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

Updated Offer Documentcum Application FormINITIAL ISSUE OPENED ON : March 2, 2000INITIAL ISSUE CLOSED ON : March 6, 2000SCHEME REOPENED ON : March 8, 2000

(Offer of units at NAV based prices)

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

TRUSTEESSundaram Finance Trustee CompanyLimited46, Whites RoadRoyapettahChennai 600014Phone : (044) 28583362/28583367Fax : (044) 28583156

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

The particulars of SUNDARAM MONEY FUND (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 offered for publicsubscription under the Scheme have neither been approved nor disapproved by theSecurities and Exchange Board of India (SEBI) nor has SEBI certified the accuracy oradequacy of the Offer Document. This offer document sets forth concisely theinformation about the Scheme that a prospective investor ought to know before investing.The Offer Document should be read in its entirety before making an application for theUnits and should be retained for future reference. Investors may note that this OfferDocument remains effective until a material change occurs (other than a change infundamental attributes and within the purview of the Offer Document) and thereafter thechanges shall be filed with SEBI and circulated to the Unitholders along with the half-yearly reports.

Important Notice

Investing in mutual fund schemes involves certain risks and considerations associatedgenerally with making investments in securities. The value of the Scheme’s investmentsmay be affected generally by factors affecting capital markets, such as price and volume,volatility in the capital markets, interest rates, currency exchange rates, changes inregulatory and administrative policies of the Government or any other appropriateauthority (including tax laws), or other political and economic developments.Consequently, there can be no assurance that the Scheme offered in this document, willachieve the stated objectives. The NAV of the Units issued under the Scheme can go up

or go down depending on the factors and forces affecting the capital market. Pastperformance of the sponsor/AMC/Mutual Fund does not indicate the future performancesof the schemes of the Mutual Fund.

Prospective investors are advised to review this document carefully and in its entirety andconsult with their legal, tax and financial advisors to determine possible legal, tax andfinancial or any other consequences of subscribing to, purchasing or holding Units underthis Scheme, before making an application to purchase or hold the Units.

Sundaram Mutual Fund (the Mutual Fund) and Sundaram Asset Management Company(the AMC) have not authorized any person to give any information or make anyrepresentations, either oral or written, not stated in this document in connection withissue of Units under this Scheme. Prospective investors are advised not to rely upon anyinformation or representations not incorporated in this document, as the same have notbeen authorized by the Mutual Fund or the AMC. Any subscription, purchase, or salemade by any person based on the statements or representations that are not contained inthis document 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 date of thisdocument from the Mutual Fund/it’s Investor Service Centres/distributors or brokers.

The offer document has been amended upto 30.06.2004. Investors may also ascertainabout further changes after the date of the offer document from the mutual fund / its servicecentres / distributors or brokers

Sundaram Money FundAn Open-Ended Liquid Scheme

Highlights

• A Mutual Fund sponsored by Sundaram Finance Limited.

• An open ended liquid scheme with an objective of providinga level of income consistent with the preservation of capital,liquidity and lower level of risk, through investments madeprimarily in money market and debt securities.

• Minimum application amount Rs.50,000 and in multiples ofRs.1/- thereafter for dividend re-investment option, andRs.10,000 and in multiples of Rs.1/- thereafter for growthOption.

• High Liquidity: Being an open-ended scheme, units may bepurchased or redeemed at NAV related price on all workingdays.

• Half yearly disclosure of established portfolio.

• Under the dividend re-investment option, the investor canchoose any of the daily, weekly, fortnightly, monthly orquarterly dividend reinvestment option.

• Dividend income from the Units of the Scheme is exempt,under Section 10(35) of the Income Tax Act, 1961 in thehands of the Investor. However, the Scheme would be liableto pay distribution tax at applicable rates.

Risk Factors

• Mutual Funds and securities investments are subject tomarket risks and there is no assurance or guarantee that theobjectives of the Scheme will be achieved.

• As with any investment in securities, the NAV of the Unitsissued under this Scheme can go up or down depending onthe factors and forces affecting the capital markets.

• Past performance of the Sponsor, AMC/Fund does notindicate the future performance of the Schemes of the Fund.

• The Sponsor is not responsible or liable for any loss resultingfrom the operation of the schemes beyond Rs. 1 lakhcontributed by it towards setting up of the Mutual Fund.

• SUNDARAM MONEY FUND is the name of the Scheme anddoes not in any manner indicate either the quality of theScheme or its future prospects and returns.

• As per SEBI circular dated December 12, 2003 refSEBI/IMD/CIR No. 10/22701/03, each scheme and individualplan(s) under the schemes should have a minimum of 20investors and no single investor should account for more than25% of the corpus of such scheme/plan(s). In case of non-fulfilment with either of the above two conditions in a threemonths time period or the end of succeeding calendarquarter, whichever is earlier, from the close of the InitialPublic Offering (IPO) of open ended schemes or on anongoing basis for each calendar quarter, the schemes/plansshall be wound up by following the guidelines prescribed bySEBI and the investor’s money would be redeemed atapplicable NAV.

Scheme Specific Risk Factors

• The NAV of this Scheme may be affected by settlement

periods and transfer procedures.

• Trading volumes may restrict the liquidity of the schemes’

investments.

• Investors in the Scheme are not being offered any guaranteed

returns.

• Sundaram Money Fund is not a Money Market Scheme.

• Changes in the prevailing rates of interest is likely to affect the

value of the scheme’s holdings and consequently the value of

the scheme’s Units. Increased rates of interest, which

frequently accompany inflation and /or a growing economy,

are likely to have a negative effect on the value of the Units.

The value of debt securities held by the scheme generally will

vary inversely with the changes in prevailing interest rates.

• Debt securities are also subject to the risk of an issuer‘s

inability to meet principal and interest payments and interest

payments on the obligations (credit risk) and may also be

subject to price volatility due to such factors as interest

sensitivity, market perception or the creditworthiness of the

issuer and general market liquidity (market risk). While it is

the intent of the fund manager to invest primarily in high

rated debt securities, the scheme may from time to time invest

in higher yielding, low rated securities. As a result, an

investment in the scheme may be accompanied by a higher

degree of risk relative to an investment consisting exclusively

of high rated, lower yielding securities.

• For risk factors and risk control please refer Page No. 11

SUNDARAM MONEY FUND

Certificate of Due Diligence

It is confirmed that:

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.

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.

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.

The intermediaries named in the offer document are registered

with SEBI and till date such registration is valid.

Place: Chennai T P Raman

Date: 26-07-04 Managing Director

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TABLE OF CONTENTS PAGE NO.

Sundaram India Leadership Fund (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 8

Auditors to the Scheme 8

REGISTRAR 8

CUSTODIAN 8

PART II 8–15

INVESTMENT OBJECTIVES AND POLICIES 8

Fundamental Attributes of the Scheme 8

Asset Allocation and Risk Profile 8

Investment Strategy and Risk Control 10

Investment Procedure 10

Benchmark Index 10

Risk Control 11

Portfolio Turnover 12

Investment Limitations 12

Valuation of Assets and NAV 12

CALCULATION OF NET ASSET VALUE 15

NAV INFORMATION 15

ACCOUNTING POLICIES AND STANDARDS 15

PART III 16–19

UNITS AND OFFER 16

Offer of units 16

Minimum Investment 16

Who Can Invest 16

How to apply during Initial Public Offer 17

Subscription to the units of the Scheme – Ongoing Basis 17

Mode of Payment 17

Repurchase of units 17

TABLE OF CONTENTS PAGE NO.

Mode of payment of redemption/dividend 17

Repurchase Price 17

Fractional units 18

Listing 18

Transfer 18

Transmission of Units 18

Switching 18

Suspension of Sale/Repurchase of units 18

Nomination Facilities 18

OPTIONS AND INVESTMENT PLANS OFFERED UNDER THE SCHEME 18

Appreciatio Option 19

Diviedend Reinvestment 19

PART IV 20-20

LOAD STRUCTURE 20

EXPENSES 20

Initial Issue Expenses 20

Annual Recurring Expenses 20

Initial Issue Expenses of the latest Scheme launched 20

CONDENSED FINANCIAL INFORMATION 21-22

PART V 22-24

INVESTORS RIGHTS AND SERVICES 22

Investor Services 22

Information about the Scheme 23

Account Statements 23

NAV Information 23

Disclosure of Information under the Regulations 23

Rights of Unitholders of the Scheme 23

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 24

To the fund 24

To the Investor 24

Dividend 24

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

Investors Grievances Redressal Mechanism 23

Associate Transaction 24

List of companies who held more than 5% of the NAV

of the schemes of Sundaram Mutual Fund in the said companies 25

Borrowing by the Mutual Fund 26

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

DEFINITIONS

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

Asset Management Sundaram Asset Management Company Limited, a company incorporated under the Companies Act, 1956 andregistered with SEBI to act as the AMC for the schemes of Sundaram Mutual Fund.

Applicable NAV The net asset value applicable for purchases/redemptions /switches etc. based on the working day and relevantcut off time on which application is accepted at investor services centres.

Custodian Standard Chartered Bank, acting as Custodian to the Scheme, or any other custodian approved by the Trustees.

Mutual Fund Sundaram Mutual Fund, a trust set up under the provisions of the Indian Trusts Act, 1882 and registered withSEBI 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 maybe prescribed by SEBI Regulations from time to time.

Offer Document This document issued by Sundaram Mutual Fund offering units of SUNDARAM MONEY FUND for investment.

Scheme SUNDARAM MONEY FUND, an open-ended liquid scheme, the units of which are offered for subscriptionunder this offer document.

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.

Trustee Sundaram Finance Trustee Company Ltd., a company incorporated under the Companies Act, 1956 andappointed as Trustee of Sundaram Mutual Fund vide the amended Trust Deed dated March 22, 2004.

Unit The interest of the investors of the Scheme which consists of each unit representing one undivided share in theNet Assets of the Scheme.

Unitholder A holder of Units in the Scheme offered under this Offer Document.

Working Day A day other than: (1) Saturday or Sunday; (2) a day on which the National Stock Exchange or the Stock Exchange,Mumbai is closed; (3) a day on which there is no Reserve Bank of India clearing/ settlement of securities; (4) aholiday under the Negotiable Instruments Act, 1881 for banks in Chennai (5) a day on which the sale andredemption of Units are suspended by the Trustees. (6) the day(s) on which the money markets are closed/notaccessible.

In case banks at any centre where the AMC’s Customer Service centres are located are closed due to a localholiday, such days will be treated as non-working days at such centres for the purposes of accepting freshsubscriptions. However, if the AMC offices in such centres are open on such local holidays, then redemption andswitch will be accepted at those centres provided it is a Working day for the scheme.

PART I

(1) SCHEME SUMMARY

Name of the Scheme SUNDARAM MONEY FUND

Structure Open-ended liquid Scheme.

Offer Price During the initial issue the units were offered at Rs.10/- each. During the ongoing phase, the Units are beingoffered at NAV related prices, subject to applicable load, if any.

Scheme Objective The main objective is to provide a level of income consistent with preservation of capital, maintenance ofliquidity and lower level of risks. However, there can be no assurance that the investment objective of theScheme will be realized.

Application Amount Minimum Rs.10,000/- per application and in multiples of Rs.1/-thereafter in appreciation option and minimumamount of Rs.50,000 and in multiples of Rs.1/- thereafter in dividend reinvestment option.

Initial Issue Expenses The initial issue expenses were borne by the AMC.

Liquidity The fund offers liquidity with redemption requests being processed on all working days and cheques would bedespatched, under normal circumstances, within two working days from the date of redemption requests.

Transparency The NAV will be computed on every Working Day (except in special circumstances) and updated on the AMFIwebsite and also available for public information at the Corporate office of the AMC. In addition, being a liquidfund, holiday NAVs are also computed and applied for sale or repurchase of units, wherever applicable. Furthertransparency will be maintained through half-yearly disclosure of established portfolio through newsletters. TheFund would publish the half-yearly and annual results as per the SEBI Regulations.

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(2) CONSTITUTION OF THE MUTUAL FUNDSponsorThe Sponsor of Sundaram Mutual Fund is Sundaram Finance Limited(SF). SF is India’s leading non-banking finance company having a trackrecord of around 50 years with an asset base over Rs. 3125 Crores. Ithas a deposit base exceeding Rs. 717 Crores covering over 347000accounts and an uninterrupted dividend record of accomplishmentsince inception. The public deposit schemes of SF enjoy the prestigious‘FAAA’ (F triple A] rating from Credit Rating Information Services ofIndia Ltd (CRISIL) and the prestigious MAAA (M triple A) rating fromICRA Ltd signifying the highest degree of safety of depositors’ funds. SF’scommercial paper has been rated P1+ by CRISIL.Sundaram Asset Management Company Limited is a wholly ownedsubsidiary of SF. Other subsidiaries of SF are:1. Sundaram Home Finance Limited, set up in 1999, provides retail

home finance.2. Sundaram Finance Distribution Limited (formerly Sundaram

Insurance Broking Limited) distributes and markets financial,savings, loan, investments and insurance products.

3. Sundaram Finance Trustee Company Limited was incorporated onDecember 2, 2003 pursuant to the decision taken by the Board ofTrustees of Sundaram Mutual Fund to convert into a trusteecompany in terms of SEBI (Mutual Funds) Regulation 1996. All thetrustees of Sundaram Mutual Fund were appointed as the firstdirectors of the trustee company. The Trustee Company has assumedthe trusteeship functions fully from the Board of Trustees ofSundaram Mutual Fund with effect from April 1, 2004.

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 accordance withthe Trust Deed dated August 24, 1996.

Financial performance of the Sponsor for the last three financialyears – (Rs. In crores )

Description Period Ended Year ended 31st March30.06.2004 2003-04 2002-03 2001-02

Turnover/Total income 97.74 357.89 375.52 467.64Profit After Tax 14.40 55.62 45.66 40.36Equity Capital (FV Rs 10/- each) 24.00 24.00 24.00 24.00Free Reserves 513.65 499.24 462.57 411.67Net-worth 537.65 523.24 486.57 435.67Earnings per share (Rs) *6.00 23.18 19.03 16.82Book value per share (Rs) 224.02 218.02 202.74 181.53Percentage of dividend paid 70% 75% 60%

(Source:published Audited financial results of Sundaram FinanceLimited).* Not Annualised

Sundaram Mutual Fund

Sundaram Mutual Fund has been constituted as a Trust under the IndianTrusts Act, 1882. The Trust Deed dated August 24, 1996 and the Deedof Amendment dated March 22, 2004 have been duly registered withthe Sub-registrar, Chennai, under Serial No. 356 of 1996 and Serial no.108 of 2004 respectively. The Mutual Fund has been registered withSEBI vide Registration No. MF/034/97/2 dated January 3, 1997.

Trustee Company

Sundaram Finance Trustee Company Ltd., a company incorporatedunder the Companies Act, 1956 is the Trustee to the Fund. SundaramFinance Ltd., the Sponsor, holds 100% of the paid up capital of theTrustee Company. The Sponsor, SF has appointed SFTC as the Trusteevide an amended Trust Deed dated 22nd March 2004.

Directors of the Trustee Company

Name, Address Principal Occupation

Mr. K.V. Ramanathan, IAS (Retired) Former Executive DirectorChairman Asian Development Bank

Manila, Philippines(Independent Director) ChairmanRohini, # 9 Second Seaward Road, The Synergy Mortgage LoanValmiki Nagar, Thiruvanmiyur, Company LimitedChennai – 600 041.Mr. S. Viji ChairmanNew No.71, Old No.33, Sundaram Home Finance Limited Poes Garden, TVS Lean Logistics Limited.Chennai – 600 086 Vice Chairman

Sundaram Finance LimitedJoint Managing DirectorBrakes India LimitedDirectorIndia Motor Parts and AccessoriesLimitedSundaram Dynacast P. LimitedSundaram Industries LimitedTV Sundram Iyengar & Sons LimitedWheels India LimitedRoyal Sundaram Alliance InsuranceCompany LimitedManaging TrusteeBharath International Trust, ChennaiTrusteeSundaram Educational TrustSundaram Medical FoundationVice ChairmanWorth Trust, Katpadi

Mr. G.K. Raman ChairmanNo 10, 12th Cross Street, Royal Sundaram Alliance InsuranceIndira Nagar, Company LimitedChennai- 600020 Whole-time Director

Sundaram Finance LimitedDirectorLakshmi General Finance LimitedTurbo Energy LimitedSundaram Home Finance LimitedBrakes India LimitedMemberSri Sathya Sai Trust, Tamil Nadu

Mr. R. Rajamani Former Secretary(Independent Director) Environment & Forests Government8-2-585/A/1, Road No.9 of IndiaBanjara Hills DirectorHyderabad - 500 034 ICICI Venture Funds Management

Company LimitedICICI Knowledge Park

Mr. K.V. Krishnamurthy Director(Independent Director) Dhanalakshmi Bank Limited174, Kalpataru Residency, Assets Reconstruction Company ofTower A, 107 Road no.8, India LimitedSion (East), Mumbai - 400 022 Partner (Part Time)

K.C.A. & Co., CharteredAccountants

FUNCTIONS AND RESPONSIBILITIES 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 the AMCfor Sundaram Mutual Fund and have to ensure that the AMC fulfils thefunctions assigned to it, from time to time, subject to the Trust Deed,SEBI Regulations and laws in force.The Trustees report every half-year to SEBI and annually to the investors

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on the functioning of the Fund. As per the Trust Deed and SEBIRegulations, the Trustees inter alia, have the following functions andresponsibilities:• A trustee in carrying out his responsibilities as a member of the

Board of Trustees or of trustee company, shall maintain arms’ lengthrelationship with other companies, or institutions or financialintermediaries or any body corporate with which he may beassociated.

• No trustee shall participate in the meetings of the Board of Trusteesor trustee company when decisions for investments in which he maybe interested are taken.

• All the trustees shall furnish to the Board of Trustees or trusteecompany, particulars of interest which he may have in any othercompany, or institution or financial intermediary or any corporate byvirtue of his position as director, partner or with which he may beassociated in any other capacity.

• 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 AssetManagement Company has been managing the schemesindependently of other activities and have taken adequate steps toensure that the interest of the investors of one scheme are not beingcompromised with those of any other scheme or of other activitiesof 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 them and shall immediately inform SEBI ofthe violation 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 Unitholders 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 theUnitholders.

• 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,take delivery of the relative securities and in all cases of sale, deliverthe securities and in no case put itself in a position whereby it hasto make short sale or carry forward transaction or engage in badlafinance.

• The Trustees are required to obtain the consent of the Unitholders ofa Scheme(a) whenever required to do so by SEBI in the interest of the

Unitholders; or(b) upon the request made by three-fourths of the Unitholders of this

Scheme; or (c) if the majority of the Trustees decide to wind up the Scheme(s) or

prematurely redeem the Units.• The trustees shall ensure that no change in the fundamental

attributes of the Scheme(s) or the Trust or fees and expenses payableor any other change which would modify the Scheme(s) or affect theinterest of the Unitholders, shall be carried out unless, 1. a written communication about the proposed change is sent to

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

2. the Unitholders are given an option to exit at the prevailing NAVwithout any exit load.

• The Trustees are required to call for the details of transactions insecurities by the key personnel of the AMC in his own name or onbehalf of the AMC and shall 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 ofthe SEBI Regulations.

• The Trustees are required to ensure that there is no conflict of interestbetween the manner of deployment of its net worth by the AMC andthe interest of the Unitholders.

• The Trustees are required to abide by the Code of Conduct asspecified in the Fifth Schedule of the SEBI Regulations.

• The meetings of the Trustees shall be held at least once in every twomonths and at least 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 that

there 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 Regulations, have been undertaken by the AMCand has taken adequate steps to ensure that the interests of theUnitholders are protected.

• The independent trustees are required to give their comments on thereport received from the AMC regarding the investments by theMutual Fund in the securities of the group companies of the Sponsor.

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

In terms of SEBI (Mutual Funds) (Amendment) Regulation 1999, theTrustees shall exercise due diligence as under:

A. General Due Diligence:

1. The Trustees shall be discerning in the appointment of the directorson the Board of the asset management company.

2. The Trustees shall review the desirability of continuance of the assetmanagement company if substantial irregularities are observed inany of the schemes and shall not allow the asset management tofloat new scheme.

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

4. The Trustees shall ensure that all service providers are holdingappropriate registrations from SEBI or concerned regulatoryauthority.

5. The Trustees shall arrange for test checks of service contracts. 6. The Trustees shall immediately report to SEBI of any special

developments in the mutual fund.

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B. Specific Due Diligence:

The Trustees shall:1. obtain internal audit reports at regular intervals from independent

auditors appointed by the Trustees;2. obtain compliance certificates at regular intervals from the AMC;3. hold meetings of the Trustees more frequently;4. consider the reports of the independent auditor and compliance

reports of the asset management company at the meetings ofTrustees for appropriate action;

5. maintain records of the decisions of the Trustees at their meetingsand of the minutes of the meetings;

6. prescribe and adhere to a code of ethics by the Trustees, the AssetManagement Company and its personnel;

7. communicate in writing to the Asset Management Company of thedeficiencies and checking on the rectification of deficiencies.

Notwithstanding anything contained in sub regulations (1) to (25) ofRegulation 25, the Trustees shall not be liable for acts done in goodfaith if they have exercised adequate due diligence honestly.

The independent trustees shall pay specific attention to the following,as may be applicable, namely:-

1. the Investment Management Agreement and the compensation paidunder 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 Management

Company.An audit committee of the Trustees has been constituted which reviewsthe internal audit systems and the recommendations of the internal andstatutory audit reports.In the Financial year ended March 31, 2004, 3 meetings of the auditcommittee and 8 meetings of the Trustees were held.The Supervisory role of the Board of Trustees is discharged by havingcontinuous feedback from the AMC on the matters of importance andreview of the Mutual Funds operations

Trusteeship Fees

Pursuant to the Trust Deed dated March 22, 2004, presently the TrusteeCompany is entitled to a fee of 0.01% of the daily average net assets ofall the schemes of the Mutual Fund.

3. THE ASSET MANAGEMENT COMPANY

Sundaram Asset Management Company Limited, the AMC of SundaramMutual Fund, is a public limited company, incorporated under theCompanies Act, 1956. The paid-up capital of the AMC is Rs.15 crores.It is a wholly owned subsidiary of Sundaram Finance Limited.

(i) Investment Management AgreementSundaram Asset Management Company Limited has been appointed asthe Investment Manager vide Investment Management Agreement(IMA) dated August 24, 1996 executed between the Trustees and theAMC.

(ii) Board of Directors

Mr. D.N. Ghosh Former ChairmanChairman State Bank of IndiaBC-148 Sector I ChairmanSalt Lake ICRA LimitedCalcutta - 700 064. The Peerless General Finance &

Investment Company LimitedDirectorHousing Development FinanceCorporation LimitedTata Tea LimitedManaging TrusteeSameeksha Trust (Economic andPolitical Weekly)

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

Mr. M.S. Parthasarathy Director(Independent Director) The Federal Bank LimitedFormer senior officer Fedbank Financial Services LimitedAsian Development BankManila, Philippines.Flat B2 ‘Ashok Svasti’33, Balakrishna Road, Valmiki Nagar,ThiruvanmiyurChennai – 600 041.

Mr. T. N. Anantharama Iyer No other directorships held currently(Independent Director)Former Managing DirectorDiscount and FinanceHouse of India Ltd8 Rajmayur, 19th RoadKhar (West)Mumbai – 400 052.

Mr. S.N. Inamdar ChairmanTax Consultant PIH Finvest Limited2A Ameya Apartments DirectorDadar, Mumbai - 400 028. Kirloskar Brothers Limited

Kirloskar Ferrous Industries LimitedBajaj Tempo LimitedFinolex Industries LimitedSudharshan Chemical Industries LimitedKulkarni Power Tools LimitedShree Suvarna Sahakari Bank LimitedBharat Containers (Nagpur) Pvt. LimitedCMC Commutator Pvt. LimitedUgar Sugar Works LimitedKirloskar Proprietary LimitedFinolex Polymers LimitedBrihan Maharashtra Sugar Syndicate Limited

Mr. T. T. Srinivasaraghavan ChairmanNo 5 Kasturi Estates, Equipment Leasing Association (India)Third Street LimitedGopalapuram Infreight India Technologies (P) LimitedMadras - 600 086. Managing Director

Sundaram Finance LimitedDirectorLakshmi General Finance LimitedSundaram Home Finance LimitedRoyal Sundaram Alliance

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Insurance Co. LimitedCouncil MemberFederation of Automobile DealersAssociationMember-General CommitteeMadras Chamber of Commerce &Industry

Mr. T. P. Raman DirectorManaging Director Association of Mutual Funds in IndiaFlat No. C#3, "Ashreya", No. 11, Raman Street, T Nagar, Chennai-600 017.

Mr. A.V. Rajwade DirectorC/o A V Rajwade & Co Business Standard LimitedForex & Treasury Cybertech Systems and Software Limited Management Consultants The Clearing Corporation of India Limited7/52, Govt. Housing scheme Royal Sundaram Alliance InsuranceOff. Jawaharlal Nehru Road Company LimitedSantacruz (E)Mumbai-400 055.

Dr. Ashoke Bijapurkar Director(Independent Director) Dhara Vegetable Oil and Foods Company Limited210, Konark Shram Future Step Advisory Services Private Limited156, Madan MohanMalviya MargTardeo, Mumbai-400 034.

Dr. Banikanta Mishra No other directorships currently held(Independent Director)Faculty Quarters - No.4 Xavier Institute of ManagementBhubaneshwar-751 013.

(iii) Functions and Responsibilities of the AMC

Important duties of the AMC as per the Investment ManagementAgreement are:• AMC will assume the day-to-day management of the Mutual Fund

and in that capacity, subject to the supervision of the Trustees, shallbe responsible for and have powers of implementing schemes andmaking investment decisions and managing the assets of theschemes of the Mutual Fund in accordance with the schemeobjectives, Trust Deed and SEBI Regulations in the best interest ofthe Unitholders.

• Implement a 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 Scheme and collect the subscriptions to and saleproceeds of units.

• Disclose the basis of calculating the repurchase price and Net AssetValue (NAV) of units of the schemes of the Mutual Fund as stated inthe offer documents and to disclose the NAV to the Unitholders atsuch intervals as may be specified by the Board of Trustees or SEBIor as may be mentioned in the offer document.

• Take all steps to protect the investments made out of the schemesand achieve the objectives of each scheme, as a diligent andprudent person would do.

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

• Distribute the profits of the schemes earned in accordance with theprovisions of the schemes and in conformity with SEBI Regulations.

• 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 memorandum isissued 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 AMC shall file with the Trustees details of transactions insecurities by its key personnel, transactions with any of itsassociates, details of interests of directors and other reports requiredto be filed under SEBI Regulations.

• The AMC shall ensure that the dealings in securities through itsassociates are in accordance with SEBI Regulations and guidelinesissued from time to time.

• The AMC shall maintain high standards of integrity and fairness inall its dealings and in the conduct of its business.

• The AMC shall render at all times high standards of service, exercisedue diligence, ensure proper care and exercise independentprofessional judgement.

• The AMC shall not make any exaggerated statement, whether oral orwritten, either about its qualifications or about capability to renderinvestment management services or its achievements.

• As per SEBI Regulations, no change in controlling interest of theAMC shall be made unless, – prior approval of the trustees and SEBI is obtained;– 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

– the Unitholders are given an option to exit at the prevailing NetAsset Value without any exit load.

(iv) Asset Management Fee

Sundaram Asset Management Company Ltd is entitled to an investmentmanagement and advisory fee of 0.70% of the daily average net assets.

Key Personnel of the AMC

Qualification Age Past experienceSri. T P Raman M.Com., CAIIB 62 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 37 9 years - 2 years in Lintas India Ltd,Vice-President- (IIM, Bangalore) 4 years in Contract AdvertisingSales & Marketing India Ltd and 3 years in ANZ Grindlays

Bank.

Sri P.N.Subramanian B.A (Economics), 45 13 years in DSP Merill LynchVice-President- P.G Diploma inSpecial Channels Business Economics

Sri. N Prasad M.Com 44 13 years –7 years in Canara Bank, 3Chief Investment Officer years in Canbank Mutual Fund, and 3

years in ICICI Asset ManagementCompany Limited.

Sri. Sanjeev Patnaik B.A. Eco (Hon), 32 9 years in Pioneer ITI AMC Ltd.Vice-President-Marketing MBA (Franklin Templeton)& Sales, Head East & South

Sri. P. Sundararajan B.Com. B.L. 48 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. 40 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 35 7 years – 2 years in Essar Steel, 2 yearsFund Manager in Management in ONGC and 3 years in SBI Fund

(IIM Ahmedabad) Management.

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Ms. R.Srividhya MMS (BITS), PG Dip. in 31 Totally 9 years – worked in a StockCo-Fund Manager - Equity Broking Equity Research Firm for a year.

Sri Anoop Bhaskar B.Com, 37 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 43 9 years in United India InsuranceAsst. Vice-President-Operations Company Limited.

Mr. Rahul Pal B.Com, A.C.A. 28 3 Years in IDBI (v) Fund ManagerMr. Anand Radhakrishnan is the Fund Manager who will manage theinvestments of the Scheme under the supervision of the CIO. (For theexperience and qualification of the Fund Manager please read the table(vi) Compliance Officer

Mr. P.SundararajanSundaram Asset Management Co. Ltd 46, Whites Road, Chennai 600 014.

(vii) Manager – Customer SupportMr. K. Sridar, Asst Manager – Customer Support, may be contacted atthe Corporate Office of the AMC at 46, Whites Road, Royapettah,Chennai 600 014. Tel.: 28583362/28583367.

4. AUDITORS

M/s. Sundaram & Srinivasan, Chartered Accountants, 23 C.P.Ramaswamy Road, Alwarpet, Chennai 600018.

5. REGISTRAR

Computer Age Management Services (P) Limited (CAMS), a Category-IRegistrar and Transfer Agent registered with SEBI, vide Registration No.INR 000002813, has been appointed to act as the Registrar and TransferAgent to this Scheme. CAMS will accept and process investors’applications and advise the AMC of the details of subscription; handlecommunications with investors, resolve investor grievances, performdata-entry services and despatch Unit Certificates and/or AccountsStatements. Sundaram Mutual Fund, the AMC and the Trustees, aftertaking appropriate due diligence measures, are satisfied that theRegistrar can provide the services required and have the adequatefacilities to do so. The Letter of Agreement of the Registrar will beavailable for inspection by the investors. The Registrar will be paid afee in accordance with the R&T Agreement. The Trustees reserve theright to appoint any other firm approved by SEBI as the Registrar of theScheme/Mutual Fund.

6. CUSTODIAN

Standard Chartered Bank (SCB) registered with SEBI, vide RegistrationNo. IN/CUS/006, has been appointed Custodian of the securities thatare bought and sold under this Scheme. The responsibilities of theCustodian include:• to keep in safe custody all the securities and instruments belonging

to the Scheme; • to ensure smooth inflow/outflow of securities and instruments as and

when necessary in the best interests of the investors;• to ensure that the benefits due on the holdings are received; and • to be responsible for the loss or damage to the securities due to

negligence on its part or on the part of its approved agents.A Custodian Agreement has been entered into by Standard CharteredBank with the AMC and the Mutual Fund outlining the custodial fees,duties, functions and obligations of the Custodian. The Trustees reservethe right to appoint any other firm approved by SEBI as the Custodianof the Scheme.

PART II(1) INVESTMENT OBJECTIVES AND POLICIES FUNDAMENTAL ATTRIBUTES OF THE SCHEMETYPE OF THE SCHEMEAn open-ended liquid income scheme.

INVESTMENT OBJECTIVE

The primary investment objective of the Scheme is to provide a level ofincome consistent with the preservation of capital, liquidity and lowerlevel of risk, through investments made primarily in money market anddebt securities. The aim is to optimise returns while providing liquidity. However, there can be no assurance that the investment objective ofthe Scheme will be realized.

ASSET ALLOCATION

Under normal circumstances, the asset allocation of the Scheme will beas follows:

Sl.no Type of security Allocation Risk Profile

1. Money Market Instruments, 0-100% Lowdebt securities* to medium

*Including securitised debt upto a maximum of 50% of the netassets of the Scheme.

Note : This is not a Money Market Mutual Fund Scheme.Terms of the issue(1) Liquidity provisions such as listing, repurchase and redemptions are

clearly defined in part III – units and offer of this document.(2) Aggregate fees and expenses are stated in Part IV of this Offer

document.(3) The scheme does not offer any guarantee or assured returns to the

Investors.

CHANGE IN INVESTMENT PATTERN:

Subject to the SEBI Regulations, the asset allocation pattern indicatedabove may change from time to time, keeping in view the marketconditions, market opportunities, applicable regulations and politicaland economic factors. It must be clearly understood that the percentagestated above are only indicative and not absolute. These proportionscan vary substantially depending upon the perception of the InvestmentManager; the intention being at all times to seek to protect the interestsof the Unitholders. Such changes in the investment pattern will be fora short term and for defensive considerations only

CHANGES IN THE FUNDAMENTAL ATTRIBUTES

When any change in the fundamental attribute of this Scheme or thetrust or fees and expenses payable or any other change which wouldmodify the Scheme or affect the interest of the Unitholders, is proposedto be carried out, no such change shall be carried out unless (i) writtencommunication about the proposed change is sent out to eachUnitholder and an advertisement is given in one English dailynewspaper having nationwide circulation as well as in a newspaperpublished in the language of the region where the head office of theMutual Fund is situated; and (ii) the Unitholders are given an option toexit at the prevailing NAV without any exit load. (Note: for the purposeof this clause, fundamental attributes mean the investment objectiveand the terms of issue of this Scheme as detailed above.).

2. A BRIEF NOTE ON THE DEBT AND MONEY MARKET IN INDIA

Indian debt market, today, rivals the most developed markets of theworld in terms of its range, depth and complexity. With market relatedborrowing and lending in place, the Government and RBI has helpedthe market develop to one of Asia’s most vibrant market. With issuancesfrom Government, PSUs, Private Sector companies, Housing FinanceCompanies, Banks, Non Banking Finance Companies, etc., the range ofinstruments is getting wider as days pass. The number of active participants too has been on the rise leading toreasonable depth in-terms of volumes in the market. From an averageof a few hundred crores 3 years back, the market today trades on anaverage of around Rs. 3,500 crores. The trading volumes are largelyconcentrated in the Government of India Securities, which contributeabout 90% of the daily trades.A bulk of debt market consists of Government Securities. Otherinstruments available currently include Corporate Debentures, Bondsissued by Financial Institutions, Commercial Paper, Certificates ofDeposits, and Securitised Debt. The Government securities have

8

tenures from one to twenty years whereas the maturity periods ofcorporate debts vary from one year to ten years. Securities may be bothlisted and unlisted but this does not impact liquidity of the instruments.Most of the transactions in debt markets are conducted over telephoneand are entered on principal-to-principal basis. The money markets in India essentially consist of the call moneymarket (i.e. market for overnight and term money between banks andinstitutions), repo transactions (Temporary sale with an agreement tobuy back the securities at a future date at a specified price), commercialpapers (CPs, short term unsecured promissory notes, generally issuedby corporates), certificate of deposits (CDs, issued by banks) andTreasury Bills (issued by RBI). A predominantly institutional market, thekey money market players are banks, financial institutions, insurancecompanies, mutual funds, primary dealers and corporates. The various instruments and their prevailing yields and liquidity arestated in the following table:

Instrument Maturity Yields Liquidity

Government of

India Treasury Bills (GOI) 91 days 4.20%-4.50% High

GOI Treasury Bills 364 days 4.20%-4.50% High

GOI- Short dated 1-3 years 4.40%-4.70% High

GOI- Medium dated 3-5 years 4.70%-4.90% High

GOI- Long dated 5-10 years 4.80%-5.30% High

Corporates AAA bonds 1-3 years 4.60%-5.30% Medium

Corporates AAA bonds 3-5 years 5.30%-5.90% Medium

Corporates AA bonds 1-3 years 4.80%-5.60% Medium

CorporatesAA bonds 3-5 years 5.50%-6.10% Medium

Corporates CPs (P1+) 3 months 4.50%-4.75% Medium to High

Securitised debt 5.25%-8.50% Low to Medium

Call/Notice Money 4.00%-4.50% Very High

Repo 4.00%-4.30% Very High

The actual yields will, however, vary in line with general levels ofinterest rates and debt/money market conditions prevailing from time totime.Over the past two years the interest rate derivatives market in India hasdeveloped significantly which has made it possible to manage theinterest rate risk actively. This has also helped the market for floatingrate securities to develop. The floating rate MIBOR/INBMK/Otherbenchmark linked corporate debentures or PSU bonds market hasgrown significantly and the market is reasonably liquid. However, themarket for the long term floating rate securities is not highly liquid. TheGovernment of India has started issuing Government Securitiescarrying floating coupons actively. This would help the markets todevelop further on the floaters.

3. INSTRUMENTS IN WHICH INVESTMENT CAN BE MADE

In order to achieve investment objectives, the corpus of the Schemecan be invested in any (but not exclusively) of the following securities:• Securities issued by the Central and State Governments and/or

repos in such Government Securities as may be permitted by RBI(including but not limited to coupon bearing bonds, zero couponbonds and treasury bills);

• Securities guaranteed by the Central, State Governments and localgovernments (including but not limited to coupon bearing bonds,zero coupon bonds and treasury bills);

• Debt obligation of domestic Government Agencies and statutorybodies, which may or may not carry a Central/State GovernmentGuarantee;

• Obligations of banks (both public and private sector) anddevelopment financial institutions;

• Money market instruments permitted by SEBI/RBI;• Certificate of Deposits (CDs); • Commercial Paper (CPs);• Bank Fixed deposits as permitted by SEBI;

• Bills of Exchange/Promissory notes;• Securitised Debt;• The non-convertible part of the convertible securities;• Any other domestic fixed income securities.The Scheme shall also explore opportunities available in overseas fixedincome market within the rules and regulations framed by the SEBI; andthe securities mentioned above could be listed, unlisted, privatelyplaced, secured, unsecured, rated or unrated and of maturity less thanone year. Bonds purchased of Government, Quasi Government or Corporate entities may include coupon bearing, floating rate, deepdiscount or zero coupon bond. The Scheme may invest in fixedinstruments of shorter or longer maturities, as determined by theInvestment Manager. All purchases of debt instruments may be madeeither through private placements, initial public offerings, throughrights offerings, or through negotiated deals, on the secondary marketon the exchange or outside the exchange.The scheme may engage in interest rate swaps and futures and suchother hedging techniques as may be permitted by SEBI and RBI fromtime to time. The fund shall enter into derivatives transactions for thepurpose of hedging and portfolio in accordance with the guidelinesissued by the SEBI.

4. Investments in derivative instruments

In terms of Circular No.MFD.BC.191/07.01.279/1999-2000 andMPD.BC.187/07.01.279/1999-2000 dated November 1, 1999 and July7, 1999 respectively issued by Reserve Bank of India permittingparticipation by Mutual Funds in Interest Rate Swaps and Forward Rate Agreements, the Fund will usederivative instruments for the purpose of hedging and portfoliobalancing. The AMC would undertake the same for similar purposesonly.

1. Interest Rate Swaps (IRS)An IRS is an agreement between two parties to exchange statedinterest obligations for an agreed period in respect of a notionalprincipal amount. The most common form is a fixed to floatingrate swap where one party receives a fixed (pre-determined) rateof interest while the other receives a floating (variable) rate ofinterest.

2. Forward Rate Agreement (FRA)A FRA is basically a forward starting IRS. It is an agreementbetween two parties to pay or receive the difference between anagreed fixed rate (the FRA rate) and the interest rate (referencerate) prevailing on a stipulated future date, based on a notionalprincipal amount for an agreed period. The only cash flow is thedifference between the FRA rate and the reference rate. As is thecase with IRS, the notional amounts are not exchanged in FRAs.

Example of a derivatives transactionExample: Let us assume that a scheme has an investment of Rs.10 crorein an instrument that pays interest linked to NSE Mibor. Since the NSEMibor would vary daily, the scheme is running interest rate risk on itsinvestment and would stand to lose if rates go down. To hedge itselfagainst this risk, the Scheme could do an IRS where it receives a fixedrate (assume 5%) for the next 5 days on the notional amount of Rs. 10crore and pay a floating rate (NSE Mibor). In doing this, the schemewould effectively lock itself into a fixed rate of 5% for the next fivedays. The steps would be:1. The scheme enters into an IRS on Rs.10 crore from January 1, 2004

to February 1, 2004. It receives a fixed rate of interest at 5% and thecounter party receives the floating rate (NSE Mibor). The schemeand the counter party exchange a contract of having entered intothis IRS.

2. On a daily basis, the NSE Mibor will be tracked by the counterparties to determine the floating rate payable by the scheme.

3. On February 1, 2004, the counterparties will calculate thefollowing:The scheme will receive interest on Rs. 10 crore at 5% p.a. for 31days i.e. Rs.4,24,657/-. The scheme will pay the compounded NSEMibor for 31 days by converting its floating rate asset into a fixed

9

rate through the IRS. If the total interest on the compounded NSEMibor rate is lower than Rs.4, 24,657/-, the scheme will receive thedifference from the counterparty and vice-versa. In case the intereston compounded NSE Mibor is higher, the scheme would make alower return than what it would have made had it not undertakenIRS.The fund will take exposure to the derivatives subject to the limitsprescribed in the SEBI regulations.A hedge is designed to offset a loss on a portfolio with a gain in thehedge position. The scheme will use derivative instruments such asinterest rate swaps, option on interest rate, forward rate agreements,etc. to generate floating rate return.

Risk factors for derivative investments

1. Credit Risk: The credit risk is the risk that the counter party willdefault obligations and is generally negligible, as there is noexchange of principal amounts in a derivative transaction.

2. Market risk: Derivatives carry the risk of adverse changes in themarket price.

3. Illiquidity risk: The risk that a derivative cannot be sold or purchasedquickly enough at a fair price, due to lack of liquidity in the market.

4. The fund pays the daily compounded rate. In practice however therecan be a difference in the actual rate at which money is lent in thecall market and the benchmark, which appears and is used.

It may be mentioned here that the guidelines issued by Reserve Bank ofIndia from time to time for forward rate agreements and interest rateswaps and other derivative products would be adhered to.

Purpose of investment:

• Trading in derivatives by the scheme shall be restricted to hedgingand portfolio balancing purposes.

• The scheme shall fully cover its positions in the derivatives marketby holding underlying securities/cash or cash equivalents/optionand/or obligation for acquiring underlying assets to honour theobligations contracted in the derivatives market.

• Separate records shall be maintained for holding the cash and cashequivalents/ securities for this purpose.

• The securities held shall be marked to market by the AMC to ensurefull coverage of investments made in derivative products at all time.

Valuation:

• The traded derivatives shall be valued at market price in conformitywith the stipulations of sub clauses (i) to (v) of clause 1 of the EighthSchedule to the Securities and Exchange Board of India (MutualFunds) Regulations, 1996.

• The valuation of untraded derivatives shall be done in accordancewith the valuation method for untraded investments prescribed insub clauses (i) and (ii) of clause 2 of the Eighth Schedule to theSecurities and Exchange Board of India (Mutual Funds) Regulations,1996.

Note: This is not a Money Market Mutual Fund Scheme.

5. Investment Strategy

1. The scheme invests primarily in short-term securities. Purchases ofdebt may be made either through initial public offer, privateplacement, through rights offerings, purchase on the floor of arecognised stock exchange or through negotiated deals on thesecondary market. The scheme may invest in the non-publiclyoffered securities on the merits of the investment proposals.

2. The Scheme does not aim to concentrate investments in anyparticular industry. The investment shall be made across industries,sector and promoter group.

3. The fund shall invest in the instruments rated as investment grade orabove by a recognised rating agency. In case, the instruments are notrated, specific approval of the Board of Directors of the AMC or acommittee constituted by the Board of Directors of the AMC and theBoard of Trustees or a committee approved by the Board of Trusteesshall be obtained.

4. Pending deployment of funds in terms of investment objectives of

the scheme, the funds may be invested in short term deposits withscheduled Commercial Banks.

5. A major portion of the fund shall be invested in liquid money marketinvestments. With this composition, the scheme shall be able tomeet the normal repurchase/redemption requirement.

6. The focus of the Scheme would be to generate regular returns on theportfolio, while maintaining low risk profile. While, generally theinvestment policy will be ‘Buy and hold’ due to the low liquidity inthe debt market, the Scheme may trade in case of necessity.However, investments in corporate debt attracting high brokerageand stamp duty, the portfolio turnover is unlikely to exceed 300%per year. In case of dealings in PSU bonds and governmentsecurities and money market investments, the portfolio turnover maybe substantially higher due to low transaction costs and fastertransfer of ownership.The fund in future, if regulations permit, may:i) Invest in debt instruments issued by companies incorporated

outside India but rated by reputed international credit ratingagencies as investment grade.

ii) Securities issued by Indian corporates in foreign currency.7. In cases where the repurchase/ redemption requirements are large,

the scheme may sell a part of debt instruments. The scheme mayalso resort to temporary borrowing within the limits laid down bySEBI.

Investment Procedure

G-Secs and treasury bills are obtained from the secondary market,while corporate debt instruments may be obtained from bothsecondary and primary markets. In the case of G-Secs and T-Bills,instruments of different maturities can be easily traded under normalmarket 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 obtainedthrough private placement route, an approval from the InvestmentCommittee (IC) is required. The IC consists of the Managing Director,and two other Directors of the AMC. The Investment department(comprising of Analysts, Fund Manager and the Chief InvestmentOfficer) submits a note to the IC for the purpose of this approval. Incase of purchases from secondary market, if the issuer’s any instrumentis/was not in the portfolio, permission from Internal InvestmentCommittee (IIC) is sought. Internal Investment Committee comprises ofthe Managing Director and the Chief Investment Officer.The reasons for purchase /sale is recorded in the ‘deal ticket’ by thefund manager. For all purchases, the AMC depend upon the creditrating assigned by external agencies. Where this is not available, itdepends on internal analysis. The AMC believes that the important risksof investing in debt arise from interest rate forecasts and asset allocationdecisions and not necessarily from individual company performances.In weekly meetings, the fund manager assesses the performance of thefund during the previous week and explains the likely strategy that heor she would adapt for the next week to the Chief Investment Officer.The member of the Internal Investment Committee who also attendsthese meetings may also stipulate some restrictions, or provideguidance at this point. In these meetings, the performance of the Fundsis compared to peers and benchmark debt market indices.Every quarter, the fund manager presents a review of all decisionstaken, and on fund performance to the Board of Directors of the AMCand the Trustee Company.

Miscellaneous

Due considerations is given to the composition of investors. Forexample, if corporate investors have contributed towards a large shareof the portfolio, the tendency would be for us to own highly liquidassets.BenchmarkThe performance of the Scheme will be compared with CRSIL LiquidFund Index.

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6. RISKS

(a) Risks associated with debt investments1. All investments involve risk and there can be no guarantee against

loss resulting from an investment in the Scheme nor can there beany assurance that the scheme‘s investment objective will beattained. As with any investment in securities, the value of andincome from an investment in the scheme can decrease or increase,depending ona) general economic conditions and market factorsb) movement in the broader bond marketsc) factors affecting capital marketsd) changes in interest ratese) 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 fluctuatecontinuously due (but not limited) to the above factors.2. Changes in the prevailing rates of interest is likely to affect the value

of the scheme’s holdings and consequently the value of thescheme’s Units. Increased rates of interest, which frequentlyaccompany inflation and /or a growing economy, are likely to havea negative effect on the value of the Units. The value of debtsecurities held by the scheme generally will vary inversely with thechanges in prevailing interest rates.

3. Debt securities are also subject to the risk of an issuer ‘s inability tomeet principal and interest payments and interest payments on theobligations (credit risk) and may also be subject to price volatilitydue to such factors as interest sensitivity, market perception or thecreditworthiness of the issuer and general market liquidity (marketrisk). While it is the intent of the fund manager to invest primarilyin high rated debt securities, the scheme may from time to timeinvest in higher yielding, low rated securities. As a result, aninvestment in the scheme may be accompanied by a higher degreeof risk relative to an investment consisting exclusively of high 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 to

developments affecting market and credit risk than high ratedsecurities (these react primarily to movements in the generallevel of interest rates)

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 offinancing available to them. Hence the risk of default on interestand/or principal is higher relative to high rated issuers. Forexample, during an economic downturn or a sustained periodof rising interest rates, highly leveraged issuers of high yieldingsecurities may experience financial stress. During these periods,such issuers may not have sufficient cash flows to meet theirinterest payment obligations. The credit risk factors pertaining tolower rated securities also apply to lower rated zero coupon,deferred interest and pay-in-kind bonds. Such bonds carry anadditional risk in that, unlike bonds that pay interest throughoutthe period to maturity, the scheme will realise no cash until thecash 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 beadversely affected by specific developments affecting the issuer, theissuer’s inability to meet specific projected business forecasts, or theunavailability of additional financing.

6. The risk or loss due to default by the issuer may be significantlygreater if the instrument held is unsecured and is subordinated toother creditors of the issuer. In case of low rated issuer, the risk issignificantly higher relative to a high rated issuer.

7. The Scheme may have difficulty in disposing of securities becausethere may be thin trading for a particular security. In case of lowrated high yielding security, in normal circumstances, the liquidity

would be lower than high rated security. This may result in lowerrealisations than at which security is valued in the event of sale.Further if the sale is taking in response to an economic event or ondeterioration / downgrading of issuer, the sale realisations would bemuch lower than what is anticipated above.

8. Reduced liquidity in the secondary market may have an adverseimpact on market price and the Scheme’s ability to dispose ofsecurities, particularly if it is intended to meet the scheme’s liquidityneeds or to respond to a specific economic event.

9. The Scheme may acquire high yielding fixed income securitiesduring an initial offering by a new company. Such securities involvespecial risks because they are new issues.

10. Zero coupon or deferred interest securities are debt obligations thatdo not entitle the holder to any periodic payments of interest priorto maturity or a specified date when the securities begin payingcurrent interest (the "cash payment date") and therefore aregenerally issued and traded at a discount from their face amounts.The discount varies depending on the time remaining until maturityor cash payment date, prevailing interest rates, liquidity of thesecurity and the perceived credit risk of the issuer. The marketprices of zero coupon securities are generally more volatile than thesecurities that pay interest periodically and are likely to respond tochanges in interest rates to a greater degree than non-zero couponor deferred interest securities having similar maturities and creditquality.

b) Risk Control

Since investing requires disciplined risk management, the AMC wouldincorporate adequate safeguards for controlling risks in the portfolioconstruction process. The risk control process involves reducing risksthrough portfolio diversification, taking care, however, not to dilutereturns in the process. The AMC believes that this diversification wouldhelp achieve the desired level of consistency in returns. The AMC aimsto identify securities, which offer superior levels of yield at lower levelsof risks. With the aim of controlling risks, rigorous in depth creditevaluation of the securities proposed to be invested in will be carriedout by the investment team of the AMC.The Scheme may also use various derivatives and hedging productsfrom time to time, as would be available and permitted by RBI, in anattempt to protect the value of the portfolio and enhance Unitholders'interests. The Scheme may invest in other Schemes managed by the AMC or inthe Schemes of any other Mutual Funds, provided it is in conformity tothe investment objectives of the Scheme and in terms of the prevailingSEBI Regulations. As per the SEBI Regulations, no investmentmanagement fees will be charged for such investments and theaggregate inter-Scheme investment made by all Schemes of SundaramMutual Fund or in the Schemes under the management of other assetmanagement companies shall not exceed 5% of the net asset value ofthe Sundaram Mutual Fund.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 riskarising from the movement in interest rates. Risk control involvesforming and maintaining a view on the direction of interest rates,tracking the spread between different assets and active durationmanagement to optimise portfolio returns. The fund could also useappropriate risk management and hedging tools to minimise risk.Liquidity Risk: While liquidity in the Indian bond markets is improving,it is largely in Government bonds, and to some extent, top ratedcorporate bonds. The fund would maintain a reasonable allocation toliquid bonds to minimise risk in case of a sudden withdrawal from thefund.For the present, the Scheme does not intend to enter into underwritingobligations. However, if the Scheme does enter into an underwritingagreement, it would do so after complying with the RBI Regulationsand with the prior approval of the Board of the AMC/Trustee Company.

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7. INVESTMENT RESTRICTIONS AND OTHER CONSIDERATIONS

Pursuant to the "SEBI" Regulations", the following investment and otherlimitations are presently applicable to the Scheme :1. The Scheme shall not invest more than 15% of its NAV in debt

instruments issued by a single issuer which are rated but not belowinvestment grade by a credit rating agency authorised to carry outsuch activity under the Securities and Exchange Board of India Act,1992. Such investment limit may be extended to 20% of the NAVof the scheme with the prior approval of the Board of Trustees andthe Board of the Asset Management Company. Provided that suchlimit shall not be applicable for investments in governmentsecurities and money market instruments.

2. The Schemes shall not invest more than 10% of its NAV in unrateddebt instruments issued by a single issuer and the total investmentin such instruments shall not exceed 25% of the NAV of thescheme. All such investments shall be made with the priorapproval of the Board of Trustees and the Board of assetmanagement company.

3. No term loans for any purpose will be advanced by the Scheme.4. The scheme may invest in another scheme under the same asset

management company or any other Mutual Fund without chargingany fees, provided that aggregate inter-scheme investment made byall schemes under the same management or in scheme under themanagement of any other asset management company shall notexceed 5% of the net asset value of the mutual fund.

5. Transfers of investments from one scheme to another scheme in theMutual Fund shall be allowed only if :a) such transfers are done at the prevailing market price for quoted

instruments on spot basis;b) the securities so transferred shall be in conformity with the

investment objective of the scheme to which such transfer hasbeen made and the registration and accounting of thetransactions is completed and is ratified in the next meeting ofthe Board of the Trustees, if the regulations so require.

6. The investment manager may invest in the Scheme from time totime. The percentage of such investments to the total net assetsmay vary from time to time and can be upto 25% of the net assetsof the scheme. However, the investment manager shall not chargeany fees on its own investment in the scheme in accordance withsub-clause (3) of Regulation 24 of the Regulations.

7. The mutual fund may borrow to meet liquidity needs within thelimits laid down by the appropriate authorities. As per the currentrules, the Mutual fund can borrow for the purpose of repurchase,redemption of units or payment of interest or dividend to theUnitholders and such borrowings shall not exceed 20% of the netasset of the scheme and duration of the borrowing shall not exceed6 months. The Fund may borrow from permissible entities at theprevailing market rates and may offer the assets of the Fund ascollateral for such borrowing.

8. The Fund shall not make any investments in a) any unlisted security of an associate or group company of the

sponsor; orb) any security issued by way of private placement by an associate

or group company of the sponsor; or c) the listed securities of group companies of the sponsor which is

in excess of 25% of the net assets of all the schemes of themutual fund.

9. Debentures, irrespective of any residual maturity period (above orbelow one year), shall attract the investments restrictions asapplicable for debt instruments as specified under clause 1 and 1 Aof the seventh schedule to the regulations.

The trustee of the Mutual Fund may alter these limitations / objectivesfrom time to time to the extent the SEBI Regulations change so as topermit the Scheme to make its investments in the full spectrum ofpermitted investments for the mutual fund in order to achieve itsinvestment objectives. All investments of the Scheme will be made inaccordance with the SEBI Regulations, including Schedule VII thereof.

As per SEBI Circular (SEBI/IMD/CIR No. 8/5611/2004) dated 19thMarch 2004, the Following investment regulations will apply toSundaram Money Fund apart from the investment restrictionsmentioned in the offer document.

Mark-to-Market component of the fund on a weekly average basis is less than 10%.

Mark to Market would mean the valuation of an asset (e.g. marketablesecurities, derivatives and other financial contracts) using a traded priceor a derived price from the corresponding yield curve. Further, for thepurpose of calculating the mark to market component of the portfolioof the scheme money market instruments shall be excluded. And

Maximum repricing tenor of 1 year reckoned as under:

i) For fixed rate asset, the remaining tenor is I year or less.ii) For a floating rate asset, the interest reset frequency is 1 year or less.iii) For a fixed rate / floating rate asset where the principal is paid in a

staggered and / or on amortizing basis (e.g. securitized papers),the average maturity of such an asset is 1 year or less.

iv) For a portfolio using Interest Rate Swaps,a) The composite floating rate asset (underlying fixed rate asset and

Interest Rate Swap, paying fixed and receiving floating) hasinterest reset frequency upto 1 year.

b) If Interest Rate Swaps (receiving fixed and paying floating), havebeen used to convert a floating rate asset into a fixed rate asset,the fixed leg of the Interest Rate Swap having remaining tenorupto 1 year.

v) For a portfolio using Forward Rate Agreements, the summation ofthe beginning and end dates of the period covered is 1 year or less.

If there are positions in Interest Rate Futures and Bond Futures, therepricing risk is 1 year or less.Further in terms of Clarification issued by SEBI, the repricing tenor ofeach of the securities included in the portfolio of the scheme shall beone year or less.All the Investment restrictions have to be considered at the point ofInvestments.

8. PORTFOLIO TURNOVER

The Asset Management Company does not have a policy statement onportfolio turnover. Generally, the Asset Management Company’sportfolio management style is conducive to a low portfolio turnoverrate. However, there are trading opportunities that present themselvesfrom time to time because of the inefficiencies in the market, whichmay cause the portfolio turnover rate to rise. This could include a risein call money rates leading to a sharp fall in security prices. Apart fromthis, the inflow/outflow of funds into the scheme would result inportfolio turnover. A high portfolio turnover rate is not necessarily adrag on portfolio performance.

9. VALUATION OF ASSETS AND NET ASSET VALUE

Valuation of Scheme’s assets and calculation of the Scheme’s NAV willbe subject to such rules or regulations that SEBI may prescribe fromtime to time and shall be subject to audit on an annual basis. Thedisclosure on valuation norms, computation and publication of NAV,repurchase and sale price, accounting policies and publication of halfyearly accounts shall conform to the relevant provisions of SEBI(Mutual Funds) Regulations, 1996. Accordingly, the followingprinciples will be adopted:1. Traded Securitiesi. The securities shall be valued at the last quoted price on the stock

exchange.ii. When the securities are traded on more than one recognised stock

exchange, the securities shall be valued at the last quoted closingprice on the stock exchange where the security is principally traded.It would be left to the AMC to select the appropriate stock exchange,but the reasons for the selection should be recorded in writing.There should however be no objection for all scrips being valued atthe prices quoted on the stock exchange where a majority in valueof the investments are principally traded.

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iii. Once a stock exchange has been selected for valuation of aparticular security, reasons for change of the exchange shall berecorded in writing by the AMC.

iv. When on a particular valuation day, a security has not been tradedon the selected stock exchange; the value at which it is traded onanother stock exchange may be used.

v. When a debt security (other than Government Securities) is nottraded on any stock exchange on any particular valuation day, thevalue at which it was traded on the principal stock exchange or anyother stock exchange, as the case may be, on the earliest previousday may be used provided such date is not more than fifteen daysprior to valuation date. When a debt security (other thanGovernment Securities) is purchased by way of private placement,the value at which it was bought may be used for a period of fifteendays beginning from the date of purchase. For valuation ofgovernment securities, all the Fund shall use the prices forGovernment Securities released by an agency suggested by AMFI.(At present Crisil.com vide AMFI circular dated February 5, 2002)

2. Thinly Traded Securities: Thinly traded securities as defined in the Regulations shall be valued inthe manner as specified in the guidelines issued by SEBI, as follows:A debt security (other than Government Securities) shall be consideredas a thinly traded security if on the valuation date, there are noindividual trades in that security in marketable lots (currently Rs 5crore) on the principal stock exchange or any other stock exchange. A thinly traded debt security as defined above would be valued as perthe norms set for non-traded debt security.3. Non-traded SecuritiesWhen a security is not traded on any stock exchange for a period offifteen days prior to the valuation date, the scrip must be treated as a‘non-traded’ scrip.Non traded/ thinly traded securities shall be valued "in good faith" bythe asset management company on the basis of the valuation principleslaid down below:Non Traded / Thinly Traded Debt Securities of Upto 182 Days tomaturityAs the money market securities are valued on the basis of amortisation(cost plus accrued interest till the beginning of the day plus thedifference between the redemption value and the cost spread uniformlyover the remaining maturity period of the instruments) a similar processshould be adopted for non-traded debt securities with residual maturityof upto 182 days, in the absence of any other standard benchmarks inthe market. Debt securities purchased with residual maturity of upto182 days are to be valued at cost (including accrued interest till thebeginning of the day) plus the difference between the redemption value(inclusive of interest) and cost spread uniformly over the remainingmaturity period of the instrument. In case of a debt security withmaturity greater than 182 days at the time of purchase, the lastvaluation price plus accrued interest should be used instead ofpurchase cost. All other non-traded Non Government debt instrumentsshall be valued using the method suggested below.Non Traded / Thinly Traded Debt Securities of Over 182 Days toMaturityFor the purpose of valuation, all non-traded debt securities would beclassified into "investment grade" and "non investment grade" securitiesbased on their credit ratings. The non-investment grade securitieswould further be classified as "performing" and "non performing" assets. • All non government investment grade debt securities, classified as

not traded, shall be valued on yield to maturity basis as describedbelow.

• All non government non-investment grade performing debtsecurities would be valued at a discount of 25% to the face value.

• All non government non-investment grade non-performing debtsecurities would be valued based on the provisioning norms.

The approach in valuation of non traded debt securities is based on theconcept of using spreads over the benchmark rate to arrive at the yieldsfor pricing the non traded security. The yields for pricing the non-traded

debt security would be arrived at using the process as defined below.Step AA risk free benchmark yield is built using the government securities(GOI Securities) as the base. GOI Securities are used as the benchmarksas they are traded regularly, free of credit risk and traded acrossdifferent maturity spectrums every week.Step BA matrix of spreads (based on the credit risk) are built for marking upthe benchmark yields. The matrix is built based on traded corporatepaper on the wholesale debt segment of an appropriate stock exchangeand the primary market issuances. The matrix is restricted only toinvestment grade corporate paper.Step CThe yields as calculated above are marked-up / marked-down forilliquidity risk.Step DThe yields so arrived are used to price the portfolio.

Methodology

Construction of Risk Free BenchmarkUsing Government of India dated securities, the benchmark shall beconstructed as below:Government of India dated securities will be grouped into the followingduration buckets viz., 0.5-1 years, 1-2 years, 2-3 years, 3-4 years, 4-5years, 5-6 years and 6 years and the volume weighted yield would becomputed for each bucket. These duration buckets may be changed toreflect the market value more closely by any agency suggested by AMFIgiving benchmark yield / matrix of spreads over benchmark yield.Accordingly, there will be a benchmark YTM for each duration bucket.The benchmark as calculated above will be set at least weekly, and inthe event of any significant movement of prices of Governmentsecurities on account of any event impacting interest rates on any daysuch as change in the RBI policies, the benchmark will be reset toreflect any change in the market conditions.Note: The concept of duration over tenor has been chosen in order tocapture the reinvestment risk. It is intended to gradually move towardsa methodology that incorporates the continuous curve approach forvaluation of such securities. However, in view of the current lack ofliquidity in the corporate bond markets, a continuous curve approachto valuation would be necessarily based on limited data points, and thiswould result in out of line valuations. As an interim methodologytherefore it is proposed that the Duration Bucket approach be adoptedand continuously tracked in order to fine-tune the duration buckets ona periodic basis. Over the next few years it is expected that with thedeepening of the secondary market trading, it would be possible tomake a gradual move from the Duration Bucket approach towards acontinuous curve approach. Building a Matrix of Spreads for Marking-up the Benchmark YieldMark up for credit risk over the risk free benchmark YTM as calculatedin step A, will be determined using the trades of corporate debentures/ bonds of different ratings. All trades on appropriate stock exchangeduring the fortnight prior to the benchmark date will be used inbuilding the corporate YTM and spread matrices. Initially thesematrices will be built only for corporate securities of investment grade.The matrices are dynamic and the spreads will be computed everyweek. The matrix will be built for all duration buckets for which thebenchmark GOI matrix is built to effectively link the corporate matrixwith the GOI securities matrix. Accordingly: • All traded paper (with minimum traded value of Rs. 1 cr. (Rupees

One Crore Only) will be classified by their ratings and grouped into7 duration buckets; for rated securities, the most conservativepublicly available rating will be used;

• For each rating category, average volume weighted yield will beobtained both from trades on the appropriate stock exchange andfrom the primary market issuances;

• Where there are no secondary trades on the appropriate stockexchange in a particular rating category and no primary marketissuances during the fortnight under consideration, then trades on

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appropriate stock exchange during the 30 days period prior to thebenchmark date will be considered for computing the average YTMfor such rating category;

• If the matrix cannot be populated using any or all of the above steps,then credit spreads from trades on appropriate stock exchange of therelevant rating category over the AAA trades will be used to populatethe matrix;

• In each rating category, all outliers will be removed for smootheningthe YTM matrix;

• Spreads will be obtained by deducting the YTM in each durationcategory from the respective YTM of the GOI securities;

• In the event of lack of trades in the secondary market and theprimary market the gaps in the matrix would be filled byextrapolation. If the spreads cannot be extrapolated for the reason ofpracticality, carrying the spreads from the last matrix will fill the gapsin the matrix.

Mark-up / Mark-down Yield

The Yields calculated would be marked-up / marked-down to accountfor the ill-liquidity risk, promoter background, finance company riskand the issuer class risk. As the level of ill-liquidity risk would be higherfor non-rated securities the marking process for rated and non-ratedsecurities would be differentiated as follows:Adjustments for Securities rated by External Rating AgenciesThe Yields so derived out of the above methodology could be adjustedto account for risk mentioned above by an appropriate discount orpremium as may be required. The range of the markups for bothdiscount as well as premium is given below:PremiumA Discretionary premium of up to -50 Basis Points for securities havingduration of up to 2 years and up to - 25 Basis Points for securitieshaving duration higher than 2 years will be permitted to be providedfor the above mentioned types of risks. The rationale for the abovediscount structure is to take cognizance of the differential interest raterisk of the securities. This structure will be reviewed periodically.

Discount

SEBI vide circular dated 20 February, 2002, has revised thediscretionary discount limits as below:

Category Discretionary discount overbenchmark yield in basis points

Rated Instruments with Discretionary Discount of up to +100duration up to 2 years

Rated Instruments with Discretionary Discount of up to +75duration over 2 years

Adjustments for Internally Rated Securities

To value an unrated security, the fund manager has to assign an internalcredit rating, which will be used for valuation. Since unratedinstruments tend to be more illiquid than rated securities, the yieldswould be mandatorily marked up by adding +50 basis point forsecurities having a duration of up to two years and +25 basis point forsecurities having duration of higher than two years to account for theilliquidity risk. The yields derived from the above methodology could be adjusted toaccount for risk mentioned above. SEBI vide circular dated 20 February,2002, has revised the discretionary discount limits as below:Category Discretionary discount over

benchmark yield in basis pointsUnrated Instruments with Discretionary Discount of up to +50duration up to 2 years over and above the mandatory

Discount of +50Unrated Instruments with Discretionary Discount of up to +50duration over 2 years over and above the mandatory

Discount of +25

The benchmark yield / matrix of spreads over benchmark yieldobtained from any agency suggested by AMFI as a provider ofbenchmark yield / matrix of spreads over benchmark yield to mutualfunds, must be applied for valuation of securities on the day on whichthe bench mark yield / matrix of spreads over benchmark yield isreleased by the aforesaid agency.

Valuation of securities with Put / Call options

The option embedded securities would be valued as follows:Securities with Call optionThe securities with call option shall be valued at the lower of the valueas obtained by valuing the security to final maturity and valuing thesecurity to call option. In case there are multiple call options, thelowest value obtained by valuing to the various call dates and valuingto the maturity date is to be taken as the value of the instrument.Securities with Put optionThe securities with put option shall be valued at the higher of the valueas obtained by valuing the security to final maturity and valuing thesecurity to put option. In case there are multiple put options, thehighest value obtained by valuing to the various put dates and valuingto the maturity date is to be taken as the value of the instruments.Securities with both Put and Call option on the same dayThe securities with both Put and Call option on the same day would bedeemed to mature on the Put / Call day and would be valuedaccordingly.

Government securities

Government securities will be valued as per the prices for GovernmentSecurities released by an agency suggested by AMFI for the sake ofuniformity in calculation of NAVs.

Fixed Income and Money Market Securities(a) The money market securities with maturity upto 182 days are valued

on the basis of amortization (cost plus accrued interest till thebeginning of the day plus the difference between the redemptionvalue and the cost spread uniformly over the remaining maturityperiod of the instruments). In case of a money market security withmaturity greater than 182 days at the time of purchase, the valuationprice as prescribed by SEBI (reduced by the cost and the accrual) tilldate of valuation would be treated as appreciation or depreciationover and above the amortization taken day on day.

(b) Investments in call money, bills purchased under rediscountingscheme and short term deposits with banks shall be valued at costplus accrual; other money market instruments shall be valued at theyield at which they are traded. For this purpose, instruments nottraded for a period of seven days will either be valued at cost plusinterest accrued till the beginning of the day plus the differencebetween the redemption value and the cost spread uniformly overthe remaining maturity period of the instruments or valued on thebasis recommended by the AMC, which will be reviewed by theTrustees periodically.

Valuation of "Repo"Where instruments have been bought on `repo' basis, the instrumentmust be valued at the resale price after deduction of applicable interestup to date of resale. Where an instrument has been sold on a `repo'basis, adjustment must be made for the difference between therepurchase price (after deduction of applicable interest up to date ofrepurchase) and the value of the instrument. If the repurchase priceexceeds the value, the depreciation must be provided for and if therepurchase price is lower than the value, credit must be taken for theappreciation.

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Valuation of convertible debentures and bondsIn respect of convertible debentures and bonds, the non-convertibleand convertible components shall be valued separately. Thenonconvertible component shall be valued on the same basis as wouldbe applicable to a debt instrument. The convertible component shall bevalued on the same basis as would be applicable to an equityinstrument. If, after conversion the resultant equity instrument would betraded pari passu with an existing instrument which is traded, the valueof the latter instrument can be adopted after an appropriate discount forthe non-tradability of the instrument during the period preceding theconversion. While valuing such instruments, the fact whether theconversion is optional will also be factored in.Valuation of warrantsIn respect of warrants to subscribe for shares attached to instruments,the warrants shall be valued at the value of the share which would beobtained on exercise of the warrant as reduced by the amount whichwould be payable on exercise of the warrant. A discount similar to thediscount to be determined in respect of convertible debentures (asreferred in valuation of convertible debentures and bonds above) shallbe deducted to account for the period which must elapse before thewarrant can be exercised;

10. General: Any changes in securities and in the number of Units be recorded inthe books not later than the first valuation date following the date oftransaction. If this is not possible given the frequency of the Net AssetValue disclosure, the recording may be delayed up to a period of sevendays following the date of the transaction, provided that as a result ofthe non-recording, the Net Asset Value calculations shall not beaffected by more than 1%.In case the NAV of the Scheme(s) differs by more than 1%, due to nonrecording of transactions, the investors or Scheme(s) as the case maybe, shall be paid the difference in amount as follows: -

• If the investors are allotted units at a price higher than NAV or aregiven a price lower than NAV at the time of sale of their Units, theyshall be paid the difference in amount by the Scheme.

• If the investors are charged lower NAV at the time of purchase oftheir Units or are given higher NAV at the time of sale of their Units,the AMC shall pay the difference in amount to the Scheme. TheAMC may recover the difference from the investors.

The valuation guidelines as outlined above are as per prevailingRegulations and are subject to change from time to time in conformitywith changes made by SEBI.SEBI has vide its circular no. MFD/CIR/8/92/2000 dated September 18,2000 and amendments vide circular no. MFD/CIR/14/088/2001 dated28.03.2001 and MFD/CIR/14/442/2002 dated 20.02.2002 prescribedcertain additional norms for identification and provisioning of NPAsand guidelines for valuation of non-traded and thinly traded debtsecurities.

11. CALCULATION OF NET ASSET VALUE

The Net Asset Value (NAV) is the most widely accepted yardstick formeasuring the performance of any scheme of a Mutual Fund. NAVcalculations shall be based upon the following formulae:

Market Value of the Scheme’s investments + other current assets +Deposits – all Liabilities except Unit capital, Reserve and Profit and

Loss Account

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Number of SUNDARAM MONEY FUND units outstanding

NAV of the Scheme will be calculated as of the close of every WorkingDay. Valuation of Scheme’s assets and calculation of the Scheme’s NAVwill be subject to such rules or regulations that SEBI may prescribe fromtime to time. NAV of the schemes will be calculated and disclosed upto four decimals and NAV of each option will be disclosed separately.Investors may note that the Repurchase Price and Sale price shall becalculated as indicated below.

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

To illustrate:Applicable NAV = Rs.11.00Entry Load = Nil (at present)Applicable Sale Price = Rs.11.00 * (1 + 0%) = Rs.11.00

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

To illustrate:If the applicable NAV is Rs.11.00, exit load is 0.50%, the redemptionprice will be computed as follows:

= Rs.11 * (1 – 0.50%)= Rs.10.945

As per SEBI Regulations, the Repurchase Price shall not be lower than93% of the NAV and the Sale Price shall not be higher than 107% ofthe NAV and the difference between the repurchase and sale price willnot exceed 7% of the Sale price.

NAV Information

The NAV will be computed on every Working Day (except in specialcircumstances) and updated on the AMFI website and available forpublic information at the Corporate office of the AMC. In addition,being a liquid fund, holiday NAVs are also computed and applied forsale or repurchase of units, wherever applicable. The Unitholders andall prospective investors can obtain the latest NAV information, bycalling the Corporate Office of the AMC or any of the designatedInvestor Service Centres. Publication of NAV, Repurchase and Saleprices shall be made daily atleast in two daily newspapers in terms ofSEBI Regulations.The board may suspend determination or publication of the NAV of theunits 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 the Ninth Schedule tothe SEBI Regulations, the Scheme shall follow the following accountingpolicies:(i) AMC shall keep and maintain proper books of accounts, records

and documents, for the Scheme so as to explain its transactionsand to disclose at any point of time the financial position of theScheme and in particular give a true and fair view of the state ofaffairs of the Scheme;

(ii) For the purpose of the financial statements, the Mutual Fund shallmark all investments to market and carry investments in thebalance sheet at market value. However, since the unrealisedgain arising out of the appreciation on investments cannot bedistributed, provisions shall be made for exclusion of this itemwhen arriving at distributable income;

(iii) Dividend income earned by the Scheme shall be recognised, noton the date the dividend is declared, but on the date, the share isquoted on an ex-dividend basis. For investments which are notquoted on a stock exchange, dividend income will be recognisedon the date of declaration;

(iv) In respect of all interest-bearing investments, income shall beaccrued on a day-to-day basis as it is earned. Therefore whensuch investments are purchased, interest paid for the period fromthe last interest due date up to the date of purchase shall not betreated as a cost of purchase but shall be debited to the InterestRecoverable Account. Similarly, interest received at the time ofsale 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 becredited to the Interest Recoverable Account;

(v) In determining the holding cost of investments and the gains orloss on sale of investments, the ‘average cost’ method shall befollowed;

(vi) Transactions for purchase or sale of investments shall berecognised as of the trade date and not as of the settlement date,so that the effect of all investments traded during the financialyear are recorded and reflected in the financial statements for the

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year. Where investment transactions take place outside the stockmarket, for example, acquisitions through private placement orpurchases or sales through private treaty, the transaction will berecorded, in the event of a purchase, as of the date on which theScheme obtains an enforceable obligation to pay the price or, inthe event of sale, when the Scheme obtains an enforceable rightto collect the proceeds of sale or an enforceable obligation todeliver the instruments sold;

(vii) Bonus shares to which the Scheme becomes entitled shall berecognised only when the original shares on which the bonusentitlement accrues are traded on the stock exchange on an ex-bonus basis. Similarly, rights entitlement would be recognisedonly when the original shares on which the rights entitlementaccrues are traded on the stock exchange on ex-rights basis;

(viii) Where income receivables on investments has accrued but hasnot been received for the period specified in the guidelines issuedby SEBI, provision shall be made by debiting to the revenueaccount the income so accrued in the manner specified byguidelines issued by the SEBI for identification and provisioningfor non-performing assets. An asset shall be treated as non-performing, if the interest and/or principal amount have not beenreceived or remained outstanding or one quarter from the daysuch income/instalment has fallen due.

(ix) When units are sold, the difference between the sale price andthe face value of the unit, if positive, shall be credited to reservesand if negative shall be debited to reserves, the face value beingcredited to Capital Account. Similarly, when units arerepurchased, the difference between the purchase price and theface value of the unit, if positive should be debited to reservesand, if negative should be credited to reserves, the face valuebeing debited to the capital account.

(x) When units are sold, an appropriate part of the sale proceedsshall be credited to an Equalisation Account and when units arerepurchased, an appropriate amount would be debited to theEqualisation Account. The net balance of this account shall becredited or debited to the Reserve Account. The balance on theEqualisation Account debited or credited to the Revenue Accountshall not decrease or increase the net income of the fund but isonly an adjustment to the distributable surplus. It shall therefore,be reflected in the Revenue Account only after the net income ofthe fund is determined.

(xi) The cost of investments acquired or purchased should includebrokerage, stamp charges and any charge customarily included inthe broker’s bought note. In respect of privately placed debtinstruments any front-end discount shall be reduced from the costof the investment;

(xii) Underwriting commission shall be recognised as revenue onlywhen there is no devolvement on the Scheme. Where there isdevolvement on the Scheme, the full underwriting commissionreceived and not merely the portion applicable to thedevolvement shall be reduced from the cost of investment.

(xiii) Being an open-ended Scheme, the initial issue expenses, if anyincurred would be amortized over a period of five years.

The accounting policies and standards as outlined above are as per theprevailing SEBI Regulations and are subject to any changes made in theRegulations.

PART III

UNITS AND OFFER

(a) Offer of UnitsDuring the initial offer period, units were offered at Rs.10/- .With effectfrom March 8, 2000 the units are being offered on a continuous basisat the NAV related price plus entry load if any.b) Minimum InvestmentMinimum Rs.10,000/- per application and in amounts of Rs.1/-thereafter in appreciation option and minimum amount of Rs.50,000and in multiples of Rs.1/- thereafter in dividend reinvestment option.

Minimum Number of InvestorsAs per SEBI circular dated December 12, 2003 ref SEBI/IMD/CIR No.10/22701/03, each scheme and individual plan(s) under the schemesshould have a minimum of 20 investors and no single investor shouldaccount for more than 25% of the corpus of such scheme/plan(s). Incase of non-fulfilment with either of the above two conditions in a threemonths time period or the end of succeeding calendar quarter,whichever is earlier, from the close of the Initial Public Offering (IPO)of open ended schemes or on an ongoing basis for each calendarquarter, the schemes/plans shall be wound up by following theguidelines prescribed by SEBI and the investor’s money would beredeemed at applicable NAV.(c) Who can InvestThe following persons may apply for subscribing to the units ofSUNDARAM MONEY FUND (subject, wherever appropriate, tosubscription to units of mutual funds being permitted under relevantstatutory regulations and the applicants’ constitutions):1. Resident adult individual

(a) Singly or jointly (not exceeding three);(b) Minors through their parents/ guardians;

2. Non-resident Indian (NRIs);3. Hindu Undivided Family (HUF);4. Partnership firm;5. An association of persons or a body of individuals whether

incorporated or not;6. Companies/Bodies Corporate/Public Sector Undertakings registered

in India;7. Banks and Financial Institutions;8. Charitable or Religious Trusts/ Wakf Boards or endowments and

Registered societies (including registered co-operative societies)and private trusts, authorised to invest in units;

9. Army/Air force/Navy/Para-military funds and other eligibleinstitutions;

10. Scientific and/or industrial research organizations authorised toinvest in units;

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

It is expressly understood that the investor has the necessary legalauthority and has complied with applicable internal procedures forsubscribing/redeeming the units. The AMC/Trustee will not beresponsible in case any transaction made by an investor is ultra viresthe relevant constitution/internal procedures. NOTES:1. Non-Resident Indians and Persons of Indian Origin residing abroad

(NRIs) and Foreign Institutional Investors (Flls) have been granted ageneral permission by the Reserve Bank of India [Schedule 5 to theForeign Exchange Management (Transfer or Issue of Security by aPerson Resident Outside India) Regulations, 2000] for investingin/redeeming units of mutual funds subject to conditions set out inthe aforesaid regulations.

2. In the case of an application under a power of attorney or by alimited company or other corporate body or an eligible institution ora registered society or a trust fund, the original power of attorney ora certified true copy duly notarised or the relevant resolution orauthority to make the application, as the case may be, or a dulynotarised copy thereof, along with a certified copy of thememorandum and articles of association and/or bye-laws and/ortrust deed and/or partnership deed and certificate of registrationshould be submitted. The officials should sign the application undertheir official designation. A duly certified/attested list of specimensignatures of the authorised officials should also be attached to theapplication. In case of a trust/fund it shall submit a resolution fromthe trustee(s) authorising the purchases.

3. It is expressly understood that the investor has the necessary legalauthority and has complied with applicable internal procedures forsubscribing/redeeming the units. The AMC/Trustee will not beresponsible in case any transaction made by an investor is ultra viresthe relevant constitution/internal procedures

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In the case of investments of Rs 50,000 and above, investors arerequired to furnish their Income Tax PAN/GIR and the income taxcircle of assessment. Any application without PAN/GIR is liable to berejected.(d) Subscription to the Units of the Scheme on ongoing basis: All valid applications for purchase of Units of this Scheme would bevalued as follows:

Timing Applicable NAVA Purchases and switch in

Receipt of valid applications Closing NAV of the day alongwith local cheque or DD immediately previous to thepayable at par up to 1:00 pm day on which funds areon a working day. available for utilisation by

the fund.

Receipt of valid applications Closing NAV of the dayalongwith local cheque or DD immediately previous topayable at par after 1:00 pm on a the next working day shall working day and the funds are be applied.available for utilisation by the scheme on the same day.

Note: (1) Sundaram Money Fund shall calculate NAV’s for everycalendar day.

(2) Being a liquid scheme, the applicable NAV for switch in, theprovisions specified in for purchases shall be applicable.

(3) The cut off timings shall also be applicable to investmentsmade through "sweep" mode.

Allotment is assured to all eligible applicants provided the applicationsare complete in all respects and are in order. However, the allotment ofsuch Units would be at the discretion of the Board of Trustees. TheAMC/Mutual Fund reserves its right to accept or to reject in whole or inpart any application not in accordance with the terms of the Scheme,without assigning any reason.(e) How to applyApplication forms are available at all offices of Sundaram FinanceLimited, brokers and agents, Registrar and at the Corporate office of theAMC, at the specified investor service centres.Application forms complete in all respects, accompanied by theamount of investment by means of a cheque/demand draft are to besubmitted at the specified collection centres before closure of thescheme. A complete list of collection centres is enclosed elsewhere.As per the directives issued by SEBI, it is mandatory for investors tomention their bank account numbers in their applications for purchaseof units.Kindly retain the acknowledgement slip initialled/stamped by thecollecting authority.(f) Mode of PaymentThe payment may be made by any of the following modes:(i) By a cheque payable locally and drawn on any bank which is a

member of the bankers clearing house located at the place wherethe application form is submitted;

(ii) Applicants located in a place where there is no designatedcollection centre may send their application accompanied by aseparate bank draft crossed; Account payee only – in favour‘SUNDARAM MONEY FUND’ to the office of theAMC/ISC/Collection centre. All demand drafts to be made payableat the collection centres stated in the offer document. No DDcharges will be absorbed by the Scheme/AMC.

(iii) In the case of NRIs and Persons of Indian origin residing abroadpayment may be made by Indian Rupee bank drafts payable atChennai, purchased abroad or by cheque/DD payable at Chennai,drawn on a Non-resident (External) account, a FCNR accountmaintained with a bank authorised to deal in foreign exchange inIndia.

All cheques/demand drafts should be drawn in favour of ‘SUNDARAMMONEY FUND’ and crossed ‘Account Payee only’. Please note thatCash, Stock Invest, outstation cheques/drafts, money orders and postalorders will not be accepted.g) Repurchase of UnitsThe units can be sold back to Sundaram Mutual Fund on any Working

Day at the applicable Repurchase Price. Repurchase requests can besent to specified investor service centre or to the corporate office of theAMC or to the Registrar. Repurchase price will be at the Net Asset Valueper unit on the valuation date and reduced by exit load if any.Unitholders shall have the option to exercise repurchase for a minimumof Rs.10,000/- and in amounts of Rs.1/- thereafter in appreciationoption and minimum amount of Rs.50,000 and in multiples of Rs.1/-thereafter in dividend reinvestment option. The repurchase request canbe made by specifying the rupee amount or by specifying the numberof Units to be redeemed. If a repurchase request is for both a specifiedrupee amount and a specified number of Units, specified number ofUnits will be considered the definitive request.In order to protect the interest of the investors from fraudulentencashment of redemption cheques, the current SEBI guidelinesprovide that redemption cheques are to specify the name of the investorand the bank name and account number where the cheque is to becredited. Hence, investors are advised in their interest to provide thename of the bank, branch address, account type, account number forremittance of repurchase amount.Sundaram Mutual Fund/Sundaram Asset Management CompanyLimited will not be responsible for any loss arising out of fraudulentencashment of cheques and delay/lost in transit.Investors may note that the AMC/Trustees may close a Unitholder’saccount if at the time of any part of repurchase of Units by theUnitholder, the value of Units (represented by units in the investorsaccount if such repurchase of units were to take place, valued at theapplicable repurchase price), falls below Rs.50000/- in dividendreinvestment option and Rs.10,000 in appreciation option.As per SEBI Regulations, the repurchase warrant shall be mailed withinten working days from the date of receipt of the repurchase request atthe office of the Registrar/Asset Management Company. However,under normal circumstances, the AMC will endeavour to despatch therepurchase proceeds within five working days. Incase of delay indespatch of redemption or repurchase proceeds within the periodspecified in sub-clause (b) of the Regulation 53, the AMC is liable topay interest to the unitholders at such rate as may be specified by SEBI.h) Repurchase PriceAll valid repurchase requests would be valued as follows: Timings Applicable NAVRedemptions and switch out Previous day’s closing NAV shall beReceipt of valid application applicable.up to 10:00 amReceipt of valid applications Closing NAV of the day immediately after 10:00 am. previous to the next working day.

Note: (1) Sundaram Money Fund shall calculate NAV’s for every calendar day. Being a liquid scheme, the applicable NAV forswitch in, the provisions specified in for purchases shall beapplicable. The cut off timings shall also be applicable toinvestments made through "sweep" mode.

i. Mode of Payment of Redemption Proceeds

The AMC proposes to use a variety of methods to effect redemptions tothe investors. In choosing the payment method for any specific investor,the AMC will endeavour to see which method would best suit theinvestor, taking into consideration the banking facilities available, thelevel of technology employed by different banks and the investor’spreference.The AMC will constantly review the options in use and new optionsthat may emerge for making payment for redemptions and alter thepayment mechanisms to best serve the investors. In this endeavour, atall points of time, the objective of the AMC will be to ensure speedyand safe payment to the investors, in a manner most convenient andcost effective to them.For the present, the AMC proposes to make redemption payments bythe following methods.- Direct CreditsSome banks have adopted a level of technology that enables them tocredit the proceeds to the accounts of the account holderselectronically. For investors who have accounts with such banks, theAMC will, in consultation with the banks and under advice toUnitholders, directly credit the accounts of the investors based on the

17

account details provided by them to the AMC. Currently, this wouldprobably be the quickest and safest method for an investor to receivepayments due to him. The following banks have confirmed that theycan extend this facility to the Unitholders in the Scheme:

1) ABN AMRO Bank2) ICICI Bank Limited (select branches)3) HDFC Bank Limited4) Standard Chartered Bank5) IDBI Bank.

An investor having an account with any of the above banks mayprovide the complete and correct account details to the AMC for directcredit of redemptions.The AMC may exclude any bank participating in this arrangementbased on its experience in dealing with the bank or add to the list abank that may be able to provide this facility to the satisfaction of theAMC.The investor has a choice of changing his option about the method ofreceiving the 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 chequesThe AMC will make arrangement with banks to issue redemptioncheques payable-at-par or pay orders at the designated centres asnotified in the application form. The AMC will endeavour to increasethe number of locations where such warrants are payable-at-par.However, if an investor resides at a centre outside the locations, thenthe instrument will be issued to be payable at par at the centre nearestto where the investor resides. The cost of clearing these instrumentsfrom such nearest centre will be borne by the investor.As prescribed by SEBI and in order to protect the interests of theinvestors, it is mandatory for the investors to provide their full bankdetails for the AMC to make payment.

j. Fractional Units

Since the request for investment or repurchase of units, is generallymade in Rupee amount and not in terms of number of Units, investorsmay be left with Fractional Units in their Account. Fractional Units willbe computed and accounted for up to three decimal places. However,Fractional Units will in no way affect the investors’ ability to redeem theUnits, either in part or in full standing to the Unitholders’ credit.

k) Listing

As the funds stands ready to buy back the units of this Scheme any timeon any working day, it is not proposed to list the Units of this Schemeon any stock exchange.

l) Transfer

The units of Sundaram Money Fund are freely transferable by act ofparties or by operation of law. For effecting a transfer the applicabletransfer form(s) shall be duly stamped and signed by all the Unitholdersand submitted along with the relevant unit certificate(s). The AssetManagement Company shall on production of instrument of transfertogether with the relevant unit certificates, register the transfer andreturn the unit certificates to the transferee within thirty days from thedate of lodgement of transfer request at the office of the Registrar.

m) Transmission:

In case units are held in a single name by the Unitholder, units shall betransmitted in favour of the nominee where the Unitholder hasappointed a nominee upon production of Death Certificate or any otherdocuments to the satisfaction of the Fund, AMC or Registrar. If theUnitholder has not appointed a nominee, the units shall be transmittedin favour of the Unitholder’s executor/administrator of its estate/legalheir(s) as the case may be on production of the Death Certificate or anyother documents to the satisfaction of the Fund/AMC/Registrar. In caseunits are held by more than one registered Unitholder, then upon deathof the first Unitholder, units shall be transmitted to the secondUnitholder on production of the necessary documents, including DeathCertificate. The rights in the units will vest in the nominee upon thedeath of all Joint Unitholders upon the nominee producing the Death

Certificate or any other document to the satisfaction of theFund/AMC/Registrar.

n) Switching

Unitholders will have an option to switch all or part of theirinvestments in the scheme to any other scheme of Sundaram MutualFund, which is available for investment at that time. The switch will beeffected by way of a repurchase of units and a reinvestment of theproceeds in another scheme(s). Accordingly, to be effective, the switchmust comply with the repurchase rules of this scheme and the issuerules of the other scheme. The price at which the units will be switchedout of the scheme will be based on the prevailing repurchase price andthe proceeds will be invested in another scheme(s) at the prevailingpublic offering price for units in that scheme.

o) Suspension of Sale/ Repurchase of units:

The sale/repurchase of the units of the Scheme may be suspendedtemporarily or 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 ofthe Unitholders.

• A complete breakdown or dislocation of business in the majorfinancial markets

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

or any other serious or sustained financial, political or industrialemergency or disturbance.

• SEBI, by order, so directs.In the above circumstances, the time limits indicated, for processingrequests for purchase and repurchase of units will not be applicable.Suspension or restriction of repurchase/redemption facility under thescheme of the mutual fund shall be made applicable only after theapproval of Board of Directors of the Asset Management Company andthe Trustees. The approval from the AMC Board and the Trustees givingthe details of circumstances and justification for the proposed actionshall also be informed to SEBI in advancep) Nomination FacilityIn terms of Regulation 29A of the SEBI Regulations, the AMC willprovide an option to investors, being individuals, to nominate a personin whom the units will vest upon the death of the investor. Joint holdersmay together nominate a person as a nominee. It must be understoodthat by providing this facility, the AMC is not declaring the nominee asthe person entitled to the units upon the death of Unitholder nor doesthe AMC purport to confer or grant any rights other than those availableunder law to the nominee. The nominee receives the units (subject tothe rights of any subsisting charge holder) only as an agent/trustee of theperson who is entitled to them under law.Where a nominee is a minor, the name and address of the guardian ofthe minor nominee shall be provided by the Unitholder. Only anindividual provided he/she is otherwise not disqualified to own theunits can be a nominee. Transmission of units (subject to the rights ofany charge holder) to the nominee will constitute full discharge of theobligations of the AMC/Trustee, towards the estate/legal heirs/successors of the deceased Unitholder,The nomination facility is subject to applicable laws. Investors arerequested to comply with the prescribed procedures to availthemselves of this facility, the details of which are available with theR&T agent.

q) Options and Investment Plans offered under the Scheme

The Scheme offers the investors two investment options. a. Appreciation Optionb. Dividend Reinvestment Option

Investors are required to tick the appropriate box in the applicationform indicating their option. In case the investor fails to indicate theoption, it would be deemed that the Unitholder has opted for theQuarterly Dividend Reinvestment Option.

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1. Growth OptionInvestors who would prefer capital appreciation can opt for theGrowth Option. The income earned on their units will remaininvested in the Scheme and will be reflected in the Net Asset Value.At the time of redemption, investors can avail the concessional taxrate on the Long term Capital Gains after taking into account thebenefits of indexation for investments over 12 months.

2. Dividend Reinvestment Option Under this option, Dividend declared will be compulsorilyreinvested at the applicable NAV of the next working day, after therecord date. The Trustees reserves the right to change rate ofdividend and frequency of dividend. Under the dividendreinvestment option, the investor may choose any one of thefollowing :a) daily dividend reinvestment option;b) weekly dividend reinvestment option;c) fortnightly dividend reinvestment optiond) monthly dividend reinvestment optione) quarterly dividend reinvestment option;

Subject to the availability of distributable surplus, dividend will bedeclared and reinvested under the different dividend reinvestmentoptions. The NAV of the dividend option will fall to the extent of thedividend declared and tax paid, if any. The additional units created byway of reinvestments of dividend at ex dividend NAV would be addedto the units already held by the Investor.For investors in the daily dividend reinvestment option, weeklydividend reinvestment option, fortnightly dividend reinvestment optionand monthly dividend reinvestment option a revised account statementwould be sent on a monthly basis only. However, the accountstatement would be sent when the investor applies for additional unitsor redeem the units, either in part or in full.For investors in the quarterly dividend reinvestment option, a revisedaccount statement would be sent on a quarterly basis. However, theaccount statement would be sent when the investor applies foradditional units or redeem the units, either in part or in full.The option may be indicated in the application or by providing theFund with a written notice signed by all the registered holder(s) of theUnits and sent to the Investor service centre. Revocation of any suchdecision also must be made in writing and signed by all the registeredholder(s) of the Units and also sent to the Investor Service Centre.The Trustees reserve the right to change the Scheme’s policies onpaying dividends if tax laws or other considerations make the paymentof dividend advantageous to the unitholders and prospective investors.

r) GENERAL

All allotments of units will be subject to realisation of the paymentinstrument and therefore any payment towards redemption/dividendsin respect of such units will be made only after such realisation.An application to purchase the units is not binding on the fund unlessit is confirmed in writing by the AMC and the payment for the purchasehas been realised by the Scheme. An entry made by the AMC as to thedate/time of receipt of an application for purchase/redemption will beconclusive and binding on the applicant. All allotments of units and payments to non-residents will be subject tothe applicable regulations prescribed in this regard by RBI/otherauthorities. Non-resident Indians (NRIs) are requested to submit thenecessary documents for undertaking the various transactions ofpurchase/redemptions, without which redemptions/ dividends cannotbe paid.After the completion of a transaction, (allotment/redemption switchetc.) an account statement will be sent reflecting the same. At theinstance of the investor, a certificate in lieu of the statement may beissued.The AMC will not be responsible for loss due to any delay in the receiptof the statement/certificate.SEBI has prescribed an uniform cut-off time across the industry.Accordingly, such cut-off time shall be applicable forpurchase/redemptions/switch transactions. The applicable price for

applications for purchase/redemption received by agents will be theprice applicable for the date/time when they are received correct andcomplete at the investor service centres of the AMC/the R&T agent. Incase SEBI prescribes any change in the uniform cut-off time, such timeshall apply automatically. Unitholders are requested to check the account statement and reportany discrepancy noticed by them to the R&T agent or customer servicedepartment of the AMC immediately. In case of any non-intimationwithin 15 days, it will be taken that there are no discrepancies.Despatch of redemption warrant or other communication will be madeby ordinary mail or registered post/courier as required under theRegulations at the risk of the investor.The Mutual Fund/AMC will not be responsible for any fraudulentconversion of any payment instrument/instruction. It is mandatory forinvestors to furnish details of their bank accounts. The normalprocessing time will not apply in cases where such details are notprovided.All disputes arising out of or in relation to the issue made under theScheme will be subject to the exclusive jurisdiction of courts in India.The Mutual Fund will have a first and paramount lien/set-off withrespect to every unit/dividend for any amount owed by the Unitholderto it.The AMC/Mutual Fund will not be responsible for any delay/non-receipt of redemption proceeds where it is attributable to anyincorrect/incomplete/inconsistent information provided by the investor.Where any request from the investor is ambiguous or contrary to theterms of the Scheme or does not conform to the proceduresprescribed by the Scheme, the AMC/Trustee reserves their right to rejectit.The Scheme is not obliged to re-present any dishonoured cheque orany other payment instrument, or inform the investor of the dishonour.In such cases, the facility of purchasing units by issue of cheque maynot be permitted to the investor concerned and the expenses incurredby the Scheme may be payable by the investor. Any request forwithdrawal of an application made during the initial public offer periodwill be treated as a redemption request and processed at theredemption price of the Scheme on the first day after it re-opens for saleand redemption on an on-going basis.All information contained in this offer document is based on the lawscurrently in force and are subject to any change thereto.In the case of amendments made to any law/regulations (e.g, SEBIRegulations, Foreign Exchange Regulations, Taxation Laws etc) inrelation to mutual funds or the Scheme, such amendments willautomatically apply to the Scheme to the extent and in the mannerprovided in such laws/regulations. Subject to SEBI Regulations, any amendment to regulations /clarifications / guidelines issued by SEBI for the operation of mutualfunds will apply to the Scheme.All response times are to be reckoned from the time of receipt ofcorrect/complete information relating to the transaction.Subject to SEBI regulations, the Trustees will have the power to doanything not inconsistent with the provisions of theScheme/Regulations, which appear to them to be desirable orexpedient for giving effect to the provisions of the Scheme or forremoval of any difficulty or inconsistency that may arise in theoperation of the Scheme. In exercise of such powers, the Trustees mayprescribe necessary forms, terms and rules with power to the AMC toalter them from time to time. Applications not complete in any respect are liable to be rejected. Inthe event of non-allotment of units, no interest will be payable bySundaram Mutual Fund on the money refunded. The decision of theBoard of Trustees as regards any representation arising from thedisqualification of any application shall be absolute and final.Sundaram Mutual Fund reserves its right to accept or to reject in wholeor in part any application not in accordance with the terms of theScheme, without assigning any reason. Refund orders will be marked ‘Account Payee only‘ and drawn in the

19

name of the sole/ first applicant. All refund cheques will be sent byRegistered Post, acknowledgement due. It is mandatory for applicantsto provide their bank name, branch name branch name and accountnumber in their application for purchase / redemption of unitsThe Trustees may add or otherwise modify any feature investmentplans/patterns, options etc. after obtaining the approval of Unitholders,SEBI and other authorities, wherever required, in accordance with theSEBI Regulations and other applicable laws and the same will bebinding on each Unitholder or any person claiming through him, as ifsuch Unitholder or person had expressly agreed to suchaddition/modification.

s) UNCLAIMED REDEMPTION/DIVIDEND AMOUNT

The unclaimed redemption amount and dividend amounts may bedeployed by the Scheme in call money market or money marketinstruments only and the investors who claim these amounts during aperiod of three years from the due date shall be paid at the prevailingNAV. After a period of three years, this amount will be transferred to apool account and the investors can claim the amount at NAV prevailingat the end of the third year. The income earned on such funds will beused for the purpose of investor education. The AMC will make acontinuous effort to remind the investors through letters to take theirunclaimed amounts. Further, the investment management fee chargedby the AMC for managing unclaimed amounts shall not exceed 50basis points.

PART IV

1. LOAD STRUCTURE

Entry Load and Exit Load:

(As a % of NAV)Entry Load NilExit Load Nil

The repurchase price shall not be lower than 93% of the applicableNAV per unit and the sale price not higher than 107% of the applicableNAV. However, the spread between the repurchase and sale prices willnot exceed the permissible limit of 7% of the sale price as prescribedby 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 acombination of entry and exit loads, subject to a maximum asprescribed under SEBI Regulations. The change will be notified by asuitable display at the Corporate Office of the AMC and at the InvestorService Centres.Any imposition or enhancement of a load in future shall be applicableon prospective investments only. At the time of changing the loadstructure, the addendum detailing the changes will be attached to theoffer document. The addendum will be circulated to all thedistributors/brokers so that the same can be attached to all copies of theoffer documents already in stock. The addendum will also be sentalong with the half-yearly portfolio statements sent to the Unitholders. Arrangements will be made to display the changes/modifications in theoffer document in the form of a notice at all the investor service centresand distributors’/brokers’ offices.The introduction of the exit load/ Contingent Deferred Sales Charges(CDSC) along with the details will be stamped on theacknowledgement slip issued to the investors on submission of theapplication form and will 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 aseparate account and may be utilised towards the selling anddistribution expenses. Any surplus in this account may be credited tothe Scheme, whenever felt appropriate by the AMC.

2. EXPENSES

(a) Initial Issue Expenses:

As per SEBI Regulations, initial issue expenses chargeable to the

Scheme were subject to a maximum of 6% of the amount collected

during the IPO. However, the initial issue expenses were borne by the

AMC.

Annual recurring expenses

The total annual recurring expenses of this Scheme excluding deferred

revenue expenditure written off, issue or redemption expenses, but

including the investment management advisory fee shall be subject to

the limits mentioned below.

Head of Expenses Estimated (%)

Investment Management & Advisory Fees 0.70%

Custodian Fees 0.08%

Registrar & Transfer Agent Fees 0.10%

Marketing & Selling Expenses including

Agents Commission 0.05%

Misc Expenses including Audit Fees, cost of

investor communication, cost of fund transfer 0.07%

Total Annual Recurring Expenses 1.00%

The purpose of the above table is to assist the investor in understanding

the various costs and expenses that an investor in the Scheme may have

to bear.

As per the Regulations, the investment management fees shall be

1.25% of the average daily net assets up to Rs.100 crores, and 1.00%

of the average daily net assets on the amount in excess of Rs.100

crores. However, the Management Fee chargeable to the Scheme is

subject to a maximum of 0.70%.

The above estimates have been made in good faith as per information

available to the Investment manager and the above expenses are

subject to change inter se. The total annual recurring expenses of the

Scheme excluding issue or redemption expenses, but including the

Investment Management and Advisory Fee shall be subject to the

following limits:

On the first Rs 100 crores of the average weekly net assets 2.50%

On the next Rs 300 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 balance assets 1.75%

Provided that such recurring expenses shall be lesser by at least 0.25%

of the weekly average net assets outstanding in each financial year in

respect of a scheme investing in bonds.

As per the SEBI Regulations, the total recurring expenses that can be

charged to this Scheme shall be subject to the applicable guidelines.

Any recurring expense above the permitted limits will be borne by the

AMC.

(b) Initial Issue Expenses of Schemes launched during 2003-04: The

Mutual Fund had launched Sundaram Monthly Income Plan in

December 2003. The entire initial issue expenses of Sundaram Monthly

Income Plan amounting to Rs. 1.09 Crores was absorbed by the AMC.

(c) Initial Issue Expenses of the latest Scheme launched: The Mutual

Fund launched Sundaram India Leadership Fund in June 2004. The

entire initial issue expenses of the Scheme amounting to about Rs. 2.45

crores were borne by the Scheme

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3. Condensed financial information of the scheme :Sundaram Money Fund (Amount Rs.)

Historical Per Unit Statistics 2001-02 2002-03 2003-04 01-04-04 to 30.06.04 **

1 Date of Allotment 07.03.2000 07.03.2000 07.03.2000 07.03.20002 NAV at the Beginning

Dividend Reinvest 10.0213 10.0068 10.1860 –Growth Option 11.0336 11.8799 12.6597 13.3075Daily Div. Reinvest – – 10.7760 10.0921Qtrly Div. Reinvest – – 10.0068 10.1400Weekly Dividend 10.0210Fortnightly Dividend 10.0295Monthly Dividend 10.0350

3 Dividend 0.6750 0.3220 – –Daily 0.3160 0.0982Quarterly 0.4850 0.1000Weekly 0.0428 0.0794Fortnightly 0.0305 0.0919Monthly 0.0882 0.0970

4 Transfer to Reserves -- -- -- --5 NAV at the end

Dividend 10.0068 10.1860 – –Growth Option 11.8799 12.6597 13.3075 13.4588Daily Div. Reinvest - - 10.0921 10.0953Qtrly Div Reinvest - - 10.1400 10.1412Weekly Dividend 10.0210 10.0449Fortnightly Dividend 10.0295 10.0343Monthly Dividend 10.0350 10.0434

6 Annualised Return (since inception – Growth Option) 8.68% 8.00% 7.28% 7.12%

7 Bench Mark Index$ N.A N.A N.A N.A.8 Net Assets at the end of

the period (Rs. In crs) 43.56 148.55 499.45 627.179 Ratio of Recurring expenses

to average net assets 0.91% 0.91% 0.54% 0.42%10 Net income Per unit 1.3155 0.4281 0.03697 0.1054

$ Crisil Liquid Fund Index. Since inception return is not given, as thebenchmark index was available w.e.f 31.03.02. ** Unaudited.Condensed financial information of the schemes launched during thelast three fiscal years:

A. Sundaram Gilt Fund (Amount Rs.)

Historical Per Unit Statistics 02.05.01 to 01.04.02 to 01.04.03 to 01.04.04 to 31.03.02 31.03.03 31.03.04 30.06.04*

1 Date of allotment 02.05.01 02.05.01 02.05.01 02.05.01Div. Grth. Div. Grth. Div. Grth. Div Grth

2 NAV at the beginning 10.00 10.00 10.24 10.98 10.19 11.69 10.1459 12.23933 Dividend (Rs.) 0.65 – 0.70 – 0.45 – 0.10 –4 Transfer to Reserves – – – – – – – –5 NAV at the end 10.24 10.98 10.19 11.69 10.1459 12.2393 12.3208 10.10076 Annualised Return

(since inception)* 9.80% 8.53% 7.18% 6.82%7 Benchmark returns*

(CRISIL Balanced Fund index) NA NA NA NA

8 Net Assets at the end of the period (Rs. In crores) 10.20 5.04 3.66 3.62

9 Ratio of recurring expenses to average net assets 1.76% 1.54% 1.63% 1.57%

10. Net income per unit (Rs.) 1.29 1.46 0.24 0.07

*Since inception return is not given, as the benchmark index wasavailable w.e.f 31.03.02

B. Sundaram Income Plus (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 30.07.02 01.04.03 01.04.04

to 31.03.03 to 31.03.04 to 30.06.04

1. Date of allotment (Rs.) 30.07.2002 30.07.2002 30.07.2002

Grth Div Grth Div Grth Div

2. NAV at the beginning 10.00 10.00 10.7467 10.5090 11.4882 10.4163

3. Dividend (Rs.) – 0.25 – 0.70 – 0.15

4. Transfer to reserves – – – – – –

5. NAV at the end (Rs.) 10.7467 10.5090 11.4882 10.4163 11.5217 10.2778

6. Annualised Return (Since inception) 7.47%# 8.66% 7.65%

7. Benchmark returns (CRISIL

Composite Bond Fund Index) 7.23% 9.68% 7.51%

8. Net Assets at the end of the

period (Rs. in crores) 105.26 54.63 53.83

9. Ratio of recurring expenses to

Average Net Assets 2.19% 2.17% 1.50%

10. Net income (per unit) 0.59 1.54 0.15

# Absolute return

C. Sundaram Select Focus (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 30.07.02 to 01.04.03 to 01.04.04 to

31.03.03 31.03.04 30.06.04

1. Date of allotment (Rs.) 30.07. 02 30.07.02 30.07.02

Grth Div Grth Div

2. NAV at the beginning 10.00 10.83 10.83 22.9042 15.7225

3. Dividend (Rs.) – – 4.50

4. Transfer to reserves – – –

5. NAV at the end(Rs.) 10.83 22.9042 15.7225 20.1568 13.8253

6. Annualised Return (since inception) 8.30%# 64.19% 44.05%

7. Benchmark returns (SNP CNX Nifty) 1.83%# 44.24% 26.36%

8. Net Assets at the end of

the period (Rs. in crores) 5.30 72.33 77.31

9. Ratio of recurring expenses to

Average Net Assets 2.29% 2.39% 2.15%

10. Net income (per unit) 0.74 6.49 -1.02

# Absolute return

D. Sundaram Select Midcap (Amount, Rs.)

HISTORICAL PER UNIT STATISTICS 30.07.02 to 01.04.03 to 01.04.04 to

31.03.03 31.03.04 30.06.04

1. Date of allotment 30.07.2002 30.07.2002 30.07.2002

Grth Div Grth Div

2. NAV at the beginning 10.00 9.75 9.75 22.9042 10.8433

3. Dividend (Rs.) – – 10.00 – –

4. Transfer to reserves – – – – –

5. NAV at the end (Rs.) 9.75 22.9042 10.8433 21.7554 10.3031

6. Annualised Return (Since inception) -2.50%# 64.15% 49.89%

7. Benchmark returns -14.43% 60.43% 46.96%

8. Net Assets at the end of the

period (Rs. in crores) 5.64 94.75 80.69

9. Ratio of recurring expenses to

Average Net Assets 2.34% 2.34% 2.25%

10. Net income (per unit) 0.23 3.25 0.23

# Absolute return

21

E. Sundaram Select Debt- Dynamic Asset Plan (Amount, Rs.)HISTORICAL PER UNIT STATISTICS 04.09.02 to 31.03.03 01.04.03 to 31.03.04 01.04.04 to 30.06.04

1 Date of allotment 04.09.2002 04.09.2002 04.09.02Q H A G Q H A G Q H A G

2 NAV at the beginning 10.00 10.00 10.00 10.00 10.59 10.89 10.89 10.89 10.17 10.18 10.37 12.133 Dividend (Rs.) 0.30 - 0.80 1.10 0.55 -4 Transfer to reserves - - - - - - - -5 NAV at the end (Rs.) 10.59 10.89 10.89 10.89 10.17 10.18 10.37 12.13 10.04 10.05 10.23 11.986 Annualised Return

(Since inception) 8.95%# 13.24% 10.52%7 Benchmark returns

(Crisil Composite Bond Fund index) 5.67% 9.41% 7.14%

8 Net Assets at the end of the period(Rs. in crores) 19.55 15.66 14.54

9 Ratio of recurring expenses to Average Net Assets 1.19% 0.99% 0.88%

10 Net income (per unit) 1.47 2.30 0.10# Absolute return

F Sundaram Select Debt – Short Term Asset Plan (Amount Rs.)

HISTORICAL PER UNIT STATISTICS 04.09.02 to 01.04.03 to 01.04.04 to31.03.03 31.03.04 30.06.04

1 Date of allotment 04.09.2002 04.09.2002 04.09.20022 NAV at the beginning

Wkly Div – 10.24 10.31Frtnly Div – – –Mntly Div – – –Qtrly Div 10.00 10.24 10.18Hly Div 10.00 10.45 10.27Annly Div 10.00 10.45 10.68Grth 10.00 10.45 11.09

3 Dividend (Rs.)Wkly – 0.26Mntly –Qtrly 0.20 0.60 0.10Hly – 0.70 0.175Anly – 0.35 0.40Grth – – –

4 Transfer to reserves – – –5 NAV at the end (Rs.)

Wkly Div – 10.31 10.4012Frtnly Div – – 10.0427Mntly Div – – 10.0584Qtrly Div 10.24 10.18 10.1942Hly Div 10.45 10.27 10.2062Annly Div 10.45 10.68 10.3486Grth 10.45 11.09 11.2324

6 Annualised Return (Since inception) 4.48%# 6.88% 6.66%

7 Benchmark returns (Crisil Liquid Fund index) 2.85%# 4.66% 4.57%

8 Net Assets at the end of the period (Rs. in crores) 18.39 44.14 28.42

9 Ratio of recurring expenses to Average Net Assets 0.71% 0.64% 0.62%

10 Net income (per unit) 2.03 1.00 0.02

G. Sundaram Monthly Income Plan (Amount Rs.)HISTORICAL PER UNIT STATISTICS 12.01.04 to 01.04.04 to

31.03.04 30.06.041 Date of Allotment 12.01.04 12.01.04

Grth Div2. NAV at the beginning 10.00 10.09 10.093. Transfer to reserves -4. Dividend - 0.065. NAV at the end (Rs.)

Growth 10.09 10.1278Dividend (Monthly, Quarterly, half yearly) 10.09 10.1278

6. Annualised returns %(Since inception) 0.09% 1.28%

7. Bench Mark Returns 0.90% -2.59%8. Net assets at the end of the

period (Rs. In cr) 247.21 270.779. Ratio of recurring expenses to

average net assets. 2.04% 2.09%10.Net Income per unit 0.0891 0.08

Note: 1. Annualised returns reported in the tables above are calculated withthe inception NAV taken at Rs.10, the face or par value of the Unit atthe time of allotment. Any dividends paid by the Scheme have beenassumed as reinvested in units of the Scheme at the ex-dividend NAVfor 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.$ The Benchmark indices were available only with effect from March31, 2002, indices return since inception are not given.Past performance may or may not be sustained in future and may notnecessarily provide a basis for comparison with other investments.PART V(1) INVESTOR’S RIGHTS AND SERVICES(a) Investor ServicesProspective investors and existing Unitholders are welcome to contactthe Assistant Manager – Customer Support at the Corporate Office ofthe AMC for any further information about the Schemes of the MutualFund and for any service concerning their investments in the Schemesof the Mutual Fund.The address and phone numbers are:Mr. K.SridharAsst.Manager – Customer Support46, Whites Road, Second FloorRoyapettahChennai 600 014Phone (91) (44) 28583362, 28583367Fax (91) (44) 2858315624-Hour Response: (91) (044) 28585607The AMC ensures that all monetary transactions are completed withinten working days from the date of receipt at the Investor ServiceCentres. Further, under normal circumstances, the AMC shallendeavour to adhere to the following time schedules on an ongoingbasis (from the date of receipt of the request)

Redemption cheque mailing Within 5 working daysPurchase request Within 3 working daysAddress change Within 10 working daysOwnership transmission Within 10 working days

The above-mentioned time schedule does not include postal transittime. The general complaints/requests regarding non-receipt of unitcertificates/account statements received by the AMC/Registrar havebeen resolved by issuing duplicate certificates/statements.(b) Information about the SchemeAn abridged scheme-wise annual report shall be mailed to allUnitholders within six months from March 31 of each year. Theabridged report shall contain such details as are required under theSEBI Regulations.The AMC will also disclose the NAV of the Scheme on all working

22

days. Transparency will be maintained through half-yearly disclosure ofthe established portfolio of the Scheme through newsletters or publishin newspapers.The AMC will also publish the NAV, Repurchase Price and Sale Priceof the Units of this Scheme as per SEBI regulations.(c) Account StatementsEach Unitholder will be sent a non-transferable Account Statement,which is a conclusive proof of investment in the Schemes of the MutualFund. The AMC will endeavour to forward the account statementwithin ten working days after every transaction of Sale or Repurchaseof Units and also in the case of other services. Investors are urged topreserve the Account Statement carefully as it is a valuable document.(d) NAV InformationThe NAV of the Scheme will be calculated and announced by theMutual Fund on all working days. The Unitholders and all prospectiveinvestors can obtain the latest NAV information, by calling theCorporate Office of the AMC or any of the designated Investor ServiceCentres. Publication of NAV, Repurchase and Sale prices shall be madedaily at least 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 Unitholder on payment of Rs.10/-. The abridged Scheme-wiseannual report shall be mailed to all Unitholders not later than sixmonths from the date of closure of the relevant accounting year. Theschemewise abridged annual reports are also displayed on the websiteof the mutual fund.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 websites of the mutual fund andthat of the Association of Mutual Funds in India (AMFI). The Scheme shall publish, before expiry of one month from the closeof each half year, that is on March 31 and September 30, its Schemeportfolio in the prescribed format as per SEBI Regulations in onenational English daily newspaper and in a newspaper in the languageof the region where the HO of the Mutual Fund is situated or send acopy to all the Unitholders and it shall also be displayed on the website of the Mutual Fund.The annual report containing the accounts of the AMC shall bedisplayed on the website of the AMC. Unitholders, if they so desire,may request for the annual report of the AMC.(g) Rights of Unitholders of the Scheme• Unitholders of the Scheme have a proportionate right in the

beneficial ownership of the assets of the Scheme and dividend if anydeclared by the Mutual Fund under the Scheme.

• When a dividend is declared under this Scheme, the dividendoption Unitholders are entitled to the despatch of the dividendwarrant within 30 days from the date of declaration of dividend.

• Unitholders are entitled to the despatch of redemption or repurchaseproceeds within 10 working days from the date of redemption orrepurchase.

• The Board of Trustees is bound to make such disclosures to theUnitholders as are essential in order to keep them informed aboutany information, known to the Board of Trustees, which may havean adverse bearing on their investments.

• The appointment of the AMC for the Scheme can be terminated bya majority of the Trustees or by three-fourths of the Unitholders ofthe Scheme.

• Any change in the appointment of the AMC shall be subject to theprior approval of SEBI and the Unitholders of the respectiveschemes.

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

• Three-fourths of the Unitholders can pass a resolution to wind up theScheme.

• The Unitholders have the right to inspect all the documents listedunder "Documents Available for Inspection" stated elsewhere in thisdocument.

• The Board of Trustees shall obtain the consent of the Unitholders:(i) whenever required to do so by SEBI, in the interest of the

Unitholders;(ii) whenever required to do so on the requisition made by 75% of

the Unitholders of the Scheme;(iii) when the Board of Trustees decides to wind up or prematurely

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

trust or fees and expenses payable or any other change which wouldmodify the Scheme or affect the interest of the Unitholders, isproposed to be carried out, no change shall be carried out unless # a written communication about the proposed change is sent out

to each Unitholder 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 theHead office of the mutual fund is situated; and

# the Unitholders are given an option to exit at the prevailing NAVwithout any exit load.

[Note: For the purpose of this clause, Fundamental Attributes mean theInvestment Objective and Terms of this Scheme].(g) Procedure and Manner of Obtaining Investors Approval inSpecified CircumstancesIn circumstances requiring the approval of Unitholders, the AMC shallbe guided by the directions issued by SEBI and the Board of Trustees,under the Regulations, in regard to the manner of obtaining suchapproval. Further, those Unitholders who have not given their consentor have not responded shall be allowed to redeem their holdings in fullin the Scheme at any time at the NAV based price. (h) Duration of the SchemeThe Scheme being an open-ended Scheme would have a perpetualduration. However, in terms of the SEBI regulations, the Scheme maybe wound up earlier after repaying the amount due to the Unitholders: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 Unitholders of the Scheme pass a resolution that the

Scheme be wound up; or3. SEBI so directs in the interest of the Unitholders of the Scheme; or4. If the number of investors of the Scheme/Plan falls below 25 and any

one Unitholder holds above 25% of the corpus of the Scheme.When the Scheme is to be wound up, the Board of Trustees shall givenotice of the circumstances leading to its winding up :(i) to SEBI and(ii) to the Unitholders of the Scheme by publication in the

newspaper(s) as per prevailing guidelines. On and from the date of the publications of the notice of winding up,the Board of Trustees or the AMC, 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 Scheme; and3. 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 Unitholders to approveby simple majority of the Unitholders present and voting at the meetingfor authorising the Board of Trustees or any other person to take stepsfor the winding up of the Scheme.The Board of Trustees or the person authorised above shall dispose ofthe assets of the Scheme concerned in the best interest of theUnitholders of the Scheme.The proceeds of sale realised in pursuance of the above, shall be firstutilised towards discharge of such liabilities as are due and payableunder the Scheme, and after making appropriate provision for meetingthe expenses connected with such winding up, the balance shall bepaid to the Unitholders in proportion to their respective interest in theassets of the Scheme, as on date the decision for winding up was taken.On completion of the winding up, the Board of Trustees shall forwardto SEBI and the Unitholders a report on the winding up, detailing thecircumstances leading to the winding up, the steps taken for disposal ofthe assets of the Scheme before winding up, net assets available fordistribution to the Unitholders and a certificate from the auditors of theScheme.Notwithstanding anything contained herein above, the provisions ofthe SEBI Regulations in respect of disclosures of half-yearly reports shallcontinue to be applicable until winding up is completed or the Schemeceases to exist.

23

After receipt of the report referred to above, if SEBI is satisfied that allmeasures for winding up of the Scheme have been complied with, theScheme shall cease to exist.(2) TAX BENEFITS OF INVESTING IN A MUTUAL FUNDCertain tax benefits are described below that are believed to beavailable, under present taxation laws, to the unit-holders of mutualfunds including Sundaram Mutual Fund. The information set forthbelow is included for general information purposes only. In view of theindividual nature of tax consequences, each investor is advised toconsult his/her own tax advisor with respect to the specific taxconsequences to him/her of participation in this Scheme.TO THE FUNDThe income earned by the fund will be totally exempt from tax. Beingan debt scheme, the Scheme is liable to pay distribution tax on thedividend paid to the investors. As per the Finance (No.2) Bill 2004,placed before the Parliament on 8th July 2004, the Mutual Fund isliable to pay distribution tax, under Section 115R of the Income TaxAct, 1961 as below:

(a) For payment to Individuals/HUF : 12.5%+ Surcharge+ Cess.(b) For payment to others : 20% + Surcharge+ Cess.

TO THE INVESTORSDIVIDENDSThe dividends received from the Scheme by all categories of investorswill be totally exempt from income tax. There will be no deduction oftax from any payment made to residents.Resident Investors Capital GainsLong term capital gains in respect of Units held for a period of morethan 12 months will be chargeable to tax under Section 112 of theIncome Tax Act, 1961, (as per Option I or Option II -whichever islower) as given below:

Option I Option IIWith indexation # Without indexation $

Individuals and HUFs 20% + surcharge* 10%+ surcharge *Domestic Companies 20% + surcharge * 10%+ surcharge *Residents other than above 20% + surcharge* 10%+ surcharge ** Surcharge at applicable rates.# From the full value of consideration, the following amounts should

be deducted to arrive at the amount of capital gains:1. cost of acquisition as adjusted by cost inflation index notified by

the Central Government, and2. any expenditure incurred wholly and exclusively in connection

with such transfer.$ From the full value of consideration, any expenditure incurred

wholly and exclusively in connection with such transfer should bededucted to arrive at the amount of capital gains.

In the case of individuals and Hindu Undivided Families where taxableincome as reduced by long-term capital gain is below the basicexemption limit, the long-term capital gain will be reduced to theextent of the shortfall and only the balance is subject to long-termcapital gains tax.Dividends Income received from units of the Scheme will be exempt in the handsof the investor, as per Section 10(35) of the Income Tax Act, 1961. TAX DEDUCTION AT SOURCETax will be deducted at source only from redemption payments madeto non-residents. The deduction will be 20% (plus surcharge), wherethe redemption relates to units held for more than 12 months. Wherethe redemption relates to units held for less than 12 months, the rate ofdeduction will be 40% (plus surcharge) for foreign corporates and 30%(plus surcharge) for all other non-residents.Where the non-resident investor files necessary certificates from taxauthorities, authorising nil or lower rates of tax deduction, tax will bededucted at nil or at such lower rates as specified in the certificates. Tobe effective, such certificates must be filed within such period as theAMC may prescribe in this behalf.Where the rates as per the double taxation avoidance agreements inforce under the Income Tax Act, 1961 are lower or more beneficial tothe investor than the rates prescribed in the Finance Act, such lower/

beneficial rates will be adopted for tax deduction. For this purpose, theinvestors will be required to submit a certificate from the tax authoritiesconfirming their entitlement to the concession.Certificate for the tax deducted will be issued to non- residents. TheAMC/ Mutual Fund will not be liable for any loss/ delay in transit.LOSS ARISING FROM REDEMPTIONFor claiming loss from sale of units, the investors are required to adhereto the minimum holding period prescribed under the Income Tax Actfailing which the loss to the extent of dividend will not be eligible forset-off.Further, there is a prohibition on set-off of loss from sale of long-termcapital asset against gain from short-term capital asset. WEALTH TAX/ GIFT TAXNo wealth tax is payable on units of the Scheme. There is no gift taxliability on gift of units of the Scheme.OTHER BENEFITSUnits of the Schemes are an eligible mode of investment in terms of thepattern of investment prescribed under the Income Tax Act for thefollowing entities:1. Charitable trusts,2. Scientific research associations,3. Institutions/associations/boards for regulating games/sports, and4. Employee welfare trusts.PART VI

Other Matters1. Investments in Group CompaniesSundaram Mutual Fund, under all its Schemes, has no investment in theGroup companies of the Sponsor. The AMC does not have a separatepolicy for investment in securities of the group companies. Any suchinvestments will be made on pure commercial consideration for thebenefits of the Mutual Fund and as per Regulations. As per currentregulations, no investment will be made in any unlisted securities of anassociate or group company of the sponsor and in any securities issuedby way of private placement by an associate or group company of thesponsor. Further, no investment shall be made in listed securities ofgroup companies of the sponsor in excess of 25% of the net assets ofthe Scheme. 2. Investor grievances redressal mechanismService requests and grievances, if any, from the investors are receivedat the corporate office of the AMC or its investor service centres or byits registrars. The service requests, complaints or grievances are closelyfollowed up with the Registrar to ensure timely redressal and promptinvestor service. Given below is a summary of all such servicerequests/complaints/grievances received from the Unitholders of theschemes of Sundaram Mutual Fund up to June 30, 2004.Summary of service requests/complaints/grievances received andredressed:Slno. Scheme 2001-02 2002-03 2003-04 01.04.2004

to 30.06.20041. Sundaram Taxsaver’97 495 299 589 1342. Sundaram Growth Fund 678 1359 3971 14203. Sundaram Bond saver 4955 10364 23092 61404. Sundaram Taxsaver’98 35 58 82 145. Sundaram Taxsaver OE 390 676 2060 10896. Sundaram Money Fund 76 218 628 3027. Sundaram Balanced Fund 435 815 2602 5478. Sundaram Gilt Fund 100 185 341 529. Sundaram Select Focus 345 2438 75410. Sundaram Select Midcap 362 4046 105311. Sundaram Income Plus 2417 2392 89112. Sundaram Select Debt 434 1067 27113. Sundaram Monthly Income Plan 1972 2024

Note: There was no pending request/complaint/grievance as on30.06.2004 except the following, which were resolved subsequently:Sundaram Select Debt 1 Sundaram Bond Saver 1During the Quarter ended 30.06.2004, we have received a letter fromSEBI on compliant from the Investor and the same has been replied onMay 25, 2004.3. Associate Transactions(a) Underwriting obligations with respect to issues of Group/Associate

24

CompaniesThe Sundaram Mutual Fund, under all its Schemes, has till date notentered into any underwriting contracts in respect of any publicissue made by any group/ associate company of the Sponsor.

(b) Subscription to issues lead managed by Group/Associate CompaniesNo Schemes of Sundaram Mutual Fund have till date invested in anypublic issue lead managed by any Group/Associate company of theSponsor.

(c) Dealings with Group/Associate CompaniesThe AMC from time to time, for the purpose of conducting its normalbusiness, uses the services of the Sponsor and the subsidiaries andother associates of the Sponsor, namely, Sundaram InsuranceBroking Limited (formerly Sundaram Finance Securities Limited) andTVS & Sons Ltd. The AMC may utilise the services of these groupcompanies and any other subsidiary or associate company of theSponsor that may be established later in case such an associatecompany is capable of providing the requisite services to the AMC.The AMC will conduct its business with the companies oncommercial terms and on arms-length basis and at the prevailingmarket prices to extent permitted under the applicable lawsincluding the Regulations, after an evaluation of the competitivenessof the pricing offered by the associate companies and services to beprovided by them.

In terms of the amendments to SEBI Regulations, the Mutual Fund shalldisclose at the time of declaring half yearly and yearly results:(a) any underwriting obligations undertaken by the schemes of the

mutual fund 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 equity or debt on private placement

basis where the sponsor or its associate companies has acted asarranger or manager.

Sundaram Mutual Fund has paid:Amount (Rs. in lakhs)

Company Scheme 01.04.2004 2003-04 2002-03 2001-02to 30.06.04

Sundaram Sundaram Growth Fund 1.18 3.84 0.03Finance Ltd Sundaram Select Focus 0.59 4.42 0.02

Sundaram Select Midcap 1.10 7.16 0.002Sundaram Tax saver (open ended) 0.06 0.44 0.03Sundaram Balanced Fund 0.06 0.63Sundaram Bond Saver 4.83 39.57 2.80Sundaram Money Fund 2.23 4.85 0.91Sundaram Income Plus 0.59 5.53 1.75Sundaram Gilt Fund 0.01 0.01 0.03Sundaram Select Debt 0.12 0.71 0.40Sundaram MonthlyIncome Plan 2.57 7.82

TVS & Sons Sundaram Money Fund 0.03 0.26 0.32

Sundaram Sundaram Growth Fund 0.80Finance Sundaram Select Focus 0.16Services Ltd Sundaram Select Midcap 0.26

Sundaram Taxsaver (open ended) 0.20Sundaram Bond Saver 23.14Sundaram Income Plus 4.011Sundaram Money Fund 1.84Sundaram Balanced Fund 0.08Sundaram Gilt Fund 0.87Sundaram Select Debt 0.94

Sundaram Sundaram Growth Fund 0.85Finance Sundaram Bond Saver 26.41Securities Sundaram Tax saver (ope ended) 0.26Limited Sundaram Money Fund 1.54

Sundaram Balanced Fund 0.11Sundaram Gilt Fund 2.30

4. Investments made in companies which have invested more than 5%of the net asset value of the schemes of Sundaram Mutual Fund as on30 June 2004Company Name Scheme in which Scheme which Aggregate Holdings as

companies have have invested investments on 30 June invested more than in the made during 2004.5% of the corpus company is the period

under Regulation 25(11)

Allahabad Bank Sundaram Income Plus SUNGRO 117.44 –MIDCAP 76.43 –

Sundaram Select Dt STBritannia Industries Sundaram Select Debt-

Short Term Asset Plan STAX 13.22 12.51–––

Indian Overseas Bank Sundaram Select Short Term Asset Plan Tax 98 0.18 –

MIDCAP 12.21 –SUNTAX 0.36 –SUNBAL 19.98 –SUNGRO 389.46 213.25

Sundaram Select Focus STAX 23.55 –Industrial Sundaram Money Fund DEBTST 1566.87 –Development SUNIP 988.50 486.88Bank of India SMON 22913.87 4892.26

SUNBDS 8725.24 2446.83SUNMIP 1521.85 1519.80

ITC Ltd Sundaram Money Fund SUNGRO 741.23 –SFOCUS 508.96 –SUNTAX 3.19TAX98 1.19SUNMIP 363.58 141.90

State Bank of India Sundaram Growth Fund SUNGRO 1153.83 398.73SFOCUS 1673.04 267.94SUNBAL 34.18 47.41STAX 37.72 –TAX98 1.38 2.07SUNTAX 3.27 5.15SUNMIP 245.50 66.12

Sundaram Clayton Ltd Sundaram Select Debt- Dynamic Asset Plan SUNGRO 29.52 –

MIDCAP 350.53 301.53STAX 7.29 –SUNBAL 18.02 –SUNTAX 1.75 –

TATA Motors Ltd Sundaram Money Fund SUNGRO 597.59 311.85SFOCUS 911.82 219.14SUNBAL 55.15 –TAX98 0.98 3.12SUNTAX 2.70 6.08SUNMIP 51.88 827.02SMON 1970.54 1587.39SUNIP – 486.88SUNBDS 992.32 –DEBTST 2577.78 413.51

Vijaya Bank Sundaram Growth Fund SUNGRO 325.13 –MIDCAP 236.47 –SUNBAL 88.86 –STAX 33.67 –TAX98 1.47 –SUNTAX 3.44 –

Wipro Sundaram Money Fund SUNGRO 1037.33 527.19SFOCUS 1032.22 261.79SUNBAL 42.98 29.27Tax 98 1.17 –SunTax 3.09 –

SUNGRO= Sundaram Growth Fund; SUNTAX = Sundaram Tax Saver97; STAX= Sundaram Tax Saver open- ended; SUNBAL= SundaramBalanced Fund; SMON= Sundaram Money Fund; SUNBDS= SundaramBond saver; SUNIP= Sundaram Income Plus; SSD= Sundaram SelectDebt; MIDCAP= Sundaram Select Midcap; SFOCUS= Sundaram SelectFocus. SUNMIP- Sundaram Monthly Income PlanInvestments in the companies were made keeping in view of thefundamentals and long-term prospects.

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5. Borrowing by the Mutual FundThe Mutual Fund has not resorted to any borrowings till date. However,the Scheme shall have powers to borrow to meet temporary liquidityneeds for the purpose of repurchase, redemption of units, or paymentof interest or dividend to the Unitholders as permitted under the SEBIRegulations. Further, as per SEBI Regulations, the Scheme shall notborrow more than 20% of the Net Assets and the duration of suchborrowing shall not exceed six months. The Scheme under suchcircumstances may borrow from any body corporate or a bank or fromany other person at the prevailing interest rates. The Scheme maydecide to offer such collateral security as may be necessary under thecircumstances. This may result in a reduction in the overall portfolioreturns during the currency of the borrowing in case the cost ofborrowing is higher than the portfolio rate of return. 6. Stock Lending by the Mutual FundSubject to the Regulations governing Stock Lending and also the SEBIRegulations and the applicable guidelines, the Fund may, if the Boardof Trustees permit, engage in stock lending. Stock lending means, thelending of stocks to another person or entity for a fixed period of timeat a negotiated compensation in order to enhance the returns of theportfolio. The borrower will return the securities on the expiry of thestipulated period. The risks pertaining to Stock Lending include counterparty risk, document risk etc. Appropriate risk containment measureswill be implemented based on the applicable Regulations.7. Inter- Scheme TransfersA transfer of traded securities from one scheme to another scheme ofthe Mutual Fund can be effected at the prevailing market prices on spotbasis. In the case of any security not traded on a stock exchange, thetransfer can be effected on fair valuation basis to be arrived by theAMC. Such transfers would be done in conformity with the objectivesof the Schemes and SEBI Regulations. 8. Inter-Scheme InvestmentsThe Scheme may invest in any other scheme having similar investmentobjective under the same Asset Management Company or any othermutual fund without charging any fees, provided that the aggregateinter-scheme investments made by all scheme under the samemanagement or in the schemes under the management of any otherAsset Management Company shall not exceed 5% of the Net AssetValue of the Investing Mutual Fund. Such investments shall be madefrom time to time on the merits of the proposal. As and when anychanges are made to SEBI regulations with respect to the aforesaidpercentage pr charging fees with respect to such inter-schemeinvestments, the same will apply.9. Investment by the AMCThe AMC may invest in the Scheme depending upon its cash flows andinvestment opportunities. In such an event, the AMC will not chargemanagement fees on its investment for the period it is retained in theScheme.The investment by the AMC shall not exceed 25% of the net assets ofthe Scheme on the date of investmentMutual Fund Units

Scheme Name Value as on 30.06.2004Sundaram Bond Saver (D) 49.34Sundaram Bond Saver (A) 101.27Sundaram Income Plus (A) 50.69Sundaram Select Focus (D) 5.89Sundaram Select Midcap (D) 4.31Sundaram Growth Fund (D) 4.18Sundaram Select Debt Dynamic 246.79

A sum of Rs.50.00 lacs was invested by AMC on May 27, 2004 inSundaram Money Fund and redeemed fully on June 6, 2004.10. Dividends and DistributionsThe Board of Trustees may at such intervals as they deem fit, decide anddeclare a dividend.With effect from 22.12.2003 the dividends would be declared on 1) daily basis ie daily dividend reinvestment option 2) Weely basis ie weekly dividend reinvestment option3) Fortnightly basis i.e fortnightly dividend reinvestment option4) Monthly basis i.e monthly dividend reinvestment option5) Quarterly basis ie quarterly dividend reinvestment optionsubject to the availability of distributable surplus, after deducting tax ondistribution in accordance with the applicable tax laws. The dividendsdeclared by way of additional units of the scheme, would be added to

the units already held by the investor.However, it must be distinctly understood that the actual declaration ofdividends under the scheme and frequency thereof will, inter alia,depend upon the disposable surplus of the scheme. The decision of theBoard of Trustees in this regard shall be final.The dividend that may be paid out of the net surplus of the Scheme willbe paid only to those Unitholders whose name appear in the register ofunitholders on the notified record date.NoteWith effect from 22.12.2003, six NAV’s would be declared for thescheme-a. Growth optionb. Daily Dividend reinvestment optionc. Weekly dividend reinvestment optiond. Fortnightly dividend reinvestment optione. Monthly dividend reinvestment optionf. Quarterly Dividend reinvestment optionThe offer document has been amended upto 30.06.2004. Investors mayalso ascertain about further changes after the date of the offer documentfrom the mutual fund / its service centres / distributors or brokers11. Penalties and 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 anycompany associated with the sponsor in any capacity including theAMC, Trustees or any of the directors or any key personnel(specifically the fund managers) of the AMC and Trustees. Nopenalties have been awarded on the Sponsor and its associates byany financial regulatory body, including stock exchanges, fordefaults in respect of shareholders, debenture holders anddepositors. No penalties have been awarded for any economicoffence and violation of any securities laws.

2. There are no pending material litigation proceedings incidental tothe business of the Mutual Fund to which the sponsor of the MutualFund or any company associated with the sponsor in any capacityincluding the AMC, Trustees or any of the directors or key personnelof the AMC is a party. Further, there are no pending criminal casesagainst the Sponsor or any company associated with the sponsor inany capacity including the AMC, Trustees or any of the directors orkey personnel.

3. There is no deficiency in the systems and operations of the sponsorof the Mutual Fund or any company associated with the sponsor inany capacity, including the AMC which SEBI has specificallyadvised to be disclosed in the Offer Document, or which has beennotified by any other regulatory agency.

4. There are no enquiries or adjudication proceedings under the SEBIAct and the Regulations made there under, which are in progressagainst any company associated with the sponsor in any capacityincluding the AMC, Trustees or any directors or key personnel of theAMC.

12. Documents available for InspectionThe following documents are available for inspection to theUnitholders at the Corporate Office of Sundaram Asset ManagementCompany Limited at Chennai:• Trust Deed of Sundaram Mutual Fund• Copy of the Registration Certificate• Investment Management Agreement• Memorandum and Articles of Association of Sundaram Asset

Management Company Limited and Trustee Company• Custodian Agreement• Consent of Auditors.• Letter of Appointment of the Registrar• SEBI (Mutual Funds) Regulations, 1996• Indian Trusts Act, 1882• The Companies Act, 195613. APPROVAL BY THE BOARD OF TRUSTEESThe original Offer Document was approved by the Board of Trustees ofSundaram Mutual Fund at their meeting held on May 13, 2004.Notwithstanding anything contained in the offer document theprovisions of the SEBI (Mutual Funds) Regulations, 1996 and theGuidelines there under shall be applicable.

For and on behalf of the Board of Directors ofSUNDARAM ASSET MANAGEMENT COMPANY LIMITED

T P RamanPlace: Chennai Managing DirectorDate: 26-07-2004

26

BROKER/AGENT NAME & CODE SUB-BROKER’S NAME & CODE COLLECTING CENTRE

STAMP & SIGN

DATE & TIME OF RECEIPT REGISTRAR’S SERIAL NO.

1. Existing Unitholder

Second Floor, 46 Whites Road,Chennai - 600 014Ph : (044) 28583362, 28583367, 28585606 SERIAL No. MF

SERIAL No. MF

Acknowledgement

Received From Mr./Mrs./Ms. .......................................................................................................................................................

Address .......................................................................................................................................................................................

....................................................................................................................................................................................................

ISC’s Signature & Stamp

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 Money Fund

a. Full Name of First/Sole Applicant (as it appears in your bank account) Salutation ■■ Mr. ■■ Ms. ■■ Dr. ■■ Prof

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. • If you have provided a Folio Number please fill in only Section 2a and then proceed to Section 4.)

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)

2. Unitholder Information (Write in block letters . Leave space between words)

Full Name of ■■ Father ■■ Husband ■■ Guardian (in the case of minor) please tick the applicable Salutation ■■ Mr. ■■ Ms. ■■ Dr. ■■ Prof

Full Name of Second Applicant Salutation ■■ Mr. ■■ Ms. ■■ Dr. ■■ Prof

Full Name of Third Applicant Salutation ■■ Mr. ■■ Ms. ■■ Dr. ■■ Prof

(As per SEBI regulations, applicants PAN/GIR number must be provided if the purchase amount is Rs.50,000/- and above, failing which the transaction has to berejected. If you have not already provided this information please do so now. If PAN is not alloted please indicate the same.)

b. Mode of Holding ■■ Single ■■ Joint ■■ Anyone or Survivor (default option – anyone or suvivor)

c. Mailing Address ■■ Home ■■ Office (P.O.Box Address is not sufficient; Overseas address in case of NRIs/FIIs)

e. Are you applying as 1. ■■ Resident ■■ NRI2. ■■ 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 ■■ Required ■■ Not requiredg. Do you want a PIN assigned to you? (This PIN will allow you access to your account via the internet) ■■ Yes ■■ No

Location PIN

d. Contact Particulars

State Country

City

Tel: Office Residence

Fax E-mail

PAN/GIR No. Date of Birth

PAN/GIR No.

PAN/GIR No.

SIGNATURES

1st Applicant ____________________________________________________________

2nd Applicant ___________________________________________________________

3rd Applicant ____________________________________________________________

Scheme Name

Cheque / DD No.

Date

Amount in Rupees

Drawn on (Nameof Bank and Branch)

6. Declaration and SignaturesThe Trustees

Sundaram Mutual Fund

Having read and understood the contents of the Offer Document of the scheme, I/we hereby

apply for units of Sundaram Money Fund as indicated in Section 5 above and agree to abide

by the terms, conditions, rules and regulations of the scheme. I/We have not received nor

been induced by any rebate or gifts, directly or indirectly in making this investment.

SERIAL No. MF3. Payment of Redemption

4. Bank Account Details Please note it is mandatory as per SEBI regulations for all investors to provide bank account details

Name of your Bank

Bank Address

Branch Your Account Number

5. Investments Opted for

Investment Option (please ✓)■■ Growth ■■ Div. Re-investment

Dividend Frequency*■■ Daily ■■ Weekly ■■ Fortnightly ■■ Monthly ■■ Quarterly*Only if dividend re-investment is chosen

Amount DD Charges Net Amount Chq/DD No. Date Bank & Branch

Net Amount

In words..........................................................................................................................................................................

Sundaram Money FundSMF

If you do not indicate an investment option, the default option will be applicable. Please issue a separate Cheque/Demand Draft for each investment.

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.

Account Type ■■ Current ■■ Savings ■■ Cash Credit ■■ NRE ■■ NRO

Sundaram Mutual Fund will endeavour to use Warrant/Draft or Direct Credit payment of 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 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 redemption amount to my account maintained with the following Bank (Please ✔ )

■■ ABN Amro Bank ■■ ICICI Bank ■■ HDFC Bank ■■ Standard Chartered Bank ■■ IDBI Bank

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 is being made, by filling

and signing this application form.

SECTION - 1

In section 1b of this form, you may indicate a folio number

under which you would like to consolidate your investments

under different schemes of Sundaram Mutual Fund. Please

note that Sundaram Mutual Fund can only consolidate these

folios where the signature(s) appear in the same order as the

signature(s) in the folio under which you are consolidating.

SECTION - 2

All 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 over Rs.50,000. We advise all applicants to provide

this number irrespective of the application amount.

All communication and payments will be made to the first

applicant or to the Karta in case of HUF.

Applicants who have checked the mode of holding as “Single”

in section 2(b) may nominate 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 named holder shall receive all Account

Statements, Redemption/refund warrants and 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 body corporate or a registered society or

a trust or a partnership, the relevant Power of Attorney or the

relevant resolution or authority to make the application and

the Trust Deed or the Partnership Deed as the case may be, or

duly certified copy thereof, along with the Memorandum and

Articles of Association and/or bye-laws must be lodged along

with the Application Form or at the Registrar’s office in

Chennai within seven days from the date of application,

quoting the details of the application. Sole Proprietory firms

may submit a completed nomination form to enable

transmission of units 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

lodged at the Registrar’s office within seven days.

Applicants who request a Personal Identification Number (PIN)

by ticking the box in section 2(g) will be sent a PIN agreement

which will be mailed separately. This PIN allows you to access

your account information via the internet.

SECTION - 3

Please tick the box if you would like to receive your

redemption 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 Sundaram Mutual Customer Service Centres are

located).

SECTION - 4

In order to protect the interest of the investors from fraudulent

encashment of refund/redemption cheque, the current SEBI

guidelines require that refund orders/redemption cheques

specify the name of the investor, bank name and account

number where the cheque is intended to be credited. Hence,

investors are advised in their interest to provide the name of

the Bank, Branch address, account type and account number

for remittance of redemption amount. The Trustees/Investment

Manager will not be responsible for any loss arising out of

fraudulent encashment of cheques or delay/loss in transit.

SECTION - 5

Please note that if you do not tick the investment option/type

box (i.e. growth option or dividend option) of the relevant

scheme in Section 5 then the Mutual Fund will buy you into

the default option of the scheme - Quarterly Dividend

Reinvestment Option.

Mode of Payment : The cheque/bank draft should be drawn in

favour of the scheme you are investing in and crossed “a/c

payee only”. For example, if you are investing in Sundaram

Money Fund the cheque or DD must be made payable to

“Sundaram Money Fund”.

SECTION - 6

Signature should be in English or in any Indian language.

Thumb impressions must be attested by a Magistrate/Notary

Public under his/her official seal. In case of HUF the Karta

should sign on behalf of the HUF.

27

Instructions

DIRECTORY SUNDARAM MUTUAL - BRANCH ADDRESSES

Ahmedabad

Behind A.K. Patel House, Mithakhali Six Road,Navarangpura, Ahmedabad - 380 009.

Ph: 079-55613337/26440442

Bangalore

1st Floor, 'Maangalaya Punarbhav' 132 Bridge RoadBangalore 560 025.

Ph: 080 - 22076706/22076707

Chennai

Sundaram Towers, 46 Whites Road, Second FloorRoyapettah, Chennai 600 014. Ph: 044 - 28583362/28583367

Cochin

The Monarch, First Floor,P.T. Usha Road, Ernakulam Cochin 682 011.

Ph: 0484 - 2371988/2374834/2383573

Coimbatore

41A, 1st Floor, West Lokamanya Street, R.S.PuramCoimbatore 641 002.

Ph: 0422 - 2542816/5360058

Delhi

#605 Ashoka Estate, 6th Floor, 24 Barakhamba Road New Delhi 110 001.

Ph: 011 - 23730246/23353276/

Hyderabad

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

Kolkata

'Constantia' 4th Floor, 11 U.N. Brahmachari SaraniKolkata 700 017.

Ph: 033 - 22816707/22835504

Madurai

No: 16 & 17, A R Plaza, North Veli Street, Madurai - 625 001. Ph: 0452 - 5377478/5376801

Mumbai

602,602A, Dalamal House, 6th Floor, Nariman Point,Mumbai - 400 021.

Ph: 022 - 22842832/22842878/22842879/22833863

Pune

First Floor, Mantri Vertex, Opp. Nirmiti , Law College RoadPune 411 004.

Ph: 020 - 25450006/25438038/5438065/5456976

Trichy

C/o.Sundaram Finance Ltd, "Centre Point", 2nd Floor,95, Bharathidasan Salai, Cantonment,

Trichy 620 001.

Ph: 0431 - 2761847/2414904/ 2410953

Vijayawada

D.No. 40-1-129, Chandramoulipuram, Near Benz Circle,M.G.Road, Vijayawada 520 010.

Ph: 0866 - 2476018/2472403

Visakhapatnam

C/o.Sundaram Finance Ltd, 47-10-13, Rednam Regency NearDiamond Park, Dwarakanagar, Vizakha Patnam 530 016.

Ph: 0891 - 2754505/2754695

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 Finance Trustee Company Limited

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

Mr. K. Sridhar

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.