional advisor concerning possible consequences of purchasing,                       by means of Indian Rupee Drafts purchased abroad or by a cheque
holding, selling, converting or otherwise disposing of the Units under the                 drawn on Non-Resident (External) Accounts/FCNR Accounts payable
laws of his/her State / Country of incorporation, establishment, citizenship,              at par at Mumbai. Payments can also be made by means of drafts
residence or domicile.                                                                     payable at Mumbai and purchased out of Funds held in Non-
                                                                                           Residents (External) Accounts/FCNR Accounts maintained with the
How to Subscribe                                                                           banks authorized to deal in foreign exchange in India.
There is only one application Form for Residents, Non-Resident Investors                   The above may be sent together with the complete Application Form
and NRIs/FIIs/OCBs on repatriable/ non-repatriable basis. However, if for                  directly by Registered Post to the Registrar or the office of the AMC
reasons of expediency, interest of unitholders and other circumstances                     superscribing the envelope as “IDBI-PRINCIPAL - Tax Savings Fund”.
make it necessary for the Fund, separate application forms may be made
for Residents and for Non-Resident Investors (based on repatriation                   b.   Issue of units on non-repatriation basis - The Funds for investment
parameters). Applicants should clearly specify their status by marking                     should be provided by eligible non-resident investors by way of inward
the appropriate choice provided for such purpose in the Application                        remittance or by debit to their NRE/FCNR/NRO/NRSR accounts
Form. Unless the applicant has ticked the appropriate NRI box, the                         maintained with authorized dealer in India. The payment procedure
application shall be treated under Resident category.                                      is as per (a) stated above.

No receipt will be issued for the application money. The collection centre            In cases where investment is made out of inward remittance or from Funds
who receives the application form shall stamp and return the                          held in NRE/FCNR/NRO accounts of the investor, the maturity proceeds
“Acknowledgement slip” of the application form, thereby acknowledging                 /repurchase price of units and/or dividend or income earned may be
receipt of the application form.                                                      credited to NRO/NRSR account (details of which should be furnished in
                                                                                      the space provided for this purpose in the Application Form) of the non-
KINDLY RETAIN THE ACKNOWLEDGEMENT SLIP OF THE                                         resident investor maintained with an authorized dealer in India. In cases
APPLICATION FORM /STAMPED BY THE COLLECTION CENTRE. THIS                              where the investment is made out of NRSR account, the maturity proceeds
SHALL BE SUBJECT TO FINAL VERIFICATION AND SCRUTINY BY                                /repurchase price of units and/or income earned should be credited to the
THE BANKERS/TRUSTEES/AMC THAT THE CHEQUE AND                                          NRSR account (details of which should be furnished in the space provided
APPLICATION FORM ARE IN ORDER /VALID.                                                 for this purpose in the Application Form) maintained by the investor with
                                                                                      an authorized dealer in India.
Subscription by Residents
                                                                                      Refunds, interest and other distribution (if any) and maturity proceeds/
•    The application form for the sale of units of the Fund will be available
                                                                                      repurchase price and /or income earned (if any) will be payable in Indian
     at the office of the Collection Centres/ISC /Registrar/ AMC etc. New
                                                                                      Rupees only. The maturity proceeds/repurchase value of units issued on
     unitholders can subscribe to units by completing the application form.
                                                                                      repatriation basis, income earned thereon, net of taxes may be credited
     Existing unitholders may use the relevant tear off section of the
                                                                                      to NRE/FCNR account (details of which should be furnished in the space
     Transaction Slip that may be enclosed with the Account Statement
                                                                                      provided for this purpose in the Application Form) of the non-resident
     for additional subscriptions or a new application form. Unitholders
                                                                                      investor or remitted to the non-resident investor. Such payments in Indian
     under any of the existing Scheme can also switch from other Scheme
                                                                                      Rupees will be converted into US dollars or into any other currency, as
     to the Scheme.
                                                                                      may be permitted by the RBI, at the rate of exchange prevailing at the
•    Applications must be completed in Block Letters in English.                      time of remittance and will be dispatched through Registered Post at the
                                                                                      unitholders risk. The Fund will not be liable for any loss on account of
•    Signatures should be in English or in any Indian Language. A
                                                                                      exchange fluctuations, while converting the rupee amount in US dollar or
     Magistrate/Notary Public /Postmaster under his/her official seal must
                                                                                      any other currency. Credit of such proceeds to NRE/FCNR account or
     attest Thumb impressions.
                                                                                      remittance thereof may be permitted by authorized dealer only on
•    Payment should be made in cheque or bank draft on any bank, which                production of a certificate from the Fund that the investment was made
     is situated at and is a member of the Bankers’ Clearing House, located           out of inward remittance or from the Funds held in NRE/FCNR account of
     at the place where the Application is submitted. Outstation cheques              the investor maintained with an authorized dealer in India. However, there
     will not be accepted and applications accompanied by such cheques                is no objection to credit of such proceeds to NRO/NRSR account of the
     may be liable to be rejected. Money orders and postal orders will                investor if he so desires.
     be accepted at selected locations. Cash if accepted would be as
                                                                                      FIIs and International Multilateral Agencies shall pay their subscription by
     per section 269SS of the Income Tax Act 1961.
                                                                                      direct remittance from abroad or out of their special Non-Resident Rupee
•    All cheques, bank drafts and payorders must be drawn in favour of                account maintained with a designated bank in India.
     “IDBI-PRINCIPAL Tax Savings Fund” and cross “Account Payee
                                                                                      In terms of the notification no. FERA/212/99-RB dated October, 18 1999,
     only”. A separate cheque or bank draft must accompany each
                                                                                      the RBI has granted a general permission to Mutual Funds as referred to
     application. In case the Fund has separate application forms for
     Resident & Non-Resident Investors, the cheques may be drawn in                   in clause (23D) of Section 10 of the Income Tax Act, 1961, to issue and
     the above manner and the Non-Residential status may be added,                    repurchase units of the schemes which are approved by SEBI to FIIs,
     on the cheque.                                                                   subject to conditions set out in aforesaid notification. Further general
                                                                                      permission is also granted to send such units / instruments out of India to
•    Applications not complete in any respect are liable to be rejected.              their global custodians. FII’s applications on a repatriation basis will be
•    Applicants located in a place where there is no designated collection            accepted if the amount representing the investment is received by debit
     centre, may send their application, accompanied with a separate                  to the Special Non-Resident Rupee Account of the FII maintained with an
     bank draft crossed “Account Payee only” in favour of “IDBI-                      approved designated bank
     PRINCIPAL Tax Savings Fund” to the Registrar or the office of the                Subscription by Multilateral Funding Agencies, on full repatriation basis,
     AMC superscribing the envelope as “IDBI-PRINCIPAL - Tax Savings                  is subject to approval by the Foreign Investment Promotion Board.
     Fund”. All demand drafts are to be made payable at Hyderabad /
     Mumbai respectively or such centers as declared by the AMC from                  Unitholder’s Bank Account Details
     time to time. The bank charges /commission as per IBA guidelines                 As a matter of precaution against possible fraudulent encashment of
     for the demand draft may be deducted from the amount of investment.              redemption Cheques due to loss/ misplacement, unitholders are requested
     Such bank charges/commission will be treated as eligible expenses                to give the full particulars of their Bank Account i.e. nature and number of
     debited to the Scheme within the expense limits laid out under SEBI              account, name, branch address of the bank at the appropriate space in
     Regulations.                                                                     the application form. It shall be mandatory for the unitholders to
•    Please state the application form number and name on the                         mention their bank account numbers in their applications/requests
     reverse of the cheque/bank draft/ payorder.                                      for redemption. Redemption Cheques and /or any other instruments will
                                                                                      then be made out in favour of the Bank for crediting the respective
SUBSCRIPTION BY NRIS AND OCBS                                                         unitholder’s account so specified.
Reserve Bank of India vide its Notification No. F.E.R.A. 195/99- RB dated
                                                                                      The normal processing time may not be applicable in situations where
March 30, 1999 has granted general permission to domestic Mutual Funds
                                                                                      such details are not provided by unitholders. The AMC will not be
referred to in clause (23 D) of Section 10 of the Income Tax Act, 1961 to
                                                                                      responsible for any loss arising out of fraudulent encashment of cheques
issue units under the Schemes floated by them to NRI’s/ PIOS/ OCBS on
                                                                                      and delay/loss in transit.
non-repatriation/ repatriation basis. Accordingly NRI’s/PIOS/OCBs may
invest in Scheme floated by IDBI-PRINCIPAL subject to the following                   Documents to be submitted
conditions.
                                                                                      In case of applications under power of attorney.
a.   Issue of units on repatriation basis -The investment should be
     made by the eligible Non-resident investors out of Funds remitted                If any application or any request for transmission is signed by a person
     from abroad in free foreign exchange through normal banking                      holding a valid Power of Attorney, the original Power of Attorney or a

                                                                                 19
certified copy duly notarized should be submitted with the application or               ALLOTMENT AND ACCOUNT STATEMENT
the transmission request, as the case may be unless the Power of Attorney
                                                                                        Allotment
has already been registered with the Fund/Registrar.
                                                                                        Allotment of units in the Scheme would be at the discretion of the Trustees.
In the case of applications by limited Company, a corporate body, an                    Allotment is assured to all applicants provided the applications, are
eligible institution, a registered society, a Trust, a Fund, a FII or an                received during business hours; and the cheque accompanying the
OCB etc.                                                                                application form is realized; are complete in all respect and are in order.
In the case of applications by limited company, a corporate body, an eligible           The allotment date under normal circumstances, is deemed to be the
institution, a registered society, a trust, a Fund, a FII or an OCB, a certified        same date as the applicable NAV.
true copy of the Board resolution of the Managing Body authorizing
investments in Units including authority granted in favour of the officials             Units will be allotted up to three decimals to all valid applications. The
signing the application of Units and their specimen signature etc. along                decimal units in no way will cause any difficulty for repurchase of units.
with a certified copy of the Memorandum and Articles of Association and                 An offer to purchase units is not binding on, and may be rejected by AMC,
/ or bylaws and/ or trust deed and / or partnership deed and Certificate or             until it has been confirmed through an Account/Transaction Statement
Registration should be submitted. The officials should sign the application             and payment has been received.
under the official designation. In the case of a trust /fund, it shall produce
                                                                                        Account Number
a resolution from the Trustee(s) authorizing purchases.
                                                                                        Each unitholder will have an account number. The number of units allotted
The above mentioned documents or duly certified copy thereof must be                    to a unitholder or repurchased by a unitholder will be reflected in his or
lodged separately at the office of the Registrar to the Offer, quoting the              her account and a statement/advice to this effect will be issued to the
serial number of the application and also with the collection centre where              unitholder.
the application form has been submitted simultaneously with the
submission of the Application form.                                                     Common Account Number
In addition to the above, in the case of applications by Overseas Corporate             As a unitholder friendly measure, (unless otherwise requested by the
Bodies, firms and societies, which are held directly or indirectly, but                 unitholder,) one Common Account Number will be assigned for one entity
ultimately to the extent of at least 60% by non-resident individuals of                 investing in different schemes of the Fund. In such a case, one
Indian nationality/origin and trust in which at least 60% of the beneficial             consolidated account statement will be provided. The number of units
interest is similarly held irrevocably by such persons, details such as name,           allotted to a unitholder or repurchased by a unitholder will be reflected in
address, percentage of ownership by non-resident individuals of Indian                  his or her account and a statement to this effect will be issued to the
nationality/origin, and certificate in original from overseas auditors on form          unitholder. The AMC reserves the right to assign the existing Common
OAC/OAC-1 (as per RBI proforma) must be lodged separately at the office                 Account Number against multiple applications and / or subsequent
of the Registrar to the Offer, quoting the serial number of the application             purchases under a new application form by an existing unitholder, with
and also with the collection centre where the application form has been                 identical mode of holding and address. The Fund is also in the process of
submitted, simultaneously with the submission of the Application form.                  assigning a Master Account Number for a “Qualified Purchaser” to monitor
                                                                                        the “Right of Accumulation” of the said purchaser, besides facilitating
All NRI applications by mail should be sent to the address(es) of the                   issuance of one consolidated account statement (unless otherwise
Registrar and/or AMC along with the relevant foreign inward remittance                  requested by the unitholder) for all the members of a Family investing in
certificates to indicate the status of the Account debited and the relevant             different schemes of the Fund.
approvals if required.
                                                                                        Account Statement
In case of non-submission of the above-mentioned documents, the
Trustees are entitled, in its sole and absolute discretion, to reject or accept         An Account or Transaction Statement reflecting the unit balance of the
any application.                                                                        unitholder, applicable loads and other relevant information will be mailed
                                                                                        to the unitholder by ordinary post, after every financial transaction is
SALE OF UNITS ON AN ONGOING BASIS                                                       effected. The Account Statement shall not be construed as a proof of title
Units of the Scheme would be available at NAV based prices, subject to                  and is only a computer-printed statement indicating the details of
the applicable sales load, on any business day from any of the designated               transactions under the scheme and is a non-transferable document.
collection centre(s). The AMC may appoint additional collection centres                 The Account Statement shall normally be dispatched within three business
(may also close) from time to time.                                                     days or after clearance of Cheque, whichever is later. The Account
                                                                                        Statement will also be dispatched to existing unitholders in cancellation /
Subscriptions on an ongoing basis will be made only by specifying
                                                                                        lieu of existing unit certificates.
the amount to be invested and not the number of units to be
subscribed. The total number of units allotted will be determined with                  Unit Certificates
reference to the applicable sale price and fractional units may be created.
                                                                                        Normally no unit certificates will be issued under these Scheme. However,
A new account/transaction statement will be dispatched reflecting the
                                                                                        if the unitholder so desires, the AMC shall issue a unit certificate to the
updated holding of the unitholder after every transaction. However, a lien
                                                                                        unitholder within 6 weeks of the receipt of request for the certificate. The
on the units so allotted on the day of transaction will be created and such
                                                                                        cost of stamp duty paid for issuing the unit certificate will form part of the
units shall not be available for redemption until the payment proceeds are
                                                                                        annual ongoing expenses and/or may be recovered from the unitholder.
realized by the Scheme. In case the Cheque/draft is dishonored by the
Bank, the transaction shall be reversed and the units allotted earlier shall            Refunds
be cancelled and the unitholder informed accordingly.
                                                                                        Refund of subscription money to investors whose applications are invalid
ONGOING SALE PRICE                                                                      for any reason whatsoever, or whose applications have not been accepted
                                                                                        in full will be without incurring any liability whatsoever for interest or other
For on-going sales, units will be offered to investors at NAV based prices.
                                                                                        sum.
An entry load of up to a maximum of 7% or as stipulated by SEBI will be
charged to all new investments under the Scheme. The entry load will be                 Rematerialisation of Demat Units
calculated as a percentage of the applicable NAV. Further, the difference
                                                                                        Investors have the option to rematerialise their existing demat Units. The
between the sale price and repurchase price of units shall not exceed 7%
                                                                                        request for rematerialising the demat Units may be given to the respective
calculated on the sale price.
                                                                                        Depository Participant (DP) of the investor. On receiving the confirmation
The sale price will be calculated using the following formula:                          of demat Units balance, account statement for the physical Units shall be
                                                                                        issued. The same number of Units held in the demat mode shall be
     Sale Price              =       Applicable NAV + entry load, if any
                                                                                        continued in the physical mode. Rematerialisation of demat Units shall
Example for calculation of Sale Price                                                   be processed within the stipulated thirty days under SEBI (Mutual Funds)
If the Applicable NAV is Rs. 12 and the entry load applicable is 2%, in this            Regulations, 1996 from the date of receipt of such a request, provided it
case the sale price will be calculated as follows:                                      is complete and valid in all respects.

     Sale Price              =       Rs. 12 + 2% of Rs. 12                              Dematerialisation of Existing Physical Units
                             =       Rs. 12 + Rs. 0.24                                  Existing Unitholders having an account statement may dematerialise
                                                                                        their Units. Necessary request for this may be submitted to the investors
                             =       Rs. 12.24 per unit                                 DP along with the account statement issued by the Fund. The same
The AMC reserves the right to modify the entry load or levy a different                 number of Units held in the physical mode shall be continued in the
entry load as regards the amount / tenure of investment etc. However,                   demat mode. Requests for dematerialisation shall be processed within
any such change in the load structure shall be only on a prospective                    the stipulated fifteen days, under SEBI (Mutual Funds) Regulations, 1996
basis. The unitholder is requested to confirm the applicable entry load at              from the date of receipt of such a request, provided it is complete and
the time of investment from the collection centre / AMC.                                valid in all respects.

                                                                                   20
Systematic Investment Plan (SIP)                                                       exceeding 7% calculated on the sale price; and at a price not higher than
This facility enables unitholders to save and invest periodically over a               107% of the NAV of the scheme being entered into. The price at which
long period of time. It is a convenient and systematic way to ‘save and                the units will be switched out of the scheme / into the scheme will be
invest’ and provides the unitholder an opportunity to invest regularly,                based on the Applicable NAV of the relevant Scheme and after considering
thereby averaging the acquisition cost of units. Any unitholder can avail              any exit / entry loads and/or combination of entry and exit loads that the
of this facility subject to certain terms and conditions in the SIP application        AMC may charge from time to time. The AMC reserves the right to charge
form. The application forms can be obtained from the collection centre.                a load on switching at any time. The Switch request will be subject to the
The fundamental attributes and other terms and conditions regarding                    minimum application amount and other terms and conditions of the scheme
purchase/repurchase, price and related matters will be same as contained               for which the Switch request has been made.
in this Offer Document.                                                                Gift Facility
The unitholder has an option to select either 5th, 15th ,or 25th day of the            After the expiry of the relevant lock-in period the unitholders can write to
month on which the sale is to be made. However, if no date is selected,                the AMC/Registrar requesting for the Gift form to Gift the units (by way of
the sale will be made on the 15th of the month at applicable NAV related               transfer of units to the donee), to the extent provided in the Regulations.
price. The AMC may change the date for group investors or on demand                    The Fund may, subject to compliance with such requirement as it deems
from a section of the unitholder or otherwise to offer benefits to the                 necessary and may stipulate, arrange to transfer the Units, on account of
unitholders.                                                                           a gift made by the unitholder out of his Unit balance as per the provisions
Unitholders in the scheme can benefit by investing specified rupee                     of applicable law. Gift in favour of Non-Residents will also be subject to
amounts periodically every month/quarter for a continuous period. The                  permission, general or specific under Foreign Exchange Management
minimum amount of periodical investment under this facility shall be similar           Act. All payments and settlements made to such donee and a receipt
minimum application amount applicable for a unitholder who is making an                thereof shall be a valid discharge by the Fund. The unitholder would be
investment subsequent to his opening the account with the Fund. For                    liable for the loss resulting from a fraudulent transfer by way of gift to a
new unitholders the facility is available after opening a new account with             donee, based on the unitholders instructions that the fund reasonably
the initial minimum investment. This minimum balance amount needed                     believed as genuine. However, it should be noted that if the unitholder
for the Systematic Investment Plan may be altered from time to time at                 has a Unit certificate, such a transfer by way of gift shall attract stamp
the discretion of the AMC.                                                             duty and the cost of stamp duty will form part of its annual ongoing
                                                                                       expenses and/or may be recovered from the unitholder.
The AMC based on cheque authorization received from the unitholder
shall approach the unitholder’s bank for setting up standing instruction               ALL SETTLEMENTS TO FOLLOW SETTLEMENT CYCLE IN MUMBAI
for remittance of the stated amount at stated intervals in favor of the                Where an applicant submits a form for sale, repurchase or switch option
Fund. In case the bank fails to cognisance of the cheque authorisation,                at any Collection Centre outside Mumbai on a day which is not a business
the unitholder may be requested to send post-dated cheques. The                        day for the AMC office at Mumbai, then the applicable NAV for such sale,
unitholder has to give a minimum of 4 or more post-dated cheques for a                 repurchase or switch option transactions will be the NAV prevalent on the
minimum application amount or more. In case any particular date of the                 next immediately succeeding business day at Mumbai.
post dated cheque falls on a holiday or falls during a book closure period
the immediate next business day will be considered for this purpose. The               MODE OF HOLDING
unitholder’s account will be credited with the number of units at the day’s            The mode of holding may be “Single”, “joint” or “either/anyone or
applicable Sale Price, subject to realization of cheque. A unitholder may              survivor”. However the Tax Benefit shall be available only to the sole
also leave a standing instruction with his/her bank to periodically remit a            applicant or the first applicant in case of joint holding.
fixed sum from his/her account into the Scheme.
                                                                                       When units are held singly, all notices and correspondences, any
A unitholder should note that the market value of the Scheme’s units is                distributions, redemption’s, etc would be sent to the Single holder. Where
subject to fluctuation. Before going in for the Systematic Investment Plan,            Units are jointly held, the person first-named in the Application Form will
the unitholder should keep in mind that such a program does not assure                 receive all notices and correspondences with respect to the Account, as
a profit or protect against a loss.                                                    well as any distributions through dividends, redemptions or otherwise.
Systematic Investment Plan (SIP) for Corporate Employees.                              Such person shall hold the voting right, if any, associated with the Units.
                                                                                       However, all documentation / purchase applications / redemptions
The SIP for corporate employees seeks to provide convenience and value                 requests/ enrollment forms shall necessarily be signed by all the holders.
of investment to salaried individuals. The application amount would be                 All payments and settlements, etc made to such first named holder shall
forwarded by the employer on specific request from the employee who                    be a valid discharge by the Fund and the liability of the Mutual Fund in
desires to invest in the Scheme. The concerned employee has to authorize               this regard shall be only to the first -named holder.
the employer to deduct the application amount from his salary and remit
the same to the Fund. The employer would then deduct the requested                     When Units are held as either / anyone or survivor, the person first-named
application amount at regular intervals (monthly or otherwise) and forward             in the Application Form will receive all notices and correspondences with
the same to the Fund.                                                                  respect to the Account, as well as any distributions through dividends,
                                                                                       redemption’s or otherwise. Anyone of the Joint holders (in case of either/
Switch Facility                                                                        anyone or survivor) shall hold the voting right, if any, associated with the
After the expiry of lock-in period (if any) unitholders under a Scheme                 Units and all documentation/purchase applications/redemption requests/
can opt to switch units for units of the other select open ended Scheme                enrolment forms may be signed by any one of the joint holders ( in case
(existing and /or to be launched in the future) of the Fund at applicable              of either/ anyone or survivor) and the Mutual Fund will act on the
NAV based prices of the respective units to be exchanged.                              instructions of the first holder /anyone of the joint account holders. However
                                                                                       under all the cases (“ joint” or “ “either / anyone or survivor”), the Fund
In the case of NRIs, OCBs, FIIs, etc. this will be subject to necessary                shall recognise the first named joint holder as the unit holder and all
approval (if any) from the Reserve Bank of India and any other approval                payments and settlements, etc. made to such first-named holder shall be
as applicable. Tax deduction at source, if any, will be effected at the                a valid discharge by the Fund and the Fund shall not be liable to any other
appropriate rate in case of a switch and the balance amount would be                   joint applicants in this regard.
utilized to exchange units to the other Scheme.
                                                                                       After the expiry of lock-in period if the joint holder(s) wants to change the
Unitholders should note that each switch option represents the                         names/order of the joint holding, or want to nominate nominees, all joint-
simultaneous repurchase of units from one scheme (which may result in                  holders should jointly indicate the change/alterations of persons and its
a capital gain or loss) and the subscription of units in another scheme.               holders and nominees. It should be noted that if unit certificate is held,
A request for switch may be specified either in terms of amount or in                  such introduction/alteration of Joint holders shall attract stamp duty and
terms of the number of units of the scheme from which the switch is                    the cost of stamp duty will form part of its annual ongoing expenses and/
sought. Such instructions may be provided in writing by completing the                 or may be recovered from the unitholder.
switch form or using the relevant tear off section of the Transaction Slip             After the expiry of lock-in period, and in case the mode of holding is “joint”
that may be enclosed with the Account Statement and lodging the same                   or either/anyone or survivor”, the joint holders can specify the percentage
on any business day at any of the designated collection centres or office              of investment that can be allotted to each of the three joint holder(s)
of the Registrar. The switch will be effected by redeeming units from the              along with their addresses. The redemption / distribution cheques would
scheme in which the units are held and investing the net proceeds in the               then be issued separately to each of the joint holders (upto three) in the
other Scheme, subject to the minimum balance applicable for the                        percentages which equate to the percentage of allocation of the original
respective Scheme.                                                                     investment unless requested otherwise. All other correspondence, would
The price at which the units will be switched out of and into the Scheme               continue to be addressed to the first named joint holder. All voting rights
will be at applicable NAV based prices subject to the repurchase price                 shall remain the same as is stated aforesaid. All payments/settlements,
not being lower than 93% of the NAV of the scheme being exited from;                   etc. made to such joint-holders, individually and separately shall be a
this would of course be subject to the difference between the repurchase               valid discharge by the Fund and the liability of the Mutual Fund in this
price (of the units of the scheme being exited from) and sale price not                regard shall be to all the joint holders.

                                                                                  21
The unitholder(s) would be liable for the loss resulting from a fraudulent            on the death of the unitholder(s). Contigent Beneficiary(s) shall have
encashment, based on the unitholder(s) (single holder or joint holders or             secondary right of vesting of units on the death of the unitholder(s) and
first holder or any holder, with or without percentage allocation of                  also the primary beneficiary(s). If the unitholder’s spouse is not appointed
investment) instructions, that the Fund reasonably believed as genuine.               as a beneficiary, the Fund may seek consent from the spouse to appoint
The subsequent clauses on “Nomination” and “Appointment of Beneficiary”               another person as beneficiary.
further clarifies the position in the event of the death of one of the joint
                                                                                      A beneficiary who becomes entitled to hold the Units in consequence of
holder or the first holder.
                                                                                      the death of a sole holder or all holders or the person next in the order as
NOMINATION FACILITY                                                                   stated in the prescribed form (in case of joint holders), (after one year
                                                                                      from the date of allotment of units), insolvency, or winding up or by
If an application is made in the name of a single individual holder or jointly
                                                                                      operation of law, pledge etc., (after three years from the date of allotment
not exceeding three individuals (under any mode of holding) the unitholders
                                                                                      of units) upon producing evidence to the satisfaction of the Fund, and / or
can request a Nomination Form to nominate beneficiary(s)/successor(s)
                                                                                      after complying with all the formalities in connection with the claim, shall
(upto three) to receive the Units upon his/her/their death, to the extent
                                                                                      have the option either to be paid repurchase value of Units, or to continue
provided in the Regulations. Unitholders can nominate individuals not
                                                                                      in the Scheme if he/she so desires and is otherwise eligible, by issuance
exceeding three (jointly) as beneficiary(s)/successor(s) to receive the units
                                                                                      of account statement in his/her name. All payments and settlements made
either on first holder basis or in a particular percentage allocation upon
                                                                                      to such beneficiary and a receipt thereof shall be a valid discharge by the
his/her/their death. Notwithstanding anything contained in any other law
                                                                                      Fund.
for the time being in force or in any disposition, whether testamentary or
otherwise, in respect of such units of the Scheme, where a nomination                 Every appointment of a beneficiary(s) to be made under the Scheme
made in the prescribed manner purports to confer on any person(s) the                 shall be subject to such conditions and in writing signed by the unitholder(s)
right to vest the units of the scheme, the nominee(s) shall, on the death of          and shall remain in full force and effect until the death of the beneficiary /
the unitholders (single holder or all the joint holders) of the scheme become         unitholder(s) or until the same is revoked in writing by the unitholder(s)
entitled to all the rights in the units of the Scheme to the exclusion of all         (by whom the same was made) and a fresh appointment is made in the
other persons, unless the nomination is varied or cancelled in the                    manner aforesaid. Unitholder(s) may from time to time revoke or change
prescribed manner as stated in the clause “Appointment of Beneficiary”.               the beneficiary(s) (including percentage allocation) by filling an appropriate
In case of 3 joint nominee(s) without any percentage allocation the first             form made available. The new appointment of the beneficiary(s) shall
named nominee alone has the right to receive the amount due in respect                take effect on the date the appropriate form for appointment of the
of units in the event of death of the unitholder(s). In case of 3 joint               beneficiary(s) is submitted to the collection centre whether or not the
nominee(s) with a particular percentage allocation, all payouts and                   unitholder(s) is/are alive on the date of acknowledgement of the change
settlements would be made to all successors in the particular percentage              in beneficiary(s) without prejudice to the Fund or AMC or Trustees on
as stated by the unitholder(s). If no percentage is stated for allocation             account of any payment or transmission of Units having been made before
amongst nominees and if the first named nominee predeceases the                       the acknowledgement of the change or on account of any delay in payment
unitholder(s) and the unitholder(s) has/have not cancelled or substituted             or transmission of units having been made due to non production of
the nomination, second named nominee shall be entitled to receive the                 evidence to the satisfaction of the Fund and /on non compliance with all
amount due in respect of the units of the deceased unitholder(s). However,            the formalities in connection with the claim.
the nomination will cease to be valid on units repurchased/transferred by
                                                                                      The Trustees /AMC may alter these above state provisions/norms for
the original unitholder in full. All payments and settlements made to such
                                                                                      appointment of beneficiary(s) from time to time to the extent deemed
nominee(s) and a receipt thereof shall be a valid discharge by the Fund.
Unitholders being either parent or lawful guardian on behalf of a minor               necessary, and also in conformity with the guidelines and Notifications
and power of attorney holder of an eligible institution, societies, Funds,            issued by SEBI/ Government of India/any other regulatory body from time
bodies corporate, partnership firms and HUF shall have no right to make               to time and /or any statutory modifications or re-enactment thereof, so as
any nomination. Nomination in favor of Non-residents will be governed by              to permit the Scheme to provide maximum benefits to the unitholders and
the rules formulated by Reserve Bank of India from time to time.                      the beneficiary(s) The provisions for appointment of beneficiary(s) with
                                                                                      regard to Mutual Funds would be as per Section 56 and Section 69
Nomination can also be made for units which are pledged and offered as                (regarding the right of the beneficiary to transfer possession) of the Indian
security in favour of any entity/body for any purpose but only after                  Trusts Act, 1882 since the Mutual Fund is formed as a Trust under the
“approval”/”no objection” clearance from such entity/body. Notwithstanding            said Act. However, acceptance of such nomination/appointment of
anything contained in any other law for the time being in force or in                 beneficiary would be at the entire discretion of the Fund taking into
disposition, whether testamentary or otherwise, in respect of such pledge             consideration the provisions of the Indian Trust Act and the Mutual Fund
unit of the scheme, where a nomination made in the prescribed manner                  assumes no responsibility therefor, and the unitholder(s) would be liable
purports to confer on any person(s) the right to rest the pledged units of            for the loss resulting from a fraudulent nomination/appointment of
the scheme, the nominee(s) shall, on the death of the unitholder(s) (single           beneficiary based on the unitholder(s) (single holder or joint-holders)
holder or all the joint holders) of the scheme become entitled to all the             instructions, that the Fund reasonably believed as genuine.
rights in the pledged units of the scheme to the exclusion of all other
persons except the entity/body in whose favour the units are pledged by               PLEDGE OF UNITS
way of lien, unless the nomination is cancelled or varied.
                                                                                      In conformity with the guidelines and notification issued by SEBI/
Unitholders are also requested to refer to the clause on “Appointment of              Government of India/ any other regulatory body from time to time and /or
Beneficiary”. The provisions for nomination with regard to Mutual Funds               any Statutory modification or re-enactment thereof, the units under the
would be as per Section 56 and Section 69 (regarding the right of the                 Scheme (after the expiry of relevant lock-in period) may be offered as
beneficiary to transfer possession ) of the Indian Trust Act, 1882 since              security by way of a pledge/charge in favor of scheduled banks, financial
the Mutual Fund is formed as a Trust under the said Act. However,                     institutions, NBFC, or any other body. The AMC and/or the Registrar will
acceptance of such nomination/appointment of beneficiary would be at                  note and record such Pledged units. Appropriate documentation has been
the entire discretion of the Fund taking into consideration the provisions            drafted for this purpose and is available on request. However, disbursement
of the Indian Trust Act and the Mutual Fund assumes no responsibility                 of such loans will be at the entire discretion of the bank/financial institution/
therefor, and the unitholder(s) would be liable for the loss resulting from a         NBFC or any other body concerned and the Mutual Fund assumes no
fraudulent nomination/appointment of beneficiary based on the                         responsibility thereof.
unitholder(s) (single holder or joint-holders) instructions, that the Fund
reasonably believed as genuine.                                                       LISTING
APPOINTMENT OF BENEFICIARY                                                            The Scheme is a target segment orient Growth Scheme under which it is
Every unitholder(s) shall appoint up to three person(s) (viz. Spouse, child           envisaged that fresh sales will be made on a continuous basis over a
or dependent) as Primary and Contingent Beneficiary(s) under the Scheme               period of time while repurchase / redemption / switch of units will be made
to receive the benefits (as allocated) hereunder the Scheme in the event              anytime after the expiry of the lock-in period. As stated earlier, as this
of the death of the individual unitholder(s). The individual unitholder can           offer document replaces the previous Offer Document dated December
nominate beneficiary(s) to receive the benefits under the Scheme upon                 11, 1995 the Scheme which till now has been listed on National Stock
his / her death, to the extent provided in the foregoing clauses(s) on                Exchange of India Ltd (NSE), will henceforth from the date when made
nomination. When units are held jointly and joint names have been inserted            open ended will not continue to be listed on NSE. The units under the
then in the event of death of the first or any other holder, the person next          Scheme will thus be delisted from NSE and also are not proposed to be
in the order as stated in the application form, (unless changed) shall be             listed on any other stock exchange(s). However, the Fund may at its sole
the only person(s) recognized by the Fund as having any title or interest             discretion list the units under the Scheme on one or more stock exchanges
in the benefits under the Scheme, to the extent provided in the foregoing             at a later date to help distribution amongst a wider unitholder base.
clause(s) on “Mode of Holding”. Only on simultaneous death of all the
joint holders, the beneficiary(s) nominated can receive the benefits under            TRANSFER
the scheme, to the extent provided in the foregoing clause(s) on                      As the Fund will be repurchasing and issuing the units on an ongoing
nomination. Primary Beneficiary(s) shall have first right of vesting of units         basis, no transfer facility is required. However, if units are gifted or in

                                                                                 22
case of change of joint holding or otherwise when unit certificates are                Units issued before conversion date i.e. during the initial offer will not
held, or if a unitholder wants to sell the units in the market, by operation of        attract any repurchase load and the units will be repurchased at the
law or otherwise upon enforcement of a pledge/charge, then the Trustees/               prevailing NAV of the relevant business day as per the terms of the previous
AMC shall effect the transfer, so long as the intended transferee is                   (original) Offer Document dated December 11, 1995.
otherwise eligible to hold the units. The instrument of transfer used for
                                                                                       Repurchase by NRI’s/OCBs/FIIs
transfer of the units (in case of unit certificates) shall be the same transfer
instruments (Form 7B) used for company shares.                                         Credit balances in the account of an NRI/OCB/FII will be subject to any
                                                                                       procedures laid down by the RBI. Such repurchase proceeds will be paid
For effecting the transfer, unitholders can request the Fund by writing to             by means of a rupee cheque payable to the designated NRE/NRO account
the Registrar along with the Account Statement/unit certificate, gift deed             of the unitholder or by a US dollar (or any other currency) draft drawn at
instrument and any other documents. The AMC shall on production of                     the exchange rates prevailing at that time and subject to RBI procedures
instrument of transfer together with relevant unit certificate(s), account             and approvals and subject to deduction of tax at source, as applicable.
statement, etc. register the transfer and return the unit certificate(s) /             All bank charges in connection with such payment will have to be borne
Account Statement to the transferee within 30 days from the date of such               by the unitholder and /or the Scheme by way of ongoing expenses.
production.
                                                                                       The Fund will not be liable for any delays or for any loss on account of
UNITS WITH DEPOSITORY                                                                  exchange fluctuations, while converting the rupee amount in US Dollar or
Units of the Scheme may, if decided by the AMC, be held with a depository.             any other currency.
Under such circumstances, units will be transferable in accordance with                Payment of Repurchase Proceeds
the provisions of the Securities and Exchange Board of India (Depositories
                                                                                       The time limit set for dispatch of repurchase proceeds will be from the
and Participants) Regulations, 1996 as may be amended from time to
                                                                                       Business Day when the request is accepted at the collection centres or
time.
                                                                                       the Registrar’s office. As per the SEBI Regulations, the Fund shall mail
REPURCHASE OF UNITS                                                                    the repurchase proceeds within ten Business Days from the date of
                                                                                       acceptance of valid request at any of the collection centres or the office of
Repurchase Procedure
                                                                                       the Registrar, in case of a repurchase request being sent by post. The
After the expiry of lock-in period (if any), the units of the Scheme can               Fund will ordinarily dispatch the repurchase warrant within 3 days from
be repurchased (sold back to the Fund) on any business day. The                        the date of acceptance of a valid repurchase request.
repurchase request can be made on a repurchase form or by using the
                                                                                       In the event of failure to dispatch the repurchase or repurchase proceeds
relevant tear off section of the Transaction Slip that may be enclosed with
                                                                                       within the statutory period specified above as per the SEBI Regulations,
the Account Statement which should be submitted at any of the collection
                                                                                       the AMC shall be liable to pay interest to the unitholders at such rate
centres or at the office of the AMC or can be sent by mail to the Registrar.
                                                                                       (currently 15% per annum) as may be specified by SEBI for the period of
In case the units are standing in the names of more than one unitholder,               such delay.
where mode of holding is specified as “Jointly”, repurchase requests will
                                                                                       ELECTRONIC CREDIT CLEARING SERVICES (ECS)
have to be signed by all the joint holders. However, in cases of holding
specified as ‘Either/Anyone or Survivor’, anyone of the joint holders (in              ECS is a facility offered by RBI, for facilitating better customer service by
case of either/anyone or survivor) will have the power to make repurchase              direct credit of dividend or repurchase amount to an unitholder’s bank
request. However, in all cases, the repurchase proceeds will be paid to                account through electronic credit. This helps in avoiding loss of dividend
the first named holder only.                                                           or repurchase warrant in transit or fraudulent encashment. The Fund will
                                                                                       endeavour to arrange such facility for payment of dividend/repurchase
The repurchase would be permitted to the extent of credit balance in the               proceeds to the unitholders. However, this facility is optional for the
unitholder’s account. The repurchase request can be made by specifying                 unitholders.
the Rupee amount or by specifying the number of units to be repurchased.
If a repurchase request is for both a specified Rupee amount and a                     Repurchase proceeds may be released through the ECS facility to
specified number of units, the specified rupee amount will be considered               unitholders residing in any of the cities where such a facility is available.
the definitive request. If the repurchase amount is specified by the                   However, the maximum amount of repurchase in such cases should be
unitholder, the AMC will divide the repurchase amount so specified by the              Rs. 100,000/-. The AMC may change this amount depending upon the
applicable NAV based price to arrive at the number of units. The request               relevant guidelines from the RBI from time to time.
for repurchase of units could also be in fractions, up to three decimal                In order to avail the above facility, the unitholder will have to give a written
places.                                                                                request to the Registrar. If the unitholder has opted for the ECS facility
In case an unitholder has subscribed to units on more than one Business                his/her bank branch will directly credit the amount due to them in their
Day (either through continuation in case of existing unitholder, or through            account whenever the payment is through ECS. The Registrar will send a
subsequent subscriptions), the units subscribed to prior in time (that is              separate advice to the unitholder informing them of the direct credit.
those units which have been held for the longest period of time), will be              It may be noted that there is no commitment from the Fund that this
deemed to have been repurchased first, that is on a First -In -First-Out               facility will be made available to the unitholders for payment of dividend/
basis. However an unitholder may request the Fund to repurchase units                  repurchase proceeds. While the Fund will endeavour in arranging the
subscribed by him/her at different dates, by indicating the specific date of           facility it will be dependent on various factors including sufficient demand
subscription of the units, which is offered for repurchase.                            for the facility from unitholders at any centre, as required by the authorities.
                                                                                       In places where such a facility is not available or if the facility is discontinued
Unitholders may also request for repurchase of their entire holding and
                                                                                       by the Fund for any reason the repurchase warrants will be mailed to the
close the account by indicating the same at the appropriate place in the
                                                                                       unitholder.
Transaction Slip / Repurchase form.
                                                                                       SYSTEMATIC WITHDRAWAL PLAN /SWITCH PLAN(S) (SWP) / (SSP)
Repurchase Price
                                                                                       After the expiry of lock-in period, the unitholder may set up a Systematic
An exit load of up to a maximum of 5% or as stipulated by SEBI will be
                                                                                       Withdrawal and/or Switch Facility on a monthly, quarterly or semi-annual
charged on repurchase of units by unitholders under the scheme. The
                                                                                       or annual basis (as follows) :
exit load will be calculated as a percentage of the applicable NAV. Further,
the difference between the sale price and repurchase price of units shall              -    redeem /transfer a fixed number of units or amount
not exceed 7% calculated on the sale price.                                            -    redeem/ transfer on dates
The repurchase price will be calculated using the following formula:                   -    redeem/transfer on realisation of Gains
     Repurchase Price           =   Applicable NAV - exit load, if any                 Once the unitholder sets up a periodic Systematic Withdrawal / Switch
                                                                                       plan, the plan would continue until:
Example for calculation of Repurchase Price
                                                                                       -    the unitholder instructs the Fund to stop periodic withdrawal and /or
If the Applicable NAV is Rs. 15 and a 2% exit load is charged the repurchase                switch in writing; or
price will be calculated as follows:
                                                                                       -    the unitholder account balance is zero.
     Repurchase Price           =   Rs. 15 - (2% of Rs. 15)                            -    On death or incapacity of the unitholder
                                =   Rs. 15 - Re. 0.30                                  -    On expiry of the time/period specified by the unitholder
                                =   Rs. 14.70 per unit
                                                                                       The unitholder has an option to select either 1st, 11th or 21st day of the
The AMC reserves the right to modify the exit load or levy a different exit            month on which the repurchase/switch is to be made. However, if no date
load as regards the amount / tenure of investment etc. However, any                    is selected, the repurchase/switch will be made on the 11th of the month at
such change in the load structure shall be only on a prospective basis.                applicable NAV related price. The AMC may change the date for group
The unitholder is requested to confirm the applicable exit load at the time            investors or on demand from a section of the unitholders or otherwise to
of investment from the AMC/ collection centre.                                         offer benefits to the unitholders.


                                                                                  23
Withdrawal payments will be endeavoured to be sent within 3 Business                        etc becomes extremely volatile and the AMC so decides in the best
Days after the repurchase date. A unitholder may avail of the Systematic                    interest of the unitholders)
Withdrawal Plan and receive regular payments from the account. The                     •    Declaration of war or occurrence of insurrection, civil commotion or
switch will happen on selected date. A unitholder may avail of the                          any other serious or sustained financial, political or industrial
systematic Switch Plan and thus can rebalance/redistribute his investment                   emergency or disturbance or any natural calamity
across the Fund. In case of withdrawal/switch on dates, on realisation of
gains, a specified amount/ full amount/ gains/ appreciation etc. would be              •    In extreme cases or complete breakdown or dislocation of business
paid /switched to the unitholder/other scheme either on the investment                      in the financial markets.
attaining a particular value or after a particular period of time. In case of          •    SEBI by order so permits
withdrawal by gains/appreciation, at the option of the unitholder, either              •    During the period of Book Closure/Record Date
the amount equivalent to gains/appreciation, would be redeemed and
paid to the unitholder /switched into other scheme, or the full original               •    On a requisition made by three-fourth’s of the unitholder.
investment would be redeemed and the gain / appreciation component                     The AMC reserves the right in its sole discretion to withdraw the facility of
paid to the unitholder/switch into other scheme and the original investment            sale and switch option of units into and out of the Scheme temporarily or
amount would be reinvested either in the same scheme or any other                      indefinitely, if AMC views that changing the size of the corpus further may
scheme.                                                                                prove detrimental to the existing unitholders of the Fund.
The amount thus withdrawn/switched shall be converted into the respective              SUSPENSION OF SALE/REPURCHASE OF DEMAT UNITS
scheme units at the applicable NAV, subject to an exit load, if any (on                The AMC may at its sole discretion suspend the sale/repurchase of demat
which date the payment / switch is scheduled), and such units will be                  Units of the scheme either temporarily or permanently on one or more
subtracted from the unit balance of that unitholder. The minimum balance               Designated Stock Exchange(s). During the period when there is a
amount needed for the Systematic Withdrawal /switch Plan may be altered                temporary suspension, Units will not be sold/repurchased by the Fund.
from time to time at the discretion of the AMC.                                        On permanently suspending the sale/repurchase of Units, existing Units
Unitholders may change the amount of withdrawal/switch but not below                   held in the dematerialised mode shall be rematerialised and account
the specified minimum amount of repurchase for a particular Scheme by                  statements despatched to them subsequently, requests for any transaction
giving 30 days written notice to the Registrars / AMC.                                 will be effected in the physical mode only.

CLOSURE OF UNITHOLDER’S ACCOUNT                                                        PAYMENT TO ALTERNATE PAYEE
Unitholders may note that the AMC at its sole discretion may close a                   The Fund may subject to compliance with such requirement as it deems
unitholder’s account after giving notice of 45 days, if at the time of any             fit and necessary and may stipulate, arrange to issue redemption and /or
part repurchase and / or systematic withdrawal / switch Plan the value of              any distribution cheques in favour of an alternate payee on unitholder(s)
units (represented by the units in the unitholder’s account if such                    request either at the time of investment and/or at the time of redemption
repurchase were to take place, valued at the applicable NAV related Price),            or any distribution. Reasonable procedures need to be followed to assure
falls below the minimum investment/balance required for the scheme (or                 that instructions from unitholders regarding payment to Alternate Payee
such other amount as the AMC may decide from time to time) or where                    are genuine. The unitholder(s) would be liable for the loss resulting from
the units are held by a unitholder in breach of any Regulation. Besides if             a fraudulent encashment/payment to Alternate Payee, based on the
the investor falls under the category where the entry load is to be waived             unitholders instructions, that the Fund reasonably believed as genuine.
or otherwise and the investor then does not submit the requisite proof,                The Fund reserves the right to require an indemnity or verification
then the Fund has the right at its sole discretion to redeem appropriate               countersigned by a bank Manager, notary public, magistrate or other party
number of units so as to recover the differential / additional entry load or           acceptable to it before accepting such instructions. All payments &
refuse to credit appropriate number of units to the account of the unitholder          settlements made to such alternate payee(s) and a receipt thereof shall
for the differential / additional entry load.                                          be a valid discharge by the Fund and the Fund shall not be in any manner
                                                                                       liable to the unit holder. It may be noted that there is no commitment from
RIGHT TO LIMIT REPURCHASES                                                             the Fund that this facility will be made available to the unitholders.
The AMC may, in the general interest of the unitholders of the Scheme,
                                                                                       ISSUE OF BONUS UNITS AND / OR DIVIDEND DISTRIBUTION
keeping in view the unforeseen circumstances/unsure conditions, limit
the total number of units which may be repurchased on any Business Day                 Guided by the philosophy of value -oriented returns the AMC may issue
to 15% of the total number of units then in issue under the Scheme (or                 bonus units & / or distribute dividend out of the distributable surplus
such higher percentage as the AMC may decide in any particular case).                  available in the Scheme. The issue of bonus units & / or distribution of
Any units which by virtue of these limitations are not repurchased on a                dividend would be done at a ratio & / or rate that would be decided by the
particular Business Day will be carried forward for repurchase to the next             Trustees. The bonus units would be issued & / or dividend would be
Business Day, in order of receipt. Repurchases so carried forward will be              distributed to all unitholders whose names appear in the register of
priced on the basis of the Repurchase Price of the Business Day on                     members as on the record date fixed for the purpose. Fresh account/
which repurchase is made. Under such circumstances, to the extent                      transaction statements will be sent to all unitholders after the allotment of
multiple repurchase requests are received at the same time on a single                 bonus units while dividend would be distributed through warrants or by
Business Day, repurchase will be made on pro-rata basis, based on the                  direct credit or otherwise as requested by the unitholders. It may be noted
size of each repurchase request, the balance amount being carried forward              that since bonus units would be issued & / or dividend would be distributed
for repurchase to the next Business Day(s).                                            out of the distributable surplus, the NAV of the Scheme will be adjusted to
                                                                                       the extent of the bonus units issued & / or dividend distributed after the
POSSIBLE DEFERRAL OF REDEMPTION/REPURCHASE REQUESTS                                    record date fixed for the purpose. Bonus units will not be subject to
Whilst every effort will be made to ensure that the Scheme will have sufficient        any lock-in period. Dividend if distributed will have following three options
liquidity to enable the repurchase cheques to be collected/despatched within           which an unitholder can choose;
the deadline stated in the foregoing Clause, unitholders should note that
where the Scheme is obliged to arrange for the disposal of the underlying              Dividend Options
securities/borrow, in order to satisfy redemption/repurchase requests,                 Dividend Payout Option: Unitholders will have the option to receive payout
unitholders may experience some delays in receiving repurchase cheques,                of their dividend by way of dividend warrant or any other means which
reflecting the time involved in settling the underlying sales of securities/           can be encashed or by way of direct credit into their account. Dividend
borrowing. However in any case, the Fund will ensure that the collection/              proceeds will be dispatched within 30 days from the date of declaration of
despatch of repurchase cheques is not delayed beyond ten working days                  the dividend.
(when IDBI-PRINCIPAL is open for business) from the date of receipt of the
                                                                                       Dividend Reinvestment Option: Unitholders will have the Option to
repurchase request in accordance with Regulation 53 (b) of the Securities
                                                                                       automatically reinvest their dividend in the Scheme at the Applicable NAV
and Exchange Board of India (Mutual Funds) Regulations, 1996.
                                                                                       based prices.
SUSPENSION OF SALE/REPURCHASE/ SWITCH OPTIONS OF THE                                   Dividend Sweep Option: Unitholders can choose to reinvest their dividend
UNITS                                                                                  in any other open ended schemes of the Fund, at Applicable NAV based
The Fund at its sole discretion reserves the right to withdraw sale and/or             prices.
repurchase and /or switch of the units under the scheme temporarily or
indefinitely, if in the opinion of the AMC the general market conditions are           SPLIT IN THE FACE VALUE OF UNITS
not favourable and/or suitable investment opportunities are not available              The units under the Scheme are presently being issued at the face value
for deployment of Funds.                                                               of Rs. 10. The AMC may split the face value of the units to below Rs. 10
The sale, repurchase and switch of the units may be temporarily suspended              in multiple of an appropriate integer, the intent being to protect the interest
under the following conditions :                                                       of the unitholders. The units after split in the face value would be issued
                                                                                       to all Unitholders whose names appear in the register of members as on
•    If the Stock / Money Markets stop functioning or trading is restricted
                                                                                       the record date fixed for the purpose. Fresh account/transaction statements
•    Under uncertain conditions when the market (capital/stock/money                   will be sent to all unitholders after the split procedure is completed. The

                                                                                  24
NAV of the Scheme will be adjusted to the extent of the split in the face           the scheme would be delivered to the Designated Clearing Corporation
value of units after the record date fixed for the purpose.                         on the 3rd Business Day from the transaction day. On a settlement day,
                                                                                    subject to the Fund receiving confirmation from the Designated Stock
 XI SALE AND REPURCHASE OF DEMAT UNITS THROUGH                                      Exchange/ Designated Clearing Corporation of the payment proceeds,
    DESIGNATED STOCK EXCHANGES                                                      the Fund will make delivery of the demat Units to the Designated Clearing
                                                                                    Corporation of the Designated Stock Exchange. The Designated Clearing
An investor may, if he/she/it so desires, use his/her/its existing demat            Corporation will then credit the demat Units to the respective Broker’s
account (“demat”) in respect of the demat units of the Scheme and in that           pool account. Under the procedure prescribed by the Designated Stock
case may avail of the advantage of the automated trading, clearing and              Exchange / Designated Clearing Corporation, thereupon the Broker is
settlement system of stock exchange(s)/ Clearing Corporations, for sale             under an obligation to credit the respective demat account of the
and repurchase of the demat Units of the Scheme. Availability of wide               Unitholder. However, the credit of demat Units by the Fund to the
reach of such a system, will make transacting in the demat Units                    Designated Clearing Corporation of the Designated Stock Exchange
operationally convenient. An investor may approach a broker, for this               will constitute full discharge of the Fund of its obligation to allot demat
purpose, who is a registered member (Participant/Trading Member/Broker)             Units to the investor and for this purpose, the Investor shall have
of a stock exchange/clearing house/clearing corporation, with which the             constituted the Broker of the Designated Stock Exchange is his/her/its
Fund has entered into an agreement/understanding in this regard                     authorised agent. Kindly see Section II “Risk Factors” for Risk associated
(hereinafter referred to as the “Designated Stock Exchanges /Designated             with Sale and Repurchase of demat Units through Designated Stock
Clearing Corporation”) and place an order for the sale / repurchase of              Exchange / Designated Clearing Corporation.
demat Units to the Broker.
                                                                                    PROCEDURE FOR REPURCHASE OF DEMAT UNITS
As of date, the fund is in a process of entering into necessary agreement
with National Stock Exchange Of India Limited (NSEIL) and its wholly                Minimum amount / Units for repurchase of Demat Units
owned clearing corporation, National Securities Clearing Corporation                The repurchase is permitted to the extent of the credit balance (which
Limited (NSCCL) for availing their automated trading, clearing and                  does not have a lock- in) in the Unitholder’s demat account. The repurchase
settlement system for Sale and Repurchase of demat Units of the Fund,               request may be made by specifying the number of demat Units to be
namely the Mutual Fund Service System (MFSS). NSE has not prescribed                repurchased.
payment of brokerage on transacting in demat Units.
                                                                                    Demat Units of the scheme may not be repurchased till the expiry of the
Orders placed for the sale / repurchase of demat Units by the Brokers of            lock in period. The AMC however, reserves the right to change the basis
the Designated Stock Exchange/Designated Clearing Corporation will be               for repurchase through demat mode from Unit basis to any other basis.
transacted by the Fund at the same price (upto 2 decimals or otherwise)
                                                                                    Repurchase of Demat Units
at which sale and repurchase is being done on that day for Units in the
present (physical) mode. Both Sale as well as repurchase is being effected          Resident investors may get repurchased their dematerialised Units by
on the applicable day end Sale Price/Repurchase Price respectively, of              placing an order with a Broker which is a member of the Designated Stock
the business day or the following Business Day (in case the transaction             Exchange/Designated Clearing Corporation, for the demat Units to be
day is not a Business Day for the Mutual Fund).                                     repurchased by the Fund. As with any dematerialised securities, the demat
                                                                                    Units will have to be transferred to the Broker’s demat account from the
Investors desiring of transacting in demat Units should note the following:         Unitholder’s demat account, and then offered for repurchase to the Fund
                                                                                    through the Designated Stock Exchange / Designated Clearing
Units for purchase as well as for repurchase in demat mode through the
                                                                                    Corporation. Under the procedure prescribed by the Designated Stock
Designated Stock Exchange is presently open only for Resident investors,
                                                                                    Exchange / Designated Clearing Corporation, the Broker is under an
excluding non-resident investors as well as investors who have custodians
                                                                                    obligation to furnish to the investor an order confirmation / transaction
handling the settlement of their investment which may be made available
                                                                                    slip for the repurchase order.
at a future date. Switching of demat Units inter scheme as well as intra
scheme which is presently not being made available & may be made                    Repurchase Price of Demat Units
available at a future date.
                                                                                    The Repurchase will be effected on the applicable day end Repurchase
                                                                                    Price (upto 2 decimals or otherwise) on the business day or the following
PROCEDURE FOR PURCHASE OF DEMAT UNITS OVER THE STOCK
                                                                                    Business Day (in case the transaction day is not a Business Day for the
EXCHANGE(S)
                                                                                    Mutual Fund). The applicable Repurchase Price as aforesaid for the
Purchase of Demat Units by Investors                                                repurchase of demat Units will be same price (upto 2 decimals or otherwise)
                                                                                    as applicable for Units repurchased in the present (physical) mode. Units
Purchase of demat Units may be made through Brokers of Designated                   tendered for repurchase through the demat mode will be priced at the
Stock Exchanges/Designated Clearing Corporation and for a specific                  Applicable NAV less exit load, if any.
number of demat Units. The AMC however, reserves the right to change
the basis for purchase through demat mode from number of Units’ basis               Payment of Repurchase Proceeds
to any other basis.                                                                 The Designated Stock Exchange / Designated Clearing Corporation and
Under the instructions issued by the Designated Stock Exchanges /                   the Fund, would agree upon a settlement cycle / schedule for the orders
Designated Clearing Corporations, the Broker registered with such                   placed by the investors with the Brokers for repurchase of demat Units
Designated Stock Exchanges / Designated Clearing Corporation is legally             from time to time. For the time being the settlement cycle is T + 3 (which
bound to supply to the investor the abridged offer document for the specific        may change), with T being the transaction day, i.e. the repurchase
scheme (made available to the Broker by the Fund through such                       proceeds of the scheme(s) would be paid to the Designated Clearing
Designated Stock Exchange/ Designated Clearing Corporation) and                     Corporation on the 3rd Business Day from the transaction day. On
procure the completed application form from the investor for the Broker’s           settlement day, subject to the Fund receiving confirmation from the
record before accepting the first order from any investor. However, for             Designated Clearing Corporation of the availability of demat Units offered
subsequent investments, completed order confirmation/ transaction slips             for repurchase, the Fund will pay the repurchase proceeds to the
containing the relevant details may be adequate. Under the procedure                Designated Clearing Corporation of the Designated Stock Exchange.
prescribed by the Designated Stock Exchange / Designated Clearing                   The Designated Clearing Corporation will then credit the repurchase
Corporation, the Broker is under an obligation to furnish to the investor an        proceeds to the respective Broker’s pool account. Under the procedure
order confirmation / transaction slip for the purchase order.                       prescribed by the Designated Stock Exchange / Designated Clearing
                                                                                    Corporation, the Broker is under an obligation thereupon to pay the
Sale Price of Demat Units by Investors                                              respective repurchase proceeds to the Unitholder. However, the payment
The sale will be effected on the applicable day end Sale Price (upto 2              of repurchase proceeds by the Fund to the Designated Clearing
decimals or otherwise) on the business day or the following Business Day            Corporation of the Designated Stock Exchange will constitute full
(in case the transaction day is not a Business Day for the Mutual Fund).            discharge of the Fund of its obligation to pay the repurchase price of the
The applicable Sale Price as aforesaid for the sale of demat Units will be          demat Units to the investor and for this purpose, the Investor shall have
the same price (upto 2 decimals or otherwise) as applicable for Units               constituted the Broker of the Designated Stock Exchange is his/her/its
subscribed in the normal (physical) mode. Units tendered for subscription           authorised agent. Kindly see Section II “Risk Factors” for Risk associated
through the demat mode, will be priced at the applicable NAV plus entry             with Sale and Repurchase of demat Units through Designated Stock
load, if any.                                                                       Exchange / Designated Clearing Corporation.
Allotment of Demat Units                                                            Other Information
The Designated Stock Exchange / Designated Clearing Corporation and                 Expenses incurred for the above distribution channel will form a part of
the Fund would agree upon a settlement cycle / schedule for the orders              the overall expense limit stated under clause 52 of SEBI (Mutual Funds)
placed by the investors with the Brokers for purchase of demat Units                Regulations, 1996. Any expenditure over and above the set limits shall
from time to time. For the time being the settlement cycle is T + 3 (which          be borne by the Asset Management Company and / or the Trustee and /
may change), with T being the transaction day, i.e. the demat units of              or the Sponsor.

                                                                               25
                                                                                         approved by the AMC. Such decision of the AMC must be
 XII VALUATION POLICY AND DETERMINATION OF NET ASSET
                                                                                         documented and the supporting data in respect of each security so
     VALUE (NAV)
                                                                                         valued must be preserved. The methods used to arrive at the values
The assets of the Scheme will be valued according to the following                       “in good faith” shall be periodically reviewed by the Trustees and
guidelines, presently in force, which are in conformity with SEBI                        reported upon by the Auditors as “Fair and Reasonable” in their report
Regulations.                                                                             on the annual accounts of the Fund. For the purpose of valuation of
                                                                                         non traded securities, the following principles will be adopted;
GUIDELINES FOR VALUATION OF SECURITIES FOR MUTUAL FUNDS
                                                                                         (i)    Non-traded / thinly traded equity securities:
Mutual funds shall categorise the securities according to the following
                                                                                                Equity instruments shall generally be valued as follows on the
norms:
                                                                                                basis of capitalisation of earnings solely or in combination with
1. Traded Securities :                                                                          the NAV, using for the purposes of capitalisation, the price or
                                                                                                earning or earnings ratios of comparable traded securities and
     1)    The securities shall be valued at the last quoted closing price
                                                                                                with an appropriate discount for lower liquidity.
           on the stock exchange.
     2)    When the securities are traded on more than one recognised                    1.     Based on the latest available Balance Sheet, net worth shall be
           stock exchange, the securities shall be valued at the last quoted                    calculated as follows :
           closing price on the stock exchange where the security is actively                   Net Worth per share = [share capital+ reserves (excluding
           traded. It would be left to the AMC to select the appropriate                        revaluation reserves) - Misc. expenditure and Debit Balance in
           stock exchange, but the reasons for the selection should be                          P&L A/c] Divided by No. of Paid up Shares.
           recorded in writing. There should however be no objection for
                                                                                         2.     Average capitalisation rate (P/E ratio) for the industry based
           all scrips being valued at the prices quoted on the stock
                                                                                                upon either BSE or NSE data (which should be followed
           exchange where a majority in value of the investments are
                                                                                                consistently and changes, if any noted with proper justification
           principally traded such as the National Stock Exchange (NSE)
                                                                                                thereof) shall be taken and discounted by 75% i.e. only 25% of
           or The Stock Exchange, Mumbai (BSE).
                                                                                                the Industry average P/E shall be taken as capitalisation rate
     3)    Once a stock exchange has been selected for valuation of a
                                                                                                (P/E ratio). Earnings per share of the latest audited annual
           particular security, reasons for change of the exchange shall
                                                                                                accounts will be considered for this purpose.
           be recorded in writing by the AMC.
     4)    When on a particular valuation day, a security has not been                   3.     The value as per the net worth value per share and the capital
           traded on the selected stock exchange; the value at which it is                      earning value calculated as above shall be averaged and further
           traded on another stock exchange may be used.                                        discounted by 10% for ill-liquidity so as to arrive at the fair value
     5)    When a security (other than government securities) is not traded                     per share.
           on any stock exchange on a particular valuation day, the value                4.     In case the EPS is negative, EPS value for that year shall be
           at which it was traded on the selected stock exchange or any                         taken as zero for arriving at capitalised earning.
           other stock exchange, as the case may be, on the earliest
                                                                                         5.     In case where the latest balance sheet of the company is not
           previous day may be used provided such date is not more than
                                                                                                available within nine months from the close of the year, unless
           thirty days prior to the valuation date.
                                                                                                the accounting year is changed, the shares of such companies
     6)    Presently the AMC is valuing the securities of the scheme based
                                                                                                shall be valued at zero.
           on the quotations of the NSE, since the price quotations of all
           securities listed on most of the Stock Exchanges are available                6.     In case an individual security accounts for more than 5% of the
           on NSE. However, the AMC reserves the right to change the                            total assets of the scheme, an independent valuer shall be
           basis of valuation to BSE, or any other stock exchange, if it is                     appointed for the valuation of the said security.
           found to be more appropriate.                                                 (ii)   Non traded debt instruments
2.   Thinly Traded Securities :                                                                 Non traded debt instruments in the Fund shall generally be
     (i)   Thinly Traded Equity/Equity Related Securities :                                     valued on an “yield to maturity” basis, the capitalization factor
                                                                                                being determined for comparable traded securities and with
           When trading in an equity/equity related security (such as                           appropriate discount for lower liquidity.
           convertible debentures, equity warrants, etc.) in a month is less
                                                                                         (a)    Non Traded /Thinly Traded Debt Securities of Upto 182 Days
           than Rs. 5 lacs or the total volume is less than 50,000 shares,
                                                                                                to Maturity :
           it shall be considered as a thinly traded security and valued
           accordingly.                                                                         As the non-traded money market securities are valued on the
           Where a stock exchange identifies the “thinly traded” securities                     basis of amortization (cost plus accrued interest till the
           by applying the above parameters for the preceding calendar                          beginning of the day plus the difference between the redemption
           month and publishes/provides the required information along                          value and the cost spread uniformly over the remaining maturity
           with the daily quotations, the same can be used by the Fund.                         period of the instruments) the same process should be adopted
           If the share is not listed on the stock exchanges which provide                      for non-traded debt securities with residual maturity of upto
           such information, then it will be obligatory on the part of the                      182 days, in the absence of any other standard benchmarks in
           Fund to make its own analysis in line with the above criteria to                     the market. All other non traded Non Government debt
           check whether such securities are thinly traded which would                          instruments should be valued using the method suggested in
           then be valued accordingly.                                                          (ii)(b) hereof.
           In case trading in an equity security is suspended upto 30 days,
                                                                                         (b)    Non Traded/ Thinly Traded Debt Securities of Over 182 Days
           then the last traded price would be considered for valuation of
                                                                                                to Maturity :
           that security. If an equity security is suspended for more than
           30 days, then the Asset Management Company/Trustees will                             For the purpose of valuation, all Non Traded Debt Securities
           decide the valuation norms to be followed and such norms would                       would be classified into “Investment grade” and “Non
           be documented and recorded.                                                          Investment grade” securities based on their credit ratings. The
                                                                                                non-investment grade securities would further be classified as
      (ii) Thinly Traded Debt Securities:                                                       “Performing” and “Non Performing” assets
           A debt security (other than Government Securities) that has a             •   All Non Government investment grade debt securities, classified as
           trading volume of less than Rs. 5 crores in the previous calendar             not traded, shall be valued on yield to maturity basis as described
           month shall be considered as a thinly traded security based                   below.
           upon information provided by the relevant stock exchange on               •   All Non Government non investment grade performing debt securities
           the volume of debt securities traded.                                         would be valued at a discount of 25% to the face value
           A thinly traded debt security as defined above would be valued            •   All Non Government non investment grade non performing debt
           as per the norms set for non-traded debt security.                            securities would be valued based on the provisioning norms.
                                                                                         The approach in valuation of non traded debt securities is based
3.   Non Traded Securities :
                                                                                         on the concept of using spreads over the benchmark rate to arrive
     When a security (other than Government Securities) is not traded                    at the yields for pricing the non traded security.
     on any stock exchange for a period of thirty days prior to the valuation
     date, the scrip must be treated as a ‘non traded’ security.                         The Yields for pricing the non traded debt security would be arrived
                                                                                         at using the process as defined below.
4.   Valuation Of Non-Traded / Thinly Traded Securities
                                                                                     Step A
     Non traded/ thinly traded securities shall be valued “in good faith” by
     the Asset Management Company on the basis of appropriate                        A Risk Free Benchmark Yield is built using the government securities
     valuation methods based on the principles laid down below and                   (GOI Sec) as the base. GOI Secs are used as the benchmarks as they


                                                                                26
are traded regularly; free of credit risk; and traded across different maturity        C.    Mark-up/Mark-down Yield
spectrums every week.
                                                                                             The Yields calculated would be marked-up/marked -down to account
Step B                                                                                       for the illiquidity risk, promoter background, finance company risk
A Matrix of spreads(based on the credit risk) are built for marking up the                   and the issuer class risk. As the level of illiquidity risk would be
benchmark yields. The matrix is built based on traded corporate paper on                     higher for non rated securities the marking process for rated and
the wholesale debt segment of an appropriate stock exchange and the                          non rated securities would be differentiated as follows
primary market issuances. The matrix is restricted only to investment                  C     (I)    Adjustments for Securities rated by external rating agencies :
grade corporate paper.
                                                                                                    The Yields so derived out of the above methodology could be
Step C                                                                                              adjusted to account for risk mentioned above.
The yields as calculated above are Marked-up/Marked-down for ill-liquidity                          A Discretionary discount/premium of upto +/-50 Basis Points
risk                                                                                                for securities having a duration of upto 2 years and upto +/- 25
Step D                                                                                              Basis Points for securities having duration higher than 2 years
                                                                                                    will be permitted to be provided for the above mentioned types
The Yields so arrived are used to price the portfolio                                               of risks. The rationale for the above discount structure is to
                                                                                                    take cognizance of the differential interest rate risk of the
METHODOLOGY                                                                                         securities. This structure will be reviewed periodically.
A. Construction of Risk Free Benchmark                                                 C     (II)   Adjustments for Internally Rated Securities :
Using Government of India dated securities, the Benchmark shall be                                  To value an un-rated security, the investment manager has to
constructed as below :                                                                              assign an internal credit rating, which will be used for valuation.
Government of India Dated securities will be grouped into the following                             Since un-rated instruments tend to be more illiquid than rated
duration buckets viz., 0.5-1 years, 1-2 years, 2-3 years, 3-4 years, 4-5                            securities, the yields would be marked up by adding +50 basis
years, 5-6 years and over 6 years and the volume weighted yield would                               point for securities having a duration of upto two years and +25
be computed for each bucket. Accordingly, there will be a benchmark                                 basis point for securities having duration of higher than two
YTM for each duration bucket.                                                                       years to account for the illiquidity risk.
The benchmark as calculated above will be set weekly, and in the event                 Valuation of securities with Put/Call Options
of any change in the Reserve Bank of India (RBI) policies affecting interest
                                                                                       The option embedded securities would be valued as follows:
rates during the week, the benchmark will be reset to reflect any change
in the market conditions.                                                              Securities with call option :
Note : The concept of duration over tenor has been chosen in order to                  The securities with call option shall be valued at the lower of the value as
capture the reinvestment risk. It is intended to gradually move towards a              obtained by valuing the security to final maturity and valuing the security
methodology that incorporates the continuous curve approach for valuation              to call option.
of such securities. However, in view of the current lack of liquidity in the
corporate bond markets, a continuous curve approach to valuation would                 In case there are multiple call options, the lowest value obtained by valuing
be necessarily based on limited data points, and this would result in out of           to the various call dates and valuing to the maturity date is to be taken as
line valuations. As an interim methodology therefore it is proposed that               the value of the instrument.
the Duration Bucket approach be adopted and continuously tracked in
                                                                                       Securities with Put option :
order to fine tune the duration buckets on a periodic basis. Over the next
few years it is expected that with the deepening of the secondary market               The securities with put option shall be valued at the higher of the value as
trading, it would be possible to make a gradual move from the Duration                 obtained by valuing the security to final maturity and valuing the security
Bucket approach towards a continuous curve approach.                                   to put option
B . Building a Matrix of Spreads for Marking-up the Benchmark Yield                    In case there are multiple put options, the highest value obtained by valuing
                                                                                       to the various put dates and valuing to the maturity date is to be taken as
Mark up for credit risk over the risk free benchmark YTM as calculated in
step A, will be determined using the trades of corporate debentures/bonds              the value of the instruments.
of different ratings. All trades on appropriate stock exchange during the              Securities with both Put and Call option on the same day
fortnight prior to the benchmark date will be used in building the corporate
YTM and spread matrices. Initially these matrices will be built only for               The securities with both Put and Call option on the same day would be
corporate securities of investment grade. The matrices are dynamic and                 deemed to mature on the Put/Call day and would be valued accordingly.
the spreads will be computed every week. The matrix will be built for all              (c)   Government securities (not traded for more than 30 days or one
duration buckets for which the benchmark GOI matrix is built to effectively                  which would qualify as a thinly traded security) will be valued at cost
link the corporate matrix with the GOI securities matrix. Accordingly :                      plus accrual and amortizing the discount or premium over the life of
•    All traded paper (with minimum traded value of Rs. 1 crore) will be                     the security.
     classified by their ratings and grouped into 7 duration buckets; for
     rated securities, the most conservative publicly available rating will            (iii) Illiquid Securities :
     be used;                                                                          (a)   Aggregate value of “illiquid securities” of the scheme, which are
•    For each rating category, average volume weighted yield will be                         defined as non-traded, thinly traded and unlisted equity shares, shall
     obtained both from trades on the appropriate stock exchange and                         not exceed 15% of the total assets of the scheme and any illiquid
     from the primary market issuances;                                                      securities held above 15% of the total assets shall be assigned zero
                                                                                             value.
•    Where there are no secondary trades on the appropriate stock
     exchange in a particular rating category and no primary market                          Provided that in case any scheme has illiquid securities in excess of
     issuances during the fortnight under consideration, then trades on                      15% of total assets as on September 30, 2000 then such a scheme
     appropriate stock exchange during the 30 day period prior to the                        shall within a period of two years bring down the ratio of illiquid
     benchmark date will be considered for computing the average YTM                         securities within the prescribed limit of 15% in the following time
     for such rating category;                                                               frame:
•    If the matrix cannot be populated using any or all of the above steps,                  (i)    All the illiquid securities above 20% of total assets of the scheme
     then credit spreads from trades on appropriate stock exchange of                               shall be assigned zero value on September 30, 2001.
     the relevant rating category over the AAA trades will be used to
     populate the matrix;                                                                    (ii)   All the illiquid securities above 15% of total assets of the scheme
                                                                                                    shall be assigned zero value on September 30, 2002.
•    In each rating category, all outliers will be removed for smoothening
     the YTM matrix;                                                                   (b)   The Fund shall disclose as on March 31 and September 30 the
                                                                                             scheme-wise total illiquid securities in value and percentage of the
•    Spreads will be obtained by deducting the YTM in each duration                          net assets while making disclosures of half yearly portfolios to the
     category from the respective YTM of the GOI securities;                                 unitholders. In the list of investments, an asterisk mark shall also be
•    In the event of lack of trades in the secondary market and the primary                  given against all such investments which are recognised as illiquid
     market the gaps in the matrix would be filled by extrapolation. If the                  securities.
     spreads cannot be extrapolated for the reason of practicality, the
                                                                                       (c)   The Fund shall not transfer illiquid securities among its schemes
     gaps in the matrix will be filled by carrying the spreads from the last
                                                                                             w.e.f. October 1, 2000.
     matrix.

                                                                                  27
(d)   In respect of closed ended funds, for the purposes of valuation of               All other assets (if any) are taken at fair value as determined in-good faith
      illiquid securities, the limits of 15% and 20% applicable to open-               in accordance with the appropriate valuation methods based on the
      ended funds should be increased to 20% and 25% respectively.                     principles approved / adopted by the AMC, and amended from time to
                                                                                       time, to ensure appropriate fair valuation of assets for the Fund. The
(e)   Where a scheme has illiquid securities as at September 30, 2001
                                                                                       Trustees /AMC may alter these above stated investment valuation norms
      not exceeding 15% in the case of an open-ended fund and 20% in
                                                                                       from time to time, and also to the extent the SEBI (Mutual Funds)
      the case of closed fund, the concessions of giving time period for
                                                                                       Regulations, 1996 change, so as to permit the Scheme to make valuation
      reducing the illiquid security to the prescribed limits would not be
                                                                                       of its investments in the full spectrum of permitted valuation norms for
      applicable and at all time the excess over 15% or 20% shall be
                                                                                       Mutual Funds to determine NAV. As such valuation of all investments of
      assigned nil value.
                                                                                       the Scheme will be made in accordance with SEBI (Mutual Funds)
      (i)    In respect of convertible debentures and bonds, the non-                  Regulations, 1996 including Schedule VIII thereof.
             convertible and convertible components will be valued
             separately. The non-convertible component is valued on the                DETERMINATION OF NAV
             same basis as would be applicable to a debt instrument. The               The NAV of the Scheme at any time shall be determined by dividing the
             convertible component is valued on the same basis as would                net assets of the Scheme by the number of outstanding units on the
             be applicable to an equity instrument. If, after conversion the           valuation date
             resultant equity instrument would be traded pari- passu with an
                                                                                       The NAV of the Scheme will be calculated on a daily basis as shown
             existing instrument, which is traded, the value of the latter
                                                                                       below :
             instrument is adopted after appropriately discounting for the
             non-tradability of the instrument during the period preceding                               (Market / Fair Value of Securities + Accrued Income +
             the conversion. While valuing such instruments, the fact whether                           Receivables+other assets+unamortised issue expenses,
             the conversion is optional will be factored in.                                             if any - Accrued Expenses - payables-other liabilities)
                                                                                       NAV per unit =
      (ii)   In respect of warrants to subscribe for shares attached to                                          No. of units outstanding of the scheme
             instruments, the warrants are valued at the value of the share
                                                                                       The NAV will be calculated up to four decimals. The NAVs will be declared
             which would be obtained on exercise of the warrant as reduced
                                                                                       as of the close of every Business Day.
             by the amount which would be payable on exercise of the
             warrant. A discount similar to the discount to be determined in           The computation of Net Asset Value, valuation of Assets, computation of
             respect of convertible debentures (as referred to above) is               applicable Net Asset Value (related price) for fresh/ongoing Sale,
             deducted to account for the period that must elapse before the            Repurchase, Switch and their frequency of disclosure shall be based upon
             warrant can be exercised.                                                 a formula in accordance with the Regulations and as amended from time
                                                                                       to time including by way of Circulars, Press Releases, or Notifications
      (iii) Where instruments have been bought on ‘repo’ basis, the
                                                                                       issued by SEBI or the Government of India to regulate the activities and
            instrument will be valued at the resale price after deduction of
                                                                                       growth of Mutual Funds.
            applicable interest up to date of resale. Where an instrument
            has been sold on a ‘repo’ basis, adjustment must be made for               The dividend if paid on units under the Scheme of the Fund shall be
            the difference between the repurchase price (after deduction of            deducted in computing the NAV of the units, each time a dividend is
            applicable interest up to date of repurchase) and the value of             declared and till it is distributed. Consequently once the dividend is
            the instrument. If the repurchase price exceeds the value, the             distributed the NAV of the units will always remain lower than the NAV
            depreciation must be provided for and if the repurchase price              had dividend not been declared and distributed.
            is lower than the value, credit must be taken for the appreciation.
                                                                                       Determination of NAV For Demat Units
      (iv) While investments in call money, bills purchased under
                                                                                       The NAV of the Scheme at any time shall be determined by dividing the
           rediscounting scheme and short term deposits with bank shall
                                                                                       net assets of the Scheme by the number of outstanding units on the
           be valued at cost plus accrual, other money market instruments
                                                                                       valuation date.
           shall be valued at the yield at which they are currently traded.
           For this purpose, non-traded instruments (instruments not traded            The NAV will be initially calculated upto four decimals & rounded off to
           for a period of seven days) will be valued at cost plus interest            two decimals (which may change). The relevant NAV for physical units
           accrued till the beginning of the day plus the difference between           will be calculated upto four decimals. The records of the scheme will be
           the repurchase value and the cost spread uniformly over the                 maintained accordingly. The difference in value on account of any unit
           remaining maturity period of the instruments.                               transaction on account of 2 decimals/4 decimals will be accounted for
                                                                                       daily as part of ongoing expenses within the overall expense limit stated
5.    Valuation of Rights                                                              under clause 52 SEBI (Mutual Funds) Regulations, 1996.
      Until they are traded, the value of the ‘rights’ shares would be
      calculated as :                                                                  ACCOUNTING POLICIES AND STANDARDS
                                                                                       The AMC will follow Accounting Policies and Standards as prescribed
                                Vr    =      n x (Pex - Pof)
                                             _                                         under Schedule Nine of the SEBI Regulations.
                                             m
                                                                                       1.   All investments will be marked to market and will be carried in the
             Where,             Vr    =      Value of rights                                balance sheet at market value. However, since the unrealised gain
                                n     =      No. rights offered                             arising out of appreciation can not be distributed, provision will be
                                m     =      No. of original shares held                    made for exclusion of this item when arriving at distributable income.
                                Pex   =      Ex-rights price                           2.   Dividend income earned by the scheme will be recognised; not on
                                Pof   =      Rights offer Price                             the date the dividend is declared, but on the date the share is quoted
                                                                                            on an ex-dividend basis. For investments that are not quoted on the
      Where the rights are not treated pari-passu with the existing shares,
                                                                                            stock exchange, dividend income must be recognised on the date of
      suitable adjustments would be made to the value of rights. Where it
                                                                                            declaration.
      is decided not to subscribe for the rights but to renounce them and
      renunciations are being traded, the rights can be valued at the                  3.   In respect of all interest bearing investments, income will be accrued
      renunciation value.                                                                   on a day to day basis as it is earned. Therefore, when such
                                                                                            investments are purchased, interest paid for the period from the last
6.    Expense and Income Accrual                                                            interest due date up to the date of purchase shall not be treated as
      All expenses and incomes accrued up to the valuation date shall be                    a cost of purchase but shall be debited to Interest Recoverable
      considered for computation of NAV. For this purpose, while major                      Account. Similarly, interest received at the time of sale for the period
      expenses like management fees and other periodic expenses should                      from the last interest due date up to the date of sale shall not be
      be accrued on a day to day basis, other minor expenses and income                     treated as an addition to sale value but shall be credited to Interest
      need not be so accrued, provided the non-accrual does not affect                      Recoverable Account.
      the NAV calculations by more than 1%.                                            4.   In determining the holding cost of investments and the gains or loss
                                                                                            on sale of investments, the “average cost” method shall be followed.
7.    Changes in the Securities and Units
                                                                                       5.   Transactions for purchase or sale of investments would be recognized
      Any changes in securities and in the number of units are recorded in
                                                                                            as of the trade date and not as of the settlement date so that the
      the books not later than the first valuation date following the date of
                                                                                            effect of all investments traded during the financial year are recorded
      transaction. If this is not possible given the frequency of NAV
                                                                                            and reflected in the financial statements for that year. When
      disclosure, the recording may be delayed up to a period of seven
                                                                                            investment transactions take place outside the stock market, e.g.
      days following the date of the transaction, provided that as a result                 acquisition through private placement or purchase or sales through
      of the non-recording, the NAV calculations shall not be affected by                   private treaty, the transaction would be recorded, in the event of a
      more than 2%.                                                                         purchase, as of the date on which the scheme obtains an enforceable

                                                                                  28
     obligation to pay the price or, in the event of a sale, when the scheme            •     10% of the book value of the asset should be provided for after
     obtains an enforceable right to collect the proceeds of sale or an                       6 months past due date of interest i.e. 3 months form the date
     enforceable obligation to deliver the instruments sold.                                  of classification of the asset as NPA.
6.   When in the case of an open ended scheme units are sold, the                       •     20% of the book value of the asset should be provided for after
     difference between the sale price and the face value of the Unit, if                     9 months past due date of interest i.e 6 months from the date
     positive, should be credited to the reserves and, if negative, is debited                of classification of the asset as NPA.
     to reserves, the face value being credited to Capital Account.                     •     Another 20% of the book value of the assets should be provided
     Similarly, when in respect of such a scheme, units are repurchased,                      for after 12 months past due date of interest i.e 9 months form
     the difference between the purchase price and the face value of the                      the date of classification of the asset as NPA.
     unit, if positive, shall be debited to reserves and, if negative, shall be
     credited to reserves, the face value being debited to the Capital                  •     Another 25% of the book value of the assets should be provided
     Account.                                                                                 for after 15 months past due date of interest i.e. 12 months
                                                                                              from the date of classification of the asset as NPA.
7.   In the case of an open ended scheme, when units are sold an
     appropriate part of the sale proceeds shall be credited to an                      •     The balance 25% of the book value of the asset should be
     Equalisation Account and when units are repurchased an appropriate                       provided for after 18 months past due date of the interest i.e 15
     amount shall be debited to Equalisation Account. The net balance                         months form the date of classification of the assets as NPA.
     on this account shall be credited or debited to the revenue account.                     Book value for the purpose of provisioning for NPAs shall be
     The balance on the Equalisation Account debited or credited to the                       taken as a value determined as per the prescribed valuation
     revenue account shall not decrease or increase the net income of                         method. If any instalment is fallen due, during the period of
     the Fund but is only an adjustment to the distributable surplus. It                      interest default, the amount of provision should be installment
     shall therefore be reflected in the revenue account only after the net                   amount or above provision amount, whichever is higher.
     income of the Fund is determined.
                                                                                        (v)   Reclassification of assets :
8.   The cost of investment acquired or purchased would include                               Upon reclassification of assets as ‘performing assets’ :
     brokerage, stamp charges and any charge customarily included in
     the brokers’ bought note. In respect of privately placed debt                      1.    In case a company has fully cleared all the arrears of interest,
     instrument, any front-end discount offered shall be reduced from the                     the interest provisions can be written back in full.
     cost of the investment.                                                            2.    The asset will be reclassified as performing on clearance of all
9.   Underwriting commission shall be recognised as revenue only when                         interest arrears and if the debt is regularly serviced over the
     there is no devolvement on the Fund. Where there is devolement on                        next two quarters.
     the Fund, the full underwriting commission received and not merely                 3.    In case the company has fully cleared all the arrears of interest,
     the portion applicable to the devolvement shall be reduced from the                      the interest not credited on accrual basis would be credited at
     cost of the investment.                                                                  the time of receipt.
10. Identification and Provisioning for Non Performing Assets                           4.    The provision made for the principal amount can be written
(A) Other than Debt Securities                                                                back in the following manner :-
    Where income receivable on investments has been accured and                         •     100% of the asset provided for in the books will be written back
    has not been received for a period of twelve months beyond the due                        at the end of the 2nd quarter where the provision of principal
    date, provision shall be made by debit to the revenue account for                         was made due to the interest defaults only.
    the income so accrued and no further accrual of income shall be
    made in respect of such investment.                                                 •     50% of the asset provided for in the books will be written back
                                                                                              at the end of the 2nd quarter and 25% after every subsequent
(B) Debt Securities                                                                           quarter where both instalments and interest were in default
     (i)    Definition of a Non Performing Asset (NPA)                                        earlier.
            An ‘asset’ shall be classified as non performing, if the interest           5.    An asset is reclassified as ‘standard asset’ only when both
            and/or principal amount have not been received or remained                        overdue interest and overdue instalments are paid in full and
            outstanding for one quarter from the day such income /                            there is satisfactory performance for a subsequent period of 6
            installment has fallen due.                                                       months.
     (ii)   Effective date for classification and provisioning of NPAs :                (vi) Receipt of past dues :
            The definition of NPA may be applied after a quarter past due                    When the fund has received income/principal amount after their
            date of the interest. For e.g. if the due date for interest is                   classifications as NPAs ;
            30.06.2001, it will be classified as NPA from 01.10.2001.                   •     For the next 2 quarters, income should be recognized on cash
     (iii) Treatment of income accrued on the NPA and further                                 basis and thereafter on accrual basis. The asset will be
           accruals                                                                           continued to be classified as NPA for these two quarters.
     •     After the expiry of the 1st quarter from the date the income has             •     During this period of two quarters although the asset is classified
           fallen due, there will be no further interest accrual on the asset                 as NPA no provision needs to be made for the principal if the
           i.e. if the due date for interest falls on 30.06.2001 and if the                   same is not due and outstanding.
           interest is not received, accrual will continue till 30.09.2001 after
                                                                                        •     If part payment is received towards principal, the asset continues
           which there will be no further accrual of income. In short, taking
                                                                                              to be classified as NPA and provisions are continued as per
           the above example, from the beginning of the 2nd quarter there
                                                                                              the norms set at (D) above. Any excess provision will be written
           will be no further accrual on income.
                                                                                              back.
     •      On classification of the asset as NPA from a quarter past due
            date of interest, all interest accrued and recognized in the books          (vii) Classification of Deep Discount Bonds as NPAs :
            of accounts of the Fund till the date, should be provided for. For                Investments in Deep Discount Bonds can be classified as NPAs,
            e.g if interest income falls due on 30.06.2001, accrual will                      if any two of the following conditions are satisfied:
            continue till 30.09.2001 even if the income as on 30.06.2001                •     If the rating of the Bond comes down to grade ‘BB’ or below.
            has not been received. Further, no accrual will be done from
            01.10.2001 onwards. Full provision will also be made for interest           •     If the company is defaulting in their commitments in respect of
            accrued and outstanding as on 30.06.2001.                                         other assets, if available.
     (iv) Provision for NPAs                                                            •     Full Net worth erosion.
          Both secured and unsecured investments once they are                                Provision should be made as per the norms set at (D) above as
                                                                                              soon as the asset is classified as NPA.
          recognized as NPAs call for provisioning in the same manner
                                                                                              Full provision can be made if the rating comes down to grade ‘D’
          and where these are related to close ended scheme the phasing
          would be such that to ensure full provisioning prior to the closure           (viii) Reschedulement of an asset :
          of the scheme or the scheduled phasing which ever is earlier.                        In case any company defaults either interest or principal amount
            The value of the asset must be provided in the following manner                    and the Fund has accepted a reschedulement of the schedule
            or earlier at the discretion of the fund. Fund will not have                       of payments, then the following practice may be adhered to :
            discretion to extend the period of provisioning. The provisioning           (a)   In case it is a first reschedulement and only interest is in default,
            against the principal amount or installments should be made at                    the status of the asset namely, ‘NPA’ may be continued and
            the following rates irrespective of whether the principal is due                  existing provisions should not be written back. This practice
            for repayment or not.                                                             should be continued for two quarters of regular servicing of the

                                                                                   29
           debt. Thereafter, this be classified as ‘performing asset’ and              linked to the amount of investment. The switchover load may be different
           the interest provided may be written back.                                  from the entry and /or exit load charged for sale and/or repurchase units.
                                                                                       The load charged could also be different as regards the amount / tenor of
     (b)   If the reschedulement is done due to default in interest and                investment etc. However any such change in the load structure shall be
           principal amount, the asset should be continued as non                      only on a prospective basis. In case of switch between Schemes it may
           performing for a period of 4 quarters, even though the asset is             be decided by the AMC that the the applicable entry load, if any will be
           continued to be serviced during these 4 quarters regularly.                 reduced by any entry and/or exit load already paid by the unitholder in the
           Thereafter, this can be classified as ‘performing asset’ and all            Scheme he is switching out from.
           the interest provided till such date should be written back.
                                                                                       There is no entry load and/or exit load on units of a Scheme subscribed
     (c)   If the reschedulement is done for a second/third time or thereafter,        with reinvested and/or sweeped dividends or other distributions. Entry
           the characteristic of NPA should be continued for eight quarters            and/or exit load may be waived and/or lower at the discretion of the AMC
           of regular servicing of the debt. The provision should be written           for the following:
           back only after it is reclassified as ‘performing asset’.
                                                                                       •       Death of the unitholder
           To provide appropriate details of the Schemewise deployment                 •       Incapacity/disability of the unitholder (as per Tax Act)
           of the assets of the Fund, certain accounting policies and
           standards in accordance with the appropriate guidance notes                 •       Small balance amounts being redeemed
           issued by the Institute of Chartered Accountants of India may               •       Through systematic Investment/withdrawal/Switch plan (subject to
           be adopted by AMC and amended from time to time. The                                limits)
           Trustees/AMC may alter these above stated accounting policies
           and standards from time to time, and also to the extent the
                                                                                       •       Reinvestment of the redemption proceeds of one scheme of the
                                                                                               Fund within 60 days after the redemption of units (an entry and /or
           guidance notes issued by the Institute of Chartered Accountants
                                                                                               exit load should have been paid for the original investment)
           of India, and the SEBI (Mutual Funds) Regulations, 1996
           change, so as to permit the Scheme to give a true and fair view             The investor should indicate on the application form that he is eligible for
           of its state of affairs. As such the accounting policies and                waiver or otherwise of the entry and/or exit load as per rules laid down by
           standards, and the preparation of the annual report and annual              the AMC. Reasonable documentary proof should be made available to
           statement of account of the Scheme will be in accordance with               claim the waiver. If the proof is not made available sufficient units would
           SEBI (Mutual Funds) Regulations, 1996, including Schedule                   be redeemed to pay the differential/additional entry load, or no units would
           IX and XI thereof.                                                          be credited to the account of the unitholder for the differential/additional
                                                                                       entry load.
 XIII LOADS, EXPENSES AND FEES
                                                                                       The Load, if levied, will be retained in the respective Scheme and used by
The information provided under this section is to assist the unitholder to             the Fund/AMC to cover the cost of raising/redeeming units on a continuous
understand the expense structure of the current Scheme and types of                    basis by way of providing redemption/distribution related services to the
fees and their percentage the unitholder is likely to incur on subscribing             Fund relating to the Sale, promotion, advertising and marketing of the
the units of the Scheme.                                                               units of the Scheme and costs associated with liquidating the Fund’s
                                                                                       investment Securities, including payments for postage and also payments
LOAD
                                                                                       to brokers for their services in connection with the redemption/distribution
The units will be sold and repurchased on an on-going basis at applicable              of the units.
NAV-based prices. For the information of Investors/unitholders, the
maximum total transaction expenses of the Scheme that may be levied                    Expenses
on the Investor/unitholder and expressed as a percentage of the amount                 Initial Issue Expenses
of the Scheme’s NAV, are estimated to be as follows:
                                                                                       i)      Present Scheme
 Type of Transaction                         Levy Upto % of NAV                                During the initial offering period i.e from January 1, 1996 to March
                                                                                               31, 1996 initial issue expenses incurred were as under;
 Maximum Sales Load imposed
 on Resale                                                  7                              Nature of Expenses                 % of resources mobilised     Actual
 Sales Load, if any, on issue of Units                                                                                         As per Offer      As Per    Rs. in
 in lieu of Dividends                                      Nil                                                                  Document         Actual    Crores
 Contingent Deferred Redemption/Sale                                                       Brokerage, Fees and Sales
 Load Year 1,Year 2,Year 3,Year 4                           Nil                            Commission                             1.75 %         1.97 %     1.05
 Maximum Redemption/                                                                       Marketing and Advertising
 Repurchase Load                                            5                              (including lead manager fees)          1.50 %        0.41 % #   0.22 #
 Maximum Switchover/                         At applicable entry-exit loads                Printing and Distribution              0.25 %         1.60 %     0.85
 Exchange Fee                                for respective Scheme
                                                                                           Registrar Fees                         0.25 %         0.24 %     0.13
Units issued before conversion date i.e. during the initial offer will not
attract any repurchase load and the units will be repurchased at the                       Early Bird Incentive                   2.00 %         1.52 %     0.81
prevailing NAV of the relevant business day as per the terms of the previous
                                                                                           Misc Expenses
(original) Offer Document dated December 11, 1995.
                                                                                           (Bank Charges, Stamp Duty, etc)        0.25 %         0.26 %     0.14
Under normal circumstances based on the Schemes(s) potential
performance in the market environment existing as of the date of the                       Total                                  6.00 %         6.00 %     3.20
Offer Document, the Fund intends to charge the following load, till                    # Excess borne by AMC Rs. 1.76 Crore (3.29%)
subsequently changed.
                                                                                       Initial issue expenses charged to the scheme @6 % of resources mobilized
 Type                                                               %                  - Rs.3.20 crore
 Entry load for ongoing subscription of units :
                                                                                       Excess over 6% borne by AMC - Rs. 1.76 crore
 For investment greater than or equal to Rs. 1 Crore                1.00%
 For investments less than Rs. 1 crore                              2.00%              During the Initial Offer Period i.e. from January 1, 1996 to March 31,
 Exit load (for ongoing repurchases of units including )            0.00%              1996, as stated above, the initial issue expenses charged to the scheme
                                                                                       were 6% of the resources mobilized. Thus for every Rs.100/- invested by
The repurchase price shall not be lower than 95% of the NAV and the sale               the investor, Rs. 94 was available for investment to the Scheme.
price shall not be higher than 107% of the NAV and the difference between
the repurchase price and sale price shall not exceed 7% on the sale                    Entire initial issue expenses of Rs.3.20 crore charged to the Scheme
price.                                                                                 were amortised during the first three years of the operation of the scheme
                                                                                       i.e. during F.Y. 1996-97, 1997-98 and 1998-99. Therefore no unamortised
The AMC reserves the right to change/modify entry / exit / switchover                  initial issue expenses is currently outstanding pending for amortisation..
load (including zero load), depending upon the circumstances prevailing
at any given time. A load structure when introduced by the AMC may                     ii)     Past Schemes
comprise of an entry load and/or exit load and/or switchover load as may                       IDBI-PRINCIPAL Index Fund (formerly IDBI Index I-Nit’99) was the
be permissible under the SEBI Regulations. The load may also be changed                        only scheme launched in the FY 1999-2000. The scheme was
from time to time and in the case of an exit / repurchase load this may be                     launched with ‘No initial load’ and the entire initial issue expenses
linked to the period of holding, while in case of entry load this may be                       were borne by the AMC. During the current Financial Year IDBI-

                                                                                  30
     PRINCIPAL Future Goals Series consisting of four schemes was                      Nature of Expenses                   % of Weekly Actual as per accounts
     launched. IDBI-PRINCIPAL Income Fund and IDBI-PRINCIPAL Cash                                                           average net      till 28/2/2001
     Management Fund were launched with “No initial load” and the entire                                                       assets
     initial issue expenses for these two schemes were borne by the AMC
                                                                                                                                           % of Weekly     Amount
     / Trust. The details of expenses for IDBI-PRINCIPAL Growth Fund,
                                                                                                                                            Average        (Rs. in
     IDBI-PRINCIPAL Balanced Fund, IDBI-PRINCIPAL Income Fund and
                                                                                                                                           Net Assets*     Crores)
     IDBI-PRINCIPAL Cash Management Fund is given below;
                                                                                       Investment Management                   1.25%          1.25%          0.63
IDBI-PRINCIPAL Growth Fund
                                                                                       Trustee Fees                            0.10%          0.08%          0.04
 Nature of Expenses                   % of resource mobilized                          Custodian Fees/Depository Charges        0.10%         0.08%          0.04
                                         As per         As Per     Actual              Registrar and Transfer Agent Fees,       0.15%         0.21%           0.11
                                          Offer         Actual     (Rs. in             Marketing and Selling Expenses           0.30%         0.00%          0.00
                                        Document                   Crores)             Audit Fees, SEBI Fees,
 Marketing and Advertisement              2.50 %        3.20%       0.8580             Bank Charges etc                         0.05%         0.02%          0.02
                                                                                       Cost of investor communication           0.05%         0.54%          0.27
 Bank Charges                             0.50 %        0.01%       0.0032
                                                                                       Advertisement                           0.10%          0.01%          0.00
 Commission for Agents & Brokers          1.50 %        1.29%       0.3472             Conversion Expenses                     0.03%          0.00%          0.00
 Printing & Mailing Expenses              0.75 %        1.21%       0.3241             Personal Accident Insurance
                                                                                       Premium                                 0.32%          0.19%          0.09 #
 Registrar’s Charges                      0.65 %        0.07%       0.0191
                                                                                       Misc Exp such as Bank Charges,
 Miscellaneous Expenses                   0.10 %        0.02%       0.0048             SEBI Fees etc                           0.05%          0.12%          0.06
 Total                                    6.00 %        5.80%      1.5564              Total                                   2.50%          2.50%          1.05

IDBI-PRINCIPAL Balanced Fund                                                          * Annualised
                                                                                      # Excess borne by AMC Rs. 0.38 crore
 Nature of Expenses                % of resource mobilized
                                      As per        As Per        As Per              These estimates have been made in good faith by the AMC and are subject
                                       Offer        Actual       Actual*              to change inter-se the expenses may be more than as specified in the
                                     Document                 (Rs. in Crores)         table above, but the total recurring expenses that can be charged to the
                                                                                      Scheme will be subject to limits prescribed from time to time under the
 Marketing and Advertisement           2.50 %       1.54%         0.5647              SEBI Regulations. Expenses over and above the permissible limits will
 Bank Charges                          0.50 %       0.01%         0.0021              be borne by the AMC and/or the Trust and/ or the sponsors.
 Commission for Agents & Brokers       1.25 %       0.92%         0.3373              The following expenses will not be charged to the scheme:
 Printing & Mailing Expenses           1.00 %       0.58%         0.2133              Penalties and fines for infraction of laws, Interest on delayed payment to
                                                                                      the unitholders, Legal, marketing, publication and other general expenses
 Registrar’s Charges                   0.65 %       0.03%         0.0126              not attributable to the scheme, Expenses on investment management/
 Miscellaneous Expenses                0.10%        0.01%         0.0031              general management, Expenses on general administration, corporate
 Total                                 6.00 %       3.09%         1.1331              advertising and infrastructure costs, Depreciation on fixed assets and
                                                                                      software development expenses, Such other costs as may be prohibited
IDBI-PRINCIPAL Income Fund                                                            by SEBI.

 Nature of Expenses                % of resource mobilized                            Any expense other than those specified in the SEBI Regulations shall be
                                                                                      borne by the AMC and/ or the Sponsors and/or Trust. The purpose of the
                                      As per        As Per        As Per              above table is to assist the unitholder in understanding the various costs
                                       Offer        Actual       Actual*              and expenses that a unitholder in the Scheme will bear directly or indirectly.
                                     Document                 (Rs. in Crores)
                                                                                      The AMC shall charge the Mutual Fund with investment and advisory
 Marketing and Advertisement           2.50 %       0.93 %        1.0143              fees subject to the following:
 Bank Charges                          0.50 %       0.00 %        0.0038               Average Weekly Net Assets                                      Fees
 Commission for Agents & Brokers       0.50 %       0.01 %        0.0139               On first Rs.100 crores                                         1.25%
 Printing & Mailing Expenses           1.50 %       0.34 %        0.3830               On the balance of Assets                                       1.00%
 Registrar’s Charges                   0.90 %       0.02 %        0.0226
                                                                                      SEBI has prescribed the following limits for total annual recurring expenses,
 Miscellaneous Expenses                0.10%        0.01 %        0.0056              which can be charged to the Scheme;
 Total                                 6.00 %       1.31%         1.4432
                                                                                       Average Weekly Net Assets                                      %
IDBI-PRINCIPAL Cash Management Fund
                                                                                       On the first Rs. 100 Crores                                 2.50%
 Nature of Expenses                % of resource mobilized
                                                                                       On the next Rs. 300 Crores                                  2.25%
                                      As per        As Per        As Per
                                                                                       On the next Rs. 300 Crores                                  2.00%
                                       Offer        Actual       Actual*
                                     Document                 (Rs. in Crores)          On the balance of assets.                                   1.75%
 Marketing and Advertisement           1.35 %       0.06 %        0.2612
                                                                                      Any expenditure in excess of the limits specified in the SEBI Regulations
 Bank Charges                          0.40 %       0.00 %        0.0010              shall be borne by the AMC and /or by the sponsors and/or Trust.
 Commission for Agents & Brokers       0.15 %       0.00 %        0.0000              The Fund shall strive to reduce the level of these expenses so as to keep
 Printing & Mailing Expenses           0.50 %       0.02 %        0.0983              them well within the maximum limits currently allowed by SEBI and any
 Registrar’s Charges                   0.50 %       0.01 %        0.0058              revision in the said expenses limits by SEBI would be applicable.
 Miscellaneous Expenses                0.10 %       0.00 %        0.0015              Conversion Expenses
 Total                                 3.00 %       0.09 %        0.3678              The expenses associated with converting the Scheme from a close ended
                                                                                      one to an open ended one will be borne by the Scheme and will form part
* Borne by AMC                                                                        of the annual recurring expenses for the first Financial Year i.e. 2000 -
Annual Recurring Expenses                                                             2001 during which the scheme would be converted from close ended one
                                                                                      to an open ended one. Any expenditure in excess of such annual recurring
The Scheme had commenced incurring ongoing expenses from the first                    expenses limits shall be borne by the AMC and or / by the Sponsors &/or
day including during of the initial offering period. It shall be the endeavour        Trust. For information of the unitholders, the details of conversion expenses
of the AMC to maintain a lower expense ratio than that allowed by SEBI                as a percentage of the amount of the Scheme’s weekly average net assets
as given in the tables below :                                                        are estimated as follows;



                                                                                 31
     Conversion Expenses                       % of weekly average net                  Only those unitholders whose names appear in the register of unitholders
                                                       assets                           as on the record date will be entitled for dividend and /or bonus units. This
                                                                                        date will be fixed by the AMC/Trustees appropriately .
     Cost of Advertisement, Printing etc                   0.02
                                                                                        The dividend warrants and/or fresh Account Statement with the bonus
     Registration                                          0.01                         units shall be despatched/credited to the unitholders within 30 days or
                                                                                        such stipulated period of the declaration of dividend /bonus units. On
     Total                                                 0.03                         unitholders request the dividend warrants can be arranged to be issued
                                                                                        in favour of an alternate payee, as per terms stated in the clause “Payment
These estimates have been made in good faith by the AMC and are subject                 to alternate payee”.
to change as per actuals.
                                                                                        In case of Dividend reinvestment / sweep option, the appropriate number
     XIV UNITHOLDERS’ RIGHTS AND SERVICES                                               of units shall be credited to unitholders account at the applicable NAV
                                                                                        (related price) on the same date when the NAV is ex-dividend
An unitholder of the Scheme has a proportionate right in the beneficial
ownership of assets of the scheme and to the dividends declared by the                  All benefits accruing/earned/received under the Scheme in respect of
Scheme. Unitholders are advised to refer to the relevant provisions of the              income (not included in NAV), capital reserves and surpluses, if any at
Indian Trusts Act, 1882, in this regard. Copies of certain relevant                     the time of its /their declaration or otherwise under the Scheme shall be
documents will be available for inspection at the office of the AMC at                  available only to the unitholders who hold the units at the time of its/their
Mumbai.                                                                                 declaration.

Fundamental Attributes                                                                  Voting Rights of the Unitholders
Type of a scheme, Investment objective and terms of a scheme constitute                 Subject to the provisions of the SEBI Regulations, the consent of
the fundamental attributes of the Scheme vide clarification issued by SEBI              unitholders shall be obtained, entirely at the option of the Trustees,, either
on February 4, 1998.                                                                    at a meeting through a postal ballot or any other mode of communication
                                                                                        as stated in the clause “unitholder’s consent”.
As per the Regulation 18 (15A) of SEBI Regulations, the trustees shall
ensure that no change in the fundamental attributes of any scheme or the                Disclosures
trust or fees and expenses payable or any other change which would                      NAV Information
modify the scheme and affects the interest of unitholders, shall be carried             The NAV of the Scheme will be calculated by the Fund on each Business
out unless, -                                                                           Day. The unitholders may obtain the information on NAV on any business
i)    a written communication about the proposed change is sent to each                 day, by calling the office of the AMC or any of the collection Centres at
      unitholder and                                                                    various locations. The Fund shall make available to the press for publishing
ii)     an advertisement is given in one English daily newspaper having                 the NAV on all business days (either through an advertisement or) by
        nationwide circulation as well as in a newspaper published in the               Press Release, in at least two daily newspaper/s. Further, the Sale and
        language of the region where the Head Office of the Mutual Fund is              Repurchase prices of units will also be similarly made available to the
        situated; and                                                                   press for publishing on all business days or as may be prescribed by
                                                                                        SEBI in at least one daily newspaper. The Fund shall also make available
iii)    the unitholders are given an option to exit at the prevailing Net Asset         at the AMFI web site and also to AMFI for publishing the Scheme’s NAV,
        Value without any exit load.                                                    Sale /Repurchase price in at least two/one daily newspaper (of all India
In addition to change in the fundamental attributes of the Scheme, any                  circulation) on all business days. In the event NAV cannot be calculated
other change which would affect the interest of the unitholders would not               and /or published such as because of the suspension of trading on the
be carried out unless                                                                   BSE/NSE/RBI, during the existence of a state of emergency and /or a
                                                                                        breakdown in communications, the AMC may suspend calculation and/or
i)      a written communication about the proposed change is sent to each               publication of NAV, etc of the units.
        unitholder and
                                                                                        Financial Results
ii)     an advertisement is given in one English daily newspaper having
        nationwide circulation as well as in a newspaper published in the               The Fund will publish and mail to all unitholders, an abridged scheme
        language of the region where the Head Office of the Mutual Fund is              wise annual report, not later than six months from 31st March, containing
        situated; and                                                                   details as specified in the SEBI Regulations. Further, the full text of the
                                                                                        annual report will be available for inspection at the office of the Fund. A
iii)    the unitholders are given an option to exit at the prevailing Net Asset         copy of the unabridged annual report will be sent to unitholders, at a
        Value without any exit load.                                                    price, on specific request.
Rights of unitholders                                                                   The Fund will publish, before the expiry of two months from the close of
                                                                                        each half year, as on 31st March and 30th September the Fund’s unaudited
The allottees of units under the Scheme of the Fund are the beneficiaries.
                                                                                        financial results in one English daily newspaper circulating in the whole of
The following are the significant rights of the beneficiaries under the SEBI
                                                                                        India and in a newspaper published in the language of the region where
Regulations.
                                                                                        the Head Office of the Fund is situated
-       Unitholders under the Scheme have a proportionate right in the
        beneficial ownership of the assets under the Scheme.                            Portfolio Disclosure
                                                                                        The Fund will send to all unitholders a complete statement of its scheme
-       The unitholders have a right to ask the Trustees about any information
                                                                                        portfolio before the expiry of one month from the close of each half year
        which may have an adverse bearing on their investments, and the
                                                                                        (i.e. 31st March and 30th September) or the Fund may publish statement
        Trustees shall be bound to disclose such information to the                     of scheme portfolio by way of an advertisement, in one English daily
        unitholders as stated in the clauses “NAV Information” and                      circulating in the whole of India and in a newspaper published in the
        “Disclosures”                                                                   language of the region where the head office of the Mutual Fund is situated.
-       The unitholders have a right to receive audited annual report setting           The Fund shall make scripwise disclosures of NPAs on half yearly basis
        forth the financials of the Scheme as on 31st March along with the              along with the half yearly portfolio disclosure. The total amount of provisions
        entire portfolio in detail.                                                     made against the NPAs shall be disclosed in addition to the total quantum
                                                                                        of NPAs and their proportion of the assets of the Fund’s scheme.
-       The appointment of AMC for the Fund can be terminated upon                      The Scheme’s entire portfolio/top holdings will also be disclosed quarterly.
        resolution by the Trustees or by seventy five percent of the unitholders        The format for half yearly disclosure of portfolio will be as prescribed by
        of the Scheme.                                                                  SEBI vide guidelines ref. MFD/CIR/9/120/2000 dated November 24, 2000.
-       Unitholders have the right to inspect all the documents listed under
                                                                                        Unclaimed Distribution Amount.
        the clause “Documents for inspection”
                                                                                        As per SEBI Guidelines Ref: MFD/CIR/9/120/2000 dated November 24,
-       Under normal circumstances, the redemption /repurchase proceeds                 2000, unclaimed redemption and dividend amounts shall be deployed by
        shall be mailed within ten working days from the date of redemption             the Fund in call money market or money market instruments only and the
        /repurchase, while income distribution warrants shall be despatched             investors who claim these amounts during a period of three years from
        within 30 days of the declaration of income                                     the due date shall be paid at the prevailing Net Asset Value. After a period
Dividends and Distributions                                                             of three years, this amount can be transferred to a pool account and the
                                                                                        investors can claim the amount at NAV prevailing at the end of the third
In the interest of the Scheme and the unitholders, the AMC may consider                 year. The income earned on such amount can be used for the purpose of
providing returns to the unitholders at appropriate times by way of periodic            investor education. AMC should make a continuous effort to remind the
declaration of dividend and /or bonus units under the Scheme after                      investors through letters to take their unclaimed amounts. Further, the
providing for all necessary recurring and other expenses.                               investment management fee charged by the AMC for managing unclaimed

                                                                                   32
amounts shall not exceed 50 basis points.                                                        and/or non-financial transactions) e.g., allotment of units in lieu of
                                                                                                 distribution of periodic dividend, besides periodic information etc by
Although the above guidelines are largely applicable to close ended
                                                                                                 way of e-mail, which is speedier and economical. Other financial
schemes, the Fund will endeavor to apply the same to open ended
                                                                                                 transactions (subscription of units) can also be conveyed to the
schemes to the extent practical and possible subject to relevant
                                                                                                 unitholders by way of e-mail, wherever requested, subject to such
Regulations.
                                                                                                 safeguards the Fund may deem necessary.
Duration of the Scheme and Winding Up                                                    b)      Investor Service centres in select cities
Being open ended; the Scheme has a perpetual life. The AMC, the Fund                             Karvy Consultants Ltd., which is presently the Registrar to the Fund,
and Trustees reserve the right to make such changes / alterations to the                         will provide unitholder service through its ISCs. Unitholders’ enquiries
Scheme (including charging of fees and expenses) offered under this                              and transactions during business hours will be entertained at the
Offer Document to the extent permitted by the SEBI Regulations. However,                         ISCs at the addresses listed at the end of this Offer Document
in terms of the SEBI Regulations, the Scheme may be wound up:                                    unitholders/investors can also write/e-mail/contact them at their
a)   On the happening of any event which, in the opinion of the Trustees,                        Hyderabad head office address. In addition unitholders may also
     requires the Scheme to be wound up; or                                                      contact the AMC at its corporate office for any additional service.
                                                                                                 The AMC will, in course of time, be setting up its own service centres
b)   Seventy five percent of the unitholders of the Scheme pass a                                at the major locations to handle unitholder enquiries and transactions
     resolution that the Scheme be wound up; or                                                  besides providing a high degree of convenience to the unitholders.
c)   SEBI directs the Scheme to be wound up in the interest of the                       c)      Meeting in Person
     unitholders.                                                                                An Investor Relations personnel of the AMC will be available every
Where a Scheme is to be wound up pursuant to the above/SEBI                                      business day between normal official hours of the AMC for personal
Regulations, the Trustees shall give notice of the circumstances leading                         meeting with any unitholder. The purpose of this facility is to attend
to the winding up of the Scheme to SEBI; and in two daily newspapers                             to any query related to investment needs of a unitholder, resolve
having circulation all over India and also in a vernacular newspaper                             any unitholder service related queries through the Registrar and to
circulating at the place where the Mutual Fund is established.                                   provide such other services that the unitholder desires.

Effect of Winding Up                                                                     d)      Investor Relations Manager
                                                                                                 At present, Mrs Kashmira Kalwachwala is the Investor Relations
On and from the date of the publication of the notice as stated above, the
                                                                                                 Manager and can be contacted at the office of the AMC, the present
Trustee or the AMC as the case maybe, shall -
                                                                                                 address being as follows:
•    cease to carry on any business activities in respect of the Scheme
     so wound up;                                                                        IDBI Mutual Fund, Bajaj Bhavan, 2nd Floor, Nariman Point, Mumbai
                                                                                         400 021. (Phone: +91 22 202 1111, Fax: +91 22 284 4466
•    cease to create or cancel units in the Scheme;
                                                                                         (E-mail: customer@idbiprincipal.com)
•    cease to issue or redeem units in the Scheme.
                                                                                         e)      Service Standards
Procedure and Manner of Winding Up                                                               The Fund shall endeavour to adhere to the following time schedules
In the event of the Scheme being wound up, the AMC shall proceed as                              on an ongoing basis provided the unitholder furnishes the Mutual
follows:                                                                                         Fund with all the required correct and complete supporting legal /
                                                                                                 other documents.
•    The Trustee shall call a meeting of the unitholders to consider and
     pass necessary resolutions by simple majority of unitholders present                                                                   From the date of receipt
     and voting at the meeting for authorising the AMC or any other person/
     agency to take the steps for winding up of the Scheme                                                                              Maximum                     Standard

•    The AMC or the person authorised as above shall dispose of the                          Repurchase Cheque Mailing         Within 10 Business Days       Within 3 Business Days
     assets of the Scheme concerned in the best interests of the
                                                                                             Purchase intimation               Within 30 Business Days       Within 3 Business Days
     unitholders of that Scheme.
•    The proceeds of the sale made in pursuance of the above, shall in                       Updated Account Statement on
     the first instance be utilised towards discharge of such liabilities as                 a/c of allotment of units in lieu of
     are properly due under the Scheme and after making appropriate                          dividend                             Within 30 DBusiness days   Within 5 Business Days*
     provision for meeting the expenses connected with such winding                          Address Change                    Within 10 Business Days       Within 5 Business Days
     up, the balance shall be paid to the unitholders in proportion to their
     respective interests in the assets of the Scheme as on the date                         Ownership Transmission            Within 30 Days                Within 10 Business Days
     when the decision for the winding up was taken.
                                                                                         * On request
•    On the completion of the winding up, the AMC shall forward to SEBI
     and the unitholders, a report on the winding up containing particulars              The above mentioned time schedule does not include postal transit time.
     such as circumstances leading to the winding up, the steps taken                    Telephone Transaction Services
     for disposal of assets of the Scheme before winding up, expenses of
     the Scheme for winding up, net assets available for distribution to                 The Fund intends to implement activation of sale, repurchase requests,
     the unitholders and a certificate from the Auditors of the Fund.                    besides rendering many services through the telephone at select centres.
                                                                                         Reasonble procedures need to be followed to assure that instructions
Notwithstanding anything contained herein, the application of the                        from unitholders are genuine. The unitholder would be liable for the loss
provisions of SEBI Regulations in respect of disclosures of half-yearly                  resulting from a fraudulent telephone instruction that the Fund reasonably
reports and annual reports shall continue to be applicable until the winding             believed as genuine. The procedures include : Telephone identification
up is completed or the Scheme ceases to exist.                                           number; recording all telephone instructions, requesting personnel
After the receipt of report referred to in the above, if SEBI is satisfied that          identification information (name, phone number, I.T. permanent account
all measures for winding up of the Scheme have been completed, the                       number; birth date etc.) and sending written confirmation to the unitholders
Scheme shall cease to exist.                                                             address of record. The Fund reserves the right to refuse telephone
                                                                                         instructions to certain unitholders.
Services to Unitholders
                                                                                         The above is not an exhaustive details of services that the Fund endeavors
Investor Services
                                                                                         to provide. As stated earlier the Fund shall constantly strive to add more
It is the endeavour of the Fund to provide consistently high quality service             services & upgrade them for the convenience of the unitholders.
to its unitholders. This would encompass all interactions by the unitholders
with the Fund. The Fund will strive to upgrade the quality of service through            Signature Verification /Indemnity
implementation of appropriate technology, through ensuring quality                       Certain transactions may require that the unitholder’s signature be verified
consciousness amongst its service personnel and agencies associated                      by a bank Manager, or a notary public or a magistrate or other party
with it. The Fund will endeavour to provide a high degree of convenience                 acceptable to the Fund for the following.
for the unitholders’ dealing with it. The Fund will strive to constantly increase
this level of convenience.                                                               •       Redemption of Rs.1,00,00,000/- or more from an individual/joint
                                                                                                 holder account
Facilitating Enquiries and Transactions
                                                                                         •       If the redemption cheque is payable to other than the unitholder, the
a)   It will be the endeavour of the Fund to extensively use technological                       sponsor or its affiliates /associates.
     tools in rendering unitholder service. The Fund’s Registrar will
     endeavour to send the Account Statements (on account of Financial                   •       To make a Dividend sweep from a folio/account with joint holders to


                                                                                    33
                                                                                               or percentage allocation of investment, if the ownership of the folio/
      a folio/account with only one holder or different joint holders.
                                                                                               account has been changed within the preceeding month.
•     To change ownership of a folio / account.                                          The above is an indication of transactions, that may require signature
•     To add telephone transaction services or other privileges that would               verification that the AMC may insist upon.
      be added from time to time.
                                                                                         Register of Unitholders
•     To change bank account information designated under an existing                    A register of unitholders shall be maintained electronically or in any other
      telephone withdrawal plan                                                          mode at the office of the Registrar and Transfer Agent and also at such
•     To have a redemption cheque mailed to an address other than the                    other places as the AMC may decide and such register shall be conclusive
      addresses on the folio /account or to the address on the folio/account             evidence of ownership. The register may be closed for such time and for
      if it has been changed within the preceding month                                  such period as the AMC may determine. In the event of closure of the
                                                                                         register for a period or periods, appropriate notice shall be given by way
•     To switch among folios with different ownership                                    of publication in newspaper(s) or other media. Requests for fresh/ongoing
•     To issue duplicate unit certificate.                                               sales, repurchase, switching will not be accepted during the period the
                                                                                         register is closed and no NAV would be determined / declared.
•     To change or introduce nomination/appointment of beneficiary and/

    XV HISTORICAL INFORMATION

EXISTING SCHEMES OF THE MUTUAL FUND

NAME              IDBI-PRINCIPAL            IDBI-PRINCIPAL         IDBI-PRINCIPAL              IDBI-PRINCIPAL         IDBI-PRINCIPAL         CHILD I-NIT '97
                  EQUITY FUND               MONEY MARKET           DEPOSIT FUND                INDEX FUND             Tax Savings Fund
                                            FUND
TYPE              Open-ended quity          Open-ended Money Open-ended dept                  Open-ended Index        Close-ended Equity     Open-ended Scheme
                  growth scheme             Market Mutual    Scheme                           Scheme                  Linked savings         with redemption after
                                            Fund Scheme                                                               Scheme                 fixed target period
OBJECTIVE         To provide investors To build a high             To build a high quality    To invest principally To build a high          To generate regular
                  long term capital    quality income              income oriented            in securities of      quality growth-          returns which would
                  appreciation         oriented portfoilo          portfolio and provide      companies whose       oriented portfolio to    be re-invested
                                       in order to provide         returns along with         securities are        provide long-term        with the aim of
                                       returns along with          regular liquidity to       included in the Nifty capital gains to the     giving lumpsum
                                       high liquidity to the       investors                  and subject to track- investor                 capital growth to the
                                       investors                                              ing errors endeavor                            Beneficiary at the
                                                                                              to attain results                              end of the chosen
                                                                                              commensurate with                              target period
                                                                                              the Nifty
DATE OF           June 14, 1995             June 15, 1997          August 13, 1998             July 27, 1999          March 31, 1996         January 7, 1998
COMMEN-
CEMENT /
ALLOTMENT


NAME                       IDBI-PRINCIPAL                     IDBI-PRINCIPAL                   IDBI-PRINCIPAL                  IDBI-PRINCIPAL
                           Growth fund                        Balanced Fund                    Income Fund                     Cash Management Fund
TYPE                       Open Ended Equity                  Open Ended Balanced              Open Ended Income               Open Ended Liquid
                           Scheme                             Scheme                           Scheme                          Scheme
OBJECTIVE                  To achieve long term capital       To provide periodic return       To generate regular income      To provide high level of income
                           appreciation                       and capital appreciation /       and capital appreciation /      available from short term
                                                              accretion from a judicious       accretion through investment    investments as is considered
                                                               mix of equity and debt          in debt instruments and         consistent with preservation
                                                              instruments with the aim         related securities besides      of capital and maintenance of
                                                              to minimize capital erosion.     preservation of capital.        liquidity by investing in a portfolio
                                                                                                                               of money market and investment
                                                                                                                               grade instrument.
DATE OF                    October 25, 2000                   October 25, 2000                 October 25, 2000                October 25, 2000
COMMENCEMENT/
ALLOTMENT

CONDENSED FINANCIAL INFORMATION FOR PAST 3 YEARS
1.   IDBI - PRINCIPAL Equity Fund
     Date of initial allotment : 14th June, 1995

                                                         1/4/1999 to 31/3/2000                    1/4/1998 to 31/3/1999                1/4/1997 to 31/3/1998
                                                    Dividend Plan       Growth Plan          Dividend Plan       Growth Plan     Dividend Plan       Growth Plan
NAV at the beginning of the year (Rs. per Unit)         10.22                9.48               10.12              9.01               8.63               8.07
Net Income (Rs. per unit )                                  4.41             4.37                0.47              0.43               1.18               0.61
Dividends (Rs. per Unit)                                    0.00             0.00                0.35              0.00               0.00               0.00
Transfer to reserves (if any) (Rs. In Crore)            25.97              28.27                 0.29              3.28             10.09                5.08
NAV at the end of the year (Rs. per Unit)               13.84              13.55                10.22              9.48              10.12               9.01
Annualised return (%)                                   7.76 *               6.53               1.47 *             -1.40              0.43              -3.66
Net Assets end of period (Rs. Crs.)                     81.54              87.61                81.10             80.59             86.03               75.39
Ratio of Recurring
Expenses to net assets                                  0.017              0.017                0.018             0.018             0.018               0.018


                                                                                    34
2.   IDBI-PRINCIPAL Tax Savings Fund
     Date of initial allotment : 31st March, 1996
                                                          1/4/1999 to 31/3/2000                       1/4/1998 to 31/3/1999            1/4/1997 to 31/3/1998
NAV at the beginning of the year (Rs. per Unit)                    13.11                                       9.31                              8.81
Net Income (Rs. per Unit)                                          13.92                                        3.80                            -0.04
Dividends (Rs. per Unit)                                              5.00                                      0.00                             0.00
Transfer to reserves (if any) (Rs. in Crore)                       31.19                                      20.285                           (0.205)
NAV at the end of the year (Rs. per Unit)                          19.81                                       13.11                             9.31
Annualised return (%)                                              25.5*                                        9.46                            -3.52
Net Assets end of period (Rs. Crs.)                                73.85                                       70.01                            49.72
Ratio of Recurring Expenses to net assets                          0.025                                       0.025                            0.025



3. IDBI-PRINCIPAL Money Market Fund
     Date of initial allotment : 15th June, 1997
                                                          1/4/1999 to 31/3/2000                       1/4/1998 to 31/3/1999            1/4/1997 to 31/3/1998
NAV at the beginning of the year (Rs. per unit)                  11.938                                      10.914                             10.00
Net Income (Rs. per unit )                                            0.52                                      0.07                             2.05
Dividends (Rs. per unit)                                              2.06                                      0.00                             0.00
Transfer to reserves (if any) (Rs. in Crores)                     -96.65                                       1.414                            0.445
NAV at the end of the year (Rs. per Unit)                         10.802                                      11.938                           10.914
Annualised return (%)                                             9.41 *                                       10.39                            11.68
Net Assets end of period (Rs. in Crores)                          304.00                                      241.87                             5.60
Ratio of Recurring Expenses to net assets                          0.012                                       0.013                            0.013

4. IDBI-PRINCIPAL Deposit Fund
     Date of initial allotment : 13th August, 1997
                                                     1/4/1999 to 31/3/2000                        1/4/1998 to 31/3/1999                1/4/1997 to 31/3/1998
                                                Plan B      Plan C            Plan       Plan B           Plan C         Plan     Plan B      Plan C           Plan
                                                                             54EA /EB                                  54EA /EB                           54EA /EB
NAV at the beginning of the year
(Rs. Per unit)                                  10.171      12.240           10.867          12.207       10.946        10.551      10.00      10.00           10.00
Net Income (Rs. per unit )                        3.71         1.78            0.33            0.13           1.89        0.29    1613.55       0.95            0.56
Dividends (Rs. per unit)                          0.80         0.00            1.24            0.00           0.00       0.130       0.00       0.00            0.00
Transfer to reserves (if any) (Rs. Crs.)          1.44         4.47            1.85           0.378        8.892         0.023      1.544     11.176           0.040
NAV at the end of the year
(Rs. per Unit)                                   10.37       13.45            11.40          10.171       12.240        10.867     12.207     10.946       10.551
Annualised return (%)                           10.00 *      11.92            13.53           11.26        13.20         12.79      37.23      15.42            8.88
Net Assets end of period (Rs. Crs.)               5.17       33.88           68.083           30.13        57.71          0.88       0.01     129.23            0.77
Ratio of Recurring Expenses to
net assets                                       0.017       0.015            0.014           0.014        0.013        0.0225      0.014      0.013       0.0225

5.   Child I-Nit’97
     Date of initial allotment : 7th January, 1998

                                                           1/4/1999 to 31/3/2000                     1/4/1998 to 31/3/1999            1/4/1997 to 31/3/1998
                                                       One Time     Recurring Annual             One Time      Recurring Annual      One Time     Recurring Annual
                                                      Investment       Investment               Investment        Investment        Investment       Investment

NAV at the beginning of
the year (Rs. per unit)                                   11.26                 11.11                 10.34              10.35         0.00                0.00

Net Income (Rs. per unit )                                 1.31                  1.02                  0.92               0.50         0.34                0.35

Dividends (Rs. per unit)                                   0.00                  0.00                  0.00               0.00         0.00                0.00

Transfer to reserves (if any) (Rs. in Crore)               0.12                  0.03                 0.087             0.0097        0.032              0.0038

NAV at the end of the year (Rs. per Unit)                 12.57                 12.41                 11.26              11.11        10.34               10.35

Annualised return (%)                                     10.80                 10.17                 10.15               8.95        15.84               16.33

Net Assets end of period (Rs. Crs.)                        1.18                  0.33                  1.06               0.22         0.97                0.11

Ratio of Recurring Expenses to net assets                 0.022                 0.022                 0.022              0.022        0.022               0.022

                                                                                        35
6.   IDBI-PRINCIPAL Index Fund
     Date of initial allotment : 27th July, 1999
                                                                                                                                                                   27/7/1999 to 31/3/2000
 NAV at the beginning of the year (Rs. per unit)                                                                                                                                    10.00
 Net Income (Rs. per unit )                                                                                                                                                             1.83
 Dividends (Rs. per unit)                                                                                                                                                               0.00
 Transfer to reserves (if any) (Rs. in Crore)                                                                                                                                       25.35
 NAV at the end of the year (Rs. per Unit)                                                                                                                                         11.591
 Total Return since inception (%)                                                                                                                                                   15.91
 Net Assets end of period (Rs. Crs.)                                                                                                                                              160.88
 Ratio of Recurring Expenses to net assets                                                                                                                                          0.012

*after assuming reinvestment of dividend declared

LATEST NAV & ANNUALISED RETURNS
- From 01/04/2000 to 28/2/2001
                          IDBI -            IDBI -     IDBI-            Child I-Nit'97               IDBI
                        PRINCIPAL         PRINCIPAL PRINCIPAL                                     PRINCIPAL
                        Equity Fund          Tax      Money                                         Index                                                  IDBI-PRINCIPAL Deposit Fund
                                           Saving    Market                                         Fund
                                            Fund      Fund

                     Dividend   Growth                              One Time     Recurring
                       Plan      Plan                                Invest       Annual                           Plan B   Plan B                 Plan B      Plan C    Plan C              Plan        Bond               Bond
                                                                      ment        Invest                           (upto   Dividend                Growth       (upto                      54EA/EB       Plan-              Plan-
                                                                                   ment                          5/10/2000                                   20/10/2000)                                Dividend           Growth

 NAV at the            13.84     13.55         13.11    10.802       12.57         12.41            11.591           10.37         10.00            10.00       13.45        10.00           11.40        10.00         10.00
 beginning of the                                                                                                                  (as on          (as on                    (as on                       (as on        (as on
 Period                                                                                                                           7-11-00          7/1100)                   7/1100                      27/7/00)      31/7/00)
 (Re. Per unit)

 Dividend Declared      0.00      0.00         0.00      0.131        0.00          0.00             0.00            0.00         0.1950            0.00         0.00            0.00          0.00       0.00              0.00
 (Re. Per Unit )

 NAV at the end       10.7626   10.3505        14.56    10.9770      13.70         13.57           10.2789          11.05         10.0017          10.2385      14.86       10.3745         12.5531      10.8841       11.0644
 of the Period                                                                                                     (as on          (as on           (as on      (as on
 (Re. Per unit)                                                                                                   5/10/00)        5/2/01)          5/2/01)     20/10/00

 Annualised Yield      1.89 %    0.60 %       13.00 %    9.02 %      10.53 %       10.19 %          1.74 %        10.97%#         1.97%*           2.39%*      13.21%        3.74%*         13.22%*      8.84%*        10.64%*
 (From date of
 allotment till
 28/2/2001)

# after assuming reinvestment of dividend declared
*Total return since date of allotment
IDBI-PRINCIPAL Future Goals Series -(Date of allotment -25/10/2000)
                                                          IDBI-PRINCIPAL                 IDBI-PRINCIPAL                   IDBI-PRINCIPAL                         IDBI-PRINCIPAL Cash Management Fund
                                                            Growth Fund                  Balanced Fund                      Income Fund                      Money At Call Option        Liquid Option
                                                        Dividend      Growth       Dividend         Growth           Dividend            Growth              Dividend             Growth              Dividend        Growth
NAV at the beginning of the Period (Re. Per unit)        10.0000       10.0000      10.0000         10.0000          10.0000             10.0000             10.0000              10.0000             10.0000          10.000
Dividend Declared (Re. Per Unit )                          0.00         0.00             0.00         0.00               0.00               0.00           0.2484162245             0.00               0.2155              0.00
NAV at the end of the Period (Re. Per unit)               10.4615      10.4895      10.1423         10.1198          10.6567             10.7143             10.0000              10.2947             10.0454         10.3105
Total Return (From date of allotment till 28/2/2001)      4.61 %       4.89 %        1.42 %         1.20 %              6.57 %           7.14 %                7.07*               8.54*               7.64*               8.99*
* Annualised Yield (From date of allotment till 28/2/2001)
Investor Complaints and Redressal
The basic objective of the Fund is to set high standards with regard to unitholder servicing as stated in the earlier clauses. To achieve this end, the Fund
has attempted to handle unitholder grievances efficiently and resolve any problems relating to its unitholders. Unitholder grievances are normally received
by IDBI Mutual Fund’s office, at the Investor Service Centre or directly by the Registrar. The grievances, received by the Fund’s office, currently are then
forwarded to the Registrar through e-mail/ courier and complete follow-up is made with the Registrars with an endeavour to resolve them diligently and
accurately.
The complaint / query history given as below:

Particulars                                             IDBI-PRINCIPAL                                                                                                  IDBI-PRINCIPAL
                                Equity      Tax Savings          Money Market             Deposit            Child I-            Index                Growth        Balanced               Income        Cash Management
                                Fund           Fund                 Fund                   Fund              Nit '97             Fund                  Fund           Fund                  Fund               Fund
15.06.95 to 31.03.96
Received                        8888             N.A.                 N.A.                 N.A.               N.A.               N.A.                   N.A.              N.A.              N.A.                    N.A.
Redressed                       8856             N.A.                 N.A.                 N.A.               N.A.               N.A.                   N.A.              N.A.              N.A.                    N.A.
Pending as on 31.03.96            32             N.A.                 N.A.                 N.A.               N.A.               N.A.                   N.A.              N.A.              N.A.                    N.A.
01.04.96 to 31.03.97

                                                                                                       36
Particulars                                            IDBI-PRINCIPAL                                                                    IDBI-PRINCIPAL
                             Equity        Tax Savings       Money Market        Deposit        Child I-          Index      Growth      Balanced     Income        Cash Management
                             Fund             Fund              Fund              Fund          Nit '97           Fund        Fund         Fund        Fund               Fund
Received                      2247            5925                N.A.              N.A.             N.A.         N.A.        N.A.            N.A.      N.A.               N.A.
Redressed                     2242            5924                N.A.              N.A.             N.A.         N.A.        N.A.            N.A.      N.A.               N.A.
Pending as on 31.03.97            5               1               N.A.              N.A.             N.A.         N.A.        N.A.            N.A.      N.A.               N.A.
01.04.97 to 31.03.98
Received                      2248            577                    0               0                3            12         N.A.            N.A.      N.A.               N.A.
Redressal                     2244            571                    0               0                3            10         N.A.            N.A.      N.A.               N.A.
Pending as on 31.03.98            4               6                  0               0                0                2      N.A.            N.A.      N.A.               N.A.
01.04.98 to 31.03.99
Received                      1424            294                    9               6               41           N.A.        N.A.            N.A.      N.A.               N.A.
Redressed                     1420            288                    9               6               41           N.A.        N.A.            N.A.      N.A.               N.A.
Pending as on 31/3/99             4               6                  0               0                0           N.A.        N.A.            N.A.      N.A.               N.A.
01.04.99 to 31/03/2000
Received                      1093            832                    0               0               28            34         N.A.            N.A.      N.A.               N.A.
Redressed                     1076            817                    0               0               28            34         N.A.            N.A.      N.A.               N.A.
Pending as on 31/3/2000           17           15                    0               0                0                0      N.A.            N.A.      N.A.               N.A.
1/4/2000 to 28/2/2001
Received                      2540            1506                   0               0               13            14          2*              2*         4*                1*
Redressed                     2479            1492                   0               0               13            14          2*              2*         4*                1*
Pending as on 28/2/2001           61           14                    0               0                0                0       0*              0*         0*                0*
1/4/2000 to 28/2/2001
(forwarded by SEBI)
Received                          19           14                    0               0                0                0       0*              0*         0*                0*
Redressed                         19           14                    0               0                0                0       0*              0*         0*                0*
Pending as on 28/2/2001           0               0                  0               0                0                0       0*              0*         0*                0*

* From 25/10/2000 to 28/2/2001
Associate Transactions
Under the normal circumstances, the Fund may have dealing with and/or do transactions with or may utilise the services of following associates of
sponsors / AMC

        Name of the                               Nature of                              Services utilised or to be utilised
        Associate                             Associates Activity
        IDBI                                      Development                            •   Services relating to marketing and distribution of the scheme.
                                               Financial Institution
        IDBI Bank Ltd.                                  Banking                          •   Collecting bankers to the scheme
                                                                                         •   Services relating to marketing and distribution.
        IDBI Capital Market                           Stock Broking                      •   Intermediary/broker for transactions pertaining to purchase and
        Services Ltd.                                                                        sale of securities; and
                                                                                         •   Services relating to marketing and distribution.
        UTI Securities                                Stock Broking                      •   Intermediary/broker for transactions pertaining to purchase and
        Exchange Limited                                                                     sale of securities; and
        (Till 1/2/2001)                                                                  •   Services relating to marketing and distribution.

The brokerage/commission payable to the sponsor/its associates will be/are market related and disclosed in the published half-yearly and annual accounts
of the scheme.
The details of brokerage paid to IDBI Capital Market Services Ltd. during the last three years and upto February 28, 2001 for current financial
year is as below :
(All volume figures in Rs lacs and brokerage is a % of volume)

                           IDBI-PRINCIPAL                      IDBI-PRINCIPAL                      IDBI-PRINCIPAL              IDBI-PRINCIPAL                   IDBI-PRINCIPAL
                             Equity Fund                       Tax Saving Fund                       Deposit Fund                Index Fund                    Money Market Fund
                        Volume         Brokerage (%)        Volume       Brokerage (%)       Volume          Brokerage (%)   Volume     Brokerage (%)     Volume Brokerage (%)

 1997-98                1330.72            0.03             203.75           0.33            1572.00             0.03         N.A.             N.A.             -                -

 1998-99                 151.00            0.24             587.44           0.24                -                 -          N.A.             N.A.             -                -

 1999-2000               817.25            0.20             278.28           0.22             508.04             0.001       5161.66           0.25       1401.60          0.001

 1/4/2000 to
 28/2/2001               813.61            0.25              21.40           0.25                -                 -         6451.26           0.37             -                -


                                                                  IDBI-PRINCIPAL Growth Fund                                        IDBI-PRINCIPAL Balanced Fund

                                                                Volume                       Brokerage (%)                           Volume                     Brokerage (%)

 1/4/2000 to 28/2/2001                                            206.06                              0.33                           145.59                         0.33


                                                                                              37
Fees paid to IDsBI as intermediary for distribution of units and as                                Volume of business and brokerage paid to UTI Securities Exchange
Principal Trustee.                                                                                 Limited for securities transactions; (1/7/2000 to 31/1/2001)
                                                                           Rs. in Lacs              Year                                          1/7/2000 to 31/1/2001
PARTICULARS                        1997-98      1998-99      1999-2000     1/4/2000 to              Volume (Rs. in Lacs)                                  4692.62
                                                                            28/2/2001               Brokerage (Rs. in Lacs)                                10.27
Brokerage on unit mobilization        -           3.93         27.40            -
Principal Trusteeship Fees          38.67        35.05         61.66          49.13                Investment in Group Companies
                                                                                                   Total investment in securities of Group companies under all schemes is
Fees paid to IDBI Bank Ltd as collecting banker and as intermediary
                                                                                                   disclosed below. No investment was made in unlisted securities of Group
for distribution of units.
                                                                                                   companies after the amendment of the SEBI Regulations in January 1998.
                                                                          Rs. in Lacs              Most of such securities were purchased from the open secondary / primary
PARTICULARS                        1997-98      1998-99      1999-2000     1/4/2000 to             market at relevant market / offer prices over a period of time based on
                                                                            28/2/2001              the approved investment strategy. All these securities pertain to highly
                                                                                                   traded Blue chip companies. In keeping with the investment objective of
Collecting Bank charges               -           0.57             3.34       2.03
                                                                                                   the Schemes, these companies offer good investment potential.
Brokerage on unit mobilization        -          0.001               -        2.88
                                                                                                   So far, no scheme of IDBI Mutual Fund has an exposure in excess of the
Fees paid to IDBI Capital Market services Ltd. (ICMS) as intermediary                              limits prescribed by SEBI for investments in companies in the same group.
for distribution of units.
                                                                              Rs. in lacs          The investment in securties of sponsor/group companies of sponsor
                                                                                                   as on February 28, 2001 is as under :
PARTICULARS                        1997-98      1998-99      1999-2000     1/4/2000 to
                                                                            28/2/2001                Aggregate Market Value                                         9.24 crore
Brokerage on unit mobilization        -          2.50               -         61.81                  % Of Aggregate Net Assets of IDBI Mutual Fund                  0.67 %

ISSUES SUBSCRIBED BY IDBI MUTUAL FUND IN WHICH SPONSOR (IDBI) IS THE ISSUE MANAGER

SR.      NAME OF THE                TYPE OF        SIZE OF ISSUE           YEAR OF            TIMES                FUNCTIONAL        AMOUNT INVESTED           SCHEME
         COMPANY                     ISSUE           (Rs.Lakhs)             ISSUE           SUBSCRIBED            RESPONSIBLIITY        By IDBI MF
1.)      ITC Bhadrachalam            Rights/              15,863            Mar’ 96               1.00               Pre Issue             22,50,000           IDBI-PRINCIPAL
         Paperboards Ltd.            Equity                                                                                                                    Equity Fund
                                                                                                                                                               (Dividend Plan)
2.)      ITC Bhadrachalam            Rights/              15,863            Mar’ 96               1.00               Pre Issue             7,50,000            IDBI-PRINCIPAL
         Paperboards Ltd.            Equity                                                                                                                    Equity Fund
                                                                                                                                                               (Growth Plan)
3.)      Gujarat State               Rights               17,790            Aug’ 96               1.05              Pre and Post           7,03,500            IDBI-PRINCIPAL
         Fertiliser                  /PCD’s                                                                                                                    Equity Fund
         Corporation Ltd.                                                                                                                                      (Dividend Plan)
4.)      Gujarat Industries          Rights/              17,790            Aug’ 96               1.05              Pre and Post           8,19,000            IDBI-PRINCIPAL
         Power Co. Ltd.              PCD’s                                                                                                                     Equity Fund
                                                                                                                                                               (Growth Plan)
5.)      Bank of India               Public/              67,000            Feb’ 97               1.70               Pro Issue             1,12,500            IDBI-PRINCIPAL
                                     Equity                                                                                                                    Equity Fund
                                                                                                                                                               (Dividend Plan)
6.)      Bank of India               Public/              67,000            Feb’ 97               1.70               Pro Issue             1,12,500            IDBI-PRINCIPAL
                                     Equity                                                                                                                    Equity Fund
                                                                                                                                                               (Growth Fund)
8.)      Corporation Bank            Public/              30,400             Oct’ 97              12.00              Pre Issue             15,68,000           IDBI-PRINCIPAL
                                     Equity                                                                                                                    Equity Fund
                                                                                                                                                               (Growth Fund)
9.)      Corporation Bank            Public/              30,400             Oct’ 97              12.00              Pre Issue             15,68,000           IDBI-PRINCIPAL
                                     Equity                                                                                                                    Tax Savings Fund
10.)     Corporation Bank            Public/              30,400            Oct’ 97               12.00              Pre Issue             19,60,000           IDBI-PRINCIPAL
                                     Equity                                                                                                                    Tax Savings Fund

Investments made by any Company in excess of 5% of net assets in any scheme of IDBI Mutual Fund and investment made by the fund in such
companies as on February 28, 2001:
Company                                      Invested fund                                       Investing fund                    Investments by the fund in the     Nature of
                                                                                                                                     company or its subsidiary       Investment
                                                                                                                                        (Cost Rs. in Crore)

Industrial                                   IDBI- PRINCIPAL Deposit Fund,                    IDBI - PRINCIPAL                                 9.11                    Bonds
Development                                  IDBI- PRINCIPAL Index Fund                       Deposit Fund
Bank Of India                                IDBI- PRINCIPAL Income Fund
                                             IDBI- PRINCIPAL Growth Fund
State Bank of India                          IDBI-PRINCIPAL Cash Management Fund              IDBI-PRINCIPAL                                   36.62                Equity, Bonds
                                             IDBI-PRINCIPAL Income Fund                       Index Fund
                                             IDBI-PRINCIPAL Balanced Fund
CIPLA Ltd                                    IDBI-PRINCIPAL                                   IDBI-PRINCIPAL Index Fund                        6.15                    Equity
                                             Deposit Fund                                     IDBI-PRINCIPAL Growth Fund
                                                                                              IDBI-PRINCIPAL Balanced Fund
                                                                                              IDBI-PRINCIPAL Tax Savings Fund
Gujarat Ambuja Cement Ltd                    IDBI-PRINCIPAL Cash Management Fund              IDBI-PRINCIPAL Index Fund                        1.83                    Equity
Tata Power Co. Ltd                           IDBI-PRINCIPAL Income Fund                       IDBI-PRINCIPAL Index Fund                        1.33                    Equity
Andhra Bank                                  IDBI- PRINCIPAL Deposit Fund                     -                                                  -                        -
Central Bank of India                        IDBI-PRINCIPAL Growth Fund
Credit Analysis and Research Ltd             IDBI- PRINCIPAL Deposit Fund                     -                                                  -                        -


                                                                                            38
Company                                       Invested fund                                Investing fund                       Investments by the fund in the     Nature of
                                                                                                                                  company or its subsidiary       Investment
                                                                                                                                     (Cost Rs. in Crore)
Fashion Makers India Pvt Ltd                  IDBI-PRINCIPAL Deposit Fund                  -                                                  -                           -
General Insurance                             IDBI-PRINCIPAL                               -                                                  -                           -
Corporation of India td                       Cash Management Fund
ICICI Bank Limited                            IDBI - PRINCIPAL Money Market Fund           -                                                  -                           -
IDBI-PRINCIPAL Asset                          IDBI-PRINCIPAL Deposit Fund                  -                                                  -                           -
Management Co. Ltd.                           IDBI-PRINCIPAL Cash Management Fund
Industrial Development                        IDBI-PRINCIPAL Cash                          -                                                  -                           -
Bank of India -Principal Trustee A/c          Management Fund
IDBI Mutual Fund Trust Corpus
Indian Bank                                   IDBI - PRINCIPAL Equity Fund                 -                                                  -                           -
Indusind Enterprises And Finance Ltd          IDBI-PRINCIPAL Cash Management Fund          -                                                  -                           -
Investor Service of India Ltd                 IDBI- PRINCIPAL Deposit Fund                 -                                                  -                           -
Jindal Menthol & Investment Ltd               IDBI-PRINCIPAL Deposit Fund                  -                                                  -                           -
LIC of India                                  IDBI-PRINCIPAL Income Fund
Maharashtra Seamless Ltd                      IDBI-PRINCIPAL Deposit Fund                  -                                                  -                           -
National Securities                           IDBI-PRINCIPAL Cash Management Fund          -                                                  -                           -
Clearing Corp Ltd
Punjab National Bank                          IDBI-PRINCIPAL Balanced Fund                 -                                                  -                           -
                                              IDBI-PRINCIPAL Cash Management Fund
                                              IDBI-PRINCIPAL Growth Fund
Syntel India Ltd                              IDBI-PRINCIPAL Cash Management Fund          -                                                  -                           -
Tanir Bavi Power Co Pvt Ltd                   IDBI-PRINCIPAL Cash Management Fund          -                                                  -                           -
The Peerless General Finance                  IDBI - PRINCIPAL Equity Fund                 -                                                  -                           -
Investment Co Ltd
The Stock Exchange, Mumbai Fund               IDBI-PRINCIPAL Cash Management               -                                                  -                           -
Trumac Engg Co. Ltd                           IDBI- PRINCIPAL Deposit Fund
United India Insurance Company Ltd            IDBI-PRINCIPAL Cash Management Fund          -                                                  -                           -
Videocon Petroleum Ltd                        IDBI-PRINCIPAL Income Fund                   -                                                  -                           -
Vijaya Bank                                   IDBI - PRINCIPAL Equity Fund                 -                                                  -                           -

As required under Regulations 25 (11) of SEBI Regulations, AMC has brought to the notice of the Trustees the investment made by any company in
excess of 5% of NAV of a scheme and the investment made by that scheme or by any other scheme of the same Mutual Fund in that company or its
subsidiaries. Further AMC has also published the above information in half yearly and annual accounts.
Borrowing by the Mutual Fund

Name Of                        Nature of             Source         Purpose          Date Of          Date Of           Rate Of           Amount              Amount
The fund                    the Instrument/                                        Borrowings        Repayment         Borrowing         Borrowed            Borrowed
and Category              Mode of Borrowings                                                                                               (Rs )         As % of Net Assets
IDBI Index Fund             Call Borrowings            Trust      Redemption       14/09/1999        23/09/1999      8.61% to 12.35%      16400000               1.0356
IDBI Index Fund             Call Borrowings            Trust      Redemption       21/09/1999        23/09/1999      8.61% to 9.62%       5400000                0.346

                                                                                                II TO THE UNITHOLDERS
 XVI Tax Treatment of Investments in Mutual Funds
                                                                                                A.   INCOME TAX
Certain tax benefits described below are available, under present taxation
laws, to the unitholders (on attaining majority or otherwise) of Mutual Funds                        Under section 88 of the Income Tax Act, 1961 relief from Income Tax
including “The Fund” and applies only to persons holding Units as an                                 is allowed by way of deduction upto Rs. 16000/- on various
investment, and does not constitute legal or tax advice. Such benefits will                          investments / payments upto Rs. 80000/- specified therein. (including
be available only to the sole unitholder or the first named holder, incase                           investment of Rs. 20000/- in infrastructure bonds, securities etc).
the units are held in the names of more than one person or to the respective                         The said relief included a deduction from Income Tax at the rate of
joint holder, (to the extent of allocation of investment ) in case percentage                        20% on subscription made, out of income chargeable to tax by an
is specified by joint holders. The information set forth below is included                           individual or Hindu Undivided Family in the Equity Linked Saving
for general information purposes only and is based on advice received by                             Scheme upto an amount not exceeding Rs. 10000/-. (30% as per
the Trustees regarding the law and practice in force in India and investors/                         proposed Finance Bill 2001 for individuals having salary income not
unitholders should be aware that the relevant fiscal rules on their
                                                                                                     exceeding Rs.1,00,000/- before claiming deductions and if such
interpretation may change. As is the case with any investment, there can
be no guarantee that the tax position or proposed tax position prevailing                            salary comprise at least 90% of gross total income). For arriving at
at the time of an investment in the Fund will enure indefinitely. In view of                         the tax deduction from salaries the employer can reckon the rebate
the individual nature of tax consequences, each investor/unitholder is                               for the subscription made. However in case of individuals whose
advised to consult his/her State/Country of incorporation, establishment,                            income derived from the exercise of his / her profession as an author,
citizenship, residence or domicile.                                                                  play wright, artist, musician, actor or sportsman (including an athlete)
                                                                                                     is 25% or more of his / her total income, the deduction will be
I. IDBI-PRINCIPAL Tax Savings Fund                                                                   admissible at a higher rate of 25%.
The entire income of IDBI-PRINCIPAL Tax Savings Fund is exempt from                                  Under the provisions of section 10(33) of the Income-tax Act, 196 1,
income tax in accordance with the provisions of section 10 (23D) of the                              income received by all categories of unitholders will be exempt from
Income-tax Act, 196 1. The income received by the Fund is not liable for
                                                                                                     income tax in their hands. In view of this position, no tax needs to be
deduction of tax at source.
                                                                                                     deducted at source from such distribution by the Fund.
Under section 115 R of the Income-tax Act, 1961, the Fund will be-liable
to pay additional income tax at the rate of 20% plus surcharge on the                           The Finance Bill 2001 proposes to retrospectively exclude (effective from
income distributed by the Mutual Fund. However, the Scheme on becoming                          Assessment Year 2000-2001) income arising from transfer to another
the open ended equity oriented, the Scheme will be exempt from such                             person units of UTI or a mutual fund from the exemption provided under
income distribution tax for a period of three years commencing from 1st                         section 10 (33). Such exemption however would be available on transfer
April, 1999.                                                                                    of units to UTI or the concerned mutual fund as the case may be.


                                                                                         39
B. LONG TERM CAPITAL GAINS                                                              a.   In case of non-resident other than a company
i)     For Individuals and HUFs                                                              Long term capital gains                20% plus surcharge
       Long-term Capital Gains in respect of Units held for a period of more                 Short term capital gains              30% plus surcharge
       than 12 months will be chargeable under section 112 of the Income-               b.   In case of foreign company -
       Tax Act, 1961, at a rate of 20% plus surcharge, as applicable. Capital                Long term capital gains                  20%
       gains would be computed after taking into account cost of acquisition                 Short term capital gains                 48%
       as adjusted by Cost Inflation Index notified by the Central Government
       and expenditure incurred wholly, and exclusively in connection with                   As per circular no. 728 dated October 1995 by CBDT , in the case of
       such transfer. In the case, where taxable income as reduced by long                   a remittance to a country with which a Double Taxation Avoidance
       term capital gains is below the exemption limit, the long term capital                Agreement (DTAA) is in force, the tax should be deducted at the rate
       gains will be reduced to the extent of the shortfall and only the balance             provided in the Finance Act of the relevant year, or at the rate provided
       long term capital gains will be charged at the flat rate of 20% plus                  in the DTAA, whichever is more beneficial to the assessee.
       surcharge, as may be applicable.                                                 E.   WEALTH TAX
       The Finance Act, 2000 has provided that an assessee will have an                      Units held under the Scheme of IDBI-PRINCIPAL Tax Savings Fund
       option to apply concessional rate of 10%, plus surcharge, provided                    are not treated as assets within the meaning of section 2(ea) of the
       the long term capital gains are computed without substituting indexed                 Wealth Tax Act, 1957, and are, therefore, not liable to Wealth-Tax.
       cost in place of cost of acquisition.                                            F.   GIFT TAX
ii)    For Partnership Firms, Non-Residents, Indian Companies/                               Units of IDBI-PRINCIPAL Tax Savings Fund may be given as a gift
       Foreign Companies (under section 112)                                                 and no gift tax will be payable either by the donor or the donee, as
                                                                                             the Gift Tax Act has been abolished.
       Long-term Capital Gains in respect of units held for a period of more
       than 12 months will be chargeable under section 112 of the Income-               G.   EXEMPTION FROM TAX ON CAPITAL GAINS ARISING ON.
       Tax Act, 1961, at a rate of 20% plus surcharge, as may be applicable.                 TRANSFER OF UNITS HELD FOR MORE THAN 12 MONTHS
       Capital gains would be computed after taking into account cost of                     As provided under section 54EC of the Income Tax Act, 1961, where
       acquisition as adjusted by Cost Inflation Index notified by the Central               an assessee has made capital gains from the transfer of units held
       Government.                                                                           in IDBI-PRINCIPAL Tax Savings Fund for a period exceeding 12
       The Finance Act, 2000 has provided that an assessee will have an                      months and the assessee has any time within a period of 6 months
       option to seek concessional rate of 10%, plus surcharge, as                           after the date of such transfer, invested the whole of the capital gains
       applicable, to long term capital gains computed without adjusting                     in the long term specified assets i.e., in bonds redeemable after 3
       cost for indexation.                                                                  years issued by the National Bank for Agriculture and Rural
                                                                                             Development, or by the National Highways Authority of India, such
       No surcharge is, however, is payable by a foreign company.                            capital gains shall be exempted from tax on capital gains under
iii)   For Non-Resident Indians                                                              section 54EC of the Income Tax Act 1961. However, if the assessee
                                                                                             has invested only a part of the capital gains, he will be eligible for the
ncome Tax Act, 1961 for non-resident Indians, income by way of long-                         proportionate exemption.
    term capital gains in respect of Units is chargeable at the rate of
    20%. Such long term capital gains would be calculated without                            The Finance Bill 2001 proposes that the exemption under section
    indexation of cost of acquisition.                                                       54EC will also be available if the gains are invested in the bonds
                                                                                             issued by the Rural Electrification Corporation Limited effective from
       The Finance Act 2000 has levied surcharge on taxes computed as
                                                                                             1st April, 2001.
       per section 115E.
                                                                                             It further propose to provide that the capital gains arising from transfer
       Non-resident Indians may opt for computation of long term capital
                                                                                             of long term capital assets, being listed securities or units of mutual
       gains as per section 112, which is more beneficial.
                                                                                             fund or UTI shall be exempt from tax to the extent such capital gains
                                                                                             are so invested within 6 months from the date of transfer in a public
iv)    For Overseas Financial Organisations, including Overseas                              issue made by a company. A lock in period of one year is provided
       Corporate Bodies and Foreign Institutional Investors fulfilling                       and if the newly acquired shares are sold or transferred during this
       conditions laid down under section 115AB (Offshore Fund)
                                                                                             lock-in period then the exempted capital gains will be charged to tax
       Under section 115 AB of the Income-Tax Act, 196 1, long term capital                  as the capital gains of the year of such sale or transfer.
       gains in respect of units held for a period of more than 12 months
                                                                                             The cost of the newly acquired shares which has been taken into
       will be chargeable at the rate of 10%, plus surcharge, as may be
                                                                                             account for claiming exemption from capital gains will not be
       applicable. Such gains would be calculated without indexation of
                                                                                             considered for granting a rebate from tax under section 88.
       cost of acquisition.
       No surcharge is applicable for taxes under section 115AB, in respect             H.   INVESTMENTS BY CHARITABLE AND RELIGIOUS TRUSTS IN
       of corporate bodies.                                                                  IDBI-PRINCIPAL TAX SAVINGS FUND
C.     SHORT TERM CAPITAL GAINS:                                                             Units of IDBI-PRINCIPAL Tax Savings Fund referred to in clause
                                                                                             23D of section 1 0 of the Income Tax Act, 1961, constitute an eligible
       Short term Capital Gains in respect of units held for a period of not                 avenue for investment by charitable or religious trusts per rule 17C
       more than 12 months, is added to the total income. Total income                       of the Income Tax Rules, 1962, read with clause (xii) of sub-section
       including short-term capital gains is chargeable to tax as per the                    (5) of section 11 of the Income Tax Act, 1961
       relevant slab of rates. The maximum tax rates applicable to different
       categories of assesees are as follows:                                           XVII GENERAL INFORMATION
       • Resident Individuals and HUF 30% plus surcharge, as applicable
       • Partnership Firms               35% plus surcharge                             Utilisation of Services of Associates
       • Indian Companies                35% plus surcharge                             The Trustees, the AMC, the Custodian, the Registrar, any Associate, any
       • Non Resident Indians            30% plus surcharge                             Distributor, Dealer, other companies within the IDBI/PRINCIPAL group
       • Foreign Companies               48% (no surcharge)                             etc. may from time to time act (individually and /or jointly) as manager,
The Finance Bill 2001 proposes that losses arising in transactions relating             custodian, registrar, administrator, investment adviser, distributor or dealer
to purchase and sale of securities or units will be ignored to a certain                or agent or marketing associate, respectively in relation to, or be otherwise
extent for the purpose of computing taxable income. This will apply to                  involved in, other Schemes/ Funds / Activities (in the same or different
cases when securities or units bought or acquired within a period of 3                  capacity) (to the extent permitted under various relevant Regulations),
                                                                                        which may have similar investment objectives to those of the Scheme/
months from the record date are sold or transferred within a period of
                                                                                        Fund. The AMC, may for example, make investments for other permitted
three months after that date and dividend or income received or receivable
                                                                                        business activities or on its own behalf without making the same available
on such securities or units is exempt from tax. Such losses are to be
                                                                                        to the Scheme/Fund. The AMC /Trustees will, at all times have regard in
ignored to the extent of amount of dividend income.
                                                                                        such event to its obligations to act in the best interests of the Scheme/
                                                                                        Fund so far as is practicable, having regard to its obligations to other
D.     TAX DEDUCTION AT SOURCE ON CAPITAL GAINS
                                                                                        permitted business activities and will ensure that such transactions are
(i)    No tax is required to be deducted at source on capital gains arising             conducted with/by the Scheme/Fund purely on commercial terms/on an
       to any resident unit holder (under section 194K) vide circular no.715            arm’s length basis as principal to principal.
       dated August 8, 1995 issued by the Central Board for Direct Taxes
       (CBDT).                                                                          AMC may, utilise the services of the Companies stated in the clause
                                                                                        ‘Associate Transactions” (and to whom selling commission has been paid
(ii)   Under section 195 of the Income. Tax Act, 1961, tax shall be deducted            / provided for their marketing efforts in mobilising subscription for the
       at source in respect of capital gains as under:                                  units of the previous schemes of the Fund) and/or the Sponsors,

                                                                                   40
Associates, other Companies within the IDBI/PRINCIPAL group,                         h)   Consent of Auditors, custodian banker, registrar
Employees or their relatives, etc. for the purpose of any securities
transactions and distribution and sale of units/securities, provided that            Penalties and Pending Litigations
any deal in securities through any broker associated with the Sponsors               1.   There are no cases of penalties awarded by SEBI under the SEBI
should not be beyond 5% of the quarterly aggregate purchase and sale of                   Act, or any of its regulations against the Sponsor of the Mutual Fund
securities by the Fund as per SEBI Regulations, and brokerage or                          or any company associated with the Sponsor in any capacity including
commission paid as per prevailing market practice and/or approved rates                   the AMC, Trustees, or any of the Directors or key personnel of the
is disclosed in the half yearly annual accounts of the Fund. AMC may,                     AMC and the Trustees. There has also not been any penalties
invest in Units of the Funds/Schemes in IDBI-PRINCIPAL (the existing                      awarded by any financial regulatory body, including stock exchanges,
Funds/Schemes including the present Scheme and others as may be                           for defaults in respect of shareholders, debenture holders and
announced/launched from time to time), only after full disclosure of its                  depositors.
intention to invest has been made in the Offer Documents. AMC shall not
                                                                                     2.   There has been no penalties awarded for any economic offence and
charge any fees on its investment in Units of the Funds/Schemes in the
                                                                                          violation of any securities laws.
Fund.
                                                                                     3.   There is no pending material litigation proceedings incidental to the
AMC shall not act as a Trustee(s) of any Mutual Fund and shall not
                                                                                          business of the Mutual Fund to which the Sponsor of the Mutual
undertake any other business activities except in the nature of portfolio
                                                                                          Fund or any company associated with the Sponsor in any capacity
management services, management and advisory services to offshore
                                                                                          including the AMC, Trustees or any of the Directors or key personnel
funds, pension funds, provident funds, venture capitals funds,
                                                                                          is a party. There are no criminal cases pending against the Sponsor
management of insurance funds, financial consultancy and exchange of
                                                                                          or any company associated with the Sponsor in any capacity including
research on commercial basis, if any of such activities are not in conflict
                                                                                          the AMC, Trustees or any Director or key personnel.
with the activities of the Fund. Provided that AMC may itself or through its
subsidiaries undertake such activities if it satisfies SEBI that its key             4.   Neither SEBI nor any regulatory body has specifically advised to
personnel, the system, back office, bank and securities accounts are                      disclose in the Offer Document any deficiency in the systems and
segregated activity wise and there exist systems to prohibit access to                    operations of the Sponsor of the Mutual Fund or any company
inside information of various activities. Provided further that AMC shall                 associated with the Sponsor in any capacity including the AMC or
meet the capital adequacy requirements, if any, separately for each such                  the Trustees.
activity and obtain separate approval, if necessary under the relevant
                                                                                     5.   There is no enquiry/adjudication proceedings under the SEBI Act
Regulations.
                                                                                          and the Regulations made thereunder, that are in progress against
Scheme Rights and additions/amendments to the Scheme                                      the Sponsor of the Mutual Fund or any company associated with the
The AMC may add to or otherwise amend either all or any of the terms of                   Sponsor in any capacity including the AMC, Trustees or any of the
the Scheme, by duly complying with the guidelines of and notifications                    Directors or key personnel of the AMC.
issued by SEBI/GOI/any other regulatory body, that may be issued from                     The above information has been disclosed in good faith as per the
time to time subject to the prior approval of SEBI, if required. The                      information available to the AMC.
addendum detailing the changes will be attached to the offer document
and abridged offer document. The addendum/amendment will be circulated               Miscellaneous Clause
to unitholders alongwith/included in the newsletter sent to unitholders and          Statements in this Offer Document are, except where otherwise stated,
to the distributors/brokers. Further arrangement will be made to make                based on the law and practice currently in force in India and are subject to
available the changes in the offer document in the form of a notice/any              changes therein. Notwithstanding anything contained in the Offer
other manner in all the investor service centers / distributors / brokers            Document, the provisions of the SEBI (Mutual Funds) Regulations, 1996
office.                                                                              and the guidelines there under shall be applicable.
Power to Remove Difficulties                                                         Subject to SEBI Regulations permitting:
If any difficulty arises in giving effect to the provision of the Scheme, the        The AMC, the Trust / or the Sponsor may also absorb expenditures in
Trustees may take such steps, which are not inconsistent with these                  addition to the limits laid down under Regulation 52 of SEBI Regulations.
provisions which appear to them to be necessary and expedient, for the               Further, any amendments / replacement / re-enactment of SEBI Regulation
purpose of removing the difficulties.                                                / clarification and guidelines in the form of notes or circulars issued from
Power to Make Rules                                                                  time to time by SEBI for the operation and management of Mutual Fund
                                                                                     subsequent to the date of the Offer Document shall prevail over those
The AMC may from time to time prescribe such forms and make such                     specified in this Offer Document.
rules for the purpose of giving effect to the provisions of the Scheme, and
add to, alter or amend all or any of the forms and rules that may be                 This information contained in this Offer Document regarding taxation is
framed from time to time.                                                            for general information purposes only and is in conformity with the relevant
                                                                                     provisions of the Tax Act, and has been included relying upon advice
Documents For Inspection                                                             provided to the Fund by N. M. Raiji and Co., Chartered Accountants,
The following documents are available for inspection by prospective                  Auditors of the Fund, based on the relevant provisions prevailing as at
unitholders, under the Scheme, between 11.00 a.m. and 1.00 p.m. on                   February 2001
any Business Day at the office of AMC at 2nd Floor, Bajaj Bhavan, Nariman
Point, Mumbai 400 021.                                                               The schemes under this Offer Document have been approved by the
                                                                                     Board of Trustees of IDBI Mutual Fund on November 8, 2000
a)   Memorandum and Articles of IDBI- PRINCIPAL Asset Management
     Co. Ltd. along with Registration Certificate from SEBI                                                    For and on behalf of the Board of Directors of
b)   Copy of Trust Deed and Investment Management Agreement.                                            IDBI-PRINCIPAL Asset Management Company Ltd.
c)   Copy of Custodian Agreement
d)   Copy of Agreement with Registrars
e)   Copy of this Scheme Offer Document
f)   Copies of the Indian Trust Act, 1882, Indian Registration Act 1908,
     and the Securities (Contracts Regulations) Act, 1956.                           Place:Mumbai                                      Sanjay Sachdev
g)   Copy of SEBI (Mutual Funds) Regulations 1996                                    Date:March 8, 2001                                Chief Executive Officer




                                                                                41
                                  FUND OFFICE - MARKETING DEPARTMENT
                 IDBI-PRINCIPAL Asset Management Company Limited, Bajaj Bhavan, 2 nd Floor
             Nariman Point, Mumbai -400 021, India. Tel : + 91 22 202 1111 Fax : + 91 22 282 5537
                    Visit us at www.idbiprincipal.com E-mail : marketing@idbiprincipal.com


                                     REGISTRAR AND TRANSFER AGENT
             Karvy Consultants Limited, 21, Avenue 4, Banjara Hills, Street no 1, Hyderabad 500 034


                                        INVESTOR SERVICE CENTRES

AHMEDABAD                                                          INDORE
IDBI-PRINCIPAL AMC Ltd.                                            IDBI-PRINCIPAL AMC Ltd.
IDBI Complex, 3rd Floor,                                           G 8 & 9, Ground floor,
Near Lal Bunglow,                                                  City Center,
Off C.G. Road,                                                     570, Mahatma Gandhi Marg,
Ellisbridge,                                                       Indore-452 001.
Ahmedabad-380 006.                                                 Tel: (0731) 267 596
Tel: (079) 640 7933-36                                             Tel/Fax: (0731) 267 345
Fax: (For fax tone dial 31)
                                                                   KOLKATA
BANGALORE                                                          IDBI-PRINCIPAL AMC Ltd.
IDBI-PRINCIPAL AMC Ltd.                                            Block No. 503,
Prestige Meridien 1,                                               “SHUBHAM”, 5th Floor,
No. 29, M.G. Road,                                                 1, Sarojini Naidu Sarani,
Bangalore-560 001.                                                 Kolkata-700 017.
Tel: (080) 509 5567-69                                             Tel: (033) 281 7030/281 7268
Tel/Fax: (080) 509 5568                                            Tel/Fax: (033) 281 7030

CHANDIGARH                                                         LUCKNOW
IDBI-PRINCIPAL AMC Ltd.                                            IDBI-PRINCIPAL AMC Ltd.
SCO 455-56, 1st Floor,                                             210-B, 2nd Floor,
Sector-35 C,                                                       “Saran Chambers-2”,
Chandigarh-160 022.                                                5, Park Road,
Tel: (0172) 613 417/389 514                                        Lucknow-226 001.
Tel/Fax: (0172) 613 417                                            Tel: (0522) 239 770

CHENNAI                                                            LUDHIANA
IDBI-PRINCIPAL AMC Ltd.                                            IDBI-PRINCIPAL AMC Ltd.
Challamal,                                                         M-9, ABC Services,
No. 401,                                                           SCO-137, Feroze Gandhi Market,
11, Thiyagaraya Road,                                              Ludhiana-141 001.
Chennai-600 017.                                                   Tel: (0161) 402 985/412 027/409 651
Tel: (044) 431 4677-79                                             Fax: (0161) 405 867
Tel/Fax: (044) 431 4677
                                                                   MUMBAI
DELHI                                                              IDBI-PRINCIPAL AMC Ltd.
IDBI-PRINCIPAL AMC Ltd.                                            2nd Floor, Bajaj Bhavan
503-504, Prakashdeep,                                              Nariman Point
7, Tolstoy Marg,                                                   Mumbai-400 021, India.
New Delhi-110 001.                                                 Tel: (022) 202 1111
Tel: (011) 331 6990/1                                              Fax: (022) 204 4466
Fax: (011) 331 6992
                                                                   PUNE
HYDERABAD                                                          IDBI-PRINCIPAL AMC Ltd.
IDBI-PRINCIPAL AMC Ltd.                                            301, 3rd Floor,
White House,                                                       “Amit Shreephal”,
503, 5th Floor, Block 1B                                           1187/25, Ghole Road,
Begumpet,                                                          Shivajinagar,
Hyderabad-500 016.                                                 Pune-411 005.
Tel: (040) 662 0812                                                Tel: 551 3093
Tel/Fax: (040) 666 9548                                            Fax: 551 3094
IP-OD/0401/01

								
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