SBI Magnum Income Fund

This product is suitable for investors who are seeking:

Investment in debt and money-

market securities

Regular income for medium term

Low risk

Disclaimer: Investors should consult their financial advisors if in doubt whether this product is suitable for them.

SBI Magnum Income Fund

Performance against benchmark

Data as on September 30, 2016

Past performance may or may not be sustained in future. Returns (in %) other than since inception are absolute, calculated for growth option of regular plan and in INR are point-to-point (PTP) returns calculated on a standard investment of 10,000/-. Additional benchmark as prescribed by SEBI for long-term debt schemes is used for comparison purposes.

30-Sep-2015 to 30-Sep-2016

30-Sep-2014 to 30-Sep-2015

30-Sep-2013 to 30-Sep-2014

Since Inception

Absolute Returns (%) CAGR Returns (%) PTP Returns (INR)

SBI Magnum Income Fund 9.64 12.53 7.35 7.79 38,194

Crisil Composite Bond Fund Index (Scheme Benchmark) 11.51 12.56 11.61 N.A. N.A.

Crisil 10 year Gilt Index (Additional benchmark) 11.11 13.76 6.85 N.A. N.A.

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14

16

30-Sep-2015 to30-Sep-2016

30-Sep-2014 to30-Sep-2015

30-Sep-2013 to30-Sep-2014

Since Inception

SBI Magnum Income Fund - Reg Plan -Growth

Scheme Benchmark: - Crisil CompositeBond Fund Index

Additional Benchmark: - Crisil 10 Yr GiltIndex

Type of Instrument % of Total Corpus Risk Profile

Corporate debentures & Bonds / PSU / FI / Govt.

Guaranteed Bonds / Other including securitized

Debt

Upto 90%

Low to Medium

Securitized debt No more than 10% of the investment in debt

Medium to High

Government securities Upto 90% Low

Cash and call money^ Upto 25% Low

Money-market instruments* Upto 25% Low

Units of other mutual funds Upto 5% Low

Broad Asset Allocation of the Portfolio

^ Pursuant to RBI Guidelines, presently Mutual Funds are not allowed to participate in Call Money.

* Money Market Instruments will include Commercial Paper, Certificates of Deposit, Treasury Bills, Bills Rediscounting, Repos, short term bank deposits, short-term Government securities (of maturities less than 1 year) and any other such short-term instruments as may be allowed under the regulations prevailing from time to time.

Detailed Asset Allocation of the Portfolio

Data as on: October 31, 2016

In

terest

Rate

Sen

sit

ivit

y

Credit Quality

High Medium Low

High

Medium

Low

DATED GOVT SECURITIES,

48.19 NON-CONVERTIBLE DEBENTURE,

29.83

ZERO COUPON

BOND, 1.58

CBLO/REVERSE REPO, 4.37

NCA, 16.03

Below AA+, 18.55

AA+, 0.81

SOV,AAA and Equivalent,

60.24

NCA(Incl. Cash,Deposits and Equity),

20.40

Bond Spreads Favoring Investment in G-Sec

Source: Reuters/Bloomberg as on October 31, 2016

Corporate Bonds spreads have narrowed significantly due to fall in interest rates.

We found spreads narrowing from 150bps to 50 bps during this period.

We expect spreads to remain at current levels and could widen on resumption of fresh supply.

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0.80

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1.20

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6

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3 Year Spread 5 Year Spread 10 Year Spread

India Rates Snapshot for October 2016

• Indian bond yields have softened massively with 10-year G-sec trading at 6.79% as of September end and down another 11bps at

6.68% as of 10th November.

• The withdrawal of the high denomination notes as legal tender could lead to large deposits of money at bank branches. Given the

ceiling on withdrawal of cash at Rs4,000 and that of Rs10,000 through cheque at bank branches, the liquidity is likely to stay within

the banking system in the short term. This augurs well for interest rates, besides boosting liquidity. Consequently, money-market

rates, too, softened on the back of anticipation of improvement in liquidity.

• Crude oil prices rose 9.1% over the month and 38% YTD.

• Rupee continues to hover around 66-67 levels against the US Dollar.

Source: Bloomberg, PPAC, SBIMF Research; NB: **Crude oil

price is average $/barrel for the month, rest of the data are %

month end; *Corporate bond rate is for AAA rated bonds ,***

Refers to PSU Banks CD rate; # INR and Oil price changes are

% change YTD

Aug-16 Sep-16 Oct-16 Change YTD (in bps)

1 Yr. T-Bill 6.68 6.55 6.44 -79

3M T-Bill 6.56 6.42 6.37 -78

10 year GSec 7.11 6.82 6.79 -97

3M CD*** 6.63 6.61 6.58 -63

12M CD*** 7.18 7.06 6.93 -78

3 Yr Corp Bond* 7.60 7.55 7.48 -85

5 Yr Corp Bond* 7.69 7.60 7.52 -87

10 Yr Corp Bond* 7.80 7.67 7.65 -76

1 Yr IRS 6.57 6.47 6.35 -72

5 Yr IRS 6.49 6.36 6.35 -61

Overnight MIBOR Rate 6.54 6.50 6.24 -79

INR/USD 67.0 66.6 66.8 0.9#

Crude Oil Indian Basket** 44.4 45.1 49.2 37.9#

RBI, on 4th October, delivered its first monetary policy decision under

governor Patel and newly-formed India’s 6-member Monetary Policy

Committee (MPC). The formation of MPC has been a landmark

institutional reform and all the members unanimously voted for a rate

cut.

The Reserve Bank’s repo rate cut of 25 bps was balanced by a

rather less dovish statement on future inflation trajectory.

The highlights of latest monetary policy was the change in stance on

the timeframe to reach the 4% inflation target (March 2018 earlier)

and the desired range for real rate.

While the self-imposed glide path to 5% by Q4 2016-17 has been

retained, the journey thereafter seems to be mired with known and

unknown upside risks to headline retail inflation.

The desired range for real rates (3m/1 year T-bill rate minus inflation

expectation) has been allowed to dip to 125bps from earlier 150-

200bps as the central bank opined that neutral rate is dynamic and

trending downwards globally.

We expect inflation to fall to 4% by November before it starts to pick-

up again in last quarter. For FY17 as a whole, the CPI inflation is

likely to average around 5%. That said, with shifting of the 4% goal

posts and removing the rigidity in real rates, the central bank has

kept the options open for itself to deliver more rate cuts in case the

global and domestic growth situations warrant.

Rate Outlook

Source: RBI, CSO, SBIFM Research

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Repo Rate (mth end, %)

There has been a subtle shift in the direction of global bond yields over

the last month with markets doubting the incremental effectiveness of

additional QE/Monetary easing measures on aggregate demand.

With the election results in the US, there has been a further rise in

treasury yields, increase in long term market implied inflation

expectations and curve steepening.

The recent demonetisation of high value notes can have major medium-

long term positive structural effects such as: a) potential additional

government tax revenues from better compliance over the coming

years, b) increase in tax/GDP ratios seen in conjunction with GST and

c) reducing the role of cash economy and additional access to formal

financial sector.

Also potential short term gains arising from a) possible one-time gains

to government from FY18 arising from cancellation of illegal high value

notes which may impact next year borrowings, b) slowdown in

discretionary consumption and its cumulative impact on demand and

inflation and, c) improvement in banking liquidity as currency partially

returns to the system.

Weak near term credit demand can support bonds, until the working

capital demand shifts to banking channels from the cash based

channel.

While fiscal situation can improve significantly over medium term, the

market can also take comfort from near term weakness in headline CPI.

In this environment, the trend for a medium term easing in market yields

remains intact driven by incremental news flow on potential benefits to

government revenues over the medium term.

In the very short term, global yield volatility , shifting expectations of US

Fed stance and lack of OMO’s /higher net supply can provide 2 way

movement in bond yields.

Market Outlook

Source: RBI, Bloomberg, SBIFM Research

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9.50

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10 year GSec yield (mth end, %) Repo Rate (mth end, %)

Average spread between G-sec and Repo in last 10 years: 75bps

Current Investment Strategy

Portfolio Tactical Allocation: 50% to

60% Strategic Allocation : 30% -

40 % ₌ ₊

The fund manager will actively manage the duration of the portfolio based on the combination of the above two strategies

This portion of the funds is invested in 2-5 years Corporate Bonds

Strategic Allocation : Accruals

Tactical Allocation : Long Bonds

The segment currently looks attractive on account of comfortable liquidity outlook.

This portion of the portfolio provides stable returns without too much volatility

The allocation to the long bonds/ GSecs would provide trading opportunities

Long bonds yields may remain volatile in the near term. Attractive absolute yield levels provide an opportunity from a long term perspective.

This portion of the portfolio may also be used to take defensive positions as per fund managers outlook

Key Information

SBI Magnum Income Fund

An actively managed fund , maintaining a high quality portfolio while taking active calls on managing the duration of the portfolio. The portfolio switches actively among government and corporate debt depending on the market conditions and the fund managers views.

Inception Date

25-Nov-98

Fund Manager

Mr. Dinesh Ahuja

Managing Since

Jan-11

Minimum Investment Amount

Rs. 5000

Additional Investment Amount

Rs. 1000

Exit Load For exit within 1 year from date of allotment –

Nil for 10% of investment & 1.00% for remaining amount For exit after 1 year – Nil

Investor Suitability Investors having a investment horizon of minimum 1 year

Investors having a reasonable risk appetite.

Economic / Market Analysis

Economic variables

Debt indicators Fiscal & Monetary Policy FX dynamics Foreign Inflows/Capital inflows Market prices

Credit selection

Security allocation

Spread Dynamics

Sector Allocation

12

Internal Mandate Regulatory guidelines Portfolio Position Concentration Portfolio Liquidity Duration constraint

Tactical Management Trading allocation Market forecast Market Liquidity Price opportunity

Credit Analysis

• Operating trends

Financial strength Solvency indicators Management Quality Business Dynamics Competitive positioning

External research Credit rating agencies Management Interaction

Duration position

Yield curve position

Portfolio Construction

Top down

Bottom-up

Fixed Income : Investment Process

Performance of other schemes managed by Mr. Dinesh Ahuja

Past performance may or may not be sustained in the future. Returns (in %) other than since inception are absolute calculated for growth option and in INR are point-to-point (PTP) returns calculated on a standard investment of 10, 000/-. Additional benchmark as prescribed by SEBI for long-term and short-term debt schemes is used for comparison purposes only. Performance calculated for regular plan.

*Returns for scheme benchmark index I Sec and Li-BEX is calculated using CRISIL Fund Analyser *Returns for scheme benchmark index Isec and SI-BEX is calculated using CRISIL Fund Analyser

Managing since

January, 2011

30-Sep-2015 to 30-Sep-

2016

30-Sep-2014 to 30-

Sep-2015

30-Sep-2013 to 30-Sep-

2014

Since Inception

Absolute Returns (%)

CAGR Returns

(%) PTP Returns

(INR)

Dynamic Bond Fund

10.47 13.41 6.99 5.49 19,653

Crisil Composite

Bond Fund Index

(Scheme Benchmark) 11.51 12.56 11.61 6.75 22,850

Crisil 10 year Gilt

Index (Additional

benchmark) 11.11 13.76 6.85 5.68 20,109

Managing since January,

2011

30-Sep-2015 to 30-

Sep-2016

30-Sep-2014 to 30-Sep-

2015

30-Sep-2013 to 30-Sep-

2014

Since Inception

Absolute Returns (%) CAGR

Returns (%)

PTP Returns

(INR)

SBI Magnum Gilt Fund -

Short Term - Growth 10.39 12.47 10.06 7.85 32,822

I Sec Si-BEX* (Scheme

Benchmark) 8.74 9.91 8.93 N.A. N.A.

Crisil 1 Year T-Bill Index

(Additional benchmark) 7.36 8.86 8.35 6.30 26,152

Managing since January,

2011

30-Sep-2015 to 30-

Sep-2016

30-Sep-2014 to 30-

Sep-2015

30-Sep-2013 to 30-Sep-

2014

Since Inception

Absolute Returns (%) CAGR

Returns (%)

PTP Returns

(INR)

SBI Magnum Gilt Fund - Long

Term - Growth 10.88 17.81 11.60 8.28 35,031

I Sec Li-BEX* (Scheme

Benchmark) 13.80 15.70 12.85 N.A. N.A.

Crisil 10 Year Gilt Index

(Additional benchmark) 11.11 13.76 6.85 N.A. N.A.

30-Sep-2015 to 30-Sep-

2016

30-Sep-2014 to 30-Sep-

2015

30-Sep-2013 to 30-Sep-

2014

Since Inception

Absolute Returns (%)

CAGR Returns

(%)

PTP Returns

(INR)

SBI Corporate Bond Fund 10.11 11.49 N.A. 10.68 12511.72

Crisil Composite Bond

Fund Index 11.51 12.56 N.A. 11.89 12814.60

Crisil 10 Yr Gilt Index 11.11 13.76 N.A. 12.12 12872.71

Mr. Navneet Munot - CIO

Navneet Munot joined SBI Funds Management as Chief Investment Officer in December 2008. He brings

with him over 15 years of rich experience in Financial Markets. In his previous assignment, he was the

Executive Director & Head - multi - strategy boutique with Morgan Stanley Investment Management. Prior

to joining Morgan Stanley Investment Management, he worked as the CIO - Fixed Income and Hybrid

Funds at Birla Sun Life Asset Management Company Ltd. Navneet had been associated with the financial

services business of the group for over 13 years and worked in various areas such as fixed income, equities

and foreign exchange. Navneet is a postgraduate in Accountancy and Business Statistics and a qualified

Chartered Accountant. He is also a Charter holder of the CFA Institute USA and CAIA Institute USA. He is

also an FRM Charter holder of Global Association of Risk Professionals (GARP).

Mr. Dinesh Ahuja – Portfolio Manager

Dinesh Ahuja joined SBIFM in 2010. Prior to joining SBIFM, Dinesh was a portfolio manager at L&T Asset

Management and Reliance Group for four years. Dinesh started his career in 1998 as a fixed income dealer

on the sell side. Thereafter he worked in leading broking outfits for eight years before moving on the buy

side in 2006. Dinesh is a Commerce graduate and holds his Masters degree in Finance from Mumbai

University.

Biographies

Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. This presentation is for information purposes only and is not an offer to sell or a solicitation to buy any mutual fund units/securities. These views alone are not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions and estimates included here constitute our view as of this date and are subject to change without notice. Neither SBI Funds Management Private Limited, nor any person connected with it, accepts any liability arising from the use of this information. The recipient of this material should rely on their investigations and take their own professional advice

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