JM FINANCIAL MUTUAL FUND

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2 Names of Schemes: JM INCOME FUND, JM SHORT TERM FUND, JM HIGH LIQUIDITY FUND, JM FLOATER FUND, JM G-SEC FUND, JM MIP FUND, JM FIXED MATURITY FUND AND JM EQUITY & DERIVATIVE FUND 1. INVESTMENT OBJECTIVES Name of the Scheme JM Income Fund JM High Liquidity Fund JM G-Sec Fund JM Short Term Fund JM Floater Fund JM MIP Fund (An open-ended monthly income fund with no assured return) JM Fixed Maturity Fund JM Equity & Derivative Fund Investment Objective of the scheme To generate stable long term returns with low risk strategy and capital appreciation/accretion through investment in debt instruments and related securities besides preservation of capital. To provide income by way of dividend (dividend plans) and capital gains (growth plan) through investing in debt and money market instruments. To provide ultimate level of safety to its unitholders in sovereign securities issued by the Central and State government. To generate regular returns and high level of liquidity with low risk strategy and capital appreciation/accretion through investment in debt instruments and related securities besides preservation of capital. To provide regular income and capital appreciation through investment in floating rate debt instruments, fixed rate debt instruments swapped for floating rate returns and also fixed rate instruments and money market instruments. To generate regular income, primarily through investments in fixed income securities so as to make monthly, quarterly and annual dividend distribution, declare bonus in the growth option. The Fund would also aim to achieve capital appreciation through investing a portion of its assets in equity and equity related securities. The investment objective of the Scheme and the Plans launched there under is to seek to generate predictable returns over a predetermined period by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the respective Plans. The Scheme will launch 7 Quarterly, 13 Half yearly and 25 Yearly Plans. As each such Plan will invest in a distinct portfolio of securities with known maturity. The primary investment objective of the scheme is to generate income through arbitrage opportunities emerging out of mis-pricing between the cash market and the derivatives market and through deployment of surplus cash in fixed income instruments. However, there can be no assurance that the investment objectives of any of the schemes will be realized. The schemes do not guarantee/indicate any returns. 2. ASSET ALLOCATION PATTERN Under normal circumstances the Investment Pattern of the Schemes would be as follows: Scheme Equity Debt Money market and short Debt, money Risk Profile term debt instruments market and maturing within short term debt one year instruments with residual maturing above one year JM Income Fund NIL %* 0-30% NIL Low to medium JM High Liquidity Fund NIL 0-30%** % NIL Low JM Floater Fund NIL NIL *100%# Low to medium JM MIP Fund Upto 15% 85%-100%* NIL NIL Debt-low (An open-ended monthly to medium income fund with no Equity-Medium assured return) to High # Asset allocation of JM Floater Fund will be 35% to 100 % in Floating rate debt securities/fixed rate debt securities swapped for floating rate returns and 0% to 65% in fixed rate debt securities (including securitised debt)/ money market securities. * Exposure to Securitised Debt 0% - 70% of net assets of this scheme with low risk profile. ** Exposure to Securitised Debt 0% - 30% of net assets of this scheme with low risk profile. 1

3 JM G-Sec Fund Under normal circumstances the Investment Pattern would be as follows: Type of Security Proportion of Fund available Risk Profile G-Sec 65% - 100% Low to Medium Money at call 0% - 35% Low JM Short Term Fund The asset allocation pattern under normal circumstances would be as under: Investment/Asset Class Proportion % of corpus Credit Risk Profile Min Likely Max upto Debt, Money Market Instruments with residual average maturity of equal to or less than 367 days Low Debt, Money Market Instruments with residual average maturity of equal Low to to or more than 367 days* Medium * Including securitized debt 0% - 70% of net assets of this scheme. JM Fixed Maturity Fund The asset allocation pattern of the schemes under normal circumstances would be as under: Type of Plan Type of Security Proportion of Fund Available Risk Profile Min Likely Around Max Quarterly Plan Short Term Debt Securities* 99% 100% Low to Medium Money Market Instruments & Cash 1% 100% Low Total 100% Half Yearly Short Term Debt Securities* 99% 100% Low to Medium Plan Money Market Instruments & Cash 1% 100% Low Total 100% Yearly Plan Short & Medium Term Debt Securities* 99% 100% Low to Medium Money Market Instruments & Cash 1% 100% Low Total 100% * Allocation in Debt securities includes securitised debt 0% - 70% of net assets of a Scheme. Investments under these plans shall primarily be made in securities, which have the maturity date falling on or before the maturity date of the respective plans. Should there be no securities available to suit this pattern, the monies received under the plans will be invested in alternative securities till such time as the appropriate security becomes available. JM Equity & Derivative Fund Under normal circumstances the Investment Pattern of the Scheme would be as follows: Instruments % Risk Profile Equity and Convertible Debentures 35% - 65% Medium - High Derivatives including stock futures and stock options # # 35% - 50% Medium - High Money market instruments/ Debt*/ Cash and Fixed Income Derivatives 25% - 65% Medium - High # The notional value exposure in derivatives securities would be reckoned for the purposes of the specified limits, the margin money deployed on these positions would be included in the Money Market category. *including securitized debt upto a maximum of 30% of net assets of this scheme. 2

4 The maximum derivative position will not exceed 50% of the portfolio (i.e. net assets including cash) The Scheme shall endeavour to take advantage of the arbitrage opportunities available due to mis-pricing emerging between cash market and the derivatives market. In line with the provisions of the SEBI Circular No. SEBI/IMD/CIRNo. 4/2627/2004 enumerating the guidelines for participation in derivatives dated February 6, 2004, the Board of AMC and Trustees have approved the following limits in their meetings held on April 28, 2004 and April 29, 2004: Common Derivative Positions and Limits SR NO. DERIVATIVE ACTION DESCRIPTION LIMIT 1 Stock futures Sell Sell against existing stock - Hedging To the extent of the particular scrip against downside on existing stock in holding in the portfolio; per scrip limit the face of expected volatility in the 100% of such scrip or such other limit stock price as may scrip or such other limit as may be prescribed by SEBI from time to time. 2 Stock options - Call Sell Sell against existing stock To the extent of the particular scrip holding in the portfolio; per scrip limit 100% of such scrip or such other limit as may be prescribed by SEBI from time to time. The Trustees may from time to time, pending investment in terms of investment objective of the Scheme, for a short term period on defensive consideration invest upto 100% of the funds available in overnight interbank call/notice money and/or repos, the primary motive being to protect the Net Asset Value of the Scheme and protect unitholders interest so also to earn reasonable returns on liquid funds maintained for redemption/ repurchase of units. Changes in Investment pattern: Subject to the SEBI Regulations, the asset allocation pattern indicated above may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors. It must be clearly understood that the percentages stated above are only indicative and not absolute and that they can vary substantially within the maximum and minimum allocation limits, depending upon the perception of the Investment Manager, the intention being at all times to seek to protect the interests of the Unitholders. Such changes in the investment pattern will be for short term and defensive considerations. Provided further and subject to the above, any change in the asset allocation affecting the investment profile of the Scheme shall be effected only in accordance with the provisions of sub regulation (15A) of Regulation 18 of the SEBI Regulation. 3. RISK PROFILE OF THE SCHEMES Mutual Fund investments are subject to market risks. Please read the offer documents carefully for details on risk factors before investment. 4. INVESTMENT PLANS AND OPTIONS The Schemes offer investors investment plans as specified below: Scheme Name JM Income Fund JM High Liquidity Fund JM G-Sec Fund JM Short Term Fund JM Floater Fund JM MIP Fund JM Fixed Maturity Fund JM Equity & Derivative Fund Plans / Options Dividend, Growth, Growth - Bonus option Dividend (Weekly), Growth, Bonus, Daily & Quarterly Dividend Plan. Premium Plan with Daily Dividend Option. Institutional Plan with Growth, Dividend with Daily & Weekly Dividend Options Super Institutional Plan with Growth, Dividend, Weekly & Daily Dividend Options Regular Plan - Dividend, Growth, Growth - Bonus Options PF Plan - Dividend and Growth Options PF Plus - Growth and Dividend Options Dividend Plan and Growth Plan Institutional Plan with Dividend Plan and Growth Option Long Term Plan with Dividend and Growth Options and Premium Plan with Dividend and Growth Options Short Term Plan with Dividend and Growth Options Dividend Plan with Monthly, Quarterly and Annual Options and Growth Plan Quarterly, Half yearly and Annual Plan each with Growth and Dividend Option Dividend, Growth and Bonus Options 3

5 The details of the Plans proposed to be launched under the JM Fixed Maturity Fund and the Options available there under, their Specified Subscription Periods, Specified Redemption Dates are as under: Fixed No. of Options Duration of Initial Offer Period Initial Specified Ongoing Sale/ Maturity plans Plans Redemption Date Repurchase Plan Quarterly Plan 7 Growth & 93 days 15 days from date of 93 rd day from date 3 days after the Dividend launch of the Plan, of closure of the closure of initial offer subject to extension, Initial Offer Period (subject to an exit if any as provided in load as applicable) this document Half yearly Plan 13 Growth & 185 days 15 days from date 185 th day from 3 days after the Dividend of launch of the date of closure closure of initial Plan, subject to of the Initial offer (subject to extension, if any Offer Period an exit load as provided in this as applicable) document Yearly Plan 25 Growth & 375 days 15 days from date of 375 th day from 3 days after the Dividend launch of the Plan, date of closure closure of initial offer subject to extension, of the Initial (subject to an exit if any as provided in Offer Period load as applicable) this document The subscription in each plan series will open tentatively on the 1st and the 16th of the month. Upon the redemption of a plan, such plan would re-open for subscription on the subsequent 1st or 16th day of the month. In case these days are not business day then it will open on the next business day. Each of the series under the plans will have identical scheme features as indicated in the table above and elsewhere in the offer document. Each plan will have a three digit name starting with the Alphabet Q - Quarterly, H - Half Yearly and Y - Yearly to be followed by an alphabet denoting the series of the plan. Each series in the Quarterly plan will be named as QSA, QSB, QSC and so on, in case of Half Yearly HSA, HSB, HSC and so on, and Yearly as YSA, YSB, YSC and so on. The subsequent plans which are rolled over from the original plans would be named as QSA1, QSB1, QSC1 and so on. NAV will be declared on every Business Day including the Business Days during the Specified Subscription Periods. Unit holders can subscribe to the Units of the Plans at the applicable NAV, subject to entry load, if any. It should be noted that the above schedule is indicative and the Trustee may decide not to launch a Plan or alter, either partly or fully, the proposed schedule of launch. Similarly, the Trustee reserves a right to increase/decrease the number of Business Days under Specified Subscription Period and alter/modify/change the Specified Subscription Period/Specified Redemption Dates. Such revision shall be notified by a suitable display in the Customer Service Centers of the AMC and on AMC's website at Further the AMC will ensure that any change in the schedule of launch of plans will be in conformity with SEBI Circular dated February 15, IMPORTANT Investors are requested to indicate their preference while investing in the Schemes. In case an investor fails to specify his preference, he shall be deemed to have opted to select the Growth Plan. In case of Dividend Plan, the investor shall have the option of dividend reinvestment/payout. If an investor fails to specify reinvestment/payout option, he shall be deemed to have opted for dividend reinvestment option. In case the dividend payable to any unit holder is below Rs. 100/- then the same will be automatically reinvested. 4a. Systematic Investment Facility Unitholders have the option of Systematic Investment Facility (SIF) [(popularly known as Systematic Investment Plan ("SIP")] in the Schemes. Thus, by investing a fixed amount at regular interval, Unitholders can take advantage of the benefits of Rupee Cost Averaging, at the same time investing a fixed amount each month. Unitholders can enroll themselves for SIF (SIP) by submitting the enrolment form alongwith the relevant documents including post dated cheques / debit instructions along with the first cheque to start SIF (SIP) and a cancelled cheque or a copy of cheque in case of Electronic Clearing System (ECS) as the case may bes at any of our ISCs. It may be noted that atleast 21 days are required to start SIF (SIP) if the investor opts 4

6 to issue debit instructions under Electronic Clearing System. The unitholder may be requested to send post-dated cheques in case the debit instructions are not accepted by the concerned Bank for any reason whatsoever.unitholders will have the right to discontinue the SIF (SIP) at any time, if they so desire. Investment can be made by the investor under SIF (SIP) in either Dividend / Growth Plan. The details of the facility are as follows: Minimum investment details Due dates Amount Cheques drawn in favour of Applicable NAV Entry / Exit load Cut off time 6 post dated Cheques of Rs. 1,000/- or 12 post dated cheques of Rs 500/- each and in multiples of Re 1/-. Alternatively, the investor may opt for an ECS debit facility for centres wherever this facility is available and issue necessary debit instructions. There shall be no obligation to adhere to the minimum investment amount as stipulated in the offer document. The investor may opt to start SIF (SIP) from any of the following dates : 1st, 5th, 10th, 15th, 20th or 25th of each month. All cheques / debit instructions should be of the same date; however, the first cheque starting the SIF (SIP) can be of any date. All cheques / debit instructions should be of the same amount The cheques / debit instructions should be in favour of "the specific scheme" as the case may be The NAV of the day on which the cheque gets banked / ECS debit is effected each month. Please refer para 13(i) for applicable load structure. As applicable to the specific scheme. Termination of SIF For discontinuation of SIF the unitholder/investor should intimate the AMC/ISC's at least 7 working days prior to the due date of next Cheques (1st, 5th, 10th, 15th, 20th or 25th of every month). In case of ECS, prior intimation of at least 15 working days is required. On such request, SIF will be terminated and the balance post-dated cheques will be returned to the investor or the debit instruction given by the investor under ECS be cancelled. In case of SIF (SIP) through post-dated cheques, the unitholder would be required to give a minimum of 6 post-dated cheques of Rs. 1000/- each or 12 post-dated cheques of Rs. 500/- each and in multiples of Re. 1/-. In case any particular date of the post dated cheque falls on a holiday or falls during a book closure period, the immediate next business day will be considered for this purpose. Subject to the realization of cheque / debit effected in case of ECS, the AMC shall credit the unitholder's account with the number of units at the day's applicable Sale Price on the due dates. A unitholder also has the option to leave a standing instruction with his/her bank to periodically remit a fixed sum from his/her account into the Scheme(s). In case of outstation cheques, if accepted by the AMC, the AMC shall credit the unitholder's account with the number of units at the applicable Sale Price on the day when clear funds are received by the Mutual Fund. In case of investments under SIF (SIP), if consecutive post dated cheques/ payment instructions provided by the investor are dishonoured for insufficiency of funds or as a result of a stop payment instruction issued by the investor or due to any other reason whatsoever attributable to the investor on 2 or more occasions, the AMC reserves the right to discontinue the SIF (SIP). In the event of an investor wishing to close the SIF (SIP) account without holding / accumulating / reaching the minimum limit prescribed in the scheme, the AMC reserves the right to redeem all units. Systematic Investment Facility (SIF) for corporate employees Corporate employees may opt for the systematic investment facility available to them. In this case, the concerned employer is required to forward to the AMC the enrolment form for SIF along with the Scheme's application form of the corporate employee who desires to invest in the Scheme. The application amount for the corporate employees would also be forwarded by the employer on specific request from the concerned employee. The concerned employee has to authorize the employer to deduct the application amount from his salary and remit the same to the Fund at regular intervals to ensure receipt of funds by the AMC on or before the next due date. 4b. Systematic Withdrawal Plan/Systematic Transfer Facility Under this facility, at the time of investment an investor shall have an option to define redemption/transfer of specified amount to any of the scheme/(s) of JM Financial Mutual Fund from the Scheme at the end of specified periodic interval viz., 5

7 either monthly or quarterly. The details of this facility are as follows: Investment Details Minimum Withdrawal /Transfer Amount Withdrawal/Transfer options Transaction day Applicable NAV Account Statements Entry/Exit Load Termination of SWP/STF Minimum balance Rs. 10,000/- in order to avail this facility Rs. 1000/- p.m. or Rs. 3000/- each quarter (and in multiples of Re.1) Monthly and Quarterly 1st Business day of month or quarter, as the case may be NAV as on the 1st Business day of the month or quarter, as the case may be Account Statements will be dispatched by mail to the unit holder normally within three working days of the date of withdrawal /transfer Please refer para 13(i) for applicable load structure. For discontinuation of SWP/STF the unitholder/investor should intimate the AMC/ISCs at least 7 working days prior to the due date of next Transfer. In case of ECS, prior intimation of at least 15 working days prior to the due date of the next Transfer is required. On such request SWP/STF will be terminated and the investors will be intimated accordingly. Note: For SWP under JM MIP Fund: i) Fixed Amount Withdrawal (FAW) : An investor can opt for automatic withdrawal at monthly/quarterly intervals upto a maximum of 70% of his total investments in the scheme. The minimum permissible amount under FAW scheme shall be Rs. 500/- & Rs. 1500/- for monthly & Quarterly withdrawal facility respectively. ii) Capital Appreciation Withdrawal (CAW) : An investor can opt for automatic withdrawal of capital appreciation either at monthly, quarterly or annual intervals. The minimum investment amount for availing of FAW & CAW shall be Rs.20000/- and in multiples of Re.1/- thereafter. Under JM Equity & Derivative Fund, the date of STF/SWP is subject to the date of redemption based on "interval period" every month. 5. APPLICABLE NAV For Purchases and Switch Ins (for all the schemes except JM High Liquidity Fund & JM Floater Fund - Short Term Plan) In respect of valid applications received upto 3 p.m. by the Mutual Fund alongwith a local cheque or a demand draft payable at par at the place where the application is received, the closing NAV of the day on which application is received shall be applicable. In respect of valid applications received after 3 p.m. by the Mutual Fund alongwith a local cheque or a demand draft payable at par at the place where the application is received, the closing NAV of the next business day shall be applicable. However, in respect of valid applications with outstation cheques/ demand drafts not payable at par at the place where the application is received, closing NAV of the day on which cheque/demand draft is credited shall be applicable. For Redemptions and Switch Outs (for all the schemes except JM High Liquidity Fund, JM Floater Fund - Short Term Plan & JM Equity & Derivative Fund) In respect of valid applications received upto 3 p.m. by the Mutual Fund, same day's closing NAV shall be applicable. In respect of valid applications received after 3 p.m. by the Mutual Fund, the closing NAV of the next business day shall be applicable. The cut off timings will also be applicable to investments made through "sweep" mode. 6

8 JM High Liquidity Fund & JM Floater Fund - Short Term Plan Operation Cut-off time Applicable NAV Valid Purchase application received Upto 1 P.M. Closing NAV of the previous day and the funds are available for utilization on the same day After 1 P.M. Closing NAV of the day immediately previous day to the next business day $ Valid Purchase application where the Within Business Closing NAV of the day immediately previous to the day funds are not available for utilization Hours on which funds are available for utilization by the fund on the same day will be applicable Valid Redemption application received Upto 10 A.M. Previous day s closing NAV After 10 A.M. Closing NAV of the day immediately previous to the next business day $ It is clarified that SATURDAY, SUNDAY AND HOLIDAYS, and day(s) on which the money markets are closed/not accessible are not business days for this purpose. Switch Transactions: Valid applications for "switch out" shall be treated as redemptions and for "switch in" shall be treated as purchases in the respective scheme with the applicable cut-off timings. JM Equity & Derivative Fund Redemption request can be submitted to the official point of acceptance on any business day till 3.00 pm. All Redemption requests received till Friday (in case such Friday is a holiday then the last business day) of the week preceding the interval period, would be processed at the NAV of the Interval Period. The Interval period will be the settlement Thursday (the settlement day for derivatives segment in the NSE which is currently last Thursday of the month) or any day which is declared as the settlement day for Derivatives segment by the NSE. Illustrative Example: Interval Period Applications for redemption/switchout Applicable NAV for the redemption/ switchout For Feb ' All redemption requests received on after NAV of p.m. and during the period to before 3.00 p.m. For Mar ' All redemption requests received on after NAV of p.m. and during the period to before 3.00 p.m. The cut off timings will also be applicable to investments made through "sweep" mode. 6. MINIMUM AMOUNT OF SUBSCRIPTION Type Fund Name Min. Investment (Rs.) Debt Funds JM Income Fund 1000/- JM Floater Fund (Short Term Plan) 5000/- JM Floater Fund (Long Term Plan) 5000/- JM Floater Fund (Long Term Plan- Premium Plan) 1 Lac JM G-Sec Fund 5000/- JM G-Sec Fund (PF Plan) 5000/- JM G- Sec (PF Plus Plan) 1 Lac JM Equity & Derivative Fund 5000/- 7

9 Short Term Funds JM Short Term Fund 5000/- JM Short Term Fund (Institutional Plan) 1 Lac Liquid Funds JM High Liquidity Fund 1000/- JM High Liquidity Fund (Institutional Plan) JM High Liquidity-(Daily Dividend Plan & Institutional Plan -Daily Dividend Option) JM High Liquidity Fund (Super Institutional Plan) 1 Crore 1 Lac 5 Crores MIP JM MIP Fund 10,000/- JM MIP Fund (Systematic Withdrawal Plan) 20,000/- FMP JM Fixed Maturity Fund 5,000/- Additional investments in multiples of Re.1/- However, there is no upper limit for investment. Minimum redemption from existing unit accounts would be Rs. 500/- or 50 units. Any redemptions in excess there of may be in multiples of Re. 1/- subject to keeping minimum balance of 500 units. 7. DISPATCH OF REPURCHASE (REDEMPTION) REQUEST Within 10 working days of the receipt of the redemption request at the authorized centres of JM Financial Mutual Fund 8. BENCHMARK INDEX The performance of the Schemes will be benchmarked as follows: Scheme JM INCOME FUND JM HIGH LIQUIDITY FUND JM FLOATER FUND JM MIP FUND JM G-SEC FUND JM SHORT TERM FUND JM FIXED MATURITY FUND JM EQUITY & DERIVATIVE FUND 9. DISTRIBUTION OF INCOME Index CRISIL COMPOSITE BOND FUND INDEX CRISIL LIQUID FUND INDEX CRISIL LIQUID FUND INDEX CRISIL MIP BLENDED INDEX ISEC COMPOSITE INDEX CRISIL LIQUID INDEX ISEC BOND INDEX CRISIL LIQUID FUND INDEX Declaration of dividends will be subject to availability of distributable profits, as computed in accordance with SEBI (Mutual Funds) Regulations, All distribution of earnings will be out of distributable surplus and at the discretion of the Trustee. Such distribution may be by way of bonus units or by way of dividend. Dividends, if declared, will be paid (subject of deduction of tax at source, if any) to those unit holders whose names appear in the register of unit holders on the notified record date. However, in case the dividend payable to any unitholder is below Rs. 100/- then the same will be automatically re-invested. On payment of dividends, the NAV will stand reduced by the amount of dividend and dividend tax (if applicable) paid. 10. NAME OF THE FUND MANAGER The Fund Manager for JM Income Fund, JM High Liquidity Fund, JM G-Sec Fund, JM Short Term Fund, JM MIP Fund, JM Floater Fund and JM Fixed Maturity Fund is Ms. Shalini Tibrewala. The Fund Manager for JM Equity & Derivative Fund is Mr. Biren Mehta. 11. NAME OF THE TRUSTEE COMPANY JM Financial Trustee Company Private Limited. 8

10 12. PERFORMANCE OF THE SCHEMES: AS ON MARCH 31, 2006 COMPOUNDED JM Income Fund ANNUALISED GROWTH RETURNS Scheme Benchmark return % return % (CCBFI) Returns for the last 1 year Returns for the last 3 years Returns for the last 5 years 8.73 NA Returns since inception* 9.70 NA Benchmark Index = CCBFI - Crisil Composite Bond Fund Index * Date of inception = Date of allotment ie Return (%) Returns for the last 1 year Scheme return % Benchmark return % Returns for the last 3 years Returns for the last 5 years Year Returns since inception* COMPOUNDED JM G Sec Fund Regular Plan ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (Isec Comp) Returns for the last 1 year Returns for the last 3 years Returns for the last 5 years NA Returns since inception* NA Benchmark Index = Isec Comp - Isec Composite Index * Date of inception = Date of allotment ie Return (%) Returns for the last 1 year Scheme return % Benchmark return % Returns for the Returns for the last 3 years last 5 years Year Returns since inception* COMPOUNDED JM G Sec Fund PF Plan ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (Isec Comp) Returns for the last 1 year Returns for the last 3 years Returns for the last 5 years NA Returns since inception* NA Benchmark Index = Isec Comp - Isec Composite Index * Date of inception = Date of allotment ie Return (%) Returns for the last 1 year Scheme return % Benchmark return % Returns for the last 3 years Year Returns for the last 5 years Returns since inception* COMPOUNDED JM G Sec Fund PF Plus Plan ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (Isec Comp) Returns for the last 1 year Returns since inception* Benchmark Index = Isec Comp - Isec Composite Index * Date of inception = Date of allotment ie Return (%) Scheme return % Benchmark return % Returns for the last 1 year Returns since inception* Year COMPOUNDED JM High Liquidity Fund ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (CLFI) Returns for the last 1 year Returns for the last 3 years Returns for the last 5 year 5.82 NA Returns since inception* 8.26 NA Benchmark Index = CLFI - Crisil Liquid Fund Index * Date of inception = Date of allotment ie Return (%) Returns for the last 1 year Scheme return % Benchmark return % Returns for the Returns for the last 3 years last 5 year Year Returns since inception* 9

11 COMPOUNDED JM Short Term Fund ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (CLFI) Returns for the last 1 year Returns for the last 3 years Returns for the last 5 years NA NA Returns since Inception* Benchmark Index = CLFI - Crisil Liquid Fund index * Date of inception = Date of allotment ie COMPOUNDED JM Floater Long Term Plan ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (CLFI) Returns for the last 1 year Returns for the last 3 years NA NA Returns for the last 5 years NA NA Returns since Inception* Benchmark Index = CLFI - Crisil Liquid Fund Index * Date of inception = Date of allotment ie COMPOUNDED JM Floater Short Term Plan ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (CLFI) Returns for the last 1 year Returns for the last 3 years NA NA Returns for the last 5 years NA NA Returns since Inception* Benchmark Index = CLFI - Crisil Liquid Fund Index * Date of inception = Date of allotment ie Return (%) Return (%) Return (%) Returns for the last 1 year Scheme return % Benchmark return % Returns for the last 3 years Returns for the last 1 year Year Year Year Returns for the last 5 years Scheme return % Benchmark return % Returns since Inception* Returns since Inception* Scheme return % Benchmark return % Returns for the last 1 year Returns since Inception* COMPOUNDED JM MIP Fund ANNUALISED GROWTH RETURNS Scheme Benchmark return return % %(CMBI) Returns for the last 1 year Returns for the last 3 years NA NA Returns for the last 5 years NA NA Returns since Inception* Benchmark Index = CMBI - Crisil MIP Blended Index * Date of inception = Date of allotment ie Return (%) Scheme return % Benchmark return % Returns for the last 1 year Returns since Inception* Year COMPOUNDED JM Equity & Derivative Fund ANNUALISED GROWTH RETURNS Scheme Benchmark return return % % (CLFI) Returns for the last 1 year Returns for the last 3 years NA NA Returns for the last 5 years NA NA Returns since Inception* Benchmark Index = CLFI - Crisil Liquid Fund Index * Date of inception = Date of allotment ie Note: Compounded Annualised Growth Returns (CAGR) for period 1 year or more, with re-investment of dividends (if any). Past performance may or may not be sustained in future. Return (%) Scheme return % Benchmark return % Returns for the last 1 year Year Returns since Inception* 10

12 ABSOLUTE RETURNS AS ON MARCH 31, EXPENSES OF THE SCHEMES i) LOAD STRUCTURE The load structure for the various schemes of JM Financial Mutual Fund is given in the following table: Name of the Scheme Entry Load Exit Load JM Income Fund No Entry Load Exit load is 0.40% for investments upto Rs.5 lacs if redemptions/switches are carried out within a period of 90 days from the date of investment. No exit load if investment is more than Rs. 5 lacs. JM G-Sec Fund Regular and PF Plans No Entry Load Regular Plan: Exit load of 0.25% for investments upto Rs. 2 Lacs redeemed or switched out within 90 days from date of investment No exit load for investments above Rs. 2 Lacs PF Plus Plan PF Plan: No exit load JM Short Term Fund No Entry Load No Exit Load Institutional Plan No Entry Load No Exit Load JM High Liquidity Fund No Entry Load No Exit Load Institutional Plan No Entry Load No Exit Load Super Institutional Plan No Entry Load No Exit Load Premium Plan-Daily Dividend Option No Entry Load No Exit Load JM Floater Fund - Short Term Plan No Entry Load No Exit Load JM Floater Fund - Long Term Plan JM FIXED MATURITY FUND JM FMP YSA 2 (Gr) - Inception Date 06/09/05* 3.35 I-Sec Bond Index 2.95 JM FMP YSB 2 (Gr) - Inception Date 27/09/05* 2.91 I-Sec Bond Index 2.69 JM FMF II QSA (Gr) - Inception Date 22/03/06* 0.20 I-Sec Bond Index 0.41 JM FMF II YSA (Gr) ) - Inception Date 22/03/06* 0.18 I-Sec Bond Index 0.41 *Date of inception = Date of allotment Note : Simple returns which have not been annualised as the plans have not completed one year of operation. Past performance may or may not be sustained in future. Exit Load of 0.60% at applicable NAV if redeemed either through normal redemption or exercising Fixed Period Redemption Option (FPRO) or switched out within 180 days from the date of the investment. No exit load would be applicable for cases covered under Automatic Annual Reinvestment Option (AARO) and Automatic Capital Appreciation Withdrawal Option (ACAWO). Exit load of 0.50% on all purchases upto and including Rs.5 lacs if such purchases are redeemed or switched out within 90 days of investment. Nil for investments above Rs. 5 lacs. 11

13 JM Floater Fund - Long Term Plan - Premium Plan No Entry Load No Exit Loand JM MIP Fund No Entry Load Exit Load of 0.50% on all investments upto and including Rs. 5 lacs if redeemed or switched out within 3 months of investment. No Exit Load for investments above Rs. 5 lacs. No exit load for investors availing Systematic Withdrawal Option. JM Fixed Maturity Fund Quarterly Plan - Nil Quarterly Plan - 1% for all investments redeemed Half Yearly Plan 2% within 90 days from the date of investment / Annual Plan 3% allotment. Nil for all investments redeemed after 90 days of the respective investment. However, no entry load shall be Half Yearly Plan 2% chargeable during the specified Annual Plan 3% period. However, no exit load shall be chargeable during the specified period. JM Equity & Derivative Fund No Entry Load On all investments of less than and including Rs. 1 Crore: 2% for investments redeemed within 25 days from the date of allotment; 1.5% for investments redeemed within 85 days from the date of allotment; 1% for investments redeemed within 175 days from the date of allotment On all investments above Rs. 1 crore: 0.50% for investments redeemed / switched out within 25 days from the date of allotment. ii) ANNUAL SCHEME RECURRING EXPENSES The details of recurring expenses of the Schemes, on an annual basis are as under: Particulars (as a % of Applicable NAV) JM Income Fund JM High Liquidity Fund JMIF JMHL JMHL IP JMHL SIP Investment Management & Advisory Fee 1.25% 0.50% 0.30% 0.35% Trustee Fee 0.05% 0.05% 0.05% 0.05% Marketing and Selling Expenses 0.55% 0.30% Custodian Expenses 0.20% 0.05% 0.35% 0.15% Registrar and Transfer Agent Fee, Audit Fee and other Expenses 0.20% 0.05% Total Recurring expenses 2.25% 1.00% 0.70% 0.55% Particulars (as a % of Applicable NAV) JM Short Term Fund JM Floater Fund JM Fixed JMSTF JMSTF IP LTP STP LTP Premium Maturity Fund Investment Management & Advisory Fee 0.50% 0.30% 0.40% 0.30% 0.35% 0.25% Trustee Fee 0.05% 0.05% 0.05% 0.05% 0.05% 0.05% 12

14 Marketing and Selling Expenses 0.30% 0.20% Custodian Expenses 0.05% 0.40% 0.15% 0.15% 0.15% 0.06% Registrar and Transfer Agent Fee, Audit Fee and other Expenses 0.10% 0.09 TOTAL 1.00% 0.75% 0.60% 0.65% 0.55% 0.65% Particulars (as a % of Applicable NAV) JM MIP JM G-Sec Fund JM Equity & Subject to the overall ongoing fees and expenses which would be charged to the scheme not exceeding the limit laid down under Regulation 52(6) [as reproduced above], the AMC may at its discretion charge to the scheme the Government levies in the form of any charges or taxes either presently payable or which may be imposed in future. Currently, the Government has imposed Service Tax of 12% on the Management and Trustee Fees which would be charged to the scheme subject to the overall expenses charged to the schemes do not exceed the limits laid down under Regulation 52(6). The purpose of the above table is to assist the investor in understanding the various costs and expenses that an investor in the scheme will bear directly or indirectly. While this estimate has been made in good faith on the basis of information available with the fund, there can be no assurance that actual expense, under any particular head will not be more or less than such estimate. The total expenses, however, will be maintained within the limits mentioned under Regulation 52 (6) of SEBI (MF) Regulations, As per the Regulations, the maximum recurring expenses including investment management and advisory fee, that can be charged to the Scheme shall be subject to a percentage limit of weekly net assets as in the table below: First Rs. 100 crore Next Rs. 300 crore Next Rs. 300 crore Over Rs. 700 crore 2.25% 2.00% 1.75% 1.50% Further, as and when permitted by SEBI, the AMC may charge a higher fee for that part of the assets which are invested overseas. However, revision in fee charged shall be within the SEBI Regulations at all times. Subject to the above limitations under the Regulations, expenses incurred over and above the prescribed limit shall be borne by the AMC/Trustees/Sponsors. Actual recurring expenses for the year Scheme Name Expenses (%) JM Income Fund 2.00 JM High Liquidity Fund 0.51 JM Short Term Fund 0.74 JM Floater Fund Short Term Plan 0.50 JM Floater Fund Long Term Plan 0.51 JM G-sec Fund Regular Plan 1.35 JM G-sec Fund PF Plan 1.05 JM G-Sec PF Plus Plan 1.05 JM MIP Fund 2.25 JM Equity & Derivative Fund 1.22 JM Fixed Maturity Fund 0.25 Fund RP PF Plan PF + Derivative Fund Investment Management & Advisory Fee 1.25% 0.60% 0.60% 0.60% 1.25% Trustee Fee 0.05% 0.02% 0.02% 0.02% 0.05% Marketing and Selling Expenses 0.80% 0.80% Custodian Expenses 0.05% 0.68% 0.38% 0.38% 0.05% Registrar and Transfer Agent Fee, Audit Fee and other Expenses 0.10% 0.10% TOTAL 2.25% 1.30% 1.00% 1.00% 2.25% 13

15 14 TAX BENEFITS The following tax benefits are available to investors and the Fund under the present taxation laws. The information set forth below is based on the advice of the Fund's tax advisor and is included for general information purposes only. The information set forth below reflects the law and practice as of date of this Offer Document. In view of the individual nature of tax consequences, each investor is advised to consult his or her own tax adviser with respect to the specific tax consequences to him or her of participation in the scheme. The disclosures regarding Income Tax / Wealth Tax / Gift Tax / Capital Gains Tax / Investments by NRIs / FIIs are in conformity with the prevalent I. T. Act, Foreign Exchange Management Act, 1999 and RBI's directions and permissions in this regard. The following information is based on the law in force in India at the date hereof. The subscriber should seek advice from his/ her/its own professional advisor if he/she/it is in any doubt regarding the taxation consequences of investing in the Fund TO THE FUND The income of the Fund registered under the SEBI Act, 1992 (15 of 1992) or regulations made there under will be exempt from income tax in accordance with the provisions of section 10(23D) of the I.T. Act. The income received by the Fund is not liable for deduction of tax at source. As per section 115R, the Fund is liable to pay additional income tax on the income distributed by it. At the same time, in view of the provisions of Section 196(iv) of the Act, the fund will receive all income without any deduction of tax at source TO THE UNITHOLDERS A. INCOME RECEIVED FROM MUTUAL FUND According to Section 10(35) of the I.T. Act, any income received in respect of Units of Mutual Fund specified under Section 10(23D) will be exempt from income tax in the hands of the Unitholders. Further, it has been clarified that income arising from transfer of units of Fund shall not be exempt under section 10(35). B. LONG TERM CAPITAL GAINS ON TRANSFER OF UNITS Long Term Capital Gains on sale of units of Mutual Funds other than Equity Oriented Funds are not exempt from Income Tax under Section 10(38) of the Act in the hands of unit holders. The provisions for taxation of long-term capital gains for different categories of assessee are explained hereunder : i) For Individuals and HUFs ii) iii) iv) Long-term Capital Gains in respect of Units of Mutual Fund held for a period of more than 12 months will be chargeable under section 112 of the Act, at a rate of 20% plus surcharge, as applicable and cess. Capital Gains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly and exclusively in connection with such transfer. In the case where taxable income as reduced by long term capital gains is below the exemption limit, the long term capital gains will be reduced to the extent of the shortfall and only the balance long term capital gains will be charged at the flat rate of 20% plus surcharge, as may be applicable and cess. It is further provided that an assessee will have an option to apply concessional rate of 10% plus applicable surcharge and cess, provided the long term capital gains are computed without substituting indexed cost in place of cost of acquisition. For Partnership Firms, Non-Residents, Indian Companies/Foreign Companies Long-term Capital Gains in respect of Units held for a period of more than 12 months will be chargeable under section 112 of the Act at a rate of 20% plus surcharge, as may be applicable and cess. Capital gains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly and exclusively in connection with such transfer. It is further provided that an assessee will have an option to seek concessional rate of 10%, plus applicable surcharge and cess to long-term capital gains computed without adjusting for cost for indexation. For Non-resident Indians Under section 115E of the Act for non-resident Indians, income by way of long-term capital gains in respect of Units is chargeable at the rate of 20% plus applicable surcharge and cess. Such long-term capital gains would be calculated without indexation of cost of acquisition. Non-resident Indians may opt for computation of long term capital gains as per section 112, which is more beneficial. For Overseas Financial Organisations, Foreign Institutional Investors fulfilling conditions laid down under section 115AB (Offshore Fund) Under section 115AB of the Act, income by way of long-term capital gains in respect of units purchased in foreign currency held for a period of more than 12 months will be chargeable to tax at the rate of 10%, plus applicable surcharge and cess. Such gains would be calculated without indexation of cost of acquisition. 14

16 C. SHORT TERM CAPITAL GAINS ON TRANSFER OF UNITS Short term Capital Gains in respect of Units held for a period of not more than 12 months is added to the total income. Total income including short-term capital gains is chargeable to tax as per the relevant slab rates. D. CAPITAL LOSSES Losses under the head "Capital Gains" cannot be setoff against income under any other head. Further within the head "Capital Gains", losses arising from the transfer of long-term capital assets cannot be adjusted against gains arising from the transfer of a short-term capital asset. However, losses arising from the transfer of short-term capital assets can be adjusted against gains arising from the transfer of either a long-term or a short-term capital asset. Unabsorbed short-term capital loss can be carried forward and set off against the income under the head Capital Gains in subsequent eight assessment years. According to Section 94(7) of the I.T. Act, if any person buys or acquires units within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of nine months from such record date, then losses arising from such sale to the extent of income received or receivable on such units, which are exempt under the I.T. Act, will be ignored for the purpose of computing his income chargeable to tax. Further, Sub-section (8) of Section 94 provides that, where additional Units have been issued to any person without any payment, on the basis of existing units held by such person then the loss on sale of original units shall be ignored for the purpose of computing income chargeable to tax, if the original units were acquired within three months prior to the record date fixed for receipt of additional units and sold within nine months from such record date. However, the loss so ignored shall be considered as cost of acquisition of such additional units held on the date of sale by such person. E. TAX DEDUCTION AT SOURCE i. For Income in respect of units: ii. No tax shall be deducted at source in respect of any income credited or paid in respect of units of the Fund as per the provisions of section 10(35), section 194K and section 196A of the I.T. Act. For Capital Gains: (a) In respect of Resident Unit holders: No tax is required to be deducted at source on capital gains arising to any resident Unit holder (under section 194K) vide circular no. 715 dated August 8, 1995 issued by the Central Board for Direct Taxes (CBDT). Further, no tax is required to be deducted at source from capital gains arising at the time of repurchase or redemption of the units. (b) In respect of Non- Resident Unit holders: As per the provisions of Section 195 of the Act, tax is required to be deducted at source from the redemption proceeds paid to investors; this withholding is in addition to the securities transaction tax payable, if any, by the investor. Under section 195 of the I.T. Act, tax shall be deducted at source in respect of capital gains as under: In case of non-resident unitholders - Short term capital gains 30% plus surcharge and cess Long term capital gains 20% plus surcharge and cess In case of foreign company - Short term capital gains 40% plus surcharge and cess No tax would be deductible at source from the capital gains (whether long-term or short-term) arising to an FII on repurchase/redemption of units in view of the provisions of Section 196D (2) of the Act. As per circular no. 728 dated October 1995 by CBDT, in the case of a remittance to a country with which a Double Taxation Avoidance Agreement (DTAA) is in force, the tax should be deducted at the rate provided in the Finance Act of the relevant year or at the rate provided in DTAA whichever is more beneficial to the assessee. F. INVESTMENTS BY CHARITABLE AND RELIGIOUS TRUSTS Units of a Fund Scheme referred to in clause 23D of section 10 of the Income Tax Act, 1961, constitute an eligible avenue for investment by charitable or religious trusts per rule 17C of the Income Tax Rules, 1962, read with clause (xii) of sub-section (5) of section 11 of the Income Tax Act, G. WEALTH TAX Units held under the Mutual Fund Scheme are not treated as assets within the meaning of section 2(ea) of the Wealth Tax Act, 1957 and are, therefore, not liable to Wealth-Tax. H. GIFT TAX The Gift-tax Act, 1958, has ceased to apply to gifts made on or after 1st October Gifts of Units, purchased under 15

17 the Scheme, would therefore, be exempt from gift-tax. However, the Finance Act 2005 states that subject to certain exceptions, gifts in excess of Rs.1,00,000/-, in case of individual's marriage and in excess of Rs.25,000/- in other cases will be taxed as income in the hands of recipients. Note: All tax benefits will be available only to the sole Unitholder or the first named holder in case the units are held in the names of more than one person. 15. PREVENTION OF MONEY LAUNDERING AND KNOW YOUR CUSTOMER (KYC) To ensure appropriate identification of the investor and with a view to monitor transactions for the prevention of money laundering as prescribed by the Prevention of Money Laundering Act, 2002, the AMC reserves the right to: (a) (b) (c) (d) (e) scrutinize and verify the identity of the investor, unit holder, person making the payment on behalf of the investor and the source of the funds invested/ to be invested in JM Financial Mutual Fund reject any application, prevent further transactions by a unit holder to mandatorily redeem the units held by the unit holder at the applicable NAV prevalent at the time of such redemption and report cases to the Specified Director appointed by the Central Government, pertaining to a single transaction exceeding Rs.10 lacs or series of transactions integrally connected or remotely connected or related to each other which are valued below the prescribed value of Rs.10 lacs within a month. The need to "Know Your Customer" is vital for the prevention of money laundering. The AMC may seek information or obtain and retain documentation used to establish identity. It may re-verify identity and obtain any missing or additional information for this purpose. The AMC, under powers delegated by the Trustee, shall have absolute discretion to reject any application, prevent further transactions by a Unit Holder, if after due diligence, the investor / Unit Holder / a person making the payment on behalf of the investor does not fulfill the requirements of the "Know Your Customer" or the AMC believes that the transaction is suspicious in nature as regards money laundering. In this behalf the AMC reserves the right to reject any application and effect a mandatory redemption of units allotted within such time as may be reasonable or in compliance with any rules, regulations, guidelines, circular, etc. issued by any regulatory authority in this regard from time to time. If the payment for purchase of units are made by a third party (e.g. a Power of Attorney Holder, a Financing Agency, a relative, etc.), the Unit Holder may be required to give such details of such transaction so as to satisfy the AMC of the source and / or consideration underlying the transaction. The Association of Mutual Funds in India ("AMFI") has constituted a working committee for recommending guidelines / procedures for Prevention of Money Laundering, Know Your Customer and for reporting suspicious transactions. The Schemes will adhere to such guidelines / procedures as may be issued by AMFI / any other regulatory body in this regard from time to time. 16. DAILY NET ASSET VALUE (NAV) PUBLICATION The NAVs of the schemes will be declared on all Business Days and will be published in 2 newspapers. In case of JM High Liquidity Fund and JM Floater Fund- Short Term Plan, NAVs will be declared on all calendar days. NAVs can also be viewed on and Investors may also contact any of the Investor Service Centres of JM Financial Mutual Fund 17. FOR INVESTOR GRIEVANCES PLEASE CONTACT HEAD - CLIENT SERVICES Mr. Harish Kukreja REGISTRAR: KARVY COMPUTERSHARE PRIVATE LTD JM FINANCIAL ASSET MANAGEMENT PRIVATE LTD Karvy Plaza, H. No , 5th Floor, A-Wing, Laxmi Towers, Avenue 4 Street No. 1,Banjara Hills, Bandra-Kurla Complex, Mumbai Hyderabad Tel: (022) Fax: (022) Tel: / / investor@jmfinancial.in OR distributor@jmfinancial.in Fax: UNIT HOLDER'S INFORMATION Accounts statements for each transaction and annual financial results shall be provided to investors by post. Half yearly Scheme portfolio will either be mailed to the unit holders or published in the newspapers as permitted under the SEBI (Mutual Funds) Regulations, Date: 27/04/