Introducing a mutual fund that moves to the markets’ tune.

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NFO Closes 29 August, 2008. (An Open Ended Equity Oriented Scheme)
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Static Strategy – A Limitation
 Most existing schemes are theme based with a static strategy.

 For e.g. a midcap fund focuses only on midcaps; a large cap fund on large caps and an infra fund on
infrastructure sectors.

 A static strategy does not change the portfolio based on expected market movements.

 So, ideally one requires a scheme that can change the strategy depending on the market outlook.

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Why a Dynamic Strategy?
 Markets remain volatile affected by both global and local factors – crude oil, inflation, interest rates,
politics, etc.

 The market alternates between bullish and bearish cycles despite long term up-trend – the trends /
cycles have become shorter.

 Difficult for investors to change portfolio composition over these shorter cycles – increases risk.

 A dynamic portfolio strategy seeks to match the risk vs return during these interim cycles of the market
by changing portfolio composition to suit the market movements.

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Scenario Analysis
Let us look at some historical data to find out the efficacy of different strategies in different market
conditions.

Scenario 1 – Bullish Markets

H1 H2 H3 H4 H5 Nifty Avg H1 - H5
From To
Return Return Return Return Return Return Return
Period 1 25-Jun-03 11-Jan-04 79.08% 66.23% 74.18% 97.84% 74.11% 66.0% 78.3%
Period 2 10-Jul-06 04-Dec-06 41.03% 11.30% 13.99% 39.44% 34.23% 26.9% 28.0%
Period 3 21-Aug-07 07-Nov-07 66.6% 38.4% 60.3% 47.1% 41.0% 32.8% 50.7%

H1 to H5: 5 Nifty stocks with highest beta.

Source: Citigroup Research

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Scenario Analysis
Scenario 2 – Bearish Markets
L1 L2 L3 L4 L5 Nifty Avg L1 - L5
  From To
Return Return Return Return Return Return Return
Period 1 16-Apr-04 17-May-04 -10.83% -26.03% -12.71% -25.25% -24.37% -27.9% -19.84%
Period 2 10-May-06 13-Jun-06 -26.38% -21.27% -23.02% -43.98% 17.29% -32.0% -19.47%
Period 3 09-Jan-08 19-Apr-08 -5.96% 19.26% -21.05% 10.31% -12.21% -21.0% -1.93%

L1 – L5: 5 Nifty stocks with lowest beta.

Scenario 3 – Range Bound Markets

  From To Nifty return Avg H1- H5 return Avg L1 - L5 return Avg H + L return
Period 02-Jan-02 24-Jun-03 4.8% -20.6% 67.56% 23.46%

H & L: 5 Nifty stocks with highest beta and 5 Nifty stocks with lowest beta.

Source: Citigroup Research

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Introducing

JM Multi Strategy Fund

A fund that uses a dynamic strategy with respect to market movements.

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Our Strengths
 Market Analysis : Our Forte
• Early identification of market trends based on macro fundamentals and technical analysis.
• Identification of stocks/themes based on the likely movement of markets.

 Strong research-based investment strategy

• Strategy is based on strong fundamental research with an experienced research team, supplemented
by technical analysis.

 Experienced Team
• Investment team has demonstrated a track record of managing schemes with different strategies –
Contra, Midcap and Large Caps.

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Our Target

To generate steady returns in varying market conditions.

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The Investment Strategy
 This is an open-ended diversified equity fund.

 The scheme will not follow a static investment strategy but rather use a dynamic one.

 Here, the call will be taken on the direction and momentum of the market at periodic intervals to
decide on a strategy to be followed for the ensuing period.

 Portfolio strategy may change or remain the same depending on the fund management view on the
outlook of the market.

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The Investment Strategy (Contd..)
 Aims to use multiple investment strategy to suit the market scenario.

• Bullish scenario: The scheme will predominantly invest in high growth stocks and will have a con-
centrated portfolio of 25 to 30 stocks; the beta of the portfolio will be greater than 1 and will have
a higher degree of volatility.

• Bearish scenario: The scheme will predominantly invest in value stocks and have a diversified
portfolio of 40 to 60 stocks; the beta of the portfolio will be less than 1 and will have a lower degree
of volatility.

• Range bound scenario: The scheme will predominantly invest in a mix of growth and value stocks
and have a diversified portfolio of 30 to 40 stocks; the beta of the portfolio will be close to 1 and
volatility will be close to the market volatility.

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The Investment Strategy (Contd..)
 Strategy will use a combination of macro-call on the market and bottom-up stock picking.

 All positions shall be taken using a combination of fundamental and technical analysis.

 Flexibility to vary cash levels.

 Portfolio concentration will change according to the market outlook; number of stocks could vary from
a max of 25 (bullish market) to a max of 60 (bearish market).

 Relatively higher portfolio turnover to achieve the desired strategy.

 Seeks to provide positive returns in all market scenarios.

 Portfolio allocation will change as per market outlook between

• Aggressive and Defensive – Growth & Value; High Beta & Low Beta
• Concentrated and Diversified Portfolio
• Cash and Stocks

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Investment Strategy - In a Nutshell

Market Scenario Inv Strategy Portfolio Turnover Portfollio Characteristics

Bullish Aggressive Concentrated Low High Beta, High P/E; High Earnings growth

Bearish Defensive Diversified Low Low Beta, Low P/E; Low Earnings growth

Rangebound Trading Diversified High Market Beta, Average P/E; Avrg Earnings growth

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Our Market View

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Where can the Sensex go?
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
EPS growth 20 20 20 17 17 17 15 15 15 12
Sensex EPS 1010 1212 1454 1702 1991 2329 2679 3081 3543 3968
P/E                    
12 12120 14544 17453 20420 23891 27953 32146 36967 42512 47614
13 13130 15756 18907 22121 25882 30282 34824 40048 46055 51582
14 14140 16968 20362 23823 27873 32611 37503 43129 49598 55550
15 15150 18180 21816 25525 29864 34941 40182 46209 53141 59517
16 16160 19392 23270 27226 31855 37270 42861 49290 56683 63485
17 17170 20604 24725 28928 33846 39600 45539 52370 60226 67453
18 18180 21816 26179 30630 35837 41929 48218 55451 63769 71421
19 19190 23028 27634 32331 37828 44258 50897 58532 67311 75389
20 20200 24240 29088 34033 39819 46588 53576 61612 70854 79357
21 21210 25452 30542 35735 41809 48917 56255 64693 74397 83324
22 22220 26664 31997 37436 43800 51246 58933 67773 77940 87292

Note: The above calculations assume hypothetical data about the EPS growth rate and the P/E ratio based on macroeconomic factors.

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Technical View - BSE 500

• The BSE 500 index has climbed back after breaching the long term support line in early March.
• A move above the downward sloping trend line may lead to a near term upside.
• Long term bull trend seems to remain intact at this point of time.

Source: Reuters

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Technical View - BSE Midcap

• The BSE Midcap index is attempting to break out over a descending triangle formation.
• Typically such a move will lead to an upside on the index and would indicate an end of the bearish move.

Source: Reuters

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Technical View - BSE Midcap

• The BSE Midcap index is showing positive divergence.

• This is expected to lead to a bottom formation in the near term.

Source: Reuters

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Technical View - BSE Sensex

• The markets tend to oscillate between overshooting and undershooting. The current undershooting is a good time to enter the markets.
• The long term chart of the sensex reflects that the index has been able to come back into the long term channel.
• As long as this index remains in the channel, the positive trend will remain intact and the index is expected to rally to the upper end of the
channel over the next few weeks.

Source: Reuters

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Technical View - BSE Sensex

• The markets continue in their long term expanding triangle formation.

• The markets are expected to hit the upper end of the triangle over the next few quarters.

Source: Reuters

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Synopsis
What have been the Key Risks to the Markets?

 High commodity prices – oil, metals etc.

 High interest rates leading to a slowing economy.
 Political instability in the country and stalling of reforms process.
 Global financial turmoil.
 Geopolitical tensions.

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Synopsis
How many of these Risks have got mitigated over the past six months?

 Commodity prices have cooled off significantly over the last few weeks. Crude and Steel were the only
ones holding on. Crude has corrected and steel prices are expected to follow.
 Falling Commodity prices will reduce pressure on inflation going forward; interest rates are expected to
stabilize and help economic growth momentum.
 Political instability seems to be resolved till middle of next year. Some movement on reforms are expected
soon.
 Global financial turmoil seems to be stabilizing with most financial companies in the US reporting results
above expectations. Continued impact of the same going forward is likely to be muted for India.
 Geopolitical tensions slightly reduced with North Korea issue being resolved to a great extent. Iran issue
remains, but both sides now seem more flexible.
Therefore incrementally things are much better than six months ago.

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Conclusion
 Indian markets are cheap and trading below fair value.
 Indian markets can move up by 20 to 30% in the next 6 to 9 months.
 There seems to be no change in the long term trend of the market.
 Given the structural change in the Indian economy, there is less likelihood of a bear market in the near
term in India.

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Scheme Highlights
Investment objective
The investment objective of the scheme is to provide capital appreciation by investing in equity and equity
related securities using a combination of strategies.

Load Structure (During and post NFO)

Entry Load Exit Load
In case of investments < Rs. 2 crores : 2.25% In case of investments < 2 crores – 1% if redeemed
within 1 year of allotment / transfer of units.
In case of investments >= Rs. 2 crores : Nil In case of investments >= 2 crores – 0.5% if redeemed
within 3 months of allotment / transfer of units.
In case of investments made through Systematic In case of investments made through Systematic
Investment Plan : Nil Investment Plan: 2.25% if redeemed within 2 year of
allotment / transfer of units of respective instalments.

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Scheme Highlights
Investment Options
 During the New Fund Offer period, the scheme will offer investors the following investment options:
(i) Growth Option and (ii) Dividend Option.
 The Dividend Option will offer investors the facilities of:
(a) Dividend Payout and (b) Dividend Reinvestment.
Minimum Subscription / Redemption Amount
 Minimum amount of Rs. 5,000/- per Plan / Option and in multiples of any amount thereafter during the
New Fund Offer period, and in case of first time investments. For ongoing investments in an existing folio
the investment would be Rs. 1,000/- and in multiples of any amount thereafter.
 Minimum redemption from existing Unit Accounts would be Rs. 500 or 50 units Any redemption in
excess thereof may be in multiples of Re.1/- subject to keeping minimum balance of Rs. 5000 or 500
units, whichever is less.
Liquidity
 Purchase / switch-in and redemptions / switch-outs on all business days at NAV based prices.

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Statutory Details & Risk Factor
Statutory Details: Trustee: JM Financial Trustee Company Private Limited. Investment Manager: JM Financial Asset Management Private
Limited. Sponsor: JM Financial Limited.

Risk Factors: Mutual fund investments are subject to market risks and there is no assurance or guarantee that the objectives of the schemes will
be achieved. As with any investment in securities, the Net Asset Value (NAV) of the units issued under the schemes can go up or down depending
on the factors and forces affecting the capital markets. Past performance of the Sponsor / AMC / Schemes of JM Financial Mutual Fund does not
indicate the future performance of the schemes of JM Financial Mutual Fund. The Sponsor is not responsible or liable for any loss resulting from
the operation of the fund beyond the initial contribution made by it of an aggregate amount of Rupees One lac towards setting up of the Mutual
Fund, which has been invested in JM Equity Fund. The Scheme should have a minimum of 20 investors and no single investor should account for
more than 25% of its corpus. In case of non-fulfillment with either of the aforesaid conditions in a three months time period or at the end of the
succeeding calendar quarter, whichever is earlier, from the close of the NFO of the Scheme, or on an ongoing basis, for each calendar quarter,
the Scheme shall be wound up by following the guidelines prescribed by SEBI. In case of Non-fulfillment with either of the above two conditions
immediately after the close of the NFO i.e. at the time of allotment, the provisions of regulation 39 (2)I of the SEBI (Mutual Fund) Regulations,
1996, would become applicable automatically without any reference from SEBI. JM Multi Strategy Fund is only the name of the scheme and does
not in any manner indicate either the quality of the scheme, its future prospects or returns. Investors in the Scheme are not being offered any
guaranteed / indicative returns. Please see “Risk Factors”, “Scheme-specific Risk Factors and Special Consideration” and “Right to limit redemptions”
in the Offer Document. Please refer to the Offer Document of the scheme which can be obtained free of cost from any of the JM Financial Mutual
Fund Investment Service Centres or distributors. Please read the Offer Document carefully before investing.

Mutual fund investments are subject to market risks. Please read the Offer Document
carefully before investing.

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 Thank you
for investing with us !

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JM Financial Asset Management Pvt Ltd, 5th Floor, 'A' Wing, Laxmi Towers, Bandra Kurla Complex, Mumbai - 400051.
Tel.: 022 - 3987 7777 | Fax: 022 - 2652 8377 / 78 | E-mail: mktg@jmfinancial.in | www.JMFinancialmf.com

(An Open Ended Equity Oriented Scheme)