OFFER DOCUMENT
SUN F&C FIXED MATURITY SERIES
An Open-End Debt Scheme

from

SUN F&C MUTUAL FUND
Issue of Units of Rs.10/- Per Unit for Cash

Investment Manager :
SUN F&C Asset Management (India) Pvt. Ltd.

Scheme Opens on : ***
Earliest Closing Date : ***
Scheme Closes on : ***

This Offer Document sets forth concisely the information about the Scheme that a prospective investor ought to know before investing. Prospective investors should study this Offer Document carefully in its entirety and consult with their legal, tax and investment advisors to determine possible legal, tax, financial or other considerations of subscribing for, purchasing or holding Units before making a subscription for Units and retain the Offer Document for future reference.

The Scheme particulars have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended till date, and filed with SEBI. The Units being offered for public subscription have not been approved or disapproved by the Securities and Exchange Board of India nor has the Securities and Exchange Board of India certified the accuracy or adequacy of the Offer Document.

The SUN F&C Mutual Fund (the Mutual Fund) and the SUN F&C Asset Management (India) Pvt. Ltd. (the AMC), have not authorized any person to give any information or make any representations, either oral or written, other than as stated in this Offer Document in connection with issue of Units under the Scheme. Prospective Investors are accordingly advised not to rely upon any information or representations not incorporated in this Offer Document. Any subscription, purchase or sale made by any person on the basis of statements or representations which are not contained in this Offer Document or which are inconsistent with the information contained herein shall be solely at the risk of the Investor.

The Scheme is an open-ended perpetual scheme. This Offer Document will remain effective till a revised version is printed and circulated. In accordance with SEBI directives, this Offer Document will be fully revised and updated at least once in two years from the date of issue. Till the time the Offer Document is re-printed, an addendum giving details of each of the changes will be attached to the Offer Document. The Yearly condensed financial information of the Scheme will also be included in the form of addendum to the Offer Document till the time the revised Offer Document is printed. The investors may also obtain information about any further changes after the date of this Offer Document from the Mutual Fund, Investor Service Centres, Distributors or Brokers. Material Changes will be filed with SEBI and circulated to the Unitholders or as may be publicly notified by advertisements in the newspapers subject to the applicable Regulations.

All references to "dollars" or "$" refer to United States Dollars and "Rs" to Indian Rupees. The reference exchange rate between the United States Dollar and the Indian Rupee has been taken at US$1 = Rs.47. A "crore" means "ten million" and a "lac" means a "hundred thousand".

The date of this Offer Document is ****

TABLE OF CONTENTS

I. DEFINITIONS & ABBREVIATIONS

II. SUMMARY - SUN F&C FIXED MATURITY SERIES

Fixed Maturity Series

The details of the Plans proposed to be launched under each Series, viz. Options available thereunder, their Fixed Subscription Periods, Fixed Maturity/Redemption Dates are as under:

·         NAV will be declared on every Business Day including the Business Days during the Fixed  Subscription Periods. Unitholders can subscribe to the Units of the FMPs at the Applicable NAV, subject to entry load, if any, during Fixed Subscription Period (s).   For the present the Trustees have decided not to levy any Entry Load.

·         Unit holders may redeem, partially or fully, their investments on the Fixed Maturity Dates/ Fixed Redemption Dates without any Exit Load or on any other Business Day at the Applicable NAV subject to Exit Load, if any.   The Units not redeemed on the Fixed Maturity Dates will automatically continue under the respective FMPs and can be redeemed during the subsequent Fixed Maturity Date(s) without any Exit Load or on any other Business Day at the Applicable NAV subject to  Exit Load, if any.

 The Trustees intend to launch several FMPs under each Series over a period of time.  It should, however, be noted that the Trustees will have the full freedom to decide on the number of FMPs to be launched under each Series. The Trustees may decide not to launch a FMP or alter, either partly or fully, the  declared schedule of launch of FMPs. Similarly, the Trustees reserve the right to increase/decrease the duration of a FMP as well as the number of Business Days as Fixed Subscription Period and alter/modify/change the Fixed Maturity Dates.  The Trustees reserve the right to terminate a particular FMP from a notified date, should the number of unitholders in the FMP and/ or the size of the net assets of the FMP go below an economic size as determined by the Trustees.  Such revision shall be notified by a suitable display in the Investor Service Centers of the AMC and on   AMC's website at www.sunfc.com or if considered necessary, by way of an advertisement in the newspaper.

Process Flow for Subscriptions and Redemptions:

The above Process Flow has been given for ease of understanding of the intending investors.

III. HIGHLIGHTS

· SUN F&C Fixed Maturity Series is a debt scheme which will endeavour to generate attractive, stable returns through investments in high quality fixed income securities. The Scheme will have Seven Series viz Monthly, Quarterly, Half-Yearly, Yearly, 3 Yearly, 5 Yearly and 7 Yearly Series and within each Series various Fixed Maturity Plans (FMPs). Each FMP will be identified by a distinct serial number and will have a portfolio of securities normally maturing in line with the time profile of the FMP.

· Initial Offer of Units at Rs. 10 and thereafter at NAV based prices.

· Choice of Options : Dividend (Payout or Reinvestment) and Growth under each FMP.

· Subscription available in all FMPs on notified Fixed Subscription Periods.

· Liquidity - Redemptions available on all Business Days at NAV based prices with exit load as applicable and on Fixed Redemption Date(s) without any exit load.

· Initial issue expenses of the Scheme to be borne by the AMC.

· Credentials : SUN F&C Mutual Fund is a mutual fund set up by F&C Emerging Markets Ltd., of the U.K. (FCEM), in association with the SUN Securities (India) Pvt. Ltd. FCEM is part of the F&C Group, one of Europe's oldest and leading asset management groups with assets under management of more than U.S.$ 29 billion (Rs.1,37,969 crores).

· Full and firm allotment to all eligible applications.

· Transparency : Daily NAV disclosure. Full portfolio disclosure at least once every quarter.

· Tax Benefits :
- Dividend distributions by Mutual Funds are tax exempt in the hands of the Unitholder.
- Unitholders who redeem units held for more than 12 months will get the benefit of long term capital gains tax and resident and other eligible investors will be entitled to get the benefit of indexation.
- Investments in the Scheme are exempt from Wealth Tax and Gift Tax.

IV. RISK FACTORS

STANDARD RISK FACTORS
· Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved.

· As with any investment in securities, the NAV of the units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets.

· Past performance of the sponsor/AMC/mutual fund does not indicate the future performance of the schemes of the mutual fund.

· SUN F&C Fixed Maturity Series is the name of the scheme and does not in any manner indicate either the quality of the scheme, its future prospects or returns.

· The sponsors are not responsible or liable for any loss or shortfall resulting from the operations of this Scheme beyond the initial contribution of Rs.5 lacs towards setting up the Mutual Fund.

SCHEME SPECIFIC RISK FACTORS
· Interest Rate Risk: Fixed Income Securities such as bonds, debentures, and money market instruments run the price-risk or interest rate risk. Generally, when interest rates rise, prices of existing fixed income securities fall and when interest rates drop, such prices increase. The extent of fall or rise in the prices is a function of the existing coupon, days to maturity, the present level of interest rates and the increase or decrease in the level of interest rates.

· Credit Risk: Debt securities are also subject to the risk of an issuer's inability to meet principal and interest payments on the obligations. Even where no default occurs, the price of a security may go down because the credit rating of an issuer goes down.

· Reinvestment Risk: Investments in Fixed income Securities may carry reinvestment risk as interest rates prevailing on the interest or maturity due dates may differ from the original coupon of the instrument. Consequently, the proceeds may get invested at a lower rate.

· Liquidity Risk: The liquidity of the Scheme's investments may be restricted by trading volumes, settlement periods and transfer procedures. In the event of an inordinately large number of redemption requests or of a restructuring of the Scheme's portfolio, the time taken by the Scheme for redemption of Units may become significant.

· Risks associated with investment in unlisted securities: Except for any security of an associate or group company, the Scheme has the power to invest in securities which are not listed on a stock exchange ("unlisted securities") which in general are subject to greater price fluctuations, less liquidity and greater risk than those which are traded in the open market. Unlisted securities may lack a liquid secondary market and there can be no assurance that the Scheme will realise their investments in unlisted securities at a fair value.

· Risks associated with investment in ADRs/GDRs: The Scheme may also invest in overseas financial assets ADRs/GDRs of Indian Corporates as permitted by the concerned regulatory authorities in India. To the extent that the assets of the Scheme will be invested in securities denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by changes in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital to India may also be hampered by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment.

· Risks associated with Derivatives: Derivative products are specialised instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price of interest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the "counterparty") to comply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices. Please also see the section on Derivatives on Page_____.

· Risks associated with Securities Lending: The risks in lending portfolio securities consist of the failure of another party, in this case the approval intermediary, to comply with the terms of agreement entered into between the lender of securities and the approved intermediary. Such failure to comply can result in the possible loss of rights in the collateral put up by the borrower of the securities, the inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefits accruing to the lender from the securities deposited with the approved intermediary.

· Regulatory Risk: Changes in Government policy in general and changes in tax benefits applicable to Mutual Funds may impact the returns to investors in the Scheme.

The investors in the Scheme are not being offered any guaranteed/indicated returns.
(Please also see Special Considerations Section in the Offer Document on Page_____).

V. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY

A Due Diligence Certificate duly signed by the Chief Compliance Officer of SUN F&C Asset Management (India) Pvt. Ltd. has been submitted to SEBI on September 11, 2001 which reads as follows :

DUE DILIGENCE CERTIFICATE
It is confirmed that :

i) the draft 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;

ii) all legal requirements connected with the launching of the Scheme as also the guidelines, instructions, etc., issued by the Government and any other competent authority in this behalf, have been duly complied with;

iii) the disclosures made in the Offer Document are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the proposed Scheme;

iv) all the intermediaries named in the Offer Document are registered with SEBI and till date such registration is valid.

VI. EXPENSES

A. Unitholder Transaction Expenses or Load Structure.

Under the Scheme, the Trustees reserve the right to introduce a Load or change the Load Structure of the Scheme if it so deems fit in the interest of smooth and efficient functioning of the Mutual Fund. A Load Structure introduced by the Trustees could comprise an Entry Load, an Exit Load or any other load as may be permissible under the SEBI Regulations and will be applicable on a prospective basis.

The Trustees reserve the right to modify/alter the load structure on a prospective basis and may decide to charge an entry load/ exit load or a combination of entry / exit loads or introduce a differential load structure on the Units subscribed / redeemed during the Fixed Subscription Periods/ Fixed Redemption Dates or on any other Business Day. Such changes will be applicable for prospective investments.

The following measures, inter alia, will be taken to inform the existing and prospective investors about the load structure:

· An addendum detailing the changes will be attached to the Offer Document and Key Information Memorandum cum Application Form. The addendum will be circulated to all the accredited distributors/brokers so that the same can be attached on all the Offer Documents/ Key Information Memorandum to be distributed by them.

· Changes / modifications will be displayed in the form of a notice in all the Investors Service Centres and circulated to all accredited distributors/ brokers.

· The introduction of the load alongwith the details may be stamped in the acknowledgement slip issued to the investors on submission of the application form.

· The current load structure as applicable to an investment by a Unitholder will also be disclosed in the Statement of Account issued to the Unitholder by the Registrar & Transfer Agent, CAMS.

Any Entry or Exit Load (including Contingent Deferred Sales Load) shall be maintained in a scheme wise separate account and may be utilised towards meeting the selling and distribution expenses. Any surplus in this account may be credited to the Scheme whenever felt appropriate by the AMC.

* On any given day the difference between the redemption price and the subscription price of the units redeemed or issued on that day shall not exceed 7% of the subscription price. The AMC, however, reserves the right to collect an additional management fee of upto 1% per annum of the average net assets till such a time as the initial issue expenses incurred under the Scheme are recovered subject to a maximum extent of 6% of the initial mobilization or as may be permitted from time to time under the SEBI Regulations.

** Applicable Entry Load, if any, will be reduced by any Entry and/or Exit Load already paid by the investor in the Scheme from which the investor is switching out from. This facility is applicable to the determination of the Entry Load only.

B. Initial Issue Expenses

· Present Scheme : SUN F&C Fixed Maturity Series. The total Initial Issue Expenses chargeable to the Scheme as per the current Regulations are subject to a maximum of 6% of the amount collected during the Initial Offer Period. However, the initial issue expenses to be incurred will be borne by the AMC.

Initial issue expenses under each plan are however estimated as under:

The above estimates are subject to change as per actuals.

· Past Schemes :

Initial Issue Expenses
The following tables briefly outline the financial information relating to the initial issue expenses of Schemes launched by SUN F&C Mutual Fund

* The above initial issue expenses of the schemes were fully borne by the AMC.
** Out of 1.61%, 1.5% was charged to the Scheme and balance 0.11% was borne by the AMC.
@ Out of 12.38%, 4.00% was charged to the Scheme and balance 8.38% was borne by the AMC.

C. Estimated Annual Recurring Expenses: SUN F&C Fixed Maturity Series (Per FMP)

· The purpose of the table is to assist the investor in understanding the various costs and expenses that an investor under each FMP in the Scheme will bear directly or indirectly These estimates have been made in good faith as per the information available to the AMC at the time of preparation of this Offer Document and the total expenses may be more than as specified in the table above. The above expenses are subject to inter-se change. The expenses also may increase/ decrease as per actuals and/ or any change in the Regulations. Overall, as per the SEBI Regulations, the total recurring expenses that can be charged to each FMP is determined by applicable guidelines as given below. Expenses over and above this limit only will be borne by the AMC.

On the first Rs.100 crores of the average weekly net assets -2.25%

On the next Rs.300 crores of the average weekly net assets -2.00%

On the next Rs.300 crores of the average weekly net assets -1.75%

On the balance of the assets -1.50%

Currently as per estimates given in the table above, the total estimated annual recurring expenses is 1.00%. However, this is subject to revision by the Trustees from a notified date.

· In terms of Regulation 52 of the SEBI Regulations, the undernoted regulatory limits on Investment Management & Advisory fees are applicable:

As per SEBI Regulations, the AMC can charge the Mutual Fund with investment and advisory fees subject to the following :

- Upto one and a quarter of one percent of the weekly average net assets outstanding in each accounting year for the scheme concerned as long as the net assets do not exceed Rs.100 crores, and

- Upto one percent of the excess amount over Rs.100 crores where net assets so calculated exceed Rs.100 crores.

Currently, as per estimates given in the table above, the AMC will charge 0.50% fee. However, this is subject to revision by the Trustees from a notified date.

VII. CONDENSED FINANCIAL INFORMATION

i. SUN F&C Value Fund

A. INFORMATION FOR THE PREVIOUS FISCAL YEARS

The Scheme was launched on 23.5.1997 and the Units allotted on 25th July, 1997.
* Figures relate to the period prior to the segregation of the Units of the Scheme into Dividend Plan and Growth Plan.
@ Includes a one time dividend payout of Rs.2.50 per unit under Growth Plan prior to segregation of the Scheme into Dividend Plan and Growth Plan.
† Returns exclude entry load, if any.

B. INFORMATION FOR THE CURRENT FISCAL YEAR (2001-2002)

Latest NAV and Annualised Returns

Annualised returns reported in the table above are calculated with the inception NAV taken as Rs.10, the Face Value of the Unit at the time of allotment on 25th July, 1997.
@ Includes a one time dividend payout of Rs.2.50 per unit under Growth Plan prior to segregation of the Scheme into Dividend Plan and Growth Plan.
† Returns exclude entry load, if any.

(ii) SUN F&C Money Value Fund

A. INFORMATION FOR THE PREVIOUS FISCAL YEARS

*    The Scheme was launched on 26.10.1998 and the Units were allotted on 23.11.1998 for Bond Option and Liquid Option (Normal Plan).  An additional Plan of Liquid Option viz.  Daily Dividend Plan was launched on 3^rd January, 2000.

@   Figures relate to the period prior to the segregation of the Units of the Scheme into Dividend Plan and Growth Plan.

†    Returns exclude entry load, if any.

** Less than Re.0.01 per unit.
† Returns exclude entry load, if any.
$ Growth Plan returns. Note: Dividend declared for the fiscal year 1999 - 2000

Note:
Dividend declared for the fiscal year 1999 - 2000

Dividends declared for the fiscal year 2000-2001

B. INFORMATION FOR THE CURRENT FISCAL YEAR (2001-2002)

Latest NAV and Annualised Returns

Annualised returns reported in the table above are calculated with the inception NAV  taken as Rs.10, the Face Value of the Unit at the time of allotment on 23^rd November, 1998.

Returns for periods less than one year are given in absolute terms only.

*    Inception Date – 3^rd January, 2000.
†    Returns exclude entry load, if any.
$    Growth Plan returns.

(iii)  SUN F&C Balanced Fund

A.   INFORMATION FOR THE PREVIOUS FISCAL YEARS