JM FINANCIAL MUTUAL FUND

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JM FINANCIAL MUTUAL FUND

  1. 1. 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
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. “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
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. 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
  24. 24. 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
  25. 25. 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
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29. 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

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