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SUNDARAM MONTHLY INCOME PLAN An Open Ended Fund. Monthly Income is not assured and is subject to the availability of distributable suplus 24 HOUR NAV RESPONSE SYSTEM: (044) 28585607 Offer Document cum Application Form An offer of units @ Rs.10 each for cash at par during the initial offer period and at NAV based prices thereafter ISSUE DETAILS Initial issue opens on 03-12-2003 Initial issue closes on 23-12-2003 Issue re-opens on 12-01-2004 SPONSOR Sundaram Finance Limited 21, Patullos Road Chennai 600 002 Phone : (044) 28521181 Fax : (044) 28520456 TRUSTEES Sundaram Mutual Fund 46, Whites Road Royapettah Chennai 600014 Phone : (044) 28583362/28583367 Fax : (044) 28583156 INVESTMENT MANAGER Sundaram Asset Management Company Limited 46, Whites Road, Royapettah Chennai 600014 Phone : (044) 28583362/28583367 Fax : (044) 28583156 This offer document sets forth concisely the information about the scheme that a prospective investor ought to know before investing. The offer document should be retained for future reference. The particulars of Sundaram Monthly Income Plan (scheme) have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended till date and filed with SEBI. The units being offered for public subscription under the scheme have neither been approved nor disapproved by the Securities and Exchange Board of India (SEBI) nor has SEBI certified the accuracy or adequacy of the offer document. Investors may note that this offer document remains effective until a material change occurs (Other than a change in fundamental attributes and within the purview of the offer document) and thereafter the changes shall be filed with SEBI and circulated to the unitholders along with the quarterly /half-yearly reports. THE OFFER DOCUMENT WILL BE REVISED AT LEAST ONCE IN EVERY TWO YEARS. Important Notice Investing in mutual fund schemes involves certain risks and considerations associated generally with making investments in securities. The value of the scheme’s investments, may be affected generally by factors affecting capital markets, such as price and volume, volatility in the capital markets, interest rates, currency exchange rates, changes in regulatory and administrative policies of the Government or any other appropriate authority (including tax laws), or other political and economic developments. Consequently, there can be no assurance that the scheme offered in this document, will achieve the stated objectives. The NAV of the units of this scheme may fluctuate and can go up or down. Past performance of the schemes managed by the Sponsor or their affiliates or the Asset Management Company are not indicative of the future performance of this scheme. Prospective investors are advised to review this document carefully and in its entirety and consult with their legal, tax and financial advisors to determine possible legal, tax and financial or any other consequences of subscribing to, purchasing or holding units under this scheme, before making an application to purchase or hold the units. Sundaram Mutual Fund (the Mutual Fund) and Sundaram Asset Management Company Limited (the AMC), have not authorised any person to give any information or make any representations, either oral or written, not stated in this document in connection with issue of units under this scheme. Prospective investors are advised not to rely upon any information or representations not incorporated in this document, as the same have not been authorised by the Mutual Fund or the AMC. Any subscription, purchase or sale made by any person on the basis of statements or representations, which are not contained in this document, or which are inconsistent with the information contained herein shall be solely at the risk of the investor. Investors may also like to ascertain about any further changes after the offer document from the mutual fund / investor service centres / distributors / brokers.

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Page 1: SUNDARAM MONTHLY INCOME PLAN

SUNDARAM MONTHLY INCOME PLANAn Open Ended Fund. Monthly Income is not assured and is subject to the availability of distributable suplus

2 4 H O U R N A V R E S P O N S E S Y S T E M : ( 0 4 4 ) 2 8 5 8 5 6 0 7

Offer Documentcum Application Form

An offer of units @ Rs.10 each for cash at par during the initial offer period and

at NAV based prices thereafter

ISSUE DETAILSInitial issue opens on

03-12-2003Initial issue closes on

23-12-2003Issue re-opens on

12-01-2004

SPONSORSundaram Finance Limited21, Patullos RoadChennai 600 002Phone : (044) 28521181Fax : (044) 28520456

TRUSTEESSundaram Mutual Fund46, Whites RoadRoyapettahChennai 600014Phone : (044) 28583362/28583367Fax : (044) 28583156

INVESTMENT MANAGERSundaram AssetManagement Company Limited46, Whites Road, RoyapettahChennai 600014Phone : (044) 28583362/28583367Fax : (044) 28583156

This offer document sets forth concisely the information about the scheme that aprospective investor ought to know before investing. The offer document shouldbe retained for future reference.

The particulars of Sundaram Monthly Income Plan (scheme) have been prepared inaccordance with the Securities and Exchange Board of India (Mutual Funds)Regulations, 1996, as amended till date and filed with SEBI. The units being offeredfor public subscription under the scheme have neither been approved nordisapproved by the Securities and Exchange Board of India (SEBI) nor has SEBIcertified the accuracy or adequacy of the offer document. Investors may note thatthis offer document remains effective until a material change occurs (Other than achange in fundamental attributes and within the purview of the offer document)and thereafter the changes shall be filed with SEBI and circulated to the unitholdersalong with the quarterly /half-yearly reports.

THE OFFER DOCUMENT WILL BE REVISED AT LEAST ONCE IN EVERY TWO YEARS.

Important Notice

Investing in mutual fund schemes involves certain risks and considerationsassociated generally with making investments in securities. The value of thescheme’s investments, may be affected generally by factors affecting capitalmarkets, such as price and volume, volatility in the capital markets, interest rates,currency exchange rates, changes in regulatory and administrative policies of theGovernment or any other appropriate authority (including tax laws), or other

political and economic developments. Consequently, there can be no assurancethat the scheme offered in this document, will achieve the stated objectives. TheNAV of the units of this scheme may fluctuate and can go up or down. Pastperformance of the schemes managed by the Sponsor or their affiliates or the AssetManagement Company are not indicative of the future performance of this scheme.

Prospective investors are advised to review this document carefully and in itsentirety and consult with their legal, tax and financial advisors to determine possiblelegal, tax and financial or any other consequences of subscribing to, purchasing orholding units under this scheme, before making an application to purchase or holdthe units.

Sundaram Mutual Fund (the Mutual Fund) and Sundaram Asset ManagementCompany Limited (the AMC), have not authorised any person to give anyinformation or make any representations, either oral or written, not stated in thisdocument in connection with issue of units under this scheme. Prospectiveinvestors are advised not to rely upon any information or representations notincorporated in this document, as the same have not been authorised by theMutual Fund or the AMC. Any subscription, purchase or sale made by any personon the basis of statements or representations, which are not contained in thisdocument, or which are inconsistent with the information contained herein shall besolely at the risk of the investor.

Investors may also like to ascertain about any further changes after the offerdocument from the mutual fund / investor service centres / distributors / brokers.

Page 2: SUNDARAM MONTHLY INCOME PLAN

HIGHLIGHTS

• A Mutual Fund sponsored by Sundaram Finance Limited.

• An open ended income scheme with no assured returns

• The primary object of the scheme is to generate regular income

through investments in fixed income securities. The secondary

objective is to generate long term capital appreciation by investing

a portion of the scheme’s assets in equity and equity related

instruments.

• Sale and redemptions of units on all working days

• Initial issue expenses would be borne by Sundaram Asset

Management Company Limited.

• Minimum investment is Rs.5,000/- and in multiples of Re.1/-

thereafter.

• Half-yearly disclosure of scheme portfolio.

• Nomination facility is available.

• Repatriation facilities are available to NRI/FII as per RBI Regulations.

• Options available- Dividend (Monthly, Quarterly and Half-Yearly) and

Growth

RISK FACTORS

• Mutual Funds and securities investments are subject to market risks

and there is no assurance or guarantee that the Fund’s objectives

will be achieved.

• As with any investment in securities, the NAV of the units issued

under this scheme can go up or down depending on the factors

and forces affecting the capital markets.

• Past performance of the Sponsor, AMC/ Fund does not indicate the

future performance of the schemes of the Fund.

• The Sponsor is not responsible or liable for any loss resulting from

the operation of the schemes beyond the initial contribution of an

amount of Rs 1 lakh made by it towards setting up the Mutual Fund.

• Sundaram Monthly Income Plan is only the name of the scheme

and does not in any manner indicate either the quality of the

scheme or its future prospects and returns.

• There is no assurance that the scheme will make periodic distribution

of dividend/income though it has every intention of doing so.

• The scheme shall not be regarded as a deposit with a bank/

company

SCHEME SPECIFIC RISK FACTORS AND SPECIAL

CONSIDERATIONS

• Changes in general market conditions, Government policies/laws,

and factors impacting capital, /debt/ money markets in particular, as

also changes in level of interest rates, trading volumes, liquidity,

market volatility and settlement/ trading procedures may affect the

value of scheme’s investments and consequently the NAV of the

scheme.

• Variations in prevailing rates of interest will impact the value of

scheme’s investment in debt/money market securities and hence the

NAV of the scheme.

• Debt securities are subject to credit risk, which means that the issuer

of the security may default in meeting the obligations under the

security.

• Securities which are not quoted or thinly traded on the stock

exchange, carry liquidity risk.

• Investments in debt securities are subject to reinvestment risk as, due

to non-availability of appropriate securities, sometimes the interest

rate at which interest/ maturity proceeds of such securities are

invested may fall.

Note: Investors are advised to read the offer document carefully before

taking any decisions to invest in the scheme.

CERTIFICATE OF DUE DILIGENCE

It is confirmed that:

1. This Offer Document forwarded to SEBI is in accordance with the

SEBI (Mutual Funds) Regulations, 1996 and the guidelines and

directives issued by SEBI from time to time.

2. All legal requirements connected with the launching of the scheme

and also the guidelines, instructions, etc. issued by the Government

of India and any other competent authority in this behalf, have been

duly complied with.

3. The disclosures made in this Offer Document are true, fair and

adequate to enable the investors to make a well-informed decision

regarding investment in the scheme.

4. According to the information furnished to us, the intermediaries

named in the offer document are registered with SEBI and till date

such registration is valid.

Place: Chennai T P Raman

Date:27-11-2003 Managing Director

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Page 3: SUNDARAM MONTHLY INCOME PLAN

TABLE OF CONTENTS PAGE NO.

Sundaram Monthly Income Plan (Introduction and Important Notice) 1

Highlights & Risk Factors 1

Scheme Specific Risk Factors and Special Considerations 1

Certificate of Due Diligence 1

Definitions 3

PART I 3–8

SCHEME SUMMARY 3

CONSTITUTION OF THE MUTUAL FUND 4

Sponsor 4

Financial Performance of the Sponsor for the last three Financial years 4

Sundaram Mutual Fund 4

Board of Trustees of Sundaram Mutual Fund 4

Functions and Responsibilities of the Board of Trustees 4-6

Trusteeship Fees 6

THE ASSET MANAGEMENT COMPANY 6

Investment Management Agreement 6

Board of Directors 6–7

Functions and Responsibilities of the AMC 7

Asset Management Fee 7

Information about the Key Personnel 7

Information about the Fund Managesr of the Scheme 7–8

Auditors to the Scheme 8

REGISTRAR 8

CUSTODIAN 8

PART II 8–12

INVESTMENT OBJECTIVES AND POLICIES 8

Fundamental Attributes of the Scheme 8

A brief note on debt markets 8

Instruments in which investments can be made 9

Investment Strategy 9

Investment Procedure 9

Risk 10

Benchmark Index 11

Regulations Governing Investments in Securities 11

Valuation of Assets and NAV 11

CALCULATION OF NET ASSET VALUE 12

NAV INFORMATION 12

ACCOUNTING POLICIES AND STANDARDS 12

ANNUAL FINANCIAL REPORTS AND HALF-YEARLY DISCLOSURES 12

PART III 12–17

UNITS AND OFFER 12

Offer of units 12

Minimum Investment 13

Who Can Invest 13

How to apply during Initial Public Offer 13

Subscription to the units of the Scheme – Ongoing Basis 13

Mode of Payment 13

Account Statements 13

Refunds 13

Allotment 14

Repurchase of units 14

TABLE OF CONTENTS PAGE NO.

Mode of payment of redemption/dividend 14

Repurchase Price 14

Fractional units 14

Usage of Load 15

Listing 15

Transfer 15

Switching 15

Suspension of Sale/Repurchase of units 15

Nomination Facilities 16

OPTIONS AND INVESTMENT PLANS OFFERED UNDER THE SCHEME 16

Dividend Option 16

Shut–out period 16

Growth Option 16

Diviedend Reinvestment 16

Systematic Investmatic Plan 16

Systematic Withdrawal Plan 17

PART IV 17–22

LOAD STRUCTURE 17

EXPENSES 17

Initial Issue Expenses 17

Annual Recurring Expenses of the past Schemes 17–19

CONDENSED FINANCIAL INFORMATION 19–22

PART V 22–24

UNIT HOLDERS RIGHTS AND SERVICES 22

Investor Services 22

Information about the Scheme 22

Account Statements 22

NAV Information 22

Disclosure of Information under the Regulations 22

Rights of unit holders of the Scheme 22

Procedure and manner of obtaining investors approval in

Specified circumstances. 23

Duration of the scheme 23

Procedure and Manner of Winding-up 23

TAX BENEFITS OF INVESTING IN A MUTUAL FUND 23

To the fund 23

To the Investor 23

Tax deduction at source 24

Loss arising from redemption 24

Wealth Tax/Gift Tax 24

PART VI 24–26

OTHER MATTERS 24

Investment in group companies 24

Unit holder Grievances Redressal Mechanism 24

Associate Transaction 24

Investments made in companies who have invested more than

5% of the NAV of the schemes or Sundaram Mutual Fund as on

30–09–2003 25

Borrowing by the Mutual Fund 25

Inter Scheme Transfers 26

Inter Scheme Investments 26

Investment by the AMC 26

Dividends and Distributions 26

Penalties and Pending Litigations 26

Documents available for Inspection 26

Approval by Board of Trustees 26

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Page 4: SUNDARAM MONTHLY INCOME PLAN

DEFINITIONS

In this Offer Document, the following words and expressions shall have the meaning specified herein, unless the context otherwise requires:

Asset Management Company Sundaram Asset Management Company Limited, a Company incorporated under the Companies Act, 1956 or AMC or Investment Manager and registered with SEBI to act as the Investment Manager for the schemes of Sundaram Mutual Fund.

Board of Trustees or Trustees The Board of Trustees of Sundaram Mutual Fund.

Custodian Standard Chartered Bank, acting as Custodian to the scheme, or any other Custodian who is approved bythe Trustees.

Mutual Fund Sundaram Mutual Fund, a trust set up under the provisions of the Indian Trusts Act, 1882 and registeredwith SEBI vide Registration No.MF/034/97/2 dated January 3, 1997.

NAV The Net Asset Value per unit of this scheme calculated in the manner provided in this Offer Document or asmay be prescribed by the SEBI Regulations from time to time.

Offer Document This document issued by Sundaram Mutual Fund offering units of Sundaram Monthly Income Plan forinvestment.

Scheme Sundaram Monthly Income Plan, an open-ended income scheme with no assured return, the units of whichis offered for subscription under the offer document.

Reserve Bank/RBI Reserve Bank of India

SEBI Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992.

SEBI Regulations / Regulation Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended from time to time.

Trust Deed The Trust Deed dated August 24, 1996 (as amended from time to time) establishing Sundaram Mutual Fund.

Unit holder/ Investor A participant in the scheme.

Working Day A day other than: (1) Saturday and Sunday (2) a day on which the National Stock Exchange or BombayStock Exchange is closed (3) a day on which there is no RBI Clearing/settlement of securities (4) a day onwhich the sale and repurchase of units are suspended by the Trustees. (5) A day on which RBI/Banks areclosed at Chennai/ Mumbai.

PART I

1) SCHEME SUMMARY

Name of the scheme Sundaram Monthly Income Plan

Structure Open-ended Income scheme with no assured /guaranteed returns.

Offer Price or Sale Price During the initial issue the units are offered at Rs.10/- each. During the ongoing phase, the units would be offeredat NAV related prices, subject to applicable load, if any.

Scheme Objective To generate regular income by investing primarily in fixed income securities/money market instruments so as tofacilitate periodic distributions to investors with the secondary objective being generation of long-term capitalappreciation by investing a small portion in equity/ equity related instruments. However, there can be no assurancethat the investment objective of the scheme will be achieved.

Application Amount Minimum application of Rs 5,000/- and in multiples of Re.1/- thereafter.

Initial Issue expenses The initial issue expenses would be borne by the AMC.

Transparency The NAV is being computed on every Working Day (except in special circumstances) and is available for publicinformation at the Corporate office of the AMC. Further transparency will be maintained through half yearlydisclosure of established portfolio through newsletters.

Load Entry Load - Nil

Exit Load – (i) For investments of Rs.10 lacs or lower = 0.50 %, if repurchase is made within 12 months from thedate of allotment of units. (ii) For investments greater than Rs.10 lacs –nil

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Page 5: SUNDARAM MONTHLY INCOME PLAN

2) CONSTITUTION OF THE MUTUAL FUND

Sponsor

Sundaram Mutual Fund has been sponsored by Sundaram FinanceLimited (SF). SF is India’s leading Non-Banking Finance Companyhaving a track record of around 50 years with an asset base over Rs.2,700 Crores. It has a deposit base exceeding Rs. 744 Crores coveringover 3,95,000 accounts and an uninterrupted dividend track recordsince inception. The public deposit schemes of SF enjoy the prestigious‘FAA+’ (F double A+) rating from CRISIL and the prestigious MAAA (Mtriple A) rating from ICRA signifying the highest degree of safety ofdepositors’ funds. Its Commercial Paper has been rated P1+.

Sundaram Asset Management Company limited is a wholly ownedSubsidiary of Sundaram Finance Limited.

Subsidiary companies of SF (other than Sundaram Asset ManagementCompany Limited) are:

a. Sundaram Home Finance Ltd. has been set up in 1999 with theobjective of providing retail home finance.

b. Sundaram Insurance Broking Limited (earlier known as SundaramFinance Securities Limited) has the following objectives:

To carry on the business of Insurance Brokers of all kinds of Insurableperils including of Life, Medical and other general insurance andsuch other business as may be allowed from time to time for theInsurance Brokers under the rules of Insurance RegulatoryDevelopment Authority

The Sponsor has irrevocably settled a sum of Rs 1 lakh as corpus of theTrust, which shall be held and managed by the Trust in accordancewith the Trust Deed, dated August 24, 1996.

Financial performance of the Sponsor for the last threefinancial years

Description Year ended 31st March (Rs in crores)2002-2003 2001-2002 2000-2001

Turnover / Total Income 476.07 467.64 532.55Profit After Tax 45.66 40.36 70.54Equity Capital (FV Rs 10/- each) 24.00 24.00 24.00Free Reserves 462.57 411.67 477.33Net worth 486.57 435.67 501.33Earnings per share (Rs) 19.03 16.82 29.39Book value per share (Rs) 202.74 181.53 208.89Percentage of dividend paid 75% 60% 60%

(Source: Annual Reports of Sundaram Finance Limited)

Sundaram Mutual Fund

Sundaram Mutual Fund has been constituted as a Trust in accordancewith the provisions of the Indian Trusts Act, 1882 and the Trust Deeddated August 24, 1996 has been duly registered with the Sub-registrar,Chennai under Serial Number 356 of 1996. The Mutual Fund has beenregistered with the Securities and Exchange Board of India (SEBI) videRegistration Number MF/034/97/2 dated January 3, 1997.

Board of Trustees of Sundaram Mutual Fund

Name, Address Principal Occupation

Dr Raja Jesudoss Chelliah, ChairmanChairman Madras School of Economics, Chennai(Independent Trustee) Director2-A, Block 2, ICRA LimitedMagnolia Park Apartments Indbank Merchant Banking Services5, Furlong Road, Guindy LimitedChennai - 600 032 Modi Corp (Pvt) Limited

Sri K V Ramanathan,IAS (Retired) Chairman(Independent Trustee) The Synergy Mortgage Loan Co Ltd.,Rohini, # 9 Second Seaward RoadValmiki Nagar, Thiruvanmiyur,Chennai – 600 041

Sri S Viji ChairmanNew No.71, Old No.33, Sundaram Home Finance LtdPoes Garden, TVS Lean Logistics Ltd.Chennai – 600 086 Vice Chairman

Sundaram Finance LimitedJoint Managing Director

Brakes India LimitedDirector

India Motor Parts and Accessories Ltd.Sundaram Dynacast LimitedSundaram Industries LimitedTV Sundram Iyengar & Sons LimitedWheels India LimitedRoyal Sundaram Alliance Insurance Company Ltd

Sri G K Raman ChairmanNo 10, 12th Cross Street, Royal Sundaram Alliance Insurance Indira Nagar, Company LtdChennai- 600020 Whole Time Director

Sundaram Finance LimitedDirector

Lakshmi General Finance Ltd.Turbo Energy Ltd.Sundaram Home Finance Ltd.

Sri R Rajamani Director(Independent Trustee) ICICI Ventures 8-2-585/A/1, Road No.9 ICICI Knowledge Park, HyderabadBanjara HillsHyderabad 500 034

Sri. K. V. Krishnamurthy Director(Independent Trustee) Dhanalakshmi Bank Ltd.174 Kalpataru Residency, Assets Reconstruction Company of India Ltd.Tower ‘A’107 Road No.8, SION (East) Mumbai 400 022.

Functions and responsibilities of the Board of Trustees

The Trustees are vested with the general power of superintendence,direction and management of the affairs of the Trust. The Trustees haveappointed Sundaram Asset Management Company Limited as theInvestment Manager for Sundaram Mutual Fund and have to ensurethat the AMC fulfills the functions assigned from time to time subject tothe Trust Deed, SEBI regulations and other laws in force.

The Trustees have also to report at the end of every six months to SEBIand annually to the investors on the functioning of the Fund. As perthe Trust Deed, SEBI Regulations and other laws in force, the Trusteesinteralia, have the following functions and responsibilities:

• In carrying out his responsibilities a member of the Board of Trusteesshall maintain arms length relationship with other companies orinstitutions or financial intermediaries or any body corporate withwhich he may be associated.

• No Trustee shall participate in the meetings of the Board of Trusteeswhen decisions for investments in which he may be interested aretaken.

• Each Trustee shall furnish to the Board of Trustees, particulars ofinterest which he may have in any other company, or institution orfinancial intermediary or any corporate by virtue of his position asdirector, partner or with which he may be associated in any othercapacity.

• Each Trustee shall file the details of his transactions of dealing insecurities with the Mutual Fund on a quarterly basis.

• The Trustees shall have the right to obtain from the AssetManagement Company such information as is considered necessary.

• The Trustees shall ensure that the transactions entered into by theAsset Management Company are in accordance with the SEBIRegulations and the scheme.

• The Trustees shall ensure that the Asset Management Company hasbeen managing the schemes independently of other activities and

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Page 6: SUNDARAM MONTHLY INCOME PLAN

have taken adequate steps to ensure that the interest of the investorsof this scheme are not being compromised with those of any otherscheme or of other activities of the Asset Management Company.

• The Trustees shall ensure that all the activities of the AssetManagement Company are in accordance with the provisions of theSEBI Regulations.

• Where the Trustees have reason to believe that the conduct ofbusiness of the Mutual Fund is not in accordance with SEBIRegulations and the scheme, they shall forthwith take such remedialsteps as are necessary by it and shall Immediately inform SEBI of theviolation and the action taken by them.

• The Trustees shall be accountable for and be the custodian of thefunds and property of the scheme and shall hold the same in trustfor the benefit of the unit holders in accordance with SEBIRegulations and the provisions of the Trust Deed.

• The Trustees shall be responsible for the calculation of any incomedue to be paid to the mutual fund and also of any income receivedin the mutual fund for the holders of the units of the scheme inaccordance with the SEBI Regulations and the provisions of the TrustDeed.

• The Trustees shall periodically review all service contracts such ascustody arrangements, transfer agency of the securities and satisfythemselves that such contracts are executed in the interest of theunit holders.

• The Trustees shall periodically review the investor complaintsreceived and the redressal of the same by the Asset ManagementCompany.

• The Trustees shall ensure that the mutual fund buys and sellssecurities on the basis of deliveries and in all cases of purchases, takedelivery of the relative securities and in all cases of sale, deliver thesecurities and in no case put itself in a position whereby it has tomake short sale or carry forward transaction or engage in badlafinance.

• The Trustees are required to obtain the consent of the unit holdersof a scheme

(a) When the Trustees are required to do so by SEBI in the interest ofthe unit holders of that scheme; or

(b) Upon the request made by three-fourths of the unit holders ofthis scheme; or

(c) If majority of the Trustees decide to wind up the scheme(s) orprematurely redeem the units; or

(d)When a change in the fundamental attributes of the scheme(s) orthe Trust or fees and expenses payable or any other change,which would modify the scheme(s) or affect the interest of theunit holders, is proposed to be carried out. No change shall becarried out unless

a. a written communication about the proposed change is sentout to each unit holder and an advertisement is given in oneEnglish daily newspaper having nation wide circulation as wellas in a newspaper published in the language of the regionwhere the Head office of the mutual fund is situated; and

b. the unit holders are given an option to exit at the prevailingNAV without any exit load.

[Note: For the purpose of this clause, Fundamental Attributes mean theInvestment Objective and Terms of this scheme].

• The Trustees are required to call for the details of transactions insecurities by the key personnel of the AMC in their own names or onbehalf of the AMC and report the same to SEBI, as and whenrequired.

• The Trustees are required to review on a quarterly basis alltransactions carried out between the Fund, AMC and its associates.

• The Trustees are required to review quarterly the net worth of theAMC and in case of any shortfall ensure that the AMC make up forthe shortfall as per clause (f) of sub regulation (1) of regulation 21 ofSEBI (Mutual Funds) Regulations, 1996.

• The Trustees are required to ensure that there is no conflict ofinterest between the manner of deployment of its net worth by theAMC and the interest of the unit holders.

• The Trustees are required to abide by the Code of Conduct asspecified in the Fifth Schedule of the SEBI (Mutual Funds)Regulations, 1996.

• The meetings of the Trustees shall be held at-least once in every twomonths and atleast six meetings shall be held in every year.

• The Trustees shall maintain high standards of integrity and fairnessin all their dealings and in the conduct of their business

• The Trustees shall render at all times high standards of service,exercise due diligence, ensure proper care and exerciseindependent professional judgement.

• The Trustees have to furnish to SEBI on a half yearly basis

a) a report on the activities of the Fund;

b) a certificate stating that the Trustees have satisfied themselves thatthere have been no instances of self dealing or front running byany of the Trustees, Directors and key personnel of the AMC;

c) A certificate to the effect that the AMC has been managing theschemes independently of any other activities and in case anyactivities of the nature referred to in Regulation 24, sub regulation(2) of the SEBI (Mutual Funds) Regulations, 1996 have beenundertaken, the AMC has taken adequate steps to ensure that theinterest of the unit holders is protected.

• The independent Trustees are required to give their comments onthe report received from the AMC regarding the investments by theMutual Fund in the securities of the group companies of theSponsors.

• No amendment to the Trust Deed shall be carried out without theprior approval of SEBI and the unit holders, where it affects theinterest of unit holders.

In terms of SEBI (Mutual Funds) (Amendment) Regulation1999, the Trustees shall exercise due diligence as under:

A. General Due Diligence:

1. The Trustees shall be discerning in the appointment of thedirectors on the Board of the Asset Management Company.

2. The Trustees shall review the desirability of continuance of theAsset Management Company if substantial irregularities areobserved in any of the schemes and shall not allow the AssetManagement Company to float new scheme.

3. The Trustees shall ensure that the trust property is properlyprotected, held and administered by proper persons and by aproper number of such persons.

4. The Trustees shall ensure that all service providers are holdingappropriate registrations from the Board or concernedregulatory authority.

5. The Trustees shall arrange for test checks of service contracts.

6. The Trustees shall immediately report to the Board of any specialdevelopments in the mutual fund.

B. Specific Due Diligence:

1. Obtain internal audit reports at regular intervals fromindependent auditors appointed by the Trustees.

2. Obtain compliance certificates at regular intervals from the AssetManagement Company.

3. Hold meetings of the Trustees more frequently.

4. Consider the reports of the independent auditor and compliancereports of the Asset Management Company at the meetings ofTrustees for appropriate action.

5. Maintain records of the decisions of the Trustees at theirmeetings and of the minutes of the meetings.

6. Prescribe and adhere to a code of ethics by the Trustees, theAsset Management Company and its personnel.

7. Communicate in writing to the Asset Management Company ofthe deficiencies and checking on the rectification of deficiencies.

Notwithstanding anything contained in sub regulations (1) to(25) of Regulation 25, the Trustees shall not be liable for actsdone in good faith if they have exercised adequate due diligencehonestly.

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Page 7: SUNDARAM MONTHLY INCOME PLAN

The Independent Trustees shall pay specific attention tothe following as may be applicable namely,

1. The Investment Management Agreement and the compensationpaid under the agreement.

2. Service contracts with affiliates – whether the Asset ManagementCompany has charged higher fees than outside contractors for thesame services.

3. Selection of the Asset Management Company’s independentdirectors

4. Securities transactions involving affiliates to the extent suchtransactions are permitted.

5. Selecting and appointing individuals to fill independent directorsvacancies.

6. Code of ethics must be designed to prevent fraudulent, deceptive ormanipulative practices by insiders in connection with personalsecurities transactions.

7. The reasonableness of fees paid to sponsors, Asset ManagementCompany and any other services provided for.

8. Principal underwriting contracts and their renewals.

9. Any service contract with the associates of the Asset ManagementCompany.

Audit committee of the Trustees has been constituted which will reviewthe internal audit systems and the recommendations of the internal andstatutory audit reports.

During the year 2002- 03 two audit committee meetings were held.

During the year 2002-03 the Board of Trustees held five meetings. Thesupervisory role of the Board of Trustees is discharged by havingcontinuous feedback from the AMC on matters of importance and areview of the Mutual Fund’s operations at the Board Meetings.

Trusteeship Fees

Pursuant to the Trust Deed, presently the Trustees are entitled to a feeof 0.0025% of the weekly average Net Asset Value of all schemes takentogether for each financial year for their services. Presently the total feepayable to all Trustees in any financial year shall not exceed Rs.5 Lakhs.In addition to the above, each Trustee shall presently be paid Rs.5,000/-per meeting for attending the meeting of the Board of Trustees or anyCommittee thereof.

3. THE ASSET MANAGEMENT COMPANY

Sundaram Asset Management Company Limited, the InvestmentManager of Sundaram Mutual Fund is a public limited company,incorporated under the Companies Act, 1956 and has a paid-up capitalof Rs.15 Crores. It is a wholly owned subsidiary of Sundaram FinanceLimited.

Investment Management Agreement

The Board of Trustees of Sundaram Mutual Fund has appointedSundaram Asset Management Company Limited as the InvestmentManager for the schemes of Sundaram Mutual Fund vide InvestmentManagement Agreement dated August 24, 1996.

Board of Directors

Shri D N Ghosh ChairmanChairman ICRA LimitedFormer Chairman The Peerless General Finance & InvestmentState Bank of India Co.Ltd.BC-148 Sector I DirectorSalt Lake Housing Development Calcutta 700 064 Finance Corporation Limited

Tata Tea LimitedManaging Trustee

Sameeksha Trust (Economic and Political Weekly)

Shri S Krishnamurthy No other directorships held currently(Independent Director)Former Managing DirectorGeneral InsuranceCorporation of India9 Nandanam ExtensionChennai – 600 035.

Shri M S Parthasarathy Director

(Independent Director) The Federal Bank LimitedFormer Senior Officer Fedbank Financial Services LimitedAsian Development BankManilla, PhilippinesFlat B2 ‘Ashok Svasti’Balakrishna Road, Valmiki Nagar, Chennai – 600 041

Shri T N Anantharama Iyer No other directorship held currently(Independent Director)Former Managing DirectorDiscount and Finance House of India Ltd8 Rajmayur, 19th RoadKhar (West)Mumbai – 400 052

Shri S N Inamdar Chairman(Independent Director) Poona Ind. Hotels LimitedTax Consultant Director2A Ameya Apartments Kirloskar Brothers LimitedDadar Kirloskar Ferrous Industries LimitedMumbai 400 028 Bajaj Tempo Limited

Finolex Industries LimitedSudharshan Chemical Industries LimitedKulkarni Power Tools LimitedShree Suvarna Sahakari Bank LimitedBharat Containers (Nagpur) Pvt. LimitedCMC Commutator Pvt. LimitedUgar Sugar Works LimitedKirloskar Proprietory LimitedFinolex Polymers LtdBrihan Maharashtra Sugar Syndicate Limited

Sri. T T Srinivasaraghavan Managing DirectorNo 5 Kasturi Estates, Sundaram Finance LimitedThird Street DirectorMadras 600 086 Lakshmi General Finance Limited

Sundaram Home Finance LimitedRoyal Sundaram Alliance Insurance Company LimitedInfreight India Technologies (p) Limited

ChairmanEquipment Leasing Association (India) Ltd

Council MemberFederation of Automatic Dealers Association

Member-General CommitteeMadras Chamber of Commerce & Industry

Shri T P Raman No other directorship held currentlyManaging DirectorFlat No. C#3, "Ashreya", No. 11, Raman Street, T Nagar, Chennai 600 017

Shri. A.V.Rajwade DirectorC/o A V Rajwade & Co Business Standard LimitedForex & Treasury Cybertech Systems and Software LimitedManagement Consultants The Clearing Corporation of India Limited7/52, Govt. Housing scheme Royal Sundaram Alliance Insurance CompanyOff. Jawaharlal Nehru Road LimitedSantacruz (E) MUMBAI – 400 055

Shri Ashoke Bijapurkar Director(Independent Director) Dhara Vegetable Oil Pvt. Ltd.210, Konark Shram Future Step Advisory Service Pvt. Ltd.156, Madan Mohan Malviya Marg TardeoMUMBAI – 400 034Functions and Responsibilities of the AMC

Important duties of the Investment Manager as per the InvestmentManagement Agreement entered into between Sundaram MutualFund and Sundaram Asset Management Company Limited, inaccordance with the SEBI Regulations and other laws in force are:

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• AMC will assume the day to day management of the Fund and inthat capacity, subject to the supervision of the Trustees, shall beresponsible for and have powers of implementing schemes andmake investment decisions and manage the assets of the schemes ofthe mutual fund in accordance with the scheme objectives, TrustDeed and SEBI Regulations in the best interest of the unit holders.

• Implement the specific scheme in all respects including the allotmentand the issue of Unit Certificates/Account Statements to the investorswho are successful in getting the units allotted to them as per theterms of the concerned scheme and collect the subscriptions/saleproceeds of units.

• Disclose the basis of calculating the repurchase price and Net AssetValue (NAV) of units of the schemes of the Fund in the offerdocuments and to disclose the NAV to the unit holders at suchintervals as may be specified by the Board of Trustees or SEBI or asmay be mentioned in the offer document.

• Take all steps to protect the investments made out of the Fund andachieve the objectives of each scheme, as a diligent and prudentperson would do.

• Maintain or cause to be maintained a register containing the namesand other required particulars of unit holders in print ormagnetic/electronic media.

• Distribute the profits of the fund earned every year in accordancewith the provisions of the schemes and in conformity with SEBIRegulations.

• Within six months from the date of closing of each financial year,forward to SEBI, a copy of the Annual Report containing the auditedannual statements of accounts viz., the Balance Sheet and the Profitand Loss account of the Mutual Fund and other informationincluding details of investments and deposits held by the MutualFund so that the entire scheme wise portfolio of the Mutual Fund isdisclosed.

• No Offer Document of a scheme, key information or memorandumis issued or publicised without the Trustees’ prior approval in writing.

• Ensure at all times that the assets and funds of the Mutual Fund aresegregated from those of the AMC and assets of any other funds forwhich the AMC is responsible.

• The Investment Manager shall file with the Trustees details oftransactions in securities by its key personnel, transactions with anyof its associates, details of interest of Directors and other reportsrequired to be filed under SEBI Regulations.

• The Investment Manager shall ensure that the dealings in securitiesthrough its associates are in accordance with SEBI Regulations andguidelines issued from time to time.

• The Asset Management Company shall maintain high standards ofintegrity and fairness in all their dealings and in the conduct of theirbusiness

• The Asset Management Company shall render at all times highstandards of service, exercise due diligence, ensure proper care andexercise independent professional judgement.

• The Asset Management company shall not make any exaggeratedstatement, whether oral or written, either about their qualificationsor capability to render investment management services or theirachievements

• As per SEBI Regulations, any change in controlling interest of theAsset Management Company shall be carried out only with a. the prior approval of Trustees and SEBI b. a written communication about the proposed change is sent to

each unitholder and an advertisement is given in one Englishdaily newspaper having nationwide circulation and in anewspaper published in the language of the region where theHead Office of the mutual fund is situated and

c. the unit holders are given an option to exit on the prevailing NetAsset Value without any exit load.

Asset Management FeeSundaram Asset Management Company Ltd., is entitled to InvestmentManagement and Advisory fee of 1.25% of the weekly average netassets upto Rs 100 crores and 1% of the weekly average net assets onthe balance amount.

Key Personnel of the AMC

Qualification Age Past experienceSri. T P Raman M.Com., CAIIB 61 30 years in State Bank of India.Managing Director Retired as General Manager of

SBI Capital Markets Ltd., Chennai.

Sri Sanjay Santhanam B-Tech PGDM 36 9 years - 2 years in Lintas India Ltd,Vice-President- Marketing (IIM, Bangalore) 4 years in Contract Advertising

India Ltd and 3 years in ANZ GrindlaysBank.

Sri P.N.Subramanian B.A (Economics), 44 13 years in DSP Merill LynchVice-President- Sales P.G Diploma in

Business Economics

Sri. N Prasad M.Com 43 13 years –7 years in Canara Bank, 3Chief Investment Officer years in Canbank Mutual Fund, and 3

years in ICICI Asset ManagementCompany Limited.

Sri. S. Venkatesh Iyer ACA 38 More than 13 years experience of whichVice-President- Operations 5 years in Audit and Consulting with

Ernst &Young. 4 years in Birla MutualFund and 4 years as consultant to largeUS based Investment ManagementCompany and BPO.

Sri. P. Sundararajan B.Com. B.L. 47 26 years in Sundaram Finance Ltd inCompany secretary FCS,CFE, CISM various capacities of which 10 years as

Deputy Secretary and ComplianceOfficer.

Sri. R Vijayendiran M.Com. 39 11 years- 3 years in Stock BrokingDealer Maker, 3 years in Stock Holding

Corporation of India, 3 years in Citicorpand 2 years in Kotak Securities.

Sri. Anand Radhakrishnan B.Tech., P G Diploma 34 7 years – 2 years in Essar Steel, 2 yearsFund Manager in Management in ONGC and 3 years in SBI Fund

(IIM Ahmedabad) Management.

Sri.R.Sivakumar B.Tech.(IIT Chennai), 28 3 years in investment research in ITCFund Manager PG Diploma Threadneedle AMC Limited and Zurich

in Management Asset Management Company (India)(IIM Ahmedabad) Limited.

Ms. R.Srividhya MMS (BITS), PG Dip. in 30 Totally 9 years – worked in a StockCo-Fund Manager - Equity Broking Equity Research Firm for a year.

Sri Anoop Bhaskar B.Com, 36 13 years, 1 year in Cross BordersCo-Fund Manager - Equity M B A (Finance) Finance & Projects, 1 Year in Brisk

Financial Services, 1 Year in ShriramFinancial Services and 10 years in Franklin Templeton.

Sri T.S.Sritharan B.Com, A.C.A, AIII 42 9 years in United India InsuranceAsst. Vice-President-Operations Company Limited.

Information about the Fund Managers of the SchemeA. Debt Portfolio

Name Mr. R.SivakumarEducational Qualifications B.Tech. (IIT Chennai), PG Diploma in

Management (IIM Ahmedabad)Past experience 3 years in investment research in ITC

Threadneedle AMC Limited and Zurich AssetManagement Company (India) Limited.

Functions Fund Manager for Debt Investments inschemes

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B. Equity Portfolio

Name Mr. Anoop BhaskarEducational Qualifications B.Com, M B A (Finance)Experience 13 Years in Equity ResearchFunctions Co-Fund Manager to Equity schemes

Compliance Officer

Name Mr. T.S. Sritharan B.Com, A.C.A, AIIIAddress, Telephone Sundaram Asset Management Company Limited & Fax No. 46 Whites Road, Royapettah, Chennai - 600 014

Phone : (044) 28583362, 28583367 Fax. : (044) 28583156

Manager – Customer Support

Ms. G.Padmavathi is the Manager – Customer Support and she may becontacted at the Corporate Office of the AMC at 46, Whites Road, Royapettah,Chennai 600 014. Tel.: 28583362/28583367.

4. AUDITORS TO THE SCHEME

M/s Sundaram & Srinivasan, Chartered Accountants, 23 C.P.RamaswamyRoad, Chennai 600018.

5. REGISTRAR

Computer Age Management Services (P) Limited (CAMS), a Category-I Registrarand Transfer Agent registered with SEBI vide Registration Number INR000002813 has been appointed to act as Registrar and Transfer Agent to thisscheme. The Registrar to the scheme will accept and process investors’applications and advise Sundaram Asset Management Company Limited of thedetails of subscription.

They will also handle communications with the investors, resolve investorgrievances, perform data entry services and despatch Unit Certificates and/orAccounts Statements. Sundaram Mutual Fund and Sundaram AssetManagement Company Limited and the Trustees, after taking appropriate duediligence measures, are satisfied that the Registrar can provide the servicesrequired and have the adequate facilities to do so. The Letter of Appointmentof the Registrar will be available for inspection by the investors. The Registrarwill be paid a fee in accordance with the Agreement. The Trustees reserves theright to appoint any other Registrar approved by SEBI to act as Registrar of thescheme.

6. CUSTODIAN

Standard Chartered Bank (SCB) registered with SEBI vide Registration NoIN/CUS/006 has been appointed Custodian of the securities that are boughtand sold under this scheme. The responsibilities of the Custodian, interaliainclude:

• To keep in safe custody all the securities and instruments belonging to thescheme.

• To ensure smooth inflow / outflow of securities and instruments as andwhen necessary in the best interests of the investors.

• To ensure that the benefits due on the holdings are received.• To be responsible for the loss or damage to the securities due to negligence

on its part or on the part of it’s approved agents.The Custodian agreement has been entered into by Standard Chartered Bankwith Sundaram Asset Management Company Limited and Sundaram MutualFund outlining the custodial fees, duties, functions and obligations of theCustodian. The Trustees reserve the right to appoint any other custodianapproved by SEBI to act as custodian of the scheme.

PART II

INVESTMENT OBJECTIVES, STRATEGY AND PROCEDURE

1. FUNDAMENTAL ATTRIBUTES

a. Type of the scheme

An open-ended scheme seeking to generate regular income primarily throughinvestments in fixed income securities. The scheme may also invest a part of itsassets in equity and equity related securities.

b. Investment Objectives

The primary object of the scheme is to generate regular income throughinvestments in fixed income securities. The secondary objective is to generatelong term capital appreciation by investing a portion of the scheme’s assets inequity and equity related instruments.

c. Asset Allocation and Risk Profile

Under normal circumstances, the broad asset allocation of the scheme shall beas follows:

Instruments Maximum Risk Profile[% of investible funds

(indicative)]Government Securities 100% Low Debt securities (other than securitised debt) 100% Low to medium Securitised Debt 75% Medium to HighEquities and Equity related securities 20% Medium to HighMoney Market instruments and cash (including money at call) 100% Medium

The asset allocation is not absolute and would vary depending upon theconditions prevailing in any of the markets. The above table is only indicativeand, subject to the Regulations, the Trustee/ AMC reserve the right to alter theasset allocation pattern from time to time, in the interest of investors,depending on the perception of the fund manager about the marketconditions and opportunities and on defensive considerations for a short termperiod. If the fund manager is unable to identify attractive investmentopportunities, the scheme’s assets may be held in cash, call or fixed depositswith banks or other money market instruments.

Maturity profile of Instruments: The duration of the portfolio, being ameasure of the average maturity of the instruments to be invested , shall beup to 6 years. While this is the aggregate measure, individual instruments’duration may be lesser or greater than this measure.

d) Terms of issue:

i. Liquidity provisions such, as listing, repurchase and redemption are clearlydefined in Part III- units and offer of this document.

ii. Aggregate fees and expenses are stated in Part IV of this offer document.

iii. The scheme does not offer any guarantee or assured returns to theinvestors.

CHANGES IN THE FUNDAMENTAL ATTRIBUTES

When any change in the fundamental attribute of this scheme or the Trust orfees and expenses payable or any other change which would modify thescheme or affect the interest of the unit holders, is proposed to be carried out,no change shall be carried out unless (I) a written communication about theproposed change is sent out to each unit holder and an advertisement is givenin one English daily newspaper having nation wide circulation as well as in anewspaper published in the language of the region where the Head office ofthe mutual fund is situated; and (II) the unit holders are given an option to exitat the prevailing NAV without any exit load. [Note: For the purpose of thisclause, Fundamental Attributes mean the Investment Objective and terms ofthis scheme as detailed above.

2. A BRIEF NOTE ON THE DEBT MARKET IN INDIA

i) Characteristics

The debt market in India is comprised of a market for Government securities(G-Sec) and a market for corporate debt. Debt markets trade in a variety ofmaturities. In the case of Government securities, the maturity of aninstrument could be as high as 20 years whereas in the case of corporatedebt, the bulk of the trading happens in instruments of 5-year maturity,though instruments of greater maturity are also available. Corporate debtis available in different forms - Non-Convertible Debentures, CommercialPapers (that have maturity of less than one year, but popularly maturity ofless than 6 months from the date of issuance) Securitised Debt etc. WhileG-secs have sovereign rating and consequently no ratings other than AAA+are deemed to be assigned to them, corporate debt has a variety of ratingscommencing from AAA of Crisil (correspondingly from other ratingagencies). For a full understanding of the ratings, please visit any of theweb sites of the rating agencies. In brief, higher the rating, lower the creditrisk. For example, a AAA-rated instrument has comparatively less credit riskthan a AA-rated instrument. And a BBB-rated instrument has a highercredit risk than the AA-rated instrument. Recently, interest rate swaps (IRS)and forward rate agreements (FRA) have also begun to be traded.

Of the two main markets, the one for G-Secs is the more liquid: the averagedaily value of trades in the month of Aug 2003 was around Rs.5, 000Crores. The market for corporate debt is relatively less liquid. Furthermore,

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due to the short tenor issuance by Indian corporates, trading volume incorporate bonds of long maturity is thinner than that of medium maturity.

India’s debt market is a telephone market. Brokers contact investors ontelephone and deals are put through between buyers and sellers- unlikethe screen-based trading that is in use in the equity market. Similarly,settlement takes place by the physical delivery of Depository instructionsand through issuance of cheque, instead of through a clearingcorporation. Recently, to overcome this problem, the Reserve Bank of Indiaintroduced Negotiated Dealing System (NDS) wherein all market playerscan become members. This is an automated system where members cantrade like in equity markets. However, this system is restricted toGovernment securities.

ii) Yields

Yields of debt instruments vary depending mainly on economic factors,liquidity conditions, and the type and maturity of the instrument. Thelonger the maturity for example, the higher will be the yield (under normalmarket conditions) and vice versa.

Corporate debt trades at a higher yield than the corresponding G-Sec,mainly due to the perceived risk of default and lower liquidity.

Indicative yields on G-Secs of 10-year maturity as of end September 2003was 5.18% (semi-annual)

3. INSTRUMENTS IN WHICH INVESTMENT CAN BE MADE (DEBT)

In order to achieve investment objectives, the scheme will invest in a widerange of debt securities including:

1. Government of India securities including T-Bills.

2. Debt obligations of Indian States and local Governments.

3. Obligations of Domestic Government agencies and statutory bodies, withor without a Government guarantee.

4. Debentures, Bonds, asset-backed/ mortgage backed securities, Trade Bills,Promissory notes, pass-through obligations, Commercial Paper and anyother transferable securities issued by a body corporate, whether in theprivate or public sector.

5. Debentures, Bonds, asset-backed securities, Bills Rediscounting, repos,certificate of deposit, Promissory notes and any other transferable securitiesissued by a bank or a financial institution.

6. Call money, notice money, fixed deposits of banks and other institutionsand other money market instruments as may be permitted by regulatorybodies from time to time.

7. Any other instruments, which may be offered from time to time in thedomestic market and permitted by SEBI. The debt instruments may becoupon – bearing, floating rate zero coupon and deep discount bonds.

4. INVESTMENT STRATEGY

1. Debt Portfolio

i. The fund manager considers economic factors such as the effect of interestrates on the scheme’s investments. He also applies a "bottom up" approachin choosing investments. This means that the scheme’s fund manager looksat income producing securities one at a time to determine if an income–producing security is an attractive investment opportunity and consistentwith the scheme’s investment policies. If a fund manager is unable to findsuch investments, the scheme’s assets may be held in cash , call or fixeddeposits with banks or other money market instruments. The scheme willalso attempt to provide capital appreciation by identifying securities thatcould be potentially upgraded by rating agencies.

ii. Based on the interest rate view, the optimum duration of the portfolio is firstdetermined. Then depending on this decision, the mix of G-Secs, corporatedebt, money market instruments, and cash is arrived at. This mix tries toensure that returns are maximized while still protecting the liquidity of theportfolio. Within corporate debt, a further decision is taken: the weights ofAAA (pronounced ‘triple A’) rated instruments and Sub-AAA ratedinstruments are determined.

iii. The scheme may invest in fixed income instruments of shorter or longermaturities, depending upon the interest rate outlook. Purchase of debt maybe made either through initial public offer, private placement, throughrights offerings, purchase on the floor of a recognised stock exchange orthrough negotiated deals on the secondary market. The scheme may investin the non-publicly offered securities on the merits of the investmentproposals.

iv. The scheme shall invest in the instruments rated investment grade or aboveby a recognised rating agency. In case the instruments are not rated,specific approval of the Board of Directors of the AMC, or a committeeconstituted by the Board of Directors of the AMC and the Board of Trustees,or a committee approved by the Board of Trustees shall be obtained.Pending deployment of funds in terms of investment objectives of thescheme, the funds may be invested in short-term deposits with ScheduledCommercial Banks and money market instruments.

v. The focus of the scheme would be to generate regular returns on theportfolio, while maintaining a moderate risk profile. In case of dealings inPSU bonds and government securities and money market investments, theportfolio turnover may be substantially higher due to low transaction costsand faster transfer of ownership. In the case of corporate debt, the turnovermay be relatively lower.

2. Equity Portfolio

The scheme shall follow a combination of Top-down and Bottom-up approachto investing in equity and equity related investments. Investments will bepursued across various industries. Within such a framework, the emphasis willbe on investing in companies with quality management, unique businessstrengths, sustainable medium/long term growth and reasonable valuations.

The AMC’s research analysts and fund managers identify investmentopportunities through continuous study of sectors and companies. The studiesfocus on the past performance and future prospects of the company and thebusiness, financial health, competitive edge, managerial quality and practices,minority shareholder fairness, transparency. Companies that adequately satisfythe prescribed criteria are included in the portfolio. The weights of individualcompanies will be based on their upside potential to downside risk.

5. INVESTMENT PROCEDURE

a. DEBT INSTRUMENTS

G-Secs are obtained from the secondary market, while corporate debtinstruments may be obtained from both secondary and primary markets. In thecase of G-Secs, instruments of different maturities can be easily traded undernormal market conditions. The particular instrument will be chosen as a resultof the duration and weight decisions.

In the case of corporate debt, if the instruments are to be obtained throughprivate placement route, an approval from the Investment Committee (IC) isrequired. The IC consists of the Managing Director, and two other Directors.The investment department (comprising of Analysts, Fund Manager and theChief Investment Officer) submits a note to the IC for the purpose of thisapproval. In case of purchases from secondary market, if the issuer’s anyinstrument is/was not in the portfolio, permission from an Internal InvestmentCommittee (IIC) is sought. The Internal Investment Committee comprises of theManaging Director and the Chief Investment Officer.

The reasons for purchase / sale is recorded in the ‘deal ticket’ by the fundmanager. For all purchases, we depend upon the credit rating assigned byexternal agencies. Where this is not available, we depend on internal analysis.We believe that the important risks of investing in debt arise from interest rateforecasts and asset allocation decisions and not necessarily from individualcompany performance.

Every quarter, the fund manager presents a review of all decisions taken, andon fund performance to the Board of Directors and the Board of Trustees.

Miscellaneous

In the asset allocation decision, the spread between G-Secs and corporatebonds are considered to determine relative weights. As the credit spreadincreases, the weight of corporate debt is raised, and as the spread declines,the weight of government bonds is raised. Thus the allocation of weightbetween corporate bonds and G-Secs is also a function of relativeattractiveness.

b. EQUITY INSTRUMENTS

The fund manager and analysts research the prospects for the company inquestion and prepare a report. Information for analysis is obtained from eitheror all of the following:

• Published sources• Research reports of broking houses• Company visitsThis report is presented to the Internal Investment Committee (IIC). The IICconsiders the research report, and approves the names of the companies for

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the fund manager. Once the approval of the IIC is obtained, the fund managercan deal in shares at any point of time.

The approval of IIC is, in turn, based upon the guiding policies laid down bythe investment Policy Committee. The IPC lays down certain guidelines fordetermining exposure levels. The investment pattern is reviewed every week inthe investment meetings and rebalancing done, if needed.

Whenever a stock is bought or sold, the reasons for the same are recorded inthe deal ticket. The fund manager makes the stock purchases only from the listof stocks approved by the Internal Investment Committee as mentioned above.

The investment group meets everyday to take stock of actions taken on theprevious day. The IIC also meets every week to review the decision of fundmanager, and to compare the performance of the fund with the benchmarkand its peers.

Every quarter, the fund manager presents a review of all decisions taken, andon fund performance to the Board of Directors and the Board of Trustees.

6. RISK

a) Risks associated with debt investments

1. All investments involve risk and there can be no guarantee against lossresulting from an investment in the scheme nor can there be any assurancethat the scheme‘s investment objective will be attained. As with anyinvestment in securities, the value of and income from an investment in thescheme can decrease or increase, depending on

a) general economic conditions and market factors

b) movement in the broader bond markets

c) factors affecting capital markets

d) changes in interest rates

e) price and volume volatility in the bond and stock markets

f) changes in governmental policies and taxation, among others.

Hence, the value of the units of the scheme would fluctuate continuouslydue (but not limited) to the above factors.

2. Changes in the prevailing rates of interest is likely to affect the value of thescheme’s holdings and consequently the value of the scheme’s units.Increased rates of interest, which frequently accompany inflation and /or agrowing economy, are likely to have a negative effect on the value of theunits. The value of debt securities held by the scheme generally will varyinversely with the changes in prevailing interest rates.

3. Debt securities are also subject to the risk of an issuer ‘s inability to meetprincipal and interest payments and interest payments on the obligations(credit risk) and may also be subject to price volatility due to such factors asinterest sensitivity, market perception or the creditworthiness of the issuerand general market liquidity (market risk). While it is the intent of theInvestment Manager to invest primarily in high rated debt securities, thescheme may from time to time invest in higher yielding, low ratedsecurities. As a result, an investment in the scheme may be accompaniedby a higher degree of risk relative to an investment consisting exclusively ofhigh rated, lower yielding securities.

4. Risks associated with lower rated or unrated securities are:

a. Lower rated or unrated securities are more likely to react todevelopments affecting market and credit risk than high rated securities(these react primarily to movements in the general level of interestrates)

b. Lower rated securities also tend to be more sensitive to economicconditions than higher rated securities.

c. Issuers of high-yielding, fixed income securities are often highlyleveraged and may not have more traditional methods of financingavailable to them. Hence the risk of default on interest and/or principalis higher relative to high rated issuers. For example, during aneconomic downturn or a sustained period of rising interest rates,highly leveraged issuers of high yielding securities may experiencefinancial stress. During these periods, such issuers may not havesufficient cash flows to meet their interest payment obligations. Thecredit risk factors pertaining to lower rated securities also apply to lowerrated zero coupon, deferred interest and pay-in-kind bonds. Such

bonds carry an additional risk in that, unlike bonds that pay interestthroughout the period to maturity, the scheme will realise no cash untilthe cash payment date and if the issuer defaults the scheme mayobtain no return at all on its investment.

5. The issuer’s ability to service its debt obligations may also be adverselyaffected by specific developments affecting the issuer, the issuer’s inabilityto meet specific projected business forecasts, or the unavailability ofadditional financing.

6. The risk or loss due to default by the issuer may be significantly greater ifthe instrument held is unsecured and is subordinated to other creditors ofthe issuer. In case of low rated issuer, the risk is significantly higher relativeto a high rated issuer.

7. The scheme may have difficulty in disposing of securities because there maybe thin trading for a particular security. In case of low rated high yieldingsecurity, in normal circumstances, the liquidity would be lower than highrated security. This may result in lower realisations than at which security isvalued in the event of sale. Further if the sale is taking in response to aneconomic event or on deterioration / downgrading of issuer, the salerealisations would be much lower than what is anticipated above.

8. Reduced liquidity in the secondary market may have an adverse impact onmarket and the scheme’s ability to dispose of securities, particularly if it isintended to meet the scheme’s liquidity needs or to respond to a specificeconomic event.

9. The scheme may acquire high yielding fixed income securities during aninitial offering by a new company. Such securities involve special risksbecause they are new issues.

10. Zero coupon or deferred interest securities are debt obligations that do notentitle the holder to any periodic payments of interest prior to maturity ora specified date when the securities begin paying current interest (the "cashpayment date") and therefore are generally issued and traded at a discountfrom their face value. The discount varies depending on the time remaininguntil maturity or cash payment date, prevailing interest rates, liquidity of thesecurity and the perceived credit risk of the issuer. The market prices of zerocoupon securities are generally more volatile than the securities that payinterest periodically and are likely to respond to changes in interest rates toa greater degree than non-zero coupon or deferred interest securitieshaving similar maturities and credit quality.

b) Risk Control

1. Debt Portfolio

Credit Risk: The fund tracks ratings assigned by reputed credit ratingagencies closely. Periodical reviews are done to keep track of theinvestments and minimise credit losses.

Interest Rate Risk: Fixed income securities are subject to volatility risk arisingfrom the movement in interest rates. Risk control involves forming andmaintaining a view on the direction of interest rates, tracking the spreadbetween different assets and active duration management to optimiseportfolio returns. The fund could also use appropriate risk managementand hedging tools to minimise risk.

Liquidity Risk: While liquidity in the Indian bond markets is improving, it islargely in Government bonds, and to some extent, top rated corporatebonds. The fund would maintain a reasonable allocation to liquid bonds tominimise risk in case of a sudden withdrawal from the fund.

The Asset Management Company will also use any derivative or hedgingtechniques that may be permitted by SEBI.

2. Equity Portfolio

Concentration Risk: In order to diversify individual company risk, the fundwill on an average and under normal circumstances invest in atleast 10companies across various sectors. The quantum of exposure is decided onthe basis of relative earnings, growth, valuations and potential valuations.As the fund intends to hold less number of stocks than a diversified growthfund, the NAV volatility (risk) will be higher than normal.

Liquidity Risk: Risk will be monitored in terms of the number of days it takesto liquidate every stock in the portfolio assuming a share of the averagevolume traded over the previous one year. Efforts would be made to keepthe average liquidation period under prudent limits prescribed internally.

The Asset Management Company will also use any derivative or hedgingtechniques that may be permitted by SEBI.

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7. BENCHMARK INDEX

The benchmark index for the scheme would be Crisil Blended MIP INDEXcomprising.

8. REGULATIONS GOVERNING INVESTMENT IN SECURITIES

Presently the Securities and Exchange Board of India (Mutual Funds)Regulations 1996, lays down following investment criteria and restrictions:

1. All the scheme’s assets will be invested in transferable securities, whether inthe money markets or in the capital markets, including any privately placeddebentures or securitised debt or Bank deposits or money at call.

2. The scheme shall not invest more than 15% of its NAV in debt instrumentsissued by a single 2. issuer which are rated not below investment grade bya credit rating agency authorised to carry out such activity under theSecurities and Exchange Board of India Act, 1992. Such investment limitmay be extended to 20% of the scheme with the prior approval of theBoard of Trustees and the Board of the Asset Management Company.Provided that such limits shall not be applicable for investments ingovernment securities and money market instruments.

Debentures, irrespective of any residual maturity period (above or belowone year), shall attract the investment restrictions as mentioned above.

3. The scheme shall not invest more than 10% of its NAV in unrated debtinstruments issued by a single issuer and total investment in suchinstruments shall not exceed 25% of the NAV of the scheme. All suchinvestments shall be made with the prior approval of the Board of Trusteesand Board of the Asset Management Company.

4. The Mutual Fund under all its schemes, including this scheme, takentogether will not own more than 10% of any company’s paid up capitalcarrying voting rights.

5. Transfer of investments from one scheme to another scheme, including thisscheme shall be allowed only if such transfers are made at the prevailingmarket price for quoted securities on a spot basis and the securities sotransferred shall be in conformity with the investment objective of thescheme to which such transfer has been made.

6. The scheme may invest in another scheme, under the same assetmanagement company or any other mutual fund, without charging anyfees, provided that the aggregate inter-scheme investments made by allschemes under the same management or in schemes under themanagement of any other asset management company shall not exceed5% of the net asset value of the mutual fund.

7. The scheme shall buy and sell securities on the basis of deliveries and shallin all cases of purchases, take delivery of relative securities and in all casesof sale, deliver the securities and shall in no case put itself in a positionwhereby it has to make short sale or carry forward transactions or engagedin badla finance. Provided that mutual fund shall enter into derivativestransactions in a recognised stock exchange for the purpose of hedgingand portfolio balancing , in accordance with the SEBI Guidelines.

8. The scheme shall, get the securities purchased, transferred in the name ofthe mutual fund on account of the concerned scheme, whereverinvestments are intended to be of a long-term nature.

9. Pending deployment of funds of the scheme in securities in terms of theinvestment objectives of the scheme, the Mutual Fund can invest the fundsof the scheme in short term deposits of scheduled commercial banks or incall deposits.

10. The scheme shall not make any investment in:

a) Any unlisted security of an associate or group company of the sponsor;or

b) Any security issued by way of private placement by an associate orgroup company of the sponsor; or

c) The listed securities of group companies of the sponsor which is inexcess of 25% of the net assets of all the schemes of the Mutual Fund

11. No mutual fund scheme shall invest more than 10% of its NAV in the equityor equity related instruments of any company

12. A mutual fund shall not invest more than 5% of its NAV in the unlistedequity shares and equity related instruments in the case of open endedschemes

To the extent the above investment limitations are amended by SEBIRegulations, the Trustees/ AMC may alter/ expand these limitations from time

to time.

Apart from the investment restrictions mentioned above, the fund may notfollow any internal norms vis-à-vis limiting exposure to a particular scrip orsector etc.

9. VALUATION OF ASSETS AND NET ASSET VALUEThe scheme’s assets will be valued as per the following guidelines in conformitywith the Regulation 47 read with the Eighth Schedule of SEBI Mutual FundsRegulations.

1. TRADED SECURITIES (a) The traded securities will be valued at the last quoted closing price on the

National Stock Exchange (NSE).

(b) However. If the securities are not traded on the NSE, the securities will bevalued on the price quoted at the Bombay Stock exchange of India Limited(BSE).

(c) When on a particular valuation day a scrip has not been traded either onNSE or BSE, then the value at which it is traded on another stock exchangewill be used.

(d) However, the AMC at its discretion select/change the principal stockexchange after recording the reasons for such change.

(e) When a scrip is not traded on any stock exchange on a particular valuationday, the value at which it was traded on the NSE/BSE or any other stockexchange, as the case may be, on the earliest previous day will be usedprovided such date is not more than 30 days in the case of equity or equityrelated instruments and 15 days in the case of Debt securities prior to thevaluation date.

(f) The Government Securities shall be valued at the prices released by CRISIL,which is currently the approved agency by the Association of the Mutualfunds of India.

(g) Investment in call money, bills purchased under rediscounting scheme andshort term deposits with banks shall be valued at cost plus accrual. Othermoney market instruments shall be valued at the yield at which they aretraded.

2. Thinly traded/ non traded Securities(a) When trading in a equity/equity related securities in a month is less than

Rs.5 lacs and the total volume is less than 50000 shares, it shall be treatedas a thinly traded security and valued accordingly.

(b) A debt security (other than Government Security) that has a trading volumeof less than Rs. 5.00cr. for a period of 15 days prior to the valuation dateshall be considered as a thinly traded security based upon informationprovided by the relevant stock exchange on the volume of debt securitiestraded.

(c) When a debt security (other than Government security and money marketinstruments) is not traded on any Stock exchange for a period of 15 daysprior to the valuation date the scrip must be treated as non-traded security.

(d) Money market instruments shall be considered as non-traded if the securityis not traded for a period of seven days and will be valued at cost plusinterest accrued till the beginning of the day plus the difference betweenthe redemption value and the cost spread uniformly over the remainingmaturity period of the instrument.

(e) Non traded/thinly traded securities shall be valued in ‘good faith’ by theAMC on the basis of valuation principles laid down by SEBI vide Gazette489/dated 26th July 2000.

3. Illiquid SecuritiesAggregate value of illiquid securities of the scheme, which are defined as non-traded, thinly traded and unlisted equity shares shall not exceed 15% of thetotal assets of the scheme and any illiquid securities held above 15% of the totalassets shall be assigned Zero value.

4. General All expenses and incomes accrued upto the valuation date shall be consideredfor computation of net asset value. For this purpose, major expenses likemanagement fees and other periodic expenses would be accrued on a day-to-day basis. The other minor expenses and income will be accrued on a periodicbasis, provided the non-accrual does not affect the NAV calculations by morethan 1%.

Any changes in securities and in the number of units will be recorded in thebooks not later than the first valuation date following the date of transaction. Ifthis is not possible given the frequency of the net asset value disclosure, the

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recording may be delayed upto a period of seven days following the date ofthe transaction, provided that as a result of the non-recording, the net assetvalue calculations shall not be affected by more than 1%.

10. CALCULATION OF NET ASSET VALUE

The Net Asset Value (NAV) is the most widely accepted yardstick for measuringthe performance of any scheme of a Mutual Fund. NAV calculations shall bebased upon the following formula:

NAV = Market Value of the scheme’s investments + other assets (includingaccrued interest) – All Liabilities except Unit Capital, Reserve and Profit and

loss Account

-----------------------------------------------------------------------------------------------------------

Number of SUNDARAM MONTHLY INCOME PLAN units outstanding

NAV of the scheme will be calculated as of the close of every Working Day.Valuation of scheme’s assets and calculation of the scheme’s NAV will besubject to such rules or regulations that SEBI may prescribe from time to time.The NAVs of the scheme would be rounded off up to 4 decimal places.

11. NAV INFORMATION

The NAV of the scheme will be calculated and announced by the Fund onevery Working Day. The unit holders and all prospective investors can obtainthe latest NAV information, by calling the Corporate Office of the AMC or anyof the designated Investor Service Centres. Publication of NAV, Repurchase andSale prices will be made daily in two daily newspapers in terms of SEBIRegulations. These will also be available on the fund’s website and that of AMFI.

The Board of Trustees may suspend determination or publication of the NAVof the units during the existence of a state of emergency or a breakdown incommunications or in the event of suspension of trading on the StockExchanges and resultantly the NAV cannot be calculated.

12. ACCOUNTING POLICIES AND STANDARDS

In accordance with SEBI Regulation 50 read with Ninth Schedule to SEBIRegulations, the fund shall follow the following accounting policies:

(a) AMC for each scheme shall keep and maintain proper books of accounts,records and documents, for the scheme so as to explain its transactions andto disclose at any point of time the financial position of the scheme and inparticular give a true and fair view of the state of affairs of the fund;

(b) For the purpose of the financial statements, mutual fund shall mark allinvestments to market and carry investments in the balance sheet at marketvalue. However, since the unrealised gain arising out of the appreciationon investments cannot be distributed, provisions shall be made forexclusion of this item when arriving at distributable income;

(c) Dividend income earned by the scheme shall be recognised, not on thedate the dividend is declared, but on the date the share is quoted on anex-dividend basis. For investments which are not quoted on the stockexchange, dividend income would be recognised on the date ofdeclaration;

(d) In respect of all interest bearing investments, income shall be accrued on aday-to-day basis as it is earned. Therefore when such investments arepurchased, interest paid for the period from the last interest due date up tothe date of purchase shall not be treated as a cost of purchase but shall bedebited to Interest Recoverable Account. Similarly, interest received at thetime of sale for the period from the last interest due date up to the date ofsale shall not be treated as an addition to sale value but shall be creditedto Interest Recoverable Account;

(e) In determining the holding cost of investments and the gains or loss on saleof investments, the ‘average cost’ method shall be followed;

(f) Transactions for purchase or sale of investments shall be recognised as ofthe trade date and not as of the settlement date, so that the effect of allinvestments traded during the financial year are recorded and reflected inthe financial statements, for that year. Where investment transactions takeplace outside the stock market, for example, acquisitions through privateplacement or purchases or sales through private treaty, the transactionwould be recorded, in the event of a purchase, as of the date on whichthe scheme obtains an enforceable obligation to pay the price or, in theevent of sale, when the scheme obtains an enforceable right to collect theproceeds of sale or an enforceable obligation to deliver the instrumentssold;

(g) Bonus shares to which the scheme becomes entitled shall be recognisedonly when the original shares on which the bonus entitlement accrues aretraded on the stock exchange on an ex bonus basis. Similarly, rightsentitlement would be recognised only when the original shares on whichthe rights entitlement accrues are traded on the stock exchange on ex-rights basis;

(h) An asset shall be classified as non-performing, if the interest and / orprincipal amount have not been received or remained outstanding for onequarter from the day such income / installment has fallen due. Provisioningfor such non-performing assets will be made as per circular issued by SEBIin this regard.

(i) When units are sold, the difference between the sale price and the facevalue of the unit, if positive, shall be credited to reserves and if negativeshall be debited to reserves, the face value being credited to CapitalAccount. Similarly, when units are repurchased, the difference between thepurchase price and face value of the unit, if positive, shall be debited toreserves and,if negative, should be credited to reserves, the face valuebeing debited to the capital account.

(j) When units are sold an appropriate part of the sale proceeds shall becredited to an Equalisation Account and when units are repurchased anappropriate amount would be debited to Equalisation Account. The netbalance of this account shall be credited or debited to Revenue Account.The balance on the Equalisation Account debited or credited to theRevenue Account shall not decrease or increase the net income of the fundbut is only an adjustment to the distributable surplus. It shall therefore, bereflected in the Revenue Account only after the net income of the fund isdetermined;

(k) The cost of investments acquired or purchased would include brokerage,stamp charges and any charge customarily included in the broker’s boughtnote. In respect of privately placed debt instruments any front-end discountoffered shall be reduced from the cost of the investment.

(l) Underwriting commission shall be recognised as revenue only when thereis no devolvement on the scheme. Where there is devolvement on thescheme, the full underwriting commission received and not merely theportion applicable to the devolvement shall be reduced from the cost of theinvestment.

The accounting policies and standards as outlined above are as per the extantSEBI Regulations. Any change in SEBI Regulations would mutatis mutandisapply.

13. ANNUAL FINANCIAL REPORTS AND HALF YEARLYDISCLOSURES

An abridged annual report of this scheme will be mailed to all the unit holdersnot later than six months from the date of closure of each accounting year i.e.March 31. Further the full text of the Annual Report will be available forinspection at the Corporate Office of the AMC and a copy thereof shall be madeavailable to the unit holders on payment of Rs.10.

The Mutual Fund shall before the expiry of one month from the close of eachhalf year, i.e., on March 31 and September 30, publish the unaudited financialresults, in one English daily news paper circulating in the whole of India and ina Tamil daily news paper published from Chennai.

The fund shall publish, before expiry of one month from the close of each halfyear that is on 31st March and 30th September, its scheme portfolio in theformat prescribed by SEBI in one national English daily newspaper and in anewspaper in the language of the region where the HO of the fund is situatedor send a copy to all the unit holders.

PART III

UNITS AND OFFER

(a) Offer of units

During the initial offer period, units are offered at Rs.10/- and the entireamount is payable on application. With effect from 12-01-2004 the units wouldbe offered on a continuous basis at the NAV related price plus entry load if any.

The minimum targeted amount is Rs 1 crore and there is no maximum amountin respect of the size of the scheme. In accordance with the SEBI Regulations,if the scheme fails to collect the minimum subscription amount of Rs. 1 crore,the Fund shall be liable to refund the money to the applicants. Allotment ofunits in the scheme would be after the approval of the Board of Trustees.Allotment is assured to eligible applicants provided the applications arecomplete in all respects and in order.

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b) Minimum investment

The minimum investment is Rs.5, 000 /- and Re.1/- thereafter-

c) Offer Period

INITIAL ISSUE OPENS ON : 03-12-2003

INITIAL ISSUE CLOSES ON : 23-12-2003

SCHEME REOPENS ON : 12-01-2004

The Board of Trustees, however, reserves the right to extend or advance theclosing date subject to the conditions that initial offer shall not be kept open formore than 30 days.

d) Who can Invest

The following persons may apply for subscribing to the units of SundaramMonthly Income Plan (subject, wherever appropriate, to subscription to units ofmutual funds being permitted under relevant statutory regulations and theirrespective constitutions):

1. Resident Adult Individuals –

(a) Singly or jointly (not exceeding three)

(b) minors through their parents/ guardians

2. Non resident Indians (NRIs) on Non repatriation basis, and Repatriationbasis, subject to RBI regulations

3. Hindu Undivided Family (HUF), in the name of the Karta

4. Partnership firms

5. An association of persons or a body of individuals.

6. Companies/Bodies Corporate/Public Sector Undertakings registered inIndia

7. Banks and Financial Institutions

8. Charitable or Religious Trusts/ Wakf Boards or endowments andRegistered societies (including registered co-operative societies) andprivate trusts,authorised to invest in units

9. Army/Airforce/Navy/Para-military funds and other eligible institutions

10. Scientific and/or Industrial Research Organisations authorised to invest inunits

11. Other associations, institutions, Bodies etc., authorised to invest in theunits

It is expressly understood that the investor has the necessary legal authority/complied with applicable procedures for subscribing/ redeeming the units. TheAMC/ Trustee will not be responsible in case any transaction made by aninvestor is ultravires the relevant constitution / internal procedures.

NOTES:

1. Non Resident Indians and Persons of Indian Origin residing abroad (NRIs) /Foreign Institutional Investors (Flls) have been granted a general permissionby Reserve Bank of India [Schedule 5 of the Foreign ExchangeManagement (Transfer or Issue of Security by a Person Resident OutsideIndia) Regulations, 2000 for investing in / redeeming units of the mutualfunds subject to conditions set out in the aforesaid regulations.

2. In case of application under a power of attorney or by a limited companyor a corporate body or an eligible institution or a registered society or atrust fund, the original power of attorney or a certified true copy dulynotarised or the relevant resolution or authority to make the application asthe case may be, or duly notarised copy thereof, along with a certified copyof the memorandum and articles of association and/or bye-laws and / ortrust deed and / or partnership deed and certificate of registration shouldbe submitted. The officials should sign the application under their officialdesignation. A list of specimen signatures of the authorised officials, dulycertified / attested should also be attached to the application form. In caseof a trust / fund it shall submit a resolution from the Trustee(s) authorisingsuch purchases

In case of investments of Rs 1 lac and above, investors are advised to furnishincome tax Pan/Gir and the income tax circle of assessment.

e) How to apply during Initial Public Offer

Application forms are available at the Corporate Office of Sundaram AssetManagement Company Limited, specified investor service centres, all offices ofSundaram Finance Limited, brokers, Agents, Registrars and at the specifiedbank collection centres.

Application forms complete in all respects, accompanied by the amount ofinvestment by means of a cheque/demand draft are to be submitted at thespecified collection centres before closure of the scheme.

Complete list of collection centres is given elsewhere in this document.

As per the directives issued by SEBI, it is mandatory for applicants to mentiontheir bank account numbers in their applications for purchase of units.

Kindly retain the acknowledgement slip initialled/stamped by the collectingauthority.

f) Subscription to the units of the scheme on ongoing basis witheffect from 12-01-2004:

All valid applications for purchase of units of this scheme received before 3.30PM on any Working Day shall be valued based on the applicable sale price.

SALE PRICE= NAV per unit on the valuation date *(1+ ENTRY LOAD, if any)

TO ILLUSTRATE;

APPLICABLE NAV = Rs11.00

ENTRY LOAD = Nil (at present)

APPLICABLE SALE PRICE = Rs11.00 *(1+0%) = Rs.11.00

Requests received after 3.30 PM will be treated as having been received on thenext Working Day.

g) Mode of Payment

The payment may be made by any of the following modes:

(i) cheque payable locally and drawn on any bank which is a member of thebankers clearing house located at the place where the application form issubmitted; or

(ii) demand draft payable at the place where the application form issubmitted, from applicants residing at places where there is no collectioncentres for this scheme.

(iii) In case of NRIs and Persons of Indian Origin residing abroad payment maybe made by Indian Rupee Drafts payable at Chennai, purchased abroad orby cheque/DD payable at Chennai, drawn on Non-resident (External)account, FCNR account maintained with the banks authorised to deal inForeign Exchange in India.

All cheques/ demand drafts should be drawn in favour of ‘Sundaram MonthlyIncome Plan’ and crossed ‘Account Payee only’. Please note that Cash, StockInvest, outstation cheques/drafts, money orders and postal orders will not beaccepted.

h) Account Statements:

An account statement will be sent by ordinary post to each unit holder, statingthe number of units allotted, not later than 30 days from the close of the initialoffer period. Each unit holder will be sent a non-transferable Accountstatement, which is a conclusive proof of investment in the schemes. On anongoing basis, the AMC will endeavour to forward the account statementwithin five working days after every transaction of sale or repurchase of units.Investors are urged to preserve the account statement carefully as it is avaluable document.

The unitholders may opt for receiving the account statements and othercorrespondences through e-mail. However, they would be requested toprovide the e-mail address and enter into a security agreement, if any requiredby the R&T Agent. It is deemed that the unitholder is aware of all security risksincluding possible third party interception of the Account Statement andcontent of the correspondences becoming known to third parties.

i) Refunds

In accordance with the Regulations, if the scheme fails to collect the minimumsubscription amount of Rs.1 crore, the Fund shall be liable to refund the moneyto the applicants. Further, refund of application money to applicants whoseapplications are invalid for any reason whatsoever, will commence immediatelyafter the allotment is completed. Refunds will be completed within a period of

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six weeks from the date of closure of subscription list of the Initial Offer. If theFund refunds the amount after six weeks, interest @ 15% per annum shall bemade by the AMC. Refund orders will be marked 'Account Payee Only' anddrawn in the name of the sole/first applicant. All refund cheques will be sentby Registered Post A.D. It is mandatory for applicants to provide their bankname, branch name and account number in their application forpurchase/redemption of units.

j) Allotment

Allotment of units in the scheme would be at the discretion of the Board ofTrustees. Allotments is assured to all applicants provided the applications arecomplete in all respects and are in order. The despatch of certificates / accountstatements/ will be made within 30 days from the date of closure ofsubscription list.

k) Repurchase of units

The units can be offered to Sundaram Mutual Fund for repurchase on allWorking Days at NAV related prices with effect from 12-01-2004. Repurchaserequests can be sent to specified investor service centre or to the corporateoffice of the AMC or to the Registrar. Repurchase price will be at the Net AssetValue per unit on the valuation date and reduced by exit load if any.

Repurchase price = NAV on the valuation date *(1- exit load, if any)

Unit holders shall have the option to exercise repurchase for a minimum ofRs.500/- and above. The repurchase request can be made by specifying therupee amount or by specifying the number of units to be redeemed. If arepurchase request is for both a specified rupee amount and a specifiednumber of units, specified number of units will be considered the definitiverequest.

In order to protect the interest of the investors from fraudulent encashment ofredemption cheques, the current SEBI guidelines provide that redemptioncheques are to specify the name of the investor and the bank name andaccount number where the cheque is to be credited. Hence investors areadvised in their interest to provide the name of the bank, branch address,account type, account number for remittance of repurchase amount.

Sundaram Mutual Fund/Sundaram Asset Management Company Limited willnot be responsible for any loss arising out of fraudulent encashment of chequesand delay/lost in transit. A fresh Account Statement will be despatchedreflecting the updated holding of the unit holder after every transaction.

Investors may note that the AMC/Trustees may close a unit holder’s account ifat the time of any part of repurchase of units by the unit holder, the value ofunits (represented by units in the investors account if such repurchase of unitswere to take place, valued at the applicable repurchase price), falls belowRs.500/-

As per SEBI Regulations, the repurchase warrant shall be mailed within tenworking days from the date of receipt of the repurchase request at the office ofthe Registrar/Asset Management Company. However, under normalcircumstances, the AMC will endeavour to despatch the repurchase proceedswithin five working days.

l) Mode of Payment of Redemption/Dividend

The AMC proposes to use a variety of methods to pay dividends and effectredemptions to the investors. In choosing the payment method for any specificinvestor, the AMC will endeavor to see which method would best suit theinvestor, taking into consideration the banking facilities available, the level oftechnology employed by different banks and the investor’s preference.

The AMC will constantly review the options in use and new options that mayemerge in the context of making payment of dividends and effectingredemptions and alter the payment mechanisms to best serve the investors. Inthis endeavor, at all points of time, the objective of the AMC will be to ensurespeedy and safe payment of the dividends due to the investors, in a mannermost convenient and cost effective for the investors.

For the present, the AMC proposes to make dividend payments and effectredemption by the following methods.

- Direct Credits:

Some banks have reached a level of technology implementation whereby theyare in a position to credit the proceeds to the account of the account holderselectronically. For the investors who have an account with such banks the AMCwill, in consultation with the bank and under advice to unit-holders, directly

credit the account of the investors based on the account details provided bythe investors.

At this point of time, this would probably be the quickest and safest method foran investor to receive payments due to him.

Currently, the following banks have confirmed that they can extend this facilityfor the investors of the scheme:

Names of the Banks :

1. ABN AMRO Bank,2. ICICI Bank Limited (select branches)3. HDFC Bank Limited4. Standard Chartered Bank.5. IDBI BankIf the investor has an account with any of the above banks, then he/she mayprovide the complete and correct account details to the AMC for direct creditof dividends and redemptions.

The AMC may alter the list of the banks participating in this arrangement fromtime to time based on its experience of dealing with any of these banks or addto the list of banks any other bank that may be able to provide this facility to thesatisfaction of AMC.

The investor has a choice of changing his option about the method of receivingthe dividends, and redemptions if he/she so desires. For this purpose, theinvestor has to communicate the change in details to the AMC or to itsCustomer Service Centres.

- Warrants/Payable at par cheques

The AMC will make arrangements with banks to issue dividend warrants andpayable at par redemption cheques at designated centres as notified in theApplication Form for subscription of units of the scheme on an ongoing basis.The AMC will endeavour to increase the number of locations where suchwarrants are payable at par. However, if an investor resides at a centre outsidethe locations, then the instrument will be issued to be payable at par at thecentre nearest to where the investor resides. The cost of clearing theseinstruments from such nearest centre will be borne by the investor.

As prescribed by SEBI and in order to protect interests of the investors, it ismandatory for the investors to provide their full bank details for the AMC tomake dividend payment.

- Other modes of payment

The AMC would constantly endeavour to make the transaction processingconvenient and cost-effective for its customers. The AMC may choose for anyinvestor that method of making the dividend payments and redemptions fromamong the options available, that in the AMC’s discretion it appears best suitedto the investor’s position at any point of time. The AMC may also explore otherinnovative and convenient methods of making payments when such optionsbecome available with the help of technology or other infrastructure created byappropriate service providers.

m) Repurchase Price

All valid requests for repurchase of units of this scheme received before 3.30 PMon any Working Day will be valued based on the applicable repurchase price.Requests received after 3.30 PM will be treated as having been received on thenext Working Day.

The repurchase price will be calculated on the basis of the load structureapplying the following formulae:

Repurchase Price = NAV per unit on the valuation date* (1- exit load, if any)

To illustrate, if the applicable NAV is Rs11.00, exit load is 0.50%, the redemption price will becomputed as follows:

= Rs.11*(1- 0.50%)

= Rs.10.945

n) Fractional units

Since the request for investment or repurchase of units, is generally made inrupee amount and not in terms of number of units, investors may be left withfractional units in their Account. Fractional units will be computed andaccounted for up to three decimal places. However, fractional units will in noway affect the investors’ ability to redeem the units, either in part or in fullstanding to the unit holders’ credit.

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o) Usage of Load

All loads (including CDSC) for the scheme shall be maintained in a separateaccount and may be utilised towards the selling and distribution expenses. Anysurplus in this account may be credited to the scheme, whenever feltappropriate by the AMC .

p) Listing

As the funds stands ready to buy back the units of this scheme any time on anyworking day, it is not proposed to list the units of this scheme on any stockexchange.

q) Transfer

The units of Sundaram Monthly Income Plan are freely transferable by act ofparties or by operation of law. For effecting a transfer the applicable transferform(s) shall be duly stamped and signed by all the unit holders and submittedalong with the relevant unit certificate(s). The Asset Management Companyshall on production of instrument of transfer together with the relevant unitcertificates, register the transfer and return the unit certificates to the transfereewithin thirty days from the date of lodgement of transfer request at the officeof the Registrar.

Since the fund is ready to buy back the units on all working days, transferfacilities are found redundant.

However, where the units are proposed to be gifted, or in case of joint-holders, any transposition / deletion of names is required, or where a personbecomes a holder by operation of law /in official capacity or due to invocationof any charge ,the transfer will be effected upon submission of necessaryevidence/documents in accordance with the applicable laws/ regulations,provided the intended transferee is otherwise not disqualified to hold theunits of the scheme.

Transmission

In case of death, and there has been no nomination the units will betransmitted to the second-named joint holder/legal heirs on submission ofnecessary documents and evidence. The AMC/ Trustee shall be entitled to beindemnified by the estate of the deceased unit holder against any loss/expenses that they may incur in relation to transmission

General

The AMC/Trustees reserve the right to extend the closing date of the IPO aftergiving notice.

All allotments of units will be subject to realisation of the payment instrumentand therefore any payment towards redemption/ dividends in respect of suchunits will be made only after such realisation

An application to purchase the units is not binding on the fund unless it isconfirmed in writing by the AMC and the payment for the purchase has beenrealised by the fund. An entry made by the AMC as to the date/ time of receiptof an application for purchase / redemption will be conclusive and binding onthe investor.

All allotment of units/ payments to non-residents will be subject to theapplicable regulations prescribed in this regard by RBI/ other authorities. Thenon-residents are requested to submit the necessary documents forundertaking the various transactions of purchase/ redemptions, failing whichpayment of redemptions/ dividends will not be possible.

After the completion of a transaction (allotment/ redemption switch etc)account statement will be sent, reflecting the same. At the instance of theinvestor a certificate (non- transferable) in-lieu of the statement may be issued.

The AMC will not be responsible for loss due to any delay in receipt of thestatement/ certificate

Cut off time:

The Trustees may revise the cut-off time for purchase/ redemption/ switch on aprospective basis, after giving prior intimation. The applicable price forapplications for purchase/ redemptions received by agents will be the priceapplicable for the date /time when they are received correct and complete atthe investor service centers of the AMC/ the R&T agents.

Unit holders are requested to check the account statement and report anydiscrepancy noticed by them to the R& T agent/ customer service departmentof the AMC immediately.In case of any non-intimation within 15 days it will betaken that there are no discrepancies.

Despatch of redemption/ dividend instrument or other communication will be

made by ordinary mail or registered post/ courier as required under theregulations at the risk of the investor.

The fund/ AMC will not be responsible for any fraudulent conversion of anypayment instrument/ instruction.

It is mandatory for investors to furnish details of their bank accounts the normalprocessing time will not apply in cases where such details are not provided.

All disputes arising out of or in relation to the issue made under the scheme willbe subject to the exclusive jurisdiction of courts in India.

The fund will have a first and paramount lien/ set-off with respect to every unit/dividend for any amount owed by the unit holder to it.

The AMC/ Mutual Fund will not be responsible for any delay/ non- receipt ofdividend/ redemption proceeds where it is attributable to any incorrect/incomplete/inconsistent information provided by the investor. Where anyrequest from the investor is ambiguous or contrary to the terms of the schemeor does not conform to the procedures prescribed by the fund, the AMC/Trustee reserves right to reject it.

The fund is not obliged to represent any dishonoured cheque or inform theinvestor about the same. In such cases, the facility of purchasing units by issueof cheque may not be permitted and the expenses incurred by the fund mayalso be payable by the investor. Any request for withdrawal of applicationmade during the initial public offer period will be treated as redemption requestand shall be processed at the redemption price of the respective plans on thefirst day after the scheme opens for sale and redemption on an on-going basis

All information contained in this offer document are based on the lawscurrently in force and are subject to changes thereto.

In case of amendments made to any law/ regulations (e.g SEBI Regulations,Foreign Exchange Regulations, Taxation Laws etc) in relation to mutual fundsor the scheme, such amendments will automatically apply to the scheme to theextent and in the manner provided in such laws/ regulations.

Subject to the regulations, any amendment to regulations/ clarifications/guidelines issued by SEBI for operation of mutual funds will apply to thescheme.

All response times are to be reckoned from the time of receipt of correct/complete information relating to the transaction

r) Switching

Unit holders will have an option to switch all or part of their investments in thescheme to any other scheme of Sundaram Mutual Fund, which is available forinvestment at that time. The switch will be effected by way of a repurchase ofunits and a reinvestment of the proceeds in another scheme(s). Accordingly, tobe effective, the switch must comply with the repurchase rules of this schemeand the issue rules of the other scheme. The price at which the units will beSwitched out of the scheme will be based on the prevailing repurchase priceand the proceeds will be invested in another scheme(s) at the prevailing publicoffering price for units in that scheme. Investors a are advised to read the offerdocuments of the schemes into which switch is opted.

s) Suspension of Sale/ Repurchase of units:

The sale/repurchase of the units of the scheme may be suspended temporarilyor indefinitely under any of the following circumstances:

• During the period of Book closure, if any• Stock markets stop functioning or trading is restricted• Periods of extreme volatility in the stock markets, which in the opinion of the

Investment Manager is prejudicial to the interest of the unit holders.• A complete breakdown or dislocation of business in the major financial

markets or any breakdown in the information processing/ communicationsystems affecting the valuation of assets./ processing of transactions

• Natural calamities• Declaration of war or occurrence of insurrection, civic commotion or any

other serious or sustained financial, political or industrial emergency ordisturbance.

• SEBI, by order, so directs.In the above circumstances, the time limits indicated, for processing requests forpurchase and repurchase of units will not be applicable.

The Trustees/ AMC may at their discretion withdraw sale of units, if it is viewedthat increase in the size of the scheme will be detrimental to the interest ofinvestors. Further, the AMC reserves the right to reject any application forpurchase, which in its opinion will be detrimental to the interest of otherinvestors

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Suspension or restriction of repurchase / redemption facility shall be madeapplicable only after the approval from the Board of Directors and the Trustees.The approval from the AMC Board and the Trustees giving details ofcircumstances and justification for the proposed action shall also be informedto SEBI in advance

t) Nomination Facility

In terms of Regulation 29A of SEBI Mutual Fund Regulations, the AMC willprovide an option to investors, being individuals, to nominate a person inwhom the units will vest upon the death of the investor. Joint holders maytogether nominate a person as a nominee. It must be understood that byproviding this facility, the AMC is not declaring the nominee as the personentitled to the units upon the death of unit holder nor does the AMC purportto confer or grant any rights other than those available under law to thenominee. The nominee receives the units (subject to the rights of anysubsisting charge holder) only as an agent/ Trustee of the person who isentitled to them under law.

Where nominee is a minor, the details of parent/ guardian need to befurnished. Only an individual provided he/ she is otherwise not disqualified toown the units could be a nominee. Transmission of units (subject to the rightsof any charge holder) to the nominee will constitute full discharge of theobligations of the AMC/ Trustee. Towards the estate / legal heirs/ successors ofthe deceased unit holder,

The nomination facility is subject to applicable laws. Investors are requested tocomply with the prescribed procedures to avail this facility, the details of whichare available with the R&T agent.

u) Options and Investment Plans offered under the scheme

The scheme offers the investors the following investment options.

a. Dividend Option

i. Monthly

ii. Quarterly

iii. Half-Yearly

b. Growth Option

Re-investment of dividends is also available

a) Dividend Option

Under the dividend option dividends will be declared out of the distributablesurplus as per SEBI regulations and paid to the investors holding the units onthe record date fixed for this purpose. It is to be noted that while it is theintention of the Trustee to pay out dividends at monthly/ quarterly/half-yearlyperiodicities, there is no assurance / guarantee with respect to the quantum orfrequency or certainty of dividend distribution, which will depend on theperformance of the scheme and availability of distributable surplus. Thedividend pay out may also vary from month to month. The decision of theTrustees will be final in this regard.

Unit holders opting for the dividend option of the fund will only receivedividends. All those unit holders whose names appear in the Register ofSundaram Monthly Income Plan, under the Dividend Option- monthly,quarterly and half -yearly as the case may be, as on the Record Date, will beentitled to the dividend. The record dates for the said options will be as follows:

Options Record Date

Monthly the last working day of each month or such other date as maybe decided by the Trustees.

Quarterly the last working day of March, June, September and Decemberor such other date as may be decided by the Trustees.

Half- yearly the last working day of March and September or such otherdate as may be decided by the Trustees.

As per the Regulations, the Fund shall despatch to the unit holders, thedividend warrants within 30 days of declaration of dividend. Dividends will bepayable to those unit holders whose name appear in the Register of unitholders on the Record Date. The cheques/warrants will be drawn in the nameof the sole/first holder and will be posted/mailed to the address as indicated inthe application form. As per SEBI guidelines and in the interest of the investorsto safeguard from loss or theft of dividend cheques/warrants, investors arerequested provide the name of the bank, branch and account number in theapplication form. Such information would be incorporated in thecheque/warrants. Investors can also opt to receive dividend through the ‘Direct

Credit Facility’ as outlined in clause ‘ m’ of this part.

The dividend payout will again be subject to the distribution tax payable by theMutual fund as per the Income Tax Act or other Laws.

SHUT-OUT PERIOD

After the closure of the Initial Offer Period, on an ongoing basis, investorsshould note that the AMC reserves the right to declare Shut-out period orclosure period not exceeding 5 days at the end of each month / quarter / half-year as the case may be, for the investors opting for payment of dividend underthe respective dividend options. The declaration of the shut-out period isenvisaged to facilitate the AMC to determine the units of the unit holderseligible for receipt of dividend under the various dividend options. Further, theshut-out period will also help in quick processing and despatch of dividendwarrants. The AMC shall arrange to display at all investor service centres at least10 days before the introduction. The shut-out period will be applicable formaking investments in the scheme. During the shut-out period the Trusteesmay stop/restrict any transactions such as purchases, redemptions and switchesunder respective dividend options.

b. Growth Option

Investors who would prefer capital appreciation can opt for the GrowthOption. The income earned on their units will remain invested in the schemeand will be reflected in the Net Asset Value.

Under this option, ordinarily, there will be no dividend pay outs and theincome earned will continue to remain invested/ deployed in the scheme andthe movement in the NAV will reflect the growth.

Investors are required to tick the appropriate box in the application formindicating their option.

c. Dividend reinvestment

Investors opting for dividends may choose to reinvest the dividend due to themin the scheme, at the first ex dividend NAV, Such payment will be treated as aconstructive payment of dividend to the investor and a constructive receipt ofthe same amount from the investor for investment into the scheme. The AMChas been advised that such reinvested dividends, being similar to dividendpayment will be exempted from tax.

v) Systematic Investment Plan (SIP)

Investors can also benefit by investing specified rupee amounts periodically fora continuous period. This concept is called Rupee cost Averaging. This savingsprogramme allows investors to save a fixed amount every month by purchasingadditional units of the scheme. Therefore, the average unit cost will always beless than average sale price per unit irrespective of the market rising, falling orfluctuating.

Example 1: RISING MARKET

Month Investment (Rs.) Offer Price (POP) Units purchased1 1000 11 90.909

2 1000 12 83.333

3 1000 13 76.923

4 1000 14 71.429

5 1000 15 66.667

Total 5000 65 389.261

Average Price (per unit) per month = Rs.13.00 (i.e Rs.65/5 months)

Average cost per unit = Rs.12.84 (i.e Rs.5000/ 389.261 units)

Example 2: FLUCTUATING MARKET

Month Investment (Rs.) Offer Price (POP) Units purchased1 1000 12 83.3332 1000 9 111.111

3 1000 15 66.667

4 1000 12 83.333

5 1000 13 76.923

Total 5000 61 421.367

Average Price (per unit) per month = Rs.12.20 (i.e Rs.61/5 months)

Average cost per unit = Rs.11.87 (i.e Rs.5000/ 421.367 units)

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Example 3: FALLING MARKET

Month Investment (Rs.) Offer Price (POP) Units purchased1 1000 13 76.923

2 1000 12 83.333

3 1000 11 90.909

4 1000 10 100.000

5 1000 9 111.111

Total 5000 55 462.277

Average Price (per unit) per month = Rs.11.00 (i.e Rs.55/5 months)

Average cost per unit = Rs.10.82 (i.e Rs.5000/ 462.277 units)

By investing a fixed amount of rupees at regular intervals, investors can takeadvantage of the benefits of Rupee Cost Averaging.

w) Systematic Withdrawal Plan (SWP)

Unit holders of the scheme, who wish to withdraw a specified sum of moneyeach month or quarter, can opt for this plan. SWP is ideal for those seekingregular inflow of funds. The minimum amount, which the unit holder canwithdraw, is Rs.500. The unit holder may avail this plan by sending a writtenrequest to the AMC or to the Registrar. Withdrawals through SWP are effectedas of the first working day of each month or quarter.

The amount thus withdrawn by this option, will be converted into units at theapplicable repurchase price on that date and will be subtracted from the unitsbalance to the credit of the unit holder. However Exit load is not applicable formonthly/quarterly, withdrawals made under the Systematic Withdrawal Plan.The Fund may close a unit holder’s account if the balance falls below Rs.500/-unit holders may change the amount indicated in the SWP, subject to aminimum amount specified above. The unit holder of the scheme mayterminate the SWP on the written notice and it will terminate automaticallywhen all the units of the unit holder are liquidated or withdrawn from theaccount.

The Asset Management Company reserves the right to amend the operationaldetails of SWP options as may be deemed fit. Such amendments will haveprospective effect.

The Trustee may launch new plans, in the scheme, within an existing option.In such a case, in relation to subscriptions received during the initialsubscription period, under such plans the Trustee reserve the right to makeallotment at the NAV of an existing option, on grounds of expediency, cost andinterest of investors

The fund reserves the right to amend, add or withdraw any special features inthe interest of investors

GENERAL

Subject to SEBI regulations, the Trustee will have the power to do anything notinconsistent with the provisions of the scheme/ regulations , which appear tothem to be desirable or expedient for giving effect to the provisions of thescheme or for removal of any difficulty that may arise in the operation of thescheme. In exercise of such powers the Trustee may prescribe necessaryforms, terms and rules with power to the AMC to alter them, from time to time.

The Trustees may add or otherwise modify any feature investment plans/patterns, options etc after obtaining the approval of SEBI , unithoders and otherauthorities, wherever required , in accordance with the SEBI mutual fundregulations and other applicable laws and the same will be binding on eachunithoder or any person claiming through him ,as if such unit holder orperson had expressly agreed to such addition /modification

UNCLAIMED REDEMPTION / DIVIDEND AMOUNT

The unclaimed redemption amount and dividend amounts may be deployedby the mutual fund in call money market or money market instruments onlyand the investors who claim these amounts during a period of three years fromthe due date shall be paid at the prevailing net asset value. After a period ofthree years, this amount will be transferred to a pool account and the investorscan claim the amount at NAV prevailing at the end of the third year. Theincome earned on such funds will be used for the purpose of investoreducation. The AMC will make a continuous effort to remind the investorsthrough letters to take their unclaimed amounts. Further, the investmentmanagement fee charged by the AMC for managing unclaimed amounts shallnot exceed 50 basis points.

PART IV1. LOAD STRUCTUREEntry Load and Exit Load:For the present, the Board of Trustees have prescribed the following entry andexit load for units to be issued.

Entry load NilExit load For investments less than Rs.10 Lacs- 0.50% if redeemed

within 12 months from the date of allotmentFor Investments of Rs.10 Lacs or greater- nil

For this purpose, applicable NAV means the Net Asset Value per unit at theclose of the working day.The repurchase price shall not be lower than 93% of the Applicable NAV perunit and the sale price not higher than 107% of the Applicable NAV. However,the spread between the repurchase and sale price will not exceed thepermissible limit of 7% of the Sale Price as prescribed by SEBI Regulations. The Board of Trustees reserves the right to prescribe or modify the loadstructure with prospective effect and to introduce an exit load or a combinationof entry and exit loads, subject to a maximum as prescribed under SEBIRegulations. The change will be notified by a suitable display at the CorporateOffice of the AMC and at the Investor Service Centres in advance. Any imposition or enhancement of load in future shall be applicable onprospective investments only. At the time of changing the load structure, theaddendum detailing the changes would be attached to offer documents. Theaddendum would be circulated to all the distributors/brokers so that the samecan be attached to all offer documents already in stock. The addendum wouldbe sent along with the quarterly/half-yearly communications sent to the unitholders after the changes. Arrangements would be made to display the changes/modifications in the offerdocument in the form of a notice in all the investor service centres anddistributors/brokers office.The introduction of the exit load/ CDSC along with the details would bestamped in the acknowledgement slip issued to the investors on submission ofthe application form and would also be disclosed in the statement of accountsissued after the introduction of such load/CDSC. All loads (including CDSC) for the scheme shall be maintained in a separateaccount and may be utilised towards the selling and distribution expenses. Anysurplus in this account may be credited to the scheme, whenever feltappropriate by the AMC.2. EXPENSES(a) Initial Issue Expenses:As per SEBI Regulations, initial issue expenses chargeable to the scheme aresubject to a maximum of 6% of the amount collected during the Initial OfferPeriod. However, all initial expenses of this scheme will be borne by the AMC.

Initial Issue Expenses As a percentage of target mobilisationAdvertising Expenses 0.50Commission to Agents/Brokers 1.00Registrar Expenses 0.15Printing and Marketing Expenses 0.40Postage and Miscellaneous Expenses 0.15Bankers Fee 0.05Total 2.25

The above percentages have been arrived based on a target mobilisation of Rs.1.00 cr. The above estimates are subject to change as per actuals. (b) Annual Recurring ExpensesThe total annual recurring expenses of this scheme excluding issue orredemption expenses, but including the investment management advisory feeshall be subject to the limits mentioned below.

Head of Expense Estimated (%)Investment Management & Advisory Fees 1.25%Trustee fees 0.01%Custodian Fees 0.05%Registrar & Transfer Agent Fees 0.10%Marketing & Selling Expenses including Agents Commission 0.50%Misc. Expenses including Audit Fees, cost of investor communication, Cost of fund transfer 0.34%Total Annual Recurring Expenses 2.25%

The purpose of the above table is to assist the investor in understanding thevarious costs and expenses that an investor in the scheme will bear.

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As per SEBI regulations, the AMC is entitled to charge an investmentmanagement fee of 1.25 % of the average weekly net assets up to Rs.100crores, and 1.00 % of the average weekly net assets on the balance amountabove Rs.100 crores.

The above estimates have been made in good faith as per information availableto the Investment manager and the above expenses are subject to change,inter se. The total annual recurring expenses of the scheme excluding issue orredemption expenses, but including the Investment Management and AdvisoryFee shall be subject to the following limits:

On the first Rs 100 Crores of the average weekly net assets 2.25%On the next Rs 300 Crores of the average weekly net assets 2.00%On the next Rs 300 Crores of the average weekly net assets 1.75%On the balance assets 1.50%

As per the SEBI Regulations, the total recurring expenses that can be chargedto this scheme shall be subject to the maximum specified under Regulation52(6). Any recurring expense above the permitted limits will be borne by theInvestment manager.

Initial Issue Expenses of Past schemes: Sundaram Mutual Fund had launchedSundaram Income Plus, Sundaram Select Focus and Sundaram Select Mid-capin July 2002 and Sundaram Select Debt in September 2002. The entire initialissue expenses of the scheme amounting to Rs.1.25 crores (approx) were borneby the AMC.

(a) Annual Recurring Expenses of the Past Schemes:

1. Sundaram Tax Saver 97: Estimated(%) Actuals (%)

2000-01 2001-02 2002-03 01-04-03 to31-10-03*

Investment management and Advisory fee 1.25 1.25 1.25 1.25 1.25Trustee Fees -Registrar and Transfer Agent Fee 0.18 0.18 0.20 0.05Custodian Fees 0.22 0.15 0.08 0.05Marketing and Selling expenses 0.08 0.04 0.03 0.03Misc. Expenses including Audit Fees, Cost of investor communications, cost of fund transfer 0.12 0.23 0.16 0.00Total 2.50 1.85 1.85 1.72 1.38(Expenses wise break up was not estimated in the Offer Document)* Annualised2. Sundaram Growth Fund

Estimated(%) Actuals (%)2000-01 2001-02 2002-03 01-04-03 to

31-10-03*Investment Management and Advisory Fee 1.25 1.25 1.25 1.25 1.25Trustee Fees 0.03 0.01Registrar and Transfer Agent Fee 0.30 0.19 0.18 0.19 0.22Custodian Fees 0.60 0.15 0.14 0.08 0.27Marketing and Selling expenses 0.05 0.06 0.53 0.15 0.71Misc. Expenses including Audit Fees, Cost of investor communications, cost of fund transfer 0.27 0.06 0.05 0.52 0.00Total 2.50 1.72 2.15 2.19 2.45* Annualised3. Sundaram Bond Saver

Estimated(%) Actuals (%)2000-01 2001-02 2002-03 01-04-03 to

31-10-03*Retail Institutional

Investment Management and Advisory Fee 1.25 1.08 1.05 1.04 0.92 0.50Registrar and Transfer Agent Fee 0.32 0.19 0.18 0.18 0.18 0.10Custodian Fees 0.45 0.07 0.06 0.04 0.02 0.00Marketing and Selling expenses 0.20 0.44 0.54 0.50 0.64 0.40Misc. Expenses including Audit Fees, Trustee fees etc. 0.03 0.02 0.01 0.06 0.00 0.00Total 2.25 1.80 1.84 1.82 1.76 1.00*Annualised

4. Sundaram Tax Saver ‘98Estimated(%) Actuals (%)

2000-01 2001-02 2002-03 01-04-03 to31-10-03*

Investment management and advisory fee 1.25 1.25 1.25 1.25 1.25Registrar and Transfer Agent Fee 0.30 0.20 0.18 0.19 0.02Custodian Fees 0.60 0.15 0.13 0.09 0.03Marketing and Selling expenses 0.20 0.04 0.02 0.02 0.01Misc. Expenses including Audit Fees, Trustee fees etc 0.15 0.05 0.11 0.15 0.00Total 2.50 1.69 1.69 1.70 1.31* Annualised5. Sundaram Tax Saver (open ended)

Estimated(%) Actuals (%)2000-01 2001-02 2002-03 01-04-03 to

31-10-03*Investment Management and Advisory Fee 1.25 1.25 1.25 1.25 1.25Registrar and Transfer Agent Fee 0.30 0.19 0.18 0.20 0.22Custodian Fees 0.60 0.16 0.14 0.07 0.17Marketing and Selling expenses 0.05 0.33 0.27 0.15 0.17Misc. Expenses including Audit Fees, Trustee fees etc 0.30 0.12 0.05 0.08 0.00Total 2.50 2.05 1.89 1.75 1.81* Annualised6. Sundaram Money Fund

Estimated(%) Actuals (%)2000-01 2001-02 2002-03 01-04-03 to

31-10-03*Investment Management and Advisory Fee 0.70 0.70 0.70 0.70 0.21Registrar and Transfer Agent Fee 0.10 0.10 0.11 0.10 0.09Custodian Fees 0.08 0.06 0.06 0.05 0.04Marketing and Selling expenses 0.05 0.02 0.02 0.02 0.24Misc. Expenses including Audit Fees, Trustee fees etc 0.07 0.04 0.02 0.05 0.00Total 1.00 0.92 0.91 0.92 0.58*Annualised7. Sundaram Balanced Fund

Estimated(%) Actuals (%)2000-01 2001-02 2002-03 01-04-03 to

31-10-03*Investment Management and advisory fee 1.25 1.25 1.25 1.25 1.25Registrar and Transfer Agent Fee 0.30 0.19 0.18 0.19 0.21Custodian Fees 0.60 0.29 0.14 0.08 0.15Marketing and Selling expenses 0.05 0.14 0.44 0.22 0.81Misc. Expenses including Audit Fees, Trustee fees etc 0.30 0.02 0.02 0.07 0.00Total 2.50 1.89 2.03 1.81 2.42*Annualised8. Sundaram Gilt Fund

Estimated(%) Actuals (%)2001-02 2002-03 01-04-03 to

30-10-03*Investment Managementand advisory fee 1.25 1.25 1.25 1.25Additional fees (if any) 0.25Trusteeship fees 0.01Registrar and Transfer Agent Fee 0.15 0.18 0.18 0.16Custodian Fees 0.15 0.01 0.00Marketing and Selling expenses 0.20 0.24 0.02 0.10Misc. Expenses including Audit Fees, Trustee fees etc 0.25 0.07 0.09 0.00Total 2.25 1.76 1.54 1.51*Annualised

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9. Sundaram Income PlusEstimated(%) Actuals (%)

2002-03 01-04-03 to30-10-03*

Investment Management and advisory fee 1.25 1.25 1.25Registrar and Transfer Agent Fee 0.32 0.17 0.19Custodian Fees 0.45 0.06 0.03Marketing and Selling expenses 0.20 0.63 0.72Misc. Expenses including Audit Fees, Trustee fees etc 0.03 0.08 0.00Total 2.25 2.19 2.19*Annualised10. Sundaram Select Focus

Estimated(%) Actuals (%)2002-03 01-04-03 to

31-10-03*Investment Management and advisory fee 1.25 1.25 1.25Trusteeship fees 0.03Registrar and Transfer Agent Fee 0.30 0.20 0.21Custodian Fees 0.60 0.33 0.39Marketing and Selling expenses 0.05 0.35 0.54Misc. Expenses including Audit Fees, Trustee fees etc 0.27 0.16 0.00Total 2.50 2.29 2.39*Annualised11. Sundaram Select Midcap

Estimated(%) Actuals (%)2002-03 01-04-03 to

31-10-03*Investment Management and advisory fee 1.25 1.25 1.25Trusteeship fees 0.03Registrar and Transfer Agent Fee 0.30 0.20 0.21Custodian Fees 0.60 0.09 0.23Marketing and Selling expenses 0.05 0.66 0.71Misc. Expenses including Audit Fees,

Trustee fees etc 0.27 0.14 0.00Total 2.50 2.34 2.40*Annualised

12. (a) Sundaram Select Debt-Dynamic Asset PlanEstimated(%) Actuals (%)

2002-03 01-04-03 to31-10-03*

Investment Management and advisory fee 1.25 0.50 0.50Registrar and Transfer Agent Fee 0.32 0.15 0.12Custodian Fees 0.45 0.02 -Marketing and Selling expenses 0.20 0.46 0.36Misc. Expenses including Audit Fees, Trustee fees etc 0.03 0.06 0.00Total 2.25 1.19 0.98*Annualised

(b) Sundaram Select Debt-Short-term PlanEstimated(%) Actuals (%)

2002-03 01-04-03 to31-10-03*

Investment Management and advisory fee 1.25 0.20 0.20Registrar and Transfer Agent Fee 0.32 0.13 0.13Custodian Fees 0.45 0.08 0.03Marketing and Selling expenses 0.20 0.27 0.17Misc. Expenses including Audit Fees, Trustee fees etc 0.03 0.03 0.00Total 2.25 0.71 0.53*Annualised

(c) Sundaram Select Debt-Long-term PlanEstimated(%) Actuals (%)

2002-03 01-04-03 to31-10-03*

Investment Management and advisory fee 1.25 0.20 0.20Registrar and Transfer Agent Fee 0.32 0.13 0.13Custodian Fees 0.45 0.00Marketing and Selling expenses 0.20 0.17 0.29Misc. Expenses including Audit Fees, Trustee fees etc 0.03 0.17 0.00Total 2.25 0.67 0.62*Annualised

(d) Sundaram Select Debt-3 year PlanEstimated(%) Actuals (%)

2002-03 01-04-03 to31-10-03*

Investment Management and advisory fee 1.25 0.20 0.20Registrar and Transfer Agent Fee 0.32 0.14 0.12Custodian Fees 0.45 0.05 -Marketing and Selling expenses 0.20 0.04 0.19Misc. Expenses including Audit Fees, Trustee fees etc 0.03 0.23 –Total 2.25 0.66 0.51*Annualised

(e) Sundaram Select Debt-5 year PlanEstimated(%) Actuals (%)

2002-2003 01-04-03 to30-10-03*

Investment Management and advisory fee 1.25 0.00 0.00Registrar and Transfer Agent Fee 0.32 0.00 0.00Custodian Fees 0.45 0.00 0.00Marketing and Selling expenses 0.20 0.00 0.00Misc. Expenses including Audit Fees, Trustee fees etc 0.03 0.00 0.00Total 2.25 0.00 0.00*AnnualisedNote: on account of the lower corpus all expenses were absorbed by AMC.

(3) CONDENSED FINANCIAL INFORMATION

A. Sundaram Tax Saver 97 (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 2000-2001 2001-2002 2002-2003 01-04-03 to31-10-03

1. Date of Allotment 31.03.97 31.03.97 31.03.97 31.03.972. NAV at the beginning (Rs.) 23.85 6.40 7.23 7.303. Transfer to reserves - - - -4. Dividend (Rs.) 10.00 - - -5. NAV at the end (Rs.) 6.40 7.23 7.30 12.80836. Annualised Return (since inception) 8.02% 7.82% 7.02% 16.44%7. Benchmark returns (BSE 200) 2.45% 3.42% 1.54% 10.031%8. Net Assets at the end of

the period (Rs. in crores) 1.94 1.24 1.09 1.699. Ratio of recurring expenses

to Average Net Assets 1.85% 1.85% 1.72% 1.38%10. Net income (per unit.) -1.81 0.30 -0.34 1.64

B. Sundaram Growth Fund (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 2000-2001 2001-2002 2002-2003 01-04-03 to31-10-03

1. Date of Allotment 24.04.97 24.04.97 24.04.97 24.04.97Grth. Div.

2. NAV at the beginning (Rs.) 21.69 11.00 12.30 12.06 10.133. Transfer to reserves – – – –4. Dividend (Rs.) 3.00 – 2.00 3.50

Grth. Div. Grth. Div.5. NAV at the end (Rs.) 11.00 12.30 12.06 10.13 21.73 13.846. Annualised Return (since inception) 11.11% 11.21% 8.90% 18.29%7. Benchmark returns (BSE 200) 0.19% 1.62% -0.22% 8.38%8. Net Assets at the end of

the period (Rs. in crores) 21.70 26.35 34.75 71.029. Ratio of recurring expenses

to Average Net Assets 1.72% 2.15% 2.19% 2.45%10. Net income (Rs.) -3.11 0.42 0.09 3.22

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C. Sundaram Bond Saver (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 2000-2001 2001-2002 2002-2003 01-04-03 to 31-10-031. Date of allotment 18.12.97 18.12.97 18.12.97 18.12.97

Grth. Div. Grth. Div. Grth. Div. Bonus Grth. Div. Bonus2. NAV at the beginning 13.46 10.33 15.03 10.29 17.45 10.39 19.75 10.66 10.393. Dividend (Rs.) – 1.00 1.35 1.05 9 units for – 0.75 –

10 units held

4. Transfer to reserves – – – –5. NAV at the end(Rs.) 15.03 10.29 17.45 10.39 19.75 10.66 10.39

Retail Insttitutional6. Annualised Return (since inception) 13.21% 13.87% 13.75% 13.69% 12.29%7. Benchmark index

(Crisil Composite Bond Fund Index) N.A N.A N.A N.A8. Net Assets at the end of the period

(Rs. in crores) 358.89 566.69 786.24 1141.749. Ratio of recurring expenses to

Average Net Assets 1.80% 1.84% 1.82% 1.76% 1.00%10. Net Income (per unit) 0.93 1.58 1.2273 0.81

D. Sundaram Tax Saver ’98 (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 2000-2001 2001-2002 2002-2003 01-04-03 to31-10-03

1. Date of allotment 31.03.98 31.03.98 31.03.98 31.03.982. NAV at the beginning 23.36 14.08 15.57 15.393. Dividend (Rs.) – – – –4. Transfer to reserves – – – –5. NAV at the end (Rs.) 14.08 15.57 15.39 27.14876. Annualised Return (since inception) 12.07% 11.69% 8.57% 19.57%7. Benchmark returns (BSE 200) -0.89% 1.13% -0.95% 9.17%8. Net Assets at the end of

the period (Rs. in crores) 0.77 0.58 0.47 0.659. Ratio of recurring expenses

to Average Net Assets 1.69% 1.69% 1.70% 1.31%10. Net income (per unit) -5.72 -0.47 -0.36 4.62

E. Sundaram Tax Saver Open ended (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 2000-2001 2001-2002 2002-2003 01-04-03 to31-10-03

1. Date of allotment 24.11.99 24.11.99 24.11.99 24.11.992. NAV at the beginning 12.57 7.79 8.69 8.453. Dividend (Rs.) – – – –4. Transfer to reserves – – – –5. NAV at the end (Rs.) 7.79 8.69 8.45 14.87006. Annualised Return (since inception) -16.88% -5.80% -4.90% 10.60%7. Benchmark returns (BSE 200) -22.52% -10.97% -10.33 4.48%8. Net Assets at the end of

the period (Rs. in crores) 3.79 4.79 4.61 6.749. Ratio of recurring expenses

to Average Net Assets 2.05% 1.89% 1.75% 1.81%10. Net income (per unit) -1.25 0.28 0.19 2.29

F. Sundaram Money Fund (Amount Rs.)

HISTORICAL PER UNIT STATISTICS 2000-2001 2001-2002 2002-2003 01-04-03 to 31-10-031. Date of allotment 07.03.2000 07.03.2000 07.03.2000 07.03.2000

Re-inv. Grth. Re-inv. Grth. Re-inv. Grth. Re-inv. Grth.Qtly. Dly.*

2. NAV at the beginning 10.01 10.06 10.02 11.03 10.00 11.88 – – 12.663. Dividend (Rs.) 0.76 – 0.67 – 0.46 – 0.385 – –4. Transfer to reserves – – – –5. NAV at the end (Rs.) 10.02 11.03 10.00 11.88 10.19 12.66 10.06 10.08 13.066. Annualised Return

(since inception) 9.64% 8.68% 8.00% 7.59%7. Benchmark returns **

(Crisil Liquid Fund Index) N.A N.A N.A N.A8. Net Assets at the end of

the period (Rs. in crores) 65.46 44.39 148.55 211.209. Ratio of recurring expenses

to Average Net Assets 0.92% 0.91% 0.92% 0.58%10. Net income(per unit) 0.7063 1.3155 0.43 0.55

* This option was introduced on 12/05/03. The NAV on that day was 10.0776** Since the Benchmark indices were available only w.e.f. 31/03/2002, since inception return

is not given

G. Sundaram Balanced Fund (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 23-06-2000 2001-2002 2002-2003 01-04-03 toto 31.03.2001 31-10-03

1. Date of allotment 23.06.2000 23.06.2000 23.06.2000 23.06.2000Grth. Div.

2. NAV at the beginning 10.00 9.00 10.01 10.16 10.163. Dividend (Rs.) – – – –4. Transfer to reserves – – – –

Grth. Div. Grth. Div.5. NAV at the end (Rs.) 9.00 10.01 10.16 10.16 15.2860 15.28606. Annualised Return

(since inception) -10% # 0.06% 0.57% 13.48%7. Benchmark returns**

(Crisil Balanced Fund Index) N.A N.A N.A N.A8. Net Assets at the end

of the period (Rs. in crores) 18.53 17.10 13.19 19.879. Ratio of recurring expenses

to Average Net Assets 1.89% 2.03% 1.81% 2.42%10. Net income (per unit) 0.14 -0.56 0.26 2.03# Absolute return since the period is less than one year.

** Since the Benchmark indices were available only w.e.f. 31/03/2002, since inception returnis not given

H. Sundaram Gilt Fund (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 02-05-01 to 31-03-2002 2002-2003 01-04-03- to 31-10-031. Date of allotment 02.05.01 02.05.01 02.05.01

Div Grth. Div. Grth. Div. Grth.2. NAV at the beginning 10.00 10.00 10.24 10.98 10.19 11.693. Dividend (Rs.) 0.65 0.70 0.354. Transfer to reserves - - –

Div. Grth.. Div. Grth. Div. Grth.5. NAV at the end (Rs.) 10.24 10.98 10.19 11.69 10.0629 11.99766. Annualised Return (since inception) 9.80%* 8.53% 7.50%7. Benchmark returns**

(I-Sec, Si-Bex) N.A N.A N.A8. Net Assets at the end

of the period (Rs. in crores) 10.19 5.05 5.299. Ratio of recurring expenses

to Average Net Assets 1.76% 1.54% 1.51%10. Net income (per unit) 1.29 1.46 0.014

** Since the Benchmark indices were available only w.e.f. 31/03/2002, since inception returnis not given

I. Sundaram Income Plus (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 30-07-02 to 31-03-03 01-04-03 to 31-10-03

1. Date of allotment 30.07.2002 30.07.2002Growth Dividend Growth Dividend

2. NAV at the beginning 10.00 10.00 10.75 10.513. Dividend (Rs.) – 0.25 – 0.604. Transfer to reserves – – – –5. NAV at the end (Rs.) 10.75 10.51 11.3394 10.39456. Annualised Return (since inception) 7.47%* 10.54%7. Benchmark returns 7.23% 11.60%

(Crisil Composite Bond Fund Index)8. Net Assets at the end of

the period (Rs. in crores) 105.26 107.889. Ratio of recurring expenses

to Average Net Assets 2.19% 2.19%10. Net income(per unit) 0.59 0.47

*Absolute Return

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J. Sundaram Select Focus (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 30-07-02 to 31-03-03 01-04-03 to 31-10-03

1. Date of allotment 30.07.2002 30.07.2002

Growth Dividend

2. NAV at the beginning 10.00 10.83 10.83

3. Dividend(Rs.) – – 4.50

4. Transfer to reserves – –

5. NAV at the end (Rs.) 10.83 19.5672 13.4238

6. Annualised Return (since inception) 8.30%* 70.74%

7. Benchmark returns (SNP CNX Nifty) 1.83% 61.96%

8. Net Assets at the end of

the period (Rs. in crores) 5.30 63.94

9. Ratio of recurring expenses

to Average Net Assets 2.29% 2.39%

10. Net income(per unit) 0.74 2.37

*Absolute Return

K. Sundaram Select Midcap (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 30-07-02 to 31-03-03 01-04-03 to 31-10-03

1. Date of allotment 30.07.2002 30.07.2002

Growth Dividend

2. NAV at the beginning 10.00 9.75 9.75

3. Dividend(Rs.) – – 2.50

4. Transfer to reserves – –

5. NAV at the end(Rs.) 9.75 19.9530 16.1419

6. Annualised Return (since inception) -2.50%* 73.42%

7. Benchmark returns (Nifty Jr.) -14.43% 60.06%

8. Net Assets at the end of

the period (Rs. in crores) 5.64 49.30

9. Ratio of recurring expenses

to Average Net Assets 2.34% 2.40%

10. Net income(per unit) 0.23 2.61

*Absolute Return

L. Sundaram Select Debt – Dynamic Asset Plan (Amount. Rs.)

HISTORICAL PER UNIT STATISTICS 04-09-02 to 31-03-03 01-04-03 to 31-10-03

1. Date of allotment 04.09.2002 04.09.2002

Div. Grth.

Qtly. Hf-yr. Ann.

2. NAV at the beginning (Rs.) 10.00 10.59 10.89 10.89 10.89

3. Transfer to reserves – – – – –

4. Dividend 0.30 0.80 1.10 0.55 –

Div. Grth. Div. Grth.

Qtly. Hf-yr. Ann. Qtly. Hf-yr. Ann.

5. NAV at the end (Rs.) 10.59 10.89 10.89 10.89 10.6593 10.6243 11.2660 11.9159

6. Annualised Return (since inception) 8.95%* 16.67%

7. Benchmark returns

(Crisil Composite Bond Fund Index) 5.67% 11.42%

8. Net Assets at the end

of the period (Rs. in crores) 19.55 41.02

9. Ratio of recurring expenses

to Average Net Assets 1.19% 0.98%

10. Net income (per unit) 1.47 0.54

*Absolute Return

M. Sundaram Select Debt-Long-term Asset Plan (Amount. Rs.)

HISTORICAL PER UNIT STATISTICS 04-09-02 to 31-03-03 01-04-03 to 31-10-031. Date of allotment 04.09.2002 04.09.2002

Div. Grth.Qtly. Hf-yr. Ann.

2. NAV at the beginning (Rs.) 10.00 10.10 10.30 10.30 10.303. Transfer to reserves – – – – –4. Dividend 0.20 0.2 0.4 0.25 –

Div. Grth. Div. Grth.Qtly. Hf-yr. Ann. Qtly. Hf-yr. Ann.

5. NAV at the end (Rs.) 10.10 10.30 10.30 10.30 10.0739 10.0524 10.51026. Annualised Return (since inception) 3.06%* 4.56%7. Benchmark returns (I-Sec Si-Bex) 11.50% 23.27%8. Net Assets at the end

of the period (Rs. in crores) 0.04 0.039. Ratio of recurring expenses

to Average Net Assets 0.39% 0.62%10. Net income (per unit) 17.62 0.22

*Absolute Return

N. Sundaram Select Debt-5 year asset plan (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 04-09-02 to 31-03-03 01-04-03 to 31-10-03

1. Date of allotment 04.09.2002 04.09-2002Div. Grth.

Qtly. Hf-yr. Ann.2. NAV at the beginning (Rs.) 10.00 10.06 10.09 10.09 10.093. Transfer to reserves – – – – –4. Dividend 0.04 0.058 – – –

Div. Grth. Div. Grth.Qtly. Hf-yr. Ann. Qtly. Hf-yr Ann.

5. NAV at the end (Rs.) 10.06 10.09 10.09 10.09 – – – –6. Annualised Return since inception) 0.90% –7. Benchmark returns

(Crisil Composite Bond Fund Index) 5.67% –8. Net Assets at the end of

the period (Rs. in crores) 0.0068 –9. Ratio of recurring expenses

to Average Net Assets 0.00% –10. Net income (per unit) 0.13 –

O. Sundaram Select Debt-3 year asset plan (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 04-09-02 to 31-03-03 01-04-03 to 31-10-031. Date of allotment 04.09.2002 04.09.2002

Div. Grth.Qtly. Hf-yr. Ann.

2. NAV at the beginning (Rs.) 10.00 10.17 10.30 10.30 10.303. Transfer to reserves – – – – –4. Dividend 0.12 0.3 – 0.22 –

Div. Grth. Div. Grth.Qtly. Hf-yr. Ann. Qtly. Hf-yr Ann.

5. NAV at the end (Rs.) 10.17 10.30 10.30 10.30 10.0979 – 10.3111 10.56866. Annualised Return (since inception) 3.01%* 5.36%7. Benchmark returns (Cirsil Liquid Fund Index) 2.85% 5.24%8. Net Assets at the end

of the period (Rs. in crores) 3.19 3.039. Ratio of recurring expenses

to Average Net Assets 0.38% 0.51%10. Net income(per unit) 0.30 0.27

*Absolute Return

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P. Sundaram Select Debt- Short-term asset plan (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 04-09-02 to 31-03-03 01-04-03 to 31-10-031. Date of allotment 04.09.2002 04.09.2002

Div. Grth.Wkly. Qtly. Hf-yr. Ann.

2. NAV at the beginning (Rs.) 10.00 – 10.24 10.44 10.44 10.443. Transfer to reserves – – – – – –4. Dividend 0.20 0.2205 0.50 0.70 0.35 –

Div. Grth. Div Grth.Qtly. Hf-yr. Ann. Wkly. Qtly. Hf-yr Ann.

5. NAV at the end (Rs.) 10.24 10.44 10.44 10.44 10.2603 10.1124 10.0951 10.4920 10.89846. Annualised Return (since inception) 4.48%* 8.16%7. Benchmark returns (Crisil Liquid Fund Index) 2.85% 4.97%8. Net Assets at the end

of the period (Rs. in crores) 18.39 113.749. Ratio of recurring expenses

to Average Net Assets 0.71% 0.53%10. Net income (per unit) 2.03 0.27

*Absolute Return

Note: 1. Annualised returns reported in the tables above are calculated with

the inception NAV taken at Rs.10, the face or par value of the unitat the time of allotment. Any dividends paid by the scheme havebeen assumed as reinvested in units of the scheme at the ex-dividend NAV for the purpose of calculating the annualised returns.

2. The Net unrealised appreciation and depreciation is excluded for thepurpose of calculating the Net income per unit.

3. $ the Benchmark indices were available only with effect from 31stMarch 2002, indices returns since inception are not given.

PART V(1) UNIT HOLDERS RIGHTS AND SERVICES(a) Investor ServicesProspective investors and existing unit holders are welcome to contactthe Investor Relations Officer at the Corporate Office of the AMC for anyfurther information about the schemes of Sundaram Mutual Fund andalso for any service concerning their investments in the schemes ofSundaram Mutual Fund.

The address and phone numbers are:Ms. Padmavathi GInvestor Relations Manager46, Whites Road, Second FloorRoyapettahChennai 600 014Phone 91-44-28583362, 28583367Fax 91-44-2 8583156The address and phone numbers are:24-Hour NAV: 91-044-28585607

The Fund ensures to complete all monetary transactions within tenworking days from the date of receipt at the Investor Service Centres.The fund shall endeavour to adhere to the following time schedules onan ongoing basis (from the date of receipt).

Redemption Cheque Mailing Within 5 working daysPurchase Intimation Withing 3 working daysAddress Change Withing 10 working daysOwnership transmission Withing 30 working days

The above-mentioned time schedule does not include postal transittime.Sundaram Asset Management Company Ltd and its Registrar havereceived general complaints/requests regarding non-receipt of unitcertificate/account statements, which have been resolved by issuingduplicate certificates/statements.

(b) Information about the schemeAn abridged scheme-wise annual report shall be mailed to all unitholders within six months from March 31 of each year. The abridgedannual report shall contain such details as are required under the SEBIRegulations.The AMC will also disclose the NAV of the scheme on every WorkingDay. Transparency will be maintained through half yearly disclosure ofestablished portfolio of the scheme through newsletters/news paperpublications.The AMC will also publish the NAV, Repurchase Price and Sale Price ofthe units of this scheme as per SEBI regulations.(c) Account StatementsEach unit holder will be sent a non-transferable Account Statement,which is a conclusive proof of investment in the schemes of SundaramMutual Fund. The AMC will endeavour to forward the AccountStatement within five working days after every transaction of Sale orRepurchase of units and also in the case of other services. Investors areurged to preserve the Account Statement carefully as it is a valuabledocument.(d) NAV InformationThe NAV of the scheme will be calculated and announced by the Fundon every Working Day. The unit holders and all prospective investorscan obtain the latest NAV information, by calling the Corporate Officeof the AMC or any of the designated Investor Service Centres.Publication of NAV, Repurchase and Sale prices shall be made daily atleast in two daily newspapers in terms of SEBI Regulations.(e) Disclosure of information under the RegulationsThe full annual report shall be available for inspection at the corporateoffice of the Mutual Fund and a copy thereof shall be made availableto the unit holder on payment of Rs.10/-. The abridged scheme-wiseannual report shall be mailed to all unit holders not later than sixmonths from the date of closure of the relevant accounting year.The Mutual Fund and the AMC shall before expiry of one month fromthe close of each half year, i.e. March 31 and September 30, publishthe unaudited financial results in one English newspaper circulating inthe whole of India and in a Tamil newspaper published from Chennai. These shall also be displayed on the web site of Sundaram mutual fundand that of AMFI. The fund shall publish, before expiry of one month from the close ofeach half year that is on 31st March and 30th September, its schemeportfolio in the prescribed format as per SEBI in one national Englishdaily newspaper and in a newspaper in the language of the regionwhere the HO of the fund is situated or send a copy to all the unitholders. (f) Rights of unit holders of the scheme• Unit holders of this scheme have a proportionate right in the

beneficial ownership of the assets of this scheme and dividend if anydeclared by the Fund under the scheme.

• When the Fund declares a dividend under this scheme, the dividendoption unit holders are entitled to the despatch of the dividendwarrant within 30 days from the date of declaration of dividend.

• Unit holders are entitled to the despatch of redemption orrepurchase proceeds within 10 working days from the date ofredemption or repurchase.

• The Board of Trustees is bound to make such disclosures to the unitholders as are essential in order to keep them informed about anyinformation, known to Board of Trustees, which may have anadverse bearing on their investments.

• The appointment of the AMC for this scheme can be terminated bythe majority of the Trustees or by three-fourths of the unit holders of

22

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the scheme(s) of the Fund. Any change in the appointment of theAMC shall be subject to the prior approval of SEBI and the unitholders of the respective schemes.

• The Board of Trustees are obliged to convene a meeting on arequisition made by three-fourths of the unit holders of a scheme.

• Three-fourths of the unit holders can pass a resolution to wind upthis scheme.

• The unit holders have the right to inspect all the documents listedunder "Documents Available for Inspection" printed elsewhere in thisdocument.

• The Board of Trustees shall obtain the consent of the unit holders:a) whenever required to do so by SEBI, in the interest of the unit

holders;b) whenever required to do so on the requisition made by 75% of

the unit holders of this scheme;c) when the Board of Trustees decides to wind up or prematurely

redeem the units of this scheme;• when any change in the fundamental attribute of this scheme or the

Trust or fees and expenses payable or any other change whichwould modify the scheme or affect the interest of the unit holders,is proposed to be carried out, no change shall be carried out unless(I) a written communication about the proposed change is sent outto each unit holder and an advertisement is given in one Englishdaily newspaper having nation wide circulation as well as in anewspaper published in the language of the region where the Headoffice of the mutual fund is situated; and (II) the unit holders aregiven an option to exit at the prevailing NAV without any exit load.[Note: For the purpose of this clause, Fundamental Attributes meanthe Investment Objective and terms of this scheme as detailed inPart II to this document.

(g) Procedure and Manner of Obtaining Investors Approvalin Specified circumstancesIn the circumstances requiring the approval of unit holders, the AMCshall be guided by the directions issued by SEBI and the Board ofTrustees, under the Regulations, in regard to the manner of obtainingsuch approval. Further, those unit holders who have not given theirconsent or have not responded shall be allowed to redeem theirholdings in full in this scheme at any time at the net asset value basedprice.(h) Duration of the schemeSundaram Monthly Income Plan is an open-ended scheme (with noassured returns), and as such it would have a perpetual duration.However, in terms of the SEBI regulations, this scheme may be woundup earlier after repaying the amount due to the unit holders: 1. If on the happening of any event which, in the opinion of the Board

of Trustees, requires this scheme to be wound up; or2. If 75% of the unit holders of this scheme pass a resolution that the

scheme be wound up; or3. SEBI so directs in the interest of the unit holders of this scheme.

When the scheme is to be wound up, the Board of Trustees shallgive notice of the circumstances leading to the winding up of thescheme:(i) to SEBI and(ii) to the unit holders of this scheme by publication in the

newspaper(s) as per prevailing guidelines.On and from the date of the publications of notice of winding up, theBoard of Trustees or the Investment Manager, as the case may be, shall:1. cease to carry on any business activities in respect of the scheme so

wound up

2. cease to create or cancel units in the scheme3. cease to issue or redeem units in the scheme

(i) Procedure and manner of Winding upThe Board of Trustees shall call a meeting of the unit holders to approve

by simple majority of the unit holders present and voting at the meeting

for authorising the Board of Trustees or any other person to take steps

for the winding up of the scheme.

The Board of Trustees or the person authorised above shall dispose of

the assets of the scheme concerned in the best interest of the unit

holders of this scheme. The proceeds of sale realised in pursuance of

the above, shall be first utilised towards discharge of such liabilities as

are due and payable under the scheme, and after making appropriate

provision for meeting the expenses connected with such winding up,

the balance shall be paid to the unit holders in proportion to their

respective interest in the assets of this scheme, as on date the decision

for winding up was taken.

On completion of the winding up, the Board of Trustees shall forward

to SEBI and the unit holders a report on the winding up, detailing the

circumstances leading to the winding up, the steps taken for disposal

of the assets of the scheme before winding up, net assets available for

distribution to the unit holders and a certificate from the auditors of the

scheme.

Notwithstanding anything contained herein above, the provisions of

the SEBI Regulations in respect of disclosures of half-yearly reports shall

continue to be applicable until winding up is completed or the scheme

ceases to exist. After receipt of the report referred to above, if SEBI is

satisfied that all measures for winding up of the scheme have been

complied with, the scheme shall cease to exist.

(2) TAX BENEFITS OF INVESTING IN A MUTUAL FUNDCertain tax benefits are described below that are believed to be

available, under present taxation laws, to the unit-holders of Mutual

Funds including Sundaram Mutual Fund. The information set forth

below is included for general information purposes only. In view of the

individual nature of tax consequences, each investor is advised to

consult his/her own tax advisor with respect to the specific tax

consequences to him/her of participation in this scheme.

TO THE FUNDThe income earned by the fund will be totally exempt from tax.

However the fund will pay distribution [email protected]%(plus surcharge) on

dividends declared by it. Further the fund is eligible to receive its

income without deduction of tax at source.

TO THE INVESTORSDIVIDENDSThe dividends received from the scheme by all categories of investors

will be totally exempt from income tax. The fund will pay dividend tax

@ 12.5% plus surcharge). There will be no deduction of tax from any

payment made to residents.

LONG TERM CAPITAL GAINS TAXCapital gains tax will be @20%( plus surcharge) where the gain arises

from units held for more than 12 months. For determining the long-

term capital gain, the cost of acquisition of units will be increased by

the cost inflation index notified under the income tax act. However

the maximum tax payable on long-term capital gains will not exceed

10% (plus surcharge) of the gain computed without considering the

cost inflation index benefit.

TAX DEDUCTION AT SOURCETax will be deducted at source only redemption payments made to

non-residents. The deduction will be at 20%(plus surcharge), where the

23

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redemption relates to units held for more than 12 months. Where the

redemption relates to units held for less than 12 months, the rate of

deduction will be at 40%(plus surcharge) for foreign corporates and at

30% ( plus surcharge) for all other non-residents.

Where the non resident investor files necessary certificates from tax

authorities, authorising nil/ lower rates of tax deduction, tax will be

deducted at nil or at such lower rates as specified in the certificates. To

be effective, such certificates must be filed within such period as the

AMC may prescribe in this behalf.

Where the rates as per the double taxation avoidance agreements in

force under the income tax act, are lower / more beneficial, than the

rates prescribed in the Finance Act, such lower/ beneficial rates will be

adopted for tax deduction. For this purpose the investors will be

required to submit a certificate from tax authorities, confirming their

entitlement to the concession.

Certificate for the tax deducted will be issued to the non- residents.

The AMC/ fund will not be liable for any loss/ delay in transit.

LOSS ARISING FROM REDEMPTION

For claiming loss from sale of units, the invstors are required to adhere

to the minimum holding period prescribed under the income tax act,

failing which the loss to the extent of dividend will not be eligible for

set off.

Further, there is a prohibition on set off of loss from sale of long term

capital asset against gain from short-term capital asset.

WEALTH TAX/ GIFT TAX

No wealth tax is payable on units of the scheme. There is no gift tax

liability on gift of units of the scheme.

OTHER BENEFITS

Units of the schemes are an eligible mode of investment in terms of the

pattern of invetment prescribed under the income tax act for the

following entities:

1. Charitable trusts,

2. Scientific research associations,

3. Institutions/ associations / boards for regulating games/ sports,

and

4. Employee welfare trusts.

PART VI

Other Matters

1) Investment in Group Companies

Sundaram Mutual Fund, under all its schemes, has not made any

investments in the Group companies of the Sponsor. AMC does not

have a separate policy for investment in securities of the group

companies. If at any time such investments are made, it will be done on

pure commercial consideration for the benefit of the fund. As per

current regulations, no investment will be made in any unlisted security

of an associate or group company of the sponsor and in any security

issued by way of private placement by an associate or group company

of the sponsor. Further, no investment will be made in listed securities

of the group company of the sponsor, which is in excess of 25% of the

net assets of the scheme of the fund. Investment in group companies

will be done only in the interest of the fund and as per Regulations.

2) Unit holder grievances redressal mechanism

Service Requests and grievances (if any) from the investors are received

at the corporate office of the AMC or at the offices of Sundaram Finance

Limited or directly by the Registrar. The Service Requests/complaints/

grievances are closely followed up with the Registrar to ensure timely

redresses and prompt investor service. Given below is the summary of

all such service requests/complaints/grievances received from the unit

holders of the schemes of Sundaram Mutual Fund as on 31.10.03

3) Associate Transactions

(a) Underwriting obligations with respect to issues of

Group/Associate Companies

The Sundaram Mutual Fund, under all its schemes, has till date not

entered into any underwriting contracts in respect of any public

issue made by any of the group/associate companies of the

Sponsor.

(b) Subscription to issues lead managed by Group/ Associate

Companies

No schemes of Sundaram Mutual Fund have till date invested in any

public issue lead managed by any Group/Associate company of the

Sponsor.

24

Sundaram Sundaram Sundaram Sundaram Sundaram Sundaram Sundaram Sundaram Sundaram Sundaram Sundaram SundaramTaxsaver’97 Growth Fund Bond Saver Taxsaver’98 Tax Saver (OE) Money Fund Balanced Fund Gilt Fund Select Focus Income Plus Select Midcap Select Debt

01.04.2000 to 31.03.2001Number of letters/Complaints Received 691 798 2050 45 267 12 428Redressed during the Period 691 798 2050 45 267 12 428

Pending Nil Nil Nil Nil Nil Nil Nil

01.04.2001 to 31.03.2002Number of letters/Complaints Received 495 678 4955 35 390 76 435 100Redressed during the Period 495 678 4955 35 390 76 435 100

Pending Nil Nil Nil Nil Nil Nil Nil Nil

01.04.2002 to 31.03.2003Number of letters/Complaints Received 299 1359 10364 58 676 218 815 185 345 2417 362 434Redressed during the Period 299 1359 10364 58 676 218 815 185 345 2417 362 434

Pending Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

01.04.2003 to 31.10.03Number of letters/Complaints Received 322 1575 12562 43 828 293 1152 214 1168 1130 922 632Redressed during the Period 322 1575 12562 43 828 293 1152 214 1168 1130 922 632

Pending Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Summary of service requests/complaints/grievances

Page 26: SUNDARAM MONTHLY INCOME PLAN

(c) Dealings with Group/Associate CompaniesThe AMC from time to time, for the purpose of conducting itsnormal business, uses the services of the Sponsor and thesubsidiaries and other associates of the Sponsor, namely, SundaramInsurance Broking Limited (formerly Sundaram Finance SecuritiesLimited). The AMC may utilise the services of these groupcompanies and any other subsidiary or associate company of theSponsor to be established at a later date in case such an associatecompany is in a position to provide the requisite services to theAMC. The AMC will conduct its business with the aforesaidcompanies on commercial terms and on arms’ length basis and atthe then prevailing market prices to extent permitted under theapplicable laws including the Regulations, after an evaluation of thecompetitiveness of the pricing offered by the associate companiesand services to be provided by them.

In terms of the amendments to SEBI (Mutual Funds) Regulations, theFund shall disclose at the time of declaring half yearly and yearly results;(a) any underwriting obligations undertaken by the schemes of the

mutual funds with respect to issue of securities of associatecompanies

(b) devolvement, if any.(c) subscription by the schemes in the issues lead managed by

associate companies(d) subscription to any issue of debt on private placement basis where

the sponsor or its associate companies has acted as arranger ormanager.

During the period from 1st April 2003 to 31st October 2003,Sundaram Mutual Fund has paid:An amount of Rs. 35.49 lakhs to Sundaram Finance Limited towardssale of units, Sundaram Growth Fund Rs. 1.17 lakhs, Sundaram SelectFocus Rs. 0.88 lakhs, Sundaram Select Midcap Rs. 1.24 lakhs, SundaramTaxsaver (open-ended) Rs. 0.18 lakhs, Sundaram Balanced Fund Rs.0.06 lakhs, Sundaram Bond Saver Rs. 25.16 lakhs, Sundaram MoneyFund Rs.2.82 lakhs, Sundaram Income Plus Rs. 3.58 lakhs, SundaramSelect Debt Rs.0.40 lakhs. A sum of Rs.0.20 lakhs has been paid to TVS& sons towards sale of units of Sundaram Money Fund.During the year ended March 31, 2003, Sundaram MutualFund has paid:An amount of Rs. 5.98 lakhs to Sundaram Finance Limited towardssale of units, Sundaram Growth Fund Rs.0.03 lakhs, Sundaram SelectFocus Rs.0.02 lakhs, Sundaram Tax Saver (open-ended ) Rs.0.03 lakhs,Sundaram Bond Saver Rs. 2.80 lakhs, Sundaram Income Plus Rs.1.75lakhs, Sundaram Money Fund Rs.0.91 lakhs, Sundaram Gilt FundRs.0.03 lakhs, Sundaram Select Debt Rs.0.41 lakhs.

During the year ended March 31, 2002, Sundaram MutualFund has paid:An amount of Rs. 31.47 lakhs to Sundaram Finance Securities Limitedtowards sale of units, Sundaram Growth Fund Rs.0.85 lakhs, SundaramBond Saver Rs. 26.41 lakhs, Sundaram Tax Saver (open-ended) Rs.0.26lakhs, Sundaram Money Fund Rs.1.54 lakhs, Sundaram Balanced FundRs.0.11 lakhs and Sundaram Gilt Fund Rs.2.30 lakhs.

During the year ended March 31, 2001, Sundaram MutualFund has paid:An amount of Rs.0.82 lakhs to Sundaram Finance Services Ltd towardsbrokerage for sale of units, Sundaram Growth Fund Rs.0.10 lakhs andSundaram Bond Saver Rs.0.72 lakhs, Rs. 33.99 lakhs to SundaramFinance Securities Limited towards brokerage for sale of units,Sundaram Growth Fund Rs.2.85 lakhs, Sundaram Bond Saver Rs.24.79lakhs, Sundaram Money Fund Rs.1.85 lakhs, Sundaram Balanced FundRs.3.77 lakhs and Sundaram Tax Saver (open-ended) Rs.0.73 lakhs.

Investments made in companies who have invested more

than five percent of the net asset value of the schemes of

Sundaram Mutual Fund as on 30th September 2003

(Rs. In Lakhs)

Company which Scheme in Schemes which Aggregate Holdings as at

have invested which companies have invested investments 30th Sept. 03

have invested more made for the at market

than 5% of the period under value

net assets Regulation 25(11)

Allahabad Bank SSD SFOCUS, MIDCAP 49.77 –

SMON SGF, SUNTAX,

TAX98, STAX, SUNBAL,

MIDCAP & SFOCUS 393.55 –

Bank of Baroda SMON &SSD SGF, SUNTAX, TAX98,

STAX, SUNBAL, MIDCAP

& SFOCUS 533.07 –

Britannia Industries SSD SGF, SUNTAX, TAX98,

STAX, SUNBAL % MIDCAP 133.36

Canara Bank SMON SGF, SUNTAX, TAX98,

STAX, SUNBAL, MIDCAP

& SFOCUS 1581.11 224.92

ITC SMON SGF, SUNTAX, TAX98,

STAX, SUNBAL, MIDCAP

& SFOCUS 676.81 236.81

Maruti Udyog SMON SGF, SUNTAX, TAX98,

STAX, SUNBAL, MIDCAP

& SFOCUS 648.08 405.04

Tata Chemicals SMON MIDCAP, 17.38 –

SUNIP & SUNBDS 1531.03* 1545.26*

Karur Vysya Bank SMON SGF, SUNTAX, TAX98, STAX,

SUNBAL, MIDCAP 88.09 –

TVS Motor Company SMON & SSD SUNGRO & MIDCAP 218.13 177.70

Union Bank of India SUNIP SGF, SUNTAX, TAX98,

STAX, SUNBAL, MIDCAP

& SFOCUS 416.72 –

Vijaya Bank SGF SGF, SUNTAX, TAX98, STAX,

SUNBAL & MIDCAP 256.86 –

Raymond SSD MIDCAP 26.45 –

Wipro SMON SGF, SUNTAX, TAX98, STAX,

SUNBAL, MIDCAP & SFOCUS 996.78 –

Finolex SSD SMON 2000 –

IDFC SMON, & SSD SBS 557.87 –

IDBI SMON SMON,SDEBT SUNIP,

SUNBDS 5904.36* 5748.29*

The investments were made keeping in view of the fundamentals and

long term prospects of the companies.

(3) Borrowing by the Mutual Fund

Sundaram Mutual Fund has not resorted to any borrowings till date.

However, this scheme shall have powers to borrow to meet temporary

liquidity needs for the purpose of repurchase, redemption of units or

payment of interest or dividend to the unit holders under the SEBI

Regulations. Further, as per SEBI Regulations, the Fund shall not

borrow more than 20% of the

25

Page 27: SUNDARAM MONTHLY INCOME PLAN

Net Assets of the respective schemes and the duration of such

borrowing shall not exceed a period of six months. The scheme under

such circumstances may borrow from any body corporate or a bank or

from any other person at the prevailing interest rates. The scheme may

decide to offer such collateral security as may be necessary under the

circumstances. This may result in a reduction in the overall portfolio

returns during the currency of the loan in case the cost of borrowing is

higher than the portfolio rate of return.

(4) Inter scheme Transfers

The transfer of investments from one scheme to another scheme of

the mutual fund will be done on the basis of prevailing market prices

for traded securities on spot basis. In case of security is not traded, the

transfer will be effected on fair valuation basis to be arrived by the

AMC. Such transfers, if made would be done in conformity with the

objectives of the schemes and sebi regulations

(5) Inter scheme Investments

This scheme may invest in any other scheme having similar investment

objective under the same Asset Management Company or any other

mutual fund without charging any fees, provided that the aggregate

inter-scheme investments made by all schemes under the same

management or in schemes under the management of any other Asset

Management Company shall not exceed 5% of the Net Asset Value of

the investing Mutual Fund. Such investments shall be made from time

to time on the merits of the proposal.

As and when any changes are made to SEBI regulations with respect

to the aforesaid percentage or charging of fees with respect to such

inter scheme investments, the same will apply.

(6) Investment by the AMC

The AMC may invest in this scheme depending upon its cash flows and

investment opportunities. In such an event, the AMC will not charge

management fees on its investment amount for the period the

investment amount is retained in this scheme.

The investment by the AMC shall not exceed 50% of the net assets of

the scheme on the date of investment or 50% of the paid-up capital

and reserves of the AMC, whichever is higher.

As on 30.09.2003, the AMC has investments amounting to Rs.67.00

lakhs in Sundaram Bond Saver, Sundaram Money Fund Rs. 40.12 lakhs,

Sundaram Dynamic Asset Plan Rs. 140 lakhs, Sundaram Growth Fund

Rs. 5.00 lakhs, Sundaram Select Midcap Rs. 5.00 lakhs and Sundaram

select Focus Rs. 5.00 lakhs.

(7) Dividends and Distributions

The Board of Trustees may, monthly, quarterly, semi-annually or at such

other intervals, decides and declares a dividend. However, it must be

distinctly understood that the actual declaration of dividends under the

scheme and the frequency thereof will, interalia, depend upon the

disposable surplus of the scheme. The decision of the Board of Trustees

in this regard shall be final.

The dividend that may be paid out of the net surplus of the scheme will

be paid only to those unit holders whose names appear in the register

of unit holders on the notified record date.

(8) Penalties & Pending Litigations:1. No penalties have been awarded by SEBI under the SEBI Act or any

of its Regulations against the sponsor of the Mutual Fund or any

company associated with the sponsor in any capacity including the

Asset Management Company, Trustees or any of the directors or

any key personnel (specifically the fund managers) of the Asset

Management Company and Trustees. No penalties have been

awarded on the Sponsor and its associates by any financial

regulatory body, including stock exchanges, for defaults in respect

of shareholders, debenture holders and depositors. No penalties

have been awarded for any economic offence and violation of any

securities laws.

2. There are no pending material litigation proceedings incidental to

the business of the Mutual Fund to which the sponsor of the Mutual

Fund or any company associated with the sponsor in any capacity

including the Asset Management Company, Trustees or any of the

directors or key personnel of the AMC is a party. Further, there are

no pending criminal cases against the Sponsor or any company

associated with the sponsor in any capacity including the Asset

Management Company, Trustees or any of the directors or key

personnel.

3. There is no deficiency in the systems and operations of the sponsor

of the Mutual Fund or any company associated with the sponsor in

any capacity, including the Asset Management Company which

SEBI has specifically advised to be disclosed in the Offer Document,

or which has been notified by any other regulatory agency.

4. There are no enquiries/ adjudication proceedings under the SEBI

Act and the Regulations made thereunder, which are in progress

against any company associated with the sponsor in any capacity

including the Asset Management Company, Trustees or any

directors or key personnel of the Asset Management Company.

(9) Documents available for InspectionThe following documents are available for inspection to the unit

holders at the Corporate Office of Sundaram Asset Management

Company Limited at Chennai:

• Trust Deed of Sundaram Mutual Fund

• Copy of the Registration Certificate

• Investment Management Agreement

• Memorandum and Articles of Association ofSundaram Asset

Management Company Limited

• Custodian Agreement

• Letter of Appointment of the Registrar

• SEBI (Mutual Funds) Regulations, 1996

• Indian Trusts Act, 1882

• The Companies Act, 1956

(10) APPROVAL BY THE BOARD OF TRUSTEESThe original Offer Document was approved by the Board of Trustees of

Sundaram Mutual Fund at their meeting held on 26th April 2003.

Notwithstanding anything contained in the offer document the

provisions of the SEBI (Mutual Funds) Regulations, 1996 and the

Guidelines thereunder shall be applicable."

For and on behalf of the Board of Directors of

SUNDARAM ASSET MANAGEMENT COMPANY LIMITED

T P RAMANPlace : Chennai Managing Director

Date : 27-11-2003

26

Page 28: SUNDARAM MONTHLY INCOME PLAN

Ahmedabad402-406, 4th Floor, Devpath Building, Off CG Road, Behind LalBungalow, Ellis Bridge. Pin-380 006.

BangaloreNo 8 Kempe Gowda Road , 2nd Floor, Mahaveer Shopping Complex,Above Kids Kemp. Pin-560009.

Bhubaneswar101/7, Janpath, Unit - III. Pin-751 001.

ChandigarhSCO No. 9-40, Navroop Building, Basement, Sector 17C. Pin-160 017.

ChennaiGround Floor, A & B. Lakshmi Bhawan, 609, Anna Salai.Pin-600 006.

Coimbatore462-A, Venkatasamy Road, New Sidhapudur Road. Pin-641 004.

IndoreDalal Chambers, 101, Sagamatha Apartments, 1st Floor, 18/7, MGRoad. Pin 452 003.

JaipurA-6, Sardar Patel Marg, C-Scheme, Opp. Bank of Raj H.O. Pin-502 001.

Jam NagarSources & Solutions Consultancy, "Aparna" Building, Behind JeevanDeep Hospital, Indira Marg, Pin - 361001

KanpurG-27,28, Ground Floor, City Centre, 63/2, The Mall. Pin-208 001.

Kochi41/1617. Rock Hill, 1st Floor, Banerji Road (North). Pin-682 018.

Kolkata53/A, Rafi Ahmed Kidwai Road. Pin-700 016.

LucknowNo.3, 1st Floor Saran Chambers 1, t, Park Road. Pin-226 001.

LudhianaShop No.20-21 (Ground Floor), Prince Market, Near Traffic Lights,Sarabha Nagar, Pulli, Pakhowal Road, PO. Model Town. Pin-141 002.

MaduraiM/s. Ganga Enterprises No.56, Naicker New Street, Pin - 625 001

Mangalore6, 1st Floor, West Gate Terminus, Falnir Road, Opp. Unity HealthComplex, Highlands. Pin-575 002.

MumbaiApollo House, 82/84, Apollo Street, Mumbai Samachar Marg, Fort. Pin-400 023.•Shoppers Point, Shop No 9 Gr Floor, S V Road, Andheri (w), Pin -400058

Nagpur145, Lendra Park, Behind Shabari, New Ramdaspeth. Pin-440 010.

New Delhi 14 & 15. Arunachal (Upper Ground Floor), 19, Barakhamba Road. Pin-110 001.

PanajiNo.15, Diamond Chambers, 1st Floor, 18th June Road. Pin-403 001.

PuneKalpataru Plaza, Office No. B–314, 3rd floor, 224, Bhawani Peth. Pin-411 042.

RajkotGurukrupa Sales Agencies, 111, Pooja Complex, Harihar Chowk, Near GPO, Pin - 360001

Salem 28, I Floor Advytha Ashram Road Pin - 636 004

Secunderabad1-7-293/2/1 to 5/A, Behind Bank of India Building, Paradise, M G Road.Pin-500 003.

Surat111, Orion House, 1st Floor, (Behind Resham Bhawan), Lal Darwaja.Pin-395 003.

VadodaraG–10, Paradise Complex, Sayagunj. Pin-390 005.

Vijayawada40-1-48/2, Bandar Road, Adj. To HDFC Bank, Pin - 520010

Visakhapatnam47/9/17, 1st Floor, 3rd Lane, Dwaraka Nagar. Pin-530 016.

Account Information 1600 – 33 – 4449 NAV Dividend Enquiry 1901 – 44 – 1234

27

ADDRESSES OF CAMS INVESTOR SERVICE CENTRES

Page 29: SUNDARAM MONTHLY INCOME PLAN

Second Floor, 46 Whites Road,Chennai - 600 014Ph : (044) 28583362, 28583367, 28585606

Sundaram Monthly Income Plan

SERIAL No. MIPAcknowledgement

Received From Mr./Mrs./Ms. .....................................................................................................................................................

Address .....................................................................................................................................................................................

..................................................................................................................................................................................................

Signature & Stamp of collection centre

All future communication in connection with the application should be addressed to the Registrar Computer Age Management Services (P) Ltd., ‘Rayala Towers’ First Floor, 781-785 Anna Salai, Chennai - 600 002. Tel: (044) 28521596, 28520516 quoting full name of Sole/First applicant, Application Serial No., Date, Name of the Bank and Branch or Centre where it was lodged.

Cheques/Drafts are subject to realisation

Sundaram Monthly Income Plan

BROKER/AGENT NAME & CODE SUB-BROKER’S NAME & CODE COLLECTING CENTRE

STAMP & SIGN

DATE & TIME OF RECEIPT REGISTRAR’S SERIAL NO.

1. Existing Unit holder

a. Are you making a purchase into an existing folio? (Please ✓) ■■ Yes ■■ No. Folio Number (If yes, Please note that investment details and mode of holding will be as per existing folio number.)

b. Do you wish to receive a consolidated account statement? (Please ✓) ■■ Yes ■■ No.

Which folio number do you wish to consolidate under ? Folio Number(Only folios where the signatories appear in the same order may be consolidated)

SERIAL No. MIP

2. Unit holder Information

(as it appears in your bank account)a. Full Name of First Applicant

PAN / GIR No. Date of Birth

Father / Husband ‘s Full Name

Full Name of Second Applicant

Full Name of Third Applicant

Full Name of Guardian (in case of minor)

b. Mode of Holding ■■ Single ■■ Joint ■■ Anyone or Survivor

c. Mailing Address

Pin Code

Location City State Country

d. Contact Particulars Tel : Office Fax

Residence E-mail

e. Are you applying as i) ■■ Resident ■■ NRI

ii) ■■ Individual ■■ Partnership ■■ Public Ltd. Co. ■■ On behalf of Minor ■■ HUF

■■ Proprietorship ■■ Trust ■■ Pvt. Ltd. Co. ■■ Society ■■ Others _______________________

f. Nomination Please request for nomination form, if necessary ■■ Yes

g. Do you want a PIN assigned to you? (This PIN will allow you access to your account via the internet) ■■ Yes ■■ No

D D M M Y Y Y Y

Page 30: SUNDARAM MONTHLY INCOME PLAN

SIGNATURES

1st Applicant ____________________________________________________________

2nd Applicant ___________________________________________________________

3rd Applicant ____________________________________________________________

Sundaram Monthly Income PlanSMIP

Amount DD Charges Net Amount Chq/DD No. Date Bank & Branch

Net Amount

In words..........................................................................................................................................................................

Investment Plan (please ✓)

■■ Growth ■■ Div. Payout ■■ Div. Re-investmentDividend Periodicity (please ✓)

■■ Monthly ■■ Quarterly ■■ Half-yearly

Scheme Name

Cheque / DD No.

Date

Amount in Rupees

Drawn on (Nameof Bank and Branch)

If you do not indicate an investment option, the default option will be applicable. Please issue a separate Cheque/Demand Draft for each investment.

5. Investments Opted for

Instructions

6. Declaration and SignaturesThe Trustees

Sundaram Mutual Fund

Having read and understood the contents of the Offer Document(s) of the scheme(s), I/wehereby apply for units of Sundaram Monthly Income Plan as indicated in Section 5 above andagree to abide by the terms, conditions, rules and regulations of the scheme(s). I/We havenot received nor been induced by any rebate or gifts, directly or indirectly in making thisinvestment.

SERIAL No. MIP

Sundaram Mutual Fund will endeavour to use Warrant/Draft or Direct Credit payment of dividend/redemption but retains the right to use any other mode of payment as deemed appropriate.You may select either Direct Credit option for receiving dividends/redemption in your bank account or warrants. Please read Instructions (section 4) below.

■■ Direct Credit ■■ Warrant/Draft

Direct Credit of Dividend and Redemption : If you have an account in any of the following banks you can opt for direct credit of dividend and redemption to your bank account.I authorise Sundaram Mutual Fund to credit my dividends/redemption amount to my account maintained with the following Bank (Please ✔ )

■■ ABN Amro Bank ■■ ICICI Bank ■■ HDFC Bank ■■ Standard Chartered Bank ■■ IDBI Bank

Please write the application Serial Number on the reverse of the Cheque/Demand Draft. All communication and payments will be made to the first applicant or to the Karta in case of HUF.

Name of Your Bank Branch

Your Account No.

Bank Address

Account Type ■■ Current ■■ Savings ■■ Cash Credit ■■ NRE ■■ NRO

4. Bank Account Details Please note it is mandatory as per SEBI regulations for all investors to provide bank account details

3. Payment of Dividends and Redemption

Please read the offer document carefully before filling in the application form.Applicants are deemed to have understood the terms subject to which this offer isbeing made, by filling and signing this application form.SECTION - 1In section 1b of this form, you may indicate a folio number under which you wouldlike to consolidate your investments under different schemes of Sundaram MutualFund. Please note that Sundaram Mutual Fund can only consolidate these folios wherethe signature(s) appear in the same order as the signature(s) in the folio under whichyou are consolidating.SECTION - 2All new applicants must complete section 2. Name and address must be given in full. Applicants’ PAN/GIR number must be provided if the amount invested is overRs.1,00,000. We advise all applicants to provide this number irrespective of theapplication amount.All communication and payments will be made to the first applicant or to the Karta incase of HUF.Applicants who have checked the mode of holding as “Single” in section 2(b) maynominate a successor to receive units upon his/her death.Where the mode of holding in section 2(b) has been specified as “Joint” the first namedholder shall receive all Account Statements, Dividend/Redemption/refund warrantsand any other correspondence sent from time to time.In case of an application under a Power of Attorney or by a limited company or a bodycorporate or a registered society or a trust or a partnership, the relevant Power ofAttorney or the relevant resolution or authority to make the application and the TrustDeed or the Partnership Deed as the case may be, or duly certified copy thereof, alongwith the Memorandum and Articles of Association and/or bye-laws must be lodgedalong with the Application Form or at the Registrar’s office in Chennai within sevendays from the date of application, quoting the details of the application. SoleProprietory firms may submit a completed nomination form to enable transmission ofunits in the event of death of the sole Proprietor. In case of HUF, a list of all co-parceners together with their dates of birth and specimen signatures must be lodgedat the Registrar’s office within seven days.

Applicants who request a Personal Identification Number (PIN) by ticking the box insection 2(g) will be sent a PIN agreement which will be mailed separately. This PINallows you to access your account information via the internet.SECTION - 3Please tick the box if you would like to receive your dividend amount and/orredemption payment under the following mode.• Direct Credit to your bank account with select banks.• Warrants/Drafts (The warrants/drafts will be payable only at cities where SundaramMutual Customer Service Centres are located).SECTION - 4In order to protect the interest of the investors from fraudulent encashment ofrefund/redemption cheque, the current SEBI guidelines require that refundorders/redemption cheques specify the name of the investor, bank name and accountnumber where the cheque is intended to be credited. Hence, investors are advised intheir interest to provide the name of the Bank, Branch address, account type andaccount number for remittance of redemption amount. The Trustees/InvestmentManager will not be responsible for any loss arising out of fraudulent encashment ofcheques or delay/loss in transit.SECTION - 5Please note that if you do not tick the investment plan/type box (i.e. growth plan ordividend plan) of the relevant scheme in Section 5 then the Mutual Fund will buy youinto the default option of the scheme - monthly dividend payout.Mode of Payment : The cheque/bank draft should be drawn in favour of the schemeyou are investing in and crossed “a/c payee only”. For example, if you are investing inSundaram Monthly Income Plan the cheque or DD must be made payable to“Sundaram Monthly Income Plan”.SECTION - 6Signature should be in English or in any Indian language. Thumb impressions must beattested by a Magistrate/Notary Public under his/her official seal. In case of HUF theKarta should sign on behalf of the HUF.

Page 31: SUNDARAM MONTHLY INCOME PLAN
Page 32: SUNDARAM MONTHLY INCOME PLAN

DIRECTORY SUNDARAM MUTUAL - BRANCH ADDRESSES

No.104, Arth Complex, Behind A.K. Patel House, Mithakhali Six Road, Navarangpura,

Ahmedabad - 380 009. Ph:079-8013337/8013338

1st Floor, 'Maangalaya Punarbhav', 132, Brigade Road, (Next to Raheja Chancery),

Bangalore - 560 025. Ph : 080 - 2076706 / 2076707

2nd Floor, 46, Whites Road,Chennai - 600 014. Ph : 044 - 28583362 / 67, 28569900.

The Monarch, 1st Floor, P.T.Usha Road, Ernakulam,Cochin - 682 011. Ph : 0484-2371988, 2374834.

41A, 1st Floor, West Lokamanya Street, R.S. Puram, Coimbatore - 641 002. Ph : 0422 - 2542816.

2nd Floor, Flat No.03, Majestic Heights, (V.V. Boulevard), Raj Bhavan Road (Food World Bldg.), Adj. Secunderabad TVS Motors, Somajiguda,

Hyderabad - 500 082. Ph : 040 - 23393669/23390815.

Constantia, 4th Floor, 11, U.N.Brahmachari Sarani,Kolkata - 700 017.

Ph : 033 - 22816707/22801283 / 22805567/22873504

279, Goodshed Street, Madurai - 625 001. Ph : 0452 - 5377478

95, 9th Floor, Maker Chambers III, Plot No.223, Nariman Point,Mumbai - 400 021.

Ph : 022 - 022 22842832 / 22842878 / 22842879 / 22833863

605, 6th Floor, Ashoka Estate, 24, Barakhambha Road,New Delhi - 110 001. Ph : 011 - 23730246 / 51515138/39.

1st Floor, Mantri, Vertex Law College Road, (Opp. Nirmiti),Pune - 411 004. Ph : 020 - 5450006 / 5456976

C/o. Sundaram Finance Ltd., “Centre Point”, 2nd Floor, 95, Bharathi Dasan Salai, Cantonment,

Trichy - 620 001. Ph : 0431 - 2761847/2414904

D.No.40-1-129, Chandramoulipuram, (Near Benz Circle),M.G.Road,

Vijayawada - 520 010. Ph : 0866 - 2470778/2476018

2nd Floor, 48-19-2 Station Road, Dwaraka Nagar,Visakhapatnam - 530 016 . Ph : 0891-754505 / 754695

SPONSOR

Sundaram Finance Limited, 21, Pattulos Road, Chennai - 600 002

Telephone : (044) 28521181 Fax : (044) 28520456

INVESTMENT MANAGER

Sundaram Asset Management Company Limited

Registered Office : 21, Pattulos Road, Chennai-600 002

Corporate Office : 46, Whites Road, Royapettah, Chennai - 600 014

Telephone : (044) 28583362, 28583367 Fax : (044) 28583156

REGISTRAR

Computer Age Management Services (P) Limited

A&B Lakshmi Bhavan, 609 Anna Salai, Chennai - 600006.

Telephone : (044) 28293292/28295402/28295163/28291549

Fax : (044) 28295403 Telefax : 0451-5181 CAMS IN

AUDITORS OF SUNDARAM MUTUAL FUND

M/s Sundaram & Srinivasan, Chartered Accountants

23, C.P. Ramaswamy Road, Alwarpet, Chennai - 600018.

Telephone : (044) 24970762.

TRUSTEES

Sundaram Mutual Fund

Registered Office : 21, Pattulos Rd,Chennai - 600 002

Corporate Office : 46, Whites Rd, Royapettah, Chennai - 600 014

Telephone : (044) 28583362/3367 Fax : (044) 28583156

INVESTOR RELATIONS MANAGER

Ms. G. Padma

Sundaram Asset Management Company Limited

Registered Office : 21 Pattulos Road, Chennai - 600 002

Corporate Office : 46, Whites Road, Royapettah, Chennai - 600 014

Telephone : (044) 28583362, 28583367. Fax : (044) 28583156

CUSTODIAN

Standard Chartered Bank

Phoenix Centre, Phoenix Mills Compound Senapati Bapat Marg,

Lower Parel, Mumbai - 400 013. Tel : (022) 24918586, 24919444.

Fax : (022) 24918592/3

AUDITORS OF

SUNDARAM ASSET MANAGEMENT COMPANY LIMITED

M/s. Brahmayya & Co., Chartered Accountants

156, Thambu Chetty Street, Chennai - 600001.

Telephone : (044) 25341743.