JM FINANCIAL MUTUAL FUND

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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.

SPONSOR: JM Financial Limited

TRUSTEE: JM Financial Trustee Company Private Limited

REGISTRAR: Karvy Computershare Private Limited

INVESTMENT MANAGER: JM Financial Asset Management Private Limited5th Floor, “A” Wing, Laxmi Towers, Bandra Karla Complex, Mumbai – 400 051

Tel. No. 022-3987 7777 Fax Nos. 022-2652 8377 / 78Web site: http://www.JMFinancialmf.com E-mail: [email protected]

This Offer Document sets forth concisely the information about the scheme that a prospectiveinvestor ought to know before investing. The Offer Document should be read in its entiretybefore 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 withSecurities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended till dateand filed with SEBI, and the units being offered for public subscription have not been approvedor disapproved by SEBI nor has SEBI certified the accuracy or adequacy of the OfferDocument.

This Offer Document will remain effective till a ‘material change’ (other than a change infundamental attributes and within the purview of this Offer Document) occurs and thereafter thechanges shall be filed with the Securities and Exchange Board of India and circulated to all theexisting Unitholders along with the quarterly/half yearly reports. An addendum shall be attachedto the offer document containing the changes. The Offer Document shall be updated at leastonce in every two years. Investors may also like to ascertain about any further changes after thedate of offer document from the mutual fund/ its investor service centers/ distributors or brokers.

This offer document is dated dd/mm/2007

http://www.jmmutual.com/

http://www.jmfinancialmf.com/

mailto:[email protected]

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SponsorJM Financial Limited

141, Maker Chambers III, Nariman Point, Mumbai - 400 021

TrusteeJM Financial Trustee Company Private Limited

Corporate Office:5th floor, “A” Wing, Laxmi Towers, Bandra-Kurla Complex, Mumbai - 400 051

Investment ManagerJM 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 AdviserUdwadia & Udeshi (Regd)

Thomas Cook Building, 3rd Floor,324, D.N. Road, Fort,Mumbai - 400 001.

AuditorsN.M. Raiji & Co

Universal Assurance Building, 6th Floor,P.M. Road, Fort,

Mumbai - 400 001.

Registrar & Transfer AgentKarvy Computershare Private Limited

Karvy Plaza; H No. 8-2-596,Avenue 4 Street No. 1,

Banjara Hills, Hyderabad - 500 034.

CustodianHDFC Bank Ltd

Custodian & Depository Services,Kamala Mills Compound, Senapati Bapat Marg,

Lower Parel, Mumbai - 400 013Tel. No. 022-2496 1616 Fax No. 022- 2496 1636

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TABLE OF CONTENTS

PARTICULARS………………………………………………………………………….Page Nos.

1.0 DEFINITIONS / TERMS ...........................................................................................................51.1 INTERPRETATION ..................................................................................................................72.0 HIGHLIGHTS & RISK FACTORS.............................................................................................82.1 HIGHLIGHTS ............................................................................................................................82.2 RISK FACTORS.........................................................................................................................92.2.1 STANDARD RISK FACTORS...................................................................................................92.2.2 SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATIONS: ........................102.3 NOTE .......................................................................................................................................152.4 RIGHT TO LIMIT REDEMPTIONS.........................................................................................152.5 POTENTIAL RISKS AND SPECIAL CONSIDERATIONS .....................................................152.6 DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY ........................................162.7 SUMMARY: JM Fixed Maturity Fund - Series XI.....................................................................183.0 FEES, EXPENSES AND LOAD ...............................................................................................233.1 NEW FUND OFFER EXPENSES.............................................................................................233.1.1 EXPENSES INCURRED IN SCHEMES LAUNCHED DURING THE LAST FISCAL YEAR AND

FROM APRIL 1, 2007 TO DECEMBER 31, 2007: ...................................................................243.2 ANNUAL SCHEME RECURRING EXPENSES ......................................................................263.3 UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD...........................................274.0 CONDENSED FINANCIAL INFORMATION ON OTHER EXISTING SCHEMES................285.0 CONSTITUTION OF JM FINANCIAL MUTUAL FUND........................................................455.1 SPONSORS ..............................................................................................................................465.1.1 JM FINANCIAL LIMITED (“The Sponsor”).............................................................. Error! Bookmark not defined.5.2 TRUSTEE COMPANY - JM FINANCIAL TRUSTEE COMPANY PRIVATE LIMITED........465.2.1 BOARD OF DIRECTORS OF TRUSTEE.................................................................................485.2.2 RIGHTS AND OBLIGATIONS OF THE TRUSTEE................................................................515.2.3 TRUSTEE’S SUPERVISORY ROLE .......................................................................................535.3 ASSET MANAGEMENT COMPANY - JM FINANCIAL ASSET MANAGEMENT PRIVATELIMITED (AMC) ..................................................................................................................................545.3.1 REMUNERATION OF THE ASSET MANAGEMENT COMPANY........................................545.3.2 BOARD OF DIRECTORS OF AMC.........................................................................................555.3.3 DUTIES AND OBLIGATIONS OF THE AMC ........................................................................585.3.4 KEY EMPLOYEES OF THE AMC ..........................................................................................605.3.5 AUDITORS ..............................................................................................................................665.3.6 CUSTODIAN ...........................................................................................................................665.3.7 REGISTRAR AND TRANSFER AGENTS...............................................................................665.3.8 OFFICIAL POINTS OF ACCEPTANCE OF TRANSACTIONS DURING AND POST NEW FUNDOFFER PERIOD ...................................................................................................................................666.0 INVESTMENT OBJECTIVES & POLICIES............................................................................67a) TYPE OF THE SCHEME .........................................................................................................67b) INVESTMENT OBJECTIVES..................................................................................................67c) INVESTMENT PATTERN.......................................................................................................68d) ASSET ALLOCATION PATTERN ..........................................................................................70e) INVESTMENT STRATEGY ..................................................................................................71f) PORTFOLIO TURNOVER POLICY: .......................................................................................72g) POLICY ON INTER SCHEME INVESTMENTS .....................................................................72h) POLICY AND SPECIAL CONSIDERATION ON INVESTMENT IN DERIVATIVE ANDHEDGING PRODUCTS........................................................................................................................72

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i) INVESTMENT BY AMC .........................................................................................................75j) BORROWING BY THE MUTUAL FUND...............................................................................75k) FUNDAMENTAL ATTRIBUTES ............................................................................................75l) POSITION OF DEBT MARKETS IN INDIA ...........................................................................767.0 INVESTMENT RESTRICTIONS .............................................................................................788.0 NET ASSET VALUE (NAV) AND VALUATION OF INVESTMENT....................................798.1. TRADED SECURITIES ...........................................................................................................798.2 NON-TRADED SECURITIES.................................................................................................809.0 ACCOUNTING POLICIES AND STANDARDS .....................................................................8110.0 UNITS ON OFFER...................................................................................................................8411.0 RIGHTS OF UNITHOLDERS ................................................................................................10511.1 VOTING RIGHTS ..................................................................................................................10611.2 NAV INFORMATION............................................................................................................10611.3 REGISTER OF UNITHOLDERS............................................................................................10711.4 DISCLOSURES......................................................................................................................10711.4.1 PORTFOLIO DISCLOSURE..................................................................................................10711.5 WINDING UP.........................................................................................................................10811.5.1 PROCEDURE AND MANNER OF WINDING UP ................................................................10812.0 ACCOUNTS, AUDIT AND TAX BENEFITS ........................................................................10812.1.1 TO THE FUND.......................................................................................................................10912.1.2 TO THE UNITHOLDERS ......................................................................................................109H. GIFT TAX ..............................................................................................................................11113.0 OTHER MATTERS................................................................................................................11213.1 GENERAL..............................................................................................................................11213.2 ASSOCIATE TRANSACTIONS.............................................................................................11213.3 INTER SCHEME TRANSFERS .............................................................................................13413.4 POWERS TO REMOVE DIFFICULTIES...............................................................................13413.5 POWERS TO MAKE RULES.................................................................................................13413.6 TERM(S) BINDING ON UNITHOLDERS.............................................................................13413.7 UNCLAIMED REDEMPTION / DIVIDEND AMOUNT........................................................13513.8 UNITHOLDER GRIEVANCES REDRESSAL MECHANISM...............................................13514.0 PENALTIES & PENDING LITIGATION...............................................................................136

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1.0 DEFINITIONS / TERMS

The following definitions / terms apply throughout this Offer Document unless the context requiresotherwise:

I. AMC or Investment Manager: JM Financial Asset Management Private Limited (theInvestment Manager/Asset Management Company of the JM Financial Mutual Fund), acompany incorporated and registered under the Companies Act, 1956 and includes itssuccessors and assigns.

II. Applicable NAV: NAV of the specified redemption date or a business day during thespecified redemption period as may be applicable, for switch out / repurchase applicationsreceived at the official points of acceptance of transactions of the Fund subject to the cut offtimes 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 whichbanks in Mumbai including the Reserve Bank of India are closed for business or clearing (c) aday on which the Bombay Stock Exchange and /or National Stock Exchange are closed (d) aday which is a public and/or bank holiday at JM ISC where the application is received (e) aday on which sale and repurchase of units is suspended by the AMC (f) a day on whichnormal business could not be transacted due to storms, floods, bandh’s, strikes, etc., Allapplications received on these non-business days will be processed on the next business day atApplicable NAV. The AMC reserves the right to declare any day as Business Day orotherwise at any or all JM ISCs.

IV. Calendar Year : A Calendar Year shall be full English Calendar months viz. 12 monthscommencing 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 thebusiness 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 365days in a year.

IX. Debt Instruments : Government securities, corporate debentures, bonds, promissory notes,money market instruments, pass-through obligations, asset backed securities / securitised debtand 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 whethersecured 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 underlyingsecurities.

XIII. FII: Foreign Institutional Investors registered with SEBI under the Securities and ExchangeBoard of India (Foreign Institutional Investors) Regulations, 1995, as amended from time totime.

XIV. Financial Year : A Financial Year shall be full English Calendar months viz. 12 monthscommencing from 1st April and ending on 31st March.

XV. Government securities : Securities created and issued by the Central Government or a StateGovernment for the purposes of raising a public loan and having one of the forms specified inclause (2) of section 2 of the Public Debt Act, 1944.

XVI. GOI : Government of India.

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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 asamended from time to time.

XIX. Investor : Any resident (person resident in India under the Foreign Exchange ManagementAct) or non-resident person (a person who is not a resident of India) whether an individual ornot (legal entity), who is eligible to subscribe for Units under the laws of his/her/theirstate/country of incorporation, establishment, citizenship, residence or domicile and who hasmade 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 constitutedas 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 Banksand / or AMC’s / Registrar and Transfer Agent’s service centres / Investor Service Centreauthorized to receive application forms during ongoing offering and also redemption/switchrequests as mentioned in this Offer Document or appointed from time to time. These centresshall be regarded the “Official Points” of acceptance of transactions forsubscription/redemption/switch and the cut-off timing for various transactions shall bereckoned 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 theearlier 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 oris a person of Indian origin pursuant to the Foreign Exchange Management (Investment inFirm 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 theScheme 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 thisOffer 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 theScheme.

XXVIII. Permissible Investments or Investments: Collective or group investments made on accountof the Unitholders in accordance with the SEBI Regulations.

XXIX. Portfolio: The portfolio of the schemes of JM Financial Mutual Fund would include allPermissible Investments and cash.

XXX. RBI: Reserve Bank of India, established under the Reserve Bank of India Act, 1934, asamended from time to time.

XXXI. Rating: means an opinion regarding securities, expressed in the form of standard symbols orin any other standardized manner, assigned by a Credit Rating Agency and used by the issuerof 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, currentlyacting as registrar and transfer agent to the Scheme, or any other registrar and transfer agentappointed by the AMC from time to time.

XXXIII. Repo / Reverse Repo : Sale / Purchase of Securities as may be allowed by RBI from time totime 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 / redeemedand will be calculated based on the applicable NAV.

XXXV. Scheme : A scheme under JM Fixed Maturity Fund - Series XI being offered by JM FinancialMutual Fund. The Scheme shall include multiple plans (including sub-plans) launched underJM Fixed Maturity Fund - Series XI.

XXXVI. SEBI Act: Securities and Exchange Board of India Act, 1992 as amended from time to time.

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XXXVII. SEBI or the Board: The Securities and Exchange Board of India established under theSecurities and Exchange Board of India Act, 1992.

XXXVIII. SEBI Regulations or the Regulations : The Securities and Exchange Board of India (MutualFunds) Regulations, 1996 as amended from time to time, and includes any amendments orclarifications and guidelines in the form of notifications or circulars or press releases issuedfrom time to time by SEBI or any other statutory authority to regulate the operation andmanagement 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 incorporatedcompany or other body corporate, Gilts/Government securities, Mutual Fund units, MoneyMarket Instruments like Call Deposit, Commercial Paper, Treasury Bills etc. such otherinstruments as may be declared by GOI and/or SEBI and/or RBI and/or any other regulatoryauthority to be securities; and rights or interest in securities.

XL. Specified Redemption Day(s) : refer to one or more Business Days during the SpecifiedRedemption Period on which the Units of a Plan under the Scheme can be redeemed orswitched out.

XLI. Specified Redemption Period : refer to the Business Days during which unitholders canredeem their investments at the applicable NAV subject to exit load and after deduction of thebalance proportionate unamortized issue expenses wherever applicable. Each 13 months planswill have specified redemption period which will normally be the first five business days atthe beginning of every calendar month during the tenure of that plan. Each 12 months Planwill have specified redemption period which will normally be the first five business days atthe beginning of every calendar month during the tenure of that plan. Specified SubscriptionPeriod : refer to one or more Business Days during which an investor may purchase the Unitsof 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 companyincorporated and registered under the Companies Act, 1956 and includes its successors andassigns.

XLIII. Stock Lending: Lending of securities to another person or entity for a fixed period of time, ata 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 otherSchemes.

XLV. Trust Deed: The registered Trust Deed dated 1st September, 1994 establishing the JMFinancial Mutual Fund as amended from time to time.

XLVI. Trustee: JM Financial Trustee Company Private Limited (the Trustee to the JM FinancialMutual Fund), a company incorporated and registered under the Companies Act, 1956 andincludes 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 beconverted or varied from time to time.

XLVIII. Units: The interest of the Unitholders in the Plan(s) under the Scheme, which consists of eachunit 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 thecontext 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 Regulationsshall have the meanings respectively assigned to them therein.

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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 normallymaturing 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 froma 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 aninvestor fails to specify his preference of the sub-plan, he shall be deemed to have opted asunder

· if the investment amount is less than Rs. 5 lacs, the default option would be the Regular Planand

· if the investment amount is equal to and more than Rs. 5 lacs, the default option would be theInstitutional Plan.

Each Sub-Plan will have a Growth and Dividend option. Each Plan will have a separateportfolio; 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 Load1 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 monthduring the tenure of that plan. During the specified redemption period, unitholders can redeemtheir 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 expensesapplicable to their investments.Investors can also redeem on business days other than the specified redemption period subjectto the applicable exit load, if any, and after deduction of the balance proportionateunamortized 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 theapplicable NAV without any exit load. In case any specified redemption day / maturity dayfall on a non-business day, the redemption requests will be accepted or the plan will mature, asthe case may be, on the next business day.

· On maturity of a Plan, the maturity pay-out will normally be effected on the day immediatelyfollowing 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 andthe 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

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in multiples of Re. 1/- thereafter. The minimum investment amount including multipleamounts 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. Anyredemption in excess thereof may be in multiples of Re.1/- subject to keeping minimumbalance of 500 units or Rs. 5000/-, whichever is less. In the event of remaining balancefalling below the minimum balance of 500 units or Rs.5000 (whichever is less) whileprocessing 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 noassurance 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 thescheme can go up or down depending on the factors and forces affecting the capitalmarkets.

· Past performance of Sponsor/AMC/Schemes of JM Financial Mutual Fund does notindicate the future performance of the Schemes.

· JM Fixed Maturity Fund - Series XI is only the name of the Scheme and does not in anymanner 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 readwith SEBI Circular No. SEBI/IMD/Cir No. 1/42529/05 dated June 14, 2005, each schemeand individual plan(s) under the schemes should have a minimum of 20 investors and nosingle 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 fulfilledimmediately after the close of the NFO i.e. at the time of allotment, the provisions ofRegulation 39(2)(c) of the SEBI (Mutual Funds) Regulations, 1996, would becomeapplicable 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 thefolio/account’s holdings, the Fund Houses are recommended to track the investors at themaster 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 issuggested that the account is identified for the purpose of aggregation to comply with20/25 rule by using a common parameter like PAN. In case of multiple folios, thesequence or the order of the compulsory redemption is left to the discretion of the fundhouse in consultation with the investor.

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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 XIwould face the following risks:

i. The Scheme may not be able to invest in the suitable securities falling within its investmentparameters leading the Scheme to hold short term deposits of scheduled commercial banks tillthe 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 theinvestee company in honoring the securities on redemption may lead to delay and/or erosionin the maturity value to the unitholders.

iii. In the event of an inordinately large number of redemption requests, the plan may face anasset-liability mismatch requiring the investment manager to make a distress sale of thesecurities leading to realignment of the portfolio consequently resulting in investment in loweryield instruments.

iv. Although the investor in the Scheme at the time of making investment will be able to estimatethe likely return from his investment, redeeming the investment before the deemed maturitydate 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 asdisproportionate losses to the investor. Execution of such strategies depends upon the ability of thefund manager to identify such opportunities. Identification and execution of the strategies to bepursued by the fund manager involve uncertainty and decision of fund manager may not always beprofitable. No assurance can be given that the fund manager will be able to identify or execute suchstrategies.

The risks associated with the use of derivatives are different from or possibly greater than, the risksassociated with investing directly in securities and other traditional investments.

In the derivative markets there are risk factors and issues concerning the use of derivatives thatinvestors should understand. Derivatives require the maintenance of adequate controls to monitor thetransactions entered into, the ability to assess the risk that a derivative adds to the portfolio and theability to manage the risks as a result of the failure of the counterparty to comply with the terms of thederivative contract. Other risks in using derivatives include the risk of mispricing or impropervaluation of derivatives, credit risk where the danger is that of a counterparty failing to honour itscommitment, liquidity risk where the danger is that the derivatives cannot be sold at prices that reflectthe underlying assets, rates and indices and price risk where the market price may move in adversefashion.

Interest Rate Risk:

As with all debt securities, changes in interest rates will affect the Scheme’s Net Asset Value as theprices of securities generally increase as interest rates decline and generally decrease as interest ratesrise. Prices of long term securities generally fluctuate more in response to interest rate changes than ofshorter-term securities. Interest rate movements in the Indian debt markets can be volatile leading tothe possibility of large price movements up or down in debt and money market securities and therebyto possibly large movements in the NAV.

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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 ofliquidity risk is the spread between the bid price and the offer price quoted by a dealer. Liquidity riskis characteristic of the Indian fixed income market. Trading volumes, settlement periods and transferprocedures may restrict the liquidity of some of these investments. Different segments of the Indianfinancial markets have different settlement periods, and such periods may be extended significantly byunforeseen circumstances. The length of time for settlement may affect the Scheme in the event it hasto meet an inordinately large number of redemption or of restructuring of the Scheme’s investmentportfolio

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 riskdebentures are sold at a yield spread above those offered on treasury securities which are sovereignobligations and generally considered to be free of credit risk. Normally, the value of a fixed incomesecurity will fluctuate depending upon the actual changes in the perceived level of credit risk as wellas the actual event of default.

Reinvestment Risk:

This risk refers to the interest rate levels at which cash flows received from the securities in theScheme or from maturities in the Scheme are reinvested. The additional income from reinvestment isthe "interest on interest" component. The risk is that the rate at which interim cash flows can bereinvested 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 underlyingrisks, 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 assetsis 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. Asregards corporate loans/receivables, depending upon the nature of the underlying security for the loanor the nature of the receivable the risks would correspondingly fluctuate. However, the creditenhancement stipulated by rating agencies for such asset class pools is typically much higher andhence their overall risks are comparable to other AAA rated asset classes. The rating agencies have anelaborate system of stipulating margins, over collateralisation and guarantees to bring risk limits inline 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 bythe underlying automobile / vehicle and sometimes by a guarantor. Mortgages are secured by theunderlying property. Personal loans are usually unsecured.

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Corporate loans could be unsecured or secured by a charge on fixed assets / receivables of thecompany or a letter of comfort from the parent company or a guarantee from a bank / financialinstitution. As a rule of thumb, underlying assets which are secured by a physical asset / guarantor areperceived to be less risky than those which are unsecured. By virtue of this, the risk and therefore theyield 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 whetherthere 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 inthe construction of a housing loan asset pool for say Rs.10,000,000/- it may be easier to construct apool with just 10 housing loans of Rs.1,000,000 each rather than to construct a pool of personal loansas the ticket size of personal loans may rarely exceed Rs.500,000/- per individual. Also to take thisillustration further, if one were to construct a pool of Rs.10,000,000/- consisting of personal loans ofRs.100,000/- each, the larger number of contracts (100 as against one of 10 housing loans of Rs.10lakh each) automatically diversifies the risk profile of the pool as compared to a housing loan basedasset pool.

Average original maturity of the pool : indicates the original repayment period and whether the loantenors are in line with industry averages and borrower’s repayment capacity. To illustrate, in a car poolconsisting 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 contractshave paid more than 50% of the installments and if no default has been observed in such contracts, thisis a far superior portfolio than a similar car loan pool where 80% of the contracts have not evencrossed 5 installments.

Loan to Value (“LTV”) Ratio: Indicates how much % value of the asset is financed by borrower’sown equity. The lower the LTV ratio, the better it is. This ratio stems from the principle that where theborrower’s own contribution of the asset cost is high, the chances of default are lower. To illustrate fora vehicle costing Rs. 50 lakhs, if the borrower has himself contributed Rs. 40 lakhs and has taken onlyRs.10 lakhs as a loan, he is going to have lesser propensity to default as he would lose an asset worthRs. 50 lakhs if he defaults in repaying an installment. This is as against a borrower who may meet onlyRs. 5 lakhs out of his own equity for a vehicle costing Rs. 50 lakhs. Between the two scenarios givenabove, the latter would have higher risk of default than the former.

Average seasoning of the pool : Indicates whether borrowers have already displayed repaymentdiscipline. To illustrate, in the case of a personal loan, if a pool of assets consists of those who havealready repaid 80% of the installments without default, this certainly is a superior asset pool than theone where only 10% of the installments have been paid. In the former case, the portfolio has alreadydemonstrated that the repayment discipline is far higher.

Default rate distribution: Indicates how much % of the pool and overall portfolio of the originator iscurrent, how much is in 0-30 DPD (days past due), 30-60 DPD, 60-90 DPD and so on. The rationalehere 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 atarget credit rating, which could be much higher than the originator’s own credit rating. This ispossible through a mechanism called “Credit enhancement” and is fulfilled by filtering the underlyingasset classes and applying selection criteria, which further diminishes the risk inherent for a particularasset class. The purpose of credit enhancement is to ensure timely payment to the investors, if theactual collections from the pool of receivables for a given period are short of the contractual payouts

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on securitisation. Securitisation is normally a non-recourse instrument and therefore, the repayment onsecuritisation 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 ofrating transition and default rates, witnessed in both international and domestic arena, clearly revealsthat structured finance ratings have been characterized by far lower default and transition rates thanthat of plain vanilla debt ratings. Further, internationally, in case of structured finance ratings, not onlyare 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 thestrength 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 AAand above indicating the high level of safety from credit risk point of view at the time of making aninvestment. The Fund will not invest in foreign securitised debt.

The Fund may invest in various type of securitisation issuances, including but not limited to AssetBacked 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, guaranteesand other credit enhancements and the portfolio characteristic of the securitisation to ensure that theissuance fits in to the overall objective of the investment in high investment grade offeringsirrespective 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 securitisedbonds depends upon the originator and varies depending on whether they are issued with recourse tooriginator or otherwise. Even within securitised debt, AAA rated securitised debt offers lesser risk ofdefault than AA rated securitised debt. A structure with Recourse will have a lower credit risk than astructure without recourse.

Underlying assets in securitised debt may assume different forms and the general types of receivablesinclude auto finance, credit cards, home loans or any such receipts. Credit risks relating to these typesof receivables depend upon various factors including macro economic factors of these industries andeconomies. 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 ofauto finance and home loans, capacity of borrower to meet its obligation on borrowings in case ofcredit cards and intentions of the borrower influence the risks relating to the asset borrowingsunderlying the securitised debt.

Holders of the securitised assets may have low credit risk with diversified retail base on underlyingassets especially when securitised assets are created by high credit rated tranches. Risk profiles ofPlanned Amortisation Class tranches (PAC), Principal Only Class Tranches (PO) and Interest Onlyclass 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 atarget credit rating, which could be much higher than the originator’s own credit rating. This ispossible through a mechanism called ‘Credit enhancement’. The process of ‘Credit enhancement’ isfulfilled by filtering the underlying asset classes and applying selection criteria, which furtherdiminishes the risks inherent for a particular asset class. The purpose of credit enhancement is to

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ensure timely payment to the investors, if the actual collection from the pool of receivables for a givenperiod is short of the contractual payout on securitisation. Securitisation is normally non-recourseinstrument and therefore, the repayment on securitisation would have to come from the underlyingassets and the credit enhancement. Therefore the rating criteria centrally focus on the quality of theunderlying assets.

The change in market interest rates – prepayments may not change the absolute amount of receivablesfor the investors, but may have an impact on the re-investment of the periodic cash flows that theinvestor 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 deepsecondary market will develop for such securities. This could limit the ability of the investor to resellthem. Even if a secondary market develops and sales were to take place, these secondary transactionsmay 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 asstipulated by the rating agency, which differ from issue to issue. The credit enhancement stipulatedrepresents a limited loss cover to the Investors. These certificates represent an undivided beneficialinterest in the underlying receivables and there is no obligation of either the Issuer or the Seller or theoriginator, or the parent or any affiliate of the seller, issuer and originator. No financial recourse isavailable to the certificate holders against the investors’ representative. Delinquencies and credit lossesmay cause depletion of the amount available under the credit enhancement and thereby the investorpayouts may get affected if the amount available in the credit enhancement facility is not enough tocover the shortfall. On persistent default of an obligor to repay his obligation, the servicer mayrepossess and sell the underlying asset. However many factors may affect, delay or prevent therepossession of such asset or the length of time required to realize the sale proceeds on such sales. Inaddition, the price at which such asset may be sold may be lower than the amount due from thatobligor.

Risks due to possible prepayments: Weighted Tenor / Yield

Asset securitisation is a process whereby commercial or consumer credits are packaged and sold in theform of financial instruments. Full prepayment of underlying loan contract may arise under any of thefollowing circumstances :Ø Obligor pays the receivable due from him at any time prior to the scheduled maturity date of

that receivable; orØ Receivable is required to be repurchased by the seller consequent to its inability to rectify a

material misrepresentation with respect to that receivable; orØ The servicer recognizing a contract as a defaulted contract and hence repossessing the

underlying asset and selling the same; orØ 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 proceedingsconcludes that the sale from originator to Trust was not a sale then an investor could experience lossesor delays in the payments due. All possible care is generally taken in structuring the transaction so asto minimize the risk of the sale to Trust not being construed as a “True Sale”. Legal opinion isnormally obtained to the effect that the assignment of Receivables to Trust in trust for and for thebenefit of the Investors, as envisaged herein, would constitute a true sale.

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Bankruptcy of the investor’s agent

If an investor’s agent becomes subject to bankruptcy proceedings and the court in the bankruptcyproceedings concludes that the recourse of investor’s agent to the assets/receivables is not in itscapacity as agent/Trustee but in its personal capacity, then an investor could experience losses ordelays in the payments due under the swap agreement. All possible care is normally taken instructuring the transaction and drafting the underlying documents so as to provide that theassets/receivables if and when held by investor’s agent is held as agent and in Trust for the investorsand shall not form part of the personal assets of investor’s agent. Legal opinion is normally obtained tothe effect that the investor’s agent’s recourse to assets/receivables is restricted in its capacity as agentand Trustee and not in its personal capacity.

Credit Rating of the Transaction / CertificateThe credit rating is not a recommendation to purchase, hold or sell the certificate in as much as theratings 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 anygiven 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 thecollection account especially considering that some of the collections may be in the form of cash. Inthis interim period, collections from the Loan Agreements may not be segregated from other funds ofthe servicer. If the servicer fails to remit such funds due to investors, the investors may be exposed to apotential loss.

2.3 NOTE

· Investors are advised to read the Offer Document carefully, before taking any decision toinvest 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 asmentioned 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, orredemption of Units within their jurisdiction of nationality, residence, ordinaryresidence 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

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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 orguarantee can be given that the objective of the Fund will be fully met. The NAV of the Units issuedunder this Scheme and the income from them can go up or down depending on the factors and forcesaffecting the capital markets, debt markets and money markets.

Entities managed or sponsored by the affiliates or associates of the Sponsors may either directly orindirectly invest in a substantial portion of this Scheme. If these entities decide to offer a substantialportion 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 ofthis Offer Document in certain jurisdictions may be restricted or subject to registration requirementsand, accordingly, persons who come into possession of this Offer Document are required to informthemselves about, and to observe, any such restrictions, as may be applicable. This Offer Documentdoes not constitute an offer or solicitation to any person within such jurisdiction. The Trustee maycompulsorily redeem any units held directly or beneficially in contraventions of these prohibitions. Itis the responsibility of any person in possession of this Offer Document and of any person wishing toapply for Units pursuant to this Offer Document to inform themselves of and to observe, all applicablelaws and Regulations of such relevant jurisdiction.

No person has been authorized to issue any advertisement or to give any information or to make anyrepresentations other than that contained in this Offer Document. Circulars in connection with thisoffering not authorized by JM Financial Mutual Fund and any information or representations notcontained 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 orinvestment 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 OfferDocument. 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 theOffer Document and a Due Diligence Certificate, duly signed by the Compliance Officer of JMFinancial Asset Management Private Limited has been submitted to SEBI on January 28,2008 whichreads as follows:

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“DUE DILIGENCE CERTIFICATE

It is confirmed that:

i. The draft Offer Document forwarded to SEBI is in accordance with the Securities andExchange Board of India (Mutual Funds) Regulations, 1996 and the guidelines anddirectives 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 thisbehalf, have been duly complied with.

iii. The disclosures made in the Offer Document are true, fair and adequate to enable theinvestors to make a well-informed decision regarding investments in the proposedScheme.

iv. All the intermediaries named in the Offer Document are registered with SEBI and till datesuch registration is valid.

Place: Mumbai Signed: sd/-

Date : January 28,2008 Name : Diana D’sa Designation :Compliance Officer

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2.7 SUMMARY: JM Fixed Maturity Fund - Series XI

NAME OF THESCHEME

JM FIXED MATURITY FUND - SERIES XI, AN UMBRELLA SCHEMECOMPRISING VARIOUS INVESTMENT PLANS.

TYPE OF SCHEME A CLOSE ENDED INCOME SCHEMENEW FUND OFFERPRICE

RS. 10/- PER UNIT DURING THE NEW FUND OFFER PERIOD

INVESTMENTOBJECTIVE

A CLOSE ENDED INCOME SCHEME COMPRISING VARIOUS PLANSSEEKING TO GENERATE REGULAR RETURNS THROUGHINVESTMENTS IN FIXED INCOME SECURITIES NORMALLYMATURING IN LINE WITH THE TIME PROFILE OF THE RESPECTIVEPLAN.

PLANS UNDER THESCHEME &DURATION

THE SCHEME WILL LAUNCH TWO 13 MONTHS PLAN, AND AYEARLY PLAN.DETAILS OF PLANS TO BE LAUNCHED UNDER THE SCHEME ARE ASFOLLOWS :

TYPE OF PLAN DURATION(NO. OF DAYSFROM THEDATE OFALLOTMENT)

NO. OFPLANS TOBELAUNCHED

YEARLY PLAN 375 DAYS 113 MONTHS PLAN 395 DAYS 2

EACH PLAN WILL HAVE A DIFFERENT PORTFOLIO; HOWEVER, SUB-PLANS / OPTIONS UNDER A PLAN WILL HAVE A COMMONPORTFOLIO. EACH PLAN WILL ADHERE TO THE REQUIREMENTS OFTHE SEBI CIRCULAR NO. SEBI/IMD/CIR NO.10/22701/03 DATEDDECEMBER 12, 2003 READ WITH SEBI CIRCULAR NO. SEBI/IMD/CIRNO. 1/42529/05 DATED JUNE 14, 2005 ON MINIMUM NUMBER OFINVESTORS. EACH SCHEME AND INDIVIDUAL PLAN(S) UNDER THESCHEMES SHOULD HAVE A MINIMUM OF 20 INVESTORS AND NOSINGLE INVESTOR SHOULD ACCOUNT FOR MORE THAN 25% OF THECORPUS OF SUCH SCHEME/ PLAN(S). IN CASE OF CLOSE-ENDEDSCHEME / PLAN, IF EITHER OF THE ABOVE TWO CONDITIONS ARENOT FULFILLED IMMEDIATELY AFTER THE CLOSE OF THE NFO I.E.AT THE TIME OF ALLOTMENT, THE PROVISIONS OF REGULATION39(2)(C) OF THE SEBI (MUTUAL FUNDS) REGULATIONS, 1996, WOULDBECOME APPLICABLE AUTOMATICALLY WITHOUT ANYREFERENCE FROM SEBI. ACCORDINGLY, THE SCHEME / PLANSSHALL BE WOUND UP BY FOLLOWING THE GUIDELINESPRESCRIBED BY SEBI AND THE INVESTORS’ MONEY WOULD BEREDEEMED AT APPLICABLE NAV.

THE TRUSTEE HAS THE DISCRETION TO AUTOMATICALLY ROLLOVER THE PLAN(S) ON MATURITY SUBJECT TO REGULATION 33 OFTHE SEBI REGULATIONS. ACCORDINGLY, A PLAN MAY BE ROLLEDOVER IF THE PURPOSE, PERIOD AND OTHER TERMS OF THEROLLOVER AND ALL OTHER MATERIAL DETAILS OF THE PLANINCLUDING THE LIKELY COMPOSITION OF ASSETS IMMEDIATELYBEFORE THE ROLLOVER, THE NET ASSETS AND NET ASSET VALUE

19

OF THE PLAN ARE DISCLOSED TO THE UNITHOLDERS AND A COPYOF THE SAME IS FILED WITH SEBI. FURTHER, SUCH ROLLOVERWILL BE PERMITTED ONLY IN CASE OF THOSE UNITHOLDERS WHOEXPRESS THEIR CONSENT IN WRITING AND THE UNITHOLDERSWHO DO NOT OPT FOR THE ROLLOVER OR HAVE NOT GIVENWRITTEN CONSENT SHALL BE ALLOWED TO REDEEM THEIRHOLDINGS IN FULL AT NET ASSET VALUE BASED PRICE. HOWEVER,THE TRUSTEE RESERVES THE RIGHT NOT TO ROLL OVER ANY PLANUPON MATURITY, IF DEEMED APPROPRIATE IN THE INTEREST OFTHE SCHEME / UNIT HOLDERS. ACCORDINGLY, AT ANY POINT OFTIME, THERE MAY BE MULTIPLE PLANS OF THE SAME MATURITYPERIOD. ALL PLANS WILL HAVE DIFFERENT PORTFOLIOS IN LINEWITH THE MATURITY OF THE PLANS.

THE TRUSTEE MAY INTRODUCE ONE OR MORE SUB-PLANS THATMAY BE ENVISAGED AT A LATER DATE UNDER ANY OF THEPLAN(S) UNDER THE SCHEME WITH DIFFERENTIAL FEESTRUCTURE, LOAD STRUCTURE, OPTIONS (DIVIDEND / GROWTH),MINIMUM SUBSCRIPTION AMOUNT, ETC. DEPENDING UPON THEMARKET CONDITIONS PREVAILING AT THE TIME OF LAUNCH OFTHE PLAN(S) AND TAKING INTO CONSIDERATION THE INTERESTSOF THE UNITHOLDERS AND SUBJECT TO THE SEBI REGULATIONS.THE INVESTMENT MANAGEMENT FEES WILL BE UNIFORM ACROSSVARIOUS SUB-PLANS LAUNCHED UNDER A PLAN. INVESTORS WILLBE SUITABLY INFORMED BY PUBLISHING A NOTICE IN ANEWSPAPER OR THROUGH ANY OTHER MEANS AS THE TRUSTEEMAY CONSIDER APPROPRIATE.

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INVESTMENTOPTIONS

THE SCHEME OFFERS INVESTORS TWO SUB-PLANS :(A) REGULAR PLAN(B) INSTITUTIONAL PLAN

INVESTORS ARE REQUESTED TO INDICATE THEIR PREFERENCEWHILE INVESTING IN THE SCHEME. IN CASE AN INVESTOR FAILSTO SPECIFY HIS PREFERENCE OF THE SUB-PLAN, HE SHALL BEDEEMED TO HAVE OPTED AS UNDER

· IF THE INVESTMENT AMOUNT IS LESS THAN RS. 5 LACS, THEDEFAULT OPTION WOULD BE THE REGULAR PLAN AND

· IF THE INVESTMENT AMOUNT IS EQUAL TO AND MORETHAN RS. 5 LACS, THE DEFAULT OPTION WOULD BE THEINSTITUTIONAL PLAN.

EACH PLAN UNDER THE SCHEME OFFERS INVESTORS TWOINVESTMENT OPTIONS :

1. DIVIDEND OPTION 2. GROWTH OPTIONINVESTORS ARE REQUESTED TO INDICATE THEIR PREFERENCEWHILE INVESTING IN THE PLAN / SUB-PLAN. IN CASE AN INVESTORFAILS TO SPECIFY HIS PREFERENCE, HE SHALL BE DEEMED TOHAVE OPTED TO SELECT THE GROWTH OPTION.UNDER THE DIVIDEND OPTION, DIVIDENDS SHALL BE DECLAREDAT THE DISCRETION OF THE TRUSTEE SUBJECT TO AVAILABILITYOF DISTRIBUTABLE SURPLUS. INVESTORS HAVE THE CHOICE OFDIVIDEND PAYOUT OR REINVESTMENT. IN CASE AN INVESTORFAILS TO SELECT HIS PREFERENCE, HE SHALL BE DEEMED TOHAVE OPTED FOR THE DIVIDEND REIVESTMENT OPTION.HOWEVER, IN CASE THE DIVIDEND PAYABLE TO ANY UNITHOLDERIS BELOW RS. 100/- THEN THE SAME WILL BE AUTOMATICALLYREINVESTED.

APPLICATIONAMOUNT

MINIMUM RS. 5,000/- FOR THE REGULAR PLAN UNDER EACHOPTION AND RS. 5,00,000/- FOR THE INSTITUTIONAL PLAN UNDEREACH OPTION AND IN MULTIPLES OF RE. 1/- THEREAFTER. THERE ISNO UPPER LIMIT FOR INVESTMENT.

DURATION OF NEWFUND OFFER PERIOD

THE INVESTMENT PLANS BEING LAUNCHED UNDER JM FIXEDMATURITY FUND - SERIES XI WILL OPEN FOR SUBSCRIPTIONDURING THE NEW FUND OFFER PERIOD AT DATES AS DETERMINEDBY THE TRUSTEE. THE TRUSTEE MAY CLOSE OR EXTEND THE NEWFUND OFFER PERIOD BY GIVING AT LEAST ONE DAY’S NOTICE INONE DAILY NEWSPAPER. THE TRUSTEE RESERVES THE RIGHT TOEXTEND THE CLOSING DATE FOR THE NEW FUND OFFER PERIODSUBJECT TO THE CONDITION THAT THE NEW FUND OFFER SHALLNOT BE KEPT OPEN FOR MORE THAN 30 DAYS.

MINIMUMSUBSCRIPTIONAMOUNT

THE FUND SEEKS TO RAISE A MINIMUM SUBSCRIPTION AMOUNTOF RS. 1 CRORE UNDER EACH OF THE PLANS (INCLUDING SUB-PLANS, IF ANY) UNDER THE SCHEME DURING THE NEW FUNDOFFER PERIOD OF THE RESPECTIVE PLAN UNDER THE SCHEME.

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REDEMPTION OFUNITS

REDEMPTION OF UNITS WILL BE RS. 500 OR 50 UNITS SUBJECT TOAPPLICABLE EXIT LOAD. ANY REDEMPTION IN EXCESS THEREOFMAY BE IN MULTIPLES OF RE.1/- SUBJECT TO KEEPING MINIMUMBALANCE OF 500 UNITS OR RS. 5000/-, WHICHEVER IS LESS. IN THEEVENT OF REMAINING BALANCE FALLING BELOW THE MINIMUMBALANCE OF 500 UNITS OR RS.5000 (WHICHEVER IS LESS) WHILEPROCESSING REDEMPTION/SWITCH REQUESTS, THE ENTIREOUTSTANDING UNITS REDEEMED.

PLAN ENTRY LOAD EXIT LOADYEARLY NOT APPLICABLE* 2% $/ 3% #13 MONTHS NOT APPLICABLE* 2% $/ 3% #

LOAD DURING NEWFUND OFFER PERIODAND FOR ONGOINGREDEMPTIONS

CLOSE ENDED SCHEMES ARE NOT PERMITTED TO CHARGE ENTRYLOAD$ DURING SPECIFIED REDEMPTION PERIOD# FOR REDEMPTION ON ALL BUSINESS DAYS OTHER THANSPECIFIED REDEMPTION PERIOD

LIQUIDITY REDEMPTION OF UNITSEACH YEARLY AND 13 MONTHS PLAN WILL HAVE SPECIFIEDREDEMPTION PERIOD WHICH WILL NORMALLY BE THE FIRST FIVEBUSINESS DAYS AT THE BEGINNING OF EVERY CALENDAR MONTHDURING THE TENURE OF THAT PLAN. ON THE SPECIFIEDREDEMPTION DAYS DURING THE SPECIFIED REDEMPTION PERIOD,UNITHOLDERS CAN REDEEM THEIR INVESTMENTS AT THEAPPLICABLE NAV SUBJECT TO EXIT LOAD, IF ANY, AND AFTERDEDUCTION OF THE BALANCE PROPORTIONATE UNAMORTIZEDNEW FUND OFFER EXPENSES APPLICABLE TO THEIR INVESTMENTS.INVESTORS CAN ALSO REDEEM ON BUSINESS DAYS OTHER THANTHE SPECIFIED REDEMPTION PERIOD SUBJECT TO THE APPLICABLEEXIT LOAD, IF ANY, AND AFTER DEDUCTION OF THE BALANCEPROPORTIONATE UNAMORTIZED NEW FUND OFFER EXPENSESAPPLICABLE TO THEIR INVESTMENTS.UNITHOLDERS IN A PLAN CAN REDEEM THEIR INVESTMENTS ONTHE DATE OF MATURITY OF THAT PLAN AT THE APPLICABLE NAVWITHOUT ANY EXIT LOAD. PLEASE NOTE THAT IF ANY SPECIFIEDREDEMPTION DAY / MATURITY DAY FALLS ON A NON-BUSINESSDAY, THE REDEMPTION REQUESTS WILL BE ACCEPTED OR THEPLAN WILL MATURE, AS THE CASE MAY BE, ON THE NEXTBUSINESS DAY.ON MATURITY OF A PLAN, THE MATURITY PAY-OUT WILLNORMALLY BE EFFECTED ON THE DAY IMMEDIATELY FOLLOWINGTHE MATURITY DAY. HOWEVER, IF THE MATURITY PAY-OUT DAYFALLS ON A NON-BUSINESS DAY, THEN THE MATURITY DAY WILLBE EXTENDED APPROPRIATELY TO ENSURE THAT BOTH THEMATURITY DAY AND THE PAY-OUT DAY ARE CONTINUOUSBUSINESS DAYS.IN CASE REDEMPTION REQUEST IS NOT RECEIVED TILL THE ENDOF BUSINESS HOURS ON THE DATE OF MATURITY OF A PLAN, THE

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ACCOUNT BALANCES WILL BE COMPULSORILY REDEEMED ANDPROCEEDS WILL BE REMITTED TO THE RESPECTIVE UNITHOLDERS.THE UNITS OF THE PLAN ARE NOT PROPOSED TO BE LISTED ONANY EXCHANGE. THE FUND WILL, UNDER NORMALCIRCUMSTANCES, ENDEAVOR TO DISPATCH THE REDEMPTIONCHEQUES WITHIN 10 BUSINESS DAYS FROM THE DATE ON WHICHTHE REDEMPTION TRANSACTION IS EFFECTED.

TRANSPARENCY NAVS WILL BE DETERMINED AT THE CLOSE OF EVERY BUSINESSDAY TAKING INTO CONSIDERATION THE EXIT LOAD, IF ANY, ANDTHE BALANCE PROPORTIONATE UNAMORTISED ISSUE EXPENSES.THE SCHEME WILL DISCLOSE DETAILS OF ITS PORTFOLIO ON AHALF YEARLY BASIS AS PRESENTLY REQUIRED UNDER THEREGULATIONS, A COMPLETE STATEMENT OF THE SCHEME’SPORTFOLIO WOULD BE PUBLISHED BY THE MUTUAL FUND AS ANADVERTISEMENT IN A NEWSPAPER WITHIN ONE MONTH FROM THECLOSE OF EACH HALF YEAR (I.E. MARCH 31ST & SEPTEMBER 30TH)OR MAILED TO THE UNIT HOLDERS.

BENCHMARK THE PERFORMANCE OF THE SCHEME WILL BE BENCHMARKEDAGAINST CRISIL LIQUID FUND INDEX

REPATRIATIONFACILITY

NRIS AND FIIS MAY INVEST IN THE SCHEME ON A FULLREPATRIATION BASIS AS PER RBI NOTIFICATION NO. FEMA 20/2000DATED MAY 3, 2000.

Each plan will have an alpha / numeric name indicating the series of the Scheme and starting with thealphabet 13 M – 13 months Plan and Y – Yearly Plan. Thus, the 13 months plan will be named as JMFMF-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 theScheme. The subscription period for each plan shall be notified by giving a public notice at least oneday prior to the opening of the subscription period. Such notice shall also be suitably displayed at theofficial points of acceptance of transactions as defined by the AMC and also on the AMC’s website atwww.JMFinancialmf.com. The Trustee also reserves the right to increase / decrease the number ofbusiness 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 asmentioned above.

The AMC may add to or otherwise amend either all or any of the terms of the Scheme, by dulycomplying with the guidelines of and notifications issued by SEBI/GOI/any other relevant regulatorybody that may be issued from time to time subject to the prior approval of SEBI, if required. The offerdocument shall be fully revised and updated at least once in two years. Till the time the offerdocument is revised and reprinted, an addendum giving details of each of the changes shall be attachedto the offer document and key information memorandum and circulated to all the distributors so thatthe same can be attached to all offer documents and key information memoranda already in stock. TheAMC will also circulate the addendum / amendment to the unitholders along with the newsletter sentto them. Arrangements will also be made to provide changes in the offer document in the form of anotice / 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 conformitywith SEBI circular dated February 15, 2001.


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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 Offerexpenses upto a maximum of 6% of the initial resources raised under the Scheme / Plan. New Fundoffer expenses comprising of advertising & marketing expenses, printing and mailing, Registrar’sexpenses, bank charges, commission to agents / distributors and other expenses not exceeding 6% ofthe initial amount mobilized in the New Fund Offer will be charged to the Plan / Scheme and will beamortised over the life of the Plan / Scheme. Actual expenses incurred in respect of the New FundOffer 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 amountmobilised

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 andare subject to change as per actual amounts mobilised. The purpose of the above table is to assistinvestors in understanding the various costs and expenses that an investor in any sub-plan / Plan underthe Scheme will bear directly or indirectly. While these estimates have been made in good faith on thebasis of information available with the Fund, there can be no assurance that actual expense, under anyparticular head will not be more or less than such estimate. The AMC reserves the rights to revise thefees payable to the service providers from time to time. The total expenses, however, will bemaintained within the limits mentioned under the SEBI Regulations.

An investor may redeem his investment before maturity of the Scheme subject to payment ofapplicable load and after deduction of the balance proportionate unamortized new fund offer expensesapplicable 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 theScheme (Rs.)

94.00

Total No. of Units allotted 10.00Total New Fund Offer Expenses amortisedover 395 days (in case of a 13 MonthsaPlan)

6.00

Maximum period for amortization 395 daysPer day amortization of New Fund Offerexpenses (Rs.)

0.01519

Balance New Fund Offer Expenses whichwill be included in Net Assets (Rs.)

5.9848

NAV on first date of computation (Rs.) (94 + 5.9848) / 10= 9.9985

24

3.1.1 EXPENSES INCURRED IN SCHEMES LAUNCHED DURING THE LAST FISCALYEAR AND FROM APRIL 1, 2007 TO DECEMBER 31, 2007

a) JM Arbitrage Advantage Fund

JM Arbitrage Advantage Fund Actuals(Rs. inLacs)

% ofresourcesmobilised

R&T Expenses 1.89 0.003Advertising Expenses 242.63 0.372Printing & Stationery 20.29 0.031Marketing Expenses 106.55 0.164TOTAL 371.36 0.570

All expenses incurred launching JM Arbitrage Advantage Fund have been borne by the AMC. TheNew Fund Offer period commenced on June 1, 2006 and closed on June 30, 2006. The Schemeopened for continuous purchases / repurchases on July 21, 2006. The Scheme has 2 plans – DividendPlan and Growth Plan.

b) JM Money Manager Fund

JM Money Manager Fund Actuals(Rs. inLacs)


Advertising Expenses 0.194 0.002Printing & Stationery 0.478 0.004Marketing Expenses 0.115 0.001TOTAL 0.787 0.007

All expenses incurred launching JM Money Manager Fund have been borne by the AMC. The NewFund Offer period commenced on September 25, 2006 and closed on September 27, 2006. TheScheme opened for continuous purchases / repurchases on September 29, 2006. The Scheme has 3plans – Regular Plan, Super Plan and Super Plus Plan with each plan having Growth and Dividendoptions.

c) JM Financial Services Sector Fund

JM Financial Services Sector Fund Actuals(Rs. inLacs)


Printing & Stationery 1.015 0.179TOTAL 1.015 0.179

In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expensesconnected with sales and distribution of the Scheme during the New Fund Offer period have been metfrom the entry load. The New Fund Offer period commenced on November 2, 2006 and closed onNovember 20, 2006. The Scheme opened for continuous purchases / repurchases on December 15,2006. The Scheme has 2 plans – Dividend Plan and Growth Plan.

25

d) JM Telecom Sector Fund

JM Telecom Sector Fund Actuals(Rs. inLacs)


Printing & Stationery 1.015 0.168TOTAL 1.015 0.168

In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expensesconnected with sales and distribution of the Scheme during the New Fund Offer period have been metfrom the entry load. The New Fund Offer period commenced on November 2, 2006 and closed onNovember 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 SaverSeries - I

Actuals(Rs. in Lacs)


R&T Expenses 1.09 0.081Printing & Stationery 22.50 1.670Marketing Expenses 68.12 5.057Advertising Expenses 1.87 0.139TOTAL

93.586.947

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 expesesupto 6% which will be amortised during the period of the scheme. The remaining expenses will beborne 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-capFund

Actuals(Rs. in Lacs)


R&T Expenses 6.65 1.172Printing & Stationery 70.00 3.174Marketing Expenses 812.50 0.026Advertising Expenses 300.00 0.273TOTAL 1189.15 4.645

In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expensesconnected with sales and distribution of the Scheme during the New Fund Offer period have been metfrom 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. TheScheme has 2 plans – Dividend Plan and Growth Plan.

26

g) JM Contra Fund

JM Contra Fund Actuals(Rs. in Lacs)


R&T Expenses 6.39 0.01Printing & Stationery 72.51 0.08Marketing Expenses 1137.79 1.21Advertising Expenses 573.3 0.61TOTAL 1789.99 1.91

In accordance with the SEBI circular on initial issue expenses, sales, marketing and other expensesconnected with sales and distribution of the Scheme during the New Fund Offer period will be metfrom the entry load. The New Fund Offer period commenced on 16th July, 2007 and closed on 14thAugust, 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 basisare 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 Feeand other expenses permitted under Regulation52(4)(b)

0.20 %

TOTAL 2.25 %

The maximum expenses that may be incurred under any new sub-plan(s) that may be introduced underany plan launched under the Scheme will be within the limits mentioned above; however, theinvestment management fees will be uniform across various sub-plans launched under a plan. Theestimated maximum recurring expenses that can be charged to a sub-plan launched under any Planunder the Scheme, on an annual basis are given below:

Particulars (as a % of Applicable

NAV)

Regular Plan Institutional Plan

Investment Management & AdvisoryFee

1.25 % 1.25 %

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,Audit Fee and other expenses

0.20 % 0.20 %

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 andexpenses that an investor in any Plan under the Scheme will bear directly or indirectly. While theseestimates have been made in good faith on the basis of information available with the Fund, there canbe no assurance that actual expense, under any particular head will not be more or less than suchestimate. The AMC reserves the rights to revise the fees payable to the service providers from time totime. The total expenses, however, will be maintained within the limits mentioned under Regulation52(6) of the SEBI Regulations. The Trustee reserves the right to charge a lower / differential feestructure for the Scheme or any Plan / Option under the Scheme.

As per the Regulations, in case of debt schemes, the maximum recurring expenses includinginvestment management and advisory fee that can be charged to the Plan / Scheme shall be subject to apercentage limit of weekly net assets as in the table below:

First Rs. 100 crore Next Rs. 300 crore Next Rs. 300crore

On the balanceassets

2.25% 2.00% 1.75% 1.50%

Subject to the overall ongoing fees and expenses which would be charged to the scheme not exceedingthe limit laid down under Regulation 52(6) [as reproduced above], the AMC may at its discretioncharge to the Scheme the Government levies in the form of any charges or applicable taxes includingapplicable surcharge either presently payable or which may be imposed in future. Currently, theGovernment has imposed Service Tax of 12% on the Management and Trustee Fees and educationcess of 2% on Service Tax which would be charged to the scheme subject to the overall expensescharged 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 assetswhich are invested overseas. However, revision in fee charged shall be within the SEBI Regulations atall 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 forongoing redemptions is given as follows :

Entry Load Exit LoadYearly Plan Not Applicable * 2%$/ 3%#13 months

Plan 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

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 tocover 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 ofthe 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 theredemption/distribution of the units. Surplus of load, if any, charged over planned marketing anddistribution expenses will be credited to the Scheme whenever felt appropriate by the AMC.

28

4.0 CONDENSED FINANCIAL INFORMATION ON SCHEMES LAUNCHED DURINGTHE LAST THREE FISCAL YEARS

HISTORICAL PER UNITSTATISTICSJM HighLiquidityFund

Super Inst.PlanWeeklyDividendOption2004-2005

Super Inst.Plan DailyDividendOption2004-2005

SuperInst. PlanGrowthOption2004-2005

SuperInst.PlanWeeklyDiv2005-2006

SuperInst.PlanPlanDaily2005-2006

SuperInst.PlanGrowthOption2005-2006

Premium Plan+2005-2006

Date ofAllotment

19.05.2004 19.05.2004 19.05.2004 19.05.04 19.05.04 19.05.04 -

NAV at thebeginning ofthe year (Rs.)

10.0000$ 10.0000$ 10.0000$ 10.0231 10.0165 10.4285 10.0000+

Net Income perunit (Rs.)

0.58 1.70 0.70

Dividends (%) 0.3973 0.4022 0 0.10 6.66 0 7.04Transfer toReserves (Rs.in Crs.)

181.89 201.45 0.00

NAV at the endof the year(Rs.)

10.0216 10.0165 10.4269 10.0601 10.0165 11.0187 10.0000

Annualisedreturn (%)(Frominception date)

2.55* 2.55* 2.55* 5.33 5.33 5.34 6.32*

Benchmark(%)Returns (CrisilLiquid FundIndex)

2.21* 2.21* 2.21* 4.55 4.55 4.55 4.99*

Net Assets atend of theperiod (Rs. inCrs.)

331.83 465.12 711.34 45.34 182.36 208.97 152.63

Ratio ofRecurringExpenses toNet Assets (%)

0.60

0.46 0.30

29

HISTORICALPER UNITSTATISTICS JMHigh LiquidityFund

Super Inst.PlanDailyDividendOption2006-2007

Super Inst.PlanGrowthOption2006-2007

Super Inst.PlanWeeklyDividendOption2006-07

JM HighLiquidityPremiumPlan Fund2006.2007

Date of Allotment 19.05.2004 19.05.2004 19.05.2004 10.02.2006NAV at thebeginning of theyear (Rs.)

10.0165 11.0187 10.0601 10.0000

Net Income perunit (Rs.)

1.21 3.82

Dividends (%) 6.98 6.92 5.94 6.92Transfer toReserves (Rs. inCrs.)

208.19 0

NAV at the end ofthe year (Rs.)

10.0165 10.0000 10.1703 10.0000

Annualised return(%) (Frominception date)

6.32 6.33 6.32 7.11@

BenchmarkReturns(%) (CrisilLiquid Fund Index)

5.46 5.46 5.46 6.33@

Net Assets at endof the period (Rs.in Crs.)

363.43 117.10 4.04 9.25

Ratio of RecurringExpenses to NetAssets (%)

0.30 0.30

$ NAV as on the date of allotment. * Benchmark Index – CRISIL Liquid Fund Index @ Absolutereturns as the Scheme has not completed one year of operation.

HISTORICAL PER UNITSTATISTICSJM Liquid Plus Fund – PremiumPlan (Formerly known as JMFloater Fund – Long TermPremium Plan)

PremiumPlanDividendOption2004-2005

PremiumPlanGrowthOption2004-2005


PremiumPlanGrowthOption2005-2006

Date of Allotment 13.10.04 13.10.04 13.10.2004 13.10.2004NAV at the beginning of the year)(Rs.)

10.0000$ 10.0000$ 10.0234 10.2448

Net Income per unit (Rs.) 0.32 3.55Dividends (%) 0.2189 0 0.21 0Transfer to Reserves (Rs. in Crs.) - 3.91NAV at the end of the year (Rs.) 10.0219 10.2433 10.0502 10.8400Annualized return (%)(frominception date)

2.43* 2.43* 5.66 5.67

Benchmark Returns (%)(Crisil Liquid Fund Index)

2.09* 2.09* 4.76 4.76

30

Net Assets at end of the period (Rs.in Crs.)

72.21 77.01 10.17 18.67

Ratio of Recurring Expenses toNet Assets (%)

0.32 0.51

$ 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 UNITSTATISTICSJM Liquid Plus Fund – PremiumPlan (Formerly known as FloaterFund – Long Term Premium Plan)


Premium PlanGrowthOption2006-2007

Date of Allotment 13.10.2004 13.10.2004NAV at the beginning of the year)(Rs.)

10.0502 10.84

Net Income per unit (Rs.) 5.56Dividends (%) 5.58 NilTransfer to Reserves (Rs. in Crs.) 4.03NAV at the end of the year (Rs.) 10.0810 11.4927Annualized return (%)(from inceptiondate)

6.04 6.05

Benchmark Returns (%)*(Crisil Liquid Fund Index)

5.66 5.66

Net Assets at end of the period (Rs. inCrs.)

0.37 0.24

Ratio of Recurring Expenses to NetAssets (%)

0.55

* Benchmark Index – I-Sec Composite Index

JM Auto Sector Fund JM Healthcare Sector FundHISTORICAL PER UNITSTATISTICS

DividendPlan

2004-2005

Growth Plan2004-2005

DividendPlan

2004-2005


Date of Allotment 29.06.2004 29.06.2004 29.06.2004 29.06.2004NAV at the beginning of the year (Rs.) 10.00$ 10.00$ 10.00$ 10.00$

Net Income per unit (Rs.) 3.26 2.04Dividends (%) 0 0 1.00 0Transfer to Reserves (Rs. In Crs.) 2.35 1.50NAV at the end of the year (Rs.) 12.35 12.34 10.61 11.57Annualized return (%) (from inceptiondate) 18.75* 18.77* 1.03* 0.96*

Benchmark Returns (%) 20.11*@ 20.11*@ (1.98)*@@ (1.98)*@@

Net Assets at end of the period (Rs. inCrs.) 8.70 3.62 14.15 5.08

Ratio of Recurring Expenses to NetAssets (%) 2.50

$NAV as on the date of allotment. * Simple returns which have not been annualised as the plans havenot completed one year of operation. @ Benchmark Index – JM Auto Sector Index @@ BenchmarkIndex – BSE Healthcare Index.

31


Dividend Plan2005-2006

GrowthPlan

2005-2006

DividendPlan

2005-2006


Date of Allotment 29.06.2004 29.06.2004 29.06.2004 29.06.2004NAV at the beginning of the year (Rs.) 12.75 12.74 10.83 11.80

Net Income per unit (Rs.) 6.08 3.64Dividends (%) 30.63 0 15.60 0Transfer to reserves (Rs. in Crs.) 3.56 2.06NAV at the end of the year (Rs.) 15.55 20.31 14.39 18.14Annualized return (%) (from inceptiondate) 49.81 49.79 40.50 40.44

Benchmark Returns (%) 65.64@ 65.64@ 40.03@@ 40.03@@

Net Assets at end of the period (Rs. inCrs.) 9.63 1.82 8.85 2.66

Ratio of Recurring Expenses to NetAssets (%) 2.50


DividendPlan

2006-2007


DividendPlan

2006-2007


Date of Allotment 29.06.2004 29.06.2004 29.06.2004 29.06.2004NAV at the beginning of the year (Rs.) 15.55 20.31 14.39 18.14Net Income per unit (Rs.) 0.78 1.37Dividends (%) 0 0 0 0Transfer to Reserves (Rs. In Crs.) 4.04 2.99NAV at the end of the year (Rs.) 15.31 19.99 13.39 16.88Annualized return (%) (from inceptiondate) 38.75 36.32 26.90 25.01Benchmark Returns (%) 44.21@ 44.21@ 25.70@@ 25.70@@

Net Assets at end of the period (Rs. inCrs.) 8.53 1.41 6.27 1.44Ratio of Recurring Expenses to NetAssets (%) 2.50

@ Benchmark Index – JM Auto Sector Index @@ Benchmark Index – BSE Healthcare Index

32

HISTORICAL PER UNIT STATISTICSJM Equity & Derivative Fund

DividendPlan

2004-2005

GrowthPlan

2004-2005

Bonus Plan2004-2005

Date of Allotment 04.03.2005 04.03.2005 04.03.2005NAV at the beginning of the year (Rs.) 10.0000$ 10.0000$ 10.0000$

Net Income per unit (Rs.) 0.10Dividends (%) 0 0 0Transfer to Reserves (Rs. in Crs.) 4.87NAV at the end of the year (Rs.) 10.0583 10.0583 10.0583Annualized return (%) (from inception date) 0.58* 0.58* 0.58*Benchmark Returns (%)(Crisil Liquid FundIndex)

0.34* 0.34* 0.34*

Net Assets at end of the period (Rs. in Crs.) 321.57 486.61 0.70Ratio 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.



GrowthPlan

2005-2006

Bonus Plan2005-2006

Date of Allotment 04.03.2005 04.03.2005 04.03.2005

NAV at the beginning of the year 10.0705 10.0705 10.0705Net Income per unit 0.30Dividends (%) 1.14 0 0Transfer to Reserves (Rs. in Crs.) 10.27NAV at the end of the year 10.3455 10.7001 10.7006Annualized return (%)(from inception date) 7.01 6.50 6.51Benchmark Returns (Crisil Liquid Fund Index) 4.85 4.85 4.85Net Assets at end of the period (Rs. in Crs.) 292.26 442.92 2.78Ratio of Recurring Expenses to Net Assets (%) 1.00


DividendPlan

2006-2007

GrowthPlan

2006-2007

Bonus Plan2006-2007

Date of Allotment 04.03.2005 04.03.2005 04.03.2005NAV at the beginning of the year (Rs.) 10.3455 10.7001 10.7006

Net Income per unit (Rs.) 3.15Dividends (%) 8.39 Nil 0.80Transfer to Reserves (Rs. in Crs.) 5.70NAV at the end of the year (Rs.) 10.2751 11.5236 10.6705Annualized return (%) (from inception date) 7.36 7.35 7.35Benchmark Returns (%)(Crisil Liquid FundIndex)

5.79 5.79 5.79

Net Assets at end of the period (Rs. in Crs.) 76.98 164.08 7.99

33

Ratio of Recurring Expenses to Net Assets (%) 1.15

HISTORICAL PER UNITSTATISTICSJM Emerging Leaders Fund

DividendPlan

2005-2006

GrowthPlan2005-2006

DividendPlan

2006-2007

GrowthPlan

2006-2007

Date of Allotment 27.07.2005 27.07.2005

27.07.2005 27.07.2005

NAV at the beginning of the year(Rs.) 10.00$ 10.00$ 12.23 12.20

Net Income per unit (Rs.) 2.20 (0.19)Dividends (%) 0 0 0 0Transfer to Reserves (Rs. in Crs.) 1.20 (9.31)NAV at the end of the year (Rs.) 12.23 12.20 9.68 9.65Annualized return (%)(from inceptiondate) 22.30* 22.00* (2.09) (2.09)

Benchmark Returns (%) (BSE 200) 43.78* 43.78* 34.91 34.91Net Assets at end of the period (Rs. inCrs.) 28.40 12.49 58.12 5.28

Ratio of Recurring Expenses to NetAssets (%) 2.13 2.19

$ 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 UNITSTATISTICS

JM HI FI Fund

DividendPlan

2006-2007


Date of Allotment 07.04.2006 07.04.2006NAV at the beginning of the period(Rs.)

10.00$ 10.00$

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 9.12Annualized return (%) (frominception date) (9.00) (9.00)Benchmark Returns (%) 10.85 10.85Net Assets at end of the period (Rs. inCrs.) 14.98 18.46Ratio of Recurring Expenses to NetAssets (%)

2.49

$ NAV as on the date of allotment. * Absolute returns as the Scheme / plan has not completed one yearof operation.# Benchmark Index – S & P CNX Nifty Index. ## Benchmark Index – S&P CNX Nifty Index

34

HISTORICAL PER UNITSTATISTICS

JM ArbitrageAdvantage Fund

DividendPlan2006-2007

GrowthPlan2006-2007

Date of Allotment 18.07.2006 18.07.2006NAV at the beginning of the period(Rs.)

10.0000$ 10.0000$

Net Income per unit (Rs.) 1.52Dividends (%) 4.20 NilTransfer to Reserves (Rs. in crores) 8.33NAV at the end of the period (Rs.) 10.1772 10.6044Annualized return (%) (frominception date)

9.51@ 8.64@

Benchmark Returns (%) 6.38*@ 6.38*@


259.85 75.61

Ratio of Recurring Expenses to NetAssets (%)

1.47

$ NAV as on the date of allotment. * Benchmark Index – CRISIL Liquid Fund Index @ Absolutereturns as the Scheme has not completed one year of operation.

Historical Per Unit StatisticsJM Money Manager Fund – RegularPlan


GrowthPlan2006-2007


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 inceptiondate)

7.46 7.45

Benchmark Returns (%) (CRISIL LiquidFund Index)

6.63 6.63


0.18 1.19

Ratio of Recurring Expenses to Net Assets(%) (Annualised)

0.50%

$ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision fordepreciation. ** as per Revenue Account. $$ Simple annualized returns as the Scheme / Plan has notcompleted one year of operation.

35

Historical Per Unit StatisticsJM Money Manager Fund – Super Plan

DividendPlan

2006-2007





Dividends (%) 3.76 N. A.




7.57 7.57

Benchmark Returns (%)(CRISIL LiquidFund Index)

6.63 6.63


54.47 2.73


0.26


Historical Per Unit StatisticsJM Money Manager Fund – Super PlusPlan

DividendPlan

2006-2007

GrowthPlan

2006-2007Date of Allotment 27.09.2006 27.09.2006



Dividends (%) 4.06 N. A.



Annualized return (%)(from inceptiondate)

8.17 8.23

Benchmark Returns (%) (CRISIL LiquidFund Index)

6.63 6.63


265.77 12.87


0.35

$NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision fordepreciation. ** as per Revenue Account. $$ Simple annualized returns as the Scheme / Plan has notcompleted one year of operation.

36

Historical Per Unit StatisticsJM Financial Services Sector Fund

DividendPlan

2006-2007

GrowthPlan

2006-2007Date of Allotment 0.7.12.2006 0.7.12.2006


Net Income per unit * (Rs.) (0.39)

Dividends (%) 0 N. A.

Transfer to reserves (Rs. in Crores) ** (0.40)



(23.90) $$ (23.90)

Benchmark Returns (%) (BSE FinanceIndex)

(27.28) $$ (27.28)


3.42 1.55


0.50

$ NAV as on the date of allotment. * calculated excluding unrealized appreciation/provision fordepreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan hasnot completed one year of operation.

Historical Per Unit StatisticsJM Telecom Sector Fund

DividendPlan

2006-2007


Date of Allotment 0.7.12.2006 0.7.12.2006







19.38 $$ 19.38$$

Benchmark Returns (%) (BSE TelecomIndex)

20.68 $$ 20.68$$


4.67 3.39


0.50


37

Historical Per Unit StatisticsJM Equity Tax Saver Fund Series - I

DividendPlan

2006-2007









N A$$ N A$$

Benchmark Returns (%) (BSE 200 Index) N A$$ N A$$


5.79 7.82


2.37


Historical Per UnitStatisticsJM Fixed Maturity Fund– Series IV

JM FMP-S4-15M1DividendPlan2006-2007

JM FMP-S4-15M1GrowthPlan2006-2007

13 MonthsPlan (JMFMF-IV-13M)DividendPlan2006-2007

13 MonthsPlan (JMFMF-IV-13M)GrowthPlan2006-2007

YearlyPlanDividendPlan2006-2007

YearlyPlanGrowthPlan2006-2007

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 ofthe year (Rs.)

10.0000$ 10.0000$ 10.0000$ 10.0000$ 10.0000$ 10.0000$

Net Income per unit * (Rs.) 0.12 0.04 0.02

Dividends (%) 1.19 Nil 0.50 Nil Nil Nil

Transfer to reserves (Rs. inCrores) **

0.52 0.29 0.09

NAV at the end of theperiod (Rs.)

10.0000 10.1185 10.0000 10.0498 10.0238 10.0238

Annualized return(%)(from inception date)

8.16 8.16 12.98 12.98 28.96 28.96

Benchmark Returns (I-SecBond Fund Index)

1.86 1.86 1.43 1.43 (39.27) (39.27)

Net Assets at end of theperiod (Rs. in Crs.)

0.36 44.18 4.02 67.58 0.05 41.71

Ratio of RecurringExpenses to Net Assets (%)(Annualised)

0.10% 0.08% 0.08%

38

$ NAV as on the date of allotment. * calculated excluding unrealised appreciation/provision fordepreciation. ** as per Revenue Account. $$ Simple returns not annualized as the Scheme / Plan hasnot completed one year of operation.

HISTORICAL PER UNITSTATISTICSJM Fixed Maturity Fund –Series VI –Quarterly Plan – 4


GrowthPlan2007-2008

InstitutionalDividend Plan2007-2008

InstitutionalGrowth Plan2007-2008

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


0.3300

NAV at the end of the period 10.0092 10.0898 10.0096 10.0941

Annualized return (%)(from inception date)

8.4112 8.4043 8.8143 8.8068

Benchmark Returns (%) (I Sec SI Bex Index)

7.7335

Net Assets at end of the period(Rs. in Crs.)

0.47 0.10 330.77 1.03

Ratio of Recurring Expenses toNet Assets (%) Annualized

0.69 0.29

HISTORICAL PER UNITSTATISTICSJM Fixed Maturity Fund –Series VI –Quarterly Plan – 5


GrowthPlan2007-2008





10.0000$


Dividends (%) 0.72 0 0.76 0


0.4700

NAV at the end of the period 10.0092 10.0810 10.0098 10.0856


8.7026 8.69558 9.1866 9.1894

Benchmark Returns (%) (I Sec SI Bex Index)

8.4702


0.02 0.01 341.10 15.81

39


0.75 0.25

HISTORICAL PER UNITSTATISTICSJM Fixed Maturity Fund –Series IV –– 15 Months Plan 2


GrowthPlan2007-2008





10.0000$


Dividends (%) 5.78 6.22


4.44

NAV at the end of the period10.0900 10.6795 10.0718 10.7058

Annualized return (%)(from inception date) 11.2100 11.2225 11.6452 11.6585Benchmark Returns (%) (I Sec SI Bex Index) 8.7535 8.7535 8.7535 8.7535Net Assets at end of the period(Rs. in Crs.) 1.46 18.42 20.80 54.69Ratio of Recurring Expenses toNet Assets (%) Annualized

0.25 0.13


HISTORICAL PER UNITSTATISTICSJM Small & Mid-Cap Fund



Date of Allotment 30/04/2007 30/04/2007

NAV at the beginning of the year 10.0000$ 10.0000$


Dividends (%) 0


11.66

NAV at the end of the period 17.6076 17.6076


113.3377 113.3377

Benchmark Returns (%) (CNX Mid-Cap Index)

112.2992 112.2992


146.67 140.07

40


2.33


HISTORICAL PER UNITSTATISTICSJM Contra Fund



Date of Allotment 07/09/2007 07/09/2007

NAV at the beginning of the year 10.0000$ 10.0000$


Dividends (%) 0


10.92

NAV at the end of the period 13.5184 13.5184


111.671 111.671

Benchmark Returns (%) (BSE 500 Index)

130.78 130.78


522.63 545.75


2.06


HISTORICAL PER UNITSTATISTICSJm Fixed Maturity Fund SeriesVII – 13M


GrowthPlan2007-2008




NAV at the beginning of the year 10.0000$ 10.0000$ 10.0000$ 10.0000$


Dividends (%) 2.07 2.51


5.9200


Annualized return (%)(from inception date) 9.1618 9.1632 9.6266 9.6256Benchmark Returns (%) (I Sec Bond Index) 7.3360

41

Net Assets at end of the period(Rs. in Crs.) 1.25 5.12 45.34 211.57Ratio of Recurring Expenses toNet Assets (%) Annualized

0.22 0.16


HISTORICAL PER UNITSTATISTICSJm Fixed Maturity Fund SeriesVII – 18M


GrowthPlan2007-2008






Dividends (%) 0.39 1.08


0.9400


Annualized return (%)(from inception date) 7.9636 7.9650 8.8704 8.8750Benchmark Returns (%) (I Sec Bond Index) 8.004Net Assets at end of the period(Rs. in Crs.) 0.80 3.79 3.15 53.94Ratio of Recurring Expenses toNet Assets (%) Annualized

0.71 0.21


HISTORICAL PER UNITSTATISTICSJM Interval Fund – Series I


GrowthPlan2007-2008






Dividends (%) 0 0


0.4400


42

Annualized return (%)(from inception date) 10.676 10.676 11.0412 11.0412Benchmark Returns (%) (CRISIL Liquid Fund Index) 9.3388 9.3388 9.3388 9.3388Net Assets at end of the period(Rs. in Crs.) 0.54 0.16 270.53 143.54Ratio of Recurring Expenses toNet Assets (%) Annualized

0.63 0.28


The borrowings of the Schemes of the Fund have been within the limits stipulated under the SEBI(Mutual Funds) Regulations, 1996 as amended.

43

Latest performance of the schemes as on December 31,2007

Name of SchemeNAV(Rs.)

Returns sinceinception (%)

BenchmarkReturns (%)

JM Equity Fund - Dividend 25.878 20.23 15.40JM Equity Fund - Growth 57.5981 14.71 15.40JM Balanced Fund - Dividend 25.8466 19.40 NAJM Balanced Fund - Growth 34.0065 20.99 NAJM Basic Fund - Dividend 33.6848 38.06 NAJM Basic Fund - Growth 39.8136 41.83 NAJM Auto Sector Fund - Dividend 20.1872 33.07 31.02JM Auto Sector Fund - Growth 26.3539 31.83 31.02JM Health Care Sector Fund - Dividend 15.7801 22.72 23.00JM Health Care Sector Fund - Growth 19.8902 21.66 23.00JM Equity & Derivative Fund - Bonus 11.2679 7.19 6.13JM Equity & Derivative Fund - Dividend 10.4057 7.19 6.13JM Equity & Derivative Fund - Growth 12.1663 7.18 6.13JM Emerging Leaders Fund - Dividend 20.6217 34.69 50.58JM Emerging Leaders Fund - Growth 20.5794 34.58 50.58JM HI FI Fund - Dividend 18.7023 43.48 39.30JM HI FI Fund - Growth 18.7067 43.60 39.30JM Arbitrage Advantage Fund - Dividend 10.3383 8.46 7.02JM Arbitrage Advantage Fund - Growth 11.2552 8.47 7.02JM 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 55.98JM Telecom Sector Fund - Growth Plan 15.1201 47.39 55.98JM 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 75.38JM Small & Midcap Fund - Regular Growth 17.6076 76.07 75.38JM 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 NAJM Income Fund - Dividend 10.6972 10.71 NAJM Income Fund - Growth 30.2359 9.06 NAJM Short Term Fund - Institutional Plan - Dividend 10.3772 6.70 5.35JM Short Term Fund - Institutional Plan - Growth 10.2463 0.51 5.35JM Short Term Fund - Dividend 11.4514 6.69 5.41JM Short Term Fund - Growth 14.3424 6.75 5.41JM High Liquidity Fund Growth - Growth option 21.6865 8.04 NAJM High Liquidity Fund Growth - Bonus option 11.3885 5.69 5.34JM High Liquidity Fund - Institutional Plan - Dividend 10.2571 6.49 5.36JM High Liquidity Fund - Institutional Plan - Growth 13.0832 5.83 5.35JM High Liquidity Super Instituitional Daily Dividend Plan 10.0165 6.22 5.69JM High Liquidity Fund - Dividend 10.4947 7.05 NAJM High Liquidity Fund -DAILY Dividend 10.4302 5.69 NAJM High Liquidity Super Instituitional Growth Plan 12.441 6.22 5.69JM High Liquidity Instituitional Daily Dividend Plan 10.0159 5.83 5.40

44

JM High Liquidity Fund - Quarterly Dividend 12.4853 5.60 5.43JM High Liquidity Super Instituitional Weekly Dividend Plan 10.0295 5.15 5.69JM High Liquidity Fund - Premium Plan - Daily DividendCorp 10 6.98 6.80JM Liquid Plus Fund - Premium Plan - Dividend 10.1185 6.28 5.94JM Liquid Plus Fund - Premium Plan - Growth 12.167 6.29 5.94JM Liquid Plus Fund - Regular Plan - Dividend 12.7087 5.45 5.37JM Liquid Plus Fund - Regular Plan - Growth 12.6675 5.37 5.37JM Liquid Plus Fund - Premium Plan - Daily Dividend 10.0004 5.01 4.20JM Liquid Plus Fund - Premium Plan - Weekly Dividend Plan 10.0915 4.79 4.12JM Liquid Plus Fund - Regular Plan-Daily Dividend 10.0004 4.62 3.99JM Liquid Plus Fund - Regular Plan-Weekly Dividend Option 10.0657 4.34 3.99JM Floater Fund - Short Term Plan - Dividend 10.0883 6.14 5.54JM Floater Fund - Short Term Plan - Growth 13.0042 5.98 5.37JM Money Manager Fund-Super Plus Plan-Daily Dividend 10.0041 8.51 7.23JM Money Manager Fund-Super Plus Plan-FortnightlyDividend 10.0492 3.93 2.71JM Money Manager Fund-Super Plus Plan-Growth 11.0874 8.54 7.23JM Money Manager Fund - Super Plus Plan - Weekly Dividend 10.074 3.85 2.64JM Money Manager Fund-Super Plan-Daily Dividend 10 7.07 7.23JM Money Manager Fund-Super Plan-Growth 10.9024 7.10 7.23JM Money Manager Fund-Super Plan-Weekly Dividend 10.0353 1.80 1.35JM Money Manager Fund-Regular Plan-Daily Dividend 10 7.11 7.23JM Money Manager Fund-Regular Plan-Growth 10.9032 7.10 7.23JM Money Manager Fund-Regular Plan-Weekly Dividend 10.0568 2.98 2.52JM MIP Fund - Annual Dividend 12.3261 9.58 9.62JM MIP Fund - Growth 14.8145 9.60 9.62JM MIP Fund - Monthly Dividend 11.2574 9.59 9.62JM MIP Fund - Quarterly Dividend 11.5876 9.60 9.62JM 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 - InstitutionalDividend 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 - InstitutionalDividend 10.0258 2.77* 2.11*JM FMF Series VII- 13 Months Plan - 1 - Institutional Growth 10.2769 2.77* 2.11*

45

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 - InstitutionalDividend 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 NAJM G-Sec Fund - Regular : Growth - Bonus 10.649 4.04 6.30JM G-Sec Fund - Regular : Dividend 10.4648 9.96 NAJM G-Sec Fund - PF Plus Plan - Dividend 11.2503 3.02 4.70JM G-Sec Fund - PF Plus Plan - Growth 11.2477 3.01 4.70JM G-Sec Fund - PF Plan - Growth 22.7665 10.47 NAJM 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. Forthe purpose of calculating returns, the inception date is deemed to be the date of allotment. * Returnsare on absolute basis as the scheme / plan has not completed one year.** Simple annualized returns asthe 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 asthe 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 "theFund") had been constituted as a Trust with J.M. Financial and Investment Consultancy ServicesPrivate Limited ("JMFICS") and JM Financial Limited (formerly known as J.M. Share and StockBrokers Limited and referred to as "JMF") as the Settlors and JM Financial Trustee Company PrivateLimited (formerly, known as J.M. Trustee Company Private Limited and hereinafter referred as "theTrustee") as Trustee. The Fund was registered with SEBI vide Registration No. MF/015/94/8 datedSeptember 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 theInvestment Manager. JMFICS and JMF who were the Sponsor and the Co-Sponsor respectively of JMFinancial Mutual Fund had made an initial contribution of Rs. One lac each towards JM FinancialMutual 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 theonly shareholder holding more than 40% of the equity share capital of the AMC, JM Financial Limitedhas 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 ofassociation with the Indian securities market both as Investment Banker and Stock Brokers. In the year

46

1999, JM Financial Group and Morgan Stanley group setup a joint venture to combine theirinvestment banking and institutional equity sales and trading businesses in India. The companies thatwere managing these businesses were known as JM Financial Consultants Pvt. Ltd. (earlier known asJM Morgan Stanley Private Limited) and Morgan Stanley India Co. Pvt. Ltd. (earlier known as JMMorgan Stanley Securities Private Limited). In October 2007, the sponsor has separated from MorganStanley in the joint venture relating to Investment Banking and Institutional Equity Sales and TradingBusinesses in India.

The main objective of JM Financial Mutual Fund is to formulate and devise various collectiveschemes of savings and investments for the general public and to provide them with reasonableincome/ 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 FinancialMutual Fund. JM Financial is the flagship listed company belonging to JM Financial Group and iscurrently a holding company of JM Financial Asset Management Private Limited. J.M.Financial andInvestment Consultancy Services Private Limited, the erstwhile sponsor of JM Financial Mutual Fundis one of the promoters of JM Financial.

Financial performance of the Sponsor Rs. In Crore

FY 2004-05 FY 2005-06 FY 2006-07Total Income 13.72 16.28 39.38Profit After Tax 9.48 15.27 35.31Equity capital (Paid up) 11.29 15.50 29.98Share Suspense Account - 12.37 -Reserves & Surplus 20.81 203.19 351.02Networth 32.10 231.06 381.00Earnings per Share (Rs.) 8.37 8.60 12.04Book Value per Share(Rs.) 28.34 148.83 126.99Dividend Paid (%) 25.00 25.00 50.00

5.2 TRUSTEE COMPANY - JM FINANCIAL TRUSTEE COMPANY PRIVATELIMITED

JM FINANCIAL TRUSTEE COMPANY PRIVATE LIMITED (formerly known as J.M. TrusteeCompany Private Limited) has been promoted by J.M. Financial & Investment Consultancy ServicesPvt. Ltd., and JM Financial Ltd. JM Financial Trustee Company Pvt. Ltd., is registered under theCompanies Act, 1956 and was incorporated on June 9, 1994. The Sponsors have executed a TrustDeed on September 1, 1994 appointing JM Financial Trustee Company Pvt. Ltd., as Trustee Companyof JM Financial Mutual Fund.

47

The following is a summary of the substantial provisions of the Trust Deed which may be of materialinterest to the Unitholders:

· The investments to be under the control and custody of the Trustee and to be held in trust forthe 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 ofunits 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, aCustodian 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 particularlydescribed under the heading "Rights and Obligations of the Trustee ".

· The Trust declared may be terminated or dissolved in accordance with SEBI Regulation by theSettlors and thereupon the Mutual Fund to be liquidated in the manner provided in the TrustDeed.

· No amendments to the Trust Deed shall be carried out without the prior approval of SEBI andUnitholders’ 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 asrequired under the Regulations :

· Each Director shall file with JM Financial Mutual Fund, details of his transactions or dealingsin securities of such value on a quarterly basis or as may be specified under the SEBIRegulations from time to time.

· The minimum number of Directors in the Trustee Company shall be four or such number ofDirectors 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 AMCshall obtain this consent by the holding of a postal ballot, administered by the AMC, or in such othermanner 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 ofthe Trustee. The Board meeting of the Trustee shall be held at least once in every two months and atleast six such meetings shall be held in every year or at such frequency as may be prescribed under theSEBI Regulation or Trust Deed. The quorum for a Board meeting of the Trustee shall not beconstituted unless such numbers of independent directors as may be prescribed by SEBI from time totime are present at the meeting. As already disclosed in the Offer Document, necessary amendmentshave been carried out in the Trust Deed for incorporation of clauses 20, 21 & 22 of the Third Scheduleto the Regulations. The supervisory role of the Trustee will also include reviewing the internalauditors/compliance officer's reports on a regular basis.

48

5.2.1 BOARD OF DIRECTORS OF TRUSTEEThe members of the Board of Directors of the Trustee are:

Mr. Nimesh N. Kampani, Chairman141, 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 isthe Chairman and Managing Director of JM Morgan Stanley Pvt. Ltd. He has varied experience ofover 3 decades in the financial services sector and is recognized as a leading investment banker.

Other Directorships Designation1) JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan

Stanley Pvt. Ltd.)Chairman & MD

2) JM Financial Services Pvt. Ltd. (earlier known as JM Morgan StanleyFinancial Services Pvt. Ltd.)

Chairman

3) JM Financial Securities Pvt. Ltd. (earlier known as JM MorganStanley Fixed Income Securities Pvt. Ltd.)

Chairman

4) J.M. Financial & Investment Consultancy Services Pvt. Ltd. Chairman5) JM Financial Ltd. Chairman6) Kampani Consultants Ltd. Chairman7) Capital Market Publishers India Pvt. Ltd. Chairman8) Apollo Tyres Ltd. Director9) KSB Pumps Ltd. Director10) Ranbaxy Laboratories Ltd. Director11) Britannia Industries Ltd. Director12) Deepak Nitrite Ltd. Director

Mr. Darius E. Udwadia, Solicitor, Partner - Udwadia & UdeshiThomas 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 PrivateLimited. He is a Solicitor and Advocate of the Bombay High Court and a Solicitor of the SupremeCourt 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 Designation1) J.M. Financial & Investment Consultancy Services Pvt. Ltd. Director2) Mechanalysis (India) Ltd. Director

3) ITD Cementation India Ltd. Director4) Astra Zeneca Pharma India Ltd. Chairman5) Bombay Burmah Trading Corp. Ltd. Director6) Coromandel Fertilisers Limited Director7) Eureka Forbes Ltd. Director8) Macmillan India Ltd. Vice Chairman9) Sundaram- Clayton Limited Director10) Wyeth Ltd. Director11) Habasit Iakoka Pvt. Ltd. Director12) Nitesh Estates Pvt. Ltd. Director13) ADF Foods Ltd. Director14) JM Financial Consultants Pvt. Ltd. (earlier known as JM

Morgan Stanley Pvt. Ltd.)Director

15) Avestha Gengraine Technologies Private Ltd. Chairman16) ABB Ltd Director17) Quantum Advisors Pvt. Ltd. Director

49

18) Avesta Nordic Research Private Limited Director19) JM Financial Limited Director20) Development Credit Bank Ltd. Director21) 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 TrusteeCompany Private Limited. He is an industrialist by profession and is the Chairman of KSB PumpsLimited.

Other Directorships Designation1) KSB Pumps Limited Chairman2) Industrial & Prudential Invt. Co Ltd Chairman3) 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 - 400001.Mr. Shivji K. Vikamsey is a Chartered Accountant by profession and is associated as a Senior Partnerwith Khimji Kunverji & Co. He is an independent director on the Board of JM Financial TrusteeCompany Private Limited.

Other Directorships Designation1) Navneet Publications (India) Ltd Director2) HLB Technologies ( Munbai) Pvt Ltd Director3) Anand Rathi Realty Fund Trustee4) Euro Ceramics Ltd. Director

Mr. Jalaj A. Dani, Industrialist (Independent Director)6-A, Shanti Nagar, Vakola Pipeline Lane, Santacruz (E), Mumbai - 400 055Mr. Jalaj A. Dani is a renowned industrialist and is on the Board of various public and private limitedcompanies. He is associated with JM Financial Trustee Company Private Limited as an independentdirector

Other Directorships Designation1) Gujarat Organics Limited Director2) Hitech plast Ltd Director3) Coatings Specialities (India) Limited Director4) Dani Finlease Limited Director5) Asian Paints (Lanka) Limited, Sri Lanka Director6) Asian Paints (International) Limited, Mauritius Director7) Asian Paints (Middle East) LLC- Oman Director8) Asian Paints (Bangladesh) Limited Bangladesh Director9) Asian Paints (South Pacific) Holdings Limited, Vanutua Director10) S C Dani Research Foundation Limited Director

11) Asian Paints (Vanutua) Ltd, Vanutau Director

12) Berger International Ltd., Singapore Director13) Berger Paints Singapore Pte. Ltd Singapore Director

50

14) Berger Building Services (Singapore) Pte. Ltd Director15) Berger Contractor (Singapore) Pte.Ltd Director16) Berger International Sdn.Bhd., Malaysia Director17) Lewis Berger International (Overseas Holdings ) Ltd. Director18) Berger Paints Jamaica Ltd Kingston Director19) Berger Paints Trinidad Ltd Port of Spain Director20) Berger Paints Thailand Ltd., Thailand Director21) Berger Paints Barbados Ltd. Bridgetown Director22) Samoa Paints Ltd. Director23) Berger Paints Ltd (Hk) Ltd. Hongkong Director24) Berger Paints (Ningbo) Co Ltd China Director25) Taubmans Paints Fiji Ltd Director26) Berger Paints Emirates Ltd UAE Director27) Berger Paints Bahrain W L L Director28) MTR Foods Limited Director29) SCIB Chemicals SAE Egypt Director30) 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 - 400025Mr. Sharad Kulkarni is an independent director on the Board of Trustee. He is Ex-President & CEO ofRPG Enterprises. He has experience of over 37 years in the areas of management of internationalalliances, joint ventures, building grass root projects and capital market operations.

Other Directorships Designation1) LANXESS ABS Ltd. Director2) Bayer Crop Sciences Ltd. Director3) Hindustan Construction Co. Ltd. Director4) KEC International Ltd. Director5) Raychem – RPG Ltd. Director6) Camlin Fine Chemicals Ltd.. Director7) RPG Enterprises LTD Director8) Travel Voyages Ltd. Director9) Navin Fluorine International Ltd. Director10) Asia Pacific Advisory Council of Arrow Electronics, USA Director11) HCC Realty Ltd. Director

51

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 SEBIRegulations, 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 thesecurities 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 orthe 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, inmonitoring securities transactions with brokers and avoiding undue concentration of businesswith any broker.

6. The Trustee shall ensure that the AMC has not given any undue or unfair advantage to anyassociates or dealt with any of the associates of the AMC in any manner detrimental to interestof the Unitholders.

7. The Trustee shall ensure that the transactions entered into by the AMC are in accordance withthe SEBI Regulations and the Scheme.

8. The Trustee shall ensure that the AMC has been managing the mutual fund schemesindependently of other activities and have taken adequate steps to ensure that the interest ofinvestors of one scheme are not being compromised with those of any other scheme or ofother activities of the AMC.

9. The Trustee shall ensure that all the activities of the AMC are in accordance with theprovisions of the SEBI Regulations.

10. Where the Trustee has reason to believe that the conduct of business of the mutual fund is notin accordance with the SEBI Regulations and the Scheme they shall forthwith take suchremedial steps as are necessary by them and shall immediately inform SEBI of the violationand the action taken by them.

11. Each Trustee shall file the details of his transactions of dealing in securities with the MutualFund on a quarterly basis.

12. The Trustee shall be accountable for, and be the Custodian of, the Funds and property of therespective schemes and shall hold the same in trust for the benefit of the Unitholders inaccordance 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 withthe provisions of the Trust Deed.

14. The Trustee shall be responsible for the calculation of any income due to be paid to the Fundand also of any income received in the Fund for the holders of the units of any scheme in

52

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; orb. whenever required to do so on the requisition made by three-fourths of the unit holders of

any scheme; orc. 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 andaffects the interest of Unitholders, shall be carried out unless,

i. a written communication about the proposed change is sent to each Unitholder and anadvertisement is given in one English daily newspaper having nationwide circulation as wellas in a newspaper published in the language of the region where the Head Office of the mutualfund 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 whenrequired.

17. The Trustee shall quarterly review all transactions carried out between the Fund, AMC and itsassociates.

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) ofRegulation 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 theinterest of the Unitholders.

20. The Trustee shall ensure that there is no conflict of interest between the manner of deploymentof 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 thesame by the AMC.

22. The Trustee shall abide by the Code of Conduct as specified in the Fifth Schedule of the SEBIRegulations.

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 theAMC;

(c) a certificate to the effect that the AMC has been managing the schemes independently ofany 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 hastaken 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 ofthe SEBI Regulations shall give their comments on the report received from the AMCregarding the investments by the mutual fund in the securities of group companies of theSponsor.

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 newschemes.

iii. The Trustee shall ensure that the Trust Property is properly protected, held andadministered by proper persons and by a proper number of such persons.

53

iv.The Trustee shall ensure that all service providers are holding appropriate registrations fromSEBI 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 diligencehonestly.

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 directorsiv.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 internaland external reporting system;

Internal Reporting: The compliance officer reports on a regular basis to the Trustee on thecompliance of mandatory regulatory requirements.

External Reporting: In terms of Regulation 18(4)(f) of the SEBI Regulations, the Trustee will ensurethat before the launch of any scheme, the AMC has prepared a compliance manual and desired internalcontrol 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 anaudit committee of the Trustee, which shall be chaired by an independent Trustee. In compliance ofthe above SEBI Regulations, the Trustee has constituted an audit committee and appointed anindependent internal auditor for conducting internal audit of the books and records of the Fund. Theinternal 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.

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5.3 ASSET MANAGEMENT COMPANY - JM FINANCIAL ASSET MANAGEMENTPRIVATE 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 wasincorporated on 9th June, 1994. JM Financial Trustee Company Pvt. Ltd. has entered into anInvestment Management Agreement (“IMA”) on 1st September, 1994 appointing the AMC as theasset 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 thefunctioning of the Fund. The AMC can be removed by the Trustee or by 75% of the Unitholders of theparticular Fund, subject to the approval of SEBI.

The AMC will manage the Scheme(s) of the Fund, including the Scheme mentioned in this OfferDocument, 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

Name of the shareholder

Status(Individual /

Corporate)

Activities

%J.M.Financial & Investment ConsultancyServices Pvt. Ltd.

Company InvestmentCompany 33.61

JM Financial Ltd.Company Investment

Company 58.26

Nimesh N Kampani & Aruna N KampaniIndividuals Investment

Banker 5.79Aruna N Kampani & Nimesh N Kampani Individuals Homemaker 2.20Nimesh N Kampani - HUF& Aruna NKampani & Vishal N Kampani

HUF Business0.14

TOTAL 100.00

ii. Preference Share Capital

Sr.No.

Name of Shareholder Status(Individual /Corporate)

Activities % ofoptionallyconvertibleredeemablepreferenceshare-holding

1. JM Financial Ltd. Company InvestmentCompany

100.00

Total 100.00

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5.3.1 REMUNERATION OF THE ASSET MANAGEMENT COMPANY

The AMC shall charge the Fund investment management and advisory fees as per the rates prescribedunder the Chapter “Fees, Expenses and Load” given in Section 3 under the heading “Annual SchemeRecurring Expenses” & “Unitholder Transaction Expenses or Sales Load”.

Expenditure in excess of the limits specified under the Regulations and/or this offer document shall beborne 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 AMCThe Board of Directors of AMC comprises eminent personalities with varied experience, details are asgiven 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 FinancialAsset Management Private Limited. He is a member of the Institute of Chartered Accountants ofIndia and also possesses a Bachelor’s degree in Law. Mr. Ghanekar has an extensive experience ofmore than 25 years. Prior to this, he was a partner in Love Lock & Lewis, Price Waterhouse Coopersand Ernst & Young over a period of 15 years and was the Head of Transfer Pricing practice inMumbai. He has worked with many companies in the financial sector in an advisory capacity andhandled 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 ManagementPrivate Limited as an associate director since M/s. M. P. Chitale & Co. advises JM Financial AssetManagement Private Limited on business and operational matters.

Other Directorships Designation1) National Securities Clearing Corp Ltd. Director2) Asset Reconstruction Company (India) Ltd. Director3) Hinduja TMT Ltd. Director4) Ambuja Cements Ltd. Director5) Reliance Capital Limited Director6) Intuit Consulting Pvt. Ltd. Director7) Reliance General Insurance Company Limited Director8) Chitale Advisory Services Private Limited Director9) IndusInd Media & Communications Limited Director10) HTMT Global Solutions Ltd. Director

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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 Londonand is Master of Commerce from University of Mumbai. Prior to working in India, Mr. Vishal Kampaniwas working with Morgan Stanley Dean Witter at New York, USA. He worked on convertible products asa part of the Equity Capital Markets Services Group. He is presently the co-head of the Corporate FinanceGroup at JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Stanley Private Limited).

Other Directorships Designation1) J. M. Financial & Investment Consultancy Services Pvt. Limited Director

2) JM Financial Consultants Pvt. Ltd. (earlier known as JM Morgan Stanley PvtLimited) Director

3) JM Financial Services Pvt. Ltd. (earlier known as JM Morgan StanleyFinancial Services Pvt. Ltd. ) Director

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 3nationalised banks for nearly 9 years. He was also the Chairman of Indian Banks’ Association. Afterretirement from Bank of India, he started a financial and Banking consultancy firm in the name ”Srinivasanand Associates.” He is associated with the Board of JM Financial Asset Management Private Limited as anindependent director.

Other Directorships Designation1) Graphite India Ltd. Director2) Elder Pharmaceuticals Ltd Director3) Goldiam International Ltd. Director4) Hi Tech Pharmaceuticals Pvt. Ltd Director5) Shalimar Paints Ltd. Director6) McLeod Russel India Ltd. Director7) Williamson Magor & Co., Ltd. Director8) Nayamode Solutions Pvt Ltd. Director9) Solar Explosives Limited Director10) Snowcem Paints Pvt. Ltd. Director11) XL Telecom Limited Director12) J. Kumar Infraprojects Ltd Director

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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 PrivateLimited. He is the proprietor of a broking firm and is also on the Board of various securities relatedcompanies.

Other Directorships Designation1) JKM Finsec (P) Ltd. Director2) Modi Securities (P) Ltd. Director3) Charbhuja Real Estate (P) Ltd. Director4) Jugal Kishore Modi Investment Company Ltd. Director5) 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 066Dr. Ajay S Mookerjee is a director on the Board of the AMC. For the past 17 years, Dr. Mookerjee has heldvery senior positions at Capital One, AIG and Booz Allen. Currently, he is the Founder & CEO ofOSAIndia. 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 DESIGNATION1) Offshore Analytic India Private Limited Non- executive

Chairman

Mr. Darius D. Pandole, Independent Director5B, 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 AssetManagement 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 squashtournaments.

Other Directorships Designation1) Credibility Financial Services Pvt. Ltd. Director2) Gateway Fund Advisors Pvt. Ltd. Director3) Melstar Information Technologies Ltd. Director4) NSR Advisors Private Limited Director

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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 investmentof funds pertaining to any scheme is not contrary to the provisions of these regulations and theTrust Deed.

(2) The AMC shall exercise due diligence and care in all its investments decisions as would beexercised by other persons engaged in the same business.

(3) The AMC shall be responsible for the acts of commissions or omissions by its employees ortheir 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 thecompliance 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 thetermination 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 itsdirectors or other officers shall not be absolved of liability to the mutual fund for their acts ofcommission or omissions, while holding such position or office.

(6A) The Chief Executive Officer (whatever his designation may be) of the AMC shall ensure that theFund complies with all the provisions of the Regulations and the guidelines or circulars issued inrelation thereto from time to time and that the investments made by the fund managers are in theinterest of the Unit holders and shall also be responsible for the overall risk managementfunction.

(6B) The fund manager (whatever his designation may be) shall ensure that the funds of the Schemesare 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 sellsecurities, which is average of 5% or more of the aggregate purchases and sale or securitiesmade by the mutual fund in all its schemes.Provided that for the purpose of this clause, aggregate purchase and sale of securities shallexclude sale and distribution of units issued by the mutual fund. Provided further that theaforesaid 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 brokerreferred to in clause 7(a) above, which is average of 5% or more of the aggregate purchasesand sale of securities made by the mutual fund in all its schemes, unless the AMC hasrecorded in writing the justification for exceeding the limit of 5% and reports of all suchinvestments 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 theirrelatives, 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 UnitHolders and the brokerage or commission paid is also disclosed in the half yearly annualaccounts of the mutual fund.

Provided further that the mutual fund shall disclose at the time of declaring half-yearly andyearly results:

(i) any underwriting obligations undertaken by the schemes of the mutual funds withrespect 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.

59

(9) The AMC shall file with the Trustee the details of transactions in securities by the keypersonnel of the AMC in their own name or on behalf of the AMC and shall also report toSEBI, as and when required by SEBI.

(10) In case the AMC enters into any securities transactions with any of its associates a report tothat 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, theinvestment made by that scheme or by any other scheme of the same mutual fund in thatcompany or its subsidiaries shall be brought to the notice of the Trustee by the AMC and bedisclosed in the half yearly and annual accounts of the respective schemes with justificationfor such investment provided the latter investment has been made within one year of the dateof the former investment calculated on either side.

(12) The AMC shall file with the Trustee and SEBI : (a) detailed bio-data of all its directorsalongwith 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 Trusteegiving details and adequate justification about the purchase and sale of the securities of thegroup companies of the Sponsor or the AMC as the case may be, by the mutual fund duringthe said quarter.

(13) Each director of the AMC shall file the details of his transactions of dealing in securities withthe 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 anyeconomic 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 atcompetitive market rates may be debited to the scheme and for rates higher than thecompetitive market rates, prior approval of the Trustee shall be obtained and reasons forcharging 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 otherbusiness activities except in the nature of portfolio management services, management andadvisory services to offshore funds, pension funds, provident funds, venture capitals funds,management of insurance funds, financial consultancy and exchange of research oncommercial 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 satisfiesSEBI that its key personnel, the system, back office, bank and securities accounts aresegregated activity wise and provided there exist systems to prohibit access to insideinformation of various activities. Further the AMC shall meet the capital adequacyrequirements, if any, separately for each such activity and obtain separate approval, ifnecessary under the relevant Regulations.

(17) The AMC shall abide by the Code of Conduct as specified in the Fifth Schedule of theRegulations.

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5.3.4 KEY EMPLOYEES OF THE AMC

Name Designation Qualifications/Age Experience & BackgroundMr. Nityanath P.Ghanekar

Managing Director& Chief ExecutiveOfficer

B.Com., FCA, LLBAge : 61 years

Mr. Ghanekar has an extensiveexperience of more than 25years. Prior to this, he was apartner in Love Lock & Lewis,Price Waterhouse Coopers andErnst & Young over a period of15 years and was the Head ofTransfer Pricing practice inMumbai. He has worked withmany companies in the financialsector in an advisory capacityand handled tax and auditingresponsibilities.

Mr. Vipul Jhaveri Chief OperatingOfficer

B.Com.,Grad.C.W.A. MMS,CFA (ICFAI-India),CFA (AIMR-USA)35 Years

He has over 12 years ofexperience in capital markets andstarted his career in theinvestment banking division ofJM Financial & InvestmentConsultancy Services Limited.He has been a part of theCorporate Finance andStructured Financial AdvisoryGroup and he was activelyinvolved in the CorporateFinance, Mergers & Acquisitionsand FinancialAdvisoryssignments. Prior tojoining the AMC, as Director -Strategic Business InitiativesGroup he was responsible forimplementation of new businessinitiatives across various JMFinancial Group companies.

Mr. SandipSabharwal

Chief InvestmentOfficer (Equity)

B.Tech, IIT Delhi,PGDM, IIMBangaloreAge : 35 years

He has over 11 years ofexperience in equity research andfund management activities. Hestarted his career with SBI FundsManagement Pvt. Ltd. as aresearch analyst in 1995 andheaded the equity fundmanagement team, when heresigned in 2005 to join LotusIndia Asset ManagementCompany Pvt. Ltd. as ChiefInvestment Officer – Equity.Prior to joining the AMC, hewas working with JM FinancialLimited where he wasresponsible for devisingstrategies for fund management

61

businesses. He is the FundManager for JM EmergingLeaders Fund, JM Small & Mid-Cap Fundand JM Contra Fund.

Mr. Mohit Verma Chief InvestmentOfficer (Debt)

M.Sc (Physics) , MFMAge : 41 years

He has been in the RupeeInterest Rates market since1999. From Jan 1999 to Jan2004, he worked with the two ofthe biggest Primary Dealers inthe country – DFHI (1999 to2002) and STCI (2002 to 2004) –both as a dealer and as the Headof the Trading Desks. He hasalso worked with RelianceIndustries Ltd., the largestprivate sector company in thecountry, as the Head of theFixed-Income Desk in theTreasury Department. AtReliance Industries Ltd. he washandling one of the largestproprietary trading desk in thecountry, reporting directly to theCFO of the Company. At theFund, he will be responsible formanaging JM Income Fund, JMG-Sec Fund and JM Short TermFund

Mr. SandeepNeema

Fund Manager B.E. (Production),MBA, CFA(ICFAI),CFA (AIMR, USA)Age: 38 yrs

He has 13 years of workexperience in the equity researchfield and has worked in variouscapacities including Head ofResearch at UTI Securities. Priorto the current assignment, he hasalso been associated with KotakSecurities and BNP Paribas. Hislast assignment was as DeputyHead of Equity Research atRefco Sify Securities. He is theFund Manager for JM BalancedFund, JM HI FI Fund and JMFinancial Services Sector Fund.

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Mr. AsitBhandarkar

Fund Manager B.Com., MMSAge : 28 years

He has 5 years of experience inequity research and fundmanagement. His last assignmentwas as Fund Manager with LotusIndia Asset ManagementCompany Pvt. Ltd. Prior to that,for more than 2 years, he waswith SBI Funds ManagementPvt. Ltd. as a Junior FundManager. He started his careeron the broking side as an equityanalyst and has worked withfirms like Jet Age Securities andSushil Finance Consultants foralmost 2 years. He is the FundManager for JM Basic Fund, JMHealthcare Sector Fund, JMAuto Sector Fund and JMTelecom Sector Fund.

Mr. Sanjay KumarChhabaria

Fund Manager -Equity

PGDBA, CFA / Age :33 years

He has more than 8 years ofexperience in fund managementand equity research. In his lastassignment he was working as aFund Manager with Lotus IndiaAMC. Prior to this he hasworked SBI Funds Managementas a Fund Manager. He startedhis career on the broking side inequity research and has workedwith firms like SMIFS Securitiesand IDBI Capital Markets for4 years. He is the Fund Managerfor JM Equity Fund and JMEquity Tax Saver Fund – Series- I.

Mr. Biren Mehta Fund Manager B. Com. , MBAAge : 38 years

He has 17 years experience inthe capital markets. He hasworked with securities house likeDSP Merrill Lynch for 2 years asa floor trader, UTI Securities for3 years in institutional sales. Hehas also worked in the SalesTrading Capacity with CSFB &BNP Paribas securities. Prior tojoining JM Financial MutualFund he was with REFCO-SIFYas Vice President - Institutionalsales and was instrumental insetting up the DerivativesArbitrage Desk at Refco-Sify. Hehas around 3 years experience inthe derivatives segment. He isthe Fund Manager of JM Equity

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& Derivative Fund and JMArbitrage Advantage Fund.

Ms. ShaliniTibrewala

Fund Manager B.Com, A.C.A., C.S.Age: 35 years

She has over 12 years ofexperience in the financialservices sector. She has beenwith the Fund for over 9 yearsand is responsible for managingthe JM High Liquidity Fund, JMMIP Fund, JM Fixed MaturityFund, JM Fixed Maturity Fund –Series II, JM Fixed MaturityFund – Series III, JM FixedMaturity Fund – Series IV, andJM Money Manager Fund. Priorto joining the AMC, she wasworking with a firm of CharteredAccountants.

Mr. Apoorva Vora Chief Dealer(Equity)

B.Com., PGDBA(Fin)Age : 36 years

He has 9 years experience in thefinancial industries whichincludes almost 2 years on thefund management side. Prior tojoining the AMC, he wasworking with Lotus India AssetManagement Company Pvt. Ltd.as Chief Dealer – Equity. He hasalso worked as Dealer – Equitywith SBI Funds ManagementPvt. Ltd. On the broking side, hehas worked with ACK Capital,Indsec and Prabhudas LiladharPvt. Ltd.

Mr. Mikesh A.Gangar

Derivatives Dealer B. Com., MMS(Marketing)Age : 29 years

He has over 4 years experiencein the areas of arbitrage andoptions trading. Prior to joiningthe AMC, he was working withChimanlal Maneklal SecuritiesPvt. Ltd. as a derivatives dealer.He is the Derivatives Dealer ofthe Fund.

Mr. Girish Hisaria Debt Dealer B.Com, MMS(Finance) / 30 years

He has 6 years of experience inFixed Income Markets. Prior tojoining the AMC, he has workedwith Sahara Indian FinancialCorp and Darashaw SecuritiesPvt Limited

Mr. Vikas Agrawal Det Dealer B.Com, PGDBM(Finance)/ 26 Years

He has 4 years of workexperience in fixed incomemarket and has worked withCentrum Capital, StratcapSecurities and SPA Securities. In his earlier assignments, hewas responsible for originationand placement of short term /long term bonds.

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Ms. Diana D’sa Head – Legal andCompliance

B.Sc., LL.B Age : 37 years

She has 15 years of workexperience and started her careerwith the investment bankingdivision of JM Financial &Investment Consultancy ServicesPvt. Ltd (JM FICS). She was partof the Compliance team at JMFICS and later moved to theCompliance Department of JMMorgan Stanley Pvt. Ltd. Shejoined the AMC in 2004 and hasbeen handling the legal andsecretarial functions since then.She is also the Principal Officerfor the AMC under Prevention ofMoney Laundering Act, 2002

Mr. Bhanu Katoch Head – Sales &Marketing

B.Com., PGDM(Marketing & Sales),MBAAge : 33 years

He has around 10 years ofexperience in the Telecom &Financial Services industry. Hestarted his career with BPL USWest Cellular Ltd. Subsequently,he has worked with variousorganisations in the financialsector like Pioneer ITI AMC,Alliance Capital AMC, Tata AIGLife Insurance Company andABN AMRO AMC. Prior tojoining JM Financial MutualFund, he was Head - Sales(North & West) at Lotus IndiaAMC.

Mr. Rakesh KumarJain

Head – Operations B.Com, A.C.AAge : 42 years

He has over 20 years of workexperience of which 15 years iswith the Mutual Fund Industryviz. LIC Mutual Fund in theareas of Fund Accounting,Banking, R & T, Back officeOperations and Marketing. Priorto joining the AMC, he wasworking with LIC HousingFinance Ltd as Deputy GeneralManager handling Finance,Accounts and project appraisalfunction.

Mr. Harish C.Kukreja

Head – ClientServices

B. Com.(Hons), M.Com., MBA (Fin),CAIIBAge : 46 years

He has over 25 years of workexperience of which 20 yearshave been in the Mutual Fundindustry in the fields of InvestorServices, Sale Promotions &Publicity and InvestmentMonitoring and 5 years withCanara Bank. Prior to the currentassignment, he was with UTI

65

Asset Management PrivateLimited (formerly known as UnitTrust of India) as an AssistantVice President and handledvarious projects including thePAN Card Project. He has alsoheaded one of the branches ofUTI for over 3 years.

Mr. George Cherian Senior VicePresident -Technology

B. Sc. (Bangalore)Age : 55 years

He has over 22 years ofexperience with the Unit Trust ofIndia, where he was Head ofTechnology. He set up and gavedirection to the technologyinitiatives till his departure in1995. He then moved to JardineFleming (now JP Morgan) to setup the IT infrastructure andmanaged the tech support team atErnst & Young. Currently, he isinvolved in strengtheningtechnology in the InvestorRelation Management and FundAccounting functions.

Mr. Vikram Shetty Head - Finance &Accounts

B.Com., M.Com.Age : 48 years

He has over 20 years of workexperience with the JM FinancialGroup. Prior to moving to JMAMC, he was with JM MorganStanley Fixed Income SecuritiesPvt. Ltd. as Head of Finance andOperation for about 3 years.Prior to that, he was part of theFinance Department of JMMorgan Stanley Pvt. Ltd.(Investment Banking Arm) forabout 3 years and with JMFinancial & InvestmentConsultancy Services Pvt. Ltd.for about 15 years overseeing theintegral part of finance functions.

The fund manager for the JM Fixed Maturity Fund – Series XI is Ms. Shalini Tibrewala. The fundmanagement process is closely associated with research and analysis of the industry, the economy andvarious companies, the Fund Managers are supported by the Research Assistants.

COMPLIANCE OFFICER HEAD – CLIENT SERVICES Ms. Diana D’sa Mr. Harish KukrejaJM FINANCIAL ASSET MANAGEMENTPRIVATE LIMITED

JM FINANCIAL ASSET MANAGEMENTPRIVATE 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

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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, LowerParel, Mumbai – 400 013, is the Custodian of JM Financial Mutual Fund schemes. The Custodian isregistered 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 thesalient 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 expressprovisions of the Custodian Agreement.

The Custodian will be entitled to remuneration for its services in accordance with the terms of theCustodian 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 TransferAgent 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 servicerequired and have adequate facilities and system capabilities to discharge the responsibility withregard to processing of applications and dispatching of unit certificates to Unitholders within the timelimit prescribed in the SEBI Regulations and also has sufficient capacity to handle investorcomplaints. 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 POSTNEW FUND OFFER PERIOD

During the New Fund Offer period, applications will be accepted during the normal working hours atthe corporate office of the AMC and at the branches of the AMC. Post the NFO, the official points ofacceptance of transactions for the Scheme will be the Investor Service Centres (ISCs) of JM FinancialMutual Fund and selected ISCs of Karvy Computershare Private Limited, the Registrar and TransferAgent of the Fund. In addition to the above ISCs, the corporate office of the AMC shall also be adesignated official point of acceptance of transactions. The cut-off time applicable to the Scheme shallbe reckoned at these locations at counters specified for this purpose. The AMC reserves the right tochange the list of official points of acceptance of transactions from time to time. A list of the officialpoints of acceptance of transactions has been put up on the web-site of the Fund.

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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 togenerate predictable returns over a predetermined period by investing in a portfolio of fixedincome 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 ofwhich is as under:

TYPE OF PLAN DURATION (NO. OFDAYS FROM THEDATE OFALLOTMENT)

NO. OFPLANS TOBELAUNCHED


The Trustee has the discretion to automatically roll over the plan(s) on maturity subject toRegulation 33 of the SEBI Regulations. Accordingly, a plan may be rolled over if thepurpose, period and other terms of the rollover and all other material details of the planincluding the likely composition of assets immediately before the rollover, the net assets andnet asset value of the plan are disclosed to the unitholders and a copy of the same is filed withSEBI. Further, such rollover will be permitted only in case of those unitholders who expresstheir consent in writing and the unitholders who do not opt for the rollover or have not givenwritten consent shall be allowed to redeem their holdings in full at net asset value basedprice. However, the Trustee reserves the right not to roll over any plan upon maturity, ifdeemed appropriate in the interest of the Scheme / Unit holders. Accordingly, at any point oftime, there may be multiple plans of the same maturity period. All plans will have differentportfolios 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, underany of the plan(s) under the Scheme with differential fee structure, load structure, options(dividend / growth), minimum subscription amount, etc. depending upon the marketconditions prevailing at the time of launch of the plan(s) and taking into consideration theinterests of the unitholders and subject to the SEBI Regulations. The maximum expenses thatmay be incurred under any new sub-plan(s) that may be introduced under any plan launchedunder the Scheme will be within the limits mentioned under Regulation 52(6) of the SEBIRegulations. The investment management fees will be uniform across various sub-planslaunched under a plan. The estimated maximum recurring expenses that can be charged to asub-plan launched under any Plan under the Scheme, on an annual basis are given below :

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Particulars (as a % of Applicable

NAV)

Regular

Plan

Institutional Plan

Investment Management & AdvisoryFee

1.25 % 1.25 %

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,Audit Fee and other expensespermitted under Regulation 52(4)(b)

0.20 % 0.20 %

TOTAL 2.25 % 2.00 %

The purpose of the above table is to assist the investor in understanding the various costs andexpenses that an investor in any sub-plan / plan under the Scheme will bear directly orindirectly. While this estimate has been made in good faith on the basis of informationavailable with the Fund, there can be no assurance that actual expense, under any particularhead will not be more or less than such estimate. The AMC reserves the rights to revise thefees payable to the service providers from time to time. The total expenses, however, will bemaintained within the limits mentioned under Regulation 52(6) of the SEBI Regulations. TheTrustee reserves the right to charge a lower / differential fee structure for the Scheme or anysub-plan / plan / option launched under the Scheme.

Investors will be suitably informed by publishing a notice in a newspaper or through any othermeans as the Trustee may consider appropriate.

c) INVESTMENT PATTERN

The corpus of the Scheme will be invested in debt and money market instruments (investmentgrade). Subject to the Regulations, the corpus of the Scheme can be invested in any of thefollowing securities:

· Securities created and issued by the Central and State Governments and/or repos/reverserepos in such Government Securities as may be permitted by RBI (including but notlimited to coupon bearing bonds, zero coupon bonds and treasury bills).

· Securities guaranteed by the Central and State Governments (including but not limited tocoupon bearing bonds, zero coupon bonds and treasury bills).

· Debt obligations of domestic Government agencies and statutory bodies, which may ormay not carry a Central/State Government guarantee.

· Corporate debt and securities (of both public and private sector undertakings) includingBonds, Debentures, Notes, Strips, etc.

· Obligations of banks (both public and private sector) and development financialinstitutions.

· 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.

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· As mentioned below in the asset allocation pattern, the Scheme may invest upto 100% inshort term debt securities and / or money market instruments. The exposure to short termdebt securities and money market instruments within the overall limit of 100% may bechanged by the AMC depending on market conditions. However, the Scheme is not amoney market mutual fund Scheme. The main aim of changing the weightages of shortterm debt securities and money market instruments will be to protect the interests of theunitholders and for short term defensive considerations

· The above investment policies are in conformity with the provisions of various constitutionaldocuments 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 directlyby the issuer, or acquired in a negotiated transaction. Notwithstanding the aforesaid, theproportion of investment in privately placed debentures, securitised debt and other unquoteddebt 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 “Possibledeferral of redemption / resale requests” and also to the Clauses on “Liquidity & MarketabilityRisks” under Specific Risk Factors. The moneys collected under this Plan / Scheme shall beinvested only in transferable securities in the money market or in the capital / debt market orin privately placed debentures or securitised debts or in Government securities.

· As per SEBI Regulations, the Plan / Scheme shall not make any investments in any unlistedsecurities of associate / group companies of the Sponsors. The Plan / Scheme will also notmake investment in privately placed securities issued by associate / group companies of theSponsor. The Plan / Scheme may invest not more than 25% of the net assets in listed securitiesof Group companies.

· JM Fixed Maturity Fund – Series XI will seek to invest in debt and money marketinstruments. The Scheme aims to identify securities, which offer superior levels of yield atlower levels of risks. With the aim of controlling risks, rigorous in depth credit evaluation ofthe securities proposed to be invested in will be carried out by the investment team of theAMC. Rated debt instruments in which the Scheme invests will be of investment grade asrated by a credit rating agency. The AMC will be guided by the ratings of rating agencies suchas CRISIL, CARE, ICRA and Duff and Phelps Credit Rating India Limited or any other ratingagencies that may be registered with SEBI from time to time. In case a debt instrument is notrated, 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 likeinterest swap etc. from time to time, as would be available and permitted by SEBI, in anattempt to protect the value of the portfolio and enhance Unitholders’ interest.

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d) ASSET ALLOCATION PATTERN

The asset allocation pattern of the plans launched under the Scheme in normal circumstanceswould be as follows :

Type of Plan Type of Security NormalAllocation(% of netassets)

RiskProfile

Short term debt securities (includingfixed income derivatives andsecuritized debt*) & money marketinstruments

65% - 100% Low toMedium

Yearly Plan

Government securities 0%-35% LowShort term debt securities (includingfixed income derivatives andsecuritized debt*) & money marketinstruments

65% - 100% Low toMedium

13 monthsPlan

Government securities 0%-35% Low* Allocation in securitized debt securities will not, normally exceed 80% of the net assets ofthe 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. Anydeviations from the asset allocation pattern would be only for defensive considerations andwill 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) launchedunder 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 banksin 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 ofthe 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 inthose securitisation issuances which have a rating of AA and above indicating the high level ofsafety from credit risk point of view at the time of making an investment.

JM Fixed Maturity Fund - Series XIDebt 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%

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Changes in investment pattern

Subject to the SEBI Regulations, the asset allocation pattern and maturity profile indicatedabove may change from time to time, keeping in view market conditions, marketopportunities, applicable regulations and political and economic factors. It must be clearlyunderstood that the percentages stated above are only indicative and not absolute. The changesin the investment pattern will be in conformity with the investment objectives and basic natureof the Scheme and asset allocation can be altered only for a short term period on defensiveconsiderations.

e) INVESTMENT STRATEGY(i) Scientific approach to investment

The Mutual Fund adopts a scientific approach to investments. Securities are selected forvarious funds by the fund managers based on a continuous study of trends in industriesand companies, including management capabilities, global competitiveness, earningpower, growth/payout features and other relevant investment criteria, which would, inter-alia include evaluation of the outlook of the economy, exposure to various industries andgeographical regions, evaluation of the intrinsic worth of specific opportunities such asprimary market transactions, private placements etc.

(ii) Liquidity ManagementThe Fund Manager may invest in short term deposits of scheduled commercial bankspending deployment of funds in accordance with SEBI Circular No. SEBI/IMD/CIR No.1/91171/07 dated April 16, 2007..

(iii) Mode of InvestmentThe securities in which the investment manager may invest would be through primary aswell as secondary market, private placement etc. These securities may be those listed onvarious stock exchanges as well as unlisted securities.

(iv) Procedure for taking investment decisionsThe investment policy of the AMC has been determined by the Investment AdvisoryCommittee (“IAC”) which has been ratified by the Boards of the AMC and Trustee. At thestrategic level, the broad investment philosophy of the AMC and the authorised exposurelimits are spelt out in investment policy of the AMC. While during trading hours, fundmanagers are allowed full discretion to take decisions of purchases and sales for thescheme within the permissible limits these decisions and the reasons, thereof arecommunicated to the CEO for post facto approval, and areas of concern if any arediscussed. The performance of the schemes is reviewed by the IAC as well as the Board ofthe Trustee periodically. The IAC is operational at the AMC level and has majorityrepresentation from the independent Directors. The AMC has a system of monthlyreporting on the performance of the schemes with appropriate benchmark indices and alsowith the relative performance of the schemes of other mutual funds schemes in the samecategory which is placed before the Boards of the AMC and Trustee. Further, in terms ofSEBI Circular No. MFD/CIR/16/400/02 dated March 26, 2002 the performance of JMFixed 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 atevery meeting of the Boards of the AMC / Trustee and corrective action as proposed willbe taken in case of unsatisfactory performance.

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f) PORTFOLIO TURNOVER POLICY:The AMC as such does not have a policy statement on portfolio turnover for JM FixedMaturity Fund – Series XI. However, the general portfolio management style is biasedtowards maintaining a low portfolio turnover rate. In the debt market, trading opportunitiesmay arise due to changes in interest rate policy announced by the Reserve Bank of India, shiftsin the yield curve, credit rating changes or any other factors where in the opinion of the fundmanager there is an opportunity to enhance the total return of the portfolio. Since theinvestments would nearly match the maturity profile of the respective plans, the consequentbrokerages and transactions costs would be low.

g) POLICY ON INTER SCHEME INVESTMENTSThe Scheme may invest in other Schemes managed by the AMC or in the Schemes of anyother Mutual Funds, provided it is in conformity to the investment objectives of the investorScheme and in terms of the prevailing SEBI Regulations. As per the SEBI Regulations, noinvestment management fees will be charged for such investments and the aggregate interScheme investment made by all Schemes of JM Financial Mutual Fund or in the Schemesunder the management of other asset management companies shall not exceed 5% of the netasset of the Mutual Fund.

IMPORTANT

It must be clearly understood that the above referred portfolio strategies are not absolute, andthat they can vary substantially depending upon the Trustee’s perception as to whether thestock / debt market is in an overheated state or has fallen well below a level they considerappropriate taking into account the factors prevailing at that time, the intent being to protectthe Unitholders’ interest, especially the NAV of the fund.

The Trustee may, from time to time, at their absolute discretion review and modify thestrategy, provided such modification is in accordance with SEBI Regulations.

h) POLICY AND SPECIAL CONSIDERATION ON INVESTMENT IN DERIVATIVEAND HEDGING PRODUCTS

The Scheme may take derivatives position in the fixed income market based on theopportunities available subject to the guidelines provided by SEBI from time to time and inline 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 orvice versa. These are known as Plain Vanilla Swaps. The RBI has currently allowed only theseswaps in the Indian market. An interest rate swap agreement (as per guidelines issued by RBIon 7th July 1999 and 1st November 1999) from fixed rate to floating rate will be an effectivehedge 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 anagreed period in respect of a notional principal amount. The most common form is a fixed tofloating rate swap where one party receives a fixed (pre-determined) rate of interest whileother receives a floating (variable) rate of interest.

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Forward Rate Agreement (FRA)

A FRA is basically a forward starting IRS. It is an agreement between two parties to pay orreceive 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 foran agreed period. The only cash flow is the difference between the FRA rate and the referencerate. 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 raterisk and stands to lose if the interest rate moves down. To hedge this interest rate risk, theScheme can enter into a 6 month MIBOR swap. Through this swap, the Scheme will receive afixed predetermined rate (assume 12%) and pays the “benchmark rate” (MIBOR), which isfixed by the National Stock Exchange of India limited (NSE) or any other agency such asReuters. 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 abook 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 afixed rate receiver at 12% and the counterparty is a floating rate receiver at the overnight rateon a compounded basis (say NSE MIBOR).

· On June 1, 2006 the Scheme and the counterparty will exchange only a contract of havingentered this swap. This documentation would be as per International Swap DealersAssociation (ISDA). On a daily basis, the benchmark rate fixed by NSE will be tracked bythem.

· 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. 1.21crore, (this amount is known at the time the swap was concluded) and will pay thecompounded benchmark rate.

· The counterparty is entitled to receive daily compounded call rate for 184 days & pay12% fixed.

· On December 1, 2006, if the total interest on the daily overnight compounded benchmarkrate 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 theScheme the difference.

· Effectively the Scheme earns interest at the rate of 12% p.a. for six months withoutlending money for 6 months fixed, while the counterparty pays interest @ 12% p.a. for 6months on Rs. 20 crore, without borrowing for 6 months fixed.

The above example illustrates the benefits and risks of using derivatives for hedging andoptimizing the investment portfolio. Swaps have their own drawbacks like credit risk,settlement risk. However, these risks are substantially reduced as the amount involved isinterest streams and not principal.

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Forward Rate Agreement (FRA)

A FRA is basically a forward starting IRS. It is an agreement between two parties to pay orreceive 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 foran agreed period. The only cash flow is the difference between the FRA rate and the referencerate. 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 prescribedby 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 ofsub clauses (i) to (v) of clause 1 of the Eighth Schedule to the SEBI Regulations, as amendedfrom time to time.

b) The valuation of untraded derivatives shall be done in accordance with the valuationmethod for untraded investments prescribed in sub clauses (i) and (ii) of clause 2 of the EighthSchedule 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 wellas disproportionate losses to the investor. Execution of such strategies depends upon theability of the fund manager to identify such opportunities. Identification and execution of thestrategies to be pursued by the fund manager involve uncertainty and decision of fundmanager may not always be profitable. No assurance can be given that the fund manager willbe able to identify or execute such strategies.

The risks associated with the use of derivatives are different from or possibly greater than, therisks associated with investing directly in securities and other traditional investments.

Additionally, the following risk factors are associated with investments in derivativeinstruments :

· Credit Risk : The credit risk is the risk that the counter party will default obligationsand is generally negligible, as there is no exchange of principal amounts in aderivative 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 thebenchmark, which appears and is used.

The Trustee shall offer their comments on the above aspects in the report filed with SEBIunder sub-regulation (23)(a) of Regulation 18 of the Regulations.

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i) INVESTMENT BY AMC

The AMC and investment companies managed by the Sponsor(s), their affiliates, theirassociate 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 inaccordance with sub-regulation 3 of Regulation 24 of the Regulations and shall charge fees onsuch amounts in future only if the SEBI Regulations so permit. The maximum amount theAMC can invest in any of the Scheme shall be its networth. The affiliates, associates, theSponsor, subsidiaries of the Sponsor and/or the AMC may acquire a substantial portion of theScheme’s units and collectively constitute a major investment in the Scheme. Consequently inthe event of repurchase of units held by such affiliates/associates and Sponsor, there be anadverse impact on the units of the Scheme as the timing of such repurchase may impact theability of other unitholders to repurchase their units. The AMC reserves the right to invest itsown funds in the Scheme as may be decided by the AMC form time to time and in accordancewith SEBI Circular No. SEBI/IMD/CIR No. 10/22701/03 dated December 12, 2003 read withSEBI Circular No. SEBI/IMD/Cir No. 1/42529/05 dated June 14, 2005 regarding minimumnumber 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 liquidityrequirements of its Scheme for the purpose of repurchase or redemption of Units or thepayment of interest or dividend to the Unit holders. Further, as per the SEBI Regulations, theMutual Fund shall not borrow more than 20% of the Net Assets of the respective plans and theduration of such borrowing shall not exceed a period of six months. The limit of 20% may berevised 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 ofits associate / group companies or banks in India or any other entity at market related ratesprevailing 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 acost, which would be dealt with in consultation with the Trustee and included in the annualrecurring charges charged to the scheme

k) FUNDAMENTAL ATTRIBUTES

For the purposes of this section, the term "fundamental attributes" shall mean: (i) Type ofScheme (ii) Investment Objective, Investment Pattern, Investment Strategy & AssetAllocation Pattern (iii) Terms of Issue, Fees and expenses as stated in section 3, AnnualScheme Recurring Expenses (As % of Average Daily Net Assets)

The fundamental attributes of the Scheme shall not be changed without obtaining the consentof less than 75% of the unitholders.

Notwithstanding the contents of this Offer Document, the Trustee may in accordance withRegulation 18 (15A) of the SEBI Regulations change the fundamental attributes of theScheme or the Trust or fees and expenses payable or any other change which would modifythe Scheme and affect the interest of the unitholders subject to (i) issuing a writtencommunication about the proposed change to each unitholder and giving an advertisement inone English daily newspaper having nationwide circulation as well as in a newspaperpublished in the language of the region where the Head Office of the mutual fund is situated;

76

and (ii) the unitholders are given an option to exit at the Applicable NAV without any exitload.

Fundamental attributes will not cover such actions of the Trustee of the Mutual Fund or theBoard of Directors of the AMC, made in order to conduct the business of the Trust, theScheme or the AMC, where such business is in the nature of discharging the duties andresponsibilities with which they have been charged. Nor will it include changes to the Schememade in order to comply with changes in regulation with which the Scheme has been requiredto comply.

l) POSITION OF DEBT MARKETS IN INDIA

The debt market in India is well developed. The largest market consists of the Government ofIndia securities daily trading in which exceed Rs.3000 crores with instruments tenors rangingfrom short dated Treasury Bills to long dated securities extending beyond 20 years. TheGovernment securities market not only provides resources to the Government for meeting itsshort term and long term needs but also acts as the benchmark for pricing corporate papers ofvarying maturities. The Government Securities market includes the dated securities issued bythe government, both central and state and T-bills of all maturities.

The corporate bond market is also fast developing with greater number of corporates accessingthe markets through MIBOR linked bonds, commercial paper issuances and medium to longdated fixed and floating rate bonds. The yield curve tends to be positive sloping i.e. yield ofshorter 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 7.02364 Days Treasury Bills 7.62P1+ Commercial Paper-90 days 8.10 – 8.25Certificate of Deposit-90 days 7.90 – 8.101 Year corporate Bond 8.80– 8.905 year corporate bond 9.10 – 9.25

These yields are only indicative and interest rates are susceptible to fluctuations and aresensitive 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 1Year INBMK

Long term debentures Maturity 3- 5 years Spread of 115-125 bps over giltof similar maturity

The instruments available in the Indian debt market are classified into two categories, namelyGovernment and Non – Government debt. The following instruments are available in thesecategories:

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A] Government Debt –

Ø Central Government DebtØ Treasury BillsØ Dated Government SecuritiesØ Coupon Bearing BondsØ Floating Rate BondsØ Zero Coupon BondsØ State Government DebtØ State Government LoansØ Coupon Bearing Bonds

B] Non-Government Debt

Ø Instruments issued by Government Agencies and other Statutory BodiesØ Government Guaranteed BondsØ PSU BondsØ Instruments issued by Public Sector UndertakingsØ Commercial PaperØ PSU BondsØ Fixed Coupon BondsØ Floating Rate BondsØ Zero Coupon BondsØ Instruments issued by Banks and Development FinancialØ InstitutionsØ Certificates of DepositØ Promissory NotesØ BondsØ Fixed Coupon BondsØ Floating Rate BondsØ Zero Coupon BondsØ Instruments issued by Corporate BodiesØ Commercial PaperØ Non-Convertible DebenturesØ Fixed Coupon DebenturesØ Floating Rate DebenturesØ Zero Coupon Debentures

Activity in the primary and secondary market is dominated by Central Government Securitiesincluding Treasury Bills. These instruments comprise close to 50% of all outstanding debt andclose to 75% of the daily trading volume on the Wholesale Debt Market Segment of theNational Stock Exchange of India Limited.

In the money market, activity levels of the Government and Non-Government Debt vary fromtime to time. Instruments that comprise a major portion of money market activity include,

Ø Overnight CallØ CBLO (Collateralised Borrowing & Lending Obligations)Ø Treasury BillsØ Government Securities with a residual maturity of < 1 yearØ Commercial PaperØ Certificates of Deposit

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Apart from these, there are some other options available for short tenure investments thatinclude MIBOR linked debentures with periodic exit options and other such instruments.Though not strictly classified as money market instruments, PSU / corporate paper with aresidual 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 ofSEBI Circular No. MFD/CIR/01/ 071/02 dated 15th April 2002 the AMC and Trustee maychange the benchmark index or select an additional benchmark index after recording adequatejustification for carrying out such change. However, change of benchmark index and / orselecting additional benchmark indices would be done in complete compliance of the relevantguidelines of SEBI in this regard. Further, in terms of SEBI Circular No. MFD/CIR/16/400/02dated 26th March 2002 the performance of Fund will be benchmarked and reviewed at everymeeting of the Boards of the AMC / Trustee.

7.0 INVESTMENT RESTRICTIONS

The relevant restrictions applicable to the Scheme as per the Seventh Schedule of SEBIRegulations are as follows:

1. The New Fund Offer expenses in respect of any Scheme will not exceed 6% of the Fundsraised under that Scheme.

2. A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issuedby a single issuer which are rated not below investment grade by a credit rating agencyauthorized to carry out such activity under the Act. Such investment limit may be extended to20% of the NAV of the scheme with the prior approval of the Board of Trustees and the boardof the AMC.

Provided that such limit shall not be applicable for investments in government securities andmoney market instruments. Provided further that investment within such limit can be made inmortgaged backed securities which are rated not below investment grade by a credit ratingagency registered with the Board.

3. Debentures, irrespective of any residual maturity period (above or below one year), shallattract the investment restrictions as applicable for debt instruments as specified under Clause1 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 instrumentsissued by a single issuer and the total investment in such instruments shall not exceed 25% ofthe NAV of the scheme. All such investments shall be made with the prior approval of theBoards of the Trustee and the AMC.

5. The scheme may invest in another scheme under the same AMC or any other mutual fundwithout charging any fees, provided that aggregate inter-scheme investment made by allschemes under the management or in schemes under the management of any other AMC shallnot 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 mutualfund on account of the concerned scheme, wherever investments are intended to be of long-term nature.

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9. Pending deployment of funds of a scheme in securities in terms of investment objectives of thescheme a mutual fund can invest the funds of the scheme in short term deposits of scheduledcommercial banks in accordance with SEBI Circular No. SEBI/IMD/CIR No. 1/91171/07dated April 16, 2007.

10. The Scheme shall not make any investment in : a) Any unlisted security of an associate orgroup company of the Sponsor; or b) Any security issued by way of private placement by anassociate or group company of the sponsor; or c) The listed securities of group companies ofthe Sponsor which is in excess of 25% of the assets.

11. Interscheme transfers of investments from one scheme to another scheme in the same MutualFund 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 forinvestments 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 equityrelated instruments of any company. After conversion of the Scheme into an open-endedscheme, investment in unlisted equity shares or equity related instruments of any companyshall not exceed 5% of its NAV.

14. The Mutual Fund having an aggregate of securities which are worth Rs.10 crores or more, ason the latest balance sheet date, shall subject to such instructions as may be issued from timeto time by the Board, settle their transactions entered on or after January 15, 1998 onlythrough dematerialised securities. Further, all transactions in government securities shall be indematerialised form.

15. No Mutual Fund under all its schemes taken together should own more than 10% of anycompany’s paid up capital carrying voting rights.

The Scheme will comply with SEBI regulations and any other Regulations applicable to theinvestments of Mutual Funds from time to time. The Trustee may alter the above restrictions fromtime to time to the extent that changes in the Regulations may allow. All investment restrictions shallbe applicable at the time of making investment.

8.0 NET ASSET VALUE (NAV) AND VALUATION OF INVESTMENTValuation of Assets, computation of NAV, repurchase price and their frequency of disclosure will bein accordance with the provisions of SEBI (MF) Regulations 1996/ Guidelines/ Directives issued bySEBI from time to time.The assets of the Scheme will be valued based on the following valuation norms.8.1. TRADED SECURITIESi. 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 principallytraded. It would be left to the AMC to select the appropriate stock exchange, but the reasons forthe selection should be recorded in writing. There should, however, be no objection for all scripsbeing valued at the prices quoted on the stock exchange where a majority in value of theinvestments are principally traded.

iii. Once a stock exchange has been selected for valuation of a particular security, reasons for changeof 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

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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 maybe, on the earliest previous day may be used provided such date is not more than thirty days priorto the valuation date. When a debt security (other than Government Securities) is purchased byway of private placement, the value at which it was bought may be used for a period of fifteendays beginning from the date of purchase. For valuation of government securities, all the mutualfunds are advised to use the prices for Government Securities released by an agency suggested byAMFI (at present Crisil.com vide AMFI circular dated February 5, 2002).

8.2 NON-TRADED SECURITIESi. 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 orderto determine whether a security is thinly traded or not the volumes traded in all recognisedstock 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 thevaluation 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 appropriatevaluation methods based on the principles approved by the Board of the AMC. For thepurpose 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 capitalisationfactor being determined for comparable traded securities and with an appropriate discountfor lower liquidity.

b) Government securities will be valued at yield to maturity based on the prevailing marketrate.

c) In respect of convertible debentures and bonds, the non-convertible and convertiblecomponents shall be valued separately. The non-convertible component should be valued onthe same basis as would be applicable to a debt instrument. The convertible componentshould be valued on the same basis as would be applicable to an equity instrument. If, afterconversion the resultant equity instrument would be traded pari passu with an existinginstrument which is traded, the value of the latter instrument can be adopted after anappropriate discount for the non-tradability of the instrument during the period precedingthe conversion. While valuing such instruments, the fact whether the conversion is optionalshould also be factored in;

d) Where instruments have been bought on ‘repo’ basis, the instrument must be valued at theresale price after deduction of applicable interest up to date of resale. Where an instrumenthas been sold on a ‘repo’ basis, adjustment must be made for the difference between therepurchase price (after deduction of application interest up to date of repurchase) and thevalue of the instrument. If the repurchase price exceeds the value, the depreciation must beprovided for and if the repurchase price is lower than the value, credit must be taken for theappreciation.

e) Investments in call money, bills purchased under rediscounting scheme and short termdeposits with banks shall be valued at cost plus accrual; other money market instrumentsshall be valued at the yield at which they are currently traded. For this purpose, non-tradedinstruments that is instruments not traded for a period of seven days will be valued at costplus interest accrued till the beginning of the day plus the difference between the redemptionvalue 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 marketrate.

iv. All expenses and incomes accrued up to the valuation date shall be considered forcomputation of net asset value. For this purpose, while major expenses like management feesand other periodic expenses should be accrued on a daily basis, other minor expenses and

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income need not be so accrued, provided the non-accrual does not affect the NAV calculationsby more than 1%.

v. Any changes in securities and in the number of units should be recorded in the books not laterthan the first valuation date following the date of transaction. If this is not possible given thefrequency of the Net Asset Value disclosure, the recording may be delayed up to a period ofseven 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 ofsub clauses (i) to (v) of clause 1 of the Eighth Schedule of the SEBI (MF) Regulations.(ii) Thevaluation of un-traded derivatives shall be done in accordance with the valuation method forun-traded investments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Scheduleto the SEBI (MF) Regulations, 1996.

vii. Thinly traded securities as defined in the guidelines shall be valued in the manner as specifiedin the guidelines issued by the SEBI.

viii. The aggregate value of illiquid securities as defined in the guidelines shall not exceed 15% ofthe total assets of the Scheme and any illiquid securities held above 15% of the total assetsshall 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 asubsequent circular no. MFD/ CIR/14/088/2001 dated March 28, 2001 (“guidelines”) givingguidelines for valuation of securities and for identification and provisioning for NPAs. TheMutual 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 thenumber of Units outstanding on the valuation date. The Fund shall value its investments according tothe valuation norms, as specified in Schedule VIII of the Regulations, or such norms as may beprescribed by SEBI from time to time. The broad valuation norms are detailed above. These norms areindicated based on the current Regulations and the guidelines/instructions issued by SEBI. In terms ofSEBI letter no. MFD/CIR/8(A)/104/2000 dated October 3, 2000, the guidelines on valuation of nontraded and thinly traded debt securities have come into force from December 1, 2000 and the samewas modified vide letter no. MFD/CIR/14/088/2001 dated March 28, 2001 andMFD/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 MutualFund 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 theirmarket value. However, since the unrealised gain arising out of appreciation on investmentscannot be distributed, provision will be made for exclusion of this item when arriving atdistributable income.

· In respect of all interest-bearing investments, income will be accrued on a day-to-day basis asit is earned. Therefore, when such investments are purchased, interest paid for the period fromthe last interest due date upto the date of purchase shall not be treated as a cost of purchase butshall be debited to Interest Recoverable Account. Similarly, interest received at the time ofsale for the period from the last interest due date upto the date of sale shall not be treated as anaddition 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 andnot as of the settlement date, so that the effect of all investments traded during a financial yearare recorded and reflected in the financial statements for that year. When investmenttransactions take place outside the stock market, for example, acquisitions through privateplacement or purchases or sales through private treaty, the transaction would be recorded, in

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the event of a purchase, as of the date on which the Scheme obtains an enforceable obligationto pay the price or, in the event of a sale, when the Scheme obtains an enforceable right tocollect 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 theperiod specified in the guidelines by SEBI, provision shall be made by debiting the revenueaccount 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 earlyredemption or repurchase their own units, the par value of the unit has to be debited to CapitalAccount and the difference between the sale price and the par value of the Unit, if positiveshall be credited to reserves and if negative will be debited to reserves. Similarly, when inrespect of such a scheme, Units are repurchased, the difference between the purchase priceand face value of the unit, if positive, shall be debited to reserves, and, if negative, shall becredited to reserves, the face value being debited to the Capital account.

· The cost of investments acquired or purchased would include, brokerage, stamp charges andany charge customarily included in the broker’s bought note. Underwriting commission shallbe recognized as revenue only when there is no devolvement on the Scheme. Where there isdevolvement on the Scheme, the full underwriting commission received and not merely theportion 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 Scheduleof the SEBI Regulations and are subject to change as per any changes in the SEBI Regulations. Allother policies and standards as specified therein, as well as any additions/modifications thereto as maybe specified by SEBI from time to time shall be adhered to while preparing the books of accounts andfinancial statements of the Fund.

To provide appropriate details of the Schemewise deployment of the assets of the Fund, the AMC mayadopt certain accounting policies and standards in accordance with the appropriate guidance notesissued 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 theextent the guidance notes issued by the Institute of Chartered Accountants of India, and the SEBIRegulations 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 beenreceived 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 duedate 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 accrualsAfter the expiry of the 1st quarter from the date the income has fallen due, there will be no furtherinterest accrual on the asset i.e. if the due date for interest falls on 31.12.2006 and if the interest is notreceived, 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 furtheraccrual on income.

On classification of the asset as NPA from a quarter past due date of interest, all interest accrued andrecognized in the books of accounts of the Fund till the date, should be provided for. For e.g. if interestincome falls due on 31.12.2006, accrual will continue till 31.03.2007 even if the income as on31.12.2006 has not been received. Further, no accrual will be done from 31.03.2007 onwards. Fullprovision will also be made for interest accrued and outstanding as on 31.12.2007.

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(iv) Provision for NPAsBoth secured and unsecured investments once they are recognized as NPAs call for provisioning in thesame manner and where these are related to close ended scheme the phasing would be such that toensure full provisioning prior to the closure of the scheme or the scheduled phasing whichever isearlier.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 theprincipal amount or installments should be made at the following rates irrespective of whether theprincipal is due for repayment or not.

· 10% of the book value of the asset should be provided for after 6 months past due date ofinterest 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 ofinterest 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 duedate 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 duedate 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 pastdue 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 theprescribed valuation method. If any installment is fallen due, during the period of interest default, theamount 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 bewritten back in full.

2. The asset will be reclassified as performing on clearance of all interest arrears and if the debtis regularly serviced over the next two quarters.

3. In case the issuer has fully cleared all the arrears of interest, the interest not credited onaccrual 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 defaultearlier.

5. An asset is reclassified, as ‘standard asset’ only when both overdue interest and overdueinstallments are paid in full and there is satisfactory performance for a subsequent period of 6months.

(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 accrualbasis. 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 needsto 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 andprovisions are continued as per the norms set at (iv) above. Any excess provision will bewritten back.

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(vii) Classification of Deep Discount Bonds as NPAs :Investments in Deep Discount Bonds can be classified as NPAs, if any two of the following conditionsare 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 areschedulement 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 shouldbe continued as non performing for a period of 4 quarters, even though the asset is continuedto 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 NPAshould be continued for eight quarters of regular servicing of the debt. The provision shouldbe written back only after it is reclassified as ‘performing asset’.

To provide appropriate details of the Schemewise deployment of the assets of the Fund, certainaccounting policies and standards in accordance with the appropriate guidance notes issued by theInstitute 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, andthe SEBI Regulations, change, so as to permit the Scheme to give a true and fair view of its state ofaffairs. As such the accounting policies and standards, and the preparation of the annual report andannual statement of account of the Scheme will be in accordance with SEBI Regulations includingSchedule IX and XI thereof.

10.0 UNITS ON OFFER

i. Nature of the FundJM Financial Mutual Fund (formerly JM Mutual Fund) has been notified as a mutual fund underSection 10(23D) of the I.T. Act by Central Board of Direct Taxes and the entire income of the Fund isexempt from income tax and all income received by the Fund will be without any deduction of tax atsource.

This offer document comprising of the Scheme has been prepared in accordance with the SEBIRegulations as applicable.

ii. The Offer

The Offer is being made for subscription to JM Fixed Maturity Fund - Series XI. The Trustee hasgiven its approval for this Offer Document in terms of a resolution passed on January 25, 2008.

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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 OptionØ Dividend Option

Options will have common portfolio under the Plan. Investors are requested to indicate theirpreference while investing in the Scheme. In case an investor fails to specify his preference, heshall 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 thevarious 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 thetime of launch of a the plan(s) and taking into consideration the interests of the unitholders and subjectto the SEBI Regulations. The investment management fees will be uniform across various sub-planslaunched under a plan. Investors will be suitably informed by publishing a notice in a newspaper orthrough 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 Trusteesubject to the availability of distributable surplus. Investors have the choice of dividend payout orreinvestment. In case an investor fails to select his preference he shall be deemed to have opted for thedividend 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 datewhen dividend(s) is (are) declared. The Mutual Fund reserves the right to introduce new investmentoptions at a later date or to alter, modify or amend in any manner, any one or all of the existing optionswith the prior approval of the Trustee.

The Fund does not guarantee or assure declaration or payment of dividend. Although, the Trustee hasthe intention to declare dividend under the dividend options, such declaration of dividend if any, issubject to the scheme’s performance and the availability of distributable surplus in the scheme at thetime 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 forsubscription whenever it feels that the prevailing business environment is not conducive to the launchof such plans.

The Scheme will launch the following plans under this Series, duration of which will be as set out inthe table below

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TYPE OF PLAN DURATION (NO. OF DAYS FROMTHE DATE OF ALLOTMENT)

NO. OF PLANS TOBE LAUNCHED


Each Plan will have different portfolio; however, sub-plans / options under a plan will have a commonportfolio. As per SEBI Circular No. SEBI/IMD/Cir No.10/22701/03 dated December 12, 2003 readwith SEBI Circular No. SEBI/IMD/Cir No. 1/42529/05 dated June 14, 2005, each scheme andindividual plan(s) under the schemes should have a minimum of 20 investors and no single investorshould account for more than 25% of the corpus of such scheme/ plan(s). In case of close-endedscheme / plan, if either of the above two conditions are not fulfilled immediately after the close of theNFO 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 SEBIand 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 beconsidered as the redemption / maturity date for that plan. On maturity of a Plan, the maturity pay-outwill normally be effected on the day immediately following the maturity day. However, if the maturitypay-out day falls on a non-business day, then the maturity day will be extended appropriately to ensurethat 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 Regulation33 of the SEBI Regulations. Accordingly, a plan may be rolled over if the purpose, period and otherterms of the rollover and all other material details of the plan including the likely composition ofassets immediately before the rollover, the net assets and net asset value of the plan are disclosed tothe unitholders and a copy of the same is filed with SEBI. Further, such rollover will be permitted onlyin case of those unitholders who express their consent in writing and the unitholders who do not optfor the rollover or have not given written consent shall be allowed to redeem their holdings in full atnet asset value based price. However, the Trustee reserves the right not to roll over any plan uponmaturity, if deemed appropriate in the interest of the Scheme / Unit holders. Accordingly, at any pointof time, there may be multiple plans of the same maturity period. All plans will have differentportfolios 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 ofthe 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 thetime of launch of the plan(s) and taking into consideration the interests of the unitholders and subjectto the SEBI Regulations. The investment management fees will be uniform across various sub-planslaunched under a plan. Investors will be suitably informed by publishing a notice in a newspaper orthrough 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 13months plans and yearly plan will have specified redemption period which will normally be the firstfive business days at the beginning of every calendar month during the tenure of that plan. On theSpecified Redemption Days during the Specified Redemption Period, unitholders can redeem theirinvestments at the applicable NAV subject to exit load and after deduction of the balanceproportionate unamortized new fund offer expenses applicable to their investments.

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Investors can also redeem on business days other than the specified redemption period subject to theapplicable exit load, if any, and after deduction of the balance proportionate unamortized new fundoffer expenses applicable to their investments.

Unitholders in a plan can redeem their investments on the date of maturity of the Plan at the applicableNAV without any exit load. In case any specified redemption day / maturity day of a Plan falls on anon-business day, then the specified redemption date / maturity date of that Plan shall be deemed to bethe next business day. In case redemption request is not received till the end of business hours on thedate of maturity of a plan, the account balances will be compulsorily redeemed and proceeds will beremitted 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 planand Rs. 5,00,000/- for the institutional plan and in multiples of Re. 1/- thereafter. However, there is noupper 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 3.00pm .These redemption requests will be processed at the applicable NAV, subject to the applicable exitload and after deduction of the balance proportionate unamortized new fund offer expenses as may beapplicable.

The Fund will endeavor to dispatch the redemption cheque / draft within 10 business days from thedate on which the redemption transaction is effected. It is clarified that the cut off timings will also beapplicable 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 eachplan will be for a period of 10 days or shorter period as may be decided by the Trustee and will startfrom the commencement of banking hours during the New Fund Offer period and end at the close ofbanking hours at the end of the New Fund Offer period. The Trustee, however, reserves the right toextend or prepone the closing date subject to the condition that the New Fund Offer period shall not bekept 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 JMFinancial Mutual Fund Agents. Units can also be purchased directly from the Fund or JM FinancialMutual Fund ISCs.

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xiv. NAV Declaration

The NAVs of the Plans / Scheme will be declared on all business days taking into consideration thebalance proportionate unamortized issue expenses. The first NAV shall be declared after 3 businessdays 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 uptofour decimal places.

xvi. Switching Options

Unitholders under the Scheme have the option to switch part or all of their unit holdings in the Schemeto another scheme(s) established by the Fund, or within the Scheme from one plan to another, which isavailable for investment at that time. This option will be useful to Unitholders who wish to alter theallocation of their investment among the scheme(s)/plan(s)/options of the Fund in order to meet theirchanged investment needs.The switch will be effected by way of a redemption of Units from the Scheme/plan/option and areinvestment of the redemption proceeds in the other scheme/plan/option and accordingly, to beeffective, the switch must comply with the redemption rules of the Scheme and the issue rules of theother scheme (for e.g. as to the minimum number of Units that may be redeemed or issued, exit/entryload, etc). The price at which the Units will be switched out of the Scheme will be based on theRepurchase Price, and the proceeds will be invested in the other scheme/plan/option at the prevailingsale price for units in that scheme/plan/option.

Subject to necessary approval (if any) from the Reserve Bank of India and any other approval asapplicable, tax deduction at source, if any, will be effected at the appropriate rate in case of aswitching by NRIs/FIIs and the balance amount would be utilized to exchange units to the otherScheme.

The switch request can be made on a pre-printed form or by using the relevant tear off section of theTransaction 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 threeBusiness 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 extentprovided 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 conditionsand arrange to transfer the Units, on account of a gift made by the unitholder out of his Unit balanceas per the provisions of applicable law. Gift in favour of Non-Residents will also be subject topermission, general or specific, under Foreign Exchange Management Act. All payments andsettlements made to such donee and a receipt thereof shall be a valid discharge by the Fund. The Fundwould not be liable for the loss resulting from a fraudulent transfer by way of gift to a donee, based onthe unitholders instructions that it reasonably believed as genuine. However, unit holders may notethat such a transfer by way of gift may attract stamp duty.

xviii. Applications via electronic mode

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Subject to the investor fulfilling certain terms and conditions stipulated by the AMC as under, theAMC, Mutual Fund or any other agent or representative of the AMC, Mutual Fund, Registrar mayaccept transactions through any electronic mode (“web/ electronic transactions”) as permitted by SEBIor other regulatory authorities;

1. The acceptance of the web/electronic transactions will be solely at the risk of the transmitter ofthe web/ electronic transactions and the recipient shall not in any way be liable or responsiblefor any loss, damage caused to the transmitter directly or indirectly, as a result of thetransmitter 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 besent 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 thetransmitter’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 ofgiving instructions/ transactions requests and that the transmitter is aware of the risks involvedincluding those arising out of such transmission.

5. The transmitter authorizes the recipient to accept and act on any web/ electronic transmissionwhich the recipient believes in good faith to be given by the transmitter and the recipient shallbe entitled to treat any such web/ electronic transaction as if the same was given to therecipient under the transmitter’s original signature.

6. The transmitter agrees that security procedures adopted by the recipient may include signatureverification, telephone call backs which may be recorded by tape recording device and thetransmitter consents to such recording and agrees to co-operate with the recipient to enableconfirmation of such web/ electronic transaction requests.

7. The transmitter accepts that the web/ electronic transactions shall not be considered until timestamped 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 actingon any web/electronic transaction request received / purporting to be received from thetransmitter, the transmitter agrees to indemnify and keep indemnified the AMC, Directors,employees, agents, representatives of the AMC, JM Financial Mutual Fund and Trustee fromand against all actions, claims, demands, liabilities, obligations, losses, damages, costs andexpenses of whatever nature (whether actual or contingent) directly or indirectly suffered orincurred, sustained by or threatened against the indemnified parties whatsoever arising from orin connection with or any way relating to the indemnified parties in good faith accepting andacting on web/ electronic transaction requests including relying upon such electronictransaction requests including relying upon such web/ electronic transaction requestpurporting 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 ofdividend or repurchase amount to a unitholder’s bank account through electronic credit which avoidsloss of dividend or repurchase warrant in transit or fraudulent encashment. The Fund will endeavour tooffer this optional facility for payment of dividend/repurchase proceeds to the unitholders residing inany of the cities where such a facility is available. The maximum amount of repurchase in cases ofECS/EFT should be such as may be decided by the processing agency and the AMC reserves the rightto change this amount depending upon the relevant guidelines from the RBI from time to time. Inorder to avail the above facility, the unitholder may be required to give a written request to theRegistrar. The Registrar will send a separate advice to the unitholder informing them of the directcredit to their account in the case of unitholder opting for the ECS/EFT facility. The AMC may seekcertain declaration/additional information to offer facility of ECS/ETF. There is no commitment fromthe Fund that this facility will be made available to the unitholders for payment of dividend/repurchaseproceeds. However, the Fund will endeavour to arrange the facility provided there is sufficient demandfor the facility from unitholders at any centre, as required by the authorities and the investor’s data

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matches with that of the Bank. The repurchase warrants will be mailed to the unitholder where such afacility is not available or if the facility is discontinued by the Fund for any reason. The AMC is notresponsible & shall not reimburse any charges that may be levied by the bank of the investor who hasopted for this facility.

It is further clarified that credits through ECS / EFT / NEFT instructions from a third party will not bepermitted.

xx. Eligibility for investment:

The following persons (subject to, whatever relevant, purchase of units of mutual funds beingpermitted under respective constitutions, and relevant statutory regulations) are eligible and may applyfor 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 SocietiesRegistration Act, 1860 (so long as the purchase of units is permitted under the respectiveconstitutions)

· Religious and Charitable Trusts, Wakfs or endowments of private trusts (subject to receipt ofnecessary approvals as required) under the provisions of 11(5) of Income Tax Act, 1961 readwith 17C of the Income Tax Rules, 1962 (subject to receipt of necessary approvals as "PublicSecurities", 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 inmutual 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 toRBI 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 theapplication 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 otherAMC, including a Fund of Fund (subject to the conditions and limits prescribed in Regulationsand/or by the Trustee, AMC or Sponsor) may subscribe to the units under the Scheme. TheAMC/Trustee /Fund /Sponsor may subject to the limits prescribed by SEBI subscribe to units ofthis Scheme. The AMC will not be entitled to charge any fees on investments made by theAMC.

3 The Trustee may accept an application from an unincorporated body of persons/trusts. TheTrustee may also periodically add and review the persons eligible for making application forpurchase of units under the Scheme. If a person who is a resident Indian at the time ofsubscription becomes a resident outside India subsequently, he/she shall have the option toeither be paid repurchase value of Units, or continue into the Scheme if he/she so desires and is

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otherwise eligible. However, the AMC shall not be liable to pay interest or any compensation tosuch a person during the period it takes for the Fund to record the change in address and theresidential status, if he desires to continue in the Scheme. Notwithstanding the aforesaid, theTrustee reserves the right to close the unitholder account and to pay the repurchase value ofUnits, 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 doso. Unitholders in whose case there has been a change of status from Resident to Non Residentwill 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 paymentinstrument may be submitted on any business day to any of the official points of acceptance notifiedby 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 anybank which is a member of the Bankers Clearing House located at the place where the applicationform is submitted. Cheques/drafts must be drawn in favour of “JM Financial “JM Fixed MaturityFund” and crossed Account Payee only.

No receipt will be issued for the application money. The bankers to the offer or their respectivedesignated branches or any authorised collection agents / centres who receive the application form,shall stamp and return the “Acknowledgment Slip” thereby acknowledging receipt of the applicationform. The investors are requested to preserve the acknowledgment slip duly stamped by the collectingbank / 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 applicationforms 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 withoutstation 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 formnumber on its reverse. As per the directive issued by SEBI vide their letterIIMARP/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 forpurchase 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 ofIndia (“SEBI”), Permanent Account Number (“PAN”) issued by the Income Tax authorities will beused as the sole identification number for all investors (existing and prospective) transacting in thesecurities market, including mutual funds, irrespective of the amount of transaction, with effect fromJuly 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

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applications for investment should be accompanied with the evidence of having applied for PAN. Inview of the above, with effect from January 1,2008 it is mandatory for all existing and prospectiveinvestors (including joint holders, guardians of minors, NRIs etc.) to enclose a verified copy of PANproof 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/ brokerthrough 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 bytheir Web Portals.In case, the investor does not conform to the above requirement of submission of verified copy ofPAN or produces original PAN proof for verification or the PAN details as per furnished verified copyof PAN proof does not match with the Website of Income Tax Deptt. as prescribed by SEBI, the AMCreserves the right to reject the application before allotment and refund the investment amount, withoutany interest.

In case of inadvertent allotment, the AMC reserves the right to refund the investment amount, withoutany interest

Investors transacting through approved Web Portals are also required to get their PAN validated bytheir Web Portals.

In terms of the Prevention of Money Laundering Act, 2002, the Rules issued there under and theguidelines / circulars issued by SEBI regarding the Anti Money Laundering ("AML Laws"), allintermediaries, including Mutual Funds, have to formulate and implement a client identificationprogramme, verification of identity and address, financial status, occupation and such other personalinformation.

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 makean investment of Rs. 50,000 or above in a mutual fund scheme will be required to complete the KYCprocess. This would also apply to new Systematic Investment Plan (SIP) registrations on or afterFebruary 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 aMutual Fund

Joint Holders: Joint holders (including first, second and third if any, are required) to be individuallyKYC compliant before they can invest with any Mutual Fund. . e.g. in case of three joint holders, allholders need to be KYC compliant and copies of each holder’s KYC Acknowledgement must beattached 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 andattach his KYC Acknowledgement while investing in the name of the minor. The Minor,uponattaining majority, should immediately apply for KYC compliance in his/her own capacity andintimate the concerned Mutual Fund(s) with all the folio details, in order to be able to transact furtherin his/her own capacity.

Power of Attorney (PoA) Holder: Investors desirous of investing through a PoA must note that theKYC compliance requirements are mandatory for both the PoA issuer (i.e. Investor) and the Attorney

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(i.e. the holder of PoA), both of whom should be KYC compliant in their independent capacity andattach their respective KYC Acknowledgements while investing.

For transmission (In case of death of the unit holder): If the deceased is the sole applicant, theclaimant should submit his/her KYC Acknowledgement along with the request and other relevantdocuments to effect the transmission in his/her favour.

KYC Process

The Association of Mutual Funds of India (AMFI) has facilitated a centralized platform throughCDSL 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 itsPoints of Service (POS) will accept KYC Application Forms, verify documents and provide the KYCAcknowledgement (across the counter on a best effort basis). The list of PoS as well as the KYCApplication Form will be displayed on our website as well as that of CDSL and AMFI. An investorcan 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 beobtained from the POS.

For obtaining the KYC Acknowledgement:

· Individual investors will have to produce his Proof of identity (Photo PAN card copy orPAN card copy and copy of the passport, driving license etc ) and Proof of Address (list ofdocuments as set out in the KYC Application Form for Individuals).

· Non –Individual Investors will have to produce certain documents pertaining to itsconstitution/registration to fulfill the KYC process (list of documents as set out in the KYCApplication Form for Non-Individuals).

· NRIs/PIOs, in addition to the certified true copy of the passport will also be required tofurnish certified true copy of the overseas address and permanent address. If any of thedocuments (including attestations/ certifications) towards proof of identity or address is in aforeign language, they have to be translated to English for submission. The documents can beattested, by the Consulate office or overseas branches of scheduled commercial banksregistered in India. A PIO, in addition, will also be required to submit a certified true copy ofthe PIO Card.

Once the KYC process is duly completed in all regards, the investor needs to produce a copy of theacknowledgement 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 thefolios/accounts that he has with the Mutual Fund. However, each of the holders in thesefolios/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 theinvestment is for Rs. 50,000/- or more for fresh investments or additional purchases in an existingfolio. Applications Forms / Transaction Slips not accompanied by KYC Acknowledgement are liableto 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

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submitting the PAN copy, can invest in the schemes of the Mutual Fund by enclosing the MINAcknowledgement along with the Investment Application Form(s) / Transaction Slip(s) whileinvesting for the first time in a Mutual Fund, as the PAN number will be verified by CVL based onMIN.

If the MIN was obtained without submitting the PAN but with other proof of identity documents, theinvestor needs to carry the PAN card in original and a copy for submission at the PoS and obtain theKYC Acknowledgement.

Further, SEBI issued circular dated 20th March, 2002, advising all intermediaries to take necessarysteps to ensure compliance with the requirement of Section 12 of the Act inter-alia maintenance andpreservation of records and reporting of information relating to cash and suspicious transactions toFinancial Intelligence Unit-India (“FIU-IND”), New Delhi. The AMC may seek information or obtainand retain documentation used to establish identity. It may re-verify identity and obtain any missing oradditional information for this purpose. The AMC, under powers delegated by the Trustee, shall haveabsolute discretion to seek information from investors, record investor’s telephonic calls, reject anyapplication, prevent further transactions by a Unit Holder, report suspicious transactions to FIU-INDand / or to freeze the folios, if after due diligence, the investor / Unit Holder / a person making thepayment on behalf of the investor does not fulfill the requirements of the "Know Your Customer" orthe AMC believes that the transaction is suspicious in nature as regards money laundering. In thisbehalf the AMC reserves the right to reject any application and effect a mandatory redemption of unitsallotted 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 thepayment for purchase of units are made by a third party (e.g. a Power of Attorney Holder, a FinancingAgency, a relative, etc.), the Unit Holder may be required to give such details of such transaction so asto satisfy the AMC of the source and / or consideration underlying the transaction. The KYCdocumentation shall also be mandatorily complied with by the holders entering the Register ofMembers by virtue of operation of law e.g. transmission, etc.

Applicants / Unit holders may contact our Investor Service Centers / their distributors, if any, for anyadditional information / clarifications. Also, please visit our website www.JMFinancialmf.com forany 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 singleholder. In case of more than one investor, where the mode of holding is not specified, it would betreated 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 theRegistrar) only will receive all notices and correspondence with respect to the Account, as well as theproceeds of any redemption requests or dividends or other distributions. In addition, such holder willhave the voting rights, as permitted, associated with such Units. However, all documentation/purchaseapplications/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 allthe joint holders. However, in the case of holdings specified as ‘Either or survivor’, any one of thejoint holders may sign such requests. In such case, all payments and settlements made to the concernedapplicant (applying for redemption) would constitute valid discharge by the fund. However under all


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the cases (“joint” or “either/anyone or survivor” , the Fund shall recognise the first named joint holderas the unit holder and all payments and settlements, etc. made to such first-named holder shall be avalid 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/ enrolmentforms may be signed by any one of the joint holders (in case of either/anyone or survivor) and theMutual Fund will act on the instructions of the first holder/anyone of the joint account holders. Thesubsequent clauses on “Nomination” and “Appointment of Beneficiary” further clarifies the positionin 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 aregistered society, or a trust, the original Power of Attorney or the certified copy duly notarisedtogether with the relevant resolution or authority to make the application as the case may be, or dulycertified copy thereof, along with a certified copy of the memorandum and articles of associationand/or bye - laws must be lodged alongwith the application form or request for transfer/transmissionand a separate set of all the documents be submitted to the Registrar. The signatures of the power ofattorney 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 generalpermission to domestic mutual funds referred to in clause (23 D) of Section 10 of the Income TaxAct, 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 MutualFund 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 normalbanking channels or out of balances held in their NRE / FCNR accounts maintained with authoriseddealers in India. Payment may be made by means of Indian Rupees Drafts purchased abroad or bycheque 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 inNon - Resident (External) Accounts / FCNR Accounts maintained with the banks authorised to dealin foreign exchange in India.

b) Issue of Units on non-repatriation basis - The Funds for investment should be provided byeligible 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 orincome earned may be credited to NRO / NRSR account (details of which should be furnished in thespace provided for this purpose in the Application Form) of the Non -Resident investor maintainedwith an authorised dealer in India. In cases where the investment is made out of NRSR account, thematurity 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.

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Refunds, interest and other distribution (if any) and maturity proceeds / repurchase price and / ordividend 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 spaceprovided for this purpose in the Application Form) of the Non - Resident Investor or remitted to theNon-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 willbe dispatched at the unitholder’s risk. The Fund will not be liable for any loss on account ofexchange fluctuations, while converting the rupee amount in US dollar or any other currency. Creditof such proceeds to NRE / FCNR account or remittance thereof may be permitted by authorizeddealer only on production of a certificate from the Fund that the investment was made out of inwardremittance or from the Funds held in NRE / FCNR account of the investor maintained with anauthorized dealer in India. However, there is no objection to credit of such proceeds to NRO/NRSRaccount 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 oftheir 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 approvalby the Foreign Investment Promotion Board (FIPB).

Nomination FacilityPursuant to Regulation 29A of the SEBI Regulations, the AMC is providing an option to the Unitholder 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 areheld by more then one person jointly, the joint Unit holders may together nominate a person in whomall the rights in the Units shall vest in the event of death of all the joint Unit holders. However, in theevent of death of a minor unitholder, where nomination has been made in the prescribed manner, therights 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 thosegranted by law to the nominee. A nomination in respect of the Units does not create an interest in theproperty after the death of the Unit holder. The nominee shall receive the Units only as an agent andtrustee for the legal heirs or legatees as the case may be. It is hereby clarified that the nominees underthe nomination facility provided herein shall not necessarily acquire any title or beneficial interest inthe property by virtue of this nomination and the transmission of units would normally be governed asper succession certificate / probate of the will. Non-individuals including society, trust, bodycorporate, partnership firm, Karta of Hindu Undivided Family, holder of Power of Attorney cannotnominate. The Nominee shall not be a trust other than a religious or charitable trust, society, bodycorporate, 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 minorcan be nominated and in that event, the name and address of the guardian of the minor nominee shallbe provided by the Unit holder. Nomination can also be in favour of the Central Government, StateGovernment, a local authority, any person designated by virtue of his office or a religious or charitabletrust.

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Units which are pledged and offered as security in favour of any entity/body for any purpose can alsohave the nomination facility after obtaining “approval”/ “no objection” clearance from suchentity/body. Notwithstanding anything contained in any other law for the time being in force or indisposition, whether testamentary or otherwise, in respect of such pledge units of the scheme, where anomination made in the prescribed manner purports to confer on any person(s) the right to vest thepledged 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 theexclusion of all other persons except the entity/body in whose favour the units are pledged by way oflieu, unless the nomination is cancelled or varied.

Nomination in respect of the Units stands rescinded upon the Redemption/Repurchase or Transfer ofUnits by the original unitholder in full. Cancellation of nomination can be made only by thoseindividuals who hold Units on their own behalf singly or jointly and who made the originalnomination. On cancellation of the nomination the nomination shall stand rescinded and the MutualFund / AMC shall not be under any obligation to transfer the Units in favour of the nominee. Thenomination facility extended under the Scheme is subject to existing laws. The AMC shall, subject toproduction of such evidence which in their opinion is sufficient, proceed to effect the payment to theNominee. 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/legalheirs.

Appointment of Beneficiary

The Mutual Fund is formed as a Trust under the provisions of the Indian Trusts Act, 1882 and theprovisions 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 IndianTrusts Act, 1882. The acceptance of such nomination/appointment of beneficiary would be at theentire discretion of the Fund taking into consideration the provisions of the Indian Trusts Act, 1882and the Mutual Fund assumes no responsibility. Therefore, the unitholder(s) would be liable for theloss 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 theScheme to receive the benefits (as allocated) hereunder the Scheme in the event of the death of theindividual unitholder(s). The nominee(s)/beneficiary(s) can be nominated by the individual unitholderto receive the benefits under the Scheme upon his/her death, as provided in the foregoing clauses(s) onnomination. When units are held jointly and joint names have been inserted, in the event of death ofthe first or any other holder, the person next in the order as stated in the application form, (unlesschanged) shall be the only person(s) recognized by the Fund as having any title or interest in thebenefits under the Scheme, to the extent provided in the clause(s) on mode of holding. However, incase of joint holdings with a minor as the first holder, the units will be vested in the legal heirs of theminor 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 extentprovided 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 continuein the Scheme if he/she so desires and is otherwise eligible, by issuance of account statement in his/hername is he/she has become entitled to hold the Units in consequence of the death of a sole holder or allholders 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 thesatisfaction 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 suchnominee/beneficiary and obtaining receipt thereof. Subject to specified conditions, every appointmentof a nominee(s)/beneficiary(s) to be made under the Scheme shall be in writing and signed by the

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unitholder(s) and shall remain in full force and effect until the death of thenominee/beneficiary/unitholder(s) or until the same is revoked in writing by the unitholder(s) (bywhom 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 anappropriate form made available. The new appointment of the nominee(s)/beneficiary(s) shall takeeffect on the date the appropriate form for appointment of the nominee(s)/beneficiary(s) is submittedto the collection centre whether or not the unitholder(s) is/are alive on the date of acknowledgement ofthe change in nominee(s)/beneficiary(s) without prejudice to the Fund or AMC or Trustee on accountof any payment or transmission of Units having been made before the acknowledgement of the changeor on account of any delay in payment or transmission of units having been made due to nonproduction of evidence to the satisfaction of the Fund and/or non compliance with all the formalities inconnection with the claim. To provide maximum benefits to the unitholders and thenominee(s)/beneficiary(s), the Trustee / AMC may alter these above stated provisions/norms forappointment of beneficiary(s) from time to time to the extent deemed necessary, and also inconformity with the guidelines and Notifications issued by SEBI/GOI/any other regulatory body fromtime 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 inaccordance with SEBI (Mutual Funds) Regulations, 1996. All distribution of earnings will be out ofdistributable surplus and at the discretion of the Trustee. Such distribution may be by way of bonusunits or by way of dividend.Under the dividend option, dividends shall be declared at the discretion of the Trustee subject to theavailability of distributable surplus. Investors have the choice of dividend payout or dividendreinvestment. In case an investor fails to select his preference, he shall be deemed to have opted for thedividend 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 datewhen dividend(s) is (are) declared. The Mutual Fund reserves the right to introduce new investmentoptions at a later date or to alter, modify or amend in any manner, any one or all of the existing optionswith the prior approval of the Trustee.

On payment of dividends, the NAV will stand reduced by the amount of dividend and dividend tax (ifapplicable) paid.

Issue of bonus units

The Trustee may launch a “bonus” plan in the Scheme at a future date to issue bonus units to theunitholders. The bonus units would be issued to all Unitholders whose names appear in the register ofmembers as on the record date fixed for the purpose. After the allotment of units, freshaccount/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, orif a unitholder wants to sell the units in the market, by operation of law or otherwise upon enforcementof a pledge/charge, then the Trustee / AMC shall effect the transfer, so long as the intended transfereeis otherwise eligible to hold the units. The instrument of transfer used for transfer of the units (in caseof 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.

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It is expressly understood that the investor/unitholder is aware of the relevant statutes, tax relatedprovisions etc. pertaining to transfer and he undertakes to abide by the same and shall pay all relevantapplicable 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 theAccount Statement/unit certificate, gift deed instrument and any other documents. The AMC shall onproduction 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 30days 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 thenominee where the Unit Holder has appointed a nominee upon production of death certificate or anyother documents to the satisfaction of the AMC / Registrar. If the Unit Holder has not appointed anominee or in the case where the nominee dies before the Unit Holder, the Units shall be transmittedin favour of or as otherwise directed by the Unit Holder's personal representative(s) on production ofthe death certificate and / or any other documents to the satisfaction of the AMC / Registrar. If Unitsare held by more than one registered Unit Holder, then, upon death of one of the Unit Holders, theUnits shall be transmitted in favour of the remaining Holder(s) (in the order in which the names appearin the register of Unit Holders with the Registrar) on production of a death certificate and / or anyother documents to the satisfaction of the AMC / Registrar and to the nominee only upon death of allthe Unit Holders. However, in case of joint holdings with a minor as the first holder, the units will bevested 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 infavour of scheduled banks, financial institutions, NBFC, or any other body approved by the AMC. TheAMC and / or the Registrar will note and record such Pledged Units. However, disbursement of suchloans will be at the entire discretion of the bank/financial institution/NBFC/any other regulatory bodyconcerned and the Fund / Trustee / AMC assumes no responsibility thereof. Appropriatedocumentation for this may be obtained from the select JM ISCs.

Rejection of Application and Refund of Application MoneysThe Trustee / AMC reserve the right to reject any application not in accordance with the terms of theFund, 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 applicationmonies refunded. In the event of failure to refund the amounts within the period specified above, theAMC shall be liable to pay interest to the applicants at a rate of fifteen per cent per annum on theexpiry of six weeks from the date of closure of the subscription list.

AllotmentAllotment of units will normally be done on the last day of the New Fund Offer period and in allcases, before the Plan opens for redemption of units after 3 business days from the closure of the NewFund Offer period. Account Statement / refund warrants (if any) will be mailed within 30 days fromthe date of closure of the subscription list.

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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 inorder. An offer to purchase units is not binding on and may be rejected by the AMC until it has beenconfirmed through an Account/Transaction Statement and payment has been received. The Unitholderwill be assigned an account number where the number of units allotted to a unitholder or repurchasedby 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 theunitholder by ordinary post, after every financial transaction is effected. The Account Statement is acomputer generated statement and is a non transferable document which will indicate the details oftransactions under the scheme. It shall normally be dispatched within three business days or afterclearance 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 theinvestor.

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 6weeks of the receipt of request for the certificate. The incidental cost of stamp duty paid for issuing theunit certificate may be recovered from the unitholder. or may be charged to the scheme as per annualrecurring expenses.

Units with depository

Units of the Scheme may, if decided by the AMC, be held with a depository. In such as case, the unitswill 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 theirrespective Depository Participant along with the account statement issued by the Fund. The samenumber of Units held in the physical mode shall be continued in the demat mode. Requests fordematerialisation shall be processed within the thirty days or such other days as may be stipulatedunder SEBI Regulations from the date of receipt of such a request, provided it is complete and valid inall respects. Issuance of units in dematerialisation mode may attract stamp duty, cost of which may berecovered 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 rematerialisationrequest to the respective Depository Participant (DP) of the investor. On receiving the confirmation ofdemat Units balance, an account statement for the physical Units shall be issued where the samenumber of Units held in the demat mode shall be continued in the physical mode. Therematerialisation of demat Units shall be processed within thirty days or such other days as may bestipulated under SEBI Regulations from the date of receipt of such a request, provided it is completeand valid in all respects.

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Refunds

The AMC shall refund the application money to the applicants if the Mutual Fund fails to receive theminimum subscription amount sought to be raised under the scheme or if the mutual fund receivesmonies in excess of the subscription amount sought to be retained by it. The refunds shall bedispatched 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 toapplicable exit load. Any redemption in excess thereof may be in multiples of Re.1/- subjectto keeping minimum balance of 500 units or Rs. 5000/-, whichever is less. In the event ofremaining balance falling below the minimum balance of 500 units or Rs.5000 (whichever isless) 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 theoption to request for redemption either in Rupees or in number of Units. If the redemption requestindicates 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 Unitsredeemed will be the amount redeemed divided by the redemption price. Alternatively, a Unitholdercan request closure of his account, in which case the entire unit balance lying to the credit of hisaccount will be redeemed.

The Fund reserves the right to redeem the entire amount lying to the credit of the Unitholder’s accountif

· after redemption, the amount lying to the credit of the Unitholder’s account falls below theminimum 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 tothis effect will be issued to the Unitholder.The Unitholders may also request for repurchase of their entire holding and close the account byindicating the same at the appropriate place in the Transaction Slip/Repurchase form.

Redemption PaymentsAll redemption payments would be in favour of the Unitholder’s registered name with bank mandatewherever applicable. The Fund will endeavour to dispatch the redemption cheque/draft within 10Business 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 byway of a press release on a daily basis. It will be available, however, at the office of the AMC on allbusiness 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 protectthe interest of the unitholders, the AMC may split the face value of the units to below Rs. 10 inmultiple of an appropriate integer or consolidate units to an appropriate integer. The units aftersplit/consolidation in the face value would be issued to all Unitholders whose names appear in theregister of members as on the record date fixed for the purpose. The NAVs of the Scheme will beadjusted to the extent of the split / consolidation in the face value of units after the record date fixedfor the purpose. After the split / consolidation procedure is completed, fresh account/transactionstatements will be sent to all unitholders.

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Suspension of Redemption and Switching of Units

Redemption of units may be suspended temporarily or indefinitely when any of the followingconditions 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 accuratelycalculated;

iv. In the event of any force majeure or disaster that affects the normal functioning of the AMC orthe JM ISC;

v. Declaration of war or occurrence of insurrection, civil commotion or any other source orsustained 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 unitstemporarily or indefinitely, if the AMC views that changing the size of the corpus further may provedetrimental 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 ofthe AMC and Trustee. The approval from the Boards of AMC and Trustee giving details ofcircumstances and justification for the proposal shall also be informed to SEBI in advance. An offer topurchase units is not binding on and may be rejected by the AMC unless it has been confirmed inwriting by the AMC and payment has been received.

Note: The Investment Manager may restrict or refuse an application for investments if it perceives thatthe same may have a potentially detrimental effect to the interests of the Scheme, in particular apattern of investments that may coincide with the market timing strategy that may be detrimental tothe Scheme.

Right to limit repurchases / redemptions

Keeping in view the unforeseen circumstances/unsure conditions, the AMC may, in the generalinterest of the unitholders of the Scheme, limit the total number of units which may be repurchased onany Business Day to 15% of the total number of units of the Scheme (or such higher percentage as theAMC may decide in any particular case). In the event of any units not being repurchased on aparticular Business Day by virtue of the foregoing clauses, will be carried forward for repurchase tothe next Business Day, in order of receipt and will be priced on the basis of the Repurchase Price ofthe Business Day on which repurchase is made. Under such circumstances, to the extent multiplerepurchase requests are received at the same time on a single Business Day, repurchase will be madeon pro-rata basis, based on the size of each repurchase request, the balance amount being carriedforward for repurchase to the next Business Day(s).

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Possible deferral of redemption/repurchase requests

The Fund will endeavor to ensure that the Scheme has sufficient liquidity to enable the repurchasecheques to be collected/despatched within the deadline stated in the foregoing clause. However wherethe Scheme is obliged to arrange for the disposal of the underlying securities/ borrow, in order tosatisfy redemption/repurchase requests, unitholders may experience some delays in receivingrepurchase cheques, reflecting the time involved in settling the underlying sales ofsecurities/borrowing. However, the Fund will ensure that the collection/despatch of repurchasecheques is not delayed beyond ten working days (when JM Financial Mutual Fund is open forbusiness) from the date of receipt of the repurchase request in accordance with Regulation 53(b) of theRegulations.

Amount set-off

The AMC reserves the right to debit / set-off dividend amounts, redemption amounts or any otheramounts payable under and in accordance with the Scheme(s) against redemption proceeds which havebeen paid by the Fund/AMC in lieu of units created without realization of the subscription amountsand/or against any excess payments made to such investor pursuant to the Scheme or under any otherscheme of the Fund managed by the AMC in the same folio or any other folio in the Fund. In case ofredemption amounts/ excess payments made by cheques and/or by way of direct credit or by anypayment instrument/mechanism, set-off, as aforesaid, by the AMC/Fund, would be effected whether ornot the cheques have been encashed or whether or not the direct credit has been made in the investorsaccount or whether or not the payment instrument/mechanism has been encashed/debited by theUnitholder / Investor.

Further to the provisions of Section 138 of the Negotiable Instruments Act, 1881, where acheque/payment instrument drawn and given to the Fund by a Unitholder/Investor towardssubscription amounts under this Scheme or under any other scheme of the Fund is returned by thebank unpaid, for any reason, and Units are created in good faith, on the bona fide assumption that thecheques 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 otheramounts payable to the Unitholder/Investor under and in accordance with the Scheme or under anyother scheme of the Fund managed by the AMC in the same folio or any other folio in the Fund, tomake good the loss suffered by the AMC/ the Fund due to interest paid on borrowed funds/excesswithdrawal of the amount and the resultant difference, if any, in NAV arising out of revertal of unitsso 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 InstrumentsAct, 1881, where a cheque/payment instrument drawn and given to the Fund by aUnitholder/Investor towards subscription amounts under this Scheme or under any other scheme of theFund is returned by the bank unpaid, for any reason, and Units are created without the realization ofthe 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 underany other Scheme of the Fund managed by the AMC in the same folio or any other folio in the Fund tothe broker/distributor who has mobilized the subscription of such defaulting Unitholder/Investor, tomake good the loss suffered by it due to interest paid on borrowed funds/excess withdrawal of theamount and the resultant difference, if any, in NAV arising out of revertal of units so created due tonon-realization of the subscription cheque/payment instrument.

THE FOREGOING WILL BE WITHOUT PREJUDICE TO ALL RIGHTS AND REMEDIESAVAILABLE TO THE AMC/FUND UNDER THE NEGOTIABLE INSTRUMENTS ACT, 1881 OROTHERWISE AT LAW.

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Closure of unitholder’s account

The AMC at its sole discretion may close a unitholder’s account after giving notice of 45 days, if atthe 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 atthe applicable NAV related price), falls below the minimum investment/balance required for eachscheme (or such other amount as the AMC may decide from time to time) or where the units are heldby 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 torecover the differential/additional entry load or refuse to credit appropriate number of units to theaccount of the unitholder for the differential/additional entry way in the event of entry load beingwaived and/or the investor falls under the category where the entry load is to be waived or otherwiseand the investor then does not invest the requisite amount or the investor does not submit the requisiteproof.

INVESTOR SERVICING

Response TimeFollowing 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 completesupporting legal documents.

Initial Offer Activity Response Time

Mailing / Despatch of AccountStatement

Within 30 days from date of closure of subscriptionlist.

Ongoing Activity From date of receipt of request

Redemption Proceeds The Fund will endeavor to dispatch the redemptioncheque/draft within 10 business days from the date onwhich 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 allrespects 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 willendeavour to send the Account Statements (on account of financial and/or non-financialtransactions) e.g., allotment of units in lieu of distribution of periodic dividend, besidesperiodic 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, whereverrequested, subject to such safeguards the Fund may deem necessary.

2. providing unitholder service through its centers. Unitholders’ enquiries and transactionsduring business hours will be entertained at the AMC’s centres. Unitholders/investors can alsowrite/e-mail/contact them at the AMC’s corporate office at Mumbai. The AMC already has itsservice centres at various locations to handle unitholder enquiries and transactions, besidesproviding a high degree of convenience to the unitholders.

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3. making available an Investor Relation personnel of the AMC on any business day betweennormal official hours of the AMC for personal meeting with any unitholder, to attend to anyquery related to investment needs of a unitholder, resolve any unitholder service relatedqueries 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-financialinformation about their transactions eg. sale, purchase, dividend declarations, change infacilities, etc. This facility is currently offered free of cost to all investors whose mobilenumbers are registered with the Fund / who register themselves for the facility by writing tothe 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 amagistrate 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 itsaffiliates/associates.- To make a dividend sweep from a folio/account with joint holders to a folio/account withonly 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 thefolio/account or to the address on the folio/account if it has been changed within the precedingmonth- 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 hasbeen 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 thesubscription list.

ii. Where the minimum subscription amount is not received, the investors are entitled to theissuance of refund order within six weeks from the date of closure of the subscription list byRegistered Post and marked “A/c Payee” and in the event of the failure of the Fund to send therefund amount by Registered Post within the stipulated period, the investors are entitled tointerest at the rate of 15% p.a. from the expiry of six weeks from the closure of the subscriptionlist.

iii. In the event of failure to dispatch the redemption or repurchase proceeds within 10 workingdays, from the date of receipt of valid request for redemption in all respects, the AMC will beliable to pay interest @ 15% per annum to the Unitholders, such interest shall be borne by theAMC.

iv. The scheme wise Annual Report of the JM Financial Mutual Fund or an abridged summary shallbe published through an advertisement and an abridged scheme wise annual report shall bemailed to all Unitholders as soon as may be but not later than six months from the date of theclosure of the relevant financial year. Whenever the report is published in summary form, a copyof the unabridged Annual Report shall be available for inspection at the corporate office of theTrustee and a copy thereof shall be made available to the Unitholders on payment of such feesas may be specified by the Fund.

v. The Fund shall publish its unaudited financial results before expiry of one month from the closeof each half year that is on 31st March and 30th September, in one national English dailynewspaper circulating in the whole of India and in a newspaper in the language of the regionwhere the Head Office of the Fund is situated. These shall also be displayed on the web site ofthe mutual fund and that of AMFI.

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vi. Unitholders under the Scheme have a proportionate right in the beneficial ownership of theassets 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 orby 75% of the Unitholders of the Scheme.

viii. The dispatch of dividend warrants shall be made within 30 days of the declaration of thedividend and dispatch of redemption or repurchase proceeds shall be made within 10 BusinessDays from the date of effecting the redemption or repurchase.

ix. Regulation 18(15) inter alia provides that the Trustee shall obtain the consent of Unitholderswhenever required to do so by SEBI in the interest of the Unitholders; or on the requisitionmade by three fourth of the Unitholders of any scheme, or when the majority of the Directors ofthe Trustee decide to wind up or prematurely redeem the Units. Regulation 18(15A) of the SEBIRegulations provides that the Trustee shall ensure that no change in the fundamental attributesof any scheme or the trust or fees and expenses payable or any other change which wouldmodify 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 anadvertisement is given in one English daily newspaper having nationwide circulationas well as in a newspaper published in the language of the region where the HeadOffice of the mutual fund is situated; and

(ii) the unitholders are given an option to exit at the prevailing Net Asset Value withoutany exit load.

The Fund shall follow the following procedure while seeking the approval/consent of theUnitholders:

(a) The Fund shall call for the meeting of the Unitholders in the city where theRegistered 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 ofthe 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 consenton the approval being sought.

In both the above cases, the consent shall be obtained from the Unitholders on theprinciple 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 consentof the Unitholders shall be obtained, entirely at the option of the Trustee either at a meeting ofthe Unitholders or through postal ballot. Only one Unitholder in respect of each folio oraccount representing a holding shall vote and he shall have one vote in respect of eachresolution to be passed.

11.2 NAV INFORMATION

The NAVs of the Plans / Scheme shall be published either through an advertisement or by wayof a press release, at least in two daily newspapers on a daily basis (of which at least one willbe a daily newspaper of all India circulation).The first NAV will be announced before the Scheme re-opens for repurchase after New FundOffer period. NAVs will be updated on the websites of AMFI (www.amfiindia.com) and theFund (http://www.JMFinancialmf.com) by 9.00 p.m. every day.


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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 ofthe Units and all correspondence, if any, shall be competent only by the first of suchpersons;

2. All payments and settlements made to the first holder and a receipt thereof shall be avalid discharge by the Fund. The Fund shall for all purposes correspond only with thefirst holder and all communications with the first holder including information on theworking of the Fund shall be deemed to be a valid discharge by Trustee of itsobligations;

3. Any change in the name and address of the Unitholder shall be notified to the JMISCs. The AMC shall on being satisfied of such change and on compliance with suchformalities as may reasonably be required, record the changes accordingly.

4. Subject to the provisions herein contained, the Trustee and the AMC shall not receivenotice of any trust, express, implied or constructive, nor shall they be bound toconsider any such notice in respect of Units in the Register except when so directed bya Court of Competent Jurisdiction.

5. In the event of death of a holder, any other person being entitled to the Units, uponrecognition of the claim in such manner as the AMC may deem necessary, shall beregistered 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 ofdeath of the sole Unitholder at any time during the life of the Fund, the legal heirs willbe recognized claimants to the outstanding Units on complying with the necessaryformalities 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 orwinding up of a sole holder or the survivor(s) of joint holders, upon producingevidence to the satisfaction of the AMC shall be registered as the holder of the Unitsor permitted to transfer the Units, as the case may be, upon such terms as the AMCmay determine.

11.4 DISCLOSURES

Disclosures to the investors

The Trustee shall make such disclosures to the investors as are essential in order to keep theminformed 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 Unitholdersbefore the expiry of one month from the close of each half year (i.e. 31st March and 30thSeptember) in the prescribed format as per SEBI circular MFD/CIR/9/120/ 2000 dated 24thNovember 2000 in one national English daily newspaper and in a newspaper in the languageof the region where the Head Office of the Fund is situated or send a copy to all theUnitholders.

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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 woundup; 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 Trusteeshall give notice of the circumstances leading to the winding up of the Scheme:

a) to SEBI; andb) 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 UPi. 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 forauthorizing 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 iswound 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 theScheme concerned in the best interests of the Unitholders of the Schemeb) The proceeds of the sale realized made in pursuance of the above, shall in the firstinstance be utilised towards discharge of such liabilities as are properly due under theScheme and after making appropriate provision for meeting the expenses connectedwith such winding up, the balance shall be paid to the Unitholders in proportion totheir respective interest in the assets of the Scheme as on the date when the decisionfor the winding up was taken.

ii. On the completion of the winding up, the Trustee shall forward to SEBI and theUnitholders, a report on the winding up containing particulars such as circumstancesleading to the winding up, the steps taken for disposal of assets of the fund beforewinding up, expenses of the fund for winding up, net assets available for distributionto the Unitholders and a certificate from the Auditors of the Fund.

iii. Notwithstanding anything contained herein, the provisions of SEBI Regulations inrespect 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 reportreferred to above under “Procedure and Manner of Winding up” if SEBI is satisfiedthat all measures for winding up of the Scheme have been complied with, the Schemeshall 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. Thefinal accounts will be drawn up to 31st March annually. M/s. N.M. Raiji & Co., CharteredAccountants, are the auditors for the Trustee as well as the Fund.

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12.1 TAX BENEFITS

The following tax benefits are available to investors and the Fund under the present taxation laws. Theinformation set forth below is based on the advice of the Fund's tax advisor and is included for generalinformation purposes only. The information set forth below reflects the law and practice as of date ofthis Offer Document. In view of the individual nature of tax consequences, each investor is advised toconsult his or her own tax adviser with respect to the specific tax consequences to him or her ofparticipation in the scheme.

The disclosures regarding Income Tax / Wealth Tax / Gift Tax / Capital Gains Tax / Investments byNRIs / FIIs are in conformity with the prevalent I. T. Act, Foreign Exchange Management Act, 1999and 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 subscribershould seek advice from his/her/its own professional advisor if he/she/it is in any doubt regarding thetaxation 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 thereunder 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 incomedistributed by it. At the same time, in view of the provisions of Section 196(iv) of the Act, the fundwill receive all income without any deduction of tax at source.

12.1.2 TO THE UNITHOLDERS

A. INCOME RECEIVED FROM MUTUAL FUNDAccording to Section 10(35) of the I.T. Act, any income received in respect of units of the MutualFund specified under Section 10(23D) will be exempt from income tax in the hands of theUnitholders. Further, it has been clarified that income arising from transfer of units of Fund shall notbe 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 notexempt from income tax under Section 10(38) of the Act in the hands of unit holders. The provisionsfor 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 monthswill be chargeable under Section 112 of the Act, at a rate of 20% plus surcharge, as applicable andcess. Capital gains would be computed after taking into account cost of acquisition as adjusted by CostInflation Index notified by the Central Government and expenditure incurred wholly and exclusivelyin connection with such transfer. In the case where taxable income as reduced by long term capitalgains is below the exemption limit, the long term capital gains will be reduced to the extent of theshortfall and only the balance long term capital gains will be charged at the flat rate of 20% plussurcharge, as may be applicable and cess.

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It is further provided that an assessee will have an option to apply concessional rate of 10% plusapplicable surcharge and cess, provided the long term capital gains are computed without substitutingindexed 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 inrespect of Units is chargeable at the rate of 20% plus applicable surcharge and cess. Such long-termcapital 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 ismore beneficial.

iii) For Overseas Financial Organisations, Foreign Institutional Investors fulfilling conditionslaid down under section 115AB (Offshore Fund)

Under Section 115AB of the Act, income by way of long-term capital gains in respect of unitspurchased in foreign currency held for a period of more than 12 months will be chargeable to tax at therate of 10%, plus applicable surcharge and cess. Such gains would be calculated without indexation ofcost 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 tothe total income. Total income including short-term capital gains is chargeable to tax as per therelevant slab rates.

D. CAPITAL LOSSES

Losses under the head "Capital Gains" cannot be setoff against income under any other head. Furtherwithin the head "Capital Gains", losses arising from the transfer of long-term capital assets cannot beadjusted against gains arising from the transfer of a short-term capital asset. However, losses arisingfrom the transfer of short-term capital assets can be adjusted against gains arising from the transfer ofeither 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 thehead 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 threemonths prior to the record date fixed for declaration of dividend or distribution of income and sells ortransfers the same within a period of nine months from such record date, then losses arising from suchsale 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 anyperson without any payment, on the basis of existing units held by such person then the loss on sale oforiginal units shall be ignored for the purpose of computing income chargeable to tax, if the originalunits were acquired within three months prior to the record date fixed for receipt of additional unitsand sold within nine months from such record date. However, the loss so ignored shall be consideredas cost of acquisition of such additional units held on the date of sale by such person.

111

E. TAX DEDUCTION AT SOURCEi. 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 theFund 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 (undersection 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 ofrepurchase 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 theredemption proceeds paid to investors; this withholding is in addition to the securities transaction taxpayable, if any, by the investor. Under Section 195 of the I.T. Act, tax shall be deducted at source inrespect of capital gains as under:

Ø In case of non-resident unitholders -Short term capital gains 30% plus surcharge and cessLong 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) arisingto 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 withwhich a Double Taxation Avoidance Agreement (DTAA) is in force, the tax should be deducted at therate provided in the Finance Act of the relevant year or at the rate provided in DTAA whichever ismore beneficial to the assessee.

F. INVESTMENTS BY CHARITABLE AND RELIGIOUS TRUSTSUnits 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 IncomeTax Rules, 1962, read with clause (xii) of sub-section (5) of Section 11 of the Income Tax Act, 1961.

G. WEALTH TAXUnits 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 theunits are held in the names of more than one person.

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13.0 OTHER MATTERS

13.1 GENERAL

The Mutual Fund, Trustee., as well as the AMC would always adhere to the provisions of SEBIRegulations as amended from time to time as well as any guidelines/directives issued by SEBI as inforce at any point in time, notwithstanding anything mentioned in this Offer Document.

13.2 ASSOCIATE TRANSACTIONS

Investment in Group CompaniesAs on date of this Offer Document, the Schemes have not made any investment in any of the securitiesof group companies.

Historical information on associate transactions for the last three years is given below:

Name of the Associate Year Type ofTransactionPurchase/Sale

Amount(Rs. inlacs)

Percentageof Totalbusiness

Percentage ofTotalbrokeragepaid (%)

JM Financial Securities Pvt. Ltd.(earlier known as JM MorganStanley Fixed Income SecuritiesPvt. Ltd.)

2004-05 Purchase 13218.72


2004-05 Sale 10340.57 2.18 0.33

Morgan Stanley India Co. Pvt. Ltd.(earlier known as JM MorganStanley Securities Pvt. Ltd.)

2004-05 Purchase 257.94


2004-05 Sale 589.44 0.87 0.08


2004-05 Purchase 187.94


2004-05 Sale 542.36 0.69 0.07


2005-06 Purchase 6661.40


2005-06 Sale 7862.39 0.785 0.059


2005-06 Purchase 194.830.011 0.053

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2005-06 Sale -

JM Financial Services Pvt. Ltd.(earlier known as JM MorganStanley Financial Services Pvt.Ltd.)

2005-06 Purchase 150.17

0.008 0.017

JM Financial Services Pvt. Ltd.(earlier known as JM MorganStanley Financial Services Pvt.Ltd.)

2005-06 Sale -

JM Financial Securities Pvt. Ltd.(earlier known as JM MorganStanley Fixed Income SecuritiesPvt Ltd)

2006-07 Purchase 4273.47

JM Financial Securities Pvt. Ltd.(earlier known as JM MorganStanley Fixed Income SecuritiesPvt Ltd)

2006-07 Sale 532.31 0.212 0.018

The above transactions have been executed and completed during normal course of business of JMFinancial Mutual Fund. These transactions have not impacted the performance of the schemes otherthan 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 LimitedCorporation Bank Escorts Financial Services LimitedEssar Oil Limited Fortis Financial Services LimitedGIC Housing Finance Limited Hindustan Petroleum Corporation LimitedICICI Banking Corporation Limited IDBIL & T (Bond Issue) Rajinder Pipes LimitedShriyam Securities & Finance Limited Simbhaoli Securities & Finance LimitedSuashish Diamond Limited The Sandesh LimitedCadilla Healthcare Ltd PNB Gilts LtdHughes Software Ltd HCL Technologies LtdAztec Software Technology Services Ltd. Balaji Telefilms LtdIndian Oil Corporation Steel Authority of India Ltd.Bharti Televentures Ltd. Maruti Udyog Ltd.UCO Bank Vijaya BankIndraprastha Gas T.V. Today Network Ltd.IPCL ONGCNDTV Tata Consultancy Services Ltd.Punjab National Bank Shingar CinemaShoppers Stop IDFCBank of Baroda Suzlon Energy

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GVK Power & Infrastructure Limited Entertainment Networks (India) LimitedReliance Petroleum Limited Development Credit Bank LimitedParsvnath Developers Limited Idea Cellular LimitedMindTree Consulting Limited Global Broadcast News LimitedApollo 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 anadvisor to the New Fund Offer for JM Emerging Leaders Fund, was paid a fixed fee of Rs. 20 Lacsand 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/ haveheld units in excess of 5% of the net assets of any schemes of the Mutual Fund.

Name ofCompany(Investor)

Scheme inwhichinvestmentis made bytheCompany

Scheme bywhichinvestment ismade insecurities ofthe company

Aggregateinvestmentby Scheme insecurities ofthe Companyduring thespecifiedperiod (Rs. inLacs)

Aggregateinvestmentoutstanding as onDecember 31,2007 (At MarketValue) (Rs. inLacs)

Axis BankJM HighLiquidityFund

JM High LiquidityFund 14129.30JM Equity &Derivative Fund 3318.90 50.02JM Fixed MaturityFund Series III -Q-5 2500.00JM Fixed MaturityFund Series IV -15M1 800.00 800.00JM Fixed MaturityFund Series IV -Q-1 5000.00JM Fixed MaturityFund Series IV -Q-2 3200.00JM Fixed MaturityFund Series IV -Q-3 2000.00JM Fixed MaturityFund Series IV -Q-4 6300.00JM Fixed MaturityFund Series IV -Yearly 600.00 600.00JM FinancialServices Fund 49.15JM ArbitrageAdvantage Fund 13928.24 250.09

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JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 589.44 290.10JM Income Fund 487.01JM MonthlyIncome Plan 20.70 20.01JM Short TermFund 859.83JM MoneyManager Fund-Regular Plan 1609.33JM MoneyManager Fund-Super Plan 1294.38JM MoneyManager Fund-Super Plus Plan 10172.07 8,569.72JM Fixed MaturityFund Series V -Q-2 1544.46JM Fixed MaturityFund Series V -Q-5 3072.20JM Fixed MaturityFund Series VI -Q-3 1534.36JM Floater Fund-Short Term Plan 0.00 890.30

Bank of BarodaJM HighLiquidityFund

JM Equity &Derivative Fund 973.03JM FinancialServices Fund 26.40JM ArbitrageAdvantage Fund 6605.58 456.84JM EmergingLeaders Fund 57.47JM HI FI Fund 395.52

Central Bank ofIndia

JM HighLiquidityFund

JM ArbitrageAdvantage Fund 1076.52 298.87

ChamabalFertlisers andChemicals Ltd

JM MoneyManagerFund-SuperPlus Plan

JM High LiquidityFund 9300.00JM Equity &Derivative Fund 322.35JM Fixed MaturityFund Series III -Q-2 6000.90JM ArbitrageAdvantage Fund 694.21

116

JM MoneyManager Fund-Regular Plan 200.00JM MoneyManager Fund-Super Plan 800.00JM MoneyManager Fund-Super Plus Plan 14900.00

CorporationBank


JM High LiquidityFund 7298.59 7,341.57JM FinancialServices Fund 46.41JM Interval Fund- Quarterly Plan 1 1930.59 1,933.03JM Agri & InfraFund 4909.36

Cummins IndiaLtd

JM LiquidPlus Fund(formerly JMFloater Fund- Long TermPlan) JM Basic Fund 572.48

JM Equity &Derivative Fund 25.55JM ArbitrageAdvantage Fund 519.46JM Equity Fund 197.93

Dena BankJM HighLiquidityFund

JM FinancialServices Fund 283.67 328.02JM ArbitrageAdvantage Fund 304.47JM HI FI Fund 265.77 255.60

DR. REDDYSLABORATORIESLTD.

JM IntervalFund -QuarterlyPlan 1

JM ArbitrageAdvantage Fund 334.84JM Equity Fund 295.29JM HealthcareSector Fund 45.56

DSP MerrillLynch CapitalLtd


JM High LiquidityFund 25375.40


JM Equity &Derivative Fund 1100.00JM Fixed MaturityFund Series III - 1538.80

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Q-2

JM Fixed MaturityFund Series III -Q-4 2700.00JM ArbitrageAdvantage Fund 1500.00JM BalancedFund 19.96 19.87JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 500.00JM Income Fund 500.00JM MoneyManager Fund-Regular Plan 1502.62JM MoneyManager Fund-Super Plan 500.00JM MoneyManager Fund-Super Plus Plan 70208.46 17,609.31JM Fixed MaturityFund Series V -Q-5 600.00JM Fixed MaturityFund Series VI -Q-3 601.76JM Fixed MaturityFund Series VII -18M 968.43 864.53

ElectrosteelCastings Ltd

JM LiquidPlus Fund(formerly JMFloater Fund- Long TermPlan)

JM High LiquidityFund 7303.61JM MoneyManager Fund-Super Plus Plan 6000.00

Global TradeFinance PrivateLimited

JM FloaterFund-ShortTerm Plan JM Basic Fund 4000.00JM HighLiquidityFund

JM High LiquidityFund 130642.34 7,800.00JM Equity &Derivative Fund 7707.55JM Fixed MaturityFund Series II - Y 7409.63JM Fixed MaturityFund Series III -M-1 5100.00

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JM Fixed MaturityFund Series III -Q-5 6000.00JM Fixed MaturityFund Series IV -13M 1000.00JM Fixed MaturityFund Series IV -Q-1 3700.00JM Fixed MaturityFund Series V -Q-1 3701.18JM Fixed MaturityFund Yearly - B2 900.00JM Fixed MaturityFund Yearly -SO1 1000.00JM ArbitrageAdvantage Fund 11616.53JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 2703.27 100.00JM Floater Fund -Short Term Plan 6206.28JM High LiquidityFund - PremiumPlan 12003.25JM Income Fund 802.69 400.00JM MonthlyIncome Plan 200.00JM Small & Mid-Cap Fund 2801.57JM Short TermFund 3902.78JM MoneyManager Fund-Regular Plan 1702.47JM MoneyManager Fund-Super Plan 6009.64JM MoneyManager Fund-Super Plus Plan 66739.60 8,900.00

GmrInfrastructureLimited


JM ArbitrageAdvantage Fund 2759.80

GrasimIndustries Ltd

JM FixedMaturityFund-SeriesIV-Q-1 JM Basic Fund 2253.36 2,748.96 JM FixedMaturityFund-Series

JM Equity &Derivative Fund 446.95

119

IV - 15M1

JM FixedMaturityFund-SeriesIV - Q -3


JM FixedMaturityFund-SeriesIV - Q -4

JM BalancedFund 63.33 76.91

JM FixedMaturityFund-Series V- Q- 2 JM Equity Fund 931.10 719.71JM FixedMaturityFund-Series V- Q-4 JM HI FI Fund 752.55JM FixedMaturityFund-Series V- Q-5JM FixedMaturityFund-SeriesVI - Q-1JM FixedMaturityFund-SeriesVI - Q-4

HindalcoIndustries Ltd

JM FixedMaturityFund-SeriesIV - Q-4


JM FixedMaturityFund-Series V- Q- 1

JM ArbitrageAdvantage Fund 8,567.62

JM FixedMaturityFund-Series V- Q- 5

JM BalancedFund 9.00 8.06

JM FixedMaturityFund-SeriesVI - Q-1 JM Equity Fund 329.34 26.86JM FixedMaturityFund-SeriesVI - Q-5 JM HI FI Fund 233.53

Hindustan ZincLtd

JM HighLiquidityFund JM Basic Fund 1445.15

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JM FixedMaturityFund-SeriesIV - 13M JM Equity Fund 274.77JM FixedMaturityFund-SeriesIV - Yearly JM HI FI Fund 202.85JM FixedMaturityFund-Series V- Q-5 JM FixedMaturityFund-SeriesVII - 13M1 JM FixedMaturityFund-Series VI - Q-3

Idea CellularLtd



ICICI BankJM HighLiquidityFund

JM High LiquidityFund 32453.95 6,410.44JM Equity &Derivative Fund 10637.39JM Fixed MaturityFund Series III -M-1 6608.47JM Fixed MaturityFund Series III -Q-2 6731.68JM Fixed MaturityFund Series III -Q-4 391.72JM Fixed MaturityFund Series III -Q-5 4000.00JM Fixed MaturityFund Series IV -13M 1400.00 1,400.00JM Fixed MaturityFund Series IV -15M1 1297.26JM Fixed MaturityFund Series IV -Q-3 289.25JM Fixed MaturityFund Series IV -Q-4 9450.72JM Fixed MaturityFund Series IV -Yearly 830.00 830.00

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JM FinancialServices Fund 652.56 480.00JM ArbitrageAdvantage Fund 26339.21JM BalancedFund 334.06 247.74JM Equity Fund 270.23JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 814.82 480.90JM Floater Fund -Short Term Plan 3614.88JM HI FI Fund 245.85 247.74JM High LiquidityFund - PremiumPlan 857.86JM MonthlyIncome Plan 93.77 102.11JM Short TermFund 3032.86 378.35JM MoneyManager Fund-Regular Plan 2854.23 96.65JM MoneyManager Fund-Super Plan 2334.96 289.94JM MoneyManager Fund-Super Plus Plan 35092.61 12,092.49JM Fixed MaturityFund Series III -Q-1 2346.12JM Fixed MaturityFund Series III -M-2 1947.79JM Fixed MaturityFund Series III -M-3 1861.96JM Fixed MaturityFund Series V -Q-3 3410.81JM Fixed MaturityFund Series V -Q-2 2364.65JM Fixed MaturityFund Series VI -Q-1 2391.51JM Contra Fund 4738.83JM Fixed MaturityFund Series VI -Q-2 4896.24JM Fixed MaturityFund Series VI -Q-4 2441.58

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IFCI LimitedJM HighLiquidityFund

JM Equity &Derivative Fund 2141.29JM FinancialServices Fund 33.32 46.58JM ArbitrageAdvantage Fund 12479.06 278.75

IndianOverseas BankLtd


JM High LiquidityFund 2381.59 2,418.26JM Equity &Derivative Fund 96.93JM FinancialServices Fund 125.84 160.83JM ArbitrageAdvantage Fund 208.56 200.32JM MoneyManager Fund-Super Plus Plan 4594.22

IndianPetrochemicalsCorpn Ltd

JM FixedMaturityFund-SeriesIV - Q- 2

JM Equity &Derivative Fund 2400.63JM ArbitrageAdvantage Fund 5026.14JM HI FI Fund 142.87

InfrastructureDevelopmentFinanceCompany Ltd

JM IncomeFund

JM Basic Fund 3253.94 3,325.40JM High LiquidityFund 4141.78JM Equity &Derivative Fund 62.47JM Fixed MaturityFund Series III -Q-3 1431.31JM Fixed MaturityFund Series IV -Q-1 1458.37JM FinancialServices Fund 262.01 274.26JM ArbitrageAdvantage Fund 2548.59JM HI FI Fund 139.90 242.72JM Income Fund 500.00JM MonthlyIncome Plan 99.68JM Small & Mid-Cap Fund 1493.46JM Short TermFund 500.00

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JM MoneyManager Fund-Regular Plan 799.68JM MoneyManager Fund-Super Plan 1,196.67JM MoneyManager Fund-Super Plus Plan 5,063.78 109.65JM Fixed MaturityFund Series VII -18M 893.30 887.15

ITC Limited

JM FixedMaturityFund-SeriesIV - Q 1




JM HighLiquidityFund -Premium Plan

JM BalancedFund 70.52


JM EmergingLeaders Fund 331.05

JM FixedMaturityFund-Series V- Q-1 JM Equity Fund 327.66JM FixedMaturityFund-Series V- Q-2JM FixedMaturityFund-SeriesVI - Q- 2

Jai Corp Ltd

JM MoneyManagerFund-SuperPlus Plan JM Basic Fund 1567.41 1,813.14

JM HI FI Fund 404.96 468.45

Larsen &Toubro Ltd

JM HighLiquidityFund JM Basic Fund 425.88JM MoneyManagerFund-SuperPlus Plan


JM FixedMaturityFund-Series


124

IV - Q-3

JM BasicFund


JM EmergingLeader Fund

JM EmergingLeaders Fund 40.34

JM FixedMaturityFund-SeriesVII - 13 M1 JM Equity Fund 159.93JM ArbitrageAdvantageFund

JM Floater Fund -Short Term Plan 1000.00JM HI FI Fund 751.26

Patni ComputerSystems Ltd



JM FixedMaturityFund-SeriesIV - 15M1


JM FixedMaturityFund-SeriesIV - Q-2JM FixedMaturityFund-SeriesIV - Q-3 JM FixedMaturityFund-SeriesIV - 13MJM FixedMaturityFund-SeriesVI - Q 1

Petronet LNGLtd



RanbaxyHolding Co. Ltd


JM High LiquidityFund 12098.41JM Fixed MaturityFund Series IV -15M1 1211.13 603.36JM Fixed MaturityFund Series IV -Q-1 3700.00JM Fixed MaturityFund Series IV -Q-2 2400.00

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JM Fixed MaturityFund Series IV -Q-3 2150.95JM Fixed MaturityFund Series IV -Q-4 4700.00JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 500.00JM Floater Fund -Short Term Plan 811.93JM Small & Mid-Cap Fund 1593.95JM Short TermFund 407.32JM MoneyManager Fund-Super Plus Plan 33082.34JM Fixed MaturityFund Series V -Q-3 1700.00JM Fixed MaturityFund Series VI -Q-1 2500.00JM Fixed MaturityFund Series VI -Q-2 2500.00JM Fixed MaturityFund Series V -Q-4 1000.00

Raymond Ltd


JM High LiquidityFund 23084.32JM Equity &Derivative Fund 1223.34JM Fixed MaturityFund Series II - Y 2405.62JM ArbitrageAdvantage Fund 5050.53JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 1605.08JM Floater Fund -Short Term Plan 302.85JM Small & Mid-Cap Fund 4641.47JM Short TermFund 402.38JM MoneyManager Fund-Regular Plan 1606.50

126

JM MoneyManager Fund-Super Plan 1514.09JM MoneyManager Fund-Super Plus Plan 15233.13

RelianceIndustries Ltd

JM HighLiquidityFund JM Basic Fund 2077.86 2,008.34JM HighLiquidityFund -Premium Plan

JM High LiquidityFund 1493.59JM Equity &Derivative Fund 17221.08JM Fixed MaturityFund Series IV -15M1 603.65JM Equity TaxSaver Fund -Series I 120.13JM ArbitrageAdvantage Fund 20178.40 8,198.40JM EmergingLeaders Fund 81.90JM Equity Fund 477.74 1.57JM HI FI Fund 1042.31JM Income Fund 402.44JM MoneyManager Fund-Regular Plan 73.73 72.54JM MoneyManager Fund-Super Plan 73.73 72.54JM MoneyManager Fund-Super Plus Plan 1565.61 72.54JM MIP Fund 145.09JM BalancedFund 0.32

Religare FinvestLtd


JM High LiquidityFund 16500.00JM Floater Fund -Short Term Plan 500.00JM MoneyManager Fund-Super Plus Plan 46044.36 5,000.00JM Fixed MaturityFund Series V -Q-2 2002.08JM Fixed MaturityFund Series V -Q-5 1727.14

127

JM Fixed MaturityFund Series VI -Q-3 1735.90

ReliancePetroleumLimited



JM FixedMaturityFund-Series V- Q-4

JM ArbitrageAdvantage Fund 3091.16 1,818.59


Shree CementLtd

JM ArbitrageAdvantageFund

JM High LiquidityFund 20504.79JM Equity TaxSaver Fund -Series I 21.96JM EmergingLeaders Fund 246.66JM Equity Fund 283.81JM HI FI Fund 218.89JM MoneyManager Fund-Super Plus Plan 30000.00

State Bank OfBikaner andJaipur


JM High LiquidityFund 20930.02 7,221.90JM Fixed MaturityFund Series III -Q-3 1372.65JM Fixed MaturityFund Series III -Q-4 913.28JM Fixed MaturityFund Series IV -15M1 518.95JM Fixed MaturityFund Series IV -Q-1 1033.09JM Fixed MaturityFund Series IV -Q-2 3200.00JM ArbitrageAdvantage Fund 997.98JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 32.92JM Floater Fund -Short Term Plan 3804.38

128

JM Income Fund 813.54JM Small & Mid-Cap Fund 3570.43JM Short TermFund 3136.38JM MoneyManager Fund-Regular Plan 581.07JM MoneyManager Fund-Super Plan 434.38JM MoneyManager Fund-Super Plus Plan 19047.58 2,407.01JM Fixed MaturityFund Series V -Q-3 2059.16

SterliteIndustries(India) Ltd



JM FixedMaturityFund-SeriesVII - 13 M1


JM FixedMaturityFund-SeriesVI - Q-3

JM Fixed MaturityFund Series III -Q-2 2500.00

JM IntervalFund -QuarterlyPlan 1

JM ArbitrageAdvantage Fund 6742.25JM BalancedFund 19.90JM EmergingLeaders Fund 474.28JM Equity Fund 318.18JM Floater Fund -Short Term Plan 2105.54JM HI FI Fund 136.14JM High LiquidityFund - PremiumPlan 2600.00JM Short TermFund 300.00JM MoneyManager Fund-Super Plan 400.00JM MoneyManager Fund-Super Plus Plan 13700.36

TataConsultancy

JM MoneyManager


129

ServicesLimited

Fund-SuperPlus PlanJM FixedMaturityFund-SeriesIV - Q-1


JM FixedMaturityFund-SeriesIV - Q-2JM FixedMaturityFund-Series V- Q-5JM FixedMaturityFund-SeriesVI - Q-2JM FixedMaturityFund-SeriesVI - Q-4JM FixedMaturityFund-SeriesVI - Q-5JM IntervalFund -QuarterlyPlan 1

Tata MotorsLimited


JM High LiquidityFund 34887.77 4,908.70JM Equity &Derivative Fund 372.84JM Fixed MaturityFund Series IV -15M1 105.49JM Auto SectorFund 118.05 191.05JM ArbitrageAdvantage Fund 296.45JM Equity Fund 367.15JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 155.59JM Floater Fund -Short Term Plan 452.73JM HI FI Fund 45.50JM Income Fund 102.85JM Short TermFund 156.64

130

JM MoneyManager Fund-Super Plus Plan 9000.00

Tata SteelLimited


JM Equity &Derivative Fund 6148.31JM ArbitrageAdvantage Fund 7693.89JM BalancedFund 39.10JM EmergingLeaders Fund 127.70JM Equity Fund 700.43JM HI FI Fund 451.51JM MonthlyIncome Plan 23.71

Tata ChemicalsLimited

JM MoneyManagerFund-SuperPlus Plan JM HI FI Fund 67.98JM FixedMaturityFund-SeriesVI - Q-1

Thermax Ltd

JM FixedMaturityFund-SeriesVI - Q-1 JM Basic Fund 1175.18

JM HI FI Fund 110.73

The GreatEasternShipping Co.Ltd

JM ArbitrageAdvantageFund JM Equity &

Derivative Fund 310.73JM HighLiquidityFund

JM ArbitrageAdvantage Fund 2779.74JM BalancedFund 78.84JM EmergingLeaders Fund 890.19JM Equity Fund 394.23JM HI FI Fund 858.02

UCO BankJM HighLiquidityFund



JM Equity &Derivative Fund 2992.03JM High LiquidityFund - Premium 466.37

131

Plan

JM MoneyManager Fund-Super Plus Plan 7987.53 4,928.61JM Fixed MaturityFund Series VI -Q-1 2254.37

UltratechCement Limited


JM ArbitrageAdvantage Fund 21.65JM Equity Fund 87.75JM HI FI Fund 154.14

Union Bank ofIndia

JM HighLiquidityFund -Premium Plan



JM Equity &Derivative Fund 2616.23 567.30JM Fixed MaturityFund Series II - Q 1958.71JM Fixed MaturityFund Series III -M-1 2481.84JM Fixed MaturityFund Series IV -13M 722.92JM Fixed MaturityFund Series IV -15M1 806.32 654.13JM Fixed MaturityFund Series IV -Yearly 351.97JM FinancialServices Fund 200.68JM ArbitrageAdvantage Fund 5173.55 3,633.21JM BalancedFund 375.75 370.00JM Liquid PlusFund (formerlyJM Floater Fund -Long Term Plan) 2282.15 490.00JM Floater Fund -Short Term Plan 6105.20 700.00JM Income Fund 910.22 50.00JM MonthlyIncome Plan 214.11 210.00JM Short TermFund 2087.05

132

JM MoneyManager Fund-Super Plus Plan 9075.90 668.46JM Fixed MaturityFund Series VII -13M 3375.54 3,452.11

Videsh SancharNigam Limited



JM FixedMaturityFund-SeriesVI - Q-1 JM Telecom Fund 59.36

JM ArbitrageAdvantage Fund 1434.16JM EmergingLeaders Fund 108.82JM Equity Fund 97.38JM HI FI Fund 87.98

Wipro LimitedJM HighLiquidityFund


JM FixedMaturityFund-SeriesVII-13 M1JM FixedMaturityFund-SeriesVI - Q-4JM FixedMaturityFund-SeriesVI - Q-5

WelspunGujarat StahlRohren Ltd


JM ArbitrageAdvantage Fund 261.63JM HI FI Fund 270.80

Yes Bank LtdJM HighLiquidityFund


JM Equity &Derivative Fund 499.22JM Fixed MaturityFund Series II - Y 3517.21JM Fixed MaturityFund Series III -Q-3 2500.00JM Fixed MaturityFund Series III -Q-4 2500.00

133

JM Fixed MaturityFund Series IV -Q-1 5048.08JM Fixed MaturityFund Series IV -Q-2 1000.00JM Fixed MaturityFund Series IV -Q-3 1500.00JM Fixed MaturityFund Yearly - A2 1201.82JM Fixed MaturityFund Yearly - B2 162.54JM FinancialServices Fund 61.81 99.72JM ArbitrageAdvantage Fund 6.37JM EmergingLeaders Fund 17.45JM High LiquidityFund - PremiumPlan 2,091.74

JM MoneyManager Fund-Super Plus Plan 3,500.00JM Fixed MaturityFund Series VI -Q-2 4,897.60JM Fixed MaturityFund Series VI - Q-5 4,900.23 4,937.22

Investments by the Schemes in the above companies have been made to achieve the investmentobjectives 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 ofUnits:

2004-05 2005-06 2006-07JM Financial Services Pvt.Ltd. (earlier known as JMMorgan Stanley FinancialServices Pvt. Ltd.) 23,927,665 23,032,930 22,962,565JM Financial Securities Pvt.Ltd. (earlier known as JMMorgan Stanley Fixed IncomeSecurities Pvt Ltd.) 1,494,356 194,467 52,674

Note: The above information is as per the audited figures.

Dealing with Associate CompaniesThe 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 associatesof its Sponsor.

134

The AMC may utilise the services of Sponsor, group companies and any other subsidiary or associatecompany of the Sponsor established or to be established at a later date. The AMC will conduct itsbusiness with the aforesaid companies on commercial terms and on arms-length basis and at mutuallyagreed terms and conditions to the extent permitted under the SEBI Regulations, after evaluation ofthe competitiveness of the pricing offered by the Sponsor, associate companies and the services to beprovided by them.

13.3 INTER SCHEME TRANSFERSTransfer of investments from one Scheme to another Scheme under the Mutual Fund, shall be allowedonly 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 spottransactions.

ii. The Securities so transferred shall be in conformity with the investment objective of theScheme to which such transfer has been made.

13.4 POWERS TO REMOVE DIFFICULTIESIf any difficulty arises in giving effect to the provisions of the Scheme, the Trustee may take suchsteps that are not inconsistent with these provisions which appear to them to be necessary andexpedient, for the purpose of removing difficulties. . The Trustees may grant approval forredemptions/ switches prior to the interval period at the applicable NAV in the case of genuineinvestors or in the case of errors in processing of transactions.

13.5 POWERS TO MAKE RULESThe Trustee / AMC may from time to time prescribe such forms and make such rules for the purposeof giving effect to the provisions of the Scheme, and add or alter / amend all or any of the forms andrules that may be framed from time to time.

13.6 TERM(S) BINDING ON UNITHOLDERSThe Mutual Fund may from time to time add to or otherwise vary or amend or alter all or any of theterms of the Fund after obtaining the prior approval from SEBI and the unitholders in accordance withthe SEBI Regulations Statements in this Offer Document are, except where otherwise stated, based onthe law and practice currently in force in India and are subject to changes therein. The informationcontained in this Offer Document regarding taxation has been included relying upon advice providedto the fund by its tax advisors.

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13.7 UNCLAIMED REDEMPTION / DIVIDEND AMOUNTThe unclaimed redemption amount and dividend amounts may be deployed by the Fund in call moneymarket or money market instruments only and the investors who claim these amounts during a periodof three years from the due date shall be paid at the prevailing NAV. After a period of three years, thisamount will be transferred to a pool account and the investors can claim the amount at NAV of thepool account prevailing at the end of the third year. The income earned on such funds will be used forthe purpose of investor education. The AMC will make a continuous effort to remind the investorsthrough letters to take their unclaimed amounts. Further, the investment management fee charged bythe AMC for managing unclaimed amounts shall not exceed 50 basis points.

13.8 UNITHOLDER GRIEVANCES REDRESSAL MECHANISMThe investor grievances will normally be received at the respective JM ISCs and at the office of theAMC. The Head Office of the AMC will follow up with the respective JM ISC to ensure timelyredresses 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 Letterrecd date

(first)JM Equity Fund 326 326 0 NAJM Balanced Fund 303 303 0 NAJM Income Fund 498 498 0 NAJM Tax Cover '96 Fund 59 59 0 NAJM Tax Cover '97 Fund 42 42 0 NAJM Tax Cover '98 Fund 12 12 0 NAJM High Liquidity Fund 13 13 0 NAJM Basic Fund 234 234 0 NAJM G-Sec Fund 75 75 0 NAJM Short-Term Fund 6 6 0 NAJM Fixed Maturity Plan 20 20 0 NAJM Floater Fund 12 12 0 NAJM MIP Fund 222 222 0 NAJM Auto Sector Fund 21 21 0 NAJM Healthcare Sector Fund 19 19 0 NAJM Equity & DerivativeFund 71 71 0 NAJM Arbitrage AdvantageFund 15 15 0 NAJM Emerging LeadersFund 34 34 0 NAJM Financial ServicesSector Fund 4 4 0 NAJM Equity Tax Saver FundSeries I 7 7 0 NAJM Small & Mid Cap Fund 21 21 0 NAJM Housing & Infra Fund 36 36 0 NAJM Contra Fund 44 44 0 NA

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JM Fixed Maturity Fund -Series VI - Quarterly Plan2 1 1 0 NATotal 2095 2095 0 NA

14.0 PENALTIES & PENDING LITIGATION

Details on penalties, pending litigation or proceedings, findings of inspections or investigation forwhich action may have been taken or is in the process of being taken by any regulatory authority :

1.Cases of penalties awarded by SEBIunder the SEBI Act or any of the itsregulations against the Sponsor of theMutual Fund or any company associatedwith the Sponsor in any capacityincluding the AMC, Trustee Company /Board of Trustees, or any of thedirectors or key personnel (especiallythe fund managers) of the AMC andTrustee Company.

The Fund was awarded penalty by SEBI in thematter of delay in listing the units of JM BasicFund. The details of adjudication proceedinginitiated by SEBI and award of the penalty are asfollows:

JM Basic Fund, a fifteen-year close ended growthscheme with investments to be primarily in thepetrochemicals sector in India. It opened forsubscription on 25th March 1997 and closed on7th May 1997. Allotment was effected on 2ndJune 1997. The units of the scheme were to belisted by 7th November 1997. There was a delayin listing with the application for listing of unitsof JM Basic Fund being filed with the NSE on27th November 1997 and listing effected on 8thDecember 1997.

SEBI had initiated adjudication proceedingagainst the Fund to conduct inquiry into anypossible violation of SEBI Regulations, in respectof delay in the listing.

The Fund had submitted in its reply that theScheme is exempt from mandatory listingrequirement pursuant to proviso (a) or proviso (c)to Regulation 32 of the SEBI Regulation, sincethe Scheme provided for periodic repurchasefacility and details of such repurchase facilityhave been disclosed in the prospectus.

Although in terms of the prospectus the facilityof listing was provided as an additional measurefor liquidity to the investors, the resultant delayin the listing has not hurt any investors in theScheme, considering the fact that there has beenno reported trades in these units during thesucceeding five months period from the date oflisting of the units. The inadvertent delay in

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listing of units of JM Basic Fund has in no waybeen beneficial or tantamount to any gain oradvantage whatsoever accrued to the Fund, JMFinancial Asset Management Private Limitedand/or its sponsors. The Adjudicating Officer ofSEBI while passing orders on the case held thatthe delay in listing the units of JM Basic Fund isin violation of Regulation 32. However, whileimposing a penalty for the violation, theAdjudicating Officer in appreciation of thebonafide action of the Fund, who entirely of theirown volition drew the attention of SEBI to thedelay in listing the units on NSE, imposed areduced penalty. The AMC has paid the penaltyamount of Rs. 50,000/- to SEBI.

Adjudication proceedings had been initiated bySEBI on the AMC & the Fund alleging non-disclosure of penalty imposed on the Sponsor fordelay in reporting of 6,999 shares representing13.99% of equity of FICS Consultancy ServicesLtd., within the stipulated time as required underSEBI (Substantial Acquisition of Shares andTakeovers) Regulations, 1997. The Fund had onits own volition brought this to the notice ofSEBI and the unitholders. The AdjudicatingOfficer had issued an order dated 22.01.2004imposing a penalty of Rs. 30 lacs on AMC andRs. 20 Lacs on the Fund. The SAT, vide its orderdated 22.11.04, had set aside the penalty againstthe Fund and has reduced the penalty on theAMC to Rs. 5 Lacs. The said penalty amount hasbeen paid by the AMC.

J. M. Financial & Investment ConsultancyServices Private Limited, the Sponsor of JMFinancial Mutual Fund had acquired 6999 sharesof FICS Consultancy Services Limited (FICS) aJM Group Company from Mr. MahendraKampani & his family members. Mr. MahendraKampani was one of the promoters of FICS alongwith the Sponsor. The shares acquired underreference were representing 13.99% of FICS'stotal share capital. Under Regulation3(1)(e)(iii)(b) of SEBI (Substantial Acquisition ofShares and Takeovers) Regulation 1997 (SAST),the said transfer of 6999 equity shares was aninter-se transfer of shares between the promoters.Under SAST, this acquisition was required to bereported to Stock Exchange/SEBI within thestipulated time period, which was inadvertently

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2. For Sponsors and its associates, otherthan the penalties as mentioned above,the penalties awarded by any financialregulatory body, including stockexchanges, for defaults in respect ofshareholders, debenture holders anddepositors.

delayed and reported subsequently. The Sponsoron its own volition brought to the notice of SEBIthis inadvertent delay in reporting. SEBI,however, initiated adjudication proceedings forviolation of Takeover Regulations, 1997 andSEBI Act, 1992. Pursuant to the adjudicationproceedings, penalty of Rs. 180,000/- wasimposed on Sponsor vide SEBI order datedOctober 20, 2000. Thereafter, the Sponsor hadappealed to the Securities Appellate Tribunal(SAT), and the SAT had reduced the penalty toRs.100,000/-. The said amount of penalty waspaid by the Sponsor.

Enquiry proceedings that were initiated by SEBIon JM Financial Consultants Pvt. Ltd.(earlierknown as JM Morgan Stanley Private Ltd.(JMMS)) (an associate of the Sponsor as perregulation 2(c) of the SEBI (Mutual Funds)Regulations, 1996) in connection with allegeddeficiency in dissemination of information inPublic Announcement on behalf of one of theirclients in terms of SEBI (Substantial Acquisitionof Shares and Takeovers) Regulations, 1997 hadled to hearing before the SEBI Chairman on May06, 2004. The SEBI Chairman, vide his orderdated February 18, 2005, had censured JMFinancial Consultants Pvt. Ltd. (earlier known asJM Morgan Stanley Pvt. Ltd.) in this regard.

Fines have been levied by Stock Exchanges (BSE& NSE) and NSDL on JM Financial ServicesPvt. Ltd. (earlier known as JM Morgan StanleyFinancial Services Pvt. Ltd., (“JMFSPL”) and byBSE, NSE and NSDL on Morgan Stanley IndiaCompany Pvt. Ltd. (Earlier known as JM MorganStanley Securities Private Ltd., (“MSICPL”)these being associate concerns of theSponsor/Co-Sponsor. The details offines/penalties are as follows:

Year JMFSPL MSICPL

1999-2000 Rs. 79,878 Rs. 19,249

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3. Additionally penalties awarded for anyeconomic offence and violation of anysecurities laws.

2000-2001 Rs. 35,812 Rs. 2,62,5652001-2002 Rs. 15,000 Rs. 56,6592002-2003 Rs. 32,000 Rs. 13,2752003-2004 Rs. 1,32,300 Rs.11,42,3642004-2005 Rs. 98,711 Rs.33,28,7472005-2006 Rs. 1,84,924 Rs.37,65,5472006-2007 Rs. 1,81,815 Rs. 20,000Upto July 2007Rs. 90969/-

NSE levied a penalty of Rs. 5,000/- on MSICPLfor partial compliance of margin requirement forthe quarter ended December 31, 2004 on accountof an employee trade. NSE also levied a penaltyof Rs. 3000/- on MSICPL and Rs. 5000/- penaltyon JM Financial Securities Pvt. Ltd. (earlierknown as JM Morgan Stanley Fixed IncomeSecurities Private Limited), for failure to seek theprior approval of NSE in case of resignation of adirector. BSE has levied a penalty of Rs. 5,000/-during quarter ended June 2005 on MSICPL fornon collection of margin.

Further, BSE has also levied a penalty of Rs.10,000/- on MSICPL for exceeding net positionlimits in Z Group Securities.

The above fines/penalties have been mainlylevied on account of various technical reasons,such as late pay-in of securities, short delivery ofsecurities, margin collection shortfall, custodiantrade rejections, bad delivery charges, notsending the statement of funds and securities toclients within the stipulated time frames,incomplete client registration forms, issuance ofcontract notes without proper signatures etc.

MSICPL is penalized by BSE and NSE fromtime to time for settling hand delivery trades dueto delay by clients in sending trade confirmationsto their custodians.

Further, JMFSPL, MSICPL and their directorshave paid the compounding fees to the RegionalDirector (RD) and Company Law Board (CLB)as per the details given below :

RD (Rs.) CLB (Rs.)

JMFSPL – 10,000/- 11,200/-Directors ofJMFSPL – 94,000/- 15,050/-

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MSICPL – 10,000/- 10,600/-Directors ofMSICPL – 114,000/- 5,150/-

The above fees have been paid for compositionof violations observed by the inspecting teamduring the inspection of books of accountconducted under section 209-A of the CompaniesAct, 1956.

NSE had levied a fine of Rs. 30,000/- onJMFSPL and Rs. 3,000/- on JM FinancialSecurities Pvt. Ltd. (earlier known as JM MorganStanley Fixed Income Securities Private Limited)arising out of the routine inspections carried outby them during 2004-05.

The Fund further confirms that there is no othercase where penalty was awarded by SEBI againstthe Sponsor of the Fund or any companyassociated with the Sponsor in any capacityincluding the AMC, Trustee Company or any ofthe directors or key personnel of AMC andTrustee Company.

4. Any pending material litigationproceedings incidental to the business ofthe Mutual Fund to which the Sponsorof the Fund or any company associatedwith the Sponsor in any capacityincluding the AMC, Board of Trustees /Trustee Company or any of the directorsor key personnel is a party.

The Sponsor of JM Financial Mutual Fund hasdisputed the Income Tax liability of Rs.21.90lacs. The disputed appeal is pending before theappropriate authority (as the same is pendingwith Tribunal and CIT [Appeals]).

The Co-Sponsor of JM Financial Mutual Fundhas disputed the Income Tax liability of Rs.314.17 lacs against which an amount of Rs.373.46 lacs have been paid on account ofadvance taxes. The disputed appeal is pendingbefore the appropriate authority (as the same ispending with Tribunal and CIT [Appeals]).

The Co-Sponsor had filed a civil suit against Mr.D B Patel for recovery of security deposit ofaround Rs. 1.28 crore paid to him for the officepremises taken on Leave & License basis. TheCo-Sponsor is in possession of the premises thatwere rented by Mr. Patel. The Co-Sponsor’sapplication for execution of decree in this regardis 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

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Investigation in a matter pertaining to hisprevious employment with SBI FundsManagement Private Limited, the assetmanagement company of SBI Mutual Fund. Thematter is presently under the purview of courts.

Apart from the matter mentioned above there areno other pending material litigation proceedingsincidental to the business of the Mutual Fundpending.

5. Any pending criminal cases against theSponsor or any company associated withthe Sponsor in any capacity includingthe AMC, Board of Trustee / TrusteeCompany or any of the directors or keypersonnel.

The Agriculture Department filed a complaint foralleged contravention of the provisions ofInsecticides Act in manufacturing and sellinginsecticide deemed to be misbranded before theChief Judicial Magistrate, Ajmer against theWyeth Ltd., its stockist, and its four directors.Criminal Revision petition was filed before theSessions Court Ajmer and thereafter before HighCourt of Judicature of Rajasthan at Jaipur. Mr.Darius E. Udwadia, Director of the TrusteeCompany is also a party to the case by the virtueof being a non- executive director of Wyeth Ltd.

Mr. Nimesh Kampani, Chairman of the Board ofthe Trustee Company, has received summonsfrom the Court of Additional Chief MetropolitanMagistrate, Esplanade, Mumbai, as one of theparties to a criminal complaint filed by M/s.Computron Systems Pvt. Ltd. for allegedviolation of the Indian Penal Code, by virtue ofhis acting as an escrow agent to a commercialtransaction with the complainant being a party.

Mr. Nimesh Kampani, a director of JM FinancialTrustee Company Private Ltd., was one of thenonexecutive directors of Nagarjuna FinanceLimited till April 28, 1999. In the contempt caseno. 915 of 2002, a single judge bench in the HighCourt of Judicature, Andhra Pradesh atHyderabad, passed an order on August 3, 2007punishing (simple imprisonment for six monthsand a fine of Rs. 2,000) Respondents no. 1 to 3(Mr. K S Raju, Mr. N Selvaraj and NagarjunaFinance Ltd. - NFL) for violating, disobeying theOrder of the Company Law Board SouthernRegion Bench at Chennai in C.P. No. 35 of 2000dated 29-2-2000 and order in C.A. No.344/634-A/SRB/2001 dated August 21, 2001 and forbreach of an affidavit filed in the Hon'ble Courtin Company Appeal No.7 of 2001. While passingthe said order, the judge also included other

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directors of 3rd respondent, viz., NFL. ThoughMr. Kampani had resigned much before the orderwas passed by the Company law Board SouthernRegion Bench at Chennai in 2001, he had beenmade party in the order of the Hon'ble HighCourt of Judicature, Andhra Pradesh. Theimplementation of the said order of the Hon'bleHigh Court of Judicature, Andhra Pradesh,Hyderabad has been suspended by a DivisionBench of the High Court of Judicature, AndhraPradesh, Hyderabad.

Apart from the matter mentioned above there areno pending criminal cases against the Sponsor orany company associated with the Sponsor in anycapacity including the AMC, Board of Trustee /Trustee Company or any of the directors or keypersonnel.

6. Any deficiency in the systems andoperations of Sponsor or the MutualFund or any company associated withthe sponsor in any capacity includingAMC or the Trustee Company whichSEBI has specifically advised to bedisclosed in the offer document, orwhich has been notified by any otherregulatory agency.

Nil

7.Any enquiry / adjudication proceedingsunder the SEBI Act and the Regulationsmade there under, that are in progressagainst the Sponsor of the Mutual Fundor any company associated with theSponsor in any capacity including theAMC, Board of Trustees / TrusteeCompany or any of the Directors or keypersonnel of the Asset ManagementCompany.

SEBI conducted an Inspection of the investmentbanking operations of JM Financial ConsultantsPvt. Ltd (earlier known as JM Morgan StanleyPvt. Ltd.) for the period September to November,2005. SEBI has given its Inspection Report dated13th March, 2006 dealing inter alia with themarket practices of acceptance of bids from andallocation to the QIB Bidders.

Recently, JM Financial Consultants Pvt. Ltd(earlier known as JM Morgan Stanley Pvt. Ltd.)has received a notice from the adjudicationofficer SEBI vide letter no. A&E/BS/95635/2007dated 7th June, 2007, issued under Rule 4 of theSEBI (Procedure for Holding Inquiry andImposing Penalties by Adjudication Officer)Rules, 1995 in connection with the aforesaidInspection. JM Financial Consultants Pvt. Ltd(earlier known as JM Morgan Stanley Pvt. Ltd.)is in the process of suitably responding to the saidNotice.

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SEBI conducted an Investigation of the BookRunning Lead Managers for the allegeddeficiency in the allocation of QIBs in thefollow-on public offering of Syndicate Bank. JMFinancial Consultants Pvt. Ltd (earlier known asJM Morgan Stanley Pvt. Ltd) has responded tothe Show Cause Notice issued by SEBI vide itsletter July 14, 2006.

The Fund further confirms that there is no othercase where penalty was awarded by SEBI againstthe Sponsor of the Fund or any companyassociated with the Sponsor in any capacityincluding the AMC, Trustee Company or any ofthe directors or key personnel of AMC andTrustee 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, 1882viii. 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. Notwithstandinganything contained in the offer document, the provisions of SEBI (Mutual Funds) Regulations,1996 and the guidelines thereunder shall be applicable. Further, anyamendments/replacement/re-enactment of SEBI Regulation/clarification and guidelines in theform of notes or circulars issued from time to time by SEBI for the operation and managementof Mutual Fund subsequent to the date of the Offer Document shall prevail over thosespecified in this Offer Document.

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iii. The information contained in this Offer Document regarding taxation is for generalinformation 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 therelevant provisions prevailing as at the day of this Offer Document in light of the provisions ofthe Finance Act 2006.

iv. Any dispute arising out of this issue shall be subject to the exclusive jurisdiction of the Courtsin India.

For and on behalf of the Board of Directors ofJM FINANCIAL ASSET MANAGEMENT PRIVATE LIMITED

Place : MumbaiDate : dd/mm/2008 Nityanath P Ghanekar

Managing Director & Chief Executive Officer

Documents

JM FINANCIAL MUTUAL FUND