• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
JM FINANCIAL MUTUAL FUND
 

JM FINANCIAL MUTUAL FUND

on

  • 1,829 views

 

Statistics

Views

Total Views
1,829
Views on SlideShare
1,829
Embed Views
0

Actions

Likes
3
Downloads
16
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    JM FINANCIAL MUTUAL FUND JM FINANCIAL MUTUAL FUND Document Transcript

    • JM FINANCIAL MUTUAL FUND LOGO OFFER DOCUMENT ________________________________________________________________________________ JM FIXED MATURITY FUND – SERIES XI A CLOSE ENDED INCOME FUND OFFERING FIXED MATURITY PLANS An offer for units @ Rs. 10/-each during the multiple New Fund Offer Period New Fund Offer Opens On: New Fund Offer Closes On: during the Specified Subscription Period. This Offer Document sets forth concisely the information about the scheme that a prospective investor ought to know before investing. The Offer Document should be read in its entirety before making an application for the Units and should be retained for future reference. The particulars of JM Fixed Maturity Fund – Series XI have been prepared in accordance with Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended till date and filed with SEBI, and the units being offered for public subscription have not been approved or disapproved by SEBI nor has SEBI certified the accuracy or adequacy of the Offer Document. This Offer Document will remain effective till a ‘material change’ (other than a change in fundamental attributes and within the purview of this Offer Document) occurs and thereafter the changes shall be filed with the Securities and Exchange Board of India and circulated to all the existing Unitholders along with the quarterly/half yearly reports. An addendum shall be attached to the offer document containing the changes. The Offer Document shall be updated at least once in every two years. Investors may also like to ascertain about any further changes after the date of offer document from the mutual fund/ its investor service centers/ distributors or brokers. This offer document is dated dd/mm/2007 SPONSOR: JM Financial Limited TRUSTEE: JM Financial Trustee Company Private Limited REGISTRAR: Karvy Computershare Private Limited INVESTMENT MANAGER: JM Financial Asset Management Private Limited 5th Floor, “A” Wing, Laxmi Towers, Bandra Karla Complex, Mumbai – 400 051 Tel. No. 022-3987 7777 Fax Nos. 022-2652 8377 / 78 Web site: http://www.JMFinancialmf.com E-mail: mktg@jmfinancial.in 1
    • Sponsor JM Financial Limited 141, Maker Chambers III, Nariman Point, Mumbai - 400 021 Trustee JM Financial Trustee Company Private Limited Corporate Office: 5th floor, “A” Wing, Laxmi Towers, Bandra-Kurla Complex, Mumbai - 400 051 Investment Manager JM Financial Asset Management Private Limited Corporate Office: 5th floor, “A” Wing, Laxmi Towers, Bandra-Kurla Complex, Mumbai - 400 051 Tel. No. 022-3987 7777 Fax No. 022- 26528377-78 Legal Adviser Udwadia & Udeshi (Regd) Thomas Cook Building, 3rd Floor, 324, D.N. Road, Fort, Mumbai - 400 001. Auditors N.M. Raiji & Co Universal Assurance Building, 6th Floor, P.M. Road, Fort, Mumbai - 400 001. Registrar & Transfer Agent Karvy Computershare Private Limited Karvy Plaza; H No. 8-2-596, Avenue 4 Street No. 1, Banjara Hills, Hyderabad - 500 034. Custodian HDFC Bank Ltd Custodian & Depository Services, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013 Tel. No. 022-2496 1616 Fax No. 022- 2496 1636 2
    • TABLE OF CONTENTS PARTICULARS………………………………………………………………………….Page Nos. 1.0 DEFINITIONS / TERMS ...........................................................................................................5 1.1 INTERPRETATION ..................................................................................................................7 2.0 HIGHLIGHTS & RISK FACTORS.............................................................................................8 2.1 HIGHLIGHTS ............................................................................................................................8 2.2 RISK FACTORS.........................................................................................................................9 2.2.1 STANDARD RISK FACTORS...................................................................................................9 2.2.2 SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATIONS: ........................10 2.3 NOTE .......................................................................................................................................15 2.4 RIGHT TO LIMIT REDEMPTIONS.........................................................................................15 2.5 POTENTIAL RISKS AND SPECIAL CONSIDERATIONS .....................................................15 2.6 DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY ........................................16 2.7 SUMMARY: JM Fixed Maturity Fund - Series XI.....................................................................18 3.0 FEES, EXPENSES AND LOAD ...............................................................................................23 3.1 NEW FUND OFFER EXPENSES.............................................................................................23 3.1.1 EXPENSES INCURRED IN SCHEMES LAUNCHED DURING THE LAST FISCAL YEAR AND FROM APRIL 1, 2007 TO DECEMBER 31, 2007: ...................................................................24 3.2 ANNUAL SCHEME RECURRING EXPENSES ......................................................................26 3.3 UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD...........................................27 4.0 CONDENSED FINANCIAL INFORMATION ON OTHER EXISTING SCHEMES................28 5.0 CONSTITUTION OF JM FINANCIAL MUTUAL FUND........................................................45 5.1 SPONSORS ..............................................................................................................................46 5.1.1 JM FINANCIAL LIMITED (“The Sponsor”).............................................................. Error! Bookmark not defined. 5.2 TRUSTEE COMPANY - JM FINANCIAL TRUSTEE COMPANY PRIVATE LIMITED........46 5.2.1 BOARD OF DIRECTORS OF TRUSTEE.................................................................................48 5.2.2 RIGHTS AND OBLIGATIONS OF THE TRUSTEE................................................................51 5.2.3 TRUSTEE’S SUPERVISORY ROLE .......................................................................................53 5.3 ASSET MANAGEMENT COMPANY - JM FINANCIAL ASSET MANAGEMENT PRIVATE LIMITED (AMC) ..................................................................................................................................54 5.3.1 REMUNERATION OF THE ASSET MANAGEMENT COMPANY........................................54 5.3.2 BOARD OF DIRECTORS OF AMC.........................................................................................55 5.3.3 DUTIES AND OBLIGATIONS OF THE AMC ........................................................................58 5.3.4 KEY EMPLOYEES OF THE AMC ..........................................................................................60 5.3.5 AUDITORS ..............................................................................................................................66 5.3.6 CUSTODIAN ...........................................................................................................................66 5.3.7 REGISTRAR AND TRANSFER AGENTS...............................................................................66 5.3.8 OFFICIAL POINTS OF ACCEPTANCE OF TRANSACTIONS DURING AND POST NEW FUND OFFER PERIOD ...................................................................................................................................66 6.0 INVESTMENT OBJECTIVES & POLICIES ............................................................................67 a) TYPE OF THE SCHEME .........................................................................................................67 b) INVESTMENT OBJECTIVES..................................................................................................67 c) INVESTMENT PATTERN.......................................................................................................68 d) ASSET ALLOCATION PATTERN ..........................................................................................70 e) INVESTMENT STRATEGY ..................................................................................................71 f) PORTFOLIO TURNOVER POLICY: .......................................................................................72 g) POLICY ON INTER SCHEME INVESTMENTS .....................................................................72 h) POLICY AND SPECIAL CONSIDERATION ON INVESTMENT IN DERIVATIVE AND HEDGING PRODUCTS........................................................................................................................72 3
    • i) INVESTMENT BY AMC .........................................................................................................75 j) BORROWING BY THE MUTUAL FUND...............................................................................75 k) FUNDAMENTAL ATTRIBUTES ............................................................................................75 l) POSITION OF DEBT MARKETS IN INDIA ...........................................................................76 7.0 INVESTMENT RESTRICTIONS .............................................................................................78 8.0 NET ASSET VALUE (NAV) AND VALUATION OF INVESTMENT ....................................79 8.1. TRADED SECURITIES ...........................................................................................................79 8.2 NON-TRADED SECURITIES.................................................................................................80 9.0 ACCOUNTING POLICIES AND STANDARDS .....................................................................81 10.0 UNITS ON OFFER...................................................................................................................84 11.0 RIGHTS OF UNITHOLDERS ................................................................................................105 11.1 VOTING RIGHTS ..................................................................................................................106 11.2 NAV INFORMATION............................................................................................................106 11.3 REGISTER OF UNITHOLDERS............................................................................................107 11.4 DISCLOSURES......................................................................................................................107 11.4.1 PORTFOLIO DISCLOSURE ..................................................................................................107 11.5 WINDING UP.........................................................................................................................108 11.5.1 PROCEDURE AND MANNER OF WINDING UP ................................................................108 12.0 ACCOUNTS, AUDIT AND TAX BENEFITS ........................................................................108 12.1.1 TO THE FUND.......................................................................................................................109 12.1.2 TO THE UNITHOLDERS ......................................................................................................109 H. GIFT TAX ..............................................................................................................................111 13.0 OTHER MATTERS ................................................................................................................112 13.1 GENERAL..............................................................................................................................112 13.2 ASSOCIATE TRANSACTIONS.............................................................................................112 13.3 INTER SCHEME TRANSFERS .............................................................................................134 13.4 POWERS TO REMOVE DIFFICULTIES...............................................................................134 13.5 POWERS TO MAKE RULES.................................................................................................134 13.6 TERM(S) BINDING ON UNITHOLDERS .............................................................................134 13.7 UNCLAIMED REDEMPTION / DIVIDEND AMOUNT........................................................135 13.8 UNITHOLDER GRIEVANCES REDRESSAL MECHANISM...............................................135 14.0 PENALTIES & PENDING LITIGATION...............................................................................136 4
    • 1.0 DEFINITIONS / TERMS The following definitions / terms apply throughout this Offer Document unless the context requires otherwise: I. AMC or Investment Manager: JM Financial Asset Management Private Limited (the Investment Manager/Asset Management Company of the JM Financial Mutual Fund), a company incorporated and registered under the Companies Act, 1956 and includes its successors and assigns. II. Applicable NAV: NAV of the specified redemption date or a business day during the specified redemption period as may be applicable, for switch out / repurchase applications received at the official points of acceptance of transactions of the Fund subject to the cut off times and load and after deduction of the balance proportionate unamortized issue expenses, wherever applicable. III. Business Day: Business day is a day other than (a) Saturday and Sunday (b) a day on which banks in Mumbai including the Reserve Bank of India are closed for business or clearing (c) a day on which the Bombay Stock Exchange and /or National Stock Exchange are closed (d) a day which is a public and/or bank holiday at JM ISC where the application is received (e) a day on which sale and repurchase of units is suspended by the AMC (f) a day on which normal business could not be transacted due to storms, floods, bandh’s, strikes, etc., All applications received on these non-business days will be processed on the next business day at Applicable NAV. The AMC reserves the right to declare any day as Business Day or otherwise at any or all JM ISCs. IV. Calendar Year : A Calendar Year shall be full English Calendar months viz. 12 months commencing from 1st January and ending on 31st December. V. Credit Risk : Risk of default in payment of principal or interest or both. VI. Credit Rating Agency : A body corporate which is engaged in, or proposes to be engaged in, the business of rating of securities offered by way of public or rights issue under the SEBI (Credit Rating Agencies) Regulations, 1999. VII. Custodian: A person who has been granted a certificate of registration to carry on the business of providing custodial services under the Securities and Exchange Board of India (Custodian of Securities) Regulations 1996, which for the time being is HDFC Bank Limited, Mumbai. VIII. Day : Any day (including Saturday, Sunday and holiday) as per English Calendar viz 365 days in a year. IX. Debt Instruments : Government securities, corporate debentures, bonds, promissory notes, money market instruments, pass-through obligations, asset backed securities / securitised debt and other possible similar securities. X. Dividend : Income distributed by the Mutual Fund on the units. XI. Depository: A body corporate as defined in the Depositories Act, 1996(22 of 1996). XII. Derivative : Includes (i) a security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security; (ii) a contract which derives its value from the prices, or index of prices, of underlying securities. XIII. FII: Foreign Institutional Investors registered with SEBI under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. XIV. Financial Year : A Financial Year shall be full English Calendar months viz. 12 months commencing from 1st April and ending on 31st March. XV. Government securities : Securities created and issued by the Central Government or a State Government for the purposes of raising a public loan and having one of the forms specified in clause (2) of section 2 of the Public Debt Act, 1944. XVI. GOI : Government of India. 5
    • XVII. I. T. Act: Income Tax Act, 1961 as amended from time to time. XVIII. IMA: Investment Management Agreement dated 1st September, 1994 between JM Financial Trustee Company Private Limited and JM Financial Asset Management Private Limited as amended from time to time. XIX. Investor : Any resident (person resident in India under the Foreign Exchange Management Act) or non-resident person (a person who is not a resident of India) whether an individual or not (legal entity), who is eligible to subscribe for Units under the laws of his/her/their state/country of incorporation, establishment, citizenship, residence or domicile and who has made an application for subscribing for Units under the scheme. Under normal circumstances, a Unitholder shall be deemed to be the investor. XX. JM Financial Mutual Fund or Fund: JM Financial Mutual Fund, a mutual Fund constituted as a Trust under the provisions of the Indian Trust Act, 1882, bearing SEBI Registration No. MF/015/94/8 dated 15th September 1994. XXI. JM ISC : Investor Service Center(s) of JM Financial Mutual Fund and of branches of Banks and / or AMC’s / Registrar and Transfer Agent’s service centres / Investor Service Centre authorized to receive application forms during ongoing offering and also redemption/switch requests as mentioned in this Offer Document or appointed from time to time. These centres shall be regarded the “Official Points” of acceptance of transactions for subscription/redemption/switch and the cut-off timing for various transactions shall be reckoned at these Official Points. XXII. New Fund Offer: Offer of the Units of the Scheme during the New Fund Offer period. XXIII. New Fund Offer Period: The dates on or the period during which the initial subscription to Units of the Scheme can be made i.e. on various dates as decided by the Trustee subject to the earlier closure or extension, if any, such offer period not being open for more than 30 days. XXIV. NRI: Non-Resident Indian : means a person resident outside India who is a citizen of India or is a person of Indian origin pursuant to the Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, 2000. XXV. Load: A charge that may be levied as a percentage of NAV at the time of entry into the Scheme or at the time of exiting from the Scheme. XXVI. NAV: Net Asset Value of the Units of the Scheme calculated in the manner provided in this Offer Document and in conformity with the SEBI Regulations as prescribed from time to time. The NAV will be computed upto four decimal places. XXVII. Offer Document: This document issued by JM Financial Mutual Fund, offering Units of the Scheme. XXVIII. Permissible Investments or Investments: Collective or group investments made on account of the Unitholders in accordance with the SEBI Regulations. XXIX. Portfolio: The portfolio of the schemes of JM Financial Mutual Fund would include all Permissible Investments and cash. XXX. RBI: Reserve Bank of India, established under the Reserve Bank of India Act, 1934, as amended from time to time. XXXI. Rating: means an opinion regarding securities, expressed in the form of standard symbols or in any other standardized manner, assigned by a Credit Rating Agency and used by the issuer of such securities, to comply with any requirement of the SEBI (Credit Rating Agencies) Regulations, 1999. XXXII. Registrar and Transfer Agent: Karvy Computershare Private Limited, Hyderabad, currently acting as registrar and transfer agent to the Scheme, or any other registrar and transfer agent appointed by the AMC from time to time. XXXIII. Repo / Reverse Repo : Sale / Purchase of Securities as may be allowed by RBI from time to time with simultaneous agreement to repurchase/resell them respectively at a later date. XXXIV. Repurchase / Redemption Price: Price at which the Units can be bought back / redeemed and will be calculated based on the applicable NAV. XXXV. Scheme : A scheme under JM Fixed Maturity Fund - Series XI being offered by JM Financial Mutual Fund. The Scheme shall include multiple plans (including sub-plans) launched under JM Fixed Maturity Fund - Series XI. XXXVI. SEBI Act: Securities and Exchange Board of India Act, 1992 as amended from time to time. 6
    • XXXVII. SEBI or the Board: The Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992. XXXVIII. SEBI Regulations or the Regulations : The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended from time to time, and includes any amendments or clarifications and guidelines in the form of notifications or circulars or press releases issued from time to time by SEBI or any other statutory authority to regulate the operation and management of mutual funds. XXXIX. Securities : Include notes, bonds, debentures, debenture stock, warrants, etc., futures, options, derivatives, etc. or other transferable securities of a like nature in or of any incorporated company or other body corporate, Gilts/Government securities, Mutual Fund units, Money Market Instruments like Call Deposit, Commercial Paper, Treasury Bills etc. such other instruments as may be declared by GOI and/or SEBI and/or RBI and/or any other regulatory authority to be securities; and rights or interest in securities. XL. Specified Redemption Day(s) : refer to one or more Business Days during the Specified Redemption Period on which the Units of a Plan under the Scheme can be redeemed or switched out. XLI. Specified Redemption Period : refer to the Business Days during which unitholders can redeem their investments at the applicable NAV subject to exit load and after deduction of the balance proportionate unamortized issue expenses wherever applicable. Each 13 months plans will have specified redemption period which will normally be the first five business days at the beginning of every calendar month during the tenure of that plan. Each 12 months Plan will have specified redemption period which will normally be the first five business days at the beginning of every calendar month during the tenure of that plan. Specified Subscription Period : refer to one or more Business Days during which an investor may purchase the Units of the Scheme during the New Fund Offer Period of the various plans under the Scheme. XLII. Sponsor: JM Financial Limited (the Sponsor of JM Financial Mutual Fund), a company incorporated and registered under the Companies Act, 1956 and includes its successors and assigns. XLIII. Stock Lending: Lending of securities to another person or entity for a fixed period of time, at a negotiated compensation in order to enhance returns of the portfolio. XLIV. Switch : Transfer of units of one Scheme of JM Financial Mutual Fund to any of its other Schemes. XLV. Trust Deed: The registered Trust Deed dated 1st September, 1994 establishing the JM Financial Mutual Fund as amended from time to time. XLVI. Trustee: JM Financial Trustee Company Private Limited (the Trustee to the JM Financial Mutual Fund), a company incorporated and registered under the Companies Act, 1956 and includes the directors of the Trustee company, and its successors and assigns. XLVII. Trust Property: Includes permissible investments and cash or any part thereof which may be converted or varied from time to time. XLVIII. Units: The interest of the Unitholders in the Plan(s) under the Scheme, which consists of each unit representing one undivided share in the assets of the Plan(s) under the Scheme. XLIX. Unit holder: A person holding Units in the Scheme of the Fund. 1.1 INTERPRETATION • For all purposes of this Offer Document, except as otherwise expressly provided or unless the context otherwise requires (a) the terms defined in this Offer Document include the plural as well as the singular and (b) pronouns having a masculine or feminine gender shall be deemed to include the other. • Words and expressions used herein but defined in the SEBI Act, 1992 or the SEBI Regulations shall have the meanings respectively assigned to them therein. 7
    • 2.0 HIGHLIGHTS & RISK FACTORS 2.1 HIGHLIGHTS · Scheme – A close-ended umbrella scheme under which there are several investment plans, which seek to generate regular returns through investment in fixed income securities normally maturing in line with the time profile of the respective plan. · JM Fixed Maturity Fund - Series XI is suitable for investors with a time horizon ranging from a year to 13 months. · Choice of Investment sub-plans/options – The Scheme offers investors two sub-plans : (a) Regular plan (b) Institutional Plan Investors are requested to indicate their preference while investing in the Scheme. In case an investor fails to specify his preference of the sub-plan, he shall be deemed to have opted as under · if the investment amount is less than Rs. 5 lacs, the default option would be the Regular Plan and · if the investment amount is equal to and more than Rs. 5 lacs, the default option would be the Institutional Plan. Each Sub-Plan will have a Growth and Dividend option. Each Plan will have a separate portfolio; however, sub-plans / options under a Plan will have common portfolio. · Load : During New Fund Offer period and for ongoing redemptions : Plan Entry Load Exit Load 1 Year Not Applicable* 2% $ / 3 % # 13 months Not Applicable* 2% $ / 3 % # * Close-ended schemes are not permitted to charge entry load. $ During Specified Redemption Period # For Redemption on all business days other than Specified Redemption Period · Liquidity - Each 13 months plans and 1 year plan will have specified redemption period which will normally be the first five business days at the beginning of every calendar month during the tenure of that plan. During the specified redemption period, unitholders can redeem their investments at the applicable NAV on the specified redemption days subject to exit load, if any, and after deduction of the balance proportionate unamortized new fund offer expenses applicable to their investments. Investors can also redeem on business days other than the specified redemption period subject to the applicable exit load, if any, and after deduction of the balance proportionate unamortized new fund offer expenses applicable to their investments. · Unitholders in a plan can redeem their investments on the date of maturity of that Plan at the applicable NAV without any exit load. In case any specified redemption day / maturity day fall on a non-business day, the redemption requests will be accepted or the plan will mature, as the case may be, on the next business day. · On maturity of a Plan, the maturity pay-out will normally be effected on the day immediately following the maturity day. However, if the maturity pay-out day falls on a non-business day, then the maturity day will be extended appropriately to ensure that both the maturity day and the pay-out day are continuous business days. · Subscription by the Unitholder under each Plan should be for a minimum investment Rs. 5,000/- only in the Regular Plan for each option and Rs. 5,00,000/- in the Instutional Plan and 8
    • in multiples of Re. 1/- thereafter. The minimum investment amount including multiple amounts may change / be different for various plans as may be decided by the AMC. · Redemption of units will be Rs. 500 or 50 units subject to applicable exit load. Any redemption in excess thereof may be in multiples of Re.1/- subject to keeping minimum balance of 500 units or Rs. 5000/-, whichever is less. In the event of remaining balance falling below the minimum balance of 500 units or Rs.5000 (whichever is less) while processing redemption/switch requests, the entire outstanding units redeemed. . · Transparency – Disclosure of NAV every business day and portfolio disclosure on a half yearly basis. · Tax Benefits - Tax benefits to the Unitholders under Section 112 of the I.T. Act. · Earnings of the Fund – Earnings of the Fund totally exempt from income tax under Section 10(23D) of the I.T. Act. 2.2 RISK FACTORS 2.2.1 STANDARD RISK FACTORS · Investments in Mutual Funds and securities are subject to market risks and there is no assurance or guarantee that the objectives of the Fund will be achieved. · As with any investment in securities, the NAV of the Units issued under plans of the scheme can go up or down depending on the factors and forces affecting the capital markets. · Past performance of Sponsor/AMC/Schemes of JM Financial Mutual Fund does not indicate the future performance of the Schemes. · JM Fixed Maturity Fund - Series XI is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects or returns. · Investors in the plans are not being offered any guaranteed/indicative returns. · Minimum number of investors and maximum holding by single investor : As per SEBI Circular No. SEBI/IMD/Cir No.10/22701/03 dated December 12, 2003 read with SEBI Circular No. SEBI/IMD/Cir No. 1/42529/05 dated June 14, 2005, each scheme and individual plan(s) under the schemes should have a minimum of 20 investors and no single investor should account for more than 25% of the corpus of such scheme/ plan(s). In case of close-ended scheme / plan, if either of the above two conditions are not fulfilled immediately after the close of the NFO i.e. at the time of allotment, the provisions of Regulation 39(2)(c) of the SEBI (Mutual Funds) Regulations, 1996, would become applicable automatically without any reference from SEBI. Accordingly, the scheme / plans shall be wound up by following the guidelines prescribed by SEBI and the investors’ money would be redeemed at applicable NAV. AMFI has suggested that in order to track the investor’s holding rather than the folio/account’s holdings, the Fund Houses are recommended to track the investors at the master folio/master account (whatever be the terminology used by the fund houses) level. In addition since there is a possibility of an investor holding multiple accounts, it is suggested that the account is identified for the purpose of aggregation to comply with 20/25 rule by using a common parameter like PAN. In case of multiple folios, the sequence or the order of the compulsory redemption is left to the discretion of the fund house in consultation with the investor. 9
    • 2.2.2 SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATIONS: Specific Risk Factors associated with investments in JM Fixed Maturity Fund - Series XI Apart from the risk factors mentioned above, the investors in JM Fixed Maturity Fund - Series XI would face the following risks: i. The Scheme may not be able to invest in the suitable securities falling within its investment parameters leading the Scheme to hold short term deposits of scheduled commercial banks till the monies are deployed as per the investment objective of the Scheme. ii. As the Scheme propose to invest and hold the securities till maturity, any default/delay by the investee company in honoring the securities on redemption may lead to delay and/or erosion in the maturity value to the unitholders. iii. In the event of an inordinately large number of redemption requests, the plan may face an asset-liability mismatch requiring the investment manager to make a distress sale of the securities leading to realignment of the portfolio consequently resulting in investment in lower yield instruments. iv. Although the investor in the Scheme at the time of making investment will be able to estimate the likely return from his investment, redeeming the investment before the deemed maturity date is likely to yield comparatively lower than estimated yield. Risks associated with Derivatives Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manager to identify such opportunities. Identification and execution of the strategies to be pursued by the fund manager involve uncertainty and decision of fund manager may not always be profitable. No assurance can be given that the fund manager will be able to identify or execute such strategies. The risks associated with the use of derivatives are different from or possibly greater than, the risks associated with investing directly in securities and other traditional investments. In the derivative markets there are risk factors and issues concerning the use of derivatives that investors should understand. 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 manage the risks as a result of the failure of the counterparty to comply with the terms of the derivative contract. Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives, credit risk where the danger is that of a counterparty failing to honour its commitment, liquidity risk where the danger is that the derivatives cannot be sold at prices that reflect the underlying assets, rates and indices and price risk where the market price may move in adverse fashion. Interest Rate Risk: As with all debt securities, changes in interest rates will affect the Scheme’s Net Asset Value as the prices of securities generally increase as interest rates decline and generally decrease as interest rates rise. Prices of long term securities generally fluctuate more in response to interest rate changes than of shorter-term securities. Interest rate movements in the Indian debt markets can be volatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possibly large movements in the NAV. 10
    • Liquidity and Marketability Risk: This refers to the ease at which a security can be sold at or near its true value. The primary measure of liquidity risk is the spread between the bid price and the offer price quoted by a dealer. Liquidity risk is characteristic of the Indian fixed income market. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of some of these investments. Different segments of the Indian financial markets have different settlement periods, and such periods may be extended significantly by unforeseen circumstances. The length of time for settlement may affect the Scheme in the event it has to meet an inordinately large number of redemption or of restructuring of the Scheme’s investment portfolio Credit Risk: Credit risk or default risk refers to the risk that an issuer of a fixed income security may default (i.e. will be unable to make timely principal and interest payments on the security). Because of this risk debentures are sold at a yield spread above those offered on treasury securities which are sovereign obligations and generally considered to be free of credit risk. Normally, the value of a fixed income security will fluctuate depending upon the actual changes in the perceived level of credit risk as well as the actual event of default. Reinvestment Risk: This risk refers to the interest rate levels at which cash flows received from the securities in the Scheme or from maturities in the Scheme are reinvested. The additional income from reinvestment is the "interest on interest" component. The risk is that the rate at which interim cash flows can be reinvested will fall. Risk analysis on underlying asset classes in securitisation Generally the following asset classes for securitisation are available in India : (a) Commercial Vehicles (b) Auto and Two wheeler pools (c) Mortgage pools (residential housing loans) (d) Personal Loan, credit card and other retail loans (e) Corporate loans/receivables In terms of specific risks attached to securitisation, each asset class would have different underlying risks, however, residential mortgages are supposed to be having lower default rates as an asset class. On the other hand, repossession and subsequent recovery of commercial vehicles and other auto assets is fairly easier and better compared to mortgages. Some of the asset classes such as personal loans, credit card receivables, etc., being unsecured credits in nature, may witness higher default rates. As regards corporate loans/receivables, depending upon the nature of the underlying security for the loan or the nature of the receivable the risks would correspondingly fluctuate. However, the credit enhancement stipulated by rating agencies for such asset class pools is typically much higher and hence their overall risks are comparable to other AAA rated asset classes. The rating agencies have an elaborate system of stipulating margins, over collateralisation and guarantees to bring risk limits in line with the other AA rated securities. The risks associated with the underlying assets can be described as under : Credit card receivables are unsecured. Automobile / vehicle loan receivables are usually secured by the underlying automobile / vehicle and sometimes by a guarantor. Mortgages are secured by the underlying property. Personal loans are usually unsecured. 11
    • Corporate loans could be unsecured or secured by a charge on fixed assets / receivables of the company or a letter of comfort from the parent company or a guarantee from a bank / financial institution. As a rule of thumb, underlying assets which are secured by a physical asset / guarantor are perceived to be less risky than those which are unsecured. By virtue of this, the risk and therefore the yield in descending order of magnitude would be credit card receivables, personal loans, vehicle /automobile loans, mortgages and corporate loans assuming the same rating. Some of the factors, which are typically analyzed for any pool are as follows : Size of the loan : generally indicates the kind of assets financed with loans. Also indicates whether there is excessive reliance on very small ticket size, which may result in difficult and costly recoveries. To illustrate, the ticket size of housing loans is generally higher than that of personal loans. Hence in the construction of a housing loan asset pool for say Rs.10,000,000/- it may be easier to construct a pool with just 10 housing loans of Rs.1,000,000 each rather than to construct a pool of personal loans as the ticket size of personal loans may rarely exceed Rs.500,000/- per individual. Also to take this illustration further, if one were to construct a pool of Rs.10,000,000/- consisting of personal loans of Rs.100,000/- each, the larger number of contracts (100 as against one of 10 housing loans of Rs.10 lakh each) automatically diversifies the risk profile of the pool as compared to a housing loan based asset pool. Average original maturity of the pool : indicates the original repayment period and whether the loan tenors are in line with industry averages and borrower’s repayment capacity. To illustrate, in a car pool consisting of 60-month contracts, the original maturity and the residual maturity of the pool viz. number of remaining installments to be paid gives a better idea of the risk of default of the pool itself. If in a pool of 100 car loans having original maturity of 60 months, if more than 70% of the contracts have paid more than 50% of the installments and if no default has been observed in such contracts, this is a far superior portfolio than a similar car loan pool where 80% of the contracts have not even crossed 5 installments. Loan to Value (“LTV”) Ratio: Indicates how much % value of the asset is financed by borrower’s own equity. The lower the LTV ratio, the better it is. This ratio stems from the principle that where the borrower’s own contribution of the asset cost is high, the chances of default are lower. To illustrate for a vehicle costing Rs. 50 lakhs, if the borrower has himself contributed Rs. 40 lakhs and has taken only Rs.10 lakhs as a loan, he is going to have lesser propensity to default as he would lose an asset worth Rs. 50 lakhs if he defaults in repaying an installment. This is as against a borrower who may meet only Rs. 5 lakhs out of his own equity for a vehicle costing Rs. 50 lakhs. Between the two scenarios given above, the latter would have higher risk of default than the former. Average seasoning of the pool : Indicates whether borrowers have already displayed repayment discipline. To illustrate, in the case of a personal loan, if a pool of assets consists of those who have already repaid 80% of the installments without default, this certainly is a superior asset pool than the one where only 10% of the installments have been paid. In the former case, the portfolio has already demonstrated that the repayment discipline is far higher. Default rate distribution: Indicates how much % of the pool and overall portfolio of the originator is current, how much is in 0-30 DPD (days past due), 30-60 DPD, 60-90 DPD and so on. The rationale here is very obvious - as against 0-30 DPD, the 60-90 DPD is certainly a higher risk category. Unlike in plain vanilla instruments, in securitisation transactions, it is possible to work towards a target credit rating, which could be much higher than the originator’s own credit rating. This is possible through a mechanism called “Credit enhancement” and is fulfilled by filtering the underlying asset classes and applying selection criteria, which further diminishes the risk inherent for a particular asset class. The purpose of credit enhancement is to ensure timely payment to the investors, if the actual collections from the pool of receivables for a given period are short of the contractual payouts 12
    • on securitisation. Securitisation is normally a non-recourse instrument and therefore, the repayment on securitisation would have to come from the underlying assets and the credit enhancement. Therefore, the rating criteria centrally focuses on the quality of the underlying assets. World over, the quality of credit ratings is measured by default rates and stability. An analysis of rating transition and default rates, witnessed in both international and domestic arena, clearly reveals that structured finance ratings have been characterized by far lower default and transition rates than that of plain vanilla debt ratings. Further, internationally, in case of structured finance ratings, not only are the default rates low but post default recovery is also high. In the Indian scenario, also, more than 95% of issuances have been AAA rated issuances indicating the strength of the underlying assets as well as adequacy of credit enhancement. Investment exposure of the Fund with reference to Securitised Debt The Fund will predominantly invest only in those securitisation issuances which have a rating of AA and above indicating the high level of safety from credit risk point of view at the time of making an investment. The Fund will not invest in foreign securitised debt. The Fund may invest in various type of securitisation issuances, including but not limited to Asset Backed Securitisation, Mortgage Backed Securitisation, Personal Loan Backed Securitisation, Collateralized Loan Obligation / Collateralized Bond Obligation and so on. The Fund will conduct an independent due diligence on the cash margins, collateralisation, guarantees and other credit enhancements and the portfolio characteristic of the securitisation to ensure that the issuance fits in to the overall objective of the investment in high investment grade offerings irrespective of underlying asset class. Risk factors specific to investments in Securitised Papers Types of securitised debt vary and carry different levels and types of risks. Credit risk on securitised bonds depends upon the originator and varies depending on whether they are issued with recourse to originator or otherwise. Even within securitised debt, AAA rated securitised debt offers lesser risk of default than AA rated securitised debt. A structure with Recourse will have a lower credit risk than a structure without recourse. Underlying assets in securitised debt may assume different forms and the general types of receivables include auto finance, credit cards, home loans or any such receipts. Credit risks relating to these types of receivables depend upon various factors including macro economic factors of these industries and economies. Specific factors like nature and adequacy of property mortgaged against these borrowings, nature of loan agreement / mortgage deed in case of home loan, adequacy of documentation in case of auto finance and home loans, capacity of borrower to meet its obligation on borrowings in case of credit cards and intentions of the borrower influence the risks relating to the asset borrowings underlying the securitised debt. Holders of the securitised assets may have low credit risk with diversified retail base on underlying assets especially when securitised assets are created by high credit rated tranches. Risk profiles of Planned Amortisation Class tranches (PAC), Principal Only Class Tranches (PO) and Interest Only class tranches (IO) will differ depending upon the interest rate movement and speed of prepayment. Unlike in plain vanilla instruments, in securitisation transactions, it is possible to work towards a target credit rating, which could be much higher than the originator’s own credit rating. This is possible through a mechanism called ‘Credit enhancement’. The process of ‘Credit enhancement’ is fulfilled by filtering the underlying asset classes and applying selection criteria, which further diminishes the risks inherent for a particular asset class. The purpose of credit enhancement is to 13
    • ensure timely payment to the investors, if the actual collection from the pool of receivables for a given period is short of the contractual payout on securitisation. Securitisation is normally non-recourse instrument and therefore, the repayment on securitisation would have to come from the underlying assets and the credit enhancement. Therefore the rating criteria centrally focus on the quality of the underlying assets. The change in market interest rates – prepayments may not change the absolute amount of receivables for the investors, but may have an impact on the re-investment of the periodic cash flows that the investor receives in the securitised paper. Limited liquidity & price risk Presently, secondary market for securitised papers is not very liquid. There is no assurance that a deep secondary market will develop for such securities. This could limit the ability of the investor to resell them. Even if a secondary market develops and sales were to take place, these secondary transactions may be at a discount to the initial issue price due to changes in the interest rate structure. Limited recourse, delinquency and credit risk Securitised transactions are normally backed by pool of receivables and credit enhancement as stipulated by the rating agency, which differ from issue to issue. The credit enhancement stipulated represents a limited loss cover to the Investors. These certificates represent an undivided beneficial interest in the underlying receivables and there is no obligation of either the Issuer or the Seller or the originator, or the parent or any affiliate of the seller, issuer and originator. No financial recourse is available to the certificate holders against the investors’ representative. Delinquencies and credit losses may cause depletion of the amount available under the credit enhancement and thereby the investor payouts may get affected if the amount available in the credit enhancement facility is not enough to cover the shortfall. On persistent default of an obligor to repay his obligation, the servicer may repossess and sell the underlying asset. However many factors may affect, delay or prevent the repossession of such asset or the length of time required to realize the sale proceeds on such sales. In addition, the price at which such asset may be sold may be lower than the amount due from that obligor. Risks due to possible prepayments: Weighted Tenor / Yield Asset securitisation is a process whereby commercial or consumer credits are packaged and sold in the form of financial instruments. Full prepayment of underlying loan contract may arise under any of the following circumstances : Ø Obligor pays the receivable due from him at any time prior to the scheduled maturity date of that receivable; or Ø Receivable is required to be repurchased by the seller consequent to its inability to rectify a material misrepresentation with respect to that receivable; or Ø The servicer recognizing a contract as a defaulted contract and hence repossessing the underlying asset and selling the same; or Ø In the event of prepayments, investors may be exposed to changes in tenor and yield. Bankruptcy of the originator or seller If originator becomes subject to bankruptcy proceedings and the court in the bankruptcy proceedings concludes that the sale from originator to Trust was not a sale then an investor could experience losses or delays in the payments due. All possible care is generally taken in structuring the transaction so as to minimize the risk of the sale to Trust not being construed as a “True Sale”. Legal opinion is normally obtained to the effect that the assignment of Receivables to Trust in trust for and for the benefit of the Investors, as envisaged herein, would constitute a true sale. 14
    • Bankruptcy of the investor’s agent If an investor’s agent becomes subject to bankruptcy proceedings and the court in the bankruptcy proceedings concludes that the recourse of investor’s agent to the assets/receivables is not in its capacity as agent/Trustee but in its personal capacity, then an investor could experience losses or delays in the payments due under the swap agreement. All possible care is normally taken in structuring the transaction and drafting the underlying documents so as to provide that the assets/receivables if and when held by investor’s agent is held as agent and in Trust for the investors and shall not form part of the personal assets of investor’s agent. Legal opinion is normally obtained to the effect that the investor’s agent’s recourse to assets/receivables is restricted in its capacity as agent and Trustee and not in its personal capacity. Credit Rating of the Transaction / Certificate The credit rating is not a recommendation to purchase, hold or sell the certificate in as much as the ratings do not comment on the market price of the certificate or its suitability to a particular investor. There is no assurance by the rating agency either that the rating will remain at the same level for any given period of time or that the rating will not be lowered or withdrawn entirely by the rating agency. Risk of Co-mingling The servicers normally deposit all payments received from the obligors into the collection account. However, there could be a time gap between collection by a servicer and depositing the same into the collection account especially considering that some of the collections may be in the form of cash. In this interim period, collections from the Loan Agreements may not be segregated from other funds of the servicer. If the servicer fails to remit such funds due to investors, the investors may be exposed to a potential loss. 2.3 NOTE · Investors are advised to read the Offer Document carefully, before taking any decision to invest in the Scheme. · Investors in the Scheme are not being offered any guaranteed/ assured returns. 2.4 RIGHT TO LIMIT REDEMPTIONS The Trustee has the right at its sole discretion, to limit redemptions under certain circumstances as mentioned under the title Suspension of Redemption and Switching of Units. 2.5 POTENTIAL RISKS AND SPECIAL CONSIDERATIONS Prospective investors in this Scheme should educate themselves or seek professional advice on: 1. Legal requirements or restrictions relating to the acquisition, holding, disposal, or redemption of Units within their jurisdiction of nationality, residence, ordinary residence and domicile or under the laws of any jurisdiction to which they are subject; and 2. Treatment of capital gains, and other tax consequences relevant to their acquisition, holding or disposal, whether by way of sale or redemption of Units Potential investors should study this Offer Document carefully in its entirety and consult their legal, tax and investment advisors to determine possible legal, tax, financial or other considerations of 15
    • subscribing for, purchasing or holding Units before making a subscription for Units. Potential investors should note that all financial investments carry inherent risks and no assurance or guarantee can be given that the objective of the Fund will be fully met. The NAV of the Units issued under this Scheme and the income from them can go up or down depending on the factors and forces affecting the capital markets, debt markets and money markets. Entities managed or sponsored by the affiliates or associates of the Sponsors may either directly or indirectly invest in a substantial portion of this Scheme. If these entities decide to offer a substantial portion of such investment for repurchase, it may have an adverse impact on the NAV of Units. Neither this Offer Document nor the Units have been registered in any jurisdiction. The distribution of this Offer Document in certain jurisdictions may be restricted or subject to registration requirements and, accordingly, persons who come into possession of this Offer Document are required to inform themselves about, and to observe, any such restrictions, as may be applicable. This Offer Document does not constitute an offer or solicitation to any person within such jurisdiction. The Trustee may compulsorily redeem any units held directly or beneficially in contraventions of these prohibitions. It is the responsibility of any person in possession of this Offer Document and of any person wishing to apply for Units pursuant to this Offer Document to inform themselves of and to observe, all applicable laws and Regulations of such relevant jurisdiction. No person has been authorized to issue any advertisement or to give any information or to make any representations other than that contained in this Offer Document. Circulars in connection with this offering not authorized by JM Financial Mutual Fund and any information or representations not contained herein must not be relied upon as having been authorized by JM Financial Mutual Fund. Prospective investors should not construe the contents hereof as advice relating to legal, taxation or investment matters and are advised to consult their own professional advisors concerning the purchase, holding or disposal of Units. SPECIAL FACILITIES The Fund reserves the right to amend or terminate or introduce special facilities in this Offer Document. Such facilities for the time being include Switch Facility, Systematic Withdrawal Plan, Systematic Switch Plan and any such facility / plan that may be introduced in the future. 2.6 DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY JM Financial Asset Management Private Limited has exercised due diligence while preparing the Offer Document and a Due Diligence Certificate, duly signed by the Compliance Officer of JM Financial Asset Management Private Limited has been submitted to SEBI on January 28,2008 which reads as follows: 16
    • “DUE DILIGENCE CERTIFICATE It is confirmed that: i. The draft Offer Document forwarded to SEBI is in accordance with the Securities and Exchange Board of India (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 investments in the proposed Scheme. iv. All the intermediaries named in the Offer Document are registered with SEBI and till date such registration is valid. Place: Mumbai Signed: sd/- Date : January 28,2008 Name : Diana D’sa Designation :Compliance Officer 17
    • 2.7 SUMMARY: JM Fixed Maturity Fund - Series XI NAME OF THE JM FIXED MATURITY FUND - SERIES XI, AN UMBRELLA SCHEME SCHEME COMPRISING VARIOUS INVESTMENT PLANS. TYPE OF SCHEME A CLOSE ENDED INCOME SCHEME NEW FUND OFFER RS. 10/- PER UNIT DURING THE NEW FUND OFFER PERIOD PRICE INVESTMENT A CLOSE ENDED INCOME SCHEME COMPRISING VARIOUS PLANS OBJECTIVE SEEKING TO GENERATE REGULAR RETURNS THROUGH INVESTMENTS IN FIXED INCOME SECURITIES NORMALLY MATURING IN LINE WITH THE TIME PROFILE OF THE RESPECTIVE PLAN. PLANS UNDER THE THE SCHEME WILL LAUNCH TWO 13 MONTHS PLAN, AND A SCHEME & YEARLY PLAN. DURATION DETAILS OF PLANS TO BE LAUNCHED UNDER THE SCHEME ARE AS FOLLOWS : TYPE OF PLAN DURATION NO. OF (NO. OF DAYS PLANS TO FROM THE BE DATE OF LAUNCHED ALLOTMENT) YEARLY PLAN 375 DAYS 1 13 MONTHS PLAN 395 DAYS 2 EACH PLAN WILL HAVE A DIFFERENT PORTFOLIO; HOWEVER, SUB- PLANS / OPTIONS UNDER A PLAN WILL HAVE A COMMON PORTFOLIO. EACH PLAN WILL ADHERE TO THE REQUIREMENTS OF THE SEBI CIRCULAR NO. SEBI/IMD/CIR NO.10/22701/03 DATED DECEMBER 12, 2003 READ WITH SEBI CIRCULAR NO. SEBI/IMD/CIR NO. 1/42529/05 DATED JUNE 14, 2005 ON MINIMUM NUMBER OF INVESTORS. EACH SCHEME AND INDIVIDUAL PLAN(S) UNDER THE SCHEMES SHOULD HAVE A MINIMUM OF 20 INVESTORS AND NO SINGLE INVESTOR SHOULD ACCOUNT FOR MORE THAN 25% OF THE CORPUS OF SUCH SCHEME/ PLAN(S). IN CASE OF CLOSE-ENDED SCHEME / PLAN, IF EITHER OF THE ABOVE TWO CONDITIONS ARE NOT FULFILLED IMMEDIATELY AFTER THE CLOSE OF THE NFO I.E. AT THE TIME OF ALLOTMENT, THE PROVISIONS OF REGULATION 39(2)(C) OF THE SEBI (MUTUAL FUNDS) REGULATIONS, 1996, WOULD BECOME APPLICABLE AUTOMATICALLY WITHOUT ANY REFERENCE FROM SEBI. ACCORDINGLY, THE SCHEME / PLANS SHALL BE WOUND UP BY FOLLOWING THE GUIDELINES PRESCRIBED BY SEBI AND THE INVESTORS’ MONEY WOULD BE REDEEMED AT APPLICABLE NAV. THE TRUSTEE HAS THE DISCRETION TO AUTOMATICALLY ROLL OVER THE PLAN(S) ON MATURITY SUBJECT TO REGULATION 33 OF THE SEBI REGULATIONS. ACCORDINGLY, A PLAN MAY BE ROLLED OVER IF THE PURPOSE, PERIOD AND OTHER TERMS OF THE ROLLOVER AND ALL OTHER MATERIAL DETAILS OF THE PLAN INCLUDING THE LIKELY COMPOSITION OF ASSETS IMMEDIATELY BEFORE THE ROLLOVER, THE NET ASSETS AND NET ASSET VALUE 18
    • OF THE PLAN ARE DISCLOSED TO THE UNITHOLDERS AND A COPY OF THE SAME IS FILED WITH SEBI. FURTHER, SUCH ROLLOVER WILL BE PERMITTED ONLY IN CASE OF THOSE UNITHOLDERS WHO EXPRESS THEIR CONSENT IN WRITING AND THE UNITHOLDERS WHO DO NOT OPT FOR THE ROLLOVER OR HAVE NOT GIVEN WRITTEN CONSENT SHALL BE ALLOWED TO REDEEM THEIR HOLDINGS IN FULL AT NET ASSET VALUE BASED PRICE. HOWEVER, THE TRUSTEE RESERVES THE RIGHT NOT TO ROLL OVER ANY PLAN UPON MATURITY, IF DEEMED APPROPRIATE IN THE INTEREST OF THE SCHEME / UNIT HOLDERS. ACCORDINGLY, AT ANY POINT OF TIME, THERE MAY BE MULTIPLE PLANS OF THE SAME MATURITY PERIOD. ALL PLANS WILL HAVE DIFFERENT PORTFOLIOS IN LINE WITH THE MATURITY OF THE PLANS. THE TRUSTEE MAY INTRODUCE ONE OR MORE SUB-PLANS THAT MAY BE ENVISAGED AT A LATER DATE UNDER ANY OF THE PLAN(S) UNDER THE SCHEME WITH DIFFERENTIAL FEE STRUCTURE, LOAD STRUCTURE, OPTIONS (DIVIDEND / GROWTH), MINIMUM SUBSCRIPTION AMOUNT, ETC. DEPENDING UPON THE MARKET CONDITIONS PREVAILING AT THE TIME OF LAUNCH OF THE PLAN(S) AND TAKING INTO CONSIDERATION THE INTERESTS OF THE UNITHOLDERS AND SUBJECT TO THE SEBI REGULATIONS. THE INVESTMENT MANAGEMENT FEES WILL BE UNIFORM ACROSS VARIOUS SUB-PLANS LAUNCHED UNDER A PLAN. INVESTORS WILL BE SUITABLY INFORMED BY PUBLISHING A NOTICE IN A NEWSPAPER OR THROUGH ANY OTHER MEANS AS THE TRUSTEE MAY CONSIDER APPROPRIATE. 19
    • INVESTMENT THE SCHEME OFFERS INVESTORS TWO SUB-PLANS : OPTIONS (A) REGULAR PLAN (B) INSTITUTIONAL PLAN INVESTORS ARE REQUESTED TO INDICATE THEIR PREFERENCE WHILE INVESTING IN THE SCHEME. IN CASE AN INVESTOR FAILS TO SPECIFY HIS PREFERENCE OF THE SUB-PLAN, HE SHALL BE DEEMED TO HAVE OPTED AS UNDER · IF THE INVESTMENT AMOUNT IS LESS THAN RS. 5 LACS, THE DEFAULT OPTION WOULD BE THE REGULAR PLAN AND · IF THE INVESTMENT AMOUNT IS EQUAL TO AND MORE THAN RS. 5 LACS, THE DEFAULT OPTION WOULD BE THE INSTITUTIONAL PLAN. EACH PLAN UNDER THE SCHEME OFFERS INVESTORS TWO INVESTMENT OPTIONS : 1. DIVIDEND OPTION 2. GROWTH OPTION INVESTORS ARE REQUESTED TO INDICATE THEIR PREFERENCE WHILE INVESTING IN THE PLAN / SUB-PLAN. IN CASE AN INVESTOR FAILS TO SPECIFY HIS PREFERENCE, HE SHALL BE DEEMED TO HAVE OPTED TO SELECT THE GROWTH OPTION. UNDER THE DIVIDEND OPTION, DIVIDENDS SHALL BE DECLARED AT THE DISCRETION OF THE TRUSTEE SUBJECT TO AVAILABILITY OF DISTRIBUTABLE SURPLUS. INVESTORS HAVE THE CHOICE OF DIVIDEND PAYOUT OR REINVESTMENT. IN CASE AN INVESTOR FAILS TO SELECT HIS PREFERENCE, HE SHALL BE DEEMED TO HAVE OPTED FOR THE DIVIDEND REIVESTMENT OPTION. HOWEVER, IN CASE THE DIVIDEND PAYABLE TO ANY UNITHOLDER IS BELOW RS. 100/- THEN THE SAME WILL BE AUTOMATICALLY REINVESTED. APPLICATION MINIMUM RS. 5,000/- FOR THE REGULAR PLAN UNDER EACH AMOUNT OPTION AND RS. 5,00,000/- FOR THE INSTITUTIONAL PLAN UNDER EACH OPTION AND IN MULTIPLES OF RE. 1/- THEREAFTER. THERE IS NO UPPER LIMIT FOR INVESTMENT. DURATION OF NEW THE INVESTMENT PLANS BEING LAUNCHED UNDER JM FIXED FUND OFFER PERIOD MATURITY FUND - SERIES XI WILL OPEN FOR SUBSCRIPTION DURING THE NEW FUND OFFER PERIOD AT DATES AS DETERMINED BY THE TRUSTEE. THE TRUSTEE MAY CLOSE OR EXTEND THE NEW FUND OFFER PERIOD BY GIVING AT LEAST ONE DAY’S NOTICE IN ONE DAILY NEWSPAPER. THE TRUSTEE RESERVES THE RIGHT TO EXTEND THE CLOSING DATE FOR THE NEW FUND OFFER PERIOD SUBJECT TO THE CONDITION THAT THE NEW FUND OFFER SHALL NOT BE KEPT OPEN FOR MORE THAN 30 DAYS. MINIMUM THE FUND SEEKS TO RAISE A MINIMUM SUBSCRIPTION AMOUNT SUBSCRIPTION OF RS. 1 CRORE UNDER EACH OF THE PLANS (INCLUDING SUB- AMOUNT PLANS, IF ANY) UNDER THE SCHEME DURING THE NEW FUND OFFER PERIOD OF THE RESPECTIVE PLAN UNDER THE SCHEME. 20
    • REDEMPTION OF REDEMPTION OF UNITS WILL BE RS. 500 OR 50 UNITS SUBJECT TO UNITS APPLICABLE EXIT LOAD. ANY REDEMPTION IN EXCESS THEREOF MAY BE IN MULTIPLES OF RE.1/- SUBJECT TO KEEPING MINIMUM BALANCE OF 500 UNITS OR RS. 5000/-, WHICHEVER IS LESS. IN THE EVENT OF REMAINING BALANCE FALLING BELOW THE MINIMUM BALANCE OF 500 UNITS OR RS.5000 (WHICHEVER IS LESS) WHILE PROCESSING REDEMPTION/SWITCH REQUESTS, THE ENTIRE OUTSTANDING UNITS REDEEMED. LOAD DURING NEW PLAN ENTRY LOAD EXIT LOAD FUND OFFER PERIOD YEARLY NOT APPLICABLE* 2% $/ 3% # AND FOR ONGOING REDEMPTIONS 13 MONTHS NOT APPLICABLE* 2% $/ 3% # CLOSE ENDED SCHEMES ARE NOT PERMITTED TO CHARGE ENTRY LOAD $ DURING SPECIFIED REDEMPTION PERIOD # FOR REDEMPTION ON ALL BUSINESS DAYS OTHER THAN SPECIFIED REDEMPTION PERIOD LIQUIDITY REDEMPTION OF UNITS EACH YEARLY AND 13 MONTHS PLAN WILL HAVE SPECIFIED REDEMPTION PERIOD WHICH WILL NORMALLY BE THE FIRST FIVE BUSINESS DAYS AT THE BEGINNING OF EVERY CALENDAR MONTH DURING THE TENURE OF THAT PLAN. ON THE SPECIFIED REDEMPTION DAYS DURING THE SPECIFIED REDEMPTION PERIOD, UNITHOLDERS CAN REDEEM THEIR INVESTMENTS AT THE APPLICABLE NAV SUBJECT TO EXIT LOAD, IF ANY, AND AFTER DEDUCTION OF THE BALANCE PROPORTIONATE UNAMORTIZED NEW FUND OFFER EXPENSES APPLICABLE TO THEIR INVESTMENTS. INVESTORS CAN ALSO REDEEM ON BUSINESS DAYS OTHER THAN THE SPECIFIED REDEMPTION PERIOD SUBJECT TO THE APPLICABLE EXIT LOAD, IF ANY, AND AFTER DEDUCTION OF THE BALANCE PROPORTIONATE UNAMORTIZED NEW FUND OFFER EXPENSES APPLICABLE TO THEIR INVESTMENTS. UNITHOLDERS IN A PLAN CAN REDEEM THEIR INVESTMENTS ON THE DATE OF MATURITY OF THAT PLAN AT THE APPLICABLE NAV WITHOUT ANY EXIT LOAD. PLEASE NOTE THAT IF ANY SPECIFIED REDEMPTION DAY / MATURITY DAY FALLS ON A NON-BUSINESS DAY, THE REDEMPTION REQUESTS WILL BE ACCEPTED OR THE PLAN WILL MATURE, AS THE CASE MAY BE, ON THE NEXT BUSINESS DAY. ON MATURITY OF A PLAN, THE MATURITY PAY-OUT WILL NORMALLY BE EFFECTED ON THE DAY IMMEDIATELY FOLLOWING THE MATURITY DAY. HOWEVER, IF THE MATURITY PAY-OUT DAY FALLS ON A NON-BUSINESS DAY, THEN THE MATURITY DAY WILL BE EXTENDED APPROPRIATELY TO ENSURE THAT BOTH THE MATURITY DAY AND THE PAY-OUT DAY ARE CONTINUOUS BUSINESS DAYS. IN CASE REDEMPTION REQUEST IS NOT RECEIVED TILL THE END OF BUSINESS HOURS ON THE DATE OF MATURITY OF A PLAN, THE 21
    • ACCOUNT BALANCES WILL BE COMPULSORILY REDEEMED AND PROCEEDS WILL BE REMITTED TO THE RESPECTIVE UNITHOLDERS. THE UNITS OF THE PLAN ARE NOT PROPOSED TO BE LISTED ON ANY EXCHANGE. THE FUND WILL, UNDER NORMAL CIRCUMSTANCES, ENDEAVOR TO DISPATCH THE REDEMPTION CHEQUES WITHIN 10 BUSINESS DAYS FROM THE DATE ON WHICH THE REDEMPTION TRANSACTION IS EFFECTED. TRANSPARENCY NAVS WILL BE DETERMINED AT THE CLOSE OF EVERY BUSINESS DAY TAKING INTO CONSIDERATION THE EXIT LOAD, IF ANY, AND THE BALANCE PROPORTIONATE UNAMORTISED ISSUE EXPENSES. THE SCHEME WILL DISCLOSE DETAILS OF ITS PORTFOLIO ON A HALF YEARLY BASIS AS PRESENTLY REQUIRED UNDER THE REGULATIONS, A COMPLETE STATEMENT OF THE SCHEME’S PORTFOLIO WOULD BE PUBLISHED BY THE MUTUAL FUND AS AN ADVERTISEMENT IN A NEWSPAPER WITHIN ONE MONTH FROM THE CLOSE OF EACH HALF YEAR (I.E. MARCH 31ST & SEPTEMBER 30TH) OR MAILED TO THE UNIT HOLDERS. BENCHMARK THE PERFORMANCE OF THE SCHEME WILL BE BENCHMARKED AGAINST CRISIL LIQUID FUND INDEX REPATRIATION NRIS AND FIIS MAY INVEST IN THE SCHEME ON A FULL FACILITY REPATRIATION BASIS AS PER RBI NOTIFICATION NO. FEMA 20/2000 DATED MAY 3, 2000. Each plan will have an alpha / numeric name indicating the series of the Scheme and starting with the alphabet 13 M – 13 months Plan and Y – Yearly Plan. Thus, the 13 months plan will be named as JM FMF-XI-13M1, & JM FMF XI -13M2 and yearly plan as JM FMF-XI-Y The Trustee reserves the right to decide the subscription periods for the different plans under the Scheme. The subscription period for each plan shall be notified by giving a public notice at least one day prior to the opening of the subscription period. Such notice shall also be suitably displayed at the official points of acceptance of transactions as defined by the AMC and also on the AMC’s website at www.JMFinancialmf.com. The Trustee also reserves the right to increase / decrease the number of business days under the subscription period and alter / modify / change the subscription period / specified redemption days. Such revision shall be notified by way of a notice suitably displayed as mentioned above. The AMC may add to or otherwise amend either all or any of the terms of the Scheme, by duly complying with the guidelines of and notifications issued by SEBI/GOI/any other relevant regulatory body that may be issued from time to time subject to the prior approval of SEBI, if required. The offer document shall be fully revised and updated at least once in two years. Till the time the offer document is revised and reprinted, an addendum giving details of each of the changes shall be attached to the offer document and key information memorandum and circulated to all the distributors so that the same can be attached to all offer documents and key information memoranda already in stock. The AMC will also circulate the addendum / amendment to the unitholders along with the newsletter sent to them. Arrangements will also be made to provide changes in the offer document in the form of a notice / any other manner in / at all the investor service centers / distributors office. Further the AMC will ensure that any change in the schedule of launch of plans will be in conformity with SEBI circular dated February 15, 2001. 22
    • 3.0 FEES, EXPENSES AND LOAD 3.1 NEW FUND OFFER EXPENSES Under the SEBI (Mutual Funds) Regulations, the Scheme / Plan is entitled to charge New Fund Offer expenses upto a maximum of 6% of the initial resources raised under the Scheme / Plan. New Fund offer expenses comprising of advertising & marketing expenses, printing and mailing, Registrar’s expenses, bank charges, commission to agents / distributors and other expenses not exceeding 6% of the initial amount mobilized in the New Fund Offer will be charged to the Plan / Scheme and will be amortised over the life of the Plan / Scheme. Actual expenses incurred in respect of the New Fund Offer expenses in excess of 6% of the initial amount mobilized shall be borne by the AMC. New Fund Offer Expenses under each Plan launched under the Scheme are estimated as under: Particulars Estimated % of amount mobilised Advertising & Marketing expenses 0.50% Printing & Distribution 0.25% Registrar’s Expenses 0.15% Agent’s Commissions 1.00% Miscellaneous Expenses 0.10% Total 2.00% The above estimates are made based on the minimum subscription (target) amount of Rs. 1 crore and are subject to change as per actual amounts mobilised. The purpose of the above table is to assist investors in understanding the various costs and expenses that an investor in any sub-plan / Plan under the Scheme will bear directly or indirectly. While these estimates have been made in good faith on the basis of information available with the Fund, there can be no assurance that actual expense, under any particular head will not be more or less than such estimate. The AMC reserves the rights to revise the fees payable to the service providers from time to time. The total expenses, however, will be maintained within the limits mentioned under the SEBI Regulations. An investor may redeem his investment before maturity of the Scheme subject to payment of applicable load and after deduction of the balance proportionate unamortized new fund offer expenses applicable to his investments. Assumed that the unitholders’ investment is Rs. 100 and the new fund offer expenses is 6% i.e. Rs. 100 * 6% = Rs. 6. Thus, the amount available for investment is Rs. 100 – Rs. 6 = Rs. 94. Total amount available for investment to the 94.00 Scheme (Rs.) Total No. of Units allotted 10.00 Total New Fund Offer Expenses amortised 6.00 over 395 days (in case of a 13 Monthsa Plan) Maximum period for amortization 395 days Per day amortization of New Fund Offer 0.01519 expenses (Rs.) Balance New Fund Offer Expenses which 5.9848 will be included in Net Assets (Rs.) NAV on first date of computation (Rs.) (94 + 5.9848) / 10 = 9.9985 23
    • 3.1.1 EXPENSES INCURRED IN SCHEMES LAUNCHED DURING THE LAST FISCAL YEAR AND FROM APRIL 1, 2007 TO DECEMBER 31, 2007 a) JM Arbitrage Advantage Fund JM Arbitrage Advantage Fund Actuals % of (Rs. in resources Lacs) mobilised R&T Expenses 1.89 0.003 Advertising Expenses 242.63 0.372 Printing & Stationery 20.29 0.031 Marketing Expenses 106.55 0.164 TOTAL 371.36 0.570 All expenses incurred launching JM Arbitrage Advantage Fund have been borne by the AMC. The New Fund Offer period commenced on June 1, 2006 and closed on June 30, 2006. The Scheme opened for continuous purchases / repurchases on July 21, 2006. The Scheme has 2 plans – Dividend Plan and Growth Plan. b) JM Money Manager Fund JM Money Manager Fund Actuals % of (Rs. in resources Lacs) mobilised Advertising Expenses 0.194 0.002 Printing & Stationery 0.478 0.004 Marketing Expenses 0.115 0.001 TOTAL 0.787 0.007 All expenses incurred launching JM Money Manager Fund have been borne by the AMC. The New Fund Offer period commenced on September 25, 2006 and closed on September 27, 2006. The Scheme opened for continuous purchases / repurchases on September 29, 2006. The Scheme has 3 plans – Regular Plan, Super Plan and Super Plus Plan with each plan having Growth and Dividend options. c) JM Financial Services Sector Fund JM Financial Services Sector Fund Actuals % of (Rs. in resources Lacs) mobilised Printing & Stationery 1.015 0.179 TOTAL 1.015 0.179 In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expenses connected with sales and distribution of the Scheme during the New Fund Offer period have been met from the entry load. The New Fund Offer period commenced on November 2, 2006 and closed on November 20, 2006. The Scheme opened for continuous purchases / repurchases on December 15, 2006. The Scheme has 2 plans – Dividend Plan and Growth Plan. 24
    • d) JM Telecom Sector Fund JM Telecom Sector Fund Actuals % of (Rs. in resources Lacs) mobilised Printing & Stationery 1.015 0.168 TOTAL 1.015 0.168 In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expenses connected with sales and distribution of the Scheme during the New Fund Offer period have been met from the entry load. The New Fund Offer period commenced on November 2, 2006 and closed on November 20, 2006. The Scheme opened for continuous purchases / repurchases on December 15, 2006. The Scheme has 2 plans – Dividend Plan and Growth Plan. e) JM Equity Tax Saver Series – I JM Equity Tax Saver Actuals % of Series - I (Rs. in Lacs) resources mobilised R&T Expenses 1.09 0.081 Printing & Stationery 22.50 1.670 Marketing Expenses 68.12 5.057 Advertising Expenses 1.87 0.139 TOTAL 6.947 93.58 In accordance with the SEBI circular No.SEBI/IMD/CIR No. 1/64057/06 dated 4th April, 2006, close- ended schemes are not permitted to charge any entry load but allowed to charge initial issue expeses upto 6% which will be amortised during the period of the scheme. The remaining expenses will be borne by the AMC. The expenses pertaining to this scheme has been therefore borne by the AMC. The New Fund Offer period commenced on 28th December, 2006 and closed on 29th March, 2007. f) JM Small & Mid-cap Fund JM Small & Mid-cap Actuals % of Fund (Rs. in Lacs) resources mobilised R&T Expenses 6.65 1.172 Printing & Stationery 70.00 3.174 Marketing Expenses 812.50 0.026 Advertising Expenses 300.00 0.273 TOTAL 1189.15 4.645 In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expenses connected with sales and distribution of the Scheme during the New Fund Offer period have been met from the entry load. The New Fund Offer period commenced on 9th March, 2007 and closed on 7th April, 2007. The Scheme opened for continuous purchases / repurchases on 4th May, 2007. The Scheme has 2 plans – Dividend Plan and Growth Plan. 25
    • g) JM Contra Fund JM Contra Fund Actuals % of (Rs. in Lacs) resources mobilised R&T Expenses 6.39 0.01 Printing & Stationery 72.51 0.08 Marketing Expenses 1137.79 1.21 Advertising Expenses 573.3 0.61 TOTAL 1789.99 1.91 In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expenses connected with sales and distribution of the Scheme during the New Fund Offer period will be met from the entry load. The New Fund Offer period commenced on 16th July, 2007 and closed on 14th August, 2007. The Scheme opened for continuous purchases / repurchases on 13th September, 2007. The Scheme has 2 plans – Dividend Plan and Growth Plan. 3.2 ANNUAL SCHEME RECURRING EXPENSES The maximum recurring expenses that can be charged to a Plan under the Scheme, on an annual basis are as under: Particulars (as a % of Applicable NAV) JM Fixed Maturity Fund - Series XI Investment Management & Advisory Fee 1.25 % Trustee Fee 0.05 % Marketing and Selling Expenses 0.55 % Custodian Expenses 0.20 % Registrar and Transfer Agent Fee, Audit Fee 0.20 % and other expenses permitted under Regulation 52(4)(b) TOTAL 2.25 % The maximum expenses that may be incurred under any new sub-plan(s) that may be introduced under any plan launched under the Scheme will be within the limits mentioned above; however, the investment management fees will be uniform across various sub-plans launched under a plan. The estimated maximum recurring expenses that can be charged to a sub-plan launched under any Plan under the Scheme, on an annual basis are given below: Particulars (as a % of Applicable Regular Plan Institutional Plan NAV) Investment Management & Advisory 1.25 % 1.25 % Fee Trustee Fee 0.05 % 0.05 % Marketing and Selling Expenses 0.55 % 0.30 % Custodian Expenses 0.20 % 0.20 % Registrar and Transfer Agent Fee, 0.20 % 0.20 % Audit Fee and other expenses 26
    • permitted under Regulation 52(4)(b) TOTAL 2.25 % 2.00 % The purpose of the above tables is to assist the investor in understanding the various costs and expenses that an investor in any Plan under the Scheme will bear directly or indirectly. While these estimates have been made in good faith on the basis of information available with the Fund, there can be no assurance that actual expense, under any particular head will not be more or less than such estimate. The AMC reserves the rights to revise the fees payable to the service providers from time to time. The total expenses, however, will be maintained within the limits mentioned under Regulation 52(6) of the SEBI Regulations. The Trustee reserves the right to charge a lower / differential fee structure for the Scheme or any Plan / Option under the Scheme. As per the Regulations, in case of debt schemes, the maximum recurring expenses including investment management and advisory fee that can be charged to the Plan / Scheme shall be subject to a percentage limit of weekly net assets as in the table below: Next Rs. 300 On the balance First Rs. 100 crore Next Rs. 300 crore crore assets 2.25% 2.00% 1.75% 1.50% Subject to the overall ongoing fees and expenses which would be charged to the scheme not exceeding the limit laid down under Regulation 52(6) [as reproduced above], the AMC may at its discretion charge to the Scheme the Government levies in the form of any charges or applicable taxes including applicable surcharge either presently payable or which may be imposed in future. Currently, the Government has imposed Service Tax of 12% on the Management and Trustee Fees and education cess of 2% on Service Tax which would be charged to the scheme subject to the overall expenses charged to the schemes do not exceed the limits laid down under Regulation 52(6). Further, as and when permitted by SEBI, the AMC may charge a higher fee for that part of the assets which are invested overseas. However, revision in fee charged shall be within the SEBI Regulations at all times. 3.3 UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD The load structure for JM Fixed Maturity Fund - Series XI during new fund offer period and for ongoing redemptions is given as follows : Entry Load Exit Load Yearly Plan Not Applicable * 2%$/ 3%# 13 months Not Applicable 2%/ 3% # Plan * * Close ended schemes are not permitted to charge entry load. $ During Specified Redemption Period # For Redemption on all business days other than Specified Redemption Period The Repurchase Price will not be lower than 95% of the NAV. The Fund / AMC shall retain the load, if charged, in the Scheme in a separate account and use it to cover the cost of raising / redeeming units on a continuous basis by way of providing redemption / distribution related services to the Fund relating to the sale, promotion, advertising and marketing of the units of the Scheme and costs associated with liquidating the Fund’s investments in securities, including payments for postage and also payments to brokers for their services in connection with the redemption/distribution of the units. Surplus of load, if any, charged over planned marketing and distribution expenses will be credited to the Scheme whenever felt appropriate by the AMC. 27
    • 4.0 CONDENSED FINANCIAL INFORMATION ON SCHEMES LAUNCHED DURING THE LAST THREE FISCAL YEARS HISTORICA Super Inst. Super Inst. Super Super Super Super Premiu L PER UNIT Plan Plan Daily Inst. Plan Inst. Inst. Inst. m Plan+ STATISTICS Weekly Dividend Growth Plan Plan Plan 2005- JM High Dividend Option Option Weekly Plan Growth 2006 Liquidity Option 2004-2005 2004-2005 Div Daily Option Fund 2004-2005 2005- 2005- 2005- 2006 2006 2006 Date of 19.05.2004 19.05.2004 19.05.2004 19.05.04 19.05.04 19.05.04 - Allotment NAV at the 10.0000$ 10.0000$ 10.0000$ 10.0231 10.0165 10.4285 10.0000+ beginning of the year (Rs.) Net Income per 0.58 1.70 0.70 unit (Rs.) Dividends (%) 0.3973 0.4022 0 0.10 6.66 0 7.04 Transfer to 181.89 201.45 0.00 Reserves (Rs. in Crs.) NAV at the end 10.0216 10.0165 10.4269 10.0601 10.0165 11.0187 10.0000 of the year (Rs.) Annualised 2.55* 2.55* 2.55* 5.33 5.33 5.34 6.32* return (%) (From inception date) Benchmark(%) 2.21* 2.21* 2.21* 4.55 4.55 4.55 4.99* Returns (Crisil Liquid Fund Index) Net Assets at 331.83 465.12 711.34 45.34 182.36 208.97 152.63 end of the period (Rs. in Crs.) Ratio of 0.46 0.30 Recurring 0.60 Expenses to Net Assets (%) 28
    • HISTORICAL Super Inst. Super Inst. Super Inst. JM High PER UNIT Plan Plan Plan Liquidity STATISTICS JM Daily Growth Weekly Premium High Liquidity Dividend Option Dividend Plan Fund Fund Option 2006-2007 Option 2006.2007 2006-2007 2006-07 Date of Allotment 19.05.2004 19.05.2004 19.05.2004 10.02.2006 NAV at the 10.0165 11.0187 10.0601 10.0000 beginning of the year (Rs.) Net Income per 1.21 3.82 unit (Rs.) Dividends (%) 6.98 6.92 5.94 6.92 Transfer to 208.19 0 Reserves (Rs. in Crs.) NAV at the end of 10.0165 10.0000 10.1703 10.0000 the year (Rs.) Annualised return 6.32 6.33 6.32 7.11@ (%) (From inception date) Benchmark 5.46 5.46 5.46 6.33@ Returns(%) (Crisil Liquid Fund Index) Net Assets at end 363.43 117.10 4.04 9.25 of the period (Rs. in Crs.) Ratio of Recurring 0.30 0.30 Expenses to Net Assets (%) $ NAV as on the date of allotment. * Benchmark Index – CRISIL Liquid Fund Index @ Absolute returns as the Scheme has not completed one year of operation. HISTORICAL PER UNIT Premium Premium Premium Premium STATISTICS Plan Plan Plan Plan JM Liquid Plus Fund – Premium Dividend Growth Dividend Growth Plan (Formerly known as JM Option Option Option Option Floater Fund – Long Term 2004-2005 2004-2005 2005-2006 2005-2006 Premium Plan) Date of Allotment 13.10.04 13.10.04 13.10.2004 13.10.2004 $ $ NAV at the beginning of the year) 10.0000 10.0000 10.0234 10.2448 (Rs.) Net Income per unit (Rs.) 0.32 3.55 Dividends (%) 0.2189 0 0.21 0 Transfer to Reserves (Rs. in Crs.) - 3.91 NAV at the end of the year (Rs.) 10.0219 10.2433 10.0502 10.8400 Annualized return (%)(from 2.43* 2.43* 5.66 5.67 inception date) Benchmark Returns (%) 2.09* 2.09* 4.76 4.76 (Crisil Liquid Fund Index) 29
    • Net Assets at end of the period (Rs. 72.21 77.01 10.17 18.67 in Crs.) Ratio of Recurring Expenses to 0.32 0.51 Net Assets (%) $ NAV as on date of allotment. *Simple returns which have not been annualized as the scheme / plan / option had not completed one year of operation. HISTORICAL PER UNIT Premium Premium Plan STATISTICS Plan Growth JM Liquid Plus Fund – Premium Dividend Option Plan (Formerly known as Floater Option 2006-2007 Fund – Long Term Premium Plan) 2006-2007 Date of Allotment 13.10.2004 13.10.2004 NAV at the beginning of the year) 10.0502 10.84 (Rs.) Net Income per unit (Rs.) 5.56 Dividends (%) 5.58 Nil Transfer to Reserves (Rs. in Crs.) 4.03 NAV at the end of the year (Rs.) 10.0810 11.4927 Annualized return (%)(from inception 6.04 6.05 date) Benchmark Returns (%)* 5.66 5.66 (Crisil Liquid Fund Index) Net Assets at end of the period (Rs. in 0.37 0.24 Crs.) Ratio of Recurring Expenses to Net 0.55 Assets (%) * Benchmark Index – I-Sec Composite Index HISTORICAL PER UNIT JM Auto Sector Fund JM Healthcare Sector Fund STATISTICS Dividend Growth Plan Dividend Growth Plan Plan 2004-2005 Plan 2004-2005 2004-2005 2004-2005 Date of Allotment 29.06.2004 29.06.2004 29.06.2004 29.06.2004 $ $ $ NAV at the beginning of the year (Rs.) 10.00 10.00 10.00 10.00$ Net Income per unit (Rs.) 3.26 2.04 Dividends (%) 0 0 1.00 0 Transfer to Reserves (Rs. In Crs.) 2.35 1.50 NAV at the end of the year (Rs.) 12.35 12.34 10.61 11.57 Annualized return (%) (from inception 18.75* 18.77* 1.03* 0.96* date) @ @ Benchmark Returns (%) 20.11* 20.11* (1.98)*@@ (1.98)*@@ Net Assets at end of the period (Rs. in 5.08 8.70 3.62 14.15 Crs.) Ratio of Recurring Expenses to Net 2.50 Assets (%) $ NAV as on the date of allotment. * Simple returns which have not been annualised as the plans have not completed one year of operation. @ Benchmark Index – JM Auto Sector Index @@ Benchmark Index – BSE Healthcare Index. 30
    • HISTORICAL PER UNIT JM Auto Sector Fund JM Healthcare Sector Fund STATISTICS Dividend Plan Growth Dividend Growth Plan 2005-2006 Plan Plan 2005-2006 2005-2006 2005-2006 Date of Allotment 29.06.2004 29.06.2004 29.06.2004 29.06.2004 NAV at the beginning of the year (Rs.) 12.75 12.74 10.83 11.80 Net Income per unit (Rs.) 6.08 3.64 Dividends (%) 30.63 0 15.60 0 Transfer to reserves (Rs. in Crs.) 3.56 2.06 NAV at the end of the year (Rs.) 15.55 20.31 14.39 18.14 Annualized return (%) (from inception 49.81 49.79 40.50 40.44 date) @ @ Benchmark Returns (%) 65.64 65.64 40.03@@ 40.03@@ Net Assets at end of the period (Rs. in 2.66 9.63 1.82 8.85 Crs.) Ratio of Recurring Expenses to Net 2.50 Assets (%) HISTORICAL PER UNIT JM Auto Sector Fund JM Healthcare Sector Fund STATISTICS Dividend Growth Plan Dividend Growth Plan Plan 2006-2007 Plan 2006-2007 2006-2007 2006-2007 Date of Allotment 29.06.2004 29.06.2004 29.06.2004 29.06.2004 NAV at the beginning of the year (Rs.) 15.55 20.31 14.39 18.14 Net Income per unit (Rs.) 0.78 1.37 Dividends (%) 0 0 0 0 Transfer to Reserves (Rs. In Crs.) 4.04 2.99 NAV at the end of the year (Rs.) 15.31 19.99 13.39 16.88 Annualized return (%) (from inception date) 38.75 36.32 26.90 25.01 Benchmark Returns (%) 44.21@ 44.21@ 25.70@@ 25.70@@ Net Assets at end of the period (Rs. in Crs.) 8.53 1.41 6.27 1.44 Ratio of Recurring Expenses to Net 2.50 Assets (%) @ Benchmark Index – JM Auto Sector Index @@ Benchmark Index – BSE Healthcare Index 31
    • HISTORICAL PER UNIT STATISTICS Dividend Growth Bonus Plan JM Equity & Derivative Fund Plan Plan 2004-2005 2004-2005 2004-2005 Date of Allotment 04.03.2005 04.03.2005 04.03.2005 $ $ NAV at the beginning of the year (Rs.) 10.0000 10.0000 10.0000$ Net Income per unit (Rs.) 0.10 Dividends (%) 0 0 0 Transfer to Reserves (Rs. in Crs.) 4.87 NAV at the end of the year (Rs.) 10.0583 10.0583 10.0583 Annualized return (%) (from inception date) 0.58* 0.58* 0.58* Benchmark Returns (%)(Crisil Liquid Fund 0.34* 0.34* 0.34* Index) Net Assets at end of the period (Rs. in Crs.) 321.57 486.61 0.70 Ratio of Recurring Expenses to Net Assets (%) 0.07 $ NAV as on the date of allotment. *Simple returns which have not been annualized as the scheme / plan / option had not completed one year of operation. HISTORICAL PER UNIT STATISTICS Dividend Plan Growth Bonus Plan JM Equity & Derivative Fund 2005-2006 Plan 2005-2006 2005-2006 Date of Allotment 04.03.2005 04.03.2005 04.03.2005 NAV at the beginning of the year 10.0705 10.0705 10.0705 Net Income per unit 0.30 Dividends (%) 1.14 0 0 Transfer to Reserves (Rs. in Crs.) 10.27 NAV at the end of the year 10.3455 10.7001 10.7006 Annualized return (%)(from inception date) 7.01 6.50 6.51 Benchmark Returns (Crisil Liquid Fund Index) 4.85 4.85 4.85 Net Assets at end of the period (Rs. in Crs.) 292.26 442.92 2.78 Ratio of Recurring Expenses to Net Assets (%) 1.00 HISTORICAL PER UNIT STATISTICS Dividend Growth Bonus Plan JM Equity & Derivative Fund Plan Plan 2006-2007 2006-2007 2006-2007 Date of Allotment 04.03.2005 04.03.2005 04.03.2005 NAV at the beginning of the year (Rs.) 10.3455 10.7001 10.7006 Net Income per unit (Rs.) 3.15 Dividends (%) 8.39 Nil 0.80 Transfer to Reserves (Rs. in Crs.) 5.70 NAV at the end of the year (Rs.) 10.2751 11.5236 10.6705 Annualized return (%) (from inception date) 7.36 7.35 7.35 Benchmark Returns (%)(Crisil Liquid Fund 5.79 5.79 5.79 Index) Net Assets at end of the period (Rs. in Crs.) 76.98 164.08 7.99 32
    • Ratio of Recurring Expenses to Net Assets (%) 1.15 HISTORICAL PER UNIT Dividend Growth Dividend Growth STATISTICS Plan Plan Plan Plan JM Emerging Leaders Fund 2005-2006 2005- 2006-2007 2006-2007 2006 Date of Allotment 27.07.2005 27.07.20 27.07.2005 27.07.2005 05 NAV at the beginning of the year 10.00$ 12.23 12.20 10.00$ (Rs.) Net Income per unit (Rs.) 2.20 (0.19) Dividends (%) 0 0 0 0 Transfer to Reserves (Rs. in Crs.) 1.20 (9.31) NAV at the end of the year (Rs.) 12.23 12.20 9.68 9.65 Annualized return (%)(from inception (2.09) (2.09) 22.30* 22.00* date) Benchmark Returns (%) (BSE 200) 43.78* 43.78* 34.91 34.91 Net Assets at end of the period (Rs. in 58.12 5.28 28.40 12.49 Crs.) Ratio of Recurring Expenses to Net 2.19 2.13 Assets (%) $ NAV as on the date of allotment. *Simple returns which have not been annualized as the scheme / plan / option had not completed one year of operation. HISTORICAL PER UNIT JM HI FI Fund STATISTICS Dividend Growth Plan Plan 2006-2007 2006-2007 Date of Allotment 07.04.2006 07.04.2006 $ NAV at the beginning of the period 10.00 10.00$ (Rs.) Net Income per unit (Rs.) (0.84) Dividends (%) Nil N. A. Transfer to Reserves (Rs. in crores) (3.23) NAV at the end of the period (Rs.) 9.12 9.12 Annualized return (%) (from inception date) (9.00) (9.00) Benchmark Returns (%) 10.85 10.85 Net Assets at end of the period (Rs. in Crs.) 14.98 18.46 Ratio of Recurring Expenses to Net 2.49 Assets (%) $ NAV as on the date of allotment. * Absolute returns as the Scheme / plan has not completed one year of operation. # Benchmark Index – S & P CNX Nifty Index. ## Benchmark Index – S&P CNX Nifty Index 33
    • HISTORICAL PER UNIT JM Arbitrage STATISTICS Advantage Fund Dividend Growth Plan Plan 2006-2007 2006-2007 Date of Allotment 18.07.2006 18.07.2006 NAV at the beginning of the period 10.0000$ 10.0000$ (Rs.) Net Income per unit (Rs.) 1.52 Dividends (%) 4.20 Nil Transfer to Reserves (Rs. in crores) 8.33 NAV at the end of the period (Rs.) 10.1772 10.6044 Annualized return (%) (from 9.51@ 8.64@ inception date) Benchmark Returns (%) 6.38*@ 6.38*@ Net Assets at end of the period (Rs. in 259.85 75.61 Crs.) Ratio of Recurring Expenses to Net 1.47 Assets (%) $ NAV as on the date of allotment. * Benchmark Index – CRISIL Liquid Fund Index @ Absolute returns as the Scheme has not completed one year of operation. Historical Per Unit Statistics Dividend Growth JM Money Manager Fund – Regular Plan Plan Plan 2006-2007 2006-2007 Date of Allotment 27.09.2006 27.09.206 NAV at the beginning of the year (Rs.) 10.0000$ 10.0000$ Net Income per unit * (Rs.) 3.96 Dividends (%) 3.71 NIL Transfer to reserves (Rs. in Crores) ** 0.04 NAV at the end of the period (Rs.) 10.0000 10.3777 Annualized return (%) (from inception 7.46 7.45 date) Benchmark Returns (%) (CRISIL Liquid 6.63 6.63 Fund Index) Net Assets at end of the period (Rs. in 0.18 1.19 Crs.) Ratio of Recurring Expenses to Net Assets 0.50% (%) (Annualised) $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple annualized returns as the Scheme / Plan has not completed one year of operation. 34
    • Historical Per Unit Statistics Dividend Growth Plan JM Money Manager Fund – Super Plan Plan 2006-2007 2006-2007 Date of Allotment 27.09.2006 27.09.206 NAV at the beginning of the year (Rs.) 10.0000$ 10.0000$ Net Income per unit * (Rs.) 0.17 Dividends (%) 3.76 N. A. Transfer to reserves (Rs. in Crores) ** 0.10 NAV at the end of the period (Rs.) 10.0000 10.3837 Annualized return (%) (from inception 7.57 7.57 date) Benchmark Returns (%)(CRISIL Liquid 6.63 6.63 Fund Index) Net Assets at end of the period (Rs. in 54.47 2.73 Crs.) Ratio of Recurring Expenses to Net Assets 0.26 (%) (Annualised) $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple annualized returns as the Scheme / Plan has not completed one year of operation. Historical Per Unit Statistics Dividend Growth JM Money Manager Fund – Super Plus Plan Plan Plan 2006-2007 2006-2007 Date of Allotment 27.09.2006 27.09.2006 NAV at the beginning of the year (Rs.) 10.0000$ 10.0000$ Net Income per unit * (Rs.) 0.67 Dividends (%) 4.06 N. A. Transfer to reserves (Rs. in Crores) ** 0.52 NAV at the end of the period (Rs.) 10.0000 10.4169 Annualized return (%)(from inception 8.17 8.23 date) Benchmark Returns (%) (CRISIL Liquid 6.63 6.63 Fund Index) Net Assets at end of the period (Rs. in 265.77 12.87 Crs.) Ratio of Recurring Expenses to Net Assets 0.35 (%) (Annualised) $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple annualized returns as the Scheme / Plan has not completed one year of operation. 35
    • Historical Per Unit Statistics Dividend Growth JM Financial Services Sector Fund Plan Plan 2006-2007 2006-2007 Date of Allotment 0.7.12.2006 0.7.12.2006 NAV at the beginning of the year (Rs.) 10.00$ 10.00$ Net Income per unit * (Rs.) (0.39) Dividends (%) 0 N. A. Transfer to reserves (Rs. in Crores) ** (0.40) NAV at the end of the period (Rs.) 9.26 9.26 Annualized return (%) (from inception (23.90) $$ (23.90) date) Benchmark Returns (%) (BSE Finance (27.28) $$ (27.28) Index) Net Assets at end of the period (Rs. in 3.42 1.55 Crs.) Ratio of Recurring Expenses to Net Assets 0.50 (%) (Annualised) $ NAV as on the date of allotment. * calculated excluding unrealized appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. Historical Per Unit Statistics Dividend Growth Plan JM Telecom Sector Fund Plan 2006-2007 2006-2007 Date of Allotment 0.7.12.2006 0.7.12.2006 NAV at the beginning of the year (Rs.) 10.00$ 10.00$ Net Income per unit * (Rs.) 0.22 Dividends (%) 0 N. A. Transfer to reserves (Rs. in Crores) ** 0.26 NAV at the end of the period (Rs.) 10.60 10.60 Annualized return (%) (from inception 19.38 $$ 19.38$$ date) Benchmark Returns (%) (BSE Telecom 20.68 $$ 20.68$$ Index) Net Assets at end of the period (Rs. in 4.67 3.39 Crs.) Ratio of Recurring Expenses to Net Assets 0.50 (%) (Annualised) $ NAV as on the date of allotment. * calculated excluding unrealized appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. 36
    • Historical Per Unit Statistics Dividend Growth Plan JM Equity Tax Saver Fund Series - I Plan 2006-2007 2006-2007 Date of Allotment 30.03.2007 30.03.2007 NAV at the beginning of the year (Rs.) 10.00$ 10.00$ Net Income per unit * (Rs.) 0.02 Dividends (%) 0 N. A. Transfer to reserves (Rs. in Crores) ** 0.02 NAV at the end of the period (Rs.) 10.11 10.11 Annualized return (%) (from inception N A$$ N A$$ date) Benchmark Returns (%) (BSE 200 Index) N A$$ N A$$ Net Assets at end of the period (Rs. in 5.79 7.82 Crs.) Ratio of Recurring Expenses to Net Assets 2.37 (%) (Annualised) $ NAV as on the date of allotment. * calculated excluding unrealized appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. Historical Per Unit JM FMP- JM FMP- 13 Months 13 Months Yearly Yearly Statistics S4-15M1 S4-15M1 Plan (JM Plan (JM Plan Plan JM Fixed Maturity Fund Dividend Growth FMF-IV- FMF-IV- Dividend Growth – Series IV Plan Plan 13M) 13M) Plan Plan 2006-2007 2006-2007 Dividend Growth 2006-2007 2006-2007 Plan Plan 2006-2007 2006-2007 Date of Allotment 06.02.2007 06.02.2007 16.03.2007 16.03.2007 28.03.2007 28.03.2007 NAV at the beginning of 10.0000$ 10.0000$ 10.0000$ 10.0000$ 10.0000$ 10.0000$ the year (Rs.) Net Income per unit * (Rs.) 0.12 0.04 0.02 Dividends (%) 1.19 Nil 0.50 Nil Nil Nil Transfer to reserves (Rs. in 0.52 0.29 0.09 Crores) ** NAV at the end of the 10.0000 10.1185 10.0000 10.0498 10.0238 10.0238 period (Rs.) Annualized return 8.16 8.16 12.98 12.98 28.96 28.96 (%)(from inception date) Benchmark Returns (I-Sec 1.86 1.86 1.43 1.43 (39.27) (39.27) Bond Fund Index) Net Assets at end of the 0.36 44.18 4.02 67.58 0.05 41.71 period (Rs. in Crs.) Ratio of Recurring 0.10% 0.08% 0.08% Expenses to Net Assets (%) (Annualised) 37
    • $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. HISTORICAL PER UNIT Dividend Growth Institutional Institutional STATISTICS Plan Plan Dividend Plan Growth Plan JM Fixed Maturity Fund – 2007-2008 2007-2008 2007-2008 2007-2008 Series VI –Quarterly Plan – 4 Date of Allotment 22/11/2007 22/11/2007 22/11/2007 22/11/2007 NAV at the beginning of the year 10.0000$ 10.0000$ 10.0000$ 10.0000$ Net Income per unit * 0.0936 Dividends (%) 0.81 0 0.85 0 Transfer to reserves (Rs. in 0.3300 Crores) ** NAV at the end of the period 10.0092 10.0898 10.0096 10.0941 Annualized return (%) 8.4112 8.4043 8.8143 8.8068 (from inception date) Benchmark Returns (%) 7.7335 (I Sec SI Bex Index) Net Assets at end of the period 0.47 0.10 330.77 1.03 (Rs. in Crs.) Ratio of Recurring Expenses to 0.69 0.29 Net Assets (%) Annualized HISTORICAL PER UNIT Dividend Growth Institutional Institutional STATISTICS Plan Plan Dividend Plan Growth Plan JM Fixed Maturity Fund – 2007-2008 2007-2008 2007-2008 2007-2008 Series VI –Quarterly Plan – 5 Date of Allotment 27/11/2007 27/11/2007 27/11/2007 27/11/2007 NAV at the beginning of the year 10.0000$ 10.0000$ 10.0000$ 10.0000$ Net Income per unit * 0.0851 Dividends (%) 0.72 0 0.76 0 Transfer to reserves (Rs. in 0.4700 Crores) ** NAV at the end of the period 10.0092 10.0810 10.0098 10.0856 Annualized return (%) 8.7026 8.69558 9.1866 9.1894 (from inception date) Benchmark Returns (%) 8.4702 (I Sec SI Bex Index) Net Assets at end of the period 0.02 0.01 341.10 15.81 (Rs. in Crs.) 38
    • Ratio of Recurring Expenses to 0.75 0.25 Net Assets (%) Annualized HISTORICAL PER UNIT Dividend Growth Institutional Institutional STATISTICS Plan Plan Dividend Plan Growth Plan JM Fixed Maturity Fund – 2007-2008 2007-2008 2007-2008 2007-2008 Series IV –– 15 Months Plan 2 Date of Allotment 24/05/2007 24/05/2007 24/05/2007 24/05/2007 NAV at the beginning of the year 10.0000$ 10.0000$ 10.0000$ 10.0000$ Net Income per unit * 0.6369 Dividends (%) 5.78 6.22 Transfer to reserves (Rs. in 4.44 Crores) ** NAV at the end of the period 10.0900 10.6795 10.0718 10.7058 Annualized return (%) (from inception date) 11.2100 11.2225 11.6452 11.6585 Benchmark Returns (%) (I Sec SI Bex Index) 8.7535 8.7535 8.7535 8.7535 Net Assets at end of the period (Rs. in Crs.) 1.46 18.42 20.80 54.69 Ratio of Recurring Expenses to 0.25 0.13 Net Assets (%) Annualized $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. HISTORICAL PER UNIT Dividend Plan Growth Plan STATISTICS 2007-2008 2007-2008 JM Small & Mid-Cap Fund Date of Allotment 30/04/2007 30/04/2007 NAV at the beginning of the year 10.0000$ 10.0000$ Net Income per unit * 1.0670 Dividends (%) 0 Transfer to reserves (Rs. in 11.66 Crores) ** NAV at the end of the period 17.6076 17.6076 Annualized return (%) 113.3377 113.3377 (from inception date) Benchmark Returns (%) 112.2992 112.2992 (CNX Mid-Cap Index) Net Assets at end of the period 146.67 140.07 (Rs. in Crs.) 39
    • Ratio of Recurring Expenses to 2.33 Net Assets (%) Annualized $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple annualized returns as the Scheme / Plan has not completed one year of operation. HISTORICAL PER UNIT Dividend Plan Growth Plan STATISTICS 2007-2008 2007-2008 JM Contra Fund Date of Allotment 07/09/2007 07/09/2007 NAV at the beginning of the year 10.0000$ 10.0000$ Net Income per unit * 0.3979 Dividends (%) 0 Transfer to reserves (Rs. in 10.92 Crores) ** NAV at the end of the period 13.5184 13.5184 Annualized return (%) 111.671 111.671 (from inception date) Benchmark Returns (%) 130.78 130.78 (BSE 500 Index) Net Assets at end of the period 522.63 545.75 (Rs. in Crs.) Ratio of Recurring Expenses to 2.06 Net Assets (%) Annualized $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple annualized returns as the Scheme / Plan has not completed one year of operation. HISTORICAL PER UNIT Dividend Growth Institutional Institutional STATISTICS Plan Plan Dividend Plan Growth Plan Jm Fixed Maturity Fund Series 2007-2008 2007-2008 2007-2008 2007-2008 VII – 13M Date of Allotment 17/09/2007 17/09/2007 17/09/2007 17/09/2007 NAV at the beginning of the year 10.0000$ 10.0000$ 10.0000$ 10.0000$ Net Income per unit * 0.2748 Dividends (%) 2.07 2.51 Transfer to reserves (Rs. in 5.9200 Crores) ** NAV at the end of the period 10.0568 10.2636 10.0258 10.2769 Annualized return (%) (from inception date) 9.1618 9.1632 9.6266 9.6256 Benchmark Returns (%) (I Sec Bond Index) 7.3360 40
    • Net Assets at end of the period (Rs. in Crs.) 1.25 5.12 45.34 211.57 Ratio of Recurring Expenses to 0.22 0.16 Net Assets (%) Annualized $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. HISTORICAL PER UNIT Dividend Growth Institutional Institutional STATISTICS Plan Plan Dividend Plan Growth Plan Jm Fixed Maturity Fund Series 2007-2008 2007-2008 2007-2008 2007-2008 VII – 18M Date of Allotment 19/10/2007 19/10/2007 19/10/2007 19/10/2007 NAV at the beginning of the year 10.0000$ 10.0000$ 10.0000$ 10.0000$ Net Income per unit * 0.1609 Dividends (%) 0.39 1.08 Transfer to reserves (Rs. in 0.9400 Crores) ** NAV at the end of the period 10.1203 10.1593 10.0691 10.1775 Annualized return (%) (from inception date) 7.9636 7.9650 8.8704 8.8750 Benchmark Returns (%) (I Sec Bond Index) 8.004 Net Assets at end of the period (Rs. in Crs.) 0.80 3.79 3.15 53.94 Ratio of Recurring Expenses to 0.71 0.21 Net Assets (%) Annualized $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. HISTORICAL PER UNIT Dividend Growth Institutional Institutional STATISTICS Plan Plan Dividend Plan Growth Plan JM Interval Fund – Series I 2007-2008 2007-2008 2007-2008 2007-2008 Date of Allotment 27/12/2007 27/12/2007 27/12/2007 27/12/2007 NAV at the beginning of the year 10.0000$ 10.0000$ 10.0000$ 10.0000$ Net Income per unit * 0.0107 Dividends (%) 0 0 Transfer to reserves (Rs. in 0.4400 Crores) ** NAV at the end of the period 10.0117 10.0117 10.0121 10.0121 41
    • Annualized return (%) (from inception date) 10.676 10.676 11.0412 11.0412 Benchmark Returns (%) (CRISIL Liquid Fund Index) 9.3388 9.3388 9.3388 9.3388 Net Assets at end of the period (Rs. in Crs.) 0.54 0.16 270.53 143.54 Ratio of Recurring Expenses to 0.63 0.28 Net Assets (%) Annualized $ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision for depreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan has not completed one year of operation. The borrowings of the Schemes of the Fund have been within the limits stipulated under the SEBI (Mutual Funds) Regulations, 1996 as amended. 42
    • Latest performance of the schemes as on December 31,2007 NAV Returns since Benchmark Name of Scheme (Rs.) inception (%) Returns (%) JM Equity Fund - Dividend 25.878 20.23 15.40 JM Equity Fund - Growth 57.5981 14.71 15.40 JM Balanced Fund - Dividend 25.8466 19.40 NA JM Balanced Fund - Growth 34.0065 20.99 NA JM Basic Fund - Dividend 33.6848 38.06 NA JM Basic Fund - Growth 39.8136 41.83 NA JM Auto Sector Fund - Dividend 20.1872 33.07 31.02 JM Auto Sector Fund - Growth 26.3539 31.83 31.02 JM Health Care Sector Fund - Dividend 15.7801 22.72 23.00 JM Health Care Sector Fund - Growth 19.8902 21.66 23.00 JM Equity & Derivative Fund - Bonus 11.2679 7.19 6.13 JM Equity & Derivative Fund - Dividend 10.4057 7.19 6.13 JM Equity & Derivative Fund - Growth 12.1663 7.18 6.13 JM Emerging Leaders Fund - Dividend 20.6217 34.69 50.58 JM Emerging Leaders Fund - Growth 20.5794 34.58 50.58 JM HI FI Fund - Dividend 18.7023 43.48 39.30 JM HI FI Fund - Growth 18.7067 43.60 39.30 JM Arbitrage Advantage Fund - Dividend 10.3383 8.46 7.02 JM Arbitrage Advantage Fund - Growth 11.2552 8.47 7.02 JM Financial Services Sector Fund - Dividend Plan 19.1618 84.08* 67.60* JM Financial Services Sector Fund - Growth Plan 19.1678 84.14* 67.60* JM Telecom Sector Fund - Dividend Plan 15.1199 47.39 55.98 JM Telecom Sector Fund - Growth Plan 15.1201 47.39 55.98 JM Equity Tax Saver Fund -1-Dividend 15.3975 53.98* 70.65* JM Equity Tax Saver Fund -1-Growth 15.3975 53.98* 70.65* JM Small & Midcap Fund - Regular Dividend 17.6076 76.08 75.38 JM Small & Midcap Fund - Regular Growth 17.6076 76.07 75.38 JM Contra Fund - Dividend 13.5184 35.18* 41.20* JM Contra Fund - Growth 13.5184 35.18* 41.20* JM Income Fund - Bonus Option 12.3698 6.06 NA JM Income Fund - Dividend 10.6972 10.71 NA JM Income Fund - Growth 30.2359 9.06 NA JM Short Term Fund - Institutional Plan - Dividend 10.3772 6.70 5.35 JM Short Term Fund - Institutional Plan - Growth 10.2463 0.51 5.35 JM Short Term Fund - Dividend 11.4514 6.69 5.41 JM Short Term Fund - Growth 14.3424 6.75 5.41 JM High Liquidity Fund Growth - Growth option 21.6865 8.04 NA JM High Liquidity Fund Growth - Bonus option 11.3885 5.69 5.34 JM High Liquidity Fund - Institutional Plan - Dividend 10.2571 6.49 5.36 JM High Liquidity Fund - Institutional Plan - Growth 13.0832 5.83 5.35 JM High Liquidity Super Instituitional Daily Dividend Plan 10.0165 6.22 5.69 JM High Liquidity Fund - Dividend 10.4947 7.05 NA JM High Liquidity Fund -DAILY Dividend 10.4302 5.69 NA JM High Liquidity Super Instituitional Growth Plan 12.441 6.22 5.69 JM High Liquidity Instituitional Daily Dividend Plan 10.0159 5.83 5.40 43
    • JM High Liquidity Fund - Quarterly Dividend 12.4853 5.60 5.43 JM High Liquidity Super Instituitional Weekly Dividend Plan 10.0295 5.15 5.69 JM High Liquidity Fund - Premium Plan - Daily Dividend Corp 10 6.98 6.80 JM Liquid Plus Fund - Premium Plan - Dividend 10.1185 6.28 5.94 JM Liquid Plus Fund - Premium Plan - Growth 12.167 6.29 5.94 JM Liquid Plus Fund - Regular Plan - Dividend 12.7087 5.45 5.37 JM Liquid Plus Fund - Regular Plan - Growth 12.6675 5.37 5.37 JM Liquid Plus Fund - Premium Plan - Daily Dividend 10.0004 5.01 4.20 JM Liquid Plus Fund - Premium Plan - Weekly Dividend Plan 10.0915 4.79 4.12 JM Liquid Plus Fund - Regular Plan-Daily Dividend 10.0004 4.62 3.99 JM Liquid Plus Fund - Regular Plan-Weekly Dividend Option 10.0657 4.34 3.99 JM Floater Fund - Short Term Plan - Dividend 10.0883 6.14 5.54 JM Floater Fund - Short Term Plan - Growth 13.0042 5.98 5.37 JM Money Manager Fund-Super Plus Plan-Daily Dividend 10.0041 8.51 7.23 JM Money Manager Fund-Super Plus Plan-Fortnightly Dividend 10.0492 3.93 2.71 JM Money Manager Fund-Super Plus Plan-Growth 11.0874 8.54 7.23 JM Money Manager Fund - Super Plus Plan - Weekly Dividend 10.074 3.85 2.64 JM Money Manager Fund-Super Plan-Daily Dividend 10 7.07 7.23 JM Money Manager Fund-Super Plan-Growth 10.9024 7.10 7.23 JM Money Manager Fund-Super Plan-Weekly Dividend 10.0353 1.80 1.35 JM Money Manager Fund-Regular Plan-Daily Dividend 10 7.11 7.23 JM Money Manager Fund-Regular Plan-Growth 10.9032 7.10 7.23 JM Money Manager Fund-Regular Plan-Weekly Dividend 10.0568 2.98 2.52 JM MIP Fund - Annual Dividend 12.3261 9.58 9.62 JM MIP Fund - Growth 14.8145 9.60 9.62 JM MIP Fund - Monthly Dividend 11.2574 9.59 9.62 JM MIP Fund - Quarterly Dividend 11.5876 9.60 9.62 JM FMF Series IV- 15 Months Plan - 1 - Dividend 10.0499 8.57* 6.97* JM FMF Series IV- 15 Months Plan - 1 - Growth 10.8815 8.82* 6.97* JM FMF Series IV- 13 Months Plan- Dividend 10.0529 8.84* 6.74* JM FMF Series IV- 13 Months Plan- Growth 10.9075 9.08* 6.74* JM FMF Series IV - Yearly - Dividend 10.1381 8.72* 6.34* JM FMF Series IV - Yearly - Growth 10.8898 8.90* 6.34* JM FMF Series IV- 15 Months Plan - 2 - Dividend 10.09 6.69* 5.30* JM FMF Series IV- 15 Months Plan - 2 - Growth 10.6795 6.80* 5.30* JM FMF Series IV- 15 Months Plan - 2 - Institutional Dividend 10.0718 6.94* 5.30* JM FMF Series IV- 15 Months Plan - 2 - Institutional Growth 10.7059 7.06* 5.30* JM FMF Series VI-Quaterly Plan - 4 - Dividend 10.0092 0.90* 0.83* JM FMF Series VI-Quaterly Plan - 4 - Growth 10.0898 0.90* 0.83* JM FMF Series VI-Quaterly Plan - 4 - Institutional Dividend 10.0096 0.94* 0.83* JM FMF Series VI-Quaterly Plan - 4 - Institutional Growth 10.0941 0.94* 0.83* JM FMF Series VII- 13 Months Plan - 1 - Dividend 10.0568 2.64* 2.11* JM FMF Series VII- 13 Months Plan - 1 - Growth 10.2636 2.64* 2.11* JM FMF Series VII- 13 Months Plan - 1 - Institutional Dividend 10.0258 2.77* 2.11* JM FMF Series VII- 13 Months Plan - 1 - Institutional Growth 10.2769 2.77* 2.11* 44
    • JM FMF Series VI-Quaterly Plan - 5 - Dividend 10.0092 0.81* 0.79* JM FMF Series VI-Quaterly Plan - 5 - Growth 10.081 0.81* 0.79* JM FMF Series VI-Quaterly Plan - 5 - Institutional Dividend 10.0098 0.86* 0.79* JM FMF Series VI-Quaterly Plan - 5 - Institutional Growth 10.0856 0.86* 0.79* JM FMF Series VII- 18 Months Plan - 1 - Dividend 10.1203 1.59* 1.60* JM FMF Series VII- 18 Months Plan - 1 - Growth 10.1593 1.59* 1.60* JM FMF Series VII- 18 Months Plan - 1 - Institutional Dividend 10.0691 1.77* 1.60* JM FMF Series VII- 18 Months Plan - 1 - Institutional Growth 10.1775 1.78* 1.60* JM Interval Fund -Quarterly Plan-1-Dividend 10.0117 0.12* 10.00* JM Interval Fund -Quarterly Plan-1-Growth 10.0117 0.12* 10.00* JM Interval Fund -Quarterly Plan-1-Institutional Dividend 10.0121 0.12* 10.00* JM Interval Fund -Quarterly Plan-1-Institutional Growth 10.0121 0.12* 10.00* JM G-Sec Fund - Regular : Growth 21.8889 9.95 NA JM G-Sec Fund - Regular : Growth - Bonus 10.649 4.04 6.30 JM G-Sec Fund - Regular : Dividend 10.4648 9.96 NA JM G-Sec Fund - PF Plus Plan - Dividend 11.2503 3.02 4.70 JM G-Sec Fund - PF Plus Plan - Growth 11.2477 3.01 4.70 JM G-Sec Fund - PF Plan - Growth 22.7665 10.47 NA JM G-Sec Fund - PF Plan - Dividend 20.8609 10.46 NA Notes : a) Returns are compounded annualized growth returns since inception upto December 31, 2007. For the purpose of calculating returns, the inception date is deemed to be the date of allotment. * Returns are on absolute basis as the scheme / plan has not completed one year.** Simple annualized returns as the plan has not completed one year. b) All dividends have been assumed to be reinvested at the ex-Dividend NAV. c) Returns of benchmark indices since inception date of the schemes are not available in some cases as the benchmark indices were launched / changed subsequent to the inception date of the scheme(s). 5.0 CONSTITUTION OF JM FINANCIAL MUTUAL FUND JM Financial Mutual Fund (formerly known as JM Mutual Fund and hereinafter referred as "the Fund") had been constituted as a Trust with J.M. Financial and Investment Consultancy Services Private Limited ("JMFICS") and JM Financial Limited (formerly known as J.M. Share and Stock Brokers Limited and referred to as "JMF") as the Settlors and JM Financial Trustee Company Private Limited (formerly, known as J.M. Trustee Company Private Limited and hereinafter referred as "the Trustee") as Trustee. The Fund was registered with SEBI vide Registration No. MF/015/94/8 dated September 15, 1994. The Trustee appointed JM Financial Asset Management Private Limited (formerly known as J.M. Capital Management Private Limited and referred to as “the AMC”) as the Investment Manager. JMFICS and JMF who were the Sponsor and the Co-Sponsor respectively of JM Financial Mutual Fund had made an initial contribution of Rs. One lac each towards JM Financial Mutual Fund which has been invested in JM Equity Fund. Consequent to the change in the shareholding of the AMC in October 2007 and by virtue of being the only shareholder holding more than 40% of the equity share capital of the AMC, JM Financial Limited has become the sole Sponsor of JM Financial Mutual Fund. JM Financial Mutual Fund was promoted by the JM Financial Group, which has over 25 years of association with the Indian securities market both as Investment Banker and Stock Brokers. In the year 45
    • 1999, JM Financial Group and Morgan Stanley group setup a joint venture to combine their investment banking and institutional equity sales and trading businesses in India. The companies that were managing these businesses were known as JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Stanley Private Limited) and Morgan Stanley India Co. Pvt. Ltd. (earlier known as JM Morgan Stanley Securities Private Limited). In October 2007, the sponsor has separated from Morgan Stanley in the joint venture relating to Investment Banking and Institutional Equity Sales and Trading Businesses in India. The main objective of JM Financial Mutual Fund is to formulate and devise various collective schemes of savings and investments for the general public and to provide them with reasonable income/ returns and ensure liquidity of investments for the unit holders. 5.1 SPONSOR JM Financial Limited is the Sole Sponsor of JM Financial Mutual Fund. 5.1.1 JM FINANCIAL LIMITED ("JM Financial/ The Sponsor") JM Financial Limited, with the approval of SEBI, has become the sole sponsor of JM Financial Mutual Fund. JM Financial is the flagship listed company belonging to JM Financial Group and is currently a holding company of JM Financial Asset Management Private Limited. J.M.Financial and Investment Consultancy Services Private Limited, the erstwhile sponsor of JM Financial Mutual Fund is one of the promoters of JM Financial. Financial performance of the Sponsor Rs. In Crore FY 2004-05 FY 2005-06 FY 2006-07 Total Income 13.72 16.28 39.38 Profit After Tax 9.48 15.27 35.31 Equity capital (Paid up) 11.29 15.50 29.98 Share Suspense Account - 12.37 - Reserves & Surplus 20.81 203.19 351.02 Networth 32.10 231.06 381.00 Earnings per Share (Rs.) 8.37 8.60 12.04 Book Value per Share(Rs.) 28.34 148.83 126.99 Dividend Paid (%) 25.00 25.00 50.00 5.2 TRUSTEE COMPANY - JM FINANCIAL TRUSTEE COMPANY PRIVATE LIMITED JM FINANCIAL TRUSTEE COMPANY PRIVATE LIMITED (formerly known as J.M. Trustee Company Private Limited) has been promoted by J.M. Financial & Investment Consultancy Services Pvt. Ltd., and JM Financial Ltd. JM Financial Trustee Company Pvt. Ltd., is registered under the Companies Act, 1956 and was incorporated on June 9, 1994. The Sponsors have executed a Trust Deed on September 1, 1994 appointing JM Financial Trustee Company Pvt. Ltd., as Trustee Company of JM Financial Mutual Fund. 46
    • The following is a summary of the substantial provisions of the Trust Deed which may be of material interest to the Unitholders: · The investments to be under the control and custody of the Trustee and to be held in trust for the Unitholders who are to have beneficial interest in the Trust Property. · The Trustee to appoint AMC to frame from time to time one or more schemes for issue of units to the public. The AMC to function under the overall superintendence of the Trustee. · The Trustee to be authorised and directed by the Settlors to enter into, on behalf of the Fund, a Custodian Agreement with a party registered with SEBI with respect to custody of Securities. The Trustee to be responsible for supervision of the activities of the Custodian. · The power and duties of the Trustee as provided in the Trust Deed are more particularly described under the heading "Rights and Obligations of the Trustee ". · The Trust declared may be terminated or dissolved in accordance with SEBI Regulation by the Settlors and thereupon the Mutual Fund to be liquidated in the manner provided in the Trust Deed. · No amendments to the Trust Deed shall be carried out without the prior approval of SEBI and Unitholders’ approval would be obtained where it affects the interests of the Unitholder. An amendment to the Trust Deed has been carried out to incorporate the following provisions as required under the Regulations : · Each Director shall file with JM Financial Mutual Fund, details of his transactions or dealings in securities of such value on a quarterly basis or as may be specified under the SEBI Regulations from time to time. · The minimum number of Directors in the Trustee Company shall be four or such number of Directors as may be prescribed under the SEBI Regulations from time to time. In specific circumstances where the consent of the Unit holders is required to be obtained, the AMC shall obtain this consent by the holding of a postal ballot, administered by the AMC, or in such other manner as may be prescribed by SEBI from time to time. On a regular basis, activity report forwarded by the AMC will be discussed at the Board meeting of the Trustee. The Board meeting of the Trustee shall be held at least once in every two months and at least six such meetings shall be held in every year or at such frequency as may be prescribed under the SEBI Regulation or Trust Deed. The quorum for a Board meeting of the Trustee shall not be constituted unless such numbers of independent directors as may be prescribed by SEBI from time to time are present at the meeting. As already disclosed in the Offer Document, necessary amendments have been carried out in the Trust Deed for incorporation of clauses 20, 21 & 22 of the Third Schedule to the Regulations. The supervisory role of the Trustee will also include reviewing the internal auditors/compliance officer's reports on a regular basis. 47
    • 5.2.1 BOARD OF DIRECTORS OF TRUSTEE The members of the Board of Directors of the Trustee are: Mr. Nimesh N. Kampani, Chairman 141, Maker Chambers III, Nariman Point, Mumbai - 400 021. Mr. Nimesh N. Kampani is an associate director and is the Chairman of the Board of Trustee. He is the Chairman and Managing Director of JM Morgan Stanley Pvt. Ltd. He has varied experience of over 3 decades in the financial services sector and is recognized as a leading investment banker. Other Directorships Designation 1) JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Chairman & MD Stanley Pvt. Ltd.) 2) JM Financial Services Pvt. Ltd. (earlier known as JM Morgan Stanley Chairman Financial Services Pvt. Ltd.) 3) JM Financial Securities Pvt. Ltd. (earlier known as JM Morgan Chairman Stanley Fixed Income Securities Pvt. Ltd.) 4) J.M. Financial & Investment Consultancy Services Pvt. Ltd. Chairman 5) JM Financial Ltd. Chairman 6) Kampani Consultants Ltd. Chairman 7) Capital Market Publishers India Pvt. Ltd. Chairman 8) Apollo Tyres Ltd. Director 9) KSB Pumps Ltd. Director 10) Ranbaxy Laboratories Ltd. Director 11) Britannia Industries Ltd. Director 12) Deepak Nitrite Ltd. Director Mr. Darius E. Udwadia, Solicitor, Partner - Udwadia & Udeshi Thomas Cook Building, 3rd Floor, 324, Dr. D. N. Road, Fort, Mumbai - 400 001. Mr. Udwadia is an Associate Director on the Board of JM Financial Trustee Company Private Limited. He is a Solicitor and Advocate of the Bombay High Court and a Solicitor of the Supreme Court of England with a standing of 40 years in the legal profession. He is a Partner of Udwadia & Udeshi, Solicitors and Advocates. He is on the Board of several public and private companies. Other Directorships Designation 1) J.M. Financial & Investment Consultancy Services Pvt. Ltd. Director 2) Mechanalysis (India) Ltd. Director 3) ITD Cementation India Ltd. Director 4) Astra Zeneca Pharma India Ltd. Chairman 5) Bombay Burmah Trading Corp. Ltd. Director 6) Coromandel Fertilisers Limited Director 7) Eureka Forbes Ltd. Director 8) Macmillan India Ltd. Vice Chairman 9) Sundaram- Clayton Limited Director 10) Wyeth Ltd. Director 11) Habasit Iakoka Pvt. Ltd. Director 12) Nitesh Estates Pvt. Ltd. Director 13) ADF Foods Ltd. Director 14) JM Financial Consultants Pvt. Ltd. (earlier known as JM Director Morgan Stanley Pvt. Ltd.) 15) Avestha Gengraine Technologies Private Ltd. Chairman 16) ABB Ltd Director 17) Quantum Advisors Pvt. Ltd. Director 48
    • 18) Avesta Nordic Research Private Limited Director 19) JM Financial Limited Director 20) Development Credit Bank Ltd. Director 21) MPS Technologies Ltd. Director 22) Rossi Gearmotors (India) Pvt. Ltd Director Mr. Anant V. Setalvad, Industrialist (Independent Director) 126, Maker Chambers III, 12th Floor, Nariman Point, Mumbai - 400 021. Mr. Anant V. Setalvad is currently an independent director on the Board of JM Financial Trustee Company Private Limited. He is an industrialist by profession and is the Chairman of KSB Pumps Limited. Other Directorships Designation 1) KSB Pumps Limited Chairman 2) Industrial & Prudential Invt. Co Ltd Chairman 3) New Holding & Trading Co. Ltd Chairman Mr. Shivji K. Vikamsey, Chartered Accountant (Independent Director) Sr. Partner, Khimji Kunverji & Co., 52 Mumbai Mutual Building, Sir P.M. Road, Fort, Mumbai - 400 001. Mr. Shivji K. Vikamsey is a Chartered Accountant by profession and is associated as a Senior Partner with Khimji Kunverji & Co. He is an independent director on the Board of JM Financial Trustee Company Private Limited. Other Directorships Designation 1) Navneet Publications (India) Ltd Director 2) HLB Technologies ( Munbai) Pvt Ltd Director 3) Anand Rathi Realty Fund Trustee 4) Euro Ceramics Ltd. Director Mr. Jalaj A. Dani, Industrialist (Independent Director) 6-A, Shanti Nagar, Vakola Pipeline Lane, Santacruz (E), Mumbai - 400 055 Mr. Jalaj A. Dani is a renowned industrialist and is on the Board of various public and private limited companies. He is associated with JM Financial Trustee Company Private Limited as an independent director Other Directorships Designation 1) Gujarat Organics Limited Director 2) Hitech plast Ltd Director 3) Coatings Specialities (India) Limited Director 4) Dani Finlease Limited Director 5) Asian Paints (Lanka) Limited, Sri Lanka Director 6) Asian Paints (International) Limited, Mauritius Director 7) Asian Paints (Middle East) LLC- Oman Director 8) Asian Paints (Bangladesh) Limited Bangladesh Director 9) Asian Paints (South Pacific) Holdings Limited, Vanutua Director 10) S C Dani Research Foundation Limited Director 11) Asian Paints (Vanutua) Ltd, Vanutau Director 12) Berger International Ltd., Singapore Director 13) Berger Paints Singapore Pte. Ltd Singapore Director 49
    • 14) Berger Building Services (Singapore) Pte. Ltd Director 15) Berger Contractor (Singapore) Pte.Ltd Director 16) Berger International Sdn.Bhd., Malaysia Director 17) Lewis Berger International (Overseas Holdings ) Ltd. Director 18) Berger Paints Jamaica Ltd Kingston Director 19) Berger Paints Trinidad Ltd Port of Spain Director 20) Berger Paints Thailand Ltd., Thailand Director 21) Berger Paints Barbados Ltd. Bridgetown Director 22) Samoa Paints Ltd. Director 23) Berger Paints Ltd (Hk) Ltd. Hongkong Director 24) Berger Paints (Ningbo) Co Ltd China Director 25) Taubmans Paints Fiji Ltd Director 26) Berger Paints Emirates Ltd UAE Director 27) Berger Paints Bahrain W L L Director 28) MTR Foods Limited Director 29) SCIB Chemicals SAE Egypt Director 30) Asian Paints (South Pacific) Limited, Fiji Director Mr. Sharad M Kulkarni, Business Consultant & Corporate Advisor (Independent Director) 161 A, Twin Towers, Veer Savarkar Marg, Prabhadevi, Mumbai - 400025 Mr. Sharad Kulkarni is an independent director on the Board of Trustee. He is Ex-President & CEO of RPG Enterprises. He has experience of over 37 years in the areas of management of international alliances, joint ventures, building grass root projects and capital market operations. Other Directorships Designation 1) LANXESS ABS Ltd. Director 2) Bayer Crop Sciences Ltd. Director 3) Hindustan Construction Co. Ltd. Director 4) KEC International Ltd. Director 5) Raychem – RPG Ltd. Director 6) Camlin Fine Chemicals Ltd.. Director 7) RPG Enterprises LTD Director 8) Travel Voyages Ltd. Director 9) Navin Fluorine International Ltd. Director 10) Asia Pacific Advisory Council of Arrow Electronics, USA Director 11) HCC Realty Ltd. Director 50
    • 5.2.2 RIGHTS AND OBLIGATIONS OF THE TRUSTEE Pursuant to the Trust Deed constituting the JM Financial Mutual Fund and Regulation 18 of the SEBI Regulations, the Trustee has several rights and obligations. These include: 1. The Trustee and the AMC shall with the prior approval of SEBI enter into an IMA. 2. The IMA shall contain such clauses as are mentioned in the Fourth Schedule of the SEBI Regulations and such other clauses as are necessary for the purpose of making investments. 3. The Trustee shall have a right to obtain from the AMC such information as is considered necessary by the Trustee. 4. The Trustee shall ensure before the launch of any scheme that the AMC has; (a) systems in place for its back office, dealing room and accounting; (b) appointed all key personnel including fund manager(s) for the scheme(s) and submitted their bio-data which shall contain the educational qualifications, past experience in the securities market with the Trustee, within 15 days of their appointment; (c) appointed auditors to audit its accounts; (d) appointed a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines instructions etc issued by SEBI or the Central Government and for redressal of investors’ grievances.; (e) appointed registrars and laid down parameters for their supervision; (f) prepared a compliance manual and designed internal control mechanisms including internal audit systems; (g) specified norms for empanelment of brokers and marketing agents. 5. The Trustee shall ensure that the AMC has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker. 6. The Trustee shall ensure that the AMC has not given any undue or unfair advantage to any associates or dealt with any of the associates of the AMC in any manner detrimental to interest of the Unitholders. 7. The Trustee shall ensure that the transactions entered into by the AMC are in accordance with the SEBI Regulations and the Scheme. 8. The Trustee shall ensure that the AMC has been managing the mutual fund schemes independently of other activities and have taken adequate steps to ensure that the interest of investors of one scheme are not being compromised with those of any other scheme or of other activities of the AMC. 9. The Trustee shall ensure that all the activities of the AMC are in accordance with the provisions of the SEBI Regulations. 10. Where the Trustee has reason to believe that the conduct of business of the mutual fund is not in accordance with the SEBI Regulations and the Scheme they shall forthwith take such remedial steps as are necessary by them and shall immediately inform SEBI of the violation and the action taken by them. 11. Each Trustee shall file the details of his transactions of dealing in securities with the Mutual Fund on a quarterly basis. 12. The Trustee shall be accountable for, and be the Custodian of, the Funds and property of the respective schemes and shall hold the same in trust for the benefit of the Unitholders in accordance with the SEBI Regulations and the provisions of the Trust Deed. 13. The Trustee shall take steps to ensure that the transactions of the Fund are in accordance with the provisions of the Trust Deed. 14. The Trustee shall be responsible for the calculation of any income due to be paid to the Fund and also of any income received in the Fund for the holders of the units of any scheme in 51
    • accordance with the SEBI Regulations and the Trust Deed. 15. The Trustee shall obtain the consent of the Unitholders a. whenever required to do so by SEBI in the interest of the Unitholders; or b. whenever required to do so on the requisition made by three-fourths of the unit holders of any scheme; or c. when the majority of the Directors of the Trustee decide to wind up or prematurely redeem the Units; or (15A). The Trustee shall ensure that no change in the fundamental attributes of any scheme or the trust or fees and expenses payable or any other change which would modify the Scheme and affects the interest of Unitholders, shall be carried out unless, i. a written communication about the proposed change is sent to each Unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; and ii. the Unitholders are given an option to exit at the Applicable NAV without any exit Load. 16. The Trustee shall call for the details of transactions in securities by the key personnel of the AMC in his own name or on behalf of the AMC and shall report to SEBI, as and when required. 17. The Trustee shall quarterly review all transactions carried out between the Fund, AMC and its associates. 18. The Trustee shall quarterly review the networth of the AMC and in case of any shortfall, ensure that the AMC make up for the shortfall as per clause (f) of sub-regulation (1) of Regulation 21 of the SEBI Regulations. 19. The Trustee shall periodically review all service contracts such as custody arrangements, transfer agency of the securities and satisfy itself that such contracts are executed in the interest of the Unitholders. 20. The Trustee shall ensure that there is no conflict of interest between the manner of deployment of its networth by the AMC and the interest of the Unitholders. 21. The Trustee shall periodically review the investor complaints received and the redressal of the same by the AMC. 22. The Trustee shall abide by the Code of Conduct as specified in the Fifth Schedule of the SEBI Regulations. 23. The Trustee shall furnish to SEBI on a half yearly basis, (a) a report on the activities of the mutual fund; (b) a certificate stating that the Trustee has satisfied itself that there have been no instances of self dealing or front running by any of the Trustee, directors and key personnel of the AMC; (c) a certificate to the effect that the AMC has been managing the schemes independently of any other activities and in case any activities of the nature referred to in sub-regulation (2) of Regulation 24 of the SEBI Regulations have been undertaken by the AMC and has taken adequate steps to ensure that the interest of the Unitholders are protected. 24. The independent Directors of the Trustee referred to in sub-regulation (5) of Regulation 16 of the SEBI Regulations shall give their comments on the report received from the AMC regarding the investments by the mutual fund in the securities of group companies of the Sponsor. 25. The Trustee shall exercise due diligence as under: A. General Due Diligence: i. The Trustee shall be discerning in the appointment of the directors on the Board of the AMC. ii. The Trustee shall review the desirability of continuance of the AMC if substantial irregularities are observed in any of the schemes and shall not allow the AMC to float new schemes. iii. The Trustee shall ensure that the Trust Property is properly protected, held and administered by proper persons and by a proper number of such persons. 52
    • iv.The Trustee shall ensure that all service providers are holding appropriate registrations from SEBI or concerned regulatory authority. v. The Trustee shall arrange for test checks of service contracts. vi.The Trustee shall immediately report to SEBI of any special developments in the Fund. B. Specific Due Diligence: The Trustee shall: i. obtain internal audit reports at regular intervals from independent auditors appointed by the Trustee. ii. obtain compliance certificates at regular intervals from the AMC. iii. hold meetings of the Directors of the Trustee more frequently. iv. consider the reports of the independent auditor and compliance reports of the AMC at the meetings of the Trustee for appropriate action. v. maintain records of the decisions of the Trustee at its meetings and of the minutes of the meetings. vi. prescribe and adhere to a code of ethics by the Trustee, AMC and its personnel. vii. communicate in writing to the AMC of the deficiencies and checking on the rectification of deficiencies. 26. Notwithstanding anything contained in clauses (1) to (25) mentioned above, the Trustee shall not be held liable for acts done in good faith if they have exercised adequate due diligence honestly. 27. The independent directors of the Trustee or AMC shall pay specific attention to the following, as may be applicable, namely: i. The IMA and the compensation paid under the agreement. ii. Service contracts with affiliates - whether the AMC has charged higher fees than outside contractors for the same services. iii. Selection of the AMC’s independent directors iv.Securities transactions involving affiliates to the extent such transactions are permitted. v. Selecting and nominating individuals to fill independent directors’ vacancies. vi.Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions. vii. The reasonableness of fees paid to Sponsors, the AMC and any others for services provided. viii. Principal underwriting contracts and their renewals. ix. Any service contract with the associates of the AMC 5.2.3 TRUSTEE’S SUPERVISORY ROLE The supervisory role of the Trustee is discharged by the Board of Directors of the Trustee by internal and external reporting system; Internal Reporting: The compliance officer reports on a regular basis to the Trustee on the compliance of mandatory regulatory requirements. External Reporting: In terms of Regulation 18(4)(f) of the SEBI Regulations, the Trustee will ensure that before the launch of any scheme, the AMC has prepared a compliance manual and desired internal control mechanism including internal audit systems. Further, SEBI vide their letter No. MFD/CIR/No.010/024/2000 dated January 17, 2000 made it mandatory for the Trustee to constitute an audit committee of the Trustee, which shall be chaired by an independent Trustee. In compliance of the above SEBI Regulations, the Trustee has constituted an audit committee and appointed an independent internal auditor for conducting internal audit of the books and records of the Fund. The internal auditors submit their report directly to the Trustee under this external reporting system. The Board of Trustee had 6 board meetings during the year 2006-2007. 53
    • 5.3 ASSET MANAGEMENT COMPANY - JM FINANCIAL ASSET MANAGEMENT PRIVATE LIMITED (AMC) Sponsored by JM Financial Ltd., JM Financial Asset Management Pvt. Ltd. (formerly known as J. M. Capital Management Pvt. Ltd.) (“AMC”) is registered under the Companies Act, 1956 and was incorporated on 9th June, 1994. JM Financial Trustee Company Pvt. Ltd. has entered into an Investment Management Agreement (“IMA”) on 1st September, 1994 appointing the AMC as the asset management company for the Fund. The AMC has to submit to the Trustee quarterly reports and / or such other reports at such intervals as may be prescribed by the Trustee or SEBI on the functioning of the Fund. The AMC can be removed by the Trustee or by 75% of the Unitholders of the particular Fund, subject to the approval of SEBI. The AMC will manage the Scheme(s) of the Fund, including the Scheme mentioned in this Offer Document, in accordance with the provisions of Investment Management Agreement, the Trust Deed, the Regulations and the objectives of each of the Scheme(s). Shareholding Pattern of JM Financial Asset Management Pvt. Ltd. as on 31/12/2007 i. Equity Share Capital Status Activities (Individual / Name of the shareholder Corporate) % J.M.Financial & Investment Consultancy Company Investment Services Pvt. Ltd. Company 33.61 Company Investment JM Financial Ltd. Company 58.26 Individuals Investment Nimesh N Kampani & Aruna N Kampani Banker 5.79 Aruna N Kampani & Nimesh N Kampani Individuals Homemaker 2.20 Nimesh N Kampani - HUF& Aruna N HUF Business Kampani & Vishal N Kampani 0.14 TOTAL 100.00 ii. Preference Share Capital Sr. Name of Shareholder Status Activities % of No. (Individual / optionally Corporate) convertible redeemable preference share- holding 1. JM Financial Ltd. Company Investment 100.00 Company Total 100.00 54
    • 5.3.1 REMUNERATION OF THE ASSET MANAGEMENT COMPANY The AMC shall charge the Fund investment management and advisory fees as per the rates prescribed under the Chapter “Fees, Expenses and Load” given in Section 3 under the heading “Annual Scheme Recurring Expenses” & “Unitholder Transaction Expenses or Sales Load”. Expenditure in excess of the limits specified under the Regulations and/or this offer document shall be borne by the AMC, Trustee / Sponsors. The IMA, inter alia, contains the following provisions: · The AMC to act as a manager of the investments of the Mutual Fund · The AMC to float Schemes for the Mutual Fund with prior approval of the Trustee and SEBI and to manage the Investments in accordance with the objectives of the Scheme. 5.3.2 BOARD OF DIRECTORS OF AMC The Board of Directors of AMC comprises eminent personalities with varied experience, details are as given below : - Mr. Nityanath P. Ghanekar, Managing Director (Associate Director) Shree Prakash, 165-C, Dr. Ambedkar Road, Dadar, Mumbai – 400 014. Mr. Nityanath P. Ghanekar is the Managing Director and Chief Executive Officer of JM Financial Asset Management Private Limited. He is a member of the Institute of Chartered Accountants of India and also possesses a Bachelor’s degree in Law. Mr. Ghanekar has an extensive experience of more than 25 years. Prior to this, he was a partner in Love Lock & Lewis, Price Waterhouse Coopers and Ernst & Young over a period of 15 years and was the Head of Transfer Pricing practice in Mumbai. He has worked with many companies in the financial sector in an advisory capacity and handled tax and auditing responsibilities. Mr. Rajendra P. Chitale, Partner – M. P. Chitale & Co. (Sponsor Nominated Director) M.P. Chitale & Co. Hamam House, Ambalal Doshi Marg, Fort, Mumbai - 400 023. Mr. Rajendra P Chitale is a Chartered Accountant by profession and is associated with M/s. M. P. Chitale & Co., Chartered Accountants as a Managing Partner. He is on the Board of JM Financial Asset Management Private Limited as an associate director since M/s. M. P. Chitale & Co. advises JM Financial Asset Management Private Limited on business and operational matters. Other Directorships Designation 1) National Securities Clearing Corp Ltd. Director 2) Asset Reconstruction Company (India) Ltd. Director 3) Hinduja TMT Ltd. Director 4) Ambuja Cements Ltd. Director 5) Reliance Capital Limited Director 6) Intuit Consulting Pvt. Ltd. Director 7) Reliance General Insurance Company Limited Director 8) Chitale Advisory Services Private Limited Director 9) IndusInd Media & Communications Limited Director 10) HTMT Global Solutions Ltd. Director 55
    • Mr. Vishal N. Kampani, Investment Banker (Sponsor Nominated Director) 123-B Maker Towers, Cuffe Parade, Mumbai - 400 005. Mr. Vishal Kampani has graduated in M. S. (Finance) from London Business School, University of London and is Master of Commerce from University of Mumbai. Prior to working in India, Mr. Vishal Kampani was working with Morgan Stanley Dean Witter at New York, USA. He worked on convertible products as a part of the Equity Capital Markets Services Group. He is presently the co-head of the Corporate Finance Group at JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Stanley Private Limited). Other Directorships Designation 1) J. M. Financial & Investment Consultancy Services Pvt. Limited Director JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Stanley Pvt 2) Director Limited) JM Financial Services Pvt. Ltd. (earlier known as JM Morgan Stanley 3) Director Financial Services Pvt. Ltd. ) 4) Capital Markets Publishers India Pvt Limited Director 5) JM Financial Commtrade Ltd. Director 6) JM Financial Investment Managers Ltd. Director 7) Infinite India Investment Management Pvt. Ltd Director 8) Oracle Property Management Private Ltd. Director 9) Shrachi Developers Private Limited Director Dr. R. Srinivasan (Independent Director) C-6-1, Llyods Garden Appa Saheb Marathe Marg, Prabhadevi, Mumbai - 400025. Dr. R. Srinivasan is a renowned banker and had served as the Chairman and Managing Director of 3 nationalised banks for nearly 9 years. He was also the Chairman of Indian Banks’ Association. After retirement from Bank of India, he started a financial and Banking consultancy firm in the name ”Srinivasan and Associates.” He is associated with the Board of JM Financial Asset Management Private Limited as an independent director. Other Directorships Designation 1) Graphite India Ltd. Director 2) Elder Pharmaceuticals Ltd Director 3) Goldiam International Ltd. Director 4) Hi Tech Pharmaceuticals Pvt. Ltd Director 5) Shalimar Paints Ltd. Director 6) McLeod Russel India Ltd. Director 7) Williamson Magor & Co., Ltd. Director 8) Nayamode Solutions Pvt Ltd. Director 9) Solar Explosives Limited Director 10) Snowcem Paints Pvt. Ltd. Director 11) XL Telecom Limited Director 12) J. Kumar Infraprojects Ltd Director 56
    • Mr. J. K. Modi (Independent Director) DD-22, Kalkaji Extension, 1st Floor, New Delhi – 110019 Mr. J. K. Modi is an independent director on the Board of JM Financial Asset Management Private Limited. He is the proprietor of a broking firm and is also on the Board of various securities related companies. Other Directorships Designation 1) JKM Finsec (P) Ltd. Director 2) Modi Securities (P) Ltd. Director 3) Charbhuja Real Estate (P) Ltd. Director 4) Jugal Kishore Modi Investment Company Ltd. Director 5) Jaibharat Commercial Enterprises (P) Ltd. Director Dr. Ajay S Mookerjee, (Business) (Independent Director) Adarsh Palm Meadows No. 34, Phase I, Airport Varthur Road, White Field, Bangalore – 560 066 Dr. Ajay S Mookerjee is a director on the Board of the AMC. For the past 17 years, Dr. Mookerjee has held very senior positions at Capital One, AIG and Booz Allen. Currently, he is the Founder & CEO of OSAIndia. He has researched Globalization & e-Business, co-authoring a book with Professor Jim Cash, Associate Dean, entitled "Global Electronic Banking", Aspen Publishing (1990). OTHER DIRECTORSHIPS DESIGNATION 1) Offshore Analytic India Private Limited Non- executive Chairman Mr. Darius D. Pandole, Independent Director 5B, Sunshine Apartments, 156, Maharshi Karve Road, Mumbai - 400020. Mr. Darius Pandole is an independent director on the Board of the AMC. For the past 14 years, Mr. Pandole has held senior positions at Duke & Sons Limited, IndAsia Fund Advisors Pvt. Ltd, IDFC Asset Management Company Limited and is currently the Managing Director of Gateway Fund Advisors Pvt. Ltd. He was the Indian junior national squash champion and has represented the country at various squash tournaments. Other Directorships Designation 1) Credibility Financial Services Pvt. Ltd. Director 2) Gateway Fund Advisors Pvt. Ltd. Director 3) Melstar Information Technologies Ltd. Director 4) NSR Advisors Private Limited Director 57
    • 5.3.3 DUTIES AND OBLIGATIONS OF THE AMC (1) The AMC shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of these regulations and the Trust Deed. (2) The AMC shall exercise due diligence and care in all its investments decisions as would be exercised by other persons engaged in the same business. (3) The AMC shall be responsible for the acts of commissions or omissions by its employees or their persons whose services have been procured by the AMC. (4) The AMC shall submit to the Trustee quarterly reports of each year on its activities and the compliance with these regulations. (5) The Trustee at the request of the AMC may terminate the assignment of the AMC at any time: Provided that such termination shall become effective only after the Trustee has accepted the termination of assignment and communicated their decision in writing to the AMC. (6) Notwithstanding anything contained in any contract or agreement or termination, the AMC or its directors or other officers shall not be absolved of liability to the mutual fund for their acts of commission or omissions, while holding such position or office. (6A) The Chief Executive Officer (whatever his designation may be) of the AMC shall ensure that the Fund complies with all the provisions of the Regulations and the guidelines or circulars issued in relation thereto from time to time and that the investments made by the fund managers are in the interest of the Unit holders and shall also be responsible for the overall risk management function. (6B) The fund manager (whatever his designation may be) shall ensure that the funds of the Schemes are invested to achieve the objectives of the Scheme and in the interest of the Unitholders. (7) (a) The AMC shall not through any broker associated with the Sponsor, purchase or sell securities, which is average of 5% or more of the aggregate purchases and sale or securities made by the mutual fund in all its schemes. Provided that for the purpose of this clause, aggregate purchase and sale of securities shall exclude sale and distribution of units issued by the mutual fund. Provided further that the aforesaid limit of 5% shall apply for a block of any three months (b) The AMC shall not purchase or sell securities through any broker other than a broker referred to in clause 7(a) above, which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes, unless the AMC has recorded in writing the justification for exceeding the limit of 5% and reports of all such investments are sent to the trustees on a quarterly basis. Provided that the aforesaid limit shall apply for a block of three months. (8) The AMC shall not utilise the services of the Sponsor or any of its associates, employees or their relatives, for the purpose of any securities transaction and distribution and sale of securities: Provided that the AMC may utilise such services if disclosure to that effect is made to the Unit Holders and the brokerage or commission paid is also disclosed in the half yearly annual accounts of the mutual fund. Provided further that the mutual fund shall disclose at the time of declaring half-yearly and yearly results: (i) any underwriting obligations undertaken by the schemes of the mutual funds with respect to issue of securities of associate companies. (ii) Devolvement, if any; (iii) Subscription by the Schemes in the issues lead managed by associate companies. (iv) Subscription to any issue of equity or debt on private placement basis where the Sponsor or its associate companies have acted as arranger or manager. 58
    • (9) The AMC shall file with the Trustee the details of transactions in securities by the key personnel of the AMC in their own name or on behalf of the AMC and shall also report to SEBI, as and when required by SEBI. (10) In case the AMC enters into any securities transactions with any of its associates a report to that effect shall be sent to the Trustee at its next meeting. (11) In case any company has invested more than 5 per cent of the net asset value of a scheme, the investment made by that scheme or by any other scheme of the same mutual fund in that company or its subsidiaries shall be brought to the notice of the Trustee by the AMC and be disclosed in the half yearly and annual accounts of the respective schemes with justification for such investment provided the latter investment has been made within one year of the date of the former investment calculated on either side. (12) The AMC shall file with the Trustee and SEBI : (a) detailed bio-data of all its directors alongwith their interest in other companies within fifteen days of their appointment ;and (b) any change in the interests of directors every six months.(c) a quarterly report to the Trustee giving details and adequate justification about the purchase and sale of the securities of the group companies of the Sponsor or the AMC as the case may be, by the mutual fund during the said quarter. (13) Each director of the AMC shall file the details of his transactions of dealing in securities with the Trustee on a quarterly basis in accordance with the guidelines issued by SEBI. (14) The AMC shall not appoint any person as key personnel who has been found guilty of any economic offense or involved in violation of securities laws. (15) The AMC shall appoint registrars and share transfer agents who are registered with SEBI. Provided if the work relating to the transfer of units is processed in-house, the charges at competitive market rates may be debited to the scheme and for rates higher than the competitive market rates, prior approval of the Trustee shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts. (16) The AMC shall not act as a Trustee of any Mutual Fund and shall not undertake any other business activities except in the nature of portfolio management services, management and advisory services to offshore funds, pension funds, provident funds, venture capitals funds, management of insurance funds, financial consultancy and exchange of research on commercial basis, if any of such activities are not in conflict with the activities of the Fund. However the AMC may itself or through its subsidiaries undertake such activities if it satisfies SEBI that its key personnel, the system, back office, bank and securities accounts are segregated activity wise and provided there exist systems to prohibit access to inside information of various activities. Further the AMC shall meet the capital adequacy requirements, if any, separately for each such activity and obtain separate approval, if necessary under the relevant Regulations. (17) The AMC shall abide by the Code of Conduct as specified in the Fifth Schedule of the Regulations. 59
    • 5.3.4 KEY EMPLOYEES OF THE AMC Name Designation Qualifications/Age Experience & Background Mr. Nityanath P. Managing Director B.Com., FCA, LLB Mr. Ghanekar has an extensive Ghanekar & Chief Executive Age : 61 years experience of more than 25 Officer years. Prior to this, he was a partner in Love Lock & Lewis, Price Waterhouse Coopers and Ernst & Young over a period of 15 years and was the Head of Transfer Pricing practice in Mumbai. He has worked with many companies in the financial sector in an advisory capacity and handled tax and auditing responsibilities. Mr. Vipul Jhaveri Chief Operating B.Com., He has over 12 years of Officer Grad.C.W.A. MMS, experience in capital markets and CFA (ICFAI-India), started his career in the CFA (AIMR-USA) investment banking division of 35 Years JM Financial & Investment Consultancy Services Limited. He has been a part of the Corporate Finance and Structured Financial Advisory Group and he was actively involved in the Corporate Finance, Mergers & Acquisitions and Financial Advisoryssignments. Prior to joining the AMC, as Director - Strategic Business Initiatives Group he was responsible for implementation of new business initiatives across various JM Financial Group companies. Mr. Sandip Chief Investment B.Tech, IIT Delhi, He has over 11 years of Sabharwal Officer (Equity) PGDM, IIM experience in equity research and Bangalore fund management activities. He Age : 35 years started his career with SBI Funds Management Pvt. Ltd. as a research analyst in 1995 and headed the equity fund management team, when he resigned in 2005 to join Lotus India Asset Management Company Pvt. Ltd. as Chief Investment Officer – Equity. Prior to joining the AMC, he was working with JM Financial Limited where he was responsible for devising strategies for fund management 60
    • businesses. He is the Fund Manager for JM Emerging Leaders Fund, JM Small & Mid- Cap Fundand JM Contra Fund. Mr. Mohit Verma Chief Investment M.Sc (Physics) , MFM He has been in the Rupee Officer (Debt) Age : 41 years Interest Rates market since 1999. From Jan 1999 to Jan 2004, he worked with the two of the biggest Primary Dealers in the country – DFHI (1999 to 2002) and STCI (2002 to 2004) – both as a dealer and as the Head of the Trading Desks. He has also worked with Reliance Industries Ltd., the largest private sector company in the country, as the Head of the Fixed-Income Desk in the Treasury Department. At Reliance Industries Ltd. he was handling one of the largest proprietary trading desk in the country, reporting directly to the CFO of the Company. At the Fund, he will be responsible for managing JM Income Fund, JM G-Sec Fund and JM Short Term Fund Mr. Sandeep Fund Manager B.E. (Production), He has 13 years of work Neema MBA, CFA(ICFAI), experience in the equity research CFA (AIMR, USA) field and has worked in various Age: 38 yrs capacities including Head of Research at UTI Securities. Prior to the current assignment, he has also been associated with Kotak Securities and BNP Paribas. His last assignment was as Deputy Head of Equity Research at Refco Sify Securities. He is the Fund Manager for JM Balanced Fund, JM HI FI Fund and JM Financial Services Sector Fund. 61
    • Mr. Asit Fund Manager B.Com., MMS He has 5 years of experience in Bhandarkar Age : 28 years equity research and fund management. His last assignment was as Fund Manager with Lotus India Asset Management Company Pvt. Ltd. Prior to that, for more than 2 years, he was with SBI Funds Management Pvt. Ltd. as a Junior Fund Manager. He started his career on the broking side as an equity analyst and has worked with firms like Jet Age Securities and Sushil Finance Consultants for almost 2 years. He is the Fund Manager for JM Basic Fund, JM Healthcare Sector Fund, JM Auto Sector Fund and JM Telecom Sector Fund. Mr. Sanjay Kumar Fund Manager - PGDBA, CFA / Age : He has more than 8 years of Chhabaria Equity 33 years experience in fund management and equity research. In his last assignment he was working as a Fund Manager with Lotus India AMC. Prior to this he has worked SBI Funds Management as a Fund Manager. He started his career on the broking side in equity research and has worked with firms like SMIFS Securities and IDBI Capital Markets for 4 years. He is the Fund Manager for JM Equity Fund and JM Equity Tax Saver Fund – Series - I. Mr. Biren Mehta Fund Manager B. Com. , MBA He has 17 years experience in Age : 38 years the capital markets. He has worked with securities house like DSP Merrill Lynch for 2 years as a floor trader, UTI Securities for 3 years in institutional sales. He has also worked in the Sales Trading Capacity with CSFB & BNP Paribas securities. Prior to joining JM Financial Mutual Fund he was with REFCO-SIFY as Vice President - Institutional sales and was instrumental in setting up the Derivatives Arbitrage Desk at Refco-Sify. He has around 3 years experience in the derivatives segment. He is the Fund Manager of JM Equity 62
    • & Derivative Fund and JM Arbitrage Advantage Fund. Ms. Shalini Fund Manager B.Com, A.C.A., C.S. She has over 12 years of Tibrewala Age: 35 years experience in the financial services sector. She has been with the Fund for over 9 years and is responsible for managing the JM High Liquidity Fund, JM MIP Fund, JM Fixed Maturity Fund, JM Fixed Maturity Fund – Series II, JM Fixed Maturity Fund – Series III, JM Fixed Maturity Fund – Series IV, and JM Money Manager Fund. Prior to joining the AMC, she was working with a firm of Chartered Accountants. Mr. Apoorva Vora Chief Dealer B.Com., PGDBA(Fin) He has 9 years experience in the (Equity) Age : 36 years financial industries which includes almost 2 years on the fund management side. Prior to joining the AMC, he was working with Lotus India Asset Management Company Pvt. Ltd. as Chief Dealer – Equity. He has also worked as Dealer – Equity with SBI Funds Management Pvt. Ltd. On the broking side, he has worked with ACK Capital, Indsec and Prabhudas Liladhar Pvt. Ltd. Mr. Mikesh A. Derivatives Dealer B. Com., MMS He has over 4 years experience Gangar (Marketing) in the areas of arbitrage and Age : 29 years options trading. Prior to joining the AMC, he was working with Chimanlal Maneklal Securities Pvt. Ltd. as a derivatives dealer. He is the Derivatives Dealer of the Fund. Mr. Girish Hisaria Debt Dealer B.Com, MMS He has 6 years of experience in (Finance) / 30 years Fixed Income Markets. Prior to joining the AMC, he has worked with Sahara Indian Financial Corp and Darashaw Securities Pvt Limited Mr. Vikas Agrawal Det Dealer B.Com, PGDBM He has 4 years of work (Finance)/ 26 Years experience in fixed income market and has worked with Centrum Capital, Stratcap Securities and SPA Securities. In his earlier assignments, he was responsible for origination and placement of short term / long term bonds. 63
    • Ms. Diana D’sa Head – Legal and B.Sc., LL.B She has 15 years of work Compliance Age : 37 years experience and started her career with the investment banking division of JM Financial & Investment Consultancy Services Pvt. Ltd (JM FICS). She was part of the Compliance team at JM FICS and later moved to the Compliance Department of JM Morgan Stanley Pvt. Ltd. She joined the AMC in 2004 and has been handling the legal and secretarial functions since then. She is also the Principal Officer for the AMC under Prevention of Money Laundering Act, 2002 Mr. Bhanu Katoch Head – Sales & B.Com., PGDM He has around 10 years of Marketing (Marketing & Sales), experience in the Telecom & MBA Financial Services industry. He Age : 33 years started his career with BPL US West Cellular Ltd. Subsequently, he has worked with various organisations in the financial sector like Pioneer ITI AMC, Alliance Capital AMC, Tata AIG Life Insurance Company and ABN AMRO AMC. Prior to joining JM Financial Mutual Fund, he was Head - Sales (North & West) at Lotus India AMC. Mr. Rakesh Kumar Head – Operations B.Com, A.C.A He has over 20 years of work Jain Age : 42 years experience of which 15 years is with the Mutual Fund Industry viz. LIC Mutual Fund in the areas of Fund Accounting, Banking, R & T, Back office Operations and Marketing. Prior to joining the AMC, he was working with LIC Housing Finance Ltd as Deputy General Manager handling Finance, Accounts and project appraisal function. Mr. Harish C. Head – Client B. Com.(Hons), M. He has over 25 years of work Kukreja Services Com., MBA (Fin), experience of which 20 years CAIIB have been in the Mutual Fund Age : 46 years industry in the fields of Investor Services, Sale Promotions & Publicity and Investment Monitoring and 5 years with Canara Bank. Prior to the current assignment, he was with UTI 64
    • Asset Management Private Limited (formerly known as Unit Trust of India) as an Assistant Vice President and handled various projects including the PAN Card Project. He has also headed one of the branches of UTI for over 3 years. Mr. George Cherian Senior Vice B. Sc. (Bangalore) He has over 22 years of President - Age : 55 years experience with the Unit Trust of Technology India, where he was Head of Technology. He set up and gave direction to the technology initiatives till his departure in 1995. He then moved to Jardine Fleming (now JP Morgan) to set up the IT infrastructure and managed the tech support team at Ernst & Young. Currently, he is involved in strengthening technology in the Investor Relation Management and Fund Accounting functions. Mr. Vikram Shetty Head - Finance & B.Com., M.Com. He has over 20 years of work Accounts Age : 48 years experience with the JM Financial Group. Prior to moving to JM AMC, he was with JM Morgan Stanley Fixed Income Securities Pvt. Ltd. as Head of Finance and Operation for about 3 years. Prior to that, he was part of the Finance Department of JM Morgan Stanley Pvt. Ltd. (Investment Banking Arm) for about 3 years and with JM Financial & Investment Consultancy Services Pvt. Ltd. for about 15 years overseeing the integral part of finance functions. The fund manager for the JM Fixed Maturity Fund – Series XI is Ms. Shalini Tibrewala. The fund management process is closely associated with research and analysis of the industry, the economy and various companies, the Fund Managers are supported by the Research Assistants. COMPLIANCE OFFICER HEAD – CLIENT SERVICES Ms. Diana D’sa Mr. Harish Kukreja JM FINANCIAL ASSET MANAGEMENT JM FINANCIAL ASSET MANAGEMENT PRIVATE LIMITED PRIVATE LIMITED 5th floor, “A” Wing, Laxmi Towers, 5th floor, “A” Wing, Laxmi Towers, Bandra-Kurla Complex, Mumbai – 400 051. Bandra-Kurla Complex, Mumbai – 400 051. Tel. : 3987 7777 Fax : 2652 8377 / 78 Tel. : 3987 7777 Fax : 2652 8377 / 78 65
    • 5.3.5 AUDITORS M/s. N. M. Raiji & Co., Chartered Accountants, Universal Assurance Building, Fort, Mumbai - 400001 are the auditors for the Schemes of the Mutual Fund.. 5.3.6 CUSTODIAN Presently, HDFC Bank Limited located at Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013, is the Custodian of JM Financial Mutual Fund schemes. The Custodian is registered with SEBI under registration No. IN/CUS/ 001 dated February 2, 1998. The Trustee and the AMC have entered into a Custodian Agreement with the Custodians and the salient features of the said Agreement with respect to its functions and responsibilities are: a. Provide post-trading and custodial services to the Mutual Fund. b. Ensure benefits due on the holdings are received. c. Provide detailed management information and other reports as required by the AMC. d. Maintain confidentiality of the transactions. e. Segregate assets of each Scheme. f. The Custodian shall not assign, transfer, hypothecate, pledge, lend, use or otherwise dispose any assets or property, except pursuant to instructions from the Trustee/AMC or under the express provisions of the Custodian Agreement. The Custodian will be entitled to remuneration for its services in accordance with the terms of the Custodian Agreement. The Trustee has the right to change the Custodian. 5.3.7 REGISTRAR AND TRANSFER AGENTS Presently, Karvy Computershare Private Limited, located at Karvy Plaza, H.No. 8-2-596, Avenue 4, Street No. 1, Banjara Hills, Hyderabad – 500 034 has been appointed as the Registrar and Transfer Agent for the Fund. The Registrar is registered with SEBI vide registration no. INR000000221. The AMC and the Trustee have satisfied themselves that the Registrars can provide the service required and have adequate facilities and system capabilities to discharge the responsibility with regard to processing of applications and dispatching of unit certificates to Unitholders within the time limit prescribed in the SEBI Regulations and also has sufficient capacity to handle investor complaints. The Registrar will be paid fees in accordance with the Agreement executed with them. 5.3.8 OFFICIAL POINTS OF ACCEPTANCE OF TRANSACTIONS DURING AND POST NEW FUND OFFER PERIOD During the New Fund Offer period, applications will be accepted during the normal working hours at the corporate office of the AMC and at the branches of the AMC. Post the NFO, the official points of acceptance of transactions for the Scheme will be the Investor Service Centres (ISCs) of JM Financial Mutual Fund and selected ISCs of Karvy Computershare Private Limited, the Registrar and Transfer Agent of the Fund. In addition to the above ISCs, the corporate office of the AMC shall also be a designated official point of acceptance of transactions. The cut-off time applicable to the Scheme shall be reckoned at these locations at counters specified for this purpose. The AMC reserves the right to change the list of official points of acceptance of transactions from time to time. A list of the official points of acceptance of transactions has been put up on the web-site of the Fund. 66
    • 6.0 INVESTMENT OBJECTIVES & POLICIES a) TYPE OF THE SCHEME A close-ended income scheme. b) INVESTMENT OBJECTIVES The investment objective of the Scheme and the plans launched thereunder is to seek to generate predictable returns over a predetermined period by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the respective Plans. It is envisaged that for the present, the Scheme will launch the following plans, the duration of which is as under: TYPE OF PLAN DURATION (NO. OF NO. OF DAYS FROM THE PLANS TO DATE OF BE ALLOTMENT) LAUNCHED YEARLY PLAN 375 DAYS 1 13 MONTHS PLAN 395 DAYS 2 The Trustee has the discretion to automatically roll over the plan(s) on maturity subject to Regulation 33 of the SEBI Regulations. Accordingly, a plan may be rolled over if the purpose, period and other terms of the rollover and all other material details of the plan including the likely composition of assets immediately before the rollover, the net assets and net asset value of the plan are disclosed to the unitholders and a copy of the same is filed with SEBI. Further, such rollover will be permitted only in case of those unitholders who express their consent in writing and the unitholders who do not opt for the rollover or have not given written consent shall be allowed to redeem their holdings in full at net asset value based price. However, the Trustee reserves the right not to roll over any plan upon maturity, if deemed appropriate in the interest of the Scheme / Unit holders. Accordingly, at any point of time, there may be multiple plans of the same maturity period. All plans will have different portfolios in line with the maturity of the plans. The Trustee may introduce one or more sub-plans that may be envisaged at a later date, under any of the plan(s) under the Scheme with differential fee structure, load structure, options (dividend / growth), minimum subscription amount, etc. depending upon the market conditions prevailing at the time of launch of the plan(s) and taking into consideration the interests of the unitholders and subject to the SEBI Regulations. The maximum expenses that may be incurred under any new sub-plan(s) that may be introduced under any plan launched under the Scheme will be within the limits mentioned under Regulation 52(6) of the SEBI Regulations. The investment management fees will be uniform across various sub-plans launched under a plan. The estimated maximum recurring expenses that can be charged to a sub-plan launched under any Plan under the Scheme, on an annual basis are given below : 67
    • Particulars (as a % of Applicable Regular Institutional Plan NAV) Plan Investment Management & Advisory 1.25 % 1.25 % Fee Trustee Fee 0.05 % 0.05 % Marketing and Selling Expenses 0.55 % 0.30 % Custodian Expenses 0.20 % 0.20 % Registrar and Transfer Agent Fee, 0.20 % 0.20 % Audit Fee and other expenses permitted under Regulation 52(4)(b) TOTAL 2.25 % 2.00 % The purpose of the above table is to assist the investor in understanding the various costs and expenses that an investor in any sub-plan / plan under the Scheme will bear directly or indirectly. While this estimate has been made in good faith on the basis of information available with the Fund, there can be no assurance that actual expense, under any particular head will not be more or less than such estimate. The AMC reserves the rights to revise the fees payable to the service providers from time to time. The total expenses, however, will be maintained within the limits mentioned under Regulation 52(6) of the SEBI Regulations. The Trustee reserves the right to charge a lower / differential fee structure for the Scheme or any sub-plan / plan / option launched under the Scheme. Investors will be suitably informed by publishing a notice in a newspaper or through any other means as the Trustee may consider appropriate. c) INVESTMENT PATTERN The corpus of the Scheme will be invested in debt and money market instruments (investment grade). Subject to the Regulations, the corpus of the Scheme can be invested in any of the following securities: · Securities created and issued by the Central and State Governments and/or repos/reverse repos in such Government Securities as may be permitted by RBI (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills). · Securities guaranteed by the Central and State Governments (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills). · Debt obligations of domestic Government agencies and statutory bodies, which may or may not carry a Central/State Government guarantee. · Corporate debt and securities (of both public and private sector undertakings) including Bonds, Debentures, Notes, Strips, etc. · Obligations of banks (both public and private sector) and development financial institutions. · Money market instruments permitted by SEBI/RBI. · Certificate of Deposits (CDs). · Commercial Paper (CPs). · Securitised Debt. · The non-convertible part of convertible securities. · Any other domestic fixed income securities including Structured Obligations. · Pass through, Pay through or other Participation Certificates representing interest in a pool of assets including receivables. · Any other like instruments as may be permitted by RBI / SEBI / such other regulatory authority from time to time. 68
    • · As mentioned below in the asset allocation pattern, the Scheme may invest upto 100% in short term debt securities and / or money market instruments. The exposure to short term debt securities and money market instruments within the overall limit of 100% may be changed by the AMC depending on market conditions. However, the Scheme is not a money market mutual fund Scheme. The main aim of changing the weightages of short term debt securities and money market instruments will be to protect the interests of the unitholders and for short term defensive considerations · The above investment policies are in conformity with the provisions of various constitutional documents viz. MOA / AOA of the AMC / Trustee, IMA and the Trust Deed. · On occasions, if deemed appropriate, the Plan / Scheme will invest in securities sold directly by the issuer, or acquired in a negotiated transaction. Notwithstanding the aforesaid, the proportion of investment in privately placed debentures, securitised debt and other unquoted debt instruments could be increased by the Trustee / AMC to around 80% of the total assets / funds available of the Plan / Scheme. For the possible impact on liquidity of the Scheme, which might be experienced due to investment of around 80% in privately placed debentures, securitised debt and other unquoted debt instruments, please refer to the clause “Possible deferral of redemption / resale requests” and also to the Clauses on “Liquidity & Marketability Risks” under Specific Risk Factors. The moneys collected under this Plan / Scheme shall be invested only in transferable securities in the money market or in the capital / debt market or in privately placed debentures or securitised debts or in Government securities. · As per SEBI Regulations, the Plan / Scheme shall not make any investments in any unlisted securities of associate / group companies of the Sponsors. The Plan / Scheme will also not make investment in privately placed securities issued by associate / group companies of the Sponsor. The Plan / Scheme may invest not more than 25% of the net assets in listed securities of Group companies. · JM Fixed Maturity Fund – Series XI will seek to invest in debt and money market instruments. The Scheme aims to identify securities, which offer superior levels of yield at lower levels of risks. With the aim of controlling risks, rigorous in depth credit evaluation of the securities proposed to be invested in will be carried out by the investment team of the AMC. Rated debt instruments in which the Scheme invests will be of investment grade as rated by a credit rating agency. The AMC will be guided by the ratings of rating agencies such as CRISIL, CARE, ICRA and Duff and Phelps Credit Rating India Limited or any other rating agencies that may be registered with SEBI from time to time. In case a debt instrument is not rated, necessary clearance of the Committee / Boards as per requirements of Regulations / Guidelines / Circulars will be obtained for such an investment. · The Plan / Scheme may also use various fixed income derivatives and hedging products like interest swap etc. from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders’ interest. 69
    • d) ASSET ALLOCATION PATTERN The asset allocation pattern of the plans launched under the Scheme in normal circumstances would be as follows : Type of Plan Type of Security Normal Risk Allocation Profile (% of net assets) Yearly Plan Short term debt securities (including 65% - 100% Low to fixed income derivatives and Medium securitized debt*) & money market instruments Government securities 0%-35% Low 13 months Short term debt securities (including 65% - 100% Low to Plan fixed income derivatives and Medium securitized debt*) & money market instruments Government securities 0%-35% Low * Allocation in securitized debt securities will not, normally exceed 80% of the net assets of the respective Plans. Securitized debt will not include foreign securitized debt. Investments under the plans shall primarily be made in securities, excluding foreign securities, which have the maturity date falling in line with the maturity date of the respective plans. Any deviations from the asset allocation pattern would be only for defensive considerations and will be rebalanced within the time frame as specified in the Regulations. The Trustee may, from time to time, pending deployment of funds of the plan(s) launched under the Scheme in securities in terms of the investment objective of the plan(s) / Scheme, invest the funds of the plan(s) / Scheme in short-term deposits of scheduled commercial banks in accordance with SEBI Circular No. SEBI/IMD/CIR No. 1/91171/07 dated April 16, 2007. Credit Quality Breakup of Debt Investment: The scheme will invest predominantly in rated debt (above investment grade). Thus most of the investments will fall in the rating categories AAA (highest safety), AA (high safety), A (moderate safety) and BBB (moderate safety). The Scheme will predominantly invest only in those securitisation issuances which have a rating of AA and above indicating the high level of safety from credit risk point of view at the time of making an investment. JM Fixed Maturity Fund - Series XI Debt breakup pattern % Investments AAA Upto 100% AA+/AA/AA- Upto 100% A+/A/A- Upto 100% BBB+/BBB Upto 100% Call / repo Upto 100% Total 100% 70
    • Changes in investment pattern Subject to the SEBI Regulations, the asset allocation pattern and maturity profile indicated above may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors. It must be clearly understood that the percentages stated above are only indicative and not absolute. The changes in the investment pattern will be in conformity with the investment objectives and basic nature of the Scheme and asset allocation can be altered only for a short term period on defensive considerations. e) INVESTMENT STRATEGY (i) Scientific approach to investment The Mutual Fund adopts a scientific approach to investments. Securities are selected for various funds by the fund managers based on a continuous study of trends in industries and companies, including management capabilities, global competitiveness, earning power, growth/payout features and other relevant investment criteria, which would, inter- alia include evaluation of the outlook of the economy, exposure to various industries and geographical regions, evaluation of the intrinsic worth of specific opportunities such as primary market transactions, private placements etc. (ii) Liquidity Management The Fund Manager may invest in short term deposits of scheduled commercial banks pending deployment of funds in accordance with SEBI Circular No. SEBI/IMD/CIR No. 1/91171/07 dated April 16, 2007. . (iii) Mode of Investment The securities in which the investment manager may invest would be through primary as well as secondary market, private placement etc. These securities may be those listed on various stock exchanges as well as unlisted securities. (iv) Procedure for taking investment decisions The investment policy of the AMC has been determined by the Investment Advisory Committee (“IAC”) which has been ratified by the Boards of the AMC and Trustee. At the strategic level, the broad investment philosophy of the AMC and the authorised exposure limits are spelt out in investment policy of the AMC. While during trading hours, fund managers are allowed full discretion to take decisions of purchases and sales for the scheme within the permissible limits these decisions and the reasons, thereof are communicated to the CEO for post facto approval, and areas of concern if any are discussed. The performance of the schemes is reviewed by the IAC as well as the Board of the Trustee periodically. The IAC is operational at the AMC level and has majority representation from the independent Directors. The AMC has a system of monthly reporting on the performance of the schemes with appropriate benchmark indices and also with the relative performance of the schemes of other mutual funds schemes in the same category which is placed before the Boards of the AMC and Trustee. Further, in terms of SEBI Circular No. MFD/CIR/16/400/02 dated March 26, 2002 the performance of JM Fixed Maturity Fund – Series XI will be benchmarked with the Crisil Liquid Fund Index. The performance of the schemes compared to its benchmark index will be reviewed at every meeting of the Boards of the AMC / Trustee and corrective action as proposed will be taken in case of unsatisfactory performance. 71
    • f) PORTFOLIO TURNOVER POLICY: The AMC as such does not have a policy statement on portfolio turnover for JM Fixed Maturity Fund – Series XI. However, the general portfolio management style is biased towards maintaining a low portfolio turnover rate. In the debt market, trading opportunities may arise due to changes in interest rate policy announced by the Reserve Bank of India, shifts in the yield curve, credit rating changes or any other factors where in the opinion of the fund manager there is an opportunity to enhance the total return of the portfolio. Since the investments would nearly match the maturity profile of the respective plans, the consequent brokerages and transactions costs would be low. g) POLICY ON INTER SCHEME INVESTMENTS The Scheme may invest in other Schemes managed by the AMC or in the Schemes of any other Mutual Funds, provided it is in conformity to the investment objectives of the investor Scheme and in terms of the prevailing SEBI Regulations. As per the SEBI Regulations, no investment management fees will be charged for such investments and the aggregate inter Scheme investment made by all Schemes of JM Financial Mutual Fund or in the Schemes under the management of other asset management companies shall not exceed 5% of the net asset of the Mutual Fund. IMPORTANT It must be clearly understood that the above referred portfolio strategies are not absolute, and that they can vary substantially depending upon the Trustee’s perception as to whether the stock / debt market is in an overheated state or has fallen well below a level they consider appropriate taking into account the factors prevailing at that time, the intent being to protect the Unitholders’ interest, especially the NAV of the fund. The Trustee may, from time to time, at their absolute discretion review and modify the strategy, provided such modification is in accordance with SEBI Regulations. h) POLICY AND SPECIAL CONSIDERATION ON INVESTMENT IN DERIVATIVE AND HEDGING PRODUCTS The Scheme may take derivatives position in the fixed income market based on the opportunities available subject to the guidelines provided by SEBI from time to time and in line with the overall investment objective of the Scheme. Fixed Income Derivatives Generally, interest rate swaps involve exchange of a fixed rate to a floating rate of interest or vice versa. These are known as Plain Vanilla Swaps. The RBI has currently allowed only these swaps in the Indian market. An interest rate swap agreement (as per guidelines issued by RBI on 7th July 1999 and 1st November 1999) from fixed rate to floating rate will be an effective hedge for portfolio in a rising interest rate environment. Interest Rate Swaps (IRS) An IRS is an agreement between two parties to exchange stated interest obligations for an agreed period in respect of a notional principal amount. The most common form is a fixed to floating rate swap where one party receives a fixed (pre-determined) rate of interest while other receives a floating (variable) rate of interest. 72
    • Forward Rate Agreement (FRA) A FRA is basically a forward starting IRS. It is an agreement between two parties to pay or receive the difference between an agreed fixed rate (the FRA rate) and the interest rate (reference rate) prevailing on a stipulated future date, based on a notional principal amount for an agreed period. The only cash flow is the difference between the FRA rate and the reference rate. As is the case with IRS, the notional amounts are not exchanged in FRAs. Basic structure of a Swap Assume that the Scheme has a Rs. 20 crores floating rate investment linked to MIBOR (Mumbai Inter Bank Offered Rate). Hence, the Scheme is currently running an interest rate risk and stands to lose if the interest rate moves down. To hedge this interest rate risk, the Scheme can enter into a 6 month MIBOR swap. Through this swap, the Scheme will receive a fixed predetermined rate (assume 12%) and pays the “benchmark rate” (MIBOR), which is fixed by the National Stock Exchange of India limited (NSE) or any other agency such as Reuters. This swap would effectively lock-in the rate of 12% for the next 6 months, eliminating the daily interest rate risk. This usually routed through an intermediary who runs a book and matches deals between various counterparties. The steps will be as follows : · Assuming the swap is for Rs. 20 crore June 1, 2006 to December 1, 2006. The Scheme is a fixed rate receiver at 12% and the counterparty is a floating rate receiver at the overnight rate on a compounded basis (say NSE MIBOR). · On June 1, 2006 the Scheme and the counterparty will exchange only a contract of having entered this swap. This documentation would be as per International Swap Dealers Association (ISDA). On a daily basis, the benchmark rate fixed by NSE will be tracked by them. · On December 1, 2006 they will calculate the following – · The Scheme is entitled to receive interest on Rs. 20 crore at 12% for 184 days i.e. Rs. 1.21 crore, (this amount is known at the time the swap was concluded) and will pay the compounded benchmark rate. · The counterparty is entitled to receive daily compounded call rate for 184 days & pay 12% fixed. · On December 1, 2006, if the total interest on the daily overnight compounded benchmark rate is higher than Rs. 1.21 crore, the Scheme will pay the difference to the counterparty. If the daily compounded benchmark rate is lower, then the counterparty will pay the Scheme the difference. · Effectively the Scheme earns interest at the rate of 12% p.a. for six months without lending money for 6 months fixed, while the counterparty pays interest @ 12% p.a. for 6 months on Rs. 20 crore, without borrowing for 6 months fixed. The above example illustrates the benefits and risks of using derivatives for hedging and optimizing the investment portfolio. Swaps have their own drawbacks like credit risk, settlement risk. However, these risks are substantially reduced as the amount involved is interest streams and not principal. 73
    • Forward Rate Agreement (FRA) A FRA is basically a forward starting IRS. It is an agreement between two parties to pay or receive the difference between an agreed fixed rate (the FRA rate) and the interest rate (reference rate) prevailing on a stipulated future date, based on a notional principal amount for an agreed period. The only cash flow is the difference between the FRA rate and the reference rate. As is the case with IRS, the notional amounts are not exchanged in FRAs. The Mutual Fund will act in accordance with the rules and regulations as may be prescribed by SEBI in this regard from time to time. Valuation of Derivative Products: a) The traded derivatives shall be valued at market price in conformity with the stipulations of sub clauses (i) to (v) of clause 1 of the Eighth Schedule to the SEBI Regulations, as amended from time to time. b) The valuation of untraded derivatives shall be done in accordance with the valuation method for untraded investments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Schedule to the SEBI Regulations as amended from time to time. Risks associated with Derivatives Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manager to identify such opportunities. Identification and execution of the strategies to be pursued by the fund manager involve uncertainty and decision of fund manager may not always be profitable. No assurance can be given that the fund manager will be able to identify or execute such strategies. The risks associated with the use of derivatives are different from or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Additionally, the following risk factors are associated with investments in derivative instruments : · Credit Risk : The credit risk is the risk that the counter party will default obligations and is generally negligible, as there is no exchange of principal amounts in a derivative transaction. · Market Risk : Derivatives carry the risk of adverse changes in the market price. · Illiquidity Risk : The risk that a derivative cannot be sold or purchased quickly enough at a fair price, due to lack of liquidity in the market. · The fund pays the daily compounded rate. In practice, however, there can be a difference in the actual rate at which money is lent in the call market and the benchmark, which appears and is used. The Trustee shall offer their comments on the above aspects in the report filed with SEBI under sub-regulation (23)(a) of Regulation 18 of the Regulations. 74
    • i) INVESTMENT BY AMC The AMC and investment companies managed by the Sponsor(s), their affiliates, their associate companies and subsidiaries may invest either directly or indirectly in the Scheme. The AMC shall not charge any fees on investment made by it in the units of the Scheme in accordance with sub-regulation 3 of Regulation 24 of the Regulations and shall charge fees on such amounts in future only if the SEBI Regulations so permit. The maximum amount the AMC can invest in any of the Scheme shall be its networth. The affiliates, associates, the Sponsor, subsidiaries of the Sponsor and/or the AMC may acquire a substantial portion of the Scheme’s units and collectively constitute a major investment in the Scheme. Consequently in the event of repurchase of units held by such affiliates/associates and Sponsor, there be an adverse impact on the units of the Scheme as the timing of such repurchase may impact the ability of other unitholders to repurchase their units. The AMC reserves the right to invest its own funds in the Scheme as may be decided by the AMC form time to time and in accordance with SEBI Circular No. SEBI/IMD/CIR No. 10/22701/03 dated December 12, 2003 read with SEBI Circular No. SEBI/IMD/Cir No. 1/42529/05 dated June 14, 2005 regarding minimum number of investors in the Scheme/ Plan. j) BORROWING BY THE MUTUAL FUND Under the SEBI Regulations, the Fund is allowed to borrow to meet temporary liquidity requirements of its Scheme for the purpose of repurchase or redemption of Units or the payment of interest or dividend to the Unit holders. Further, as per the SEBI Regulations, the Mutual Fund shall not borrow more than 20% of the Net Assets of the respective plans and the duration of such borrowing shall not exceed a period of six months. The limit of 20% may be revised by the Fund and to the extent the Regulations hereafter permit. The Fund may raise such borrowings after approval by the Trustee, from the Sponsor or any of its associate / group companies or banks in India or any other entity at market related rates prevailing at the time and applicable to similar borrowings. The security for such borrowings, if required, will be as determined by the Trustee. Such borrowings, if raised, may result in a cost, which would be dealt with in consultation with the Trustee and included in the annual recurring charges charged to the scheme k) FUNDAMENTAL ATTRIBUTES For the purposes of this section, the term "fundamental attributes" shall mean: (i) Type of Scheme (ii) Investment Objective, Investment Pattern, Investment Strategy & Asset Allocation Pattern (iii) Terms of Issue, Fees and expenses as stated in section 3, Annual Scheme Recurring Expenses (As % of Average Daily Net Assets) The fundamental attributes of the Scheme shall not be changed without obtaining the consent of less than 75% of the unitholders. Notwithstanding the contents of this Offer Document, the Trustee may in accordance with Regulation 18 (15A) of the SEBI Regulations change the fundamental attributes of the Scheme or the Trust or fees and expenses payable or any other change which would modify the Scheme and affect the interest of the unitholders subject to (i) issuing a written communication about the proposed change to each unitholder and giving an advertisement in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; 75
    • and (ii) the unitholders are given an option to exit at the Applicable NAV without any exit load. Fundamental attributes will not cover such actions of the Trustee of the Mutual Fund or the Board of Directors of the AMC, made in order to conduct the business of the Trust, the Scheme or the AMC, where such business is in the nature of discharging the duties and responsibilities with which they have been charged. Nor will it include changes to the Scheme made in order to comply with changes in regulation with which the Scheme has been required to comply. l) POSITION OF DEBT MARKETS IN INDIA The debt market in India is well developed. The largest market consists of the Government of India securities daily trading in which exceed Rs.3000 crores with instruments tenors ranging from short dated Treasury Bills to long dated securities extending beyond 20 years. The Government securities market not only provides resources to the Government for meeting its short term and long term needs but also acts as the benchmark for pricing corporate papers of varying maturities. The Government Securities market includes the dated securities issued by the government, both central and state and T-bills of all maturities. The corporate bond market is also fast developing with greater number of corporates accessing the markets through MIBOR linked bonds, commercial paper issuances and medium to long dated fixed and floating rate bonds. The yield curve tends to be positive sloping i.e. yield of shorter dated securities being lower than that of longer dated ones. Current Yield Range as on December 31, 2007 Instrument Current Yield (% per annum) 91 Days Treasury Bills 7.02 364 Days Treasury Bills 7.62 P1+ Commercial Paper-90 days 8.10 – 8.25 Certificate of Deposit-90 days 7.90 – 8.10 1 Year corporate Bond 8.80– 8.90 5 year corporate bond 9.10 – 9.25 These yields are only indicative and interest rates are susceptible to fluctuations and are sensitive to various Macro Economic and political Factors. Currently, floating rate instruments available in the market are : Instrument Type Maturity Profile Yield (as on December 31, 2007) Mibor linked debentures Maturity upto 1 year Spread of 200-225bps over 1 Year INBMK Long term debentures Maturity 3- 5 years Spread of 115-125 bps over gilt of similar maturity The instruments available in the Indian debt market are classified into two categories, namely Government and Non – Government debt. The following instruments are available in these categories: 76
    • A] Government Debt – Ø Central Government Debt Ø Treasury Bills Ø Dated Government Securities Ø Coupon Bearing Bonds Ø Floating Rate Bonds Ø Zero Coupon Bonds Ø State Government Debt Ø State Government Loans Ø Coupon Bearing Bonds B] Non-Government Debt Ø Instruments issued by Government Agencies and other Statutory Bodies Ø Government Guaranteed Bonds Ø PSU Bonds Ø Instruments issued by Public Sector Undertakings Ø Commercial Paper Ø PSU Bonds Ø Fixed Coupon Bonds Ø Floating Rate Bonds Ø Zero Coupon Bonds Ø Instruments issued by Banks and Development Financial Ø Institutions Ø Certificates of Deposit Ø Promissory Notes Ø Bonds Ø Fixed Coupon Bonds Ø Floating Rate Bonds Ø Zero Coupon Bonds Ø Instruments issued by Corporate Bodies Ø Commercial Paper Ø Non-Convertible Debentures Ø Fixed Coupon Debentures Ø Floating Rate Debentures Ø Zero Coupon Debentures Activity in the primary and secondary market is dominated by Central Government Securities including Treasury Bills. These instruments comprise close to 50% of all outstanding debt and close to 75% of the daily trading volume on the Wholesale Debt Market Segment of the National Stock Exchange of India Limited. In the money market, activity levels of the Government and Non-Government Debt vary from time to time. Instruments that comprise a major portion of money market activity include, Ø Overnight Call Ø CBLO (Collateralised Borrowing & Lending Obligations) Ø Treasury Bills Ø Government Securities with a residual maturity of < 1 year Ø Commercial Paper Ø Certificates of Deposit 77
    • Apart from these, there are some other options available for short tenure investments that include MIBOR linked debentures with periodic exit options and other such instruments. Though not strictly classified as money market instruments, PSU / corporate paper with a residual maturity of < 1 year, are actively traded and offer a viable investment option. m) BENCHMARK INDEX The performance of the Scheme will be benchmarked to Crisil Liquid Fund Index. In terms of SEBI Circular No. MFD/CIR/01/ 071/02 dated 15th April 2002 the AMC and Trustee may change the benchmark index or select an additional benchmark index after recording adequate justification for carrying out such change. However, change of benchmark index and / or selecting additional benchmark indices would be done in complete compliance of the relevant guidelines of SEBI in this regard. Further, in terms of SEBI Circular No. MFD/CIR/16/400/02 dated 26th March 2002 the performance of Fund will be benchmarked and reviewed at every meeting of the Boards of the AMC / Trustee. 7.0 INVESTMENT RESTRICTIONS The relevant restrictions applicable to the Scheme as per the Seventh Schedule of SEBI Regulations are as follows: 1. The New Fund Offer expenses in respect of any Scheme will not exceed 6% of the Funds raised under that Scheme. 2. A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer which are rated not below investment grade by a credit rating agency authorized to carry out such activity under the Act. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the board of the AMC. Provided that such limit shall not be applicable for investments in government securities and money market instruments. Provided further that investment within such limit can be made in mortgaged backed securities which are rated not below investment grade by a credit rating agency registered with the Board. 3. Debentures, irrespective of any residual maturity period (above or below one year), shall attract the investment restrictions as applicable for debt instruments as specified under Clause 1 and 1 A of Seventh Schedule to the Regulations. 4. A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the scheme. All such investments shall be made with the prior approval of the Boards of the Trustee and the AMC. 5. The scheme may invest in another scheme under the same AMC or any other mutual fund without charging any fees, provided that aggregate inter-scheme investment made by all schemes under the management or in schemes under the management of any other AMC shall not exceed 5% of the net asset value of the mutual fund. 6. No scheme of a mutual fund shall make any investment in any fund of funds scheme. 7. The Scheme may buy and sell securities on the basis of deliveries and will not make any short sales or engage in carry forward transactions except as and when permitted by SEBI / RBI / any other relevant regulatory authority in this regard. 8. Every mutual fund shall get the securities purchased or transferred in the name of the mutual fund on account of the concerned scheme, wherever investments are intended to be of long- term nature. 78
    • 9. Pending deployment of funds of a scheme in securities in terms of investment objectives of the scheme a mutual fund can invest the funds of the scheme in short term deposits of scheduled commercial banks in accordance with SEBI Circular No. SEBI/IMD/CIR No. 1/91171/07 dated April 16, 2007. 10. The Scheme shall not make any investment in : a) Any unlisted security of an associate or group company of the Sponsor; or b) 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 assets. 11. Interscheme transfers of investments from one scheme to another scheme in the same Mutual Fund shall be allowed only if : -Such transfers are done at the prevailing market price for quoted instruments on spot basis. Explanation -“Spot basis” shall have same meaning as specified by stock exchange for spot transactions. -The securities so transferred shall be in conformity with the investment objective of the scheme to which such transfer has been made. 12. No mutual fund scheme shall invest more than 10% of its NAV in the equity shares or equity related instruments of any company. Provided that the limit of 10% shall not be applicable for investments in case of index scheme or sector or industry specific scheme. 13. The Scheme shall not invest more than 10% of its NAV in the unlisted equity shares or equity related instruments of any company. After conversion of the Scheme into an open-ended scheme, investment in unlisted equity shares or equity related instruments of any company shall not exceed 5% of its NAV. 14. The Mutual Fund having an aggregate of securities which are worth Rs.10 crores or more, as on the latest balance sheet date, shall subject to such instructions as may be issued from time to time by the Board, settle their transactions entered on or after January 15, 1998 only through dematerialised securities. Further, all transactions in government securities shall be in dematerialised form. 15. No Mutual Fund under all its schemes taken together should own more than 10% of any company’s paid up capital carrying voting rights. The Scheme will comply with SEBI regulations and any other Regulations applicable to the investments of Mutual Funds from time to time. The Trustee may alter the above restrictions from time to time to the extent that changes in the Regulations may allow. All investment restrictions shall be applicable at the time of making investment. 8.0 NET ASSET VALUE (NAV) AND VALUATION OF INVESTMENT Valuation of Assets, computation of NAV, repurchase price and their frequency of disclosure will be in accordance with the provisions of SEBI (MF) Regulations 1996/ Guidelines/ Directives issued by SEBI from time to time. The assets of the Scheme will be valued based on the following valuation norms. 8.1. TRADED SECURITIES i. 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 closing price 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 at the prices quoted on the stock exchange where a majority in value of the investments are principally traded. iii. Once a stock exchange has been selected for valuation of a particular security, reasons for change of the exchange shall be recorded in writing by the Asset Management Company. iv. When on a particular valuation day, a security has not been traded on the selected stock 79
    • exchange, the value at which it is traded on another stock exchange may be used. v. When a security is not traded on any stock exchange on a particular valuation day, the value at which it was traded on the selected stock exchange or any other stock exchange, as the case may be, on the earliest previous day may be used provided such date is not more than thirty days prior to the valuation date. When a debt security (other than Government Securities) is purchased by way of private placement, the value at which it was bought may be used for a period of fifteen days beginning from the date of purchase. For valuation of government securities, all the mutual funds are advised to use the prices for Government Securities released by an agency suggested by AMFI (at present Crisil.com vide AMFI circular dated February 5, 2002). 8.2 NON-TRADED SECURITIES i. A debt security (other than Government Securities) is considered as a thinly traded security if on the valuation date, there are no individual trades in that security in marketable lots (presently Rs 5 crores) on the principal stock exchange or any other stock exchange. In order to determine whether a security is thinly traded or not the volumes traded in all recognised stock exchanges in India may be taken into account. ii. When a security is not traded on any stock exchange for a period of thirty days prior to the valuation date, the scrip must be treated as ‘non-traded’ scrip. iii. Non-traded securities shall be valued “in-good faith” by the AMC on the basis of appropriate valuation methods based on the principles approved by the Board of the AMC. For the purpose of valuation of non-traded securities, the following principles will be adopted: a) Debt instruments shall generally be valued on a yield to maturity basis, the capitalisation factor being determined for comparable traded securities and with an appropriate discount for lower liquidity. b) Government securities will be valued at yield to maturity based on the prevailing market rate. c) In respect of convertible debentures and bonds, the non-convertible and convertible components shall be valued separately. The non-convertible component should be valued on the same basis as would be applicable to a debt instrument. The convertible component should be valued on the same basis as would be applicable to an equity instrument. If, after conversion the resultant equity instrument would be traded pari passu with an existing instrument which is traded, the value of the latter instrument can be adopted after an appropriate discount for the non-tradability of the instrument during the period preceding the conversion. While valuing such instruments, the fact whether the conversion is optional should also be factored in; d) Where instruments have been bought on ‘repo’ basis, the instrument must be valued at the resale price after deduction of applicable interest up to date of resale. Where an instrument has been sold on a ‘repo’ basis, adjustment must be made for the difference between the repurchase price (after deduction of application interest up to date of repurchase) and the value of the instrument. If the repurchase price exceeds the value, the depreciation must be provided for and if the repurchase price is lower than the value, credit must be taken for the appreciation. e) Investments in call money, bills purchased under rediscounting scheme and short term deposits with banks shall be valued at cost plus accrual; other money market instruments shall be valued at the yield at which they are currently traded. For this purpose, non-traded instruments that is instruments not traded for a period of seven days will be valued at cost plus interest accrued till the beginning of the day plus the difference between the redemption value and the cost spread uniformly over the remaining maturity period of the instruments; government securities will be valued at yield to maturity based on the prevailing market rate. iv. All expenses and incomes accrued up to the valuation date shall be considered for computation of net asset value. For this purpose, while major expenses like management fees and other periodic expenses should be accrued on a daily basis, other minor expenses and 80
    • income need not be so accrued, provided the non-accrual does not affect the NAV calculations by more than 1%. v. Any changes in securities and in the number of units should be recorded in the books not later than the first valuation date following the date of transaction. If this is not possible given the frequency of the Net Asset Value disclosure, the recording may be delayed up to a period of seven days following the date of the transaction, provided that as a result of the non-recording, the Net Asset Value calculations shall not be affected by more than 1%. vi. (i) The traded derivatives shall be valued at market price in conformity with the stipulations of sub clauses (i) to (v) of clause 1 of the Eighth Schedule of the SEBI (MF) Regulations.(ii) The valuation of un-traded derivatives shall be done in accordance with the valuation method for un-traded investments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Schedule to the SEBI (MF) Regulations, 1996. vii. Thinly traded securities as defined in the guidelines shall be valued in the manner as specified in the guidelines issued by the SEBI. viii. The aggregate value of illiquid securities as defined in the guidelines shall not exceed 15% of the total assets of the Scheme and any illiquid securities held above 15% of the total assets shall be valued in the manner specified in the guidelines issued by SEBI. ix. SEBI has issued circular no. MFD/CIR/8/92/2000 dated September 18, 2000 as amended by a subsequent circular no. MFD/ CIR/14/088/2001 dated March 28, 2001 (“guidelines”) giving guidelines for valuation of securities and for identification and provisioning for NPAs. The Mutual Fund shall value its securities accordingly. The NAVs of the Units of the Plans will be computed by dividing the net assets of the Plan by the number of Units outstanding on the valuation date. The Fund shall value its investments according to the valuation norms, as specified in Schedule VIII of the Regulations, or such norms as may be prescribed by SEBI from time to time. The broad valuation norms are detailed above. These norms are indicated based on the current Regulations and the guidelines/instructions issued by SEBI. In terms of SEBI letter no. MFD/CIR/8(A)/104/2000 dated October 3, 2000, the guidelines on valuation of non traded and thinly traded debt securities have come into force from December 1, 2000 and the same was modified vide letter no. MFD/CIR/14/088/2001 dated March 28, 2001 and MFD/CIR/No.14/442/2002 dated February 20, 2002 and subsequent amendments issued by SEBI. 9.0 ACCOUNTING POLICIES AND STANDARDS In accordance with Regulation 50 read with the Ninth Schedule to the SEBI Regulations, the Mutual Fund shall follow the accounting policies and standards stated below : · All investments will be marked to market and will be carried in the balance sheet at their market value. However, since the unrealised gain arising out of appreciation on investments cannot be distributed, provision will be made for exclusion of this item when arriving at distributable income. · In respect of all interest-bearing investments, income will be accrued on a day-to-day basis as it is earned. Therefore, when such investments are purchased, interest paid for the period from the last interest due date upto the date of purchase shall not be treated as a cost of purchase but shall be debited to Interest Recoverable Account. Similarly, interest received at the time of sale for the period from the last interest due date upto the date of sale shall not be treated as an addition to sale value but shall be credited to Interest Recoverable Account. · In determining the holding cost of investments and the gains or loss on sale of investments, the “average cost” method shall be followed. · Transactions for purchase or sale of investments would be recognized as of the trade date and not as of the settlement date, so that the effect of all investments traded during a financial year are recorded and reflected in the financial statements for that year. When investment transactions take place outside the stock market, for example, acquisitions through private placement or purchases or sales through private treaty, the transaction would be recorded, in 81
    • the event of a purchase, as of the date on which the Scheme obtains an enforceable obligation to pay the price or, in the event of a sale, when the Scheme obtains an enforceable right to collect the proceeds of sale or an enforceable obligation to deliver the instruments sold. · Where income receivable on investments has been accrued and has not been received for the period specified in the guidelines by SEBI, provision shall be made by debiting the revenue account for the income so accrued in the manner specified by the guidelines issued by SEBI. · In case of a close-ended scheme which provides to the unitholders the option for an early redemption or repurchase their own units, the par value of the unit has to be debited to Capital Account and the difference between the sale price and the par value of the Unit, if positive shall be credited to reserves and if negative will be debited to reserves. Similarly, when in respect of such a scheme, Units are repurchased, the difference between the purchase price and face value of the unit, if positive, shall be debited to reserves, and, if negative, shall be credited to reserves, the face value being debited to the Capital account. · The cost of investments acquired or purchased would include, brokerage, stamp charges and any charge customarily included in the broker’s bought note. Underwriting commission shall be recognized as revenue only when there is no devolvement on the Scheme. Where there is devolvement on the Scheme, the full underwriting commission received and not merely the portion applicable to the devolvement shall be reduced from the cost of the investment. The accounting policies and standards as mentioned above are in accordance with the Ninth Schedule of the SEBI Regulations and are subject to change as per any changes in the SEBI Regulations. All other policies and standards as specified therein, as well as any additions/modifications thereto as may be specified by SEBI from time to time shall be adhered to while preparing the books of accounts and financial statements of the Fund. To provide appropriate details of the Schemewise deployment of the assets of the Fund, the AMC may adopt certain accounting policies and standards in accordance with the appropriate guidance notes issued by the Institute of Chartered Accountants of India as amended from time to time. The Trustee / AMC may alter these above stated accounting policies and standards from time to time, and also to the extent the guidance notes issued by the Institute of Chartered Accountants of India, and the SEBI Regulations change, so as to permit the Scheme to give a true and fair view of its state of affairs. Identification and Provisioning for Non Performing Assets (i) Definition of a Non Performing Asset (NPA) An ‘asset’ shall be classified as non performing, if the interest and / or principal amount have not been received or remained outstanding for one quarter from the day such income/installment has fallen due. (ii) Effective date for classification and provisioning of NPAs : The definition of NPA may be applied after a quarter past due date of the interest. For e.g. if the due date for interest is 31.12.2006, it will be classified as NPA from 01.04.2007. (iii) Treatment of income accrued on the NPA and further accruals After the expiry of the 1st quarter from the date the income has fallen due, there will be no further interest accrual on the asset i.e. if the due date for interest falls on 31.12.2006 and if the interest is not received, accrual will continue till 31.03.2007 after which there will be no further accrual of income. In short, taking the above example, from the beginning of the 2nd quarter there will be no further accrual on income. On classification of the asset as NPA from a quarter past due date of interest, all interest accrued and recognized in the books of accounts of the Fund till the date, should be provided for. For e.g. if interest income falls due on 31.12.2006, accrual will continue till 31.03.2007 even if the income as on 31.12.2006 has not been received. Further, no accrual will be done from 31.03.2007 onwards. Full provision will also be made for interest accrued and outstanding as on 31.12.2007. 82
    • (iv) Provision for NPAs Both secured and unsecured investments once they are recognized as NPAs call for provisioning in the same manner and where these are related to close ended scheme the phasing would be such that to ensure full provisioning prior to the closure of the scheme or the scheduled phasing whichever is earlier. The value of the asset must be provided in the following manner or earlier at the discretion of the fund. Fund will not have discretion to extend the period of provisioning. The provisioning against the principal amount or installments should be made at the following rates irrespective of whether the principal is due for repayment or not. · 10% of the book value of the asset should be provided for after 6 months past due date of interest i.e. 3 months form the date of classification of the asset as NPA. · 20% of the book value of the asset should be provided for after 9 months past due date of interest i.e. 6 months from the date of classification of the asset as NPA. · Another 20% of the book value of the assets should be provided for after 12 months past due date of interest i.e. 9 months form the date of classification of the asset as NPA. · Another 25% of the book value of the assets should be provided for after 15 months past due date of interest i.e. 12 months from the date of classification of the asset as NPA. · The balance 25% of the book value of the asset should be provided for after 18 months past due date of the interest i.e. 15 months form the date of classification of the assets as NPA. Book value for the purpose of provisioning for NPAs shall be taken as a value determined as per the prescribed valuation method. If any installment is fallen due, during the period of interest default, the amount of provision should be installment amount or above provision amount, whichever is higher. (v) Reclassification of assets : Upon reclassification of assets as ‘performing assets’ : 1. In case an issuer has fully cleared all the arrears of interest, the interest provisions can be written back in full. 2. The asset will be reclassified as performing on clearance of all interest arrears and if the debt is regularly serviced over the next two quarters. 3. In case the issuer has fully cleared all the arrears of interest, the interest not credited on accrual basis would be credited at the time of receipt. 4. The provision made for the principal amount can be written back in the following manner : · 100% of the asset provided for in the books will be written back at the end of the 2nd quarter where the provision of principal was made due to the interest defaults only. · 50% of the asset provided for in the books will be written back at the end of the 2nd quarter and 25% after every subsequent quarter where both installments and interest were in default earlier. 5. An asset is reclassified, as ‘standard asset’ only when both overdue interest and overdue installments are paid in full and there is satisfactory performance for a subsequent period of 6 months. (vi) Receipt of past dues: When the fund has received income / principal amount after their classifications as NPAs ; · For the next 2 quarters, income should be recognized on cash basis and thereafter on accrual basis. The asset will be continued to be classified as NPA for these two quarters. · During this period of two quarters although the asset is classified as NPA no provision needs to be made for the principal if the same is not due and outstanding. · If part payment is received towards principal, the asset continues to be classified as NPA and provisions are continued as per the norms set at (iv) above. Any excess provision will be written back. 83
    • (vii) Classification of Deep Discount Bonds as NPAs : Investments in Deep Discount Bonds can be classified as NPAs, if any two of the following conditions are satisfied: · If the rating of the Bond comes down to grade ‘BB’ or below. · If the company is defaulting in their commitments in respect of other assets, if available. · Full Net worth erosion. · Provision should be made as per the norms set at (iv) above as soon as the asset is classified as NPA. · Full provision can be made if the rating comes down to grade ‘D’ (viii) Reschedulement of an asset : In case any company defaults either interest or principal amount and the Fund has accepted a reschedulement of the schedule of payments, then the following practice may be adhered to: (a) In case it is a first reschedulement and only interest is in default, the status of the asset namely, ‘NPA’ may be continued and existing provisions should not be written back. This practice should be continued for two quarters of regular servicing of the debt. Thereafter, this be classified as ‘performing asset’ and the interest provided may be written back. (b) If the reschedulement is done due to default in interest and principal amount, the asset should be continued as non performing for a period of 4 quarters, even though the asset is continued to be serviced during these 4 quarters regularly. Thereafter, this can be classified as ‘performing asset’ and all the interest provided till such date should be written back. (c) If the reschedulement is done for a second/third time or thereafter, the characteristic of NPA should be continued for eight quarters of regular servicing of the debt. The provision should be written back only after it is reclassified as ‘performing asset’. To provide appropriate details of the Schemewise deployment of the assets of the Fund, certain accounting policies and standards in accordance with the appropriate guidance notes issued by the Institute of Chartered Accountants of India may be adopted by AMC and amended from time to time. The Trustee / AMC may alter these above stated accounting policies and standards from time to time, and also to the extent the guidance notes issued by the Institute of Chartered Accountants of India, and the SEBI Regulations, change, so as to permit the Scheme to give a true and fair view of its state of affairs. As such the accounting policies and standards, and the preparation of the annual report and annual statement of account of the Scheme will be in accordance with SEBI Regulations including Schedule IX and XI thereof. 10.0 UNITS ON OFFER i. Nature of the Fund JM Financial Mutual Fund (formerly JM Mutual Fund) has been notified as a mutual fund under Section 10(23D) of the I.T. Act by Central Board of Direct Taxes and the entire income of the Fund is exempt from income tax and all income received by the Fund will be without any deduction of tax at source. This offer document comprising of the Scheme has been prepared in accordance with the SEBI Regulations as applicable. ii. The Offer The Offer is being made for subscription to JM Fixed Maturity Fund - Series XI. The Trustee has given its approval for this Offer Document in terms of a resolution passed on January 25, 2008. 84
    • iii. Type of the scheme A close ended income scheme. iv. Investment option Each Plan under the Scheme offers investors two investment options : Ø Growth Option Ø Dividend Option Options will have common portfolio under the Plan. Investors are requested to indicate their preference while investing in the Scheme. In case an investor fails to specify his preference, he shall be deemed to have opted to select the Growth option. The Trustee may introduce one or more sub-plans that may be envisaged at a later date, under the various plan(s) under the Scheme with differential fee structure, load structure, options (Dividend / Growth), minimum subscription amount, etc. depending upon the market conditions prevailing at the time of launch of a the plan(s) and taking into consideration the interests of the unitholders and subject to the SEBI Regulations. The investment management fees will be uniform across various sub-plans launched under a plan. Investors will be suitably informed by publishing a notice in a newspaper or through any other means as the Trustee may consider appropriate. Under the Dividend Option of a Plan, dividends shall be declared at the discretion of the Trustee subject to the availability of distributable surplus. Investors have the choice of dividend payout or reinvestment. In case an investor fails to select his preference he shall be deemed to have opted for the dividend reinvestment option. However, in case the dividend payable to any unitholder is below Rs. 100/- then the same will be automatically reinvested. An investor of record for the purpose of dividend is an investor who is a Unitholder as of the date when dividend(s) is (are) declared. The Mutual Fund reserves the right to introduce new investment options at a later date or to alter, modify or amend in any manner, any one or all of the existing options with the prior approval of the Trustee. The Fund does not guarantee or assure declaration or payment of dividend. Although, the Trustee has the intention to declare dividend under the dividend options, such declaration of dividend if any, is subject to the scheme’s performance and the availability of distributable surplus in the scheme at the time of declaration of such dividend. Under the Growth Option, the earnings will be retained and reflected in the NAV and not distributed. v. New Fund Offer Price: Rs. 10/- per Unit. vi. Duration of the Scheme: The Trustee will continue to launch plans under the various series mentioned earlier under Section 2.7. However, the Trustee reserves the right to suspend / terminate offering fresh plans of any maturity for subscription whenever it feels that the prevailing business environment is not conducive to the launch of such plans. The Scheme will launch the following plans under this Series, duration of which will be as set out in the table below 85
    • TYPE OF PLAN DURATION (NO. OF DAYS FROM NO. OF PLANS TO THE DATE OF ALLOTMENT) BE LAUNCHED YEARLY PLAN 375 DAYS 1 13 MONTHS PLAN 395 DAYS 2 Each Plan will have different portfolio; however, sub-plans / options under a plan will have a common portfolio. As per SEBI Circular No. SEBI/IMD/Cir No.10/22701/03 dated December 12, 2003 read with SEBI Circular No. SEBI/IMD/Cir No. 1/42529/05 dated June 14, 2005, each scheme and individual plan(s) under the schemes should have a minimum of 20 investors and no single investor should account for more than 25% of the corpus of such scheme/ plan(s). In case of close-ended scheme / plan, if either of the above two conditions are not fulfilled immediately after the close of the NFO i.e. at the time of allotment, the provisions of Regulation 39(2)(c) of the SEBI (Mutual Funds) Regulations, 1996, would become applicable automatically without any reference from SEBI. Accordingly, the scheme / plans shall be wound up by following the guidelines prescribed by SEBI and the investors’ money would be redeemed at applicable NAV. In case the maturity date of a plan falls on a non-business day, the next business day shall be considered as the redemption / maturity date for that plan. On maturity of a Plan, the maturity pay-out will normally be effected on the day immediately following the maturity day. However, if the maturity pay-out day falls on a non-business day, then the maturity day will be extended appropriately to ensure that both the maturity day and the pay-out day are continuous business days. The Trustee has the discretion to automatically roll over the plan(s) on maturity subject to Regulation 33 of the SEBI Regulations. Accordingly, a plan may be rolled over if the purpose, period and other terms of the rollover and all other material details of the plan including the likely composition of assets immediately before the rollover, the net assets and net asset value of the plan are disclosed to the unitholders and a copy of the same is filed with SEBI. Further, such rollover will be permitted only in case of those unitholders who express their consent in writing and the unitholders who do not opt for the rollover or have not given written consent shall be allowed to redeem their holdings in full at net asset value based price. However, the Trustee reserves the right not to roll over any plan upon maturity, if deemed appropriate in the interest of the Scheme / Unit holders. Accordingly, at any point of time, there may be multiple plans of the same maturity period. All plans will have different portfolios in line with the maturity of the plans. The Trustee may introduce one or more sub-plans that may be envisaged at a later date, under any of the plan(s) under the Scheme with differential fee structure, load structure, options (Dividend / Growth), minimum subscription amount, etc. depending upon the market conditions prevailing at the time of launch of the plan(s) and taking into consideration the interests of the unitholders and subject to the SEBI Regulations. The investment management fees will be uniform across various sub-plans launched under a plan. Investors will be suitably informed by publishing a notice in a newspaper or through any other means as the Trustee may consider appropriate. vii. Liquidity / Redemption of Units The Scheme will allow redemptions / repurchases during the Specified Redemption Period. Each 13 months plans and yearly plan will have specified redemption period which will normally be the first five business days at the beginning of every calendar month during the tenure of that plan. On the Specified Redemption Days during the Specified Redemption Period, unitholders can redeem their investments at the applicable NAV subject to exit load and after deduction of the balance proportionate unamortized new fund offer expenses applicable to their investments. 86
    • Investors can also redeem on business days other than the specified redemption period subject to the applicable exit load, if any, and after deduction of the balance proportionate unamortized new fund offer expenses applicable to their investments. Unitholders in a plan can redeem their investments on the date of maturity of the Plan at the applicable NAV without any exit load. In case any specified redemption day / maturity day of a Plan falls on a non-business day, then the specified redemption date / maturity date of that Plan shall be deemed to be the next business day. In case redemption request is not received till the end of business hours on the date of maturity of a plan, the account balances will be compulsorily redeemed and proceeds will be remitted to the respective Unitholders. viii. Listing: As repurchase facility is available to the Unitholders during the Specified Redemption Days / Period, the units of the Scheme are not proposed to be listed on any stock exchange(s). ix. Minimum amount of subscription: An application during the new fund offer should be for a minimum of Rs. 5,000/- for the Regular plan and Rs. 5,00,000/- for the institutional plan and in multiples of Re. 1/- thereafter. However, there is no upper limit for investment. x. Minimum corpus to be raised: Rs. 100 lacs in each series of the various plans (including sub-plans, if any) of the Scheme. xi Applicable NAV: For Redemptions and Switch Outs Redemption request can be submitted to the official point of acceptance on any business day till 3.00 pm .These redemption requests will be processed at the applicable NAV, subject to the applicable exit load and after deduction of the balance proportionate unamortized new fund offer expenses as may be applicable. The Fund will endeavor to dispatch the redemption cheque / draft within 10 business days from the date on which the redemption transaction is effected. It is clarified that the cut off timings will also be applicable to investments made through “sweep” mode. xii. New Fund Offer Period The New Fund Offer Period for the Scheme will be for multiple plans under the scheme and for each plan will be for a period of 10 days or shorter period as may be decided by the Trustee and will start from the commencement of banking hours during the New Fund Offer period and end at the close of banking hours at the end of the New Fund Offer period. The Trustee, however, reserves the right to extend or prepone the closing date subject to the condition that the New Fund Offer period shall not be kept open for more than 30 days. xiii. Purchase of Units Units of the Scheme will be offered during the New Fund Offer Period at Rs.10 per unit through JM Financial Mutual Fund Agents. Units can also be purchased directly from the Fund or JM Financial Mutual Fund ISCs. 87
    • xiv. NAV Declaration The NAVs of the Plans / Scheme will be declared on all business days taking into consideration the balance proportionate unamortized issue expenses. The first NAV shall be declared after 3 business days from the closure of the New Fund Offer period. xv. NAV & Fractional Units Account balances of Units will be calculated upto three decimal places. NAVs will be calculated upto four decimal places. xvi. Switching Options Unitholders under the Scheme have the option to switch part or all of their unit holdings in the Scheme to another scheme(s) established by the Fund, or within the Scheme from one plan to another, which is available for investment at that time. This option will be useful to Unitholders who wish to alter the allocation of their investment among the scheme(s)/plan(s)/options of the Fund in order to meet their changed investment needs. The switch will be effected by way of a redemption of Units from the Scheme/plan/option and a reinvestment of the redemption proceeds in the other scheme/plan/option and accordingly, to be effective, the switch must comply with the redemption rules of the Scheme and the issue rules of the other scheme (for e.g. as to the minimum number of Units that may be redeemed or issued, exit/entry load, etc). The price at which the Units will be switched out of the Scheme will be based on the Repurchase Price, and the proceeds will be invested in the other scheme/plan/option at the prevailing sale price for units in that scheme/plan/option. Subject to necessary approval (if any) from the Reserve Bank of India and any other approval as applicable, tax deduction at source, if any, will be effected at the appropriate rate in case of a switching by NRIs/FIIs and the balance amount would be utilized to exchange units to the other Scheme. The switch request can be made on a pre-printed form or by using the relevant tear off section of the Transaction Slip enclosed with the Account Statement, which should be submitted at any of the ISCs. An Account Statement reflecting the new holding will be dispatched to the Unitholders within three Business Days of completion/effecting of switch transaction. The AMC retains the right to charge different loads on switching of Units as compared to sale / repurchase of Units as the case may be. xvii. Gift Facility The unitholders have the option to gift the units (by way of transfer of units to the donee), to the extent provided in the Regulations and can write to the AMC requesting for the Gift Form. The Fund may, subject to compliance with such requirement as it deems necessary, may stipulate certain conditions and arrange to transfer the Units, on account of a gift made by the unitholder out of his Unit balance as per the provisions of applicable law. Gift in favour of Non-Residents will also be subject to permission, general or specific, under Foreign Exchange Management Act. All payments and settlements made to such donee and a receipt thereof shall be a valid discharge by the Fund. The Fund would not be liable for the loss resulting from a fraudulent transfer by way of gift to a donee, based on the unitholders instructions that it reasonably believed as genuine. However, unit holders may note that such a transfer by way of gift may attract stamp duty. xviii. Applications via electronic mode 88
    • Subject to the investor fulfilling certain terms and conditions stipulated by the AMC as under, the AMC, Mutual Fund or any other agent or representative of the AMC, Mutual Fund, Registrar may accept transactions through any electronic mode (“web/ electronic transactions”) as permitted by SEBI or other regulatory authorities; 1. The acceptance of the web/electronic transactions will be solely at the risk of the transmitter of the web/ electronic transactions and the recipient shall not in any way be liable or responsible for any loss, damage caused to the transmitter directly or indirectly, as a result of the transmitter sending or purporting to send such transactions. 2. The recipient will also not be liable in the case where the transaction sent or purported to be sent is not processed on account of the fact that it was not received by the recipient. 3. The transmitter’s request to the recipient to act on any web/electronic transmission is for the transmitter’s convenience and the recipient is not obliged or bound to act on the same. 4. The transmitter acknowledges that fax/web/electronic transactions is not a secure means of giving instructions/ transactions requests and that the transmitter is aware of the risks involved including those arising out of such transmission. 5. The transmitter authorizes the recipient to accept and act on any web/ electronic transmission which the recipient believes in good faith to be given by the transmitter and the recipient shall be entitled to treat any such web/ electronic transaction as if the same was given to the recipient under the transmitter’s original signature. 6. The transmitter agrees that security procedures adopted by the recipient may include signature verification, telephone call backs which may be recorded by tape recording device and the transmitter consents to such recording and agrees to co-operate with the recipient to enable confirmation of such web/ electronic transaction requests. 7. The transmitter accepts that the web/ electronic transactions shall not be considered until time stamped as a valid transaction request in the Scheme in line with SEBI regulations. 8. In consideration of the recipient from time to time accepting and at its sole discretion acting on any web/electronic transaction request received / purporting to be received from the transmitter, the transmitter agrees to indemnify and keep indemnified the AMC, Directors, employees, agents, representatives of the AMC, JM Financial Mutual Fund and Trustee from and against all actions, claims, demands, liabilities, obligations, losses, damages, costs and expenses of whatever nature (whether actual or contingent) directly or indirectly suffered or incurred, sustained by or threatened against the indemnified parties whatsoever arising from or in connection with or any way relating to the indemnified parties in good faith accepting and acting on web/ electronic transaction requests including relying upon such electronic transaction requests including relying upon such web/ electronic transaction request purporting to come from the transmitter even though it may not come from the transmitter. The AMC reserves the right to discontinue the facility at any point of time. xix. Electronic Clearing Services (ECS)/Electronic Fund Transfer (EFT) The RBI offers the facility of ECS / EFT for facilitating better customer service by direct credit of dividend or repurchase amount to a unitholder’s bank account through electronic credit which avoids loss of dividend or repurchase warrant in transit or fraudulent encashment. The Fund will endeavour to offer this optional facility for payment of dividend/repurchase proceeds to the unitholders residing in any of the cities where such a facility is available. The maximum amount of repurchase in cases of ECS/EFT should be such as may be decided by the processing agency and the AMC reserves the right to change this amount depending upon the relevant guidelines from the RBI from time to time. In order to avail the above facility, the unitholder may be required to give a written request to the Registrar. The Registrar will send a separate advice to the unitholder informing them of the direct credit to their account in the case of unitholder opting for the ECS/EFT facility. The AMC may seek certain declaration/additional information to offer facility of ECS/ETF. There is no commitment from the Fund that this facility will be made available to the unitholders for payment of dividend/repurchase proceeds. However, the Fund will endeavour to arrange the facility provided there is sufficient demand for the facility from unitholders at any centre, as required by the authorities and the investor’s data 89
    • matches with that of the Bank. The repurchase warrants will be mailed to the unitholder where such a facility is not available or if the facility is discontinued by the Fund for any reason. The AMC is not responsible & shall not reimburse any charges that may be levied by the bank of the investor who has opted for this facility. It is further clarified that credits through ECS / EFT / NEFT instructions from a third party will not be permitted. xx. Eligibility for investment: The following persons (subject to, whatever relevant, purchase of units of mutual funds being permitted under respective constitutions, and relevant statutory regulations) are eligible and may apply for subscription to the Units of the Scheme. · Resident adult individuals, either singly or jointly (not exceeding three) · Parents/Lawful Guardian on behalf of Minors · Hindu Undivided Family (HUF), in the name of Karta · Companies/Bodies Corporate/Public Sector Undertakings, association of persons or bodies of individuals whether incorporated or not and societies registered under the Societies Registration Act, 1860 (so long as the purchase of units is permitted under the respective constitutions) · Religious and Charitable Trusts, Wakfs or endowments of private trusts (subject to receipt of necessary approvals as required) under the provisions of 11(5) of Income Tax Act, 1961 read with 17C of the Income Tax Rules, 1962 (subject to receipt of necessary approvals as "Public Securities", where required); · Trustee of private trusts authorized to invest in mutual fund scheme under the Trust Deed · Partnership firm in the name of partner(s) · Proprietorship firm in the name of the proprietor · Banks and Financial Institutions · NRIs/ persons of Indian origin residing abroad on full repatriation basis (subject to RBI approval, if any) or non-repatriation basis . Presently OCBs are not permitted to invest in mutual funds pursuant to RBI A.P.(DIR Series) Circular No. 14 dated September 16,2003 · Foreign Institutional Investors (FIIs) registered with SEBI on full repatriation basis (subject to RBI approval, if any ) · Army/Air Force/Navy and other Para Military units and other eligible institutions · Scientific and/or industrial research organisations · International Multilateral Agencies approved by Government of India · Non- Government Provident/Pension/Gratuity funds as and when permitted to invest · Others who are permitted to invest in the Scheme as per their respective constitutions Note : 1 Subject to the Regulations, the Trustee may reject any application received in case the application is found invalid/ incomplete or for any other reason in the Trustee’s sole discretion. 2 Any scheme of JM Financial Mutual Fund or of any other Mutual Fund managed by any other AMC, including a Fund of Fund (subject to the conditions and limits prescribed in Regulations and/or by the Trustee, AMC or Sponsor) may subscribe to the units under the Scheme. The AMC/Trustee /Fund /Sponsor may subject to the limits prescribed by SEBI subscribe to units of this Scheme. The AMC will not be entitled to charge any fees on investments made by the AMC. 3 The Trustee may accept an application from an unincorporated body of persons/trusts. The Trustee may also periodically add and review the persons eligible for making application for purchase of units under the Scheme. If a person who is a resident Indian at the time of subscription becomes a resident outside India subsequently, he/she shall have the option to either be paid repurchase value of Units, or continue into the Scheme if he/she so desires and is 90
    • otherwise eligible. However, the AMC shall not be liable to pay interest or any compensation to such a person during the period it takes for the Fund to record the change in address and the residential status, if he desires to continue in the Scheme. Notwithstanding the aforesaid, the Trustee reserves the right to close the unitholder account and to pay the repurchase value of Units, subsequent to his becoming a person resident outside India, should the reasons of cost, interest of other unitholders and any other circumstances make it necessary for the Fund to do so. Unitholders in whose case there has been a change of status from Resident to Non Resident will not have a right to claim growth in capital and/or income distribution. Where to submit application forms Duly completed application forms for purchase of units under the Scheme along with the payment instrument may be submitted on any business day to any of the official points of acceptance notified by the AMC. An investor should clearly indicate the residential status in the application form. MODE OF PAYMENT Domestic Unitholders: Payment may be made for a minimum amount of Rs. 5,000/- by cheque/draft, drawn locally on any bank which is a member of the Bankers Clearing House located at the place where the application form is submitted. Cheques/drafts must be drawn in favour of “JM Financial “JM Fixed Maturity Fund” and crossed Account Payee only. No receipt will be issued for the application money. The bankers to the offer or their respective designated branches or any authorised collection agents / centres who receive the application form, shall stamp and return the “Acknowledgment Slip” thereby acknowledging receipt of the application form. The investors are requested to preserve the acknowledgment slip duly stamped by the collecting bank / centre etc. This shall be subject to final verification and scrutiny by the bankers / Trustee / AMC that the cheque / demand draft and application form are in order / valid. Note: Returned cheques will not be presented again for collection, and the accompanying application forms shall not be considered for allotment. In the normal course, stockinvests / outstation cheques / outstation drafts are liable to be rejected. However, if the AMC accepts valid applications with outstation cheques/ demand drafts not payable at par at a place where the application is received, closing NAV of the day on which outstation cheques / demand drafts is credited shall be applicable. IMPORTANT Disclosure of Bank Mandate and PAN Number All cheques and bank drafts accompanying the application form should contain the application form number on its reverse. As per the directive issued by SEBI vide their letter IIMARP/MF/CIR/07/826/98 dated April 15, 1998, and SEBI/IMD/CIR No. 6/4213/04 dated March 1, 2004 it is mandatory for applicants to mention their bank account numbers in their applications for purchase or redemption of units. This is to prevent fraudulent encashment of dividend/redemption / refund cheques. In accordance with Circular dated April 27, 2007 issued by the Securities and Exchange Board of India (“SEBI”), Permanent Account Number (“PAN”) issued by the Income Tax authorities will be used as the sole identification number for all investors (existing and prospective) transacting in the securities market, including mutual funds, irrespective of the amount of transaction, with effect from July 02, 2007. SEBI vide its Circular dated June 25, 2007 has further clarified that until December 31, 2007, the existing and potential investors not having PAN , should apply for PAN immediately and 91
    • applications for investment should be accompanied with the evidence of having applied for PAN. In view of the above, with effect from January 1,2008 it is mandatory for all existing and prospective investors (including joint holders, guardians of minors, NRIs etc.) to enclose a verified copy of PAN proof along with the applicationn for any transaction in the schemes of JM Financial Mutual Fund. The verification of the PAN from the original PAN card/ letter can be done by the distributor/ broker through whom the transaction is done if PAN proof is attested by: • investor, or by any one of the following under his/her signature, rubber stamp and date • Bank Manager, • notary, • officials of JM Financial Mutual/ Investor Service Centres of Karvy Computershare Pvt. Ltd. Investors transacting through approved Web Portals are also required to get their PAN verified by their Web Portals. In case, the investor does not conform to the above requirement of submission of verified copy of PAN or produces original PAN proof for verification or the PAN details as per furnished verified copy of PAN proof does not match with the Website of Income Tax Deptt. as prescribed by SEBI, the AMC reserves the right to reject the application before allotment and refund the investment amount, without any interest. In case of inadvertent allotment, the AMC reserves the right to refund the investment amount, without any interest Investors transacting through approved Web Portals are also required to get their PAN validated by their Web Portals. In terms of the Prevention of Money Laundering Act, 2002, the Rules issued there under and the guidelines / circulars issued by SEBI regarding the Anti Money Laundering ("AML Laws"), all intermediaries, including Mutual Funds, have to formulate and implement a client identification programme, verification of identity and address, financial status, occupation and such other personal information. KNOW YOUR CUSTOMER – MANDATORY W.E.F 1st FEBRUARY,2008 With effect from 1st February,2008, all investors (Individuals or Non Individuals) who wish to make an investment of Rs. 50,000 or above in a mutual fund scheme will be required to complete the KYC process. This would also apply to new Systematic Investment Plan (SIP) registrations on or after February 1, 2008, if each SIP installment is of value greater than or equal to Rs. 50,000. KYC Compliance mandatory for all investors (including NRIs) investing Rs. 50,000 or more in a Mutual Fund Joint Holders: Joint holders (including first, second and third if any, are required) to be individually KYC compliant before they can invest with any Mutual Fund. . e.g. in case of three joint holders, all holders need to be KYC compliant and copies of each holder’s KYC Acknowledgement must be attached to the investment application form with any Mutual Fund. Minors: In case of investments in respect of a Minor, the Guardian should be KYC compliant and attach his KYC Acknowledgement while investing in the name of the minor. The Minor,upon attaining majority, should immediately apply for KYC compliance in his/her own capacity and intimate the concerned Mutual Fund(s) with all the folio details, in order to be able to transact further in his/her own capacity. Power of Attorney (PoA) Holder: Investors desirous of investing through a PoA must note that the KYC compliance requirements are mandatory for both the PoA issuer (i.e. Investor) and the Attorney 92
    • (i.e. the holder of PoA), both of whom should be KYC compliant in their independent capacity and attach their respective KYC Acknowledgements while investing. For transmission (In case of death of the unit holder): If the deceased is the sole applicant, the claimant should submit his/her KYC Acknowledgement along with the request and other relevant documents to effect the transmission in his/her favour. KYC Process The Association of Mutual Funds of India (AMFI) has facilitated a centralized platform through CDSL Ventures Limited (“CDSL”), a wholly owned subsidiary of Central Depository Services (India) Limited, to carry out the KYC procedure,free of cost, on behalf of all Mutual Funds. CVL through its Points of Service (POS) will accept KYC Application Forms, verify documents and provide the KYC Acknowledgement (across the counter on a best effort basis). The list of PoS as well as the KYC Application Form will be displayed on our website as well as that of CDSL and AMFI. An investor can complete the KYC Application Form and submit the same along with the necessary documents (including originals if the copies are not attested) to a POS and the KYC Acknowledgement can be obtained from the POS. For obtaining the KYC Acknowledgement: · Individual investors will have to produce his Proof of identity (Photo PAN card copy or PAN card copy and copy of the passport, driving license etc ) and Proof of Address (list of documents as set out in the KYC Application Form for Individuals). · Non –Individual Investors will have to produce certain documents pertaining to its constitution/registration to fulfill the KYC process (list of documents as set out in the KYC Application Form for Non-Individuals). · NRIs/PIOs, in addition to the certified true copy of the passport will also be required to furnish certified true copy of the overseas address and permanent address. If any of the documents (including attestations/ certifications) towards proof of identity or address is in a foreign language, they have to be translated to English for submission. The documents can be attested, by the Consulate office or overseas branches of scheduled commercial banks registered in India. A PIO, in addition, will also be required to submit a certified true copy of the PIO Card. Once the KYC process is duly completed in all regards, the investor needs to produce a copy of the acknowledgement when investing for the first time with a Mutual Fund if the investment is for Rs. 50,000/- or more for fresh investments or additional purchases in an existing folio. An existing investor can inform the Mutual Fund to update the KYC Acknowledgement against all the folios/accounts that he has with the Mutual Fund. However, each of the holders in these folios/accounts should be KYC Compliant. Investors must attach their KYC Acknowledgement along with the Investment Application Form(s) / Transaction Slip(s) while investing for the first time in a mutual fund after 1st February,2008 if the investment is for Rs. 50,000/- or more for fresh investments or additional purchases in an existing folio. Applications Forms / Transaction Slips not accompanied by KYC Acknowledgement are liable to be rejected by the Mutual Fund and no transactions, other than redemption, will be permitted. Investors who have already obtained the Mutual Identification Number Investors who have earlier obtained the Mutual Fund Identification Number (“MIN”) from CVL by 93
    • submitting the PAN copy, can invest in the schemes of the Mutual Fund by enclosing the MIN Acknowledgement along with the Investment Application Form(s) / Transaction Slip(s) while investing for the first time in a Mutual Fund, as the PAN number will be verified by CVL based on MIN. If the MIN was obtained without submitting the PAN but with other proof of identity documents, the investor needs to carry the PAN card in original and a copy for submission at the PoS and obtain the KYC Acknowledgement. Further, SEBI issued circular dated 20th March, 2002, advising all intermediaries to take necessary steps to ensure compliance with the requirement of Section 12 of the Act inter-alia maintenance and preservation of records and reporting of information relating to cash and suspicious transactions to Financial Intelligence Unit-India (“FIU-IND”), New Delhi. The AMC may seek information or obtain and retain documentation used to establish identity. It may re-verify identity and obtain any missing or additional information for this purpose. The AMC, under powers delegated by the Trustee, shall have absolute discretion to seek information from investors, record investor’s telephonic calls, reject any application, prevent further transactions by a Unit Holder, report suspicious transactions to FIU-IND and / or to freeze the folios, if after due diligence, the investor / Unit Holder / a person making the payment on behalf of the investor does not fulfill the requirements of the "Know Your Customer" or the AMC believes that the transaction is suspicious in nature as regards money laundering. In this behalf the AMC reserves the right to reject any application and effect a mandatory redemption of units allotted within such time as may be reasonable or in compliance with any rules, regulations, guidelines, circular, etc. issued by any regulatory authority in this regard from time to time. If the payment for purchase of units are made by a third party (e.g. a Power of Attorney Holder, a Financing Agency, a relative, etc.), the Unit Holder may be required to give such details of such transaction so as to satisfy the AMC of the source and / or consideration underlying the transaction. The KYC documentation shall also be mandatorily complied with by the holders entering the Register of Members by virtue of operation of law e.g. transmission, etc. Applicants / Unit holders may contact our Investor Service Centers / their distributors, if any, for any additional information / clarifications. Also, please visit our website www.JMFinancialmf.com for any other related information. The Schemes will adhere to such guidelines / procedures as have been or may be issued by AMFI / SEBI / or any other regulatory authority in this regard from time to time. MODE OF HOLDING The mode of holding may be “single”, “joint” or “either / anyone or survivor”. When units are held “singly”, all notices, correspondences, distributions, redemptions, etc would be sent to the single holder. In case of more than one investor, where the mode of holding is not specified, it would be treated as a joint holding. JOINT APPLICATIONS/HOLDERS If an account has more than one holder, the first- named holder (as determined by the records of the Registrar) only will receive all notices and correspondence with respect to the Account, as well as the proceeds of any redemption requests or dividends or other distributions. In addition, such holder will have the voting rights, as permitted, associated with such Units. However, all documentation/purchase applications/redemption requests/enrollment forms shall necessarily be signed by all the holders. In case of holdings specified as ‘Jointly’ all requests other than purchases will have to be signed by all the joint holders. However, in the case of holdings specified as ‘Either or survivor’, any one of the joint holders may sign such requests. In such case, all payments and settlements made to the concerned applicant (applying for redemption) would constitute valid discharge by the fund. However under all 94
    • the cases (“joint” or “either/anyone or survivor” , the Fund shall recognise the first named joint holder as the unit holder and all payments and settlements, etc. made to such first-named holder shall be a valid discharge by the Fund and the Fund shall not be liable to any other joint applicants in this regard. Any one of the Joint holders (in case of either / anyone or survivor) shall hold the voting right, if any, associated with the Units and all documentation/purchase applications/redemption requests/ enrolment forms may be signed by any one of the joint holders (in case of either/anyone or survivor) and the Mutual Fund will act on the instructions of the first holder/anyone of the joint account holders. The subsequent clauses on “Nomination” and “Appointment of Beneficiary” further clarifies the position in the event of the death of one of the joint holder or the first holder. Application under Power of Attorney 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, the original Power of Attorney or the certified copy duly notarised together with the relevant resolution or authority to make the application as the case may be, or duly certified copy thereof, along with a certified copy of the memorandum and articles of association and/or bye - laws must be lodged alongwith the application form or request for transfer/transmission and a separate set of all the documents be submitted to the Registrar. The signatures of the power of attorney holder, duly attested, must also be submitted to the Registrar. Subscription by NRI For Applications by Non - Residents of Indian Nationality (NRIs) / Persons of Indian Origin (PIOs) : The Reserve Bank of India vide circular no. FEMA 20/2000 dated May 3, 2000 has granted general permission to domestic mutual funds referred to in clause (23 D) of Section 10 of the Income Tax Act, 1961 to issue units under the schemes floated by them to NRIs / PIOs on non - repatriation / repatriation basis. Accordingly, NRIs / PIOs may invest in Schemes floated by JM Financial Mutual Fund subject to the following conditions :- a) Issue of Units on repatriation basis - The investment should be made by the eligible Non - Resident Investors out of funds remitted from abroad in free foreign exchange through normal banking channels or out of balances held in their NRE / FCNR accounts maintained with authorised dealers in India. Payment may be made by means of Indian Rupees Drafts purchased abroad or by cheque drawn on Non - Resident (External) Accounts / FCNR Accounts payable at par at Mumbai. Payments can also be made by means of drafts payable at Mumbai and purchased out of funds held in Non - Resident (External) Accounts / FCNR Accounts maintained with the banks authorised to deal in foreign exchange in India. b) Issue of Units on non-repatriation basis - The Funds for investment should be provided by eligible non - resident investors by way of inward remittance or by debit to their NRE / FCNR / NRO / NRSR Accounts maintained with authorised dealer in India. The payment procedure is as per (a) stated above. In cases where the investment is made out of inward remittance or from funds held in NRE / FCNR / NRO Accounts of the investor, the maturity proceeds / repurchase price of Units and / or dividend or income earned may be credited to NRO / NRSR account (details of which should be furnished in the space provided for this purpose in the Application Form) of the Non -Resident investor maintained with an authorised dealer in India. In cases where the investment is made out of NRSR account, the maturity proceeds and / or the dividend or income earned should be credited to the NRSR accounts (details of which should be furnished in the space provided for this purpose in the Application Form) maintained by the investor with an authorised dealer in India. 95
    • Refunds, interest and other distribution (if any) and maturity proceeds / repurchase price and / or dividend or income earned (if any) will be payable in Indian Rupees only. The maturity proceeds / repurchase value of units issued on repatriation basis, dividend or income earned thereon, net of taxes (if any), may be credited to NRE / FCNR accounts (details of which should be furnished in the space provided for this purpose in the Application Form) of the Non - Resident Investor or remitted to the Non-Resident investor. Such payments will be converted into US dollars or into any other currency, as may be permitted by the RBI, at the rate of exchange prevailing at the time of remittance and will be dispatched at the unitholder’s risk. The Fund will not be liable for any loss on account of exchange fluctuations, while converting the rupee amount in US dollar or any other currency. Credit of such proceeds to NRE / FCNR account or remittance thereof may be permitted by authorized dealer only on production of a certificate from the Fund that the investment was made out of inward remittance or from the Funds held in NRE / FCNR account of the investor maintained with an authorized dealer in India. However, there is no objection to credit of such proceeds to NRO/NRSR account of the investor if he so desires. Subscriptions by FIIs / Multilateral Funding Agencies FIIs and Multinational Agencies shall pay their subscription by direct remittance from abroad or out of their special non-resident Rupee account maintained with a designated bank in India. Subscriptions by FIIs / Multilateral Funding Agencies, on full repatriation basis, is subject to approval by the Foreign Investment Promotion Board (FIPB). Nomination Facility Pursuant to Regulation 29A of the SEBI Regulations, the AMC is providing an option to the Unit holder to nominate (in the manner prescribed under the SEBI Regulations), beneficiary(s) / successor(s) in whom the Units held by him shall vest in the event of his death. Where the Units are held by more then one person jointly, the joint Unit holders may together nominate a person in whom all the rights in the Units shall vest in the event of death of all the joint Unit holders. However, in the event of death of a minor unitholder, where nomination has been made in the prescribed manner, the rights in the units will not be vested in the nominee but in the legal heirs of the minor. By provision of this facility the AMC is not in any way attempting to grant any rights other than those granted by law to the nominee. A nomination in respect of the Units does not create an interest in the property after the death of the Unit holder. The nominee shall receive the Units only as an agent and trustee for the legal heirs or legatees as the case may be. It is hereby clarified that the nominees under the nomination facility provided herein shall not necessarily acquire any title or beneficial interest in the property by virtue of this nomination and the transmission of units would normally be governed as per succession certificate / probate of the will. Non-individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family, holder of Power of Attorney cannot nominate. The Nominee shall not be a trust other than a religious or charitable trust, society, body corporate, partnership firm, Karta of Hindu Undivided Family or a Power of Attorney holder. A non- resident Indian can be a Nominee subject to the exchange controls in force from time to time. A minor can be nominated and in that event, the name and address of the guardian of the minor nominee shall be provided by the Unit holder. Nomination can also be in favour of the Central Government, State Government, a local authority, any person designated by virtue of his office or a religious or charitable trust. 96
    • Units which are pledged and offered as security in favour of any entity/body for any purpose can also have the nomination facility after obtaining “approval”/ “no objection” clearance from such entity/body. Notwithstanding anything contained in any other law for the time being in force or in disposition, whether testamentary or otherwise, in respect of such pledge units of the scheme, where a nomination made in the prescribed manner purports to confer on any person(s) the right to vest the pledged units of the scheme, on the death of the unitholders (single holder or all the joint holder(s)), the nominee(s) shall become entitled to all the rights in the pledged units of the scheme to the exclusion of all other persons except the entity/body in whose favour the units are pledged by way of lieu, unless the nomination is cancelled or varied. Nomination in respect of the Units stands rescinded upon the Redemption/Repurchase or Transfer of Units by the original unitholder in full. Cancellation of nomination can be made only by those individuals who hold Units on their own behalf singly or jointly and who made the original nomination. On cancellation of the nomination the nomination shall stand rescinded and the Mutual Fund / AMC shall not be under any obligation to transfer the Units in favour of the nominee. The nomination facility extended under the Scheme is subject to existing laws. The AMC shall, subject to production of such evidence which in their opinion is sufficient, proceed to effect the payment to the Nominee. Transfer of Units / payment to the nominee of the sums shall discharge the Mutual Fund / AMC of all liability towards the estate of the deceased Unit holder and his/her/their successors/legal heirs. Appointment of Beneficiary The Mutual Fund is formed as a Trust under the provisions of the Indian Trusts Act, 1882 and the provisions for appointment of beneficiary(s) with regard to Mutual Funds would be as per Section 56, Section 58 and Section 69 (regarding the right of the beneficiary to transfer possession) of the Indian Trusts Act, 1882. The acceptance of such nomination/appointment of beneficiary would be at the entire discretion of the Fund taking into consideration the provisions of the Indian Trusts Act, 1882 and the Mutual Fund assumes no responsibility. Therefore, the unitholder(s) would be liable for the loss resulting from a fraudulent nomination/appointment of beneficiary based on the unitholder(s) (single holder or joint-holders) instructions, that the Fund reasonably believed as genuine. Every unitholder(s) shall appoint upto at least one person as nominee(s)/Beneficiary(s) under the Scheme to receive the benefits (as allocated) hereunder the Scheme in the event of the death of the individual unitholder(s). The nominee(s)/beneficiary(s) can be nominated by the individual unitholder to receive the benefits under the Scheme upon his/her death, as provided in the foregoing clauses(s) on nomination. When units are held jointly and joint names have been inserted, in the event of death of the first or any other holder, the person next in the order as stated in the application form, (unless changed) shall be the only person(s) recognized by the Fund as having any title or interest in the benefits under the Scheme, to the extent provided in the clause(s) on mode of holding. However, in case of joint holdings with a minor as the first holder, the units will be vested in the legal heirs of the minor and not to the joint holder(s), in the event of death of the minor. The nominee(s)/beneficiary(s) nominated can receive the benefits under the scheme, to the extent provided in the foregoing clause(s) on nomination only on simultaneous death of all the joint holders. A nominee/beneficiary shall have the option either to be paid repurchase value of Units, or to continue in the Scheme if he/she so desires and is otherwise eligible, by issuance of account statement in his/her name is he/she has become entitled to hold the Units in consequence of the death of a sole holder or all holders or the person next in the order as stated in the prescribed form (in case of joint holders), insolvency, or by operation of law, pledge or winding up etc., upon producing evidence to the satisfaction of the Fund, and/or after complying with all the formalities in connection with the claim, The Fund will be discharged of all liabilities on payments and settlements made to such nominee/beneficiary and obtaining receipt thereof. Subject to specified conditions, every appointment of a nominee(s)/beneficiary(s) to be made under the Scheme shall be in writing and signed by the 97
    • unitholder(s) and shall remain in full force and effect until the death of the nominee/beneficiary/unitholder(s) or until the same is revoked in writing by the unitholder(s) (by whom the same was made) and a fresh appointment is made in the manner aforesaid. Unitholder(s) have the option to revoke or change the nominee(s)/beneficiary(s) by filling an appropriate form made available. The new appointment of the nominee(s)/beneficiary(s) shall take effect on the date the appropriate form for appointment of the nominee(s)/beneficiary(s) is submitted to the collection centre whether or not the unitholder(s) is/are alive on the date of acknowledgement of the change in nominee(s)/beneficiary(s) without prejudice to the Fund or AMC or Trustee on account of any payment or transmission of Units having been made before the acknowledgement of the change or on account of any delay in payment or transmission of units having been made due to non production of evidence to the satisfaction of the Fund and/or non compliance with all the formalities in connection with the claim. To provide maximum benefits to the unitholders and the nominee(s)/beneficiary(s), the Trustee / AMC may alter these above stated provisions/norms for appointment of beneficiary(s) from time to time to the extent deemed necessary, and also in conformity with the guidelines and Notifications issued by SEBI/GOI/any other regulatory body from time to time and/or any statutory modifications or re-enactment thereof. Distribution of income Declaration of dividends will be subject to availability of distributable profits, as computed in accordance with SEBI (Mutual Funds) Regulations, 1996. All distribution of earnings will be out of distributable surplus and at the discretion of the Trustee. Such distribution may be by way of bonus units or by way of dividend. Under the dividend option, dividends shall be declared at the discretion of the Trustee subject to the availability of distributable surplus. Investors have the choice of dividend payout or dividend reinvestment. In case an investor fails to select his preference, he shall be deemed to have opted for the dividend reinvestment option. However, in case the dividend payable to any unitholder is below Rs. 100/- then the same will be automatically reinvested. An investor of record for the purpose of dividend is an investor who is a Unitholder as of the date when dividend(s) is (are) declared. The Mutual Fund reserves the right to introduce new investment options at a later date or to alter, modify or amend in any manner, any one or all of the existing options with the prior approval of the Trustee. On payment of dividends, the NAV will stand reduced by the amount of dividend and dividend tax (if applicable) paid. Issue of bonus units The Trustee may launch a “bonus” plan in the Scheme at a future date to issue bonus units to the unitholders. The bonus units would be issued to all Unitholders whose names appear in the register of members as on the record date fixed for the purpose. After the allotment of units, fresh account/transaction statements will be sent to all Unitholders . Transfer If units are gifted or in case of change of joint holding or otherwise when unit certificates are held, or if a unitholder wants to sell the units in the market, by operation of law or otherwise upon enforcement of a pledge/charge, then the Trustee / AMC shall effect the transfer, so long as the intended transferee is otherwise eligible to hold the units. The instrument of transfer used for transfer of the units (in case of unit certificates) shall be the same transfer instruments (Form 7B) used for company shares. Appropriate documentation for this may be obtained from the select JM ISCs. 98
    • It is expressly understood that the investor/unitholder is aware of the relevant statutes, tax related provisions etc. pertaining to transfer and he undertakes to abide by the same and shall pay all relevant applicable duties, tax, stamp duty cess, etc. The investor/unitholder should not make any transfer etc. contrary to the relevant statutes, tax related provisions etc. For effecting the transfer, unitholders can request the Fund by writing to the Registrar along with the Account Statement/unit certificate, gift deed instrument and any other documents. The AMC shall on production of instrument of transfer together with relevant unit certificate(s), account statement, etc. register the transfer and return the unit certificate(s) / Account Statement to the transferee within 30 days from the date of such production. Transmission If Units are held in a single name by the Unit Holder, Units shall be transmitted in favour of the nominee where the Unit Holder has appointed a nominee upon production of death certificate or any other documents to the satisfaction of the AMC / Registrar. If the Unit Holder has not appointed a nominee or in the case where the nominee dies before the Unit Holder, the Units shall be transmitted in favour of or as otherwise directed by the Unit Holder's personal representative(s) on production of the death certificate and / or any other documents to the satisfaction of the AMC / Registrar. If Units are held by more than one registered Unit Holder, then, upon death of one of the Unit Holders, the Units shall be transmitted in favour of the remaining Holder(s) (in the order in which the names appear in the register of Unit Holders with the Registrar) on production of a death certificate and / or any other documents to the satisfaction of the AMC / Registrar and to the nominee only upon death of all the Unit Holders. However, in case of joint holdings with a minor as the first holder, the units will be vested in the legal heirs of the minor and not to the joint holder(s), in the event of death of the minor. Pledge of Units The Units of the Scheme under this Offer Document may be offered as security by way of a pledge in favour of scheduled banks, financial institutions, NBFC, or any other body approved by the AMC. The AMC and / or the Registrar will note and record such Pledged Units. However, disbursement of such loans will be at the entire discretion of the bank/financial institution/NBFC/any other regulatory body concerned and the Fund / Trustee / AMC assumes no responsibility thereof. Appropriate documentation for this may be obtained from the select JM ISCs. Rejection of Application and Refund of Application Moneys The Trustee / AMC reserve the right to reject any application not in accordance with the terms of the Fund, without assigning any reason. In case an application is rejected, the application money received will be refunded to the applicant, within six weeks of the date of closure of the subscription list. No interest will be paid on application monies refunded. In the event of failure to refund the amounts within the period specified above, the AMC shall be liable to pay interest to the applicants at a rate of fifteen per cent per annum on the expiry of six weeks from the date of closure of the subscription list. Allotment Allotment of units will normally be done on the last day of the New Fund Offer period and in all cases, before the Plan opens for redemption of units after 3 business days from the closure of the New Fund Offer period. Account Statement / refund warrants (if any) will be mailed within 30 days from the date of closure of the subscription list. 99
    • Allotment is assured to all applicants provided the applications are received during business hours (and the cheque accompanying the application form is realized) are complete in all respects and in order. An offer to purchase units is not binding on and may be rejected by the AMC until it has been confirmed through an Account/Transaction Statement and payment has been received. The Unitholder will be assigned an account number where the number of units allotted to a unitholder or repurchased by a unitholder will be reflected and a statement/advice to this effect will be issued to the unitholder. An account or transaction statement reflecting the unit balance of the unitholder will be mailed to the unitholder by ordinary post, after every financial transaction is effected. The Account Statement is a computer generated statement and is a non transferable document which will indicate the details of transactions under the scheme. It shall normally be dispatched within three business days or after clearance of cheque, whichever is later on an ongoing basis. The Account Statement will be issued in the name of the beneficiary and will carry the name of the investor. Unit certificate Normally no unit certificates will be issued under the Scheme. However, if the unitholder so desires, the AMC shall issue a unit certificate to the unitholder within 6 weeks of the receipt of request for the certificate. The incidental cost of stamp duty paid for issuing the unit certificate may be recovered from the unitholder. or may be charged to the scheme as per annual recurring expenses. Units with depository Units of the Scheme may, if decided by the AMC, be held with a depository. In such as case, the units will be dematerialised in accordance with the provisions of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, as may be amended from time to time. Dematerialisation of existing physical units Necessary request for dematerialization of units can be submitted by the existing unitholders to their respective Depository Participant along with the account statement issued by the Fund. The same number of Units held in the physical mode shall be continued in the demat mode. Requests for dematerialisation shall be processed within the thirty days or such other days as may be stipulated under SEBI Regulations from the date of receipt of such a request, provided it is complete and valid in all respects. Issuance of units in dematerialisation mode may attract stamp duty, cost of which may be recovered from unitholders or may be charged to the scheme as per annual recurring expenses. Rematerialisation of demat units Investors have the option to rematerialise their existing demat Units and can give the rematerialisation request to the respective Depository Participant (DP) of the investor. On receiving the confirmation of demat Units balance, an account statement for the physical Units shall be issued where the same number of Units held in the demat mode shall be continued in the physical mode. The rematerialisation of demat Units shall be processed within thirty days or such other days as may be stipulated under SEBI Regulations from the date of receipt of such a request, provided it is complete and valid in all respects. 100
    • Refunds The AMC shall refund the application money to the applicants if the Mutual Fund fails to receive the minimum subscription amount sought to be raised under the scheme or if the mutual fund receives monies in excess of the subscription amount sought to be retained by it. The refunds shall be dispatched within 30 days of closure of subscription list. REDEMPTION OF UNITS Minimum redemption from existing Unit Accounts would be Rs. 500 or 50 units subject to applicable exit load. Any redemption in excess thereof may be in multiples of Re.1/- subject to keeping minimum balance of 500 units or Rs. 5000/-, whichever is less. In the event of remaining balance falling below the minimum balance of 500 units or Rs.5000 (whichever is less) while processing redemption/switch requests, the entire outstanding units redeemed. Units purchased by cheque may not be redeemed until after realisation of cheque. A Unitholder has the option to request for redemption either in Rupees or in number of Units. If the redemption request indicates both amount in Rupees and number of Units, the lower of the two values will be considered. Where a Rupee amount is specified or deemed to be specified for redemption, the number of Units redeemed will be the amount redeemed divided by the redemption price. Alternatively, a Unitholder can request closure of his account, in which case the entire unit balance lying to the credit of his account will be redeemed. The Fund reserves the right to redeem the entire amount lying to the credit of the Unitholder’s account if · after redemption, the amount lying to the credit of the Unitholder’s account falls below the minimum balance; or · the redemption request amount exceeds the balance lying to the credit of the Unitholder. The number of Units so redeemed will be subtracted from the Unitholder’s account and a statement to this effect will be issued to the Unitholder. The Unitholders may also request for repurchase of their entire holding and close the account by indicating the same at the appropriate place in the Transaction Slip/Repurchase form. Redemption Payments All redemption payments would be in favour of the Unitholder’s registered name with bank mandate wherever applicable. The Fund will endeavour to dispatch the redemption cheque/draft within 10 Business Days from the date on which the redemption transaction is effected. The Redemption Price will be published in a daily newspaper either through an advertisement or by way of a press release on a daily basis. It will be available, however, at the office of the AMC on all business days. Split in the face value of units / consolidation of units The units under the Scheme are presently being issued at the face value of Rs. 10. In order to protect the interest of the unitholders, the AMC may split the face value of the units to below Rs. 10 in multiple of an appropriate integer or consolidate units to an appropriate integer. The units after split/consolidation in the face value would be issued to all Unitholders whose names appear in the register of members as on the record date fixed for the purpose. The NAVs of the Scheme will be adjusted to the extent of the split / consolidation in the face value of units after the record date fixed for the purpose. After the split / consolidation procedure is completed, fresh account/transaction statements will be sent to all unitholders. 101
    • Suspension of Redemption and Switching of Units Redemption of units may be suspended temporarily or indefinitely when any of the following conditions exist: i. BSE/NSE stops functioning or trading is restricted; ii. Period of extreme volatility in the stock market, which, in the opinion of the AMC, is prejudicial to the interest of the Unitholders; iii. A complete breakdown or dislocation of business in the major financial markets or breakdown in the means of communication used for the valuation of investments in the Scheme(s), without which the value of the securities held in the Scheme(s) cannot be accurately calculated; iv. In the event of any force majeure or disaster that affects the normal functioning of the AMC or the JM ISC; v. Declaration of war or occurrence of insurrection, civil commotion or any other source or sustained financial political or industrial emergency or disturbance; vi. SEBI / any other regulatory authority by order so permits; vii. On a requisition made by three-fourths of the Unitholders The AMC reserves the right in its sole discretion to withdraw the facility of redemption of units temporarily or indefinitely, if the AMC views that changing the size of the corpus further may prove detrimental to the existing Unitholders of the Scheme. However the suspension of sale/repurchase/ switch either temporarily or indefinitely will be made applicable only after approval of the Boards of the AMC and Trustee. The approval from the Boards of AMC and Trustee giving details of circumstances and justification for the proposal shall also be informed to SEBI in advance. An offer to purchase units is not binding on and may be rejected by the AMC unless it has been confirmed in writing by the AMC and payment has been received. Note: The Investment Manager may restrict or refuse an application for investments if it perceives that the same may have a potentially detrimental effect to the interests of the Scheme, in particular a pattern of investments that may coincide with the market timing strategy that may be detrimental to the Scheme. Right to limit repurchases / redemptions Keeping in view the unforeseen circumstances/unsure conditions, the AMC may, in the general interest of the unitholders of the Scheme, limit the total number of units which may be repurchased on any Business Day to 15% of the total number of units of the Scheme (or such higher percentage as the AMC may decide in any particular case). In the event of any units not being repurchased on a particular Business Day by virtue of the foregoing clauses, will be carried forward for repurchase to the next Business Day, in order of receipt and will be priced on the basis of the Repurchase Price of the Business Day on which repurchase is made. Under such circumstances, to the extent multiple repurchase requests are received at the same time on a single Business Day, repurchase will be made on pro-rata basis, based on the size of each repurchase request, the balance amount being carried forward for repurchase to the next Business Day(s). 102
    • Possible deferral of redemption/repurchase requests The Fund will endeavor to ensure that the Scheme has sufficient liquidity to enable the repurchase cheques to be collected/despatched within the deadline stated in the foregoing clause. However where the Scheme is obliged to arrange for the disposal of the underlying securities/ borrow, in order to satisfy redemption/repurchase requests, unitholders may experience some delays in receiving repurchase cheques, reflecting the time involved in settling the underlying sales of securities/borrowing. However, the Fund will ensure that the collection/despatch of repurchase cheques is not delayed beyond ten working days (when JM Financial Mutual Fund is open for business) from the date of receipt of the repurchase request in accordance with Regulation 53(b) of the Regulations. Amount set-off The AMC reserves the right to debit / set-off dividend amounts, redemption amounts or any other amounts payable under and in accordance with the Scheme(s) against redemption proceeds which have been paid by the Fund/AMC in lieu of units created without realization of the subscription amounts and/or against any excess payments made to such investor pursuant to the Scheme or under any other scheme of the Fund managed by the AMC in the same folio or any other folio in the Fund. In case of redemption amounts/ excess payments made by cheques and/or by way of direct credit or by any payment instrument/mechanism, set-off, as aforesaid, by the AMC/Fund, would be effected whether or not the cheques have been encashed or whether or not the direct credit has been made in the investors account or whether or not the payment instrument/mechanism has been encashed/debited by the Unitholder / Investor. Further to the provisions of Section 138 of the Negotiable Instruments Act, 1881, where a cheque/payment instrument drawn and given to the Fund by a Unitholder/Investor towards subscription amounts under this Scheme or under any other scheme of the Fund is returned by the bank unpaid, for any reason, and Units are created in good faith, on the bona fide assumption that the cheques will be fully honoured on presentation, without the realization of the subscription amounts, the AMC/Fund reserves the right to debit/set-off dividend amounts, redemption amounts or any other amounts payable to the Unitholder/Investor under and in accordance with the Scheme or under any other scheme of the Fund managed by the AMC in the same folio or any other folio in the Fund, to make good the loss suffered by the AMC/ the Fund due to interest paid on borrowed funds/excess withdrawal of the amount and the resultant difference, if any, in NAV arising out of revertal of units so created due to non-realization of the subscription cheque/payment instrument. In addition to the above and further to the provisions of Section 138 of the Negotiable Instruments Act, 1881, where a cheque/payment instrument drawn and given to the Fund by a Unitholder/Investor towards subscription amounts under this Scheme or under any other scheme of the Fund is returned by the bank unpaid, for any reason, and Units are created without the realization of the subscription amounts, the AMC/Fund reserves the right to debit/set-off brokerage amounts, incentive amounts or any other amounts payable under and in accordance with the Scheme or under any other Scheme of the Fund managed by the AMC in the same folio or any other folio in the Fund to the broker/distributor who has mobilized the subscription of such defaulting Unitholder/Investor, to make good the loss suffered by it due to interest paid on borrowed funds/excess withdrawal of the amount and the resultant difference, if any, in NAV arising out of revertal of units so created due to non-realization of the subscription cheque/payment instrument. THE FOREGOING WILL BE WITHOUT PREJUDICE TO ALL RIGHTS AND REMEDIES AVAILABLE TO THE AMC/FUND UNDER THE NEGOTIABLE INSTRUMENTS ACT, 1881 OR OTHERWISE AT LAW. 103
    • Closure of unitholder’s account The AMC at its sole discretion may close a unitholder’s account after giving notice of 45 days, if at the time of any part repurchase and/or Systematic Withdrawal/Switch Plan, the value of units (represented by the units in the unitholder’s account if such repurchase were to take place, valued at the applicable NAV related price), falls below the minimum investment/balance required for each scheme (or such other amount as the AMC may decide from time to time) or where the units are held by a unitholder in breach of any Regulation. The AMC also has the right to, at its sole discretion, to redeem appropriate number of units so as to recover the differential/additional entry load or refuse to credit appropriate number of units to the account of the unitholder for the differential/additional entry way in the event of entry load being waived and/or the investor falls under the category where the entry load is to be waived or otherwise and the investor then does not invest the requisite amount or the investor does not submit the requisite proof. INVESTOR SERVICING Response Time Following will be the response time for the Mutual Fund with regard to various investor services, provided the Unitholder furnishes the Mutual Fund with all the required correct and complete supporting legal documents. Initial Offer Activity Response Time Mailing / Despatch of Account Within 30 days from date of closure of subscription Statement list. Ongoing Activity From date of receipt of request Redemption Proceeds The Fund will endeavor to dispatch the redemption cheque/draft within 10 business days from the date on which the redemption transaction is effected. Address Change Within 10 business days Ownership Transfer/Transmission Within 30 business days These response times will be effective from the date of receipt of documents, complete in all respects at the office of the Registrar and Transfer Agents. The Fund will strive to provide good services to its investors by; 1. extensively using technological tools in rendering unitholder service i.e. The Fund will endeavour to send the Account Statements (on account of financial and/or non-financial transactions) e.g., allotment of units in lieu of distribution of periodic dividend, besides periodic information etc by way of e-mail, which is speedier. Other financial transactions (subscription of units) may also be conveyed to the unitholders by way of e-mail, wherever requested, subject to such safeguards the Fund may deem necessary. 2. providing unitholder service through its centers. Unitholders’ enquiries and transactions during business hours will be entertained at the AMC’s centres. Unitholders/investors can also write/e-mail/contact them at the AMC’s corporate office at Mumbai. The AMC already has its service centres at various locations to handle unitholder enquiries and transactions, besides providing a high degree of convenience to the unitholders. 104
    • 3. making available an Investor Relation personnel of the AMC on any business day between normal official hours of the AMC for personal meeting with any unitholder, to attend to any query related to investment needs of a unitholder, resolve any unitholder service related queries through the Registrar and to provide such other services that the unitholder desires. 4. the AMC provides SMS alert facility to its investors providing financial and non-financial information about their transactions eg. sale, purchase, dividend declarations, change in facilities, etc. This facility is currently offered free of cost to all investors whose mobile numbers are registered with the Fund / who register themselves for the facility by writing to the Registrar and Transfer Agent, mentioning their folio numbers and mobile numbers. SIGNATURE VERIFICATION/ INDEMNITY The AMC may insist on signature verification by a bank manager or a notary public or a magistrate or any other party acceptable to the Fund, in case of the following transactions - Redemption of Rs. 10,000,000/- or more from an individual/joint holder account - If the redemption cheque is payable to other than the unitholder, the sponsor or its affiliates/associates. - To make a dividend sweep from a folio/account with joint holders to a folio/account with only one holder or different joint holders. - To change ownership of a folio/account. - To change bank account information designated under an existing plan - To have a redemption cheque mailed to an address other than the addresses on the folio/account or to the address on the folio/account if it has been changed within the preceding month - To switch among folios with different ownership - To issue duplicate unit certificate. - To change or introduce nomination/appointment, if the ownership of the folio/account has been changed within the preceding month. 11.0 RIGHTS OF UNITHOLDERS i. The Account Statement will be issued within 30 days from the date of closure of the subscription list. ii. Where the minimum subscription amount is not received, the investors are entitled to the issuance of refund order within six weeks from the date of closure of the subscription list by Registered Post and marked “A/c Payee” and in the event of the failure of the Fund to send the refund amount by Registered Post within the stipulated period, the investors are entitled to interest at the rate of 15% p.a. from the expiry of six weeks from the closure of the subscription list. iii. In the event of failure to dispatch the redemption or repurchase proceeds within 10 working days, from the date of receipt of valid request for redemption in all respects, the AMC will be liable to pay interest @ 15% per annum to the Unitholders, such interest shall be borne by the AMC. iv. The scheme wise Annual Report of the JM Financial Mutual Fund or an abridged summary shall be published through an advertisement and an abridged scheme wise annual report shall be mailed to all Unitholders as soon as may be but not later than six months from the date of the closure of the relevant financial year. Whenever the report is published in summary form, a copy of the unabridged Annual Report shall be available for inspection at the corporate office of the Trustee and a copy thereof shall be made available to the Unitholders on payment of such fees as may be specified by the Fund. v. The Fund shall publish its unaudited financial results before expiry of one month from the close of each half year that is on 31st March and 30th September, in one national English daily newspaper circulating in the whole of India and in a newspaper in the language of the region where the Head Office of the Fund is situated. These shall also be displayed on the web site of the mutual fund and that of AMFI. 105
    • vi. Unitholders under the Scheme have a proportionate right in the beneficial ownership of the assets of and to the dividend/ bonus declared, if any, by the Fund for the Scheme. vii. The appointment of the AMC can be terminated by majority of the Directors of the Trustee or by 75% of the Unitholders of the Scheme. viii. The dispatch of dividend warrants shall be made within 30 days of the declaration of the dividend and dispatch of redemption or repurchase proceeds shall be made within 10 Business Days from the date of effecting the redemption or repurchase. ix. Regulation 18(15) inter alia provides that the Trustee shall obtain the consent of Unitholders whenever required to do so by SEBI in the interest of the Unitholders; or on the requisition made by three fourth of the Unitholders of any scheme, or when the majority of the Directors of the Trustee decide to wind up or prematurely redeem the Units. Regulation 18(15A) of the SEBI Regulations provides that the Trustee shall ensure that no change in the fundamental attributes of any scheme or the trust or fees and expenses payable or any other change which would modify the scheme and affects the interest of Unitholders, shall be carried out unless, (i) a written communication about the proposed change is sent to each unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; and (ii) the unitholders are given an option to exit at the prevailing Net Asset Value without any exit load. The Fund shall follow the following procedure while seeking the approval/consent of the Unitholders: (a) The Fund shall call for the meeting of the Unitholders in the city where the Registered Office of the AMC is located or in any other city: Provided, 30 days prior to the date fixed for the meeting of the Unitholders, more than 75% of the Unitholders of the Scheme fall within the Jurisdiction of the city limit of the city where such meeting is being convened. Alternatively (b) The Fund shall call for consent of the Unitholders through postal ballot wherein atleast 21 days notice shall be given to the Unitholders to express their consent on the approval being sought. In both the above cases, the consent shall be obtained from the Unitholders on the principle of ‘one folio one consent/vote’. 11.1 VOTING RIGHTS Subject to the provisions of the SEBI Regulations as amended from time to time, the consent of the Unitholders shall be obtained, entirely at the option of the Trustee either at a meeting of the Unitholders or through postal ballot. Only one Unitholder in respect of each folio or account representing a holding shall vote and he shall have one vote in respect of each resolution to be passed. 11.2 NAV INFORMATION The NAVs of the Plans / Scheme shall be published either through an advertisement or by way of a press release, at least in two daily newspapers on a daily basis (of which at least one will be a daily newspaper of all India circulation). The first NAV will be announced before the Scheme re-opens for repurchase after New Fund Offer period. NAVs will be updated on the websites of AMFI (www.amfiindia.com) and the Fund (http://www.JMFinancialmf.com) by 9.00 p.m. every day. 106
    • 11.3 REGISTER OF UNITHOLDERS The following provisions shall have effect with regard to the registration of the Unitholders : 1. In all cases where Units are held in the name of two or three persons and in all matters concerning the Fund, it shall be deemed that the first of such persons is the holder of the Units and all correspondence, if any, shall be competent only by the first of such persons; 2. All payments and settlements made to the first holder and a receipt thereof shall be a valid discharge by the Fund. The Fund shall for all purposes correspond only with the first holder and all communications with the first holder including information on the working of the Fund shall be deemed to be a valid discharge by Trustee of its obligations; 3. Any change in the name and address of the Unitholder shall be notified to the JM ISCs. The AMC shall on being satisfied of such change and on compliance with such formalities as may reasonably be required, record the changes accordingly. 4. Subject to the provisions herein contained, the Trustee and the AMC shall not receive notice of any trust, express, implied or constructive, nor shall they be bound to consider any such notice in respect of Units in the Register except when so directed by a Court of Competent Jurisdiction. 5. In the event of death of a holder, any other person being entitled to the Units, upon recognition of the claim in such manner as the AMC may deem necessary, shall be registered as the holder of the Units. 6. In the case of death of a joint holder, the survivor(s) shall be the only person(s) recognized by the Fund as having any title or interest in the Units. In the event of death of the sole Unitholder at any time during the life of the Fund, the legal heirs will be recognized claimants to the outstanding Units on complying with the necessary formalities as may be stipulated by the Trustee/ AMC from time to time. 7. A person becoming entitled to the Units in consequences of the death, insolvency or winding up of a sole holder or the survivor(s) of joint holders, upon producing evidence to the satisfaction of the AMC shall be registered as the holder of the Units or permitted to transfer the Units, as the case may be, upon such terms as the AMC may determine. 11.4 DISCLOSURES Disclosures to the investors The Trustee shall make such disclosures to the investors as are essential in order to keep them informed about any information which may have an adverse bearing on their investments. 11.4.1 Portfolio Disclosure The Fund shall disclose full portfolio of the Plans / Scheme to the respective Unitholders before the expiry of one month from the close of each half year (i.e. 31st March and 30th September) in the prescribed format as per SEBI circular MFD/CIR/9/120/ 2000 dated 24th November 2000 in one national English daily newspaper and in a newspaper in the language of the region where the Head Office of the Fund is situated or send a copy to all the Unitholders. 107
    • 11.5 WINDING UP The Scheme may be wound up if: - i. There are changes in the capital markets, fiscal laws or legal system, or any other event or series of events occurs, which in the opinion of the Trustee, requires the Scheme to be wound up; or ii. Seventy five percent of the Unitholders of the Scheme pass a resolution that the Scheme be ;wound up; iii. SEBI directs the Scheme to be wound up in the interests of the Unitholders. Where a Scheme is to be wound up upon happening of the events specified above, the Trustee shall give notice of the circumstances leading to the winding up of the Scheme: a) to SEBI; and b) in two daily newspapers having circulation all over India and also in a vernacular newspaper circulating at the place where the mutual fund is established. 11.5.1 PROCEDURE AND MANNER OF WINDING UP i. The Trustee shall call a meeting of the Unitholders to consider and pass necessary resolutions by simple majority of the Unitholders present and voting at the meeting for authorizing the Trustee or any other person to take steps for winding up the Scheme: Provided that a meeting of the Unitholders shall not be necessary if the Scheme is wound up at the end of the maturity period of the Scheme. a) The Trustee or the person authorised as above, shall dispose of the assets of the Scheme concerned in the best interests of the Unitholders of the Scheme b) The proceeds of the sale realized made in pursuance of the above, shall in the first instance be utilised towards discharge of such liabilities as are properly due under the Scheme and after making appropriate provision for meeting the expenses connected with such winding up, the balance shall be paid to the Unitholders in proportion to their respective interest in the assets of the Scheme as on the date when the decision for the winding up was taken. ii. On the completion of the winding up, the Trustee shall forward to SEBI and the Unitholders, a report on the winding up containing particulars such as circumstances leading to the winding up, the steps taken for disposal of assets of the fund before winding up, expenses of the fund for winding up, net assets available for distribution to the Unitholders and a certificate from the Auditors of the Fund. iii. Notwithstanding anything contained herein, the provisions of SEBI Regulations in respect of disclosures of half-yearly reports and annual reports shall continue to apply, until winding up is complete or the Scheme ceases to exist. After the receipt of report referred to above under “Procedure and Manner of Winding up” if SEBI is satisfied that all measures for winding up of the Scheme have been complied with, the Scheme shall cease to exist. 12.0 ACCOUNTS, AUDIT AND TAX BENEFITS The accounts of the Scheme will be maintained by the AMC under the supervision of the Trustee. The final accounts will be drawn up to 31st March annually. M/s. N.M. Raiji & Co., Chartered Accountants, are the auditors for the Trustee as well as the Fund. 108
    • 12.1 TAX BENEFITS The following tax benefits are available to investors and the Fund under the present taxation laws. The information set forth below is based on the advice of the Fund's tax advisor and is included for general information purposes only. The information set forth below reflects the law and practice as of date of this Offer Document. In view of the individual nature of tax consequences, each investor is advised to consult his or her own tax adviser with respect to the specific tax consequences to him or her of participation in the scheme. The disclosures regarding Income Tax / Wealth Tax / Gift Tax / Capital Gains Tax / Investments by NRIs / FIIs are in conformity with the prevalent I. T. Act, Foreign Exchange Management Act, 1999 and RBI's directions and permissions in this regard. The following information is based on the law in force in India at the date hereof. The subscriber should seek advice from his/her/its own professional advisor if he/she/it is in any doubt regarding the taxation consequences of investing in the Fund. 12.1.1 TO THE FUND The income of the Fund registered under the SEBI Act, 1992 (15 of 1992) or regulations made there under will be exempt from income tax in accordance with the provisions of section 10(23D) of the I.T. Act. The income received by the Fund is not liable for deduction of tax at source. As per Section 115R of the I.T.Act, the Fund is liable to pay additional income tax on the income distributed by it. At the same time, in view of the provisions of Section 196(iv) of the Act, the fund will receive all income without any deduction of tax at source. 12.1.2 TO THE UNITHOLDERS A. INCOME RECEIVED FROM MUTUAL FUND According to Section 10(35) of the I.T. Act, any income received in respect of units of the Mutual Fund specified under Section 10(23D) will be exempt from income tax in the hands of the Unitholders. Further, it has been clarified that income arising from transfer of units of Fund shall not be exempt under Section 10(35). B. LONG TERM CAPITAL GAINS ON TRANSFER OF UNITS Long-term capital gains on sale of units of Mutual Funds other than equity oriented funds are not exempt from income tax under Section 10(38) of the Act in the hands of unit holders. The provisions for taxation of long-term capital gains for different categories of assessee are explained hereunder : i) For individuals , HUFs, partnership firms, non-residents, Indian companies, foreign companies Long-term capital gains in respect of Units of Mutual Fund held for a period of more than 12 months will be chargeable under Section 112 of the Act, at a rate of 20% plus surcharge, as applicable and cess. Capital gains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly and exclusively in connection with such transfer. In the case where taxable income as reduced by long term capital gains is below the exemption limit, the long term capital gains will be reduced to the extent of the shortfall and only the balance long term capital gains will be charged at the flat rate of 20% plus surcharge, as may be applicable and cess. 109
    • It is further provided that an assessee will have an option to apply concessional rate of 10% plus applicable surcharge and cess, provided the long term capital gains are computed without substituting indexed cost in place of cost of acquisition. ii) For Non-resident Indians Under Section 115E of the Act for non-resident Indians, income by way of long-term capital gains in respect of Units is chargeable at the rate of 20% plus applicable surcharge and cess. Such long-term capital gains would be calculated without indexation of cost of acquisition. Non-resident Indians may opt for computation of long term capital gains as per Section 112, which is more beneficial. iii) For Overseas Financial Organisations, Foreign Institutional Investors fulfilling conditions laid down under section 115AB (Offshore Fund) Under Section 115AB of the Act, income by way of long-term capital gains in respect of units purchased in foreign currency held for a period of more than 12 months will be chargeable to tax at the rate of 10%, plus applicable surcharge and cess. Such gains would be calculated without indexation of cost of acquisition. C. SHORT TERM CAPITAL GAINS ON TRANSFER OF UNITS Short term capital gains in respect of Units held for a period of not more than 12 months is added to the total income. Total income including short-term capital gains is chargeable to tax as per the relevant slab rates. D. CAPITAL LOSSES Losses under the head "Capital Gains" cannot be setoff against income under any other head. Further within the head "Capital Gains", losses arising from the transfer of long-term capital assets cannot be adjusted against gains arising from the transfer of a short-term capital asset. However, losses arising from the transfer of short-term capital assets can be adjusted against gains arising from the transfer of either a long-term or a short-term capital asset. Unabsorbed short-term capital loss can be carried forward and set off against the income under the head Capital Gains in subsequent eight assessment years. According to Section 94(7) of the I.T. Act, if any person buys or acquires units within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of nine months from such record date, then losses arising from such sale to the extent of income received or receivable on such units, which are exempt under the I.T. Act, will be ignored for the purpose of computing his income chargeable to tax. Further, Sub-section (8) of Section 94 provides that, where additional Units have been issued to any person without any payment, on the basis of existing units held by such person then the loss on sale of original units shall be ignored for the purpose of computing income chargeable to tax, if the original units were acquired within three months prior to the record date fixed for receipt of additional units and sold within nine months from such record date. However, the loss so ignored shall be considered as cost of acquisition of such additional units held on the date of sale by such person. 110
    • E. TAX DEDUCTION AT SOURCE i. For income in respect of units: No tax shall be deducted at source in respect of any income credited or paid in respect of units of the Fund as per the provisions of Section 10(35), Section 194K and Section 196A of the I.T. Act. ii. For Capital Gains: (a) In respect of Resident Unit holders: No tax is required to be deducted at source on capital gains arising to any resident Unit holder (under section 194K) vide circular no. 715 dated August 8, 1995 issued by the Central Board for Direct Taxes (CBDT). Further, no tax is required to be deducted at source from capital gains arising at the time of repurchase or redemption of the units. (b) In respect of Non- Resident Unit holders: As per the provisions of Section 195 of the Act, tax is required to be deducted at source from the redemption proceeds paid to investors; this withholding is in addition to the securities transaction tax payable, if any, by the investor. Under Section 195 of the I.T. Act, tax shall be deducted at source in respect of capital gains as under: Ø In case of non-resident unitholders - Short term capital gains 30% plus surcharge and cess Long term capital gains 20% plus surcharge and cess Ø In case of foreign company - Short term capital gains 40% plus surcharge and cess No tax would be deductible at source from the capital gains (whether long-term or short-term) arising to an FII on repurchase/redemption of units in view of the provisions of Section 196D (2) of the Act. As per circular no. 728 dated October 1995 by CBDT, in the case of a remittance to a country with which a Double Taxation Avoidance Agreement (DTAA) is in force, the tax should be deducted at the rate provided in the Finance Act of the relevant year or at the rate provided in DTAA whichever is more beneficial to the assessee. F. INVESTMENTS BY CHARITABLE AND RELIGIOUS TRUSTS Units of a Fund Scheme referred to in clause 23D of section 10 of the Income Tax Act, 1961, constitute an eligible avenue for investment by charitable or religious trusts per rule 17C of the Income Tax Rules, 1962, read with clause (xii) of sub-section (5) of Section 11 of the Income Tax Act, 1961. G. WEALTH TAX Units held under the Mutual Fund Scheme are not treated as assets within the meaning of section 2(ea) of the Wealth Tax Act, 1957 and are, therefore, not liable to Wealth-Tax. H. GIFT TAX The Gift-tax Act, 1958, has ceased to apply to gifts made on or after 1st October 1998. Gifts of Units, purchased under the Scheme, would therefore, be exempt from gift-tax. Note: All tax benefits will be available only to the sole Unitholder or the first named holder in case the units are held in the names of more than one person. 111
    • 13.0 OTHER MATTERS 13.1 GENERAL The Mutual Fund, Trustee., as well as the AMC would always adhere to the provisions of SEBI Regulations as amended from time to time as well as any guidelines/directives issued by SEBI as in force at any point in time, notwithstanding anything mentioned in this Offer Document. 13.2 ASSOCIATE TRANSACTIONS Investment in Group Companies As on date of this Offer Document, the Schemes have not made any investment in any of the securities of group companies. Historical information on associate transactions for the last three years is given below: Name of the Associate Year Type of Amount Percentage Percentage of Transaction (Rs. in of Total Total Purchase/Sale lacs) business brokerage paid (%) JM Financial Securities Pvt. Ltd. 2004-05 Purchase 13218.72 (earlier known as JM Morgan Stanley Fixed Income Securities Pvt. Ltd.) 2.18 0.33 JM Financial Securities Pvt. Ltd. 2004-05 Sale 10340.57 (earlier known as JM Morgan Stanley Fixed Income Securities Pvt. Ltd.) Morgan Stanley India Co. Pvt. Ltd. 2004-05 Purchase 257.94 (earlier known as JM Morgan Stanley Securities Pvt. Ltd.) 0.87 0.08 Morgan Stanley India Co. Pvt. Ltd. 2004-05 Sale 589.44 (earlier known as JM Morgan Stanley Securities Pvt. Ltd.) Morgan Stanley India Co. Pvt. Ltd. 2004-05 Purchase 187.94 (earlier known as JM Morgan Stanley Securities Pvt. Ltd.) 0.69 0.07 Morgan Stanley India Co. Pvt. Ltd. 2004-05 Sale 542.36 (earlier known as JM Morgan Stanley Securities Pvt. Ltd.) JM Financial Securities Pvt. Ltd. 2005-06 Purchase 6661.40 (earlier known as JM Morgan Stanley Fixed Income Securities Pvt. Ltd.) 0.785 0.059 JM Financial Securities Pvt. Ltd. 2005-06 Sale 7862.39 (earlier known as JM Morgan Stanley Fixed Income Securities Pvt. Ltd.) Morgan Stanley India Co. Pvt. Ltd. 2005-06 Purchase 194.83 (earlier known as JM Morgan 0.011 0.053 Stanley Securities Pvt. Ltd.) 112
    • Morgan Stanley India Co. Pvt. Ltd. 2005-06 Sale - (earlier known as JM Morgan Stanley Securities Pvt. Ltd.) JM Financial Services Pvt. Ltd. 2005-06 Purchase 150.17 (earlier known as JM Morgan 0.008 0.017 Stanley Financial Services Pvt. Ltd.) JM Financial Services Pvt. Ltd. 2005-06 Sale - (earlier known as JM Morgan Stanley Financial Services Pvt. Ltd.) JM Financial Securities Pvt. Ltd. 2006-07 Purchase 4273.47 (earlier known as JM Morgan Stanley Fixed Income Securities Pvt Ltd) 0.212 0.018 JM Financial Securities Pvt. Ltd. 2006-07 Sale 532.31 (earlier known as JM Morgan Stanley Fixed Income Securities Pvt Ltd) The above transactions have been executed and completed during normal course of business of JM Financial Mutual Fund. These transactions have not impacted the performance of the schemes other than the normal market related impact. The relevant Schemes and considering long term prospects and/or yield on investments. Subscription in issues lead managed by associate companies Bank of India Binani Zinc Limited Corporation Bank Escorts Financial Services Limited Essar Oil Limited Fortis Financial Services Limited GIC Housing Finance Limited Hindustan Petroleum Corporation Limited ICICI Banking Corporation Limited IDBI L & T (Bond Issue) Rajinder Pipes Limited Shriyam Securities & Finance Limited Simbhaoli Securities & Finance Limited Suashish Diamond Limited The Sandesh Limited Cadilla Healthcare Ltd PNB Gilts Ltd Hughes Software Ltd HCL Technologies Ltd Aztec Software Technology Services Ltd. Balaji Telefilms Ltd Indian Oil Corporation Steel Authority of India Ltd. Bharti Televentures Ltd. Maruti Udyog Ltd. UCO Bank Vijaya Bank Indraprastha Gas T.V. Today Network Ltd. IPCL ONGC NDTV Tata Consultancy Services Ltd. Punjab National Bank Shingar Cinema Shoppers Stop IDFC Bank of Baroda Suzlon Energy 113
    • GVK Power & Infrastructure Limited Entertainment Networks (India) Limited Reliance Petroleum Limited Development Credit Bank Limited Parsvnath Developers Limited Idea Cellular Limited MindTree Consulting Limited Global Broadcast News Limited Apollo Tyres Ltd. Omaxe Ltd. Koutons Retail India Ltd. Mudra Port & Special Economic Zone Ltd. Edelweiss Capital Limited JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Stanley Private Limited), as an advisor to the New Fund Offer for JM Emerging Leaders Fund, was paid a fixed fee of Rs. 20 Lacs and additional performance fee of 0.40% of the amount mobilized for executing the transaction. During the year, the Mutual Fund has made the following investments in companies which hold/ have held units in excess of 5% of the net assets of any schemes of the Mutual Fund. Aggregate investment Scheme in by Scheme in Aggregate which Name of Scheme by securities of investment investment Company which the Company outstanding as on is made by (Investor) investment is during the December 31, the made in specified 2007 (At Market Company securities of period (Rs. in Value) (Rs. in the company Lacs) Lacs) JM High Axis Bank Liquidity JM High Liquidity Fund Fund 14129.30 JM Equity & Derivative Fund 3318.90 50.02 JM Fixed Maturity Fund Series III - Q-5 2500.00 JM Fixed Maturity Fund Series IV - 15M1 800.00 800.00 JM Fixed Maturity Fund Series IV - Q-1 5000.00 JM Fixed Maturity Fund Series IV - Q-2 3200.00 JM Fixed Maturity Fund Series IV - Q-3 2000.00 JM Fixed Maturity Fund Series IV - Q-4 6300.00 JM Fixed Maturity Fund Series IV - Yearly 600.00 600.00 JM Financial Services Fund 49.15 JM Arbitrage Advantage Fund 13928.24 250.09 114
    • JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 589.44 290.10 JM Income Fund 487.01 JM Monthly Income Plan 20.70 20.01 JM Short Term Fund 859.83 JM Money Manager Fund- Regular Plan 1609.33 JM Money Manager Fund- Super Plan 1294.38 JM Money Manager Fund- Super Plus Plan 10172.07 8,569.72 JM Fixed Maturity Fund Series V - Q-2 1544.46 JM Fixed Maturity Fund Series V - Q-5 3072.20 JM Fixed Maturity Fund Series VI - Q-3 1534.36 JM Floater Fund- Short Term Plan 0.00 890.30 JM High Bank of Baroda Liquidity JM Equity & Fund Derivative Fund 973.03 JM Financial Services Fund 26.40 JM Arbitrage Advantage Fund 6605.58 456.84 JM Emerging Leaders Fund 57.47 JM HI FI Fund 395.52 JM High Central Bank of Liquidity JM Arbitrage India Fund Advantage Fund 1076.52 298.87 JM Money Chamabal Manager Fertlisers and Fund-Super JM High Liquidity Chemicals Ltd Plus Plan Fund 9300.00 JM Equity & Derivative Fund 322.35 JM Fixed Maturity Fund Series III - Q-2 6000.90 JM Arbitrage Advantage Fund 694.21 115
    • JM Money Manager Fund- Regular Plan 200.00 JM Money Manager Fund- Super Plan 800.00 JM Money Manager Fund- Super Plus Plan 14900.00 JM High Corporation Liquidity JM High Liquidity Bank Fund Fund 7298.59 7,341.57 JM Financial Services Fund 46.41 JM Interval Fund - Quarterly Plan 1 1930.59 1,933.03 JM Agri & Infra Fund 4909.36 JM Liquid Plus Fund Cummins India (formerly JM Ltd Floater Fund - Long Term Plan) JM Basic Fund 572.48 JM Equity & Derivative Fund 25.55 JM Arbitrage Advantage Fund 519.46 JM Equity Fund 197.93 JM High Dena Bank Liquidity JM Financial Fund Services Fund 283.67 328.02 JM Arbitrage Advantage Fund 304.47 JM HI FI Fund 265.77 255.60 JM Interval DR. REDDYS Fund - LABORATORIES Quarterly JM Arbitrage LTD. Plan 1 Advantage Fund 334.84 JM Equity Fund 295.29 JM Healthcare Sector Fund 45.56 DSP Merrill JM High Lynch Capital Liquidity JM High Liquidity Ltd Fund Fund 25375.40 JM Money Manager Fund-Super JM Equity & Plus Plan Derivative Fund 1100.00 JM Fixed Maturity Fund Series III - 1538.80 116
    • Q-2 JM Fixed Maturity Fund Series III - Q-4 2700.00 JM Arbitrage Advantage Fund 1500.00 JM Balanced Fund 19.96 19.87 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 500.00 JM Income Fund 500.00 JM Money Manager Fund- Regular Plan 1502.62 JM Money Manager Fund- Super Plan 500.00 JM Money Manager Fund- Super Plus Plan 70208.46 17,609.31 JM Fixed Maturity Fund Series V - Q-5 600.00 JM Fixed Maturity Fund Series VI - Q-3 601.76 JM Fixed Maturity Fund Series VII - 18M 968.43 864.53 JM Liquid Plus Fund Electrosteel (formerly JM Castings Ltd Floater Fund - Long Term JM High Liquidity Plan) Fund 7303.61 JM Money Manager Fund- Super Plus Plan 6000.00 Global Trade JM Floater Finance Private Fund-Short Limited Term Plan JM Basic Fund 4000.00 JM High Liquidity JM High Liquidity Fund Fund 130642.34 7,800.00 JM Equity & Derivative Fund 7707.55 JM Fixed Maturity Fund Series II - Y 7409.63 JM Fixed Maturity Fund Series III - M-1 5100.00 117
    • JM Fixed Maturity Fund Series III - Q-5 6000.00 JM Fixed Maturity Fund Series IV - 13M 1000.00 JM Fixed Maturity Fund Series IV - Q-1 3700.00 JM Fixed Maturity Fund Series V - Q-1 3701.18 JM Fixed Maturity Fund Yearly - B2 900.00 JM Fixed Maturity Fund Yearly - SO1 1000.00 JM Arbitrage Advantage Fund 11616.53 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 2703.27 100.00 JM Floater Fund - Short Term Plan 6206.28 JM High Liquidity Fund - Premium Plan 12003.25 JM Income Fund 802.69 400.00 JM Monthly Income Plan 200.00 JM Small & Mid- Cap Fund 2801.57 JM Short Term Fund 3902.78 JM Money Manager Fund- Regular Plan 1702.47 JM Money Manager Fund- Super Plan 6009.64 JM Money Manager Fund- Super Plus Plan 66739.60 8,900.00 Gmr JM High Infrastructure Liquidity JM Arbitrage Limited Fund Advantage Fund 2759.80 JM Fixed Grasim Maturity Industries Ltd Fund-Series IV-Q-1 JM Basic Fund 2253.36 2,748.96 JM Fixed Maturity JM Equity & Fund-Series Derivative Fund 446.95 118
    • IV - 15M1 JM Fixed Maturity Fund-Series JM Arbitrage IV - Q -3 Advantage Fund 788.71 JM Fixed Maturity Fund-Series JM Balanced IV - Q -4 Fund 63.33 76.91 JM Fixed Maturity Fund-Series V - Q- 2 JM Equity Fund 931.10 719.71 JM Fixed Maturity Fund-Series V - Q-4 JM HI FI Fund 752.55 JM Fixed Maturity Fund-Series V - Q-5 JM Fixed Maturity Fund-Series VI - Q-1 JM Fixed Maturity Fund-Series VI - Q-4 JM Fixed Hindalco Maturity Industries Ltd Fund-Series JM Equity & IV - Q-4 Derivative Fund 1457.05 JM Fixed Maturity Fund-Series V JM Arbitrage - Q- 1 Advantage Fund 8,567.62 JM Fixed Maturity Fund-Series V JM Balanced - Q- 5 Fund 9.00 8.06 JM Fixed Maturity Fund-Series VI - Q-1 JM Equity Fund 329.34 26.86 JM Fixed Maturity Fund-Series VI - Q-5 JM HI FI Fund 233.53 JM High Hindustan Zinc Liquidity Ltd Fund JM Basic Fund 1445.15 119
    • JM Fixed Maturity Fund-Series IV - 13M JM Equity Fund 274.77 JM Fixed Maturity Fund-Series IV - Yearly JM HI FI Fund 202.85 JM Fixed Maturity Fund-Series V - Q-5 JM Fixed Maturity Fund-Series VII - 13M1 JM Fixed Maturity Fund-Series V I - Q-3 JM High Idea Cellular Liquidity JM Arbitrage Ltd Fund Advantage Fund 213.02 JM High ICICI Bank Liquidity JM High Liquidity Fund Fund 32453.95 6,410.44 JM Equity & Derivative Fund 10637.39 JM Fixed Maturity Fund Series III - M-1 6608.47 JM Fixed Maturity Fund Series III - Q-2 6731.68 JM Fixed Maturity Fund Series III - Q-4 391.72 JM Fixed Maturity Fund Series III - Q-5 4000.00 JM Fixed Maturity Fund Series IV - 13M 1400.00 1,400.00 JM Fixed Maturity Fund Series IV - 15M1 1297.26 JM Fixed Maturity Fund Series IV - Q-3 289.25 JM Fixed Maturity Fund Series IV - Q-4 9450.72 JM Fixed Maturity Fund Series IV - Yearly 830.00 830.00 120
    • JM Financial Services Fund 652.56 480.00 JM Arbitrage Advantage Fund 26339.21 JM Balanced Fund 334.06 247.74 JM Equity Fund 270.23 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 814.82 480.90 JM Floater Fund - Short Term Plan 3614.88 JM HI FI Fund 245.85 247.74 JM High Liquidity Fund - Premium Plan 857.86 JM Monthly Income Plan 93.77 102.11 JM Short Term Fund 3032.86 378.35 JM Money Manager Fund- Regular Plan 2854.23 96.65 JM Money Manager Fund- Super Plan 2334.96 289.94 JM Money Manager Fund- Super Plus Plan 35092.61 12,092.49 JM Fixed Maturity Fund Series III - Q-1 2346.12 JM Fixed Maturity Fund Series III - M-2 1947.79 JM Fixed Maturity Fund Series III - M-3 1861.96 JM Fixed Maturity Fund Series V - Q-3 3410.81 JM Fixed Maturity Fund Series V - Q-2 2364.65 JM Fixed Maturity Fund Series VI - Q-1 2391.51 JM Contra Fund 4738.83 JM Fixed Maturity Fund Series VI - Q-2 4896.24 JM Fixed Maturity Fund Series VI - Q-4 2441.58 121
    • JM High IFCI Limited Liquidity JM Equity & Fund Derivative Fund 2141.29 JM Financial Services Fund 33.32 46.58 JM Arbitrage Advantage Fund 12479.06 278.75 Indian JM High Overseas Bank Liquidity JM High Liquidity Ltd Fund Fund 2381.59 2,418.26 JM Equity & Derivative Fund 96.93 JM Financial Services Fund 125.84 160.83 JM Arbitrage Advantage Fund 208.56 200.32 JM Money Manager Fund- Super Plus Plan 4594.22 JM Fixed Indian Maturity Petrochemicals Fund-Series JM Equity & Corpn Ltd IV - Q- 2 Derivative Fund 2400.63 JM Arbitrage Advantage Fund 5026.14 JM HI FI Fund 142.87 Infrastructure Development JM Income Finance Fund Company Ltd JM Basic Fund 3253.94 3,325.40 JM High Liquidity Fund 4141.78 JM Equity & Derivative Fund 62.47 JM Fixed Maturity Fund Series III - Q-3 1431.31 JM Fixed Maturity Fund Series IV - Q-1 1458.37 JM Financial Services Fund 262.01 274.26 JM Arbitrage Advantage Fund 2548.59 JM HI FI Fund 139.90 242.72 JM Income Fund 500.00 JM Monthly Income Plan 99.68 JM Small & Mid- Cap Fund 1493.46 JM Short Term Fund 500.00 122
    • JM Money Manager Fund- Regular Plan 799.68 JM Money Manager Fund- Super Plan 1,196.67 JM Money Manager Fund- Super Plus Plan 5,063.78 109.65 JM Fixed Maturity Fund Series VII - 18M 893.30 887.15 JM Fixed Maturity ITC Limited Fund-Series JM Equity & IV - Q 1 Derivative Fund 625.51 JM High Liquidity JM Arbitrage Fund Advantage Fund 449.07 JM High Liquidity Fund - JM Balanced Premium Plan Fund 70.52 JM Fixed Maturity Fund-Series JM Emerging IV - Q-4 Leaders Fund 331.05 JM Fixed Maturity Fund-Series V - Q-1 JM Equity Fund 327.66 JM Fixed Maturity Fund-Series V - Q-2 JM Fixed Maturity Fund-Series VI - Q- 2 JM Money Manager Jai Corp Ltd Fund-Super Plus Plan JM Basic Fund 1567.41 1,813.14 JM HI FI Fund 404.96 468.45 JM High Larsen & Liquidity Toubro Ltd Fund JM Basic Fund 425.88 JM Money Manager Fund-Super JM High Liquidity Plus Plan Fund 1500.00 JM Fixed Maturity JM Equity & Fund-Series Derivative Fund 480.53 123
    • IV - Q-3 JM Basic JM Arbitrage Fund Advantage Fund 1597.17 841.81 JM Emerging JM Emerging Leader Fund Leaders Fund 40.34 JM Fixed Maturity Fund-Series VII - 13 M1 JM Equity Fund 159.93 JM Arbitrage Advantage JM Floater Fund - Fund Short Term Plan 1000.00 JM HI FI Fund 751.26 JM Fixed Patni Computer Maturity Systems Ltd Fund-Series JM Equity & IV - Q-1 Derivative Fund 256.92 JM Fixed Maturity Fund-Series JM Arbitrage IV - 15M1 Advantage Fund 1199.34 JM Fixed Maturity Fund-Series IV - Q-2 JM Fixed Maturity Fund-Series IV - Q-3 JM Fixed Maturity Fund-Series IV - 13M JM Fixed Maturity Fund-Series VI - Q 1 JM High Petronet LNG Liquidity JM Arbitrage Ltd Fund Advantage Fund 1983.26 949.40 JM High Ranbaxy Liquidity JM High Liquidity Holding Co. Ltd Fund Fund 12098.41 JM Fixed Maturity Fund Series IV - 15M1 1211.13 603.36 JM Fixed Maturity Fund Series IV - Q-1 3700.00 JM Fixed Maturity Fund Series IV - Q-2 2400.00 124
    • JM Fixed Maturity Fund Series IV - Q-3 2150.95 JM Fixed Maturity Fund Series IV - Q-4 4700.00 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 500.00 JM Floater Fund - Short Term Plan 811.93 JM Small & Mid- Cap Fund 1593.95 JM Short Term Fund 407.32 JM Money Manager Fund- Super Plus Plan 33082.34 JM Fixed Maturity Fund Series V - Q-3 1700.00 JM Fixed Maturity Fund Series VI - Q-1 2500.00 JM Fixed Maturity Fund Series VI - Q-2 2500.00 JM Fixed Maturity Fund Series V - Q-4 1000.00 JM Money Manager Raymond Ltd Fund-Super JM High Liquidity Plus Plan Fund 23084.32 JM Equity & Derivative Fund 1223.34 JM Fixed Maturity Fund Series II - Y 2405.62 JM Arbitrage Advantage Fund 5050.53 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 1605.08 JM Floater Fund - Short Term Plan 302.85 JM Small & Mid- Cap Fund 4641.47 JM Short Term Fund 402.38 JM Money Manager Fund- Regular Plan 1606.50 125
    • JM Money Manager Fund- Super Plan 1514.09 JM Money Manager Fund- Super Plus Plan 15233.13 JM High Reliance Liquidity Industries Ltd Fund JM Basic Fund 2077.86 2,008.34 JM High Liquidity Fund - JM High Liquidity Premium Plan Fund 1493.59 JM Equity & Derivative Fund 17221.08 JM Fixed Maturity Fund Series IV - 15M1 603.65 JM Equity Tax Saver Fund - Series I 120.13 JM Arbitrage Advantage Fund 20178.40 8,198.40 JM Emerging Leaders Fund 81.90 JM Equity Fund 477.74 1.57 JM HI FI Fund 1042.31 JM Income Fund 402.44 JM Money Manager Fund- Regular Plan 73.73 72.54 JM Money Manager Fund- Super Plan 73.73 72.54 JM Money Manager Fund- Super Plus Plan 1565.61 72.54 JM MIP Fund 145.09 JM Balanced Fund 0.32 JM High Religare Finvest Liquidity JM High Liquidity Ltd Fund Fund 16500.00 JM Floater Fund - Short Term Plan 500.00 JM Money Manager Fund- Super Plus Plan 46044.36 5,000.00 JM Fixed Maturity Fund Series V - Q-2 2002.08 JM Fixed Maturity Fund Series V - Q-5 1727.14 126
    • JM Fixed Maturity Fund Series VI - Q-3 1735.90 Reliance JM High Petroleum Liquidity JM Equity & Limited Fund Derivative Fund 502.17 JM Fixed Maturity Fund-Series V JM Arbitrage - Q-4 Advantage Fund 3091.16 1,818.59 JM Fixed Maturity Fund-Series V - Q-5 JM Arbitrage Shree Cement Advantage JM High Liquidity Ltd Fund Fund 20504.79 JM Equity Tax Saver Fund - Series I 21.96 JM Emerging Leaders Fund 246.66 JM Equity Fund 283.81 JM HI FI Fund 218.89 JM Money Manager Fund- Super Plus Plan 30000.00 State Bank Of JM High Bikaner and Liquidity JM High Liquidity Jaipur Fund Fund 20930.02 7,221.90 JM Fixed Maturity Fund Series III - Q-3 1372.65 JM Fixed Maturity Fund Series III - Q-4 913.28 JM Fixed Maturity Fund Series IV - 15M1 518.95 JM Fixed Maturity Fund Series IV - Q-1 1033.09 JM Fixed Maturity Fund Series IV - Q-2 3200.00 JM Arbitrage Advantage Fund 997.98 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 32.92 JM Floater Fund - Short Term Plan 3804.38 127
    • JM Income Fund 813.54 JM Small & Mid- Cap Fund 3570.43 JM Short Term Fund 3136.38 JM Money Manager Fund- Regular Plan 581.07 JM Money Manager Fund- Super Plan 434.38 JM Money Manager Fund- Super Plus Plan 19047.58 2,407.01 JM Fixed Maturity Fund Series V - Q-3 2059.16 JM Money Sterlite Manager Industries Fund-Super JM High Liquidity (India) Ltd Plus Plan Fund 26310.66 JM Fixed Maturity Fund-Series JM Equity & VII - 13 M1 Derivative Fund 1550.86 JM Fixed Maturity JM Fixed Maturity Fund-Series Fund Series III - VI - Q-3 Q-2 2500.00 JM Interval Fund - Quarterly JM Arbitrage Plan 1 Advantage Fund 6742.25 JM Balanced Fund 19.90 JM Emerging Leaders Fund 474.28 JM Equity Fund 318.18 JM Floater Fund - Short Term Plan 2105.54 JM HI FI Fund 136.14 JM High Liquidity Fund - Premium Plan 2600.00 JM Short Term Fund 300.00 JM Money Manager Fund- Super Plan 400.00 JM Money Manager Fund- Super Plus Plan 13700.36 Tata JM Money JM Equity & Consultancy Manager Derivative Fund 300.42 128
    • Services Fund-Super Limited Plus Plan JM Fixed Maturity Fund-Series JM Arbitrage IV - Q-1 Advantage Fund 396.74 JM Fixed Maturity Fund-Series IV - Q-2 JM Fixed Maturity Fund-Series V - Q-5 JM Fixed Maturity Fund-Series VI - Q-2 JM Fixed Maturity Fund-Series VI - Q-4 JM Fixed Maturity Fund-Series VI - Q-5 JM Interval Fund - Quarterly Plan 1 JM High Tata Motors Liquidity JM High Liquidity Limited Fund Fund 34887.77 4,908.70 JM Equity & Derivative Fund 372.84 JM Fixed Maturity Fund Series IV - 15M1 105.49 JM Auto Sector Fund 118.05 191.05 JM Arbitrage Advantage Fund 296.45 JM Equity Fund 367.15 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 155.59 JM Floater Fund - Short Term Plan 452.73 JM HI FI Fund 45.50 JM Income Fund 102.85 JM Short Term Fund 156.64 129
    • JM Money Manager Fund- Super Plus Plan 9000.00 JM High Tata Steel Liquidity JM Equity & Limited Fund Derivative Fund 6148.31 JM Arbitrage Advantage Fund 7693.89 JM Balanced Fund 39.10 JM Emerging Leaders Fund 127.70 JM Equity Fund 700.43 JM HI FI Fund 451.51 JM Monthly Income Plan 23.71 JM Money Tata Chemicals Manager Limited Fund-Super Plus Plan JM HI FI Fund 67.98 JM Fixed Maturity Fund-Series VI - Q-1 JM Fixed Maturity Thermax Ltd Fund-Series VI - Q-1 JM Basic Fund 1175.18 JM HI FI Fund 110.73 The Great JM Arbitrage Eastern Advantage Shipping Co. JM Equity & Fund Ltd Derivative Fund 310.73 JM High Liquidity JM Arbitrage Fund Advantage Fund 2779.74 JM Balanced Fund 78.84 JM Emerging Leaders Fund 890.19 JM Equity Fund 394.23 JM HI FI Fund 858.02 JM High JM High Liquidity UCO Bank Liquidity Fund Fund 4293.49 JM Money Manager Fund-Super JM Equity & Plus Plan Derivative Fund 2992.03 JM High Liquidity Fund - Premium 466.37 130
    • Plan JM Money Manager Fund- Super Plus Plan 7987.53 4,928.61 JM Fixed Maturity Fund Series VI - Q-1 2254.37 JM Fixed Ultratech Maturity Cement Limited Fund-Series V JM Arbitrage - Q-3 Advantage Fund 21.65 JM Equity Fund 87.75 JM HI FI Fund 154.14 JM High Liquidity Union Bank of Fund - JM High Liquidity India Premium Plan Fund 11832.48 JM High Liquidity JM Equity & Fund Derivative Fund 2616.23 567.30 JM Fixed Maturity Fund Series II - Q 1958.71 JM Fixed Maturity Fund Series III - M-1 2481.84 JM Fixed Maturity Fund Series IV - 13M 722.92 JM Fixed Maturity Fund Series IV - 15M1 806.32 654.13 JM Fixed Maturity Fund Series IV - Yearly 351.97 JM Financial Services Fund 200.68 JM Arbitrage Advantage Fund 5173.55 3,633.21 JM Balanced Fund 375.75 370.00 JM Liquid Plus Fund (formerly JM Floater Fund - Long Term Plan) 2282.15 490.00 JM Floater Fund - Short Term Plan 6105.20 700.00 JM Income Fund 910.22 50.00 JM Monthly Income Plan 214.11 210.00 JM Short Term Fund 2087.05 131
    • JM Money Manager Fund- Super Plus Plan 9075.90 668.46 JM Fixed Maturity Fund Series VII - 13M 3375.54 3,452.11 JM Money Videsh Sanchar Manager Nigam Limited Fund-Super JM Equity & Plus Plan Derivative Fund 542.96 JM Fixed Maturity Fund-Series VI - Q-1 JM Telecom Fund 59.36 JM Arbitrage Advantage Fund 1434.16 JM Emerging Leaders Fund 108.82 JM Equity Fund 97.38 JM HI FI Fund 87.98 JM High Wipro Limited Liquidity JM Arbitrage Fund Advantage Fund 282.81 JM Fixed Maturity Fund-Series VII-13 M1 JM Fixed Maturity Fund-Series VI - Q-4 JM Fixed Maturity Fund-Series VI - Q-5 Welspun JM High Gujarat Stahl Liquidity JM Arbitrage Rohren Ltd Fund Advantage Fund 261.63 JM HI FI Fund 270.80 JM High Yes Bank Ltd Liquidity JM High Liquidity Fund Fund 7739.57 JM Equity & Derivative Fund 499.22 JM Fixed Maturity Fund Series II - Y 3517.21 JM Fixed Maturity Fund Series III - Q-3 2500.00 JM Fixed Maturity Fund Series III - Q-4 2500.00 132
    • JM Fixed Maturity Fund Series IV - Q-1 5048.08 JM Fixed Maturity Fund Series IV - Q-2 1000.00 JM Fixed Maturity Fund Series IV - Q-3 1500.00 JM Fixed Maturity Fund Yearly - A2 1201.82 JM Fixed Maturity Fund Yearly - B2 162.54 JM Financial Services Fund 61.81 99.72 JM Arbitrage Advantage Fund 6.37 JM Emerging Leaders Fund 17.45 JM High Liquidity Fund - Premium Plan 2,091.74 JM Money Manager Fund- Super Plus Plan 3,500.00 JM Fixed Maturity Fund Series VI - Q-2 4,897.60 JM Fixed Maturity Fund Series VI - Q- 5 4,900.23 4,937.22 Investments by the Schemes in the above companies have been made to achieve the investment objectives of the relevant Schemes and considering long term prospects and/or yield on investments. Future positions and CBLO have not been considered for investment purpose. Brokerage and incentive paid to associate companies towards procurement of subscription of Units: 2004-05 2005-06 2006-07 JM Financial Services Pvt. Ltd. (earlier known as JM Morgan Stanley Financial Services Pvt. Ltd.) 23,927,665 23,032,930 22,962,565 JM Financial Securities Pvt. Ltd. (earlier known as JM Morgan Stanley Fixed Income Securities Pvt Ltd.) 1,494,356 194,467 52,674 Note: The above information is as per the audited figures. Dealing with Associate Companies The AMC may, from time to time, for the purpose of conducting its normal business, use the services (including Brokerage services and securities transactions) of the Sponsor, subsidiaries and associates of its Sponsor. 133
    • The AMC may utilise the services of Sponsor, group companies and any other subsidiary or associate company of the Sponsor established or to be established at a later date. The AMC will conduct its business with the aforesaid companies on commercial terms and on arms-length basis and at mutually agreed terms and conditions to the extent permitted under the SEBI Regulations, after evaluation of the competitiveness of the pricing offered by the Sponsor, associate companies and the services to be provided by them. 13.3 INTER SCHEME TRANSFERS Transfer of investments from one Scheme to another Scheme under the Mutual Fund, shall be allowed only if: i. such transfers are made at the prevailing market price for quoted Securities on spot basis. Explanation: Spot basis shall have the same meaning as specified by Stock Exchange for spot transactions. ii. The Securities so transferred shall be in conformity with the investment objective of the Scheme to which such transfer has been made. 13.4 POWERS TO REMOVE DIFFICULTIES If any difficulty arises in giving effect to the provisions of the Scheme, the Trustee may take such steps that are not inconsistent with these provisions which appear to them to be necessary and expedient, for the purpose of removing difficulties. . The Trustees may grant approval for redemptions/ switches prior to the interval period at the applicable NAV in the case of genuine investors or in the case of errors in processing of transactions. 13.5 POWERS TO MAKE RULES The Trustee / AMC may from time to time prescribe such forms and make such rules for the purpose of giving effect to the provisions of the Scheme, and add or alter / amend all or any of the forms and rules that may be framed from time to time. 13.6 TERM(S) BINDING ON UNITHOLDERS The Mutual Fund may from time to time add to or otherwise vary or amend or alter all or any of the terms of the Fund after obtaining the prior approval from SEBI and the unitholders in accordance with the SEBI Regulations Statements in this Offer Document are, except where otherwise stated, based on the law and practice currently in force in India and are subject to changes therein. The information contained in this Offer Document regarding taxation has been included relying upon advice provided to the fund by its tax advisors. 134
    • 13.7 UNCLAIMED REDEMPTION / DIVIDEND AMOUNT The unclaimed redemption amount and dividend amounts may be deployed by the Fund in call money market or money market instruments only and the investors who claim these amounts during a period of three years from the due date shall be paid at the prevailing NAV. After a period of three years, this amount will be transferred to a pool account and the investors can claim the amount at NAV of the pool account prevailing at the end of the third year. The income earned on such funds will be used for the purpose of investor education. The AMC will make a continuous effort to remind the investors through letters to take their unclaimed amounts. Further, the investment management fee charged by the AMC for managing unclaimed amounts shall not exceed 50 basis points. 13.8 UNITHOLDER GRIEVANCES REDRESSAL MECHANISM The investor grievances will normally be received at the respective JM ISCs and at the office of the AMC. The Head Office of the AMC will follow up with the respective JM ISC to ensure timely redresses and prompt investor services. Mr. Harish Kukreja can be contacted at the office of the AMC, at 5th floor, A-Wing, Laxmi Towers, Bandra-Kurla Complex, Bandra (East), Mumbai – 400 051. Tel. No. 022-3987 7777 Fax No. 022- 2652 8377 / 78. The number of complaints received from the investors and redressed during 01.04.2002 to 31.12.2007 Scheme Received Redressed Pending Pending Letter recd date (first) JM Equity Fund 326 326 0 NA JM Balanced Fund 303 303 0 NA JM Income Fund 498 498 0 NA JM Tax Cover '96 Fund 59 59 0 NA JM Tax Cover '97 Fund 42 42 0 NA JM Tax Cover '98 Fund 12 12 0 NA JM High Liquidity Fund 13 13 0 NA JM Basic Fund 234 234 0 NA JM G-Sec Fund 75 75 0 NA JM Short-Term Fund 6 6 0 NA JM Fixed Maturity Plan 20 20 0 NA JM Floater Fund 12 12 0 NA JM MIP Fund 222 222 0 NA JM Auto Sector Fund 21 21 0 NA JM Healthcare Sector Fund 19 19 0 NA JM Equity & Derivative Fund 71 71 0 NA JM Arbitrage Advantage Fund 15 15 0 NA JM Emerging Leaders Fund 34 34 0 NA JM Financial Services Sector Fund 4 4 0 NA JM Equity Tax Saver Fund Series I 7 7 0 NA JM Small & Mid Cap Fund 21 21 0 NA JM Housing & Infra Fund 36 36 0 NA JM Contra Fund 44 44 0 NA 135
    • JM Fixed Maturity Fund - Series VI - Quarterly Plan 2 1 1 0 NA Total 2095 2095 0 NA 14.0 PENALTIES & PENDING LITIGATION Details on penalties, pending litigation or proceedings, findings of inspections or investigation for which action may have been taken or is in the process of being taken by any regulatory authority : 1.Cases of penalties awarded by SEBI The Fund was awarded penalty by SEBI in the under the SEBI Act or any of the its matter of delay in listing the units of JM Basic regulations against the Sponsor of the Fund. The details of adjudication proceeding Mutual Fund or any company associated initiated by SEBI and award of the penalty are as with the Sponsor in any capacity follows: including the AMC, Trustee Company / Board of Trustees, or any of the JM Basic Fund, a fifteen-year close ended growth directors or key personnel (especially scheme with investments to be primarily in the the fund managers) of the AMC and petrochemicals sector in India. It opened for Trustee Company. subscription on 25th March 1997 and closed on 7th May 1997. Allotment was effected on 2nd June 1997. The units of the scheme were to be listed by 7th November 1997. There was a delay in listing with the application for listing of units of JM Basic Fund being filed with the NSE on 27th November 1997 and listing effected on 8th December 1997. SEBI had initiated adjudication proceeding against the Fund to conduct inquiry into any possible violation of SEBI Regulations, in respect of delay in the listing. The Fund had submitted in its reply that the Scheme is exempt from mandatory listing requirement pursuant to proviso (a) or proviso (c) to Regulation 32 of the SEBI Regulation, since the Scheme provided for periodic repurchase facility and details of such repurchase facility have been disclosed in the prospectus. Although in terms of the prospectus the facility of listing was provided as an additional measure for liquidity to the investors, the resultant delay in the listing has not hurt any investors in the Scheme, considering the fact that there has been no reported trades in these units during the succeeding five months period from the date of listing of the units. The inadvertent delay in 136
    • listing of units of JM Basic Fund has in no way been beneficial or tantamount to any gain or advantage whatsoever accrued to the Fund, JM Financial Asset Management Private Limited and/or its sponsors. The Adjudicating Officer of SEBI while passing orders on the case held that the delay in listing the units of JM Basic Fund is in violation of Regulation 32. However, while imposing a penalty for the violation, the Adjudicating Officer in appreciation of the bonafide action of the Fund, who entirely of their own volition drew the attention of SEBI to the delay in listing the units on NSE, imposed a reduced penalty. The AMC has paid the penalty amount of Rs. 50,000/- to SEBI. Adjudication proceedings had been initiated by SEBI on the AMC & the Fund alleging non- disclosure of penalty imposed on the Sponsor for delay in reporting of 6,999 shares representing 13.99% of equity of FICS Consultancy Services Ltd., within the stipulated time as required under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The Fund had on its own volition brought this to the notice of SEBI and the unitholders. The Adjudicating Officer had issued an order dated 22.01.2004 imposing a penalty of Rs. 30 lacs on AMC and Rs. 20 Lacs on the Fund. The SAT, vide its order dated 22.11.04, had set aside the penalty against the Fund and has reduced the penalty on the AMC to Rs. 5 Lacs. The said penalty amount has been paid by the AMC. J. M. Financial & Investment Consultancy Services Private Limited, the Sponsor of JM Financial Mutual Fund had acquired 6999 shares of FICS Consultancy Services Limited (FICS) a JM Group Company from Mr. Mahendra Kampani & his family members. Mr. Mahendra Kampani was one of the promoters of FICS along with the Sponsor. The shares acquired under reference were representing 13.99% of FICS's total share capital. Under Regulation 3(1)(e)(iii)(b) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulation 1997 (SAST), the said transfer of 6999 equity shares was an inter-se transfer of shares between the promoters. Under SAST, this acquisition was required to be reported to Stock Exchange/SEBI within the stipulated time period, which was inadvertently 137
    • delayed and reported subsequently. The Sponsor on its own volition brought to the notice of SEBI this inadvertent delay in reporting. SEBI, however, initiated adjudication proceedings for violation of Takeover Regulations, 1997 and SEBI Act, 1992. Pursuant to the adjudication proceedings, penalty of Rs. 180,000/- was imposed on Sponsor vide SEBI order dated October 20, 2000. Thereafter, the Sponsor had appealed to the Securities Appellate Tribunal (SAT), and the SAT had reduced the penalty to Rs.100,000/-. The said amount of penalty was paid by the Sponsor. Enquiry proceedings that were initiated by SEBI on JM Financial Consultants Pvt. Ltd.(earlier known as JM Morgan Stanley Private Ltd. (JMMS)) (an associate of the Sponsor as per regulation 2(c) of the SEBI (Mutual Funds) Regulations, 1996) in connection with alleged deficiency in dissemination of information in Public Announcement on behalf of one of their clients in terms of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 had led to hearing before the SEBI Chairman on May 06, 2004. The SEBI Chairman, vide his order dated February 18, 2005, had censured JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Stanley Pvt. Ltd.) in this regard. 2. For Sponsors and its associates, other Fines have been levied by Stock Exchanges (BSE than the penalties as mentioned above, & NSE) and NSDL on JM Financial Services the penalties awarded by any financial Pvt. Ltd. (earlier known as JM Morgan Stanley regulatory body, including stock Financial Services Pvt. Ltd., (“JMFSPL”) and by exchanges, for defaults in respect of BSE, NSE and NSDL on Morgan Stanley India shareholders, debenture holders and Company Pvt. Ltd. (Earlier known as JM Morgan depositors. Stanley Securities Private Ltd., (“MSICPL”) these being associate concerns of the Sponsor/Co-Sponsor. The details of fines/penalties are as follows: Year JMFSPL MSICPL 1999-2000 Rs. 79,878 Rs. 19,249 138
    • 2000-2001 Rs. 35,812 Rs. 2,62,565 2001-2002 Rs. 15,000 Rs. 56,659 2002-2003 Rs. 32,000 Rs. 13,275 2003-2004 Rs. 1,32,300 Rs.11,42,364 2004-2005 Rs. 98,711 Rs.33,28,747 2005-2006 Rs. 1,84,924 Rs.37,65,547 2006-2007 Rs. 1,81,815 Rs. 20,000 Upto July 2007Rs. 90969/- NSE levied a penalty of Rs. 5,000/- on MSICPL for partial compliance of margin requirement for the quarter ended December 31, 2004 on account of an employee trade. NSE also levied a penalty of Rs. 3000/- on MSICPL and Rs. 5000/- penalty on JM Financial Securities Pvt. Ltd. (earlier known as JM Morgan Stanley Fixed Income Securities Private Limited), for failure to seek the prior approval of NSE in case of resignation of a director. BSE has levied a penalty of Rs. 5,000/- during quarter ended June 2005 on MSICPL for non collection of margin. Further, BSE has also levied a penalty of Rs. 10,000/- on MSICPL for exceeding net position limits in Z Group Securities. The above fines/penalties have been mainly levied on account of various technical reasons, such as late pay-in of securities, short delivery of securities, margin collection shortfall, custodian trade rejections, bad delivery charges, not sending the statement of funds and securities to clients within the stipulated time frames, incomplete client registration forms, issuance of contract notes without proper signatures etc. 3. Additionally penalties awarded for any MSICPL is penalized by BSE and NSE from economic offence and violation of any time to time for settling hand delivery trades due securities laws. to delay by clients in sending trade confirmations to their custodians. Further, JMFSPL, MSICPL and their directors have paid the compounding fees to the Regional Director (RD) and Company Law Board (CLB) as per the details given below : RD (Rs.) CLB (Rs.) JMFSPL – 10,000/- 11,200/- Directors of JMFSPL – 94,000/- 15,050/- 139
    • MSICPL – 10,000/- 10,600/- Directors of MSICPL – 114,000/- 5,150/- The above fees have been paid for composition of violations observed by the inspecting team during the inspection of books of account conducted under section 209-A of the Companies Act, 1956. NSE had levied a fine of Rs. 30,000/- on JMFSPL and Rs. 3,000/- on JM Financial Securities Pvt. Ltd. (earlier known as JM Morgan Stanley Fixed Income Securities Private Limited) arising out of the routine inspections carried out by them during 2004-05. The Fund further confirms that there is no other case where penalty was awarded by SEBI against the Sponsor of the Fund or any company associated with the Sponsor in any capacity including the AMC, Trustee Company or any of the directors or key personnel of AMC and Trustee Company. 4. Any pending material litigation The Sponsor of JM Financial Mutual Fund has proceedings incidental to the business of disputed the Income Tax liability of Rs.21.90 the Mutual Fund to which the Sponsor lacs. The disputed appeal is pending before the of the Fund or any company associated appropriate authority (as the same is pending with the Sponsor in any capacity with Tribunal and CIT [Appeals]). including the AMC, Board of Trustees / Trustee Company or any of the directors The Co-Sponsor of JM Financial Mutual Fund or key personnel is a party. has disputed the Income Tax liability of Rs. 314.17 lacs against which an amount of Rs. 373.46 lacs have been paid on account of advance taxes. The disputed appeal is pending before the appropriate authority (as the same is pending with Tribunal and CIT [Appeals]). The Co-Sponsor had filed a civil suit against Mr. D B Patel for recovery of security deposit of around Rs. 1.28 crore paid to him for the office premises taken on Leave & License basis. The Co-Sponsor is in possession of the premises that were rented by Mr. Patel. The Co-Sponsor’s application for execution of decree in this regard is pending in the High Court, Bombay. Proceedings have been initiated against Mr. Sandip Sabharwal, Chief Investment Officer (Equity) of the AMC, by the Central Bureau of 140
    • Investigation in a matter pertaining to his previous employment with SBI Funds Management Private Limited, the asset management company of SBI Mutual Fund. The matter is presently under the purview of courts. Apart from the matter mentioned above there are no other pending material litigation proceedings incidental to the business of the Mutual Fund pending. 5. Any pending criminal cases against the The Agriculture Department filed a complaint for Sponsor or any company associated with alleged contravention of the provisions of the Sponsor in any capacity including Insecticides Act in manufacturing and selling the AMC, Board of Trustee / Trustee insecticide deemed to be misbranded before the Company or any of the directors or key Chief Judicial Magistrate, Ajmer against the personnel. Wyeth Ltd., its stockist, and its four directors. Criminal Revision petition was filed before the Sessions Court Ajmer and thereafter before High Court of Judicature of Rajasthan at Jaipur. Mr. Darius E. Udwadia, Director of the Trustee Company is also a party to the case by the virtue of being a non- executive director of Wyeth Ltd. Mr. Nimesh Kampani, Chairman of the Board of the Trustee Company, has received summons from the Court of Additional Chief Metropolitan Magistrate, Esplanade, Mumbai, as one of the parties to a criminal complaint filed by M/s. Computron Systems Pvt. Ltd. for alleged violation of the Indian Penal Code, by virtue of his acting as an escrow agent to a commercial transaction with the complainant being a party. Mr. Nimesh Kampani, a director of JM Financial Trustee Company Private Ltd., was one of the nonexecutive directors of Nagarjuna Finance Limited till April 28, 1999. In the contempt case no. 915 of 2002, a single judge bench in the High Court of Judicature, Andhra Pradesh at Hyderabad, passed an order on August 3, 2007 punishing (simple imprisonment for six months and a fine of Rs. 2,000) Respondents no. 1 to 3 (Mr. K S Raju, Mr. N Selvaraj and Nagarjuna Finance Ltd. - NFL) for violating, disobeying the Order of the Company Law Board Southern Region Bench at Chennai in C.P. No. 35 of 2000 dated 29-2-2000 and order in C.A. No.344/634- A/SRB/2001 dated August 21, 2001 and for breach of an affidavit filed in the Hon'ble Court in Company Appeal No.7 of 2001. While passing the said order, the judge also included other 141
    • directors of 3rd respondent, viz., NFL. Though Mr. Kampani had resigned much before the order was passed by the Company law Board Southern Region Bench at Chennai in 2001, he had been made party in the order of the Hon'ble High Court of Judicature, Andhra Pradesh. The implementation of the said order of the Hon'ble High Court of Judicature, Andhra Pradesh, Hyderabad has been suspended by a Division Bench of the High Court of Judicature, Andhra Pradesh, Hyderabad. Apart from the matter mentioned above there are no pending criminal cases against the Sponsor or any company associated with the Sponsor in any capacity including the AMC, Board of Trustee / Trustee Company or any of the directors or key personnel. 6. Any deficiency in the systems and Nil operations of Sponsor or the Mutual Fund or any company associated with the sponsor in any capacity including AMC or the Trustee Company which SEBI has specifically advised to be disclosed in the offer document, or which has been notified by any other regulatory agency. 7.Any enquiry / adjudication proceedings SEBI conducted an Inspection of the investment under the SEBI Act and the Regulations banking operations of JM Financial Consultants made there under, that are in progress Pvt. Ltd (earlier known as JM Morgan Stanley against the Sponsor of the Mutual Fund Pvt. Ltd.) for the period September to November, or any company associated with the 2005. SEBI has given its Inspection Report dated Sponsor in any capacity including the 13th March, 2006 dealing inter alia with the AMC, Board of Trustees / Trustee market practices of acceptance of bids from and Company or any of the Directors or key allocation to the QIB Bidders. personnel of the Asset Management Company. Recently, JM Financial Consultants Pvt. Ltd (earlier known as JM Morgan Stanley Pvt. Ltd.) has received a notice from the adjudication officer SEBI vide letter no. A&E/BS/95635/2007 dated 7th June, 2007, issued under Rule 4 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudication Officer) Rules, 1995 in connection with the aforesaid Inspection. JM Financial Consultants Pvt. Ltd (earlier known as JM Morgan Stanley Pvt. Ltd.) is in the process of suitably responding to the said Notice. 142
    • SEBI conducted an Investigation of the Book Running Lead Managers for the alleged deficiency in the allocation of QIBs in the follow-on public offering of Syndicate Bank. JM Financial Consultants Pvt. Ltd (earlier known as JM Morgan Stanley Pvt. Ltd) has responded to the Show Cause Notice issued by SEBI vide its letter July 14, 2006. The Fund further confirms that there is no other case where penalty was awarded by SEBI against the Sponsor of the Fund or any company associated with the Sponsor in any capacity including the AMC, Trustee Company or any of the directors or key personnel of AMC and Trustee Company. DOCUMENTS AVAILABLE FOR INSPECTION i. Trust Deed; ii. Investment Management Agreement; iii. Custodian Agreement; iv. Registrars Agreement; v. Memorandum and Articles of Association of the Trustee and AMC; vi. Securities and Exchange Board of India (Mutual Fund) Regulations 1996; vii. Indian Trusts Act, 1882 viii. Registration Certificate for the JM Financial Mutual Fund granted by SEBI; ix. Consent of Auditors and Legal Advisors. Note: i. The Trustee has approved this Offer Document vide circular resolution passed on January 25,2008 ii. Statements in this Offer Document are, except where otherwise stated, based on the law, practice currently in force in India, and are subject to changes therein. Notwithstanding anything contained in the offer document, the provisions of SEBI (Mutual Funds) Regulations, 1996 and the guidelines thereunder shall be applicable. Further, any amendments/replacement/re-enactment of SEBI Regulation/clarification and guidelines in the form of notes or circulars issued from time to time by SEBI for the operation and management of Mutual Fund subsequent to the date of the Offer Document shall prevail over those specified in this Offer Document. 143
    • iii. The information contained in this Offer Document regarding taxation is for general information purposes only and is in conformity with the relevant provisions of the Tax Act, and has been included relying upon advice provided to the Fund’s tax advisor based on the relevant provisions prevailing as at the day of this Offer Document in light of the provisions of the Finance Act 2006. iv. Any dispute arising out of this issue shall be subject to the exclusive jurisdiction of the Courts in India. For and on behalf of the Board of Directors of JM FINANCIAL ASSET MANAGEMENT PRIVATE LIMITED Place : Mumbai Date : dd/mm/2008 Nityanath P Ghanekar Managing Director & Chief Executive Officer 144