Viva Presentation

J.P. Morgan is a global leader in financial services, offering solutions to the world's most
important corporations, governments and institutions in more than 100 countries

Slide 1
J.P. Morgan Chase & Co. is built on the foundation of more than 1200 predecessor institutions that
have come together through the years to form today’s company.

It traces it roots to 1799 in New York City, and our many well-known heritage firms include
J.P. Morgan & Co.,

The Manhattan Company to use its surplus capital for banking operations.  Within five
months, The Bank of The Manhattan Company opens for business, becoming the second
commercial bank in New York City after Hamilton’s Bank of New York. 

1879 -  Morgan finances the completion of the Northern Pacific Railroad underwriting the
sale of $40 million in bonds, at the time "the largest transaction in railroad bonds ever made
in the United States.

 1955 - The new institution combines Chase National’s strength in international, corporate,
and correspondent banking with The Bank of The Manhattan Company's network of
branches and retail banking expertise.

2008 - The Chase Manhattan Bank, Bank One, Manufacturers Hanover Trust Co., Chemical
Bank, The First National Bank of Chicago, National Bank of Detroit,

The Bear Stearns Companies Inc., Robert Fleming Holdings, Cazenove Group and the
business acquired in the Washington Mutual transaction.

Each of these firms, in its time, was closely tied to innovations in finance and the growth of
the U.S. and global economies.

Slide 2

Slide 3

Slide 4-5
Net Asset Value (NAV)
The Net Asset Value represents the market value per share of a particular mutual fund. It is
calculated by deducting the liabilities from total asset value divided by number of outstanding
shares. To calculate NAV, one needs to gather the market value of the portfolio and divide it
by the total current fund unit to determine the price of each fund.

Relevance
The net value of an asset is simply a reflection of how the underlying assets have performed
over time. Thus, the net value of an asset is helpful in determining how a fund performs on a
daily basis.

Structure of Fund Accounting

Fund Accounting is responsible for the validation and delivery of the NAV value. Within
Fund Accounting, there are four more departments and Functional Areas.

 Fund Pricing
Fund Pricing is one of the most important function of Fund Accounting. Fund Pricing,
in general, is done for validating the movement of Fund Prices. The primary
responsibility of Fund Pricing is to ensure that the price issued each day for all the
Funds that are managed by the J.P. Morgan Fund Accounting team are both accurate
and in accordance with the benchmark index.

The Fund Price considers the value of Fund’s underlying holdings such as assets,
shares, bonds, property it owns.

 G.L. Tech Accounting

G.L. Tech Accounting has a supporting function in Fund Accounting. It provides
technical support within the operation team. The main Function of a General Ledger
Tech Accountant is to ensure the accuracy of data, this is made sure by conducting
audits to maintain truthful and precise data in documents.
On a regular basis, GL Accountants reconcile accounts with Journal Ledger. They
ensure all entries are accurate and transactions reported are in accordance with
accounting standards and government regulations.

 Property/ Real Estate Accounting

Real Estate Accounting is used for Property Management. It covers the accounting
requirements of real estate transaction. The Funds that are managed by J.P. Morgan is
also invested in the form of “Direct Investments” in Property and real estates. The
book-keeping of all these transactions.

 Client Reporting
Client Reporting is that function of Fund Accounting that involves direct contact with
the client. The client is not necessarily the ultimate end user of the organization. But
sometimes, departments within the organization can also act as client for Fund
Accounting Team. Client Reporting involves compiling reports related to Net Asset
 Value and other Financial Aspects and delivering it to the clients via email. The
Client Reporting team sends these reports on a daily basis and is required to cater to
urgent requirements of clients if required.

Slide 6
Key Stakeholders

The structure of the mutual fund consists of the following components. These bodies of
stakeholders have a unique role to play in the inception and working of the fund. It is not the
different banks and AMCs that create or float different mutual fund schemes, instead, there
are other players that are involved in structure of mutual funds.

 Sponsor
A Sponsor is any person or entity that can set up a mutual fund scheme to generate
income through fund management. The sponsor is the first layer of the mutual fund
structure. The Sponsor approach the Regulatory body in order to start the mutual
fund. There are set of formalities and procedures which are need to be fulfilled by the
Sponsors with the Regulatory body. Some of the requirements are as follows:
 They must have minimum 5 years of experience in the Financial Services
Industry.
 They must be a profit-making company in the past 3 years.
 The net worth of the company for the last 5 years should be positive.

Once the registration is completed, they can proceed with next steps which include

 Formation of Trust
 Appointment of AMC
 Appointment of Custodian, Transfer Agents and Auditor.

 Trust and Trustees

Trustees are the next step after the registration of Sponsor. Trustees are also known as
protector of the fund and are sponsored by the fund sponsor. As the name suggests,
they have a very important role in maintaining the trust of the investors and oversee
the growth of the funds. Trustees can be created either in the form of Board of
Trustees or a Trust Company. The Trustees supervise the entire functioning of the
AMC and regulate the operations of the mutual fund scheme.
The Trustees are also required to be registered under the regulatory body, which has
the power to suspend or revoke the registration if found breaching any conditions.
  Asset Management Company
An Asset Management Company (AMC) is a firm that invests the funds pooled from
individual investors in securities with the objective of optimal returns for the investors
in exchange for a fee. AMC maintains the diversity of the portfolio by investing in
both high-risk and low-risk securities such as stocks, debt, real estates, shares, bonds
and pension funds. Factors such as industry risk, market risk, political risks are
considered before selecting a security to be included in the portfolio.
An AMC is appointed by the Sponsor and Trustee to manage the pool of funds. AMC
acts under the jurisdiction of Sponsors and Trustees who in turn are governed by the
regulatory board. This ensures transparency, accountability and objectivity.

 Custodian
A Custodian is an entity which is responsible for the safekeeping of the securities.
Custodians are registered with the regulatory body and are responsible for the transfer
and delivery of units and securities. Custodians also enable investors in updating their
holdings at a particular point of time and help them keeping track of the investments.
Along with the primary job of safekeeping, custodians are also in charge of collecting
corporate benefits such as bonuses, interest, dividends etc.

 Transfer Agents
The Transfer Agents form the important link between the fund managers and investors. They
cater to the fund managers by updating them with investor details and to the investors by
delivering the benefits of funds to them. Transfer Agents are registered with the regulatory
body, who process the applications of mutual funds, help with investor KYC, manage and
deliver periodical statements of investments, update records of investors and process investor
requests.

Slide 7
The high-level overview of the Fund Pricing Process is shown in the above diagram. The
Fund Manager decides which securities are to be kept or get rid of in the portfolio of the
fund. During the trading time when the market is open, these securities are subscribed or
redeemed. After the market is closed these redemptions and subscriptions are sent to the Fund
Pricing Team via the Transfer Agents.

Overview of the process

The process starts after the TA sends files containing subscriptions and redemptions to the
JPM Fund pricing team.
Cash Management Process
Cash Management process is the first step in the fund pricing process and is managed via the
pricing application tool. The cash allocation process is dependent on static mapping tables
set up within the application which maps the various TA codes to their respective funds. The
transfer of data between these applications happens through the overnight Straight-through
Processing (STP). In addition to the automated overnight process, JPM Fund pricing team
also process ad-hoc transactions (fund-switches, manual trades) prior to close of business
which will then be included within the overnight cash management process. Once, this
process is completed we get the cash and units positions of the fund.

Overnight Valuation Process

The valuation process is scripted to run automatically each morning in compliance with
certain conditions. As each valuation is complete it is then loaded into the import directory
linked to the pricing application. In addition to the above there are additional file loads,
indices, spot rates, income, trade imports which will be added to the pricing application. The
entire purpose of this process is to consolidate all the data into the pricing as well as valuation
tool.

Daily Validations
The daily validation process consists the following controls:

 Overnight dependency checks

 Equity and Bond Price Movement Substantiation
 Accrued interest substantiation & Income Analysis
 Trade Analysis
 Corporate Action Analysis
In Addition, to these controls there are 25 other checks and validations. Namely, benchmark
check, currency check, custody fees check, price basis check, unit on issue check etc.

Price Validation & Release

Once all the validations and checks are completed a review is done in order to confirm that
same prices are reflected across both the applications (Pricing Application and Valuation
tool). This makes sure that if amendments have been made in the above previous process
validations are captured in both the applications.

Files after being compared are sent back to the TA via the STP.