SBI DYNAMIC BOND 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 Dynamic Bond Fund

SBI Dynamic Bond Fund Features

Instruments % of Net Assets (Min – Max.)

Risk Profile

Debt# Instrumentsincluding GovernmentSecurities andCorporate Debt

0 - 100% Medium

Money Market Instruments

0 - 100% Low

#Debt Instruments may include securitized debt up to 40% of the net assets

Actively managed fund with the flexibility to

invest in overnight maturity papers to high

duration papers, it may move across different

asset types from money market to medium/long

bonds and G-sec based on the fund manager’s

outlook

Average maturity is dynamically managed

based on interest rate view, inflation & credit

risk

The Fund is best suited in volatile markets as

it endeavours to capture the best of duration

play, interest rate movements& credit

spreads. The fund focuses on generating

returns by way of market movements rather

than through interest accrual

15.9715.29 15.16 15.74

17.00 17.53

15.63

9.14

5.246.65 6.68

9.57

0

4

8

12

16

20

SBI Dynamic Bond Fund Performance

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 of10,000/-. Additional benchmark as prescribed by SEBI for long-term debt schemes is used for comparison purposes.

31-Mar-2015 To 31-Mar-2016

31-Mar-2014 To 31-Mar-2015

28-Mar-2013 To 31-Mar-2014

Since Inception

Absolute Returns (%)CAGR Returns

(%)PTP Returns

(INR)

SBI Dynamic Bond Fund 5.57 13.69 2.56 5.02 18,131Crisil Composite Bond Fund Index (Scheme Benchmark) 8.24 14.59 4.39 6.41 21,259Crisil 10 year Gilt Index (Additional Benchmark) 7.97 14.57 -0.96 5.32 18,767

Data as on March 31, 2016

-2

0

2

4

6

8

10

12

14

16

31-Mar-2015 To31-Mar-2016

31-Mar-2014 To31-Mar-2015

28-Mar-2013 To31-Mar-2014

Since Inception

SBI Dynamic Bond Fund

Crisil Composite Bond Fund Index(Scheme Benchmark)

Crisil 10 year Gilt Index (AdditionalBenchmark)

SBI Dynamic Bond Fund Competitive Advantage

Strategic Asset Allocation

Tactical Asset Allocation

Change in systemic liquiditydriven by factors such ascredit deposit growth andcurrency in circulation.

Policy rate actions.

Short term – corporate credit

Change in systemicliquidity driven by factorssuch as credit depositgrowth and currency incirculation.

Policy rate actions.

The issuance calendar ofbills.

Short term – Govt Bonds

Change in monetarystance.

Assessment of fiscalsituation.

Shape of the yield curve.

SLR holdings of banks.

RBI's open marketoperations.

Movement in commodityand forex markets .

Long term – Govt Bonds

Spread reversion w.r.tmedium term levels.

Changes in relative attractionbetween offshore anddomestic funding avenues.

Appetite from insurance co’sand PF's

Movement in commodity andforex markets

Long term – Corporate Credit

• Change in systemic liquidity driven by factors such as

• Supply issues for all segments

• News flow

• Global developments

• Market positioning

SBI Dynamic Bond Fund – Competitive Advantage - Instances

Strategic Asset Allocation

Yield on March 10, 2012:

Market analysis & call: (March 2012)

With the commencement of borrowing by the government in the new financial year, government bonds were

expected to underperform

With demand for wholesale funds from banks & consequent year end tightness, money market rates were at

elevated levels. 1 year CD’s during March were at 10.75-10.85%.

The short end corporate bonds (2-3 yrs.) at 9.65-9.70% levels were also fairly priced vis-à-vis G-Sec

considering moderate supply pipeline.

On account of above we invested 90% of our assets in 1 year CD and balance in the ST corporate bond

segment.

Securities 1 Year 2-3 Year 10 Year

G Sec 8.26 8.30

Corporate bonds 9.66 9.39

CD 10.80%

Yield on April 21, 2012:

Securities 1 Year 2-3 Year 10 Year

G Sec 8.22% 8.58%

Corporate bonds 9.46% 9.35%

CD 9.80%

Source: SBIMF Internal Analysis & Bloomberg

Past performance may or may not be sustained in future.

SBI Dynamic Bond Fund – Competitive Advantage - Instances

Tactical Asset Allocation

Market analysis & call: (May- July 13)

RBI policy guidance had stressed on external sector factors driving policy actions

Weakening external sector variables had impacted Forex market trends, even as markets where anticipating

additional policy cuts during this period

The newly issued 10 year government bond yield which traded at 7.11% in end May closed at 8.17% on 31st

July post the RBI measures.

Considering the broad concerns on Forex trends and remote possibility of rate cuts, we had reduced duration

in the fund during this period.

Modified duration of the fund

Date Average Maturity- Yrs

End May 13 10.25

End June 13 7.43

End July 13 5.01

Source: SBIMF Internal Analysis

Past performance may or may not be sustained in future.

SDBF aims to buildmid and long termexpectations onrate trajectory

SDBF aims to actively react to tactical opportunities in the market

SBI Dynamic Bond Fund – Current Strategy

• Lower GDP growth• Monsoon Deficit• Chinese Yuan

devaluation• Fed Rate Hike

uncertainty

• Impact of Forex flows• Effects of Geo-

political Events

We have added duration in the fund

post the policy review, and increased

allocation to the 5 – 10 year

government bonds. With the RBI

expected to conduct market

purchases of government bonds, we

expect this segment to deliver

reasonable risk adjusted returns.

The maturity of the fund as on 30th

April is 9.55 years with around 30%

allocation to Tax Free Bonds.

Rates Snapshot for April 2016

• Bond yields depicted a marginal downside bias in April.10 year yields fell by another 15bps during the month.

• Money-market rates, too, eased considerably in April as some of the year-end liquidity tightness reversed and RBI redirected itself

to ease liquidity in the system.

• Crude oil prices rose 10% during the month, third consecutive month of upward movement.

• Rupee depicted stability during the month, broadly hovering between 66-67 range.

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

Feb-16 Mar-16 Apr-16Change YTD (in

bps)

1 Yr T-Bill 7.25 7.06 6.88 -35

3M T-Bill 7.26 7.13 6.81 -34

10 year GSec 7.63 7.47 7.44 -33

3M CD*** 8.49 8.28 7.40 20

12M CD*** 8.28 8.00 7.48 -23

3 Yr Corp Bond* 8.53 8.31 8.04 -30

5 Yr Corp Bond* 8.59 8.35 8.18 -21

10 Yr Corp Bond* 8.67 8.41 8.26 -16

1 Yr IRS 6.85 6.70 6.67 -40

5 Yr IRS 6.70 6.61 6.70 -26

Overnight MIBOR Rate 6.96 7.38 6.57 -46

INR/USD 68.4 66.2 66.3 0.3#

Crude Oil Indian Basket** 30.5 36.4 39.9 11.8#

RBI has cut Repo rate by 25bps in April and cumulatively delivered

150bps of rate cut in this easing cycle thus far.

The G-sec 10 year yield moved within a narrow range of 7.40%-

7.50% during the month of April displaying the market sentiments

which have been bearish even after the 25 bps cut by RBI at the

beginning of the month and March CPI inflation being more benign

than expected.

Supply of DISCOM bonds and likelihood of increased state bonds

supply continues to prevent any meaningful rally. The near term

direction of yields would largely be determined by the OMO schedule

as also the domestic banking system’s credit.

In the money market, liquidity conditions eased at the margin on

account of reversal of year end tightness. Government’s cash

balances came back into the system and RBI conducted Rs. 300bn of

OMO to diffuse liquidity into the system. This was partially offset by

higher currency withdrawals and seasonal increase in CRR

requirement. Easing of liquidity has helped to considerably ease the

short-term rates.

Given the current demand-supply dynamics of bonds and our view on

evolution of inflation trajectory, we have reduced duration in bond

funds by switching to front-end of the curve (5-7 year segment) that

looks attractive from a valuation perspective.

Market Outlook

Source: RBI, Bloomberg, SBIFM Research

6.00

6.50

7.00

7.50

8.00

8.50

9.00

9.50

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

May

-15

Sep

-15

Jan

-16

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

Average spread between G-sec and Repo in last 5 years: 75bps

Investment Objective &

Internal Guidelines

Sector Yield Curve

Credit

Duration

TradingQuantitative

Analysis

Portfolio Construction

Top Down Analysis

Bottom Up Security Selection

Risk Management

Investment Process

The portfolio construction process is a combination of top-down analysis and bottom up security selection done within the framework of internal risk control system

Performance of other schemes managed by Mr. Dinesh Ahuja

Managing since

January, 2011

31-Mar-2015 To 31-Mar-2016

31-Mar-2014 To 31-Mar-

2015

28-Mar-2013 To 31-Mar-

2014

Since Inception

Absolute Returns (%) CAGR Returns (%)

PTP Returns (INR)

Magnum Income Fund 5.86 13.09 2.81 7.59 35,607

Crisil Composite Bond

Fund Index (Scheme

Benchmark) 8.24 14.59 4.39 N.A. N.A.

Crisil 10 year Gilt Index

(Additional

benchmark) 7.97 14.57 -0.96 N.A. N.A.

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

31-Mar-2015 To 31-Mar-2016

31-Mar-2014 To 31-Mar-

2015

28-Mar-2013To 31-Mar-

2014

Since Inception

Absolute Returns (%)CAGR

Returns (%)

PTP Returns

(INR)

SBI Magnum Gilt Fund -

Short Term - Growth 8.93 13.20 8.76 7.71 31,003

I Sec Si-BEX* (Scheme

Benchmark) 9.06 9.75 6.66 N.A. N.A.

Crisil 1 Year T-Bill Index

(Additional benchmark) 7.69 8.74 5.84 6.25 25,192

Managing since January,

2011

31-Mar-2015 To 31-Mar-2016

31-Mar-2014 To 31-Mar-2015

28-Mar-2013To 31-Mar-

2014

Since Inception

Absolute Returns (%)CAGR

Returns (%)

PTP Returns

(INR)

SBI Magnum Gilt Fund - Long

Term - Growth5.90 21.34 5.38 7.95 32,155

I Sec Li-BEX* (Scheme

Benchmark) 7.26 19.88 1.77 N.A. N.A.

Crisil 10 Year Gilt Index

(Additional benchmark) 7.97 14.57 -0.96 N.A. N.A.

• 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

SBI Funds Management Private Limited

(A joint venture between SBI and

AMUNDI)

Registered Office:

9th Floor, Crescenzo, C-38 & 39, ‘G’

Block,

Bandra Kurla Complex, Bandra (E),

Mumbai - 400 051

Board line: +91 22 61793000

Fax: +91 22 67425687

Call: 1800 425 5425

SMS: “SBIMF” to 56161

Email: customer.delight@sbimf.com

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www.sbimf.comWebsite

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