SUNDARAM MONTHLY INCOME PLAN - Kotak Mahindra Bank

SUNDARAM MONTHLY INCOME PLAN

An Open Ended Fund. Monthly Income is not assured

and is subject to the availability of distributable suplus

ISSUE DETAILS Initial issue opens on

03-12-2003 Initial issue closes on

23-12-2003 Issue re-opens on

12-01-2004

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

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.

24 HOUR NAV RESPONSE SYSTEM: (044) 28585607

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.

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.

? 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.

? 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.

? The scheme shall not be regarded as a deposit with a bank/ Place: Chennai

company

Date:27-11-2003

1

T P Raman Managing Director

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 Repurchase Price Fractional units Usage of Load Listing Transfer Switching Suspension of Sale/Repurchase of units Nomination Facilities OPTIONS AND INVESTMENT PLANS OFFERED UNDER THE SCHEME Dividend Option Shut?out period Growth Option Diviedend Reinvestment Systematic Investmatic Plan Systematic Withdrawal Plan PART IV LOAD STRUCTURE EXPENSES Initial Issue Expenses Annual Recurring Expenses of the past Schemes CONDENSED FINANCIAL INFORMATION PART V UNIT HOLDERS RIGHTS AND SERVICES Investor Services Information about the Scheme Account Statements NAV Information Disclosure of Information under the Regulations Rights of unit holders of the Scheme Procedure and manner of obtaining investors approval in Specified circumstances. Duration of the scheme Procedure and Manner of Winding-up TAX BENEFITS OF INVESTING IN A MUTUAL FUND To the fund To the Investor Tax deduction at source Loss arising from redemption Wealth Tax/Gift Tax PART VI OTHER MATTERS Investment in group companies Unit holder Grievances Redressal Mechanism Associate Transaction 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 Borrowing by the Mutual Fund Inter Scheme Transfers Inter Scheme Investments Investment by the AMC Dividends and Distributions Penalties and Pending Litigations Documents available for Inspection Approval by Board of Trustees

14 14 14 15 15 15 15 15 16 16 16 16 16 16 16 17 17?22 17 17 17 17?19 19?22 22?24 22 22 22 22 22 22 22

23 23 23 23 23 23 24 24 24 24?26 24 24 24 24

25 25 26 26 26 26 26 26 26

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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 by the Trustees.

Mutual Fund

Sundaram Mutual Fund, a trust set up under the provisions of the Indian Trusts Act, 1882 and registered with 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 as

may 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 for investment.

Scheme

Sundaram Monthly Income Plan, an open-ended income scheme with no assured return, the units of which is 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 Bombay Stock Exchange is closed (3) a day on which there is no RBI Clearing/settlement of securities (4) a day on which the sale and repurchase of units are suspended by the Trustees. (5) A day on which RBI/Banks are closed at Chennai/ Mumbai.

PART I

1) SCHEME SUMMARY

Name of the scheme Structure Offer Price or Sale Price Scheme Objective

Application Amount Initial Issue expenses Transparency

Load

Sundaram Monthly Income Plan

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

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

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

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

The initial issue expenses would be borne by the AMC.

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

Entry Load - Nil

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

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2) CONSTITUTION OF THE MUTUAL FUND

Sponsor

Sundaram Mutual Fund has been sponsored by Sundaram Finance Limited (SF). SF is India's leading Non-Banking Finance Company having 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 covering over 3,95,000 accounts and an uninterrupted dividend track record since inception. The public deposit schemes of SF enjoy the prestigious `FAA+' (F double A+) rating from CRISIL and the prestigious MAAA (M triple A) rating from ICRA signifying the highest degree of safety of depositors' funds. Its Commercial Paper has been rated P1+.

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

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

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

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

To carry on the business of Insurance Brokers of all kinds of Insurable perils including of Life, Medical and other general insurance and such other business as may be allowed from time to time for the Insurance Brokers under the rules of Insurance Regulatory Development Authority

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

Financial performance of the Sponsor for the last three financial years

Description

Year ended 31st March (Rs in crores)

2002-2003 2001-2002 2000-2001

Turnover / Total Income

476.07

467.64

532.55

Profit After Tax

45.66

40.36

70.54

Equity Capital

(FV Rs 10/- each)

24.00

24.00

24.00

Free Reserves

462.57

411.67

477.33

Net worth

486.57

435.67

501.33

Earnings per share (Rs)

19.03

16.82

29.39

Book value per share (Rs)

202.74

181.53

208.89

Percentage 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 accordance with the provisions of the Indian Trusts Act, 1882 and the Trust Deed dated August 24, 1996 has been duly registered with the Sub-registrar, Chennai under Serial Number 356 of 1996. The Mutual Fund has been registered with the Securities and Exchange Board of India (SEBI) vide Registration Number MF/034/97/2 dated January 3, 1997.

Board of Trustees of Sundaram Mutual Fund

Name, Address

Principal Occupation

Dr Raja Jesudoss Chelliah, Chairman (Independent Trustee) 2-A, Block 2, Magnolia Park Apartments 5, Furlong Road, Guindy Chennai - 600 032

Chairman Madras School of Economics, Chennai

Director ICRA Limited Indbank Merchant Banking Services Limited Modi Corp (Pvt) Limited

Sri K V Ramanathan,IAS (Retired) Chairman

(Independent Trustee)

The Synergy Mortgage Loan Co Ltd.,

Rohini, # 9 Second Seaward Road

Valmiki Nagar, Thiruvanmiyur,

Chennai ? 600 041

Sri S Viji New No.71, Old No.33, Poes Garden, Chennai ? 600 086

Chairman Sundaram Home Finance Ltd TVS Lean Logistics Ltd.

Vice Chairman Sundaram Finance Limited

Joint Managing Director Brakes India Limited

Director India Motor Parts and Accessories Ltd. Sundaram Dynacast Limited Sundaram Industries Limited TV Sundram Iyengar & Sons Limited Wheels India Limited Royal Sundaram Alliance Insurance Company Ltd

Sri G K Raman No 10, 12th Cross Street, Indira Nagar, Chennai- 600020

Chairman Royal Sundaram Alliance Insurance Company Ltd

Whole Time Director Sundaram Finance Limited

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

Sri R Rajamani (Independent Trustee) 8-2-585/A/1, Road No.9 Banjara Hills Hyderabad 500 034

Director ICICI Ventures ICICI Knowledge Park, Hyderabad

Sri. K. V. Krishnamurthy (Independent Trustee) 174 Kalpataru Residency, Tower `A' 107 Road No.8, SION (East) Mumbai 400 022.

Director Dhanalakshmi Bank Ltd. Assets Reconstruction Company of India Ltd.

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 have appointed Sundaram Asset Management Company Limited as the Investment Manager for Sundaram Mutual Fund and have to ensure that the AMC fulfills the functions assigned from time to time subject to the Trust Deed, SEBI regulations and other laws in force.

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

? In carrying out his responsibilities a member of the Board of Trustees shall maintain arms length relationship with other companies or institutions or financial intermediaries or any body corporate with which he may be associated.

? No Trustee shall participate in the meetings of the Board of Trustees when decisions for investments in which he may be interested are taken.

? Each Trustee shall furnish to the Board of Trustees, particulars of interest which he may have in any other company, or institution or financial intermediary or any corporate by virtue of his position as director, partner or with which he may be associated in any other capacity.

? Each Trustee shall file the details of his transactions of dealing in securities with the Mutual Fund on a quarterly basis.

? The Trustees shall have the right to obtain from the Asset Management Company such information as is considered necessary.

? The Trustees shall ensure that the transactions entered into by the Asset Management Company are in accordance with the SEBI Regulations and the scheme.

? The Trustees shall ensure that the Asset Management Company has been managing the schemes independently of other activities and

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