Prudential ICICI Mutual Fund - Kotak Mahindra Bank Prudential ICICI Mutual Fund (the Fund) and the...

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Prudential ICICI Mutual Fund

IMPORTANT NOTICE

Investing in mutual fund schemes involves certain risks and considerations associated generally with making investments insecurities. The value of the Scheme’s investments may be affected generally by factors affecting financial markets, such as priceand volume, volatility in interest rates, currency exchange rates, changes in regulatory and administrative policies of the Governmentor any other appropriate authority (including tax laws) or other political and economic developments. Consequently, there canbe no assurance that the Scheme offered in this Offer Document would achieve the stated objectives. The NAV of the Units of theScheme may fluctuate and can go up or down. Past performance of the schemes managed by the Sponsors or their affiliates orthe Asset Management Company is not indicative of the future performance of the Scheme nor will the performance of theScheme, following the commencement of the operations, be indicative of the Scheme’s future performance.

Prospective investors are advised to review this Offer Document carefully and in its entirety and consult their legal, tax andfinancial advisors to determine possible legal, tax and financial or any other consequences of subscribing to, purchasing orholding Units under the Scheme, before making an application to subscribe or purchase the Units.

The Prudential ICICI Mutual Fund (the Fund) and the Prudential ICICI Asset Management Company Limited (the AMC), have notauthorized any person to give any information or make any representations, either oral or written, not stated in this OfferDocument in connection with issue of Units under the Scheme. Prospective investors are accordingly advised not to rely uponany information or representations not incorporated in this Offer Document. Any subscription, purchase or sale made by anyperson on the basis of statements or representations which are not contained in this Offer Document or which are inconsistentwith the information contained herein shall be solely at the risk of the investor.

Unitholders / investors are requested to read and understand the Offer Document, Key Information Memorandum and riskfactors furnished with the scheme in which they seek to make investments or in which they have invested. Unitholders / Investorsare urged not to rely upon or be misled by any oral promises or statements made by the distributors / intermediaries of theMutual Fund and it is brought to the special attention of investors that the AMC / Mutual Fund will not be liable for mis-statement or communication by agents / distributors which are not previously expressly authorized / approved by the AMC /Mutual Fund.

The AMC, Trust and Prudential ICICI Mutual Fund shall not be responsible for any claims made by the Unitholders / Investorsbased on such oral promises made by the distributors / intermediaries.

The current Regulations impose certain restrictions and conditions on the AMC for entering into transactions with the Sponsorsand their associates on behalf of the Fund. These restrictions include:

a) Purchase or sale of securities through any broker associated with the Sponsors or through a firm which is an associate of theSponsor(s) shall not exceed an average of 5% of the aggregate purchases and sale of securities made by the Fund in all itsSchemes in a block of any three months.

b) Utilization of the services of the Sponsors or any of their associates, for the purpose of any securities transactions anddistribution and sale of securities shall be made only if a disclosure to this effect is made in the Offer Document and thebrokerage or commission paid is also disclosed in the half yearly annual accounts of the mutual fund.

c) The Mutual Fund Scheme shall not make any investment in:

1. any unlisted security of an associate or group company of the Sponsor; or

2. any security issued by way of private placement by an associate or group company of the Sponsor; or

3. the listed securities of group companies of the Sponsor which is in excess of 25% of its net assets.

In this Offer Document, all references to “$” are to United States of America Dollars, “£” to Pound Sterling of United Kingdomand “Rs.” to Indian Rupees. The Reference Exchange Rate between the United States Dollar and the Indian Rupee has beentaken at $1 = Rs.44.38 and UK£ and Indian Rupee at 1£=Rs.78.35.

This Offer Document is dated January 20, 2006.


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TABLE OF CONTENTS

1. Highlights .............................................................................................................................................. 5

2. Risk Factors .............................................................................................................................................. 8

3. Due Diligence Certificate ........................................................................................................................ 15

4. Definitions .............................................................................................................................................. 16

5. Summary – Prudential ICICI Fusion Fund ................................................................................................ 18

6. Constitution of the Mutual Fund ............................................................................................................ 20

a) The Sponsors ................................................................................................................................... 20

b) The Trustee Company ...................................................................................................................... 21

i. Directors ................................................................................................................................ 21

ii. Rights and Obligations of the Trustee .................................................................................... 22

iii. Trusteeship Fees ..................................................................................................................... 24

c) Management of Asset Management Company (AMC) ..................................................................... 24

i. Board of Directors of the AMC .............................................................................................. 24

ii. Powers, Duties & Responsibilities of the AMC ....................................................................... 27

iii. Key Employees of AMC & relevant experience ........................................................................ 28

iv. Fund Manager ....................................................................................................................... 33

v. Compliance Officer ................................................................................................................ 33

vi. Investor Relations Officer ....................................................................................................... 33

d) Auditors .......................................................................................................................................... 34

e) Registrar .......................................................................................................................................... 34

f) Custodian ........................................................................................................................................ 34

7. Investment Objectives & Policies ........................................................................................................... 35

Fundamental Attributes of the Scheme ..................................................................................................... 35

a) Type of the Scheme .......................................................................................................................... 35

b) Investment Objective ....................................................................................................................... 35

c) Investment Pattern and Investment Policies ...................................................................................... 35

d) Change in Investment Pattern .......................................................................................................... 36

e) Terms of the Scheme ........................................................................................................................ 36

f) Change in Fundamental Attributes .................................................................................................. 38

g) Investment Strategy ......................................................................................................................... 38

h) Portfolio Turnover ............................................................................................................................ 40

i) Procedure followed for investment decisions ................................................................................... 41

j) Exposure to Derivatives .................................................................................................................... 41

k) Investment Restrictions for the Scheme ............................................................................................ 42

l) Underwriting by the Fund ................................................................................................................ 43

m) Computation of Net Asset Value ...................................................................................................... 43

n) Accounting Policies & Standards ...................................................................................................... 47

8. Units & The New Fund Offer .................................................................................................................. 50

General Information .................................................................................................................................. 50

a) Minimum Subscription Amount ...................................................................................................... 50

b) Offer Price ........................................................................................................................................ 50

c) Minimum Amount for Application .................................................................................................. 50

d) New Fund Offer Issue Expenses ........................................................................................................ 50

e) Options and Investment plans offered under the Scheme ................................................................ 50

i. Growth Option – For Capital Appreciation ............................................................................ 50

ii. Dividend Option – For Regular Income .................................................................................. 50

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f) Pledge of Units for Loans ................................................................................................................. 50

g) How to Switch ................................................................................................................................. 51

h) Who can Invest? .............................................................................................................................. 51

i) How to Apply? ................................................................................................................................. 51

i. New Fund Offer ..................................................................................................................... 51

ii. Resident Investors - Mode of Payment ................................................................................... 52

iii. NRIs & FIIs .............................................................................................................................. 52

iv. Mode of Payment on Repatriation Basis ................................................................................ 52

v. Mode of Payment on Non-Repatriation Basis ......................................................................... 52

vi. Investments of the minor investors on attaining majority ....................................................... 52

vii. Application under Power of Attorney/Body Corporate/Registered / Society/ Trust/Partnership 52

viii. Joint Applicants ..................................................................................................................... 53

ix. Nomination Facility ................................................................................................................ 53

j) Issuance of Units/Refund ................................................................................................................. 53

k) Account Statements ......................................................................................................................... 53

l) Refunds ........................................................................................................................................... 53

m) Redemption of Units ....................................................................................................................... 53

i. Redemption Price ................................................................................................................... 54

ii. Applicable NAV ...................................................................................................................... 54

iii. How to Redeem? ................................................................................................................... 54

iv. Redemption on Maturity ....................................................................................................... 54

v. Payment of Maturity Proceeds ................................................................................................ 54

vi. Payment of Maturity Proceeds to NRIs/FIIs .............................................................................. 55

vii. Non receipt of email communication by Investors .................................................................. 55

viii. Effect of Redemptions ........................................................................................................... 55

ix. Fractional Units ...................................................................................................................... 55

x. Signature mismatch cases ...................................................................................................... 55

xi. Right to Limit Redemptions ................................................................................................... 55

xii. Suspension of Sale and Redemption of Units ........................................................................ 56

xiii. Permanent Account Number (PAN) ......................................................................................... 56

xiv. Unique Identification Number (UIN) ....................................................................................... 56

xv. Dormant Account Locking ..................................................................................................... 56

9. Load Structure, Fees and Expenses ........................................................................................................ 57

a) Load Structure of the Scheme .......................................................................................................... 57

b) Fees and Expenses of the Scheme .................................................................................................... 57

i. New Fund Offer Expenses ...................................................................................................... 57

ii. Estimated Recurring Expenses ................................................................................................ 58

c) Fees and Expenses of the Existing Scheme ....................................................................................... 58

i. New Fund Offer Expenses ...................................................................................................... 58

ii. Condensed Financial Information .......................................................................................... 59

10. Unitholders Rights and Services ............................................................................................................. 71

a) Investors Services ............................................................................................................................. 71

b) Ease of Transactions ......................................................................................................................... 71

i. Customer Service Centers in major metros ............................................................................. 71

ii. Process transactions in a timely manner ................................................................................. 71

c) Problem Resolution ......................................................................................................................... 71

d) Information about the Scheme ........................................................................................................ 71


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e) NAV Information .............................................................................................................................. 71

f) Disclosure of information under the Regulations ............................................................................. 72

g) Rights of Unitholders of the Scheme ............................................................................................... 72

h) Duration of the Scheme/Winding up ............................................................................................... 72

i) Procedure and manner of Winding up ............................................................................................. 73

j) Tax Benefits ...................................................................................................................................... 73

i) To the Mutual Fund ............................................................................................................... 73

ii) To the Unitholders ................................................................................................................. 74

A. Income received from mutual fund ........................................................................................ 74

B. Long term capital gains on transfer of units ........................................................................... 74

i. For Individuals and HUFs ............................................................................................... 74

ii. For Partnership Firms, Non-Residents, Indian Companies/Foreign Companies .............. 74

iii. For Non-resident Indians .............................................................................................. 74

iv. For Overseas Financial Organisations and Foreign Institutional Investors ...................... 75fulfilling conditions laid down under section 115AB (Offshore Fund

C. Short term capital gains ......................................................................................................... 75

D. Capital Losses ........................................................................................................................ 75

E. Tax deduction for individual & HUF under Sec. 80C ................................................................ 75

D. Tax deduction at source ......................................................................................................... 76

E. Exemption from tax on capital gains arising on transfer of units held for more than 12 months 76

F. Investments by charitable and religious trusts in the plan ...................................................... 76

G. Wealth Tax Sec. 2 (ea) ............................................................................................................. 77

k) Unclaimed redemption amount ....................................................................................................... 77

11. Other Matters

a) Unitholders Grievances Redressal Mechanism ................................................................................. 78

b) Associate Transactions ..................................................................................................................... 80

c) Details of Investment in Companies that hold more than 5% of NAV of Schemes ........................... 87managed by the AMC

d) Penalties and Pending Litigations .................................................................................................... 91

e) Borrowing by the Mutual Fund ........................................................................................................ 98

f) Stock Lending by the Mutual Fund .................................................................................................. 98

g) Policy on Offshore Investments by the Scheme ................................................................................ 98

h) Inter-Scheme Transfers ..................................................................................................................... 98

i) General Information ........................................................................................................................ 99

� Power to make Rules ....................................................................................................................... 99

� Power to remove Difficulties ............................................................................................................ 99

� Scheme to be binding on the Unitholders ....................................................................................... 99

� Documents available for Inspection ................................................................................................. 99

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HIGHLIGHTS

The Sponsors of the Fund are Prudential plc of the United Kingdom (UK) and ICICI Bank Limited (erstwhile ICICI Limited).

Prudential plc is a leading international financial services group providing retail financial products and services and fundmanagement to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, over GBP187billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as of December 31,2003.

Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval inrecognizing ICICI Bank Ltd. as a co-sponsor consequent to the merger of ICICI Ltd. with ICICI Bank Ltd.

ICICI Bank is India’s second-largest bank with total assets of about Rs.1,67,659 crore at March 31, 2005 and profit after tax ofRs. 2,005 crore for the year ended March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 573branches and extension counters and over 2,000 ATMs. ICICI Bank offers a wide range of banking products and financialservices to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries andaffiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank setup its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domesticbanking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada andRussia, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates,Bangladesh and South Africa. (Source: Overview at www.icicibank.com).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary.ICICI’s shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equityoffering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of Madura Limited in an all-stockamalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002.

Pursuant to the Scheme of Amalgamation effective March 30, 2002, among ICICI, ICICI Personal Financial Services, ICICI CapitalServices and ICICI Bank, sanctioned by the High Court of Gujarat and the High Court of Judicature at Bombay and approved bythe Reserve Bank of India, ICICI, ICICI Personal Financial Services and ICICI Capital Services were merged with ICICI Bank in an all-stock merger. ICICI Bank is the surviving legal entity in the amalgamation.

� Fund Management expertise

Prudential plc is a leading international financial services group providing retail financial products and services and fundmanagement to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, overGBP187 billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as ofDecember 31, 2003.

Prudential ICICI Asset Management Company Limited, the Investment Manager to the Prudential ICICI Mutual Fund,manages assets over Rs. 21,992 crores as of December 31, 2005 through 24 schemes. It is one of the largest assetmanagement companies in the country.

� Investment Objectives

Prudential ICICI Fusion Fund is a close-ended diversified equity Scheme, with a maturity period of 5 years, that seeks togenerate long-term capital appreciation by investing predominantly in equity and equity related instruments of companiesacross large, mid and small market capitalization.

However, there can be no assurance that the investment objective of the Scheme will be realized.

� Transparency –The AMC will calculate and disclose the first NAV not later than 30 days from the closure of the New FundOffer. Subsequently, the NAV will be calculated and disclosed at the close of every Business Day. In addition, the AMC willdisclose details of the portfolio at least on a half-yearly basis.

� Load –

� Entry Load

The Trustees for the present do not intent to charge any entry load on the investments made.

� Exit Load

For the redemptions made before the Maturity Date of the Scheme, i.e. redemptions made during the repurchasefacility period, the following exit load structure will be applicable:


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Sr. No. Investment Period Exit Load

1 If the amount sought to be redeemed is invested for a period of one yearor less than one year from the date of allotment. 5.00%

2 If the amount sought to be redeemed is invested for a period more thanone year but less than or equal to two years from the date of allotment. 4.00%

3 If the amount sought to be redeemed is invested for a period of more thantwo years but less than or equal to three years from the date of allotment. 3.00%

4 If the amount sought to be redeemed is invested for a period of more thanthree years but less than or equal to four years from the date of allotment. 2.00%

5 If the amount sought to be redeemed is invested for a period of more thanfour years from the date of allotment but redeemed before the date ofmaturity of the Scheme. 1.00%

However, the Trustee shall have a right to prescribe or modify the load structure with prospective effect subject to amaximum prescribed under the Regulations.

� Liquidity - To provide liquidity to investors, the Fund proposes to provide repurchase facility at Quarterly intervals (fordetails, please refer to page no.36. The investors may redeem the units on the stipulated dates for redemption as mentionedin this offer document on page no.36 at NAV based prices, subject to the prevalent exit load provisions. The Fund will, undernormal circumstances, endeavour to dispatch redemption cheques within T+3 Business Day from the date of acceptance ofthe redemption request at any of the official point(s) of transaction(s). This service standard will apply only at the centerswhere RBI handles clearing directly and is able to transfer funds from Mumbai on the same-day-value basis. In respect of allnon-RBI centers, for redemption payments, AMC will take additional day(s) – not exceeding 3 Business Days- that wouldessentially be linked to the time taken by banks to clear funds at such Non-RBI centers.

The Units of the Scheme will not be listed on any exchange, for the present.

� New Fund Offer Expenses - The New Fund Offer expenses charged to the Scheme in this Offer Document will be limitedto 3.75% of the amount mobilised under the new fund offer. Under the Regulations, the Fund is entitled to charge newfund offer expenses up to a maximum of 6% of initial resources raised under the Scheme. The new fund offer expensescharged to the Scheme may be amortised over a period not exceeding five years and would be included in the NAV.

� Investment Options - Investors under the Prudential ICICI Fusion Fund have the choice of a Growth Option or a DividendOption. Both the Options under the Scheme will have the same portfolio. The Trustees may at their discretion add one ormore additional options under the Scheme.

� Repatriation – Repatriation benefits would be available to NRIs/PIOs/FIIs, subject to applicable Regulations notified byReserve Bank of India from time to time. Repatriation of these benefits will be subject to applicable deductions in respectof levies and taxes, as may be applicable at present or in future.

� For details on tax update, please refer page 73 of this document.

� Investors in the Scheme are not being offered any guaranteed returns.

� Investors are advised to consult their Legal /Tax and other Professional Advisors in regard to tax/legal implicationsrelating to their investments in the Scheme and before making decision to invest in the Scheme or redeem theUnits in the Scheme.

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RISK FACTORS AND SPECIAL CONSIDERATIONS

� Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that theobjectives of the Scheme will be achieved.

� As with any securities investment, the NAV of the Units issued under the Scheme can go up or down depending on thefactors and forces affecting the capital markets.

� Past performance of the Sponsors, AMC/Fund does not indicate the future performance of the Scheme of the Fund.

� The Sponsors are not responsible or liable for any loss resulting from the operation of the Scheme beyond the contributionof an amount of Rs. 22.2 lacs collectively made by them towards setting up the Fund and such other accretions andadditions to the corpus set up by the Sponsors.

� Prudential ICICI Fusion Fund is the name of the Scheme and does not in any manner indicate either the quality of theScheme or its future prospects and returns.

� The NAVs of the Scheme may be affected by changes in the general market conditions, factors and forces affecting capitalmarket, in particular, level of interest rates, various market related factors and trading volumes, settlement periods andtransfer procedures.

� In the event of receipt of inordinately large number of redemption requests or of a restructuring of the scheme’s portfolio,there may be delays in the redemption of units. Please see page 8 for “Risk factors and special consideration” and page 55for “Right to limt Redemption” in this Offer Document.

� The liquidity of the Scheme’s investments is inherently restricted by trading volumes in the securities in which it invests.

� The Scheme may use various derivatives and hedging products from time to time, as would be available and permitted bySEBI, in an attempt to protect the value of the portfolio and enhance Unitholders interest. In case the Scheme utilizes anyderivatives under the Regulations, the Scheme may, in certain situations, be exposed to risks associated with the use ofderivatives.

� Investors in the Scheme are not offered any guaranteed returns.

� Mutual Funds being vehicles of securities investments are subject to market and other risks and there can be no guaranteeagainst loss resulting from investing in schemes. The various factors which impact the value of scheme investments includebut are not limited to fluctuations in the equity and bond markets, fluctuations in interest rates, prevailing political andeconomic environment, changes in government policy, factors specific to the issuer of securities, tax laws, liquidity of theunderlying instruments, settlements periods, trading volumes etc. and securities investments are subject to market risksand there is no assurance or guarantee that the objectives of the Scheme will be achieved.

� As the liquidity of the Scheme’s investments could at times, be restricted by trading volumes and settlement periods, thetime taken by the Fund for redemption of units may be significant in the event of an inordinately large number ofredemption requests or of a restructuring of the Scheme’s portfolio. In view of this the Trustee has the right, at their solediscretion to limit redemptions (including suspending redemption) under certain circumstances, as described under thesection titled “Right to limit Repurchases”.

� From time to time and subject to the regulations, the sponsors, the mutual funds and investment Companies managed bythem, their affiliates, their associate companies, subsidiaries of the sponsors and the AMC may invest in either directly orindirectly in the scheme. The funds managed by these affiliates, associates and/ or the AMC may acquire a substantialportion of the Scheme. Accordingly, redemption of units held by such funds, affiliates/associates and sponsors may have anadverse impact on the units of the Scheme because the timing of such redemption may impact the ability of otherunitholders to redeem their units

The Scheme may invest in other schemes managed by the AMC or in the schemes of any other Mutual Funds, provided it isin conformity to the investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations,no investment management fees will be charged for such investments.

� From time to time and subject to the regulations, the AMC may invest in this Scheme. The decision to invest in the Schemeby the AMC will be based on parameters specified by the Board of the AMC.

Further, as per the Regulation, in case the AMC invests in any of the schemes managed by it, it shall not be entitled to chargeany fees on such investments

� It may be noted that no prior intimation/indication would be given to investors when the composition/asset allocationpattern under the scheme undergo changes within the permitted band from 70% to 100% for equity and equity relatedsecurities and from 0% to 30% for debt, money market instruments & call money. The investors/unitholders can ascertaindetails of asset allocation of the scheme as on the last date of each month on AMC’s website at www.pruicici.com.

� In terms of SEBI circular dated December 12, 2003 and June 14, 2005 having ref SEBI/IMD/CIR No. 10/22701/03 and SEBI/IMD/CIR No. 1/42529/05 respectively and AMFI’s communication having ref. No.35/MEM-COR/55/04-05 dated December31, 2004, each scheme should have a minimum of 20 investors at the time of allotment, in case Scheme fails to assembleminimum 20 investors at the time of allotment, the scheme shall be wound up, by following the guidelines prescribed bySEBI and the investor’s application money would be refunded. Further, at the time of allotment, no single investor shouldaccount for more than 25% of the corpus of such scheme (i.e. at the portfolio level), accordingly Fund is constrained toreject the application by a single unitholder having exposure of more than 25% at the time of allotment, hence, suchunitholder could be allotted limited units to such extent.


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� Different types of securities in which the scheme would invest as given in the offer document carry different levels and typesof risk. Accordingly the scheme’s risk may increase or decrease depending upon its investment pattern. E.g. corporate bondscarry a higher amount of risk than Government securities. Further even among corporate bonds, bonds which are AAArated are comparatively less risky than bonds which are AA rated.

Scheme Specific Risk Factors

1. Funds available for distribution on maturity date as well as upon winding up of the scheme before maturity will be limitedto the collection proceeds and the balance standing to the credit of Distribution Reserve Account. The Scheme will have noassets other than the scheme assets described herein and any distributions on the units shall be made only out of theScheme Assets.

The ability of the scheme to meet redemptions on the maturity date and payment of distributions to the holders of the Unitswill ultimately depend on the realization of the underlying cash flows from the Scheme Assets. Accordingly, there is noassurance or guarantee that the scheme will necessarily meet the redemption on maturity date.

The units are limited-recourse obligations of the Fund. No redemption or other distribution will be made on the units otherthan as expressly provided herein. The Trustee, the Custodian, the AMC or the Registrar and paying agent or any of theiraffiliates or any of their respective security holders, members, officers, directors, managers or incorporators or any otherperson or entity will not be obligated to make distributions in respect of the Units. Consequently, the Unit holders must relysolely on amounts received on the Scheme assets for distributions on the units. There can be no assurance that amountsreceived with respect to the Scheme assets will be sufficient to make distributions on any class of units. The Fund’s ability tomake distributions on units will be constrained by the Priority of Distributions. If amounts received on the Scheme assets areinsufficient to make distributions on the units, no other assets will be available for payment of deficiency and followingliquidation of all the Scheme assets, the Fund will have no further obligations in respect of the units.

2. Being a close-ended Scheme, the Scheme offers repurchase facility on a quarterly basis, subject to exit load prescribed by theTrustees from time to time, if any, to that extent scheme has limited liquidity exposure.

3. Investors may note that AMC/Fund Manger’s investment decisions may not be always profitable. The Scheme proposes toinvest substantially in equity and equity related securities. The Scheme will, to a lesser extent, also invest in debt, cash andmoney market instruments. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of theseinvestments. Different segments of the Indian financial markets have different settlement periods and such periods may beextended significantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases dueto settlement problems could cause the Scheme to miss certain investment opportunities. By the same rationale, theinability to sell securities held in the Scheme’s portfolio due to the absence of a well developed and liquid secondary marketfor debt securities would result, at times, in potential losses to the Scheme, in case of a subsequent decline in the value ofsecurities held in the Scheme’s portfolio.

4. The scheme is also vulnerable to movements in the prices of securities invested by the scheme, which again could have amaterial bearing on the overall returns from the scheme. These stocks, at times, may be relatively less liquid as compared togrowth stocks.

5. The liquidity of the Scheme’s investments is inherently restricted by trading volumes in the securities in which it invests.

6. The value of the Scheme’s investments, may be affected generally by factors affecting securities markets, such as price andvolume volatility in the capital markets, interest rates, currency exchange rates, changes in policies of the Government,taxation laws or any other appropriate authority policies and other political and economic developments which may havean adverse bearing on individual securities, a specific sector or all sectors including equity and debt markets. Consequently,the NAV of the Units of the Scheme may fluctuate and can go up or down.

7. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of the investments made by theScheme. Different segments of the Indian financial markets have different settlement periods and such periods may beextended significantly by unforeseen circumstances leading to delays in receipt of proceeds from sale of securities. The NAVof the Scheme can go up and down because of various factors that affect the capital markets in general.

8. The NAV of the Scheme to the extent invested in Debt and Money market securities, are likely to be affected by changes inthe prevailing rates of interest.

9. Securities, which are not quoted on the stock exchanges, are inherently illiquid in nature and carry a larger amount ofliquidity risk, in comparison to securities that are listed on the exchanges or offer other exit options to the investor,including a put option. Within the Regulatory limits, the AMC may choose to invest in unlisted securities that offer attractiveyields. This may however increase the risk of the portfolio.

10. While securities that are listed on the stock exchange carry lower liquidity risk, the ability to sell these investments is limitedby the overall trading volume on the stock exchanges. Money market securities, while fairly liquid, lack a well-developedsecondary market, which may restrict the selling ability of the Scheme(s) and may lead to the Scheme(s) incurring losses tillthe security is finally sold.

11. Investment decisions made by the AMC may not always be profitable, as actual market movements may be at variance withanticipated trends.

12. The Scheme may use various derivative products as permitted by the Regulations. Use of derivatives requires an understandingof not only the underlying instrument but also of the derivative itself. Other risks include, the risk of mispricing or impropervaluation and the inability of derivatives to correlate perfectly with underlying assets, rates and indices. The Scheme may usederivatives instruments like Stock Index Futures, Interest Rate Swaps, Forward Rate Agreements or other derivative instrumentsfor the purpose of hedging and portfolio balancing, as permitted under the Regulations and guidelines. Usage of derivativeswill expose the Scheme to certain risks inherent to such derivatives. Please refer page 41 for details.

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13. Different segments of the Indian financial markets have different settlement periods and such periods may be extendedsignificantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases due tosettlement problems could cause the Scheme to miss certain investment opportunities. By the same rationale, the inabilityto sell securities held in the Scheme’s portfolio due to the absence of a well developed and liquid secondary market for debtsecurities would result, at times, in potential losses to the Scheme, in case of a subsequent decline in the value of securitiesheld in the Scheme’s portfolio.

14. The Scheme may also invest in ADRs / GDRs as permitted by Reserve Bank of India and Securities and Exchange Board ofIndia. To the extent that some part of the assets of the Schemes may be invested in securities denominated in foreigncurrencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by thechanges in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital also may behampered by changes in regulations concerning exchange controls or political circumstances as well as the application toit of other restrictions on investment. For further details, please refer page 98.

15. The performance of the scheme will be affected in case of unforeseen circumstances like political crisis, natural calamities,and changes in currency exchange rates or interest rates.

16. Fund manager tries to generate returns based on certain past statistical trend. The performance of the scheme may getaffected if there is a change in the said trend. There can be no assurance that such historical trends will continue.

17. The Scheme’s NAV will react to the stock market movements. The Investor could lose money over short periods due tofluctuation in the Scheme’s NAV in response to factors such as economic and political developments, changes in interestrates and perceived trends in stock prices market movements, and over longer periods during market downturns.

� Redemption Risk: Investors may note that, this is a Close-ended scheme; accordingly units under the Scheme can beredeemed on Maturity date without charging any load. To provide liquidity to investors, the Fund proposes to providerepurchase facility at Quarterly intervals (for details, please refer to page no.36. The investors may redeem the units on thestipulated dates for redemption as mentioned in this offer document on page no.36 at NAV based prices, subject to theprevalent exit load provisions.

� Liquidity risk

In case of abnormal circumstances it will be difficult to complete the square off transaction due to liquidity being poor instock futures/spot market. However fund will aim at taking exposure only into liquid stocks where there will be minimal riskto square off the transaction.

� Fixed Income Securities

� Interest Rate Risk: As with all debt securities, changes in interest rates may affect the Scheme’s Net Asset Value as theprices of securities generally increase as interest rates decline and generally decrease as interest rates rise. Prices oflong-term securities generally fluctuate more in response to interest rate changes than do short-term securities. Indiandebt markets can be volatile leading to the possibility of price movements up or down in fixed income securities andthereby to possible movements in the NAV.

� Liquidity or Marketability Risk: This refers to the ease with which a security can be sold at or near to its valuationyield-to-maturity (YTM). The primary measure of liquidity risk is the spread between the bid price and the offer pricequoted by a dealer. Liquidity risk is today characteristic of the Indian fixed income market.

Credit Risk : Credit risk or default risk refers to the risk that an issuer of a fixed income security may default (i.e. will beunable to make timely principal and interest payments on the security). Because of this risk corporate debentures aresold at a yield above those offered on Government Securities, which are sovereign obligations and free of credit risk.Normally, the value of a fixed income security will fluctuate depending upon the changes in the perceived level of creditrisk as well as any actual event of default. The greater the credit risk, the greater the yield required for someone to becompensated for the increased risk.

� Reinvestment Risk: This risk refers to the interest rate levels at which cash flows received from the securities in theScheme are reinvested. The additional income from reinvestment is the “interest on interest” component. The risk isthat the rate at which interim cash flows can be reinvested may be lower than that originally assumed.

� Money Market Securities are subject to the risk of an issuer’s inability to meet interest and principal payments on itsobligations and market perception of the creditworthiness of the issuer

� Risks attached with the use of derivatives: As and when the Scheme trade in the derivatives market there are risk factorsand issues concerning the use of derivatives that Investors should understand. Derivative products are specialized instrumentsthat require investment techniques and risk analyses different from those associated with stocks and bonds. The use of aderivative requires an understanding not only of the underlying instrument but of the derivative itself. Derivatives requirethe maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivativeadds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibility that a lossmay be sustained by the portfolio as a result of the failure of another party (usually referred to as the “counter party”) tocomply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mis pricing or impropervaluation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices.

Thus, derivatives are highly leveraged instruments. Even a small price movement in the underlying security could have alarge impact on their value. Also, the market for derivative instruments is nascent in India.

� Also please refer to Page 41 for example on Derivatives.


11

Risk Analysis on underlying asset classes in Securitisation:

Generally available Asset Classes for securitisation in IndiaCommercial VehiclesAuto and Two wheeler poolsMortgage pools (residential housing loans)Personal Loan, credit card and other retail loansCorporate loans/receivables

In terms of specific risks attached to securitisation, each asset class would have different underlying risks, however, residentialmortgages are supposed to be having lower default rates as an asset class. On the other hand, repossession and subsequentrecovery of commercial vehicles and other auto assets is fairly easier and better compared to mortgages. Some of the assetclasses such as personal loans, credit card receivables etc., being unsecured credits in nature, may witness higher default rates.As regards corporate loans/receivables, depending upon the nature of the underlying security for the loan or the nature of thereceivable the risks would correspondingly fluctuate. However, the credit enhancement stipulated by rating agencies for suchasset class pools is typically much higher and hence their overall risks are comparable to other AAA rated asset classes.

The rating agencies have an elaborate system of stipulating margins, over collateralisation and guarantees to bring risk limits inline with the other AAA rated securities.

It is relevant to note here that predominantly the scheme intends to invest in only AAA rated securitised debt. This comparesfavourably with a portfolio which is constructed on the basis of AA rated securitised debt.

Some of the factors, which are typically analyzed for any pool are as follows:

Size of the loan: generally indicates the kind of assets financed with loans. Also indicates whether there is excessive reliance onvery small ticket size, which may result in difficult and costly recoveries. To illustrate, the ticket size of housing loans is generallyhigher than that of personal loans. Hence in the construction of a housing loan asset pool for say Rs.1,00,00,000/- it may beeasier to construct a pool with just 10 housing loans of Rs.10,00,000 each rather than to construct a pool of personal loans asthe ticket size of personal loans may rarely exceed Rs.5,00,000/- per individual. Also to amplify this illustration further, if onewere to construct a pool of Rs.1,00,00,000/- consisting of personal loans of Rs.1,00,000/- each, the larger number of contracts(100as against one of 10 housing loans of Rs.10 lakh each) automatically diversifies the risk profile of the pool as compared to ahousing loan based asset pool.

Average original maturity of the pool: indicates the original repayment period and whether the loan tenors are in line withindustry averages and borrower’s repayment capacity. To illustrate, in a car pool consisting of 60 month contracts, the originalmaturity and the residual maturity of the pool viz. number of remaining installments to be paid gives a better idea of the risk ofdefault 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, this is a far superiorportfolio than a similar car loan pool where 80% of the contracts have not even crossed 5 installments.

Loan to Value Ratio: Indicates how much % value of the asset is financed by borrower’s own equity. The lower LTV, the better itis. This Ratio stems from the principle that where the borrowers own contribution of the asset cost is high, the chances of defaultare lower. To illustrate for a Truck costing Rs.20 lakhs, if the borrower has himself contributed Rs.10 lakh and has taken onlyRs.10 lakh as a loan, he is going to have lesser propensity to default as he would lose an asset worth Rs.20 lakhs if he defaultsin repaying an installment. This is as against a borrower who may meet only Rs.2 lakh out of his own equity for a truck costingRs.20 lakh. Between the two scenarios given above, the latter would have higher risk of default than the former.

Average seasoning of the pool: indicates whether borrowers have already displayed repayment discipline. To illustrate, in thecase of a personal loan, if a pool of assets consist of those who have already repaid 80% of the installments without default, thiscertainly is a superior asset pool than one where only 10% of installments have been paid. In the former case, the portfolio hasalready demonstrated that the repayment discipline is far higher.

Default rate distribution: Indicates how much % of the pool and overall portfolio of the originator is current, how much is in 0-30 DPD (days past due), 30-60 DPD, 60-90 DPD and so on. The rationale here is very obvious, as against 0-30 DPD, the 60-90 DPDis certainly a higher risk category.

Unlike in plain vanilla instruments, in securitisation transactions it is possible to work towards a target credit rating, which couldbe much higher than the originator’s own credit rating. This is possible through a mechanism called ‘Credit enhancement’. Thepurpose of credit enhancement is to ensure timely payment to the investors, if the actual collection from the pool of receivablesfor a given period are short of the contractual payouts on securitisation. Securitisation are normally non-recourse instrumentsand therefore, the repayment on securitisation would have to come from the underlying assets and the credit enhancement.Therefore, the rating criteria centrally focus on the quality of the underlying assets.

World over, the quality of credit ratings is measured by default rates and stability. An analysis of rating transition and defaultrates, witnessed in both international and domestic arena, clearly reveals that structured finance ratings have been characterizedby far lower default and transition rates than that of plain vanilla debt ratings. Further, internationally, in case of structuredfinance ratings, not only are the default rates low but post default recovery is also high.

In the Indian scenario, also, more than 95% of issuances have been AAA rated issuances indicating the strength of theunderlying assets as well as adequacy of credit enhancement.

Investment exposure of the Fund with reference to Securitised Debt

The Scheme will predominantly invest only in those securitisation issuances which have AAA rating indicating the highest levelof safety from credit risk point of view at the time of making an investment. The Scheme will not invest in foreign securitiseddebt.

12


The fund may invest in various type of securitisation issuances, including but not limited to Asset Backed Securitisation,Mortgage Backed Securitisation, Personal Loan Backed Securitisation, Collateralized Loan Obligation / Collateralized BondObligation and so on.

The fund does not propose to limit its exposure to only one asset class or to have asset class based sub-limits as it will primarilylook towards the AAA rating of the offering.

The fund will conduct an independent due diligence on the cash margins, collateralisation, guarantees and other creditenhancements and the portfolio characteristic of the securitisation to ensure that the issuance fits in to the overall objective ofthe investment in high investment grade offerings irrespective of underlying asset class.

Risk Factors specific to investments in Securitised Papers

Types of Securitised Debt vary and carry different levels and types of risks. Credit Risk on Securitised Bonds depends upon theOriginator and varies depending on whether they are issued with Recourse to Originator or otherwise.

Even within securitised debt, AAA rated securitised debt offers lesser risk of default than AA rated securitised debt. A structurewith Recourse will have a lower Credit Risk than a structure without Recourse.

Underlying assets in Securitised Debt may assume different forms and the general types of receivables include Auto Finance,Credit Cards, Home Loans or any such receipts, Credit risks relating to these types of receivables depend upon various factorsincluding macro economic factors of these industries and economies. Specific factors like nature and adequacy of propertymortgaged against these borrowings, nature of loan agreement/ mortgage deed in case of Home Loan, adequacy ofdocumentation in case of Auto 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 borrowings underlying the securitised debt.

Holders of the securitised assets may have low credit risk with diversified retail base on underlying assets especially whensecuritised assets are created by high credit rated tranches, risk profiles of Planned Amortisation Class tranches (PAC), PrincipalOnly Class Tranches (PO) and Interest Only class tranches (IO) will differ depending upon the interest rate movement and speedof prepayment.

Unlike in plain vanilla instruments, in securitisation transactions, it is possible to work towards a target credit rating, which couldbe much higher than the originator’s own credit rating. This is possible through a mechanism called ‘Credit enhancement’. Theprocess of ‘Credit enhancement’ is fulfilled 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 ensure timely payment to theinvestors, if the actual collection from the pool of receivables for a given period is short of the contractual payout on securitisation.Securitisation is normally non-recourse instruments and therefore, the repayment on securitisation would have to come fromthe underlying assets and the credit enhancement. Therefore the rating criteria centrally focus on the quality of the underlyingassets.

The change in market interest rates – prepayments may not change the absolute amount of receivables for the investors, but mayhave an impact on the re-investment of the periodic cash flows that the investor receives in the securitised paper.

Limited Liquidity & Price risk

Presently, secondary market for securitised papers is not very liquid. There is no assurance that a deep secondary market willdevelop for such securities. This could limit the ability of the investor to resell them. Even if a secondary market develops andsales were to take place, these secondary transactions may be at a discount to the initial issue price due to changes in the interestrate structure.

Limited Recourse, Delinquency and Credit Risk

Securitised transactions are normally backed by pool of receivables and credit enhancement as stipulated by the rating agency,which differ from issue to issue. The Credit Enhancement stipulated represents a limited loss cover to the Investors. TheseCertificates represent an undivided beneficial interest in the underlying receivables and there is no obligation of either the Issueror the Seller or the originator, or the parent or any affiliate of the Seller, Issuer and Originator. No financial recourse is availableto the Certificate Holders against the Investors’ Representative. Delinquencies and credit losses may cause depletion of theamount available under the Credit Enhancement and thereby the Investor Payouts may get affected if the amount available inthe Credit Enhancement facility is not enough to cover the shortfall. On persistent default of a Obligor to repay his obligation,the Servicer may repossess and sell the underlying Asset. However many factors may affect, delay or prevent the repossession ofsuch Asset or the length of time required to realize the sale proceeds on such sales. In addition, the price at which such Asset maybe sold may be lower than the amount due from that Obligor.

Risks due to possible prepayments: Weighted Tenor / Yield

Asset securitisation is a process whereby commercial or consumer credits are packaged and sold in the form of financialinstruments Full prepayment of underlying loan contract may arise under any of the following circumstances;

� Obligor pays the Receivable due from him at any time prior to the scheduled maturity date of that Receivable; or

� Receivable is required to be repurchased by the Seller consequent to its inability to rectify a material misrepresentation withrespect to that Receivable; or

� The Servicer recognizing a contract as a defaulted contract and hence repossessing the underlying Asset and selling thesame

In the event of prepayments, investors may be exposed to changes in tenor and yield.


13

Bankruptcy of the Originator or Seller

If originator becomes subject to bankruptcy proceedings and the court in the bankruptcy proceedings concludes that the salefrom originator to Trust was not a sale then an Investor could experience losses or delays in the payments due. All possible careis generally taken in structuring the transaction so as to minimize the risk of the sale to Trust not being construed as a “TrueSale”. Legal opinion is normally obtained to the effect that the assignment of Receivables to Trust in trust for and for the benefitof the Investors, as envisaged herein, would constitute a true sale.

Bankruptcy of the Investor’s Agent

If Investor’s agent, becomes subject to bankruptcy proceedings and the court in the bankruptcy proceedings concludes that therecourse of Investor’s Agent to the assets/receivables is not in its capacity as agent/Trustee but in its personal capacity, then anInvestor could experience losses or delays 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 the assets/receivables if and when heldby Investor’s Agent is held as agent and in Trust for the Investors and shall not form part of the personal assets of Investor’sAgent. Legal opinion is normally obtained to the effect that the Investors Agent’s recourse to assets/receivables is restricted in itscapacity as agent and trustee and not in its personal capacity.

Credit Rating of the Transaction / Certificate

The credit rating is not a recommendation to purchase, hold or sell the Certificate in as much as the ratings do not comment onthe market price of the Certificate or its suitability to a particular investor. There is no assurance by the rating agency either thatthe rating will remain at the same level for any given period of time or that the rating will not be lowered or withdrawn entirelyby 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 atime gap between collection by a Servicer and depositing the same into the Collection account especially considering that someof the collections may be in the form of cash. In this interim period, collections from the Loan Agreements may not be segregatedfrom other funds of the Servicer. If the Servicer fails to remit such funds due to Investors, the Investors may be exposed to apotential loss.

Due care is normally taken to ensure that the Servicer enjoys highest credit rating on stand alone basis to minimize Co-mingling risk.

Investors are urged to study the terms of the Offer Document carefully before investing in this Scheme, and to retain this OfferDocument for future reference.

� Investors in the Scheme are not being offered any guaranteed returns.

� Investors are advised to consult their Legal /Tax and other Professional Advisors in regard to tax/legal implicationsrelating to their investments in the Scheme and before making decision to invest in the Scheme or redeem theUnits in the Scheme.

14


Sponsors

Prudential plcLaurence Pountney Hill,London EC4R DHH,United Kingdom

ICICI Bank LimitedLandmark,Race Course Circle,Vadodara 390 007,India

Asset Management Company

Prudential ICICI Asset Management Company Limited

Registered Office206 Ashoka Estate, 2nd Floor,24 Barakhamba Road,New Delhi – 110 001Telephone: 022 - 24997000Fax : 022 - 24997029

Corporate Office8th Floor, Peninsula Tower, Peninsula Corporate Park,Ganpatrao Kadam Marg, Off Senapati Bapat Marg,Lower Parel, Mumbai 400 013.Telephone: 022 - 24997000Fax: 022 - 24997029

Trustee

Prudential ICICI Trust Limited206 Ashoka Estate, 2nd Floor,24 Barakhamba Road,New Delhi – 110 001

Registrar

Computer Age Management Services Private LimitedUnit : Prudential ICICI Mutual FundA&B Lakshmi Bhavan609 Anna SalaiChennai 600 006

Auditors to the Scheme

N. M. Raiji & CompanyUniversal Insurance BuildingSir Phiroze Shah Mehta RoadMumbai 400 001

Custodian

HDFC Bank LimitedSandoz HouseDr. Annie Besant RoadWorliMumbai 400 018

Legal Advisors

A.R.A. LAW1st Floor,Agra Building,121, M.G. Road,Fort, Mumbai - 400 023


15

SECTION I

DUE DILIGENCE CERTIFICATE

It is confirmed that:

i) The draft Offer Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and theguidelines and directives issued by SEBI from time to time.

ii) All legal requirements connected with the launching of the Scheme and also the guidelines, instructions, etc. issued by theGovernment of India and any other competent authority in this behalf, have been duly complied with.

iii) The disclosures made in the Offer Document are true, fair and adequate to enable the investors to make a well-informeddecision regarding investment in the proposed Scheme.

iv) The intermediaries named in the Offer Document, according to the information given to the AMC, are registered with SEBIand till date such registration is valid.

Ranganth Athreya

Sr. Vice President – Legal, ComplianceAnd Company Secretary

Place : Mumbai

Date : August 16, 2005.

Note: The Due Diligence Certificate as stated above was submitted to SEBI on August 16, 2005.

16


DEFINITIONS

In this Offer Document, the following words and expressions shall have the meaning specified herein, unless the contextotherwise requires:

Asset Management Company or AMC or Prudential ICICI Asset Management Company Ltd. (formerly ICICI Asset

Investment Manager Management Company Limited), the Asset Management Companyincorporated under the Companies Act, 1956, and registered withSEBI to act as an Investment Manager for the schemes of PrudentialICICI Mutual Fund

Applicable NAV for purchase Being a Close-ended Scheme, units can be purchased at FaceValueduring New Fund Offer period only.In respect of valid applicationsreceived upto closure of banking hours of the last day of New FundOffer Period the cut-off time by the Mutual Fund alongwith a localcheque or a demand draft payable at par at the place where theapplication is received, the units will be issued at par. No applicationsreceived after the closure of banking hours will be accepted.

Applicable NAV for redemption In respect of valid applications received upto the cut-off time on thebusiness day on which repurchase facility is provided as prescribed onpage no. 36 by the Mutual Fund, same day’s closing NAV shall beapplicable.No applications will be accepted after the cut-off time onthe business day on which repurchase facility is provided by the MutualFund, as stated above.

Business Day A day other than (1) Saturday and Sunday or (2) a day on which theStock Exchange, Mumbai and National Stock Exchange are closedwhether or not the Banks in Mumbai are open. (3) a day on which theSale and Redemption of Units is suspended by the Trustee/AMC.However, the AMC reserves the right to declare any day as a non-business day at any of its locations at its sole-discretion.

Call Option An agreement that gives an investor the right (but not the obligation)to buy a stock/bond at a specified price within a specific time period.Call Option gives you the right to “call in” (buy) an asset. An investorgets profit on a call when the underlying asset increases in price.Theseller of the option undertakes to buy the underlying in exchange.

Money Market Instruments Commercial papers, commercial bills, treasury bills, Governmentsecurities having an unexpired maturity upto one year, call or noticemoney, certificate of deposit, usance bill and any other like instrumentsas specified by the - Reserve Bank of India from time to time includingmibor linked securities, call products having unexpired maturity uptoone year.

Custodian HDFC Bank Limited, Mumbai, acting as Custodian to the Scheme, orany other custodian who is approved by the Trustee.

FII Foreign Institutional Investors registered with SEBI under Securitiesand Exchange Board of India (Foreign Institutional Investors)Regulations, 1995, as amended from time to time.

ICICI Bank ICICI Bank Limited

Investment Management Agreement The Agreement dated September 3, 1993 entered into betweenPrudential ICICI Trust Limited (formerly ICICI Trust Limited) andPrudential ICICI Asset Management Company Limited (formerly ICICIAsset Management Company Limited) as amended from time to time.

NAV Net Asset Value of the Units of the Scheme /Plans and Options therein,calculated on every Business Day in the manner provided in this OfferDocument or as may be prescribed by Regulations from time to time.

NRI Non-Resident Indian.

Offer Document This document issued by Prudential ICICI Mutual Fund, offering Unitsof Fusion Fund

Prudential Prudential plc (formerly known as Prudential Corporation plc), of theU.K. and includes, wherever the context so requires, its wholly ownedsubsidiary Prudential Corporation Holdings Limited.


17

Prudential ICICI Fusion Fund Prudential ICICI Fusion Fund and the options and investment plans, ifany, offered there under.

Put Option Put option is a financial contract between two parties, the buyer andthe seller of the option. The put allows the buyer the right (but not theobligation) to sell a financial instrument (the underlying instrument)to the seller of the option at a certain time for a certain price (the strikeprice). The seller assumes the corresponding obligations.The seller ofthe option undertakes to buy the underlying in exchange.

RBI Reserve Bank of India, established under the Reserve Bank of India Act,1934, as amended from time to time.

SEBI Securities and Exchange Board of India established under Securitiesand Exchange Board of India Act, 1992, as amended from time totime.

The Fund or The Mutual Fund Prudential ICICI Mutual Fund (formerly ICICI Mutual Fund), a trust setup under the provisions of the Indian Trusts Act, 1882. The Fund isregistered with SEBI vide Registration No.MF00393/6 dated October13, 1993 as ICICI Mutual Fund and has obtained approval from SEBIfor change in name to Prudential ICICI Mutual Fund vide SEBI’s letterdated April 16, 1998.

The Trustee Prudential ICICI Trust Limited (formerly ICICI Trust Limited), a companyset up under the Companies Act, 1956, and approved by SEBI to act asthe Trustee for the schemes of Prudential ICICI Mutual Fund

The Regulations Securities and Exchange Board of India (Mutual Funds) Regulations,1996, as amended from time to time.

Source scheme Source scheme means the scheme from which the investor is seekingto switch-out his investments to enable switch-in under the Scheme(Prudential ICICI Fusion Fund) during the New Fund Offer.

Trust Deed The Trust Deed dated August 25, 1993 establishing ICICI Mutual Fund(subsequently renamed Prudential ICICI Mutual Fund), as amendedfrom time to time.

Trust Fund Amounts settled/contributed by the Sponsors towards the corpus ofthe Prudential ICICI Mutual Fund and additions/accretions thereto.

Unit The interest of an investor, which consists of one undivided share inthe Net Assets of the Scheme.

Unit holder A holder of Unit(s) in the scheme of Prudential ICICI Fusion Fund ascontained in this Offer Document.

18


SUMMARY – PRUDENTIAL ICICI FUSION FUND

Name of the Scheme Prudential ICICI Fusion Fund

Structure Closed-ended equity scheme

Features Prudential ICICI Fusion Fund is a close-ended diversified equity Scheme,with a maturity period of 5 years, that seeks to generate long-termcapital appreciation by investing predominantly in equity and equityrelated instruments of companies across large, mid and small marketcapitalization.

Minimum Application Amount Rs 5000/- per application (plus in multiples of Re.1)

Duration of New Fund Offer The Scheme will open for subscription from February 1, 2006 to February27, 2006 during the New Fund Offer. The Trustee reserves the right toextend the closing date for the New Fund Offer subject to the conditionthat the New Fund Offer shall not be kept open for more than 30 days.

Target Amount The AMC seeks to raise a minimum subscription amount of Rs.1 lakhduring the New Fund Offer of the Scheme.

New Fund Offer Expenses The new fund offer expenses charged to the Scheme in this OfferDocument will be limited to 3.75% of the amount mobilised underthe New Fund Offer. Under the Regulations, the Fund is entitled tocharge new fund offer expenses up to a maximum of 6% of initialresources raised under the Scheme. The new fund offer expensescharged to the Scheme may be amortised over a period not exceedingfive years and would be included in the NAV.

Liquidity Purchase of Units:Being a close-ended Scheme, investors can subscribeto the Units of the Scheme during the New Fund Offer Period only. Toprovide liquidity to investors, the Fund proposes to provide repurchasefacility at Quarterly intervals. The investors may redeem the units onthe stipulated dates for redemption as mentioned in this offerdocument on page no.36, at NAV based prices, subject to the prevalentexit load provisions.The Units of the Scheme will not be listed on anyexchange, for the present.The Fund will, under normal circumstances,endeavour to dispatch redemption cheques within T+3 Business Daysfrom the date of acceptance of the redemption request at any of theofficial point(s) of transaction(s). This service standard will apply only atthe centers where RBI handles clearing directly and is able to transferfunds from Mumbai on the same-day-value basis. In respect of all non-RBI centers, for redemption payments, AMC will take additional day(s)– not exceeding 3 Business Days- that would essentially be linked tothe time taken by banks to clear funds at such Non-RBI centers.

Transparency NAV will be determined on every Business Day, except in specialcircumstances described on page 56. NAV of the Scheme shall bemade available at all Customer Service Centers of the AMC. The AMCshall also endeavor to have the NAV published in a daily newspaperand updated on AMC’s website (www.pruicici.com). AMC shall updatethe NAVs on the website of Association of Mutual Funds in India -AMFI (www.amfiindia.com) by 8.00 -p.m. every Business Day. In case ofany delay, the reasons for such delay would be explained to AMFI andSEBI by the next day. If the NAVs are not available before commencementof business hours on the following day due to any reason, the Fundshall issue a press release providing reasons and explaining when theFund would be able to publish the NAVs.The Mutual Fund shallendeavour to disclose the full portfolio of the Scheme at least on ahalf-yearly basis.

Repatriation facility NRIs/PIOs/FIIs have been granted a general permission by RBI [Schedule5 of the Foreign Exchange Management (Transfer or Issue of Securityby a Person Resident Outside India) Regulations, 2000] for investing in/ redeeming units of the schemes subject to conditions set out in theaforesaid regulations.

Eligibility for Trusts Religious and Charitable Trusts are eligible to invest in the Schemeunder the provisions of Section 11(5)(xii) of the Income-tax Act, 1961read with Rule 17C of Income-tax Rules, 1962.


19

Options available under the Scheme Investors under the Prudential ICICI Fusion Fund have the choice of aGrowth Option or a Dividend Option at present. The Growth and theDividend Option will have common portfolio. The Dividend option willbe the default option and hence if an investor fails to specify theoption applied for, he will be allotted units under the Dividend optionof the Scheme. The Trustees reserve right to introduce any other option(s)under the Scheme at a later date, by providing a notice to the investorson the AMC’s website and by issuing a press release, prior tointroduction of such option(s).

Growth Option

Under this option the Scheme will not declare any dividends. Theincome earned by the Scheme will remain invested in the Scheme andwill be reflected in the Net Asset Value.

Dividend Option

This option is suited for investors seeking regular income throughdividends declared by the Scheme The Trustee may at their discretionand subject to availability of distributable surplus, approve thedistribution of dividends by the AMC out of the net surplus of theScheme. To the extent the net surplus is not distributed, the same willremain invested in the Scheme and be reflected. The dividends declared,if any, will be paid-out to the investors.

Maturity The scheme shall be fully redeemed at the end of the maturity periodi.e. 5 years from the date of allotment, unless rolled over as per SEBIguidelines. The Fund will, under normal circumstances, endeavour todispatch redemption cheques within T+3 Business Days from the dateof acceptance of the redemption request at any of the official point(s)of transaction(s). This service standard will apply only at the centerswhere RBI handles clearing directly and is able to transfer funds fromMumbai on the same-day-value basis. In respect of all non-RBI centers,for redemption payments, AMC will take additional day(s) – notexceeding 3 Business Days- that would essentially be linked to thetime taken by banks to clear funds at such Non-RBI centers.

Roll Over Facility At the time of maturity, if it is perceived that the market outlook for thesimilar securities/ instruments is positive and investment in the similarkind of instruments would likely to fetch better returns for the investors,then in the interest of the Investor, the Trustees may decide to rolloverthe scheme. This would be based on demand/ request of the investorsfor the same. All other material details of the scheme/plans includingthe likely composition of assets immediately before the roll over, thenet assets and net asset value of the scheme, will be disclosed to theunitholders and a copy of the same filed with the SEBI. Such rolloverwill always be permitted only in case of those unitholders who expresstheir consent in writing.

Conversion of Close ended Scheme to Subject to the Regulations, the Trustee may choose to convert theOpen ended Scheme scheme to an open ended Scheme for the benefit of providing investors

the facililty of daily purchase and redemptions.

20


CONSTITUTION OF THE MUTUAL FUND

ICICI Mutual Fund, which has been renamed as Prudential ICICI Mutual Fund (“the Mutual Fund” or “the Fund”) has beenconstituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882). The Mutual Fund wasregistered with SEBI on October 13, 1993.

ICICI Mutual Fund was established by erstwhile ICICI Ltd. (Since merged with ICICI Bank Ltd), by execution of a Trust Deed datedAugust 25, 1993 by contributing Rs. 10 lacs. Prudential plc, through its wholly owned subsidiary, Prudential CorporationHoldings Limited (PCHL), has contributed an amount of Rs.12.2 lacs to the corpus of the Fund and has received permission forsuch contribution from the RBI vide letter No: CO.FID (I) 4940/10/I.07.02.200 (221) 97-98 dated April 25, 1998. SEBI hasapproved the change in name of the Fund to Prudential ICICI Mutual Fund vide its letter IIMARP / 88 / 98 dated April 16, 1998.A deed of amendment to the Trust Deed dated August 25, 1993 was executed and registered.

a) Sponsors

Prudential plc (formerly known as Prudential Corporation plc)

Prudential plc is a leading international financial services group providing retail financial products and services and fundmanagement to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, over GBP187billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as of December 31,2003.

Given below is a brief summary of Prudential’s financials:

(Rs. crores)

Year ended December 31

Year ended December 31 (Rs. crores)Description 2004 2003 2002

Total Income 291,760 246,466 269,446Profit Before Tax 5,093 2,742 3,792Profit After Tax 3,353 1,630 3,518Shareholders' Funds 33,542 25,683 28,739Earnings per share (Rs.) 15.75 8.47 18.41Equity Capital (5 Pence per share) 932.37 783.50 783.50Free Reserves 32,609 24,900 27,955Net-worth 33,542 25,683 28,739Book Value per share (Rs.) 140.93 128.42 143.69Percentage of dividend per share 316.80% 320% 520%Dividend per share (in Pence) 15.84P 16.00P 26.00P

ICICI Bank Limited

Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval inrecognizing ICICI Bank Ltd. as a co-sponsor consequent to the merger of ICICI Ltd. with ICICI Bank Ltd.

ICICI Bank is India’s second-largest bank with total assets of about Rs.1,67,659 crore at March 31, 2005 and profit after tax ofRs. 2,005 crore for the year ended March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 573branches and extension counters and over 2,000 ATMs. ICICI Bank offers a wide range of banking products and financialservices to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries andaffiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank setup its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domesticbanking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada andRussia, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates,Bangladesh and South Africa. (Source: Overview at www.icicibank.com).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary.ICICI’s shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equityoffering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of Madura Limited in an all-stockamalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002.

Pursuant to the Scheme of Amalgamation effective March 30, 2002, among ICICI, ICICI Personal Financial Services, ICICI CapitalServices and ICICI Bank, sanctioned by the High Court of Gujarat and the High Court of Judicature at Bombay and approved bythe Reserve Bank of India, ICICI, ICICI Personal Financial Services and ICICI Capital Services were merged with ICICI Bank in an all-stock merger. ICICI Bank is the surviving legal entity in the amalgamation.


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Given below is a brief summary of ICICI Bank’s financials

(Rs. in crores)

*Year ended *Year ended *Year ended * Year ended

March 31, 2002 March 31, 2003 March 31,2004 March 31, 2005

Total Income 2726.59 12,526.88 11,958.96 12,826.04Profit After Tax 258.3 1,206.18 1,637.10 2,005.20Free Reserves @ 5632.41 6,320.65 7,394.16 11,813.20Net Worth 6244.96 6933.31 8,010.56 12,549.98Earnings per Share (Rs.) (diluted) 11.61 19.65 26.44 27.33Book Value per Share (Rs.) 101.95 113.10 129.96 170.33Dividend 20% 75% 75% 85%Paid Up Capital (Equity) $ 612.55 612.66 616.40 736.78(Preference) # 350 350 350 350

* The results include the result of erstwhile ICICI Limited and its subsidiaries, ICICI Personal Financial Services Limited and ICICICapital Services Limited, amalgamated with the Bank w.e.f. March 30, 2002. The financials for the current periods are notcomparable with the earlier periods.

@ Excludes revaluation reserve

$ Includes in 2002, Rs. 392.67 crores for shares to be issued to shareholders of ICICI Limited on amalgamation, further, duringthe year ended March 31, 2003, the Bank allotted 3,000 shares pursuant to exercise of employee stock options.

# Represents in 2002, face value of 350 preference shares to be issued to shareholders of ICICI Ltd on amalgamation, redeemableat par on April 20, 2018. As per the notification received from Ministry of Finance, the restriction of section 12(1) of the BankingRegulation Act, 1949, prohibiting banks established after 1944 from holding preference shares, is not applicable to the Bankfor a specified period.

Note: ICICI Bank has raised Rs. 324600 Crores of equity in April 2004 (including a green shoe option)

Prudential plc of UK, through its wholly owned subsidiary, Prudential Corporation Holdings Limited, has been issued andallotted shares aggregating 55% stake in the share capital of Prudential ICICI Asset Management Company Limited (AMC),whereas the balance 45% shareholding in the AMC is being held by ICICI Group. Out of the total 45% of the paid-up capitalof the AMC held by the ICICI Group, 30% is held by ICICI Bank and the balance 15% is held by a subsidiary of ICICI Bank Ltd.viz. ICICI Venture Funds Management Company Limited.

b) The Trustee Company (The Trustee) - Prudential ICICI Trust Limited

Prudential ICICI Trust Limited, a company incorporated under the Companies Act, 1956 is the Trustee to the Fund vide Trust Deeddated August 25, 1993 as amended from time to time. Prudential plc. of UK, through its wholly owned subsidiary, PrudentialCorporation Holdings Limited, has been issued and allotted shares aggregating 55% stake in the share capital of PrudentialICICI Trust Limited, whereas the balance 45% shareholding in the Prudential ICICI Trust Limited is being held by ICICI Group.Out of the total 45% of the paid-up capital of the Prudential ICICI Trust Limited held by the ICICI Group, 30% is held by ICICIBank and the balance 15% is held by a subsidiary of ICICI Bank Ltd. viz. ICICI Venture Funds Management Company Limited.

i) The Directors of the Trustee Company are

Mr. Eruch .B. Desai Partner(S/o. Mr. Byramsha Desai) 81, Sonarica Mulla & Mulla & Craigie Blunt & Caroe33-A, Pedder Road DirectorMumbai 400 026 Birla Global Finance Ltd.Bekaert Industries Pvt.Ltd.Solicitor and Advocate The Century Textiles & Industries Ltd.

Dolphin Fisheries & Trading Pvt.Ltd.Hercules Hoists Ltd. (Alternate director)Hindalco Industries Ltd.Matsushita Lakhanpal Battery India Ltd.Kennametal Widia (India) Ltd. (Alternate)Supreme Industries Ltd.

Mr. Nagesh D. Pinge* Nominee Director (on behalf of ICICI Bank Limited)(S/o. Dinkar Shripad Pinge) The India Cements LimitedD-408/1, Viman Darshan 28-29 Swami Nityanand Marg Rama Newsprint and Papers Ltd.Andheri (East), Mumbai 400069Senior General Manager – Compliance andAudit Group – ICICI Bank Ltd.

Mr. Sham P. Subhedar* Senior Advisor(S/o. Mr. Pandharinath Subhedar) Prudential Corporation Asia Ltd.1, GulmoharS.V. RoadVile Parle (W) DirectorMumbai 400 056 Peter Pan Travels Services Pvt. Ltd.Consultant SAS Management Consultants and Office Services Pvt. Ltd.

Prudential Process Management Services Pvt. Ltd.

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Mr. D. J. Balaji Rao Director(S/o D. B. Jagannath Rao) Ashok Leyland Ltd.D-103, Adarsh Residency, 47th Cross (2nd Main) ChennaiBajaj Auto Ltd.Jayanagar, 8th BlockBangalore – 560082 3M INDIA Ltd., Bangalore

South East Asia Marine Engg. & Construction Ltd.,KolkataGraphite India Ltd., KolkataEnnore Foundries Ltd.

Mr . M S Parthasarathy Managing Trustee(S/o Late M.S. Tiruvenkatachari) SFL Shares TrustB2 Ashok Svasti, 33 Balakrishna Road DirectorValmiki Ngr, TiruvanmiyurChennai – 600041 Sundaram Home Finance Ltd., Chennai

*Mr. Nagesh Pinge is a Senior General Manager – Compliance and Audit Group of ICICI Bank Limited and Mr. S.P. Subhedaris a Senior Advisor to the Prudential Corporation Asia Limited, a wholly owned subsidiary of Prudential plc.

ii) Rights and Obligations of the Trustee under the Trust Deed and the Regulations

Pursuant to the Deed of Trust dated August 25, 1993 constituting the Mutual Fund and in terms of the Regulations the rightsand obligations of the Trustee are as under:

1. The Trustee shall have a right to obtain from the AMC such information as is considered necessary by it.

2. The Trustee shall ensure before the launch of any scheme that the Asset Management Company has:

i. systems in place for its back office, dealing room and accounting;

ii. appointed all key personnel including fund manager(s) for the scheme(s) and submitted to the Trustee their bio-datawhich shall contain the educational qualifications, past experience in the securities market within fifteen days of theirappointment;

iii. appointed auditors to audit the accounts of the schemes;

iv. appointed a compliance officer to comply with regulatory requirements and to redress investor grievances;

v. appointed registrars and laid down parameters for their supervision;

vi. prepared a compliance manual which is updated by including all the provisions of regulations and guidelines issuedby SEBI from time to time and designed internal control mechanisms including internal audit systems commensuratewith the size of the mutual fund.

vii. Specified norms for empanelment of brokers and marketing agents.

3. The Trustee shall ensure that the AMC has been diligent in empanelling the brokers, in monitoring securities transactionswith brokers and avoiding undue concentration of business with any broker.

4. The Trustee is required to ensure that the AMC has not given any undue or unfair advantage to any associate or dealt withany of the associates of the AMC in any manner detrimental to the interests of the Unitholders.

5. The Trustee is required to ensure that the transactions entered into by the AMC are in accordance with the Regulations andthe provisions of the Scheme.

6. The Trustee is required to ensure that the AMC has been managing the schemes independently of other activities and hastaken adequate steps to ensure that the interest of investors of one Scheme are not compromised with those of any otherScheme or of other activities of the AMC.

7. The Trustee is required to ensure that all the activities of the AMC are in accordance with the provisions of the Regulationsand shall exercise general and specific due diligence as required under the Regulations.

8. Where the Trustee has reason to believe that the conduct of the business of the Fund is not in accordance with theseRegulations and the provisions of Scheme it is required to take such remedial steps as are necessary by it and to immediatelyinform SEBI of the violation and the action taken by it.

9. Each Director of the Trustee is required to file with the Trust the details of each securities transaction, which exceed the valueof Rs.1 lakh on a quarterly basis.

10. The Trustee is accountable for and is required to be the custodian of the Fund’s property of the respective Scheme and tohold the same in trust for the benefit of the Unitholders in accordance with the Regulations and the provisions of the TrustDeed.

11. The Trustee is required to take steps to ensure that the transactions of the Fund are in accordance with the provisions of theTrust Deed.

12. The Trustee is responsible for the calculation of any income due to be paid to the Mutual Fund and also of any incomereceived in the Mutual Fund for the holders of the units of any scheme in accordance the Regulations and the Trust Deed.

13. The Trustee shall obtain the consent of the Unitholders:

a) whenever required to do so by SEBI, in the interest of Unitholders

b) whenever required to do so on the requisition made by three-fourths of the Unitholders of the Scheme.

c) when the Trustee decides to wind up or prematurely redeem the units.


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14. The Trustees shall ensure that no change in the fundamental attributes of any scheme or the trust or fee and expensespayable or any other change which would modify the scheme and affects the interests of unit holders is carried out unless:

- a written communication about the proposed change is sent to each Unitholder and

- an advertisement is given in one 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; and

- the Unitholders are given an option to exit at the prevailing Net Asset Value without any exit load.

Subject to the Regulations and the guidelines issued by SEBI, the consent of the Unitholders of the Scheme will be obtainedthrough voting, by mail. Detailed modalities of the same, including the principles for entitlement of votes for eachUnitholder will be finalized in consultation with and after obtaining the approval of SEBI and the Trustee.

15. The Trustee is required to call for the details of transactions in securities by the key personnel of the AMC in their own namesor on behalf of the AMC and report the same to SEBI as and when called for.

16. The Trustee is required to review quarterly, all transactions carried out between the Fund, the AMC and its associates.

17. The Trustee is required to review quarterly, the net worth of the AMC and in case of any shortfall ensure that the AMC makesup for the shortfall as per clause (f) of sub regulation (1) of Regulation 21 of the Regulations.

18. The Trustee is required to periodically review all service contracts such as custody arrangements and transfer agency, andsatisfy itself that such contracts are executed in the interest of the Unitholders.

19. The Trustee is required to ensure that there is no conflict of interest between the manner of deployment of its net worth bythe AMC and the interest of the Unitholders.

20. The Trustee is required to periodically review the investor complaints received and the redressal of the same by the AMC.

21. The Trustee is required to abide by the Code of Conduct as specified in the Fifth Schedule of the Regulations.

22. The Trustee has to furnish to SEBI on a half yearly basis:-

a) a report on the activities of the Fund covering the details as prescribed by SEBI;

b) a certificate stating that the Trustees have satisfied themselves that there have been no instances of self dealing or frontrunning by any of the Trustee, directors and key personnel of the AMC;

c) a certificate to the effect that the AMC has been managing the schemes independently of any other activities and incase any activities of the nature referred to in sub Regulation (2) of Regulation 24 of the Regulations have beenundertaken, the AMC has taken adequate steps to ensure that the interest of the Unitholders is protected.

23. The independent Directors of the Trustee are required to give their comments on the report received from the AMCregarding the investments by the Mutual Fund in the securities of the group companies of the sponsors.

24. No amendments to the Trust Deed shall be carried out without the prior approval of SEBI and Unitholders approval/ consentwill be obtained where it affects the interests of Unitholders as per the procedure / provisions laid down in the Regulations.

25. The Trustees shall exercise general and specific due diligence required under the Regulations.

26. Trustee shall maintain high standards of integrity and fairness in all their dealings and in the conduct of their business.

27. Trustee shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independentprofessional judgement.

28. The independent directors of the Trustee shall pay specific attention to the following as may be applicable, namely:

a) The Investment Management Agreement and the compensation paid under the agreement.

b) Service contracts with affiliates – whether the asset management company has charged higher fees than outsidecontractors for the same services.

c) Selection of the asset management company’s independent directors

d) Securities transactions involving affiliates to the extent such transaction are permitted.

e) Selecting and nominating individuals to fill independent directors vacancies.

f) Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connectionwith personal securities transactions.

g) The reasonableness of fees paid to sponsors, asset management company and any others for services provided.

h) Principal underwriting contracts and renewals

i) Any service contracts with the associates of the asset management company.

29. Notwithstanding anything contained in sub-regulations (1) to (25) of regulation 18 of the Regulations, the Trustees shallnot be held liable for acts done in good faith if they have exercised adequate due diligence honestly.

30. SEBI circular no. MFD/CIR/10/ 15895 /2002 dated August 20, 2002 provides that the meetings of the Trustees shall be heldat least once in every two calendar months and at least six such meetings should be held every year. Further, as per theRegulations, for the purposes of constituting the quorum for the meetings of the Trustees, at least one IndependentTrustee or Director should be present during such meetings.

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During the year 2003 – 2004, six meetings of the Directors of the Trustees were held and during the period from April 1, 2005January 10, 2005 five meetings of the Directors of the Trustee were held. The Trustee’s supervisory role is discharged by reviewingthe information and the operations of the Fund based on reports submitted at the Board Meetings of the Trustee, by reviewingthe reports being submitted by the Internal Auditor and the bi-monthly, quarterly and half-yearly compliance reports. TheTrustee also conducts a detailed review of the half-yearly and annual accounts of the schemes of the Fund and discusses thematters arising there from with the Statutory Auditors of the Fund.

iii) Trusteeship Fees

Pursuant to the Deed of Trust constituting the Fund, the Fund is authorized to pay the Trustee a fee for its services in such capacityof a sum, presently computed at the rate of upto 0.05% of the amount, being the aggregate of the Trust Fund and Unit Capitalof all the Schemes put together on April 1 of each year or a sum of Rs.5 lacs, whichever is higher. The Trustee may charge furtherfees as permitted from time to time under the Trust Deed and the Regulations.

SEBI has, in terms of its letter No.MFD/LV/059/00 dated January 31, 2000 approved an amendment to Trust Deed. The amendmentauthorizes the Trustee to decide upon the Trusteeship Fee to be charged from the Mutual Fund at the beginning of each financialyear (April 1 to March 31), subject to the maximum limit of 0.05% to be arrived at as indicated above. The amendment does notin any way, adversely impact or alter the interests of Unitholders under the existing schemes of the Fund.

c) Management of Asset Management Company (AMC)

ICICI Asset Management Company Limited (I-AMC), a company registered under the Companies Act, 1956, was established byICICI as its wholly owned subsidiary, to act as the Investment Manager of the ICICI Mutual Fund vide the Investment ManagementAgreement dated September 3, 1993. Consequent to a review of long-term business strategy of the AMC, it was decided tofurther strengthen commitment to the individual investor segment. As a part of this Scheme, Prudential plc. (formerly known asPrudential Corporation plc.) of the UK (Prudential) was inducted as the new joint venture partner.

I-AMC was approved by SEBI to act as the Investment Manager of ICICI Mutual Fund vide its letter No.IIMARP/MF/22356 datedOctober 12, 1993. Consequent to the restructuring of shareholding pattern as stated above, SEBI vide its letter No.IIMARP\631\98dated March 11, 1998 accorded its approval for the induction of Prudential plc (through its wholly own subsidiary, PrudentialCorporation Holdings Limited) as a shareholder of the AMC. The AMC has applied and secured approval from the Registrar ofCompanies, Delhi and Haryana, for its change of name to Prudential ICICI Asset Management Company Limited, vide letterNo.21/55-54135/320 dated March 26, 1998.

Prudential plc. of UK, through its wholly owned subsidiary, Prudential Corporation Holdings Limited, has been issued andallotted shares aggregating 55% stake in the share capital of Prudential ICICI Asset Management Company Limited (AMC),whereas the balance 45% shareholding in the AMC is being held ICICI Group. Out of the total 45% of the paid-up capital ofthe AMC held by the ICICI Group, 30% is held by ICICI Bank and the balance 15% is held by a subsidiary of ICICI Bank Ltd. viz.ICICI Venture Funds Management Company Limited.

The Sponsors of the Fund, ICICI Bank Limited and Prudential plc. have proposed to transfer their Shareholding in the PrudentialICICI Asset Management Co. Ltd. (AMC) and Prudential ICICI Trust Ltd. (Trust Company) whereby Prudential Plc will transfer 6%of the paid-up capital in AMC and Trust Company to ICICI Bank Limited. Further ICICI Venture Funds Management CompanyLimited will also transfer its 15.1% of the paid-up capital in AMC and Trust Company to ICICI Bank Limited. This transfer wheneffected will result in ICICI Bank holding 51% and Prudential Plc. (through PCHL) holding 49% of the paid up equity sharecapital of the AMC and Trust Company.

AMC has informed SEBI of the proposed transfer. SEBI has vide its letter IMD/RK/42692/05 dated June 15, 20056 taken note ofthe proposed transfer.

The AMC will manage the schemes of the Fund, including the Scheme mentioned in this Offer Document, in accordance with theprovisions of Investment Management Agreement, the Trust Deed, the Regulations and the objectives of each of the schemes.

AMC has obtained registration from SEBI vide Registration No.INP000000373 dated February 29, 2000 read with a renewedcertificate dated February 27, 2003, to act as a Portfolio Manager under SEBI (Portfolio Managers) Regulations, 1993. Further,the Mutual Funds Division of SEBI, vide its letter no. MFD/LV/248/2000 dated May 10, 2000, conveyed its no objection for theAMC undertaking PMS activities subject to the AMC complying with the requirements as envisaged in Regulation 24(2) of SEBI(Mutual Funds) Regulations, 1996. The AMC has commenced the Portfolio Management activities, after complying with theregulatory requirements. The same are not in conflict with the mutual fund activities.

i) Board of Directors of the AMC

Mr. K. V. Kamath

Radhika’, 930 TPS IV, Off Sayani Road, Opp. Ravindra Natya Mandir, Prabhadevi, Mumbai 400 025

Mr. Kamath has a degree in mechanical engineering and a master’s degree in business administration from the IndianInstitute of Management Ahmedabad.

Mr.Kamath is the Managing Director and Chief Executive Officer of ICICI Bank Limited. Mr. Kamath has a degree inmechanical engineering and a master’s degree in business administration from the Indian Institute of Management,Ahmedabad. He started his career in 1971 at ICICI, an Indian financial institution that later founded ICICI Bank, and mergedwith it in 2002. In ICICI, Mr. Kamath worked in project finance and corporate strategy and was involved with setting up newbusinesses and institutions in the areas of leasing, venture capital and credit rating. In 1988, he moved to the AsianDevelopment Bank and spent several years in south-east Asia before returning to ICICI as its Managing Director and CEOin 1996. Over the next few years, the ICICI group transformed itself into a diversified, technology-driven universal bankinggroup, that includes India’s leading retail bank as well its leading private sector insurance companies. ICICI Bank was named


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the “Best Managed Bank in Asia” by Euromoney in 2002. Mr. Kamath was named Asian Business Leader of the Year byCNBC in 2001.

Mr. Kamath is currently a Member of the National Council of the Confederation of Indian Industry, the apex chamber ofcommerce of Indian industry. He is also a member of the Board of Directors of Visa International (Asia-Pacific). Mr. Kamathis also a Member of the Governing Boards of prestigious educational institutions including the Indian Institute ofManagement - Ahmedabad, Indian School of Business - Hyderabad and Manipal Academy of Higher Education - Manipal

Mr. Mark Norbom

Prudential Corporation Asia, One International Finance Centre 13 Floor, 1 Harbour View Street, Central, HongKong.

Mr. Mark Norbom graduated from Pennsylvania State University with a B.S. degree in Economics in 1980.

Mr. Norbom began his career at GE in 1980 and served in a number of senior management positions in the US and in Asia.Prior to joining Prudential, Mr. Norbom was President and CEO for GE Japan with responsibility for all of GE’s activities inJapan. Mr. Norbom’s ten years experience in Asia also included being Head of GE Capital Taiwan, Country President of GECapital Indonesia, CEO of GE Capital Thailand, and National Executive of GE Thailand. Presently, Mr. Norbom is a ChiefExecutive of Prudential Corporation Asia with responsibility for Prudential’s business interests across the region. Mr.Norbom oversees Prudential’s extensive network of 23 life insurance, general insurance, retail mutual funds and institutionalasset management operations across 12 countries in Asia: China, India, Taiwan, Hong Kong, Singapore, Malaysia, Korea,Japan, Vietnam, Indonesia, the Philippines, and Thailand.

Mr. Ajay Srinivasan

Prudential Corporation Asia, One International Finance Centre 13 Floor, 1 Harbour View Street, Central, HongKong

Mr. Srinivasan is Chief Executive, Fund Management, Prudential Corporation Asia responsible for its mutual funds /Institutional Funds business in Asia. Mr. Srinivasan was the Managing Director of the Prudential ICICI Asset ManagementCompany Ltd. during the period March 1998 to December 2000 and was responsible for the development of business ofthe Company and its day-to-day management.

Mr. Srinivasan has significant experience in managing asset management companies. As the Deputy Chief Executive of ITCThreadneedle AMC. Mr. Srinivasan was part of the team responsible for making policy for ITC Threadneedle AMC Ltd andwas also head of the fund management function. Prior to his tenure at ITC Threadneedle, Mr. Srinivasan was a member ofthe ITC Group’s Financial Services Division and was responsible for establishing, planning and running several businessesat ITC, including the stock broking business, Over the Counter Exchange business, the private equity business and investmentbanking business. Mr. Srinivasan began his career at ICICI where, as a part of project appraisal team, he assessed thefeasibility of several projects in various sectors.

Mr. Srinivasan has a Post Graduate Diploma in Business Management from Indian Institute of Management, Ahmedabad,specializing in finance. He has a Bachelor’s Degree in Economics (Honours) from St. Stephens’ College, New Delhi.

Ms. Kalpana Morparia

B92, Ocean Gold CHS, Twin Tower Lane, Prabhadevi, Mumbai - 400 025.

Ms. Kalpana Morparia is a graduate in law from Bombay University.

Ms. Kalpana Morparia is the Deputy Managing Director of ICICI Bank Limited. Ms. Morparia is responsible for the CorporateCentre at ICICI Bank. The Corporate Centre comprises the finance and treasury, planning and strategy, risk management,human resources management, legal and corporate communications and corporate brand management functions and isresponsible for ensuring strategic consistency across the ICICI group. Ms. Morparia is the official spokesperson for ICICIBank. Ms. Morparia joined ICICI Limited in 1975. She worked in the areas of planning, treasury, resources and corporatelegal services. In 2001, she led the ICICI group’s major corporate structuring initiative, the merger of ICICI Limited with ICICIBank to create India’s second largest bank. Ms. Morparia has served on several committees constituted by the Governmentof India.

Mr. K. S. Mehta

C-70 Panchsheel Enclave, New Delhi 11 0017

Mr. Mehta is a Senior Partner of S.S. Kothari & Co., Chartered Accountants, and heads the firm’s management consultancydivision. Mr. Mehta specializes in corporate financial planning, restructuring, project financing and working capital control.He has an in-depth knowledge of industry in his capacity as Director of some of the leading companies and as a managementconsultant.

Mr. Mehta is a Member of the Managing Committee of Federation of Indian Chambers of Commerce and Industry (FICCI).He is a former Member of the Advisory Committee on Primary Markets set up by SEBI, a Former Director on the Board of theNational Stock Exchange of India Limited and is the past President of PHD Chamber of Commerce & Industry.

Mr. Mehta is a FCA and has a Bachelor of Commerce (Hons.) Degree.

Mr. Dadi Engineer

Flat no.4, 1st Floor, Shiv Shanti Bhuvan, 146 M. Karve Road, Opp. The Oval, Mumbai – 400 020.

Mr. Engineer is a Solicitor and Advocate and is a Senior Partner at Crawford Bayley & Co. He has over 40 years experience inthe legal profession and has expertise in various aspects of Corporate Law, Indirect Taxation, Foreign Exchange, Imports,Trade Control Regulations and Civil and Constitutional Law.

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Mr. Engineer is the President of the Managing Committee of Bombay Incorporated Law Society and served as theRepresentative Member of the Governing Council of the Bar Association of India. He has also been associated with thevarious committees set up by Bombay Chamber of Commerce and Industry and Associated Chambers of Commerce andIndustry.

Mr. Engineer is on the Boards of several leading domestic and multi-national companies.

Mr. B. R. Gupta

6B, Sheetal Apartments, Lokhandwala Complex, Andheri (W) , Mumbai400 053.

Mr. Gupta is the former Executive Director of the Life Insurance Corporation of India (LIC). He was working as Consultant(Investment) to GIC of India till December 2000.

Mr. Gupta has worked with LIC for over 35 years in various capacities and has had extensive experience in the operations ofthe life insurance industry, specifically in the areas of investment, marketing, underwriting and administration. Mr. Guptaalso worked in the investment department of the LIC for 10 years and headed the department as Executive Director. He wasresponsible for managing LIC’s portfolio comprising a variety of investments. Subsequent to his retirement, till May 1999,he functioned as the Investment Advisor to LIC.

Mr. Gupta is on the Boards of several companies and had been a Member of “The Administrative Committee of InsuranceInstitute of India”, “The Committee of NSE on Development of the Debt Market in India”, “The Executive Committee of theNSE” and “The Advisory Committee on Secondary Market Operations of SEBI”. At present Mr. Gupta is an Advisor to IL&FSAcademy for Insurance & Finance Ltd., an initiative of IL&FS Group. Mr. Gupta is a M.A in English and has a LL.B. degreebesides being a Fellow of Insurance Institute of India.

Mr. Pradip P. Shah

72A, Embassy Apartments, 46, Nepean Sea Road, Bombay 400 006.

Mr. Pradip P. Shah started IndAsia, a private equity investment and corporate finance advisory company in April 1998,following his separation from the management of the Indocean Fund which he helped establish in October 1994, inassociation with affiliates of Soros Fund Management and Chemical Venture Partners (now Chase Capital Partners).

Prior to starting Indocean, he was the Managing Director of the Credit Rating and Information Services of India Limited(‘CRISIL’), India’s first and the largest credit rating agency. Mr. Shah was one of the team members, which assisted infounding CRISIL in 1988. While at CRISIL, Mr. Shah was instrumental in technology transfer to and the training of personnelof Rating Agency Malaysia Berhad and The Israeli Securities Rating Company.

Prior to founding of CRISIL, Mr. Shah assisted as a member of the project team in founding the Housing DevelopmentFinance Corporation (HDFC) in 1977. Before joining HDFC, Mr. Shah was a Project Officer at the Industrial Credit andInvestment Corporation of India Limited (‘ICICI’). Mr. Shah has also served as a consultant to USAID, the World Bank and theAsian Development Bank.

Mr. Shah holds an MBA from Harvard Business School and is a qualified Chartered Accountant as well as a Cost Accountantand ranked first in India in the Chartered Accountancy examination.

Dr. (Mrs.) Swati A Piramal

95A, Benzer Terrace, Abdul Gaffar Khan Road, Worli Sea Face, Mumbai 400 018.

Dr. Swati A. Piramal, is a Medical Doctor (M.B.B.S.) from the University of Bombay. Dr. Piramal graduated with a MastersDegree from Harvard School of Public Health, Boston USA, where she had the unique honour of being selectedCommencement Speaker at the 1992 Graduation Ceremony.

Dr. Swati A. Piramal is the Director-Strategic Alliances & Communications of Nicholas Piramal India Limited. Her currentresponsibilities include Research & Development, Information Technology, Medical Services, and Knowledge Managementfor the Healthcare Group of Piramal Enterprises.

Under her leadership, Piramal Enterprises has made significant progress in Discovery Research for discovering and patentingnew NCEs, new Drug Delivery Systems, Clinical Research for planning clinical trials, new drug protocols and pharmacokineticslabs, herbal Research for DNA fingerprinting and standardization of Ayurveda, the setting up of a Business R & D programmein the Company (BDRD.

Dr. Piramal is a Member of the Drugs Technical Advisory Board and the Maharashtra Biotechnology Council, Council ofScientific & Industrial Research (CSIR), State Bank of India Life Insurance Company, Confederation of Indian Industries (CII),WHO IPR Committee - Commission on Intellectual Property Rights, Innovation and Public Health. (CIPIH) and Chair of theLife science & Biotech Committee and Economic Growth Committee. She heads the “Mahabioyatra” an initiative by theConfederation of Indian Industry a Biotechnology network in Maharashtra. She is also on the Board of Directors of theIndian Council for Research on International Economic Relations. (ICRIER).

Dr. Piramal has co-authored books on Health and Nutrition. One with Mrs. Tarla Dalal titled “Eat Your Way to Good Health.”She has also published articles in many leading publications.

Ms. Shikha Sharma

16-A, Peregrine, 400, Veer Savarkar Marg, Prabhadevi, Mumbai 400 025.

Ms. Sharma completed her Masters of Business Administration from the Indian Institute of Management - Ahmedabad.

Ms. Shikha Sharma is the Managing Director & CEO of ICICI Prudential Life Insurance Company (“I-Pru”). ICICI Prudentialwas amongst the first private sector companies in India to be awarded a life license in December 2000, and since its


27

inception the I-Pru has established itself as India’s leading private life insurer, offering a complete range of products to meetthe varying needs of the Indian customer.

She began her career with ICICI, one of India’s largest financial services providers, in 1980. She has been instrumental insetting up various group businesses for ICICI, including investment banking and retail finance.

Ms. Sharma was awarded for India’s most Powerful Woman in Business by Business Today, CEO of the year by Indira Groupof Institutes, India’s greatest brand builders, and Institute of Marketing and Management Award for Excellence in the year2004.

Mr. Pankaj Razdan

Sherwin Ark, Bunglow No. 3, Bellscot Co-op Hsg. Society, Lokhandwala Complex, Andheri (W), Mumbai 400058

Mr. Razdan is the Managing Director of the Prudential ICICI Asset Management Company Ltd. and is responsible fordevelopment of the business of the Company and its day-to-day management.

Mr. Razdan has rich experience and knowledge in Sales, Distribution and Marketing. He began his career with the HMGFinancial Services Limited as a Marketing Manager. He then joined Karvy Securities Limited where he worked for 5 years inits Distribution and Merchant Banking Division. Mr. Razdan joined Prudential ICICI Asset Management Co. Ltd. in April1998, as Vice President & Head – Sales and Distribution of West Zone of the Company. In 1999, he headed the Sales andDistribution of the Company in West and North Zone. He was promoted to become the Senior Vice President – Sales andDistribution in February 2000 and Senior Vice President – Sales and Marketing in 2001. In March 2003 he took over thepost of Deputy CEO with a responsibility to oversee Sales, Distribution and Marketing for all India, Strategic Planning,Development and Customer Service.

Mr. Razdan has a Bachelors degree in Electronics and has graduated in Engineering specializing in electronics.

i) Powers, Duties and Responsibilities of the AMC

The duties and responsibilities of the AMC shall be governed by the Regulations and the Investment ManagementAgreement. The AMC, in the course of managing the affairs of the Mutual Fund, has the power, inter-alia:

(a) to invest in, acquire, hold, manage or dispose of all or any securities and to deal with, engage in and carry out all otherfunctions and to transact all business pertaining to the Fund;

(b) to keep the moneys belonging to the Trust with scheduled banks and Custodians as it may deem fit;

(c) to issue, sell and purchase Units under any Scheme;

(d) to repurchase the Units that are offered for repurchase and hold, reissue or cancel them;

(e) to formulate strategies, lay down policies for deployment of funds under various Schemes and set limits collectively orseparately for privately placed debentures, unquoted debt instruments, securitised debts and other forms of variablesecurities which are to form part of the investments of the Trust Funds;

(f) to arrange for investments, deposits or other deployment as well as disinvestment or refund out of the Trust Funds asper the set strategies and policies;

(g) to make and give receipts, releases and other discharges for moneys payable to the Trust and for the claims anddemands of the Trust;

(h) to get the Units under any scheme listed on any one or more stock exchanges in India or abroad;

(i) to open one or more bank accounts for the purposes of the Fund, to deposit and withdraw money and fully operatethe same;

(j) to pay for all costs, charges and expenses, incidental to the administration of the Trust and the management andmaintenance of the Trust property, Custodian and/or any other entities entitled for the benefit of the Fund, audit fee,management fee and other fees;

(k) to furnish compliance reports to the Trustees as prescribed by SEBI.

(l) to provide or cause to provide information to SEBI and the Unitholders as may be specified by SEBI and

(m) to generally do all acts, deeds, matters and things which are necessary for any object, purpose or in relation to thePrudential ICICI Mutual Fund in any manner or in relation to any scheme of the Prudential ICICI Mutual Fund.

The Asset Management Company shall maintain high standards of integrity and fairness in all their dealings and in theconduct of their business.

The Asset Management Company shall render at all times high standards of service, exercise due diligence, ensure propercare and exercise independent professional judgement.

The independent directors of the Asset Management Company shall pay specific attention to the following as may beapplicable, namely :

i. The Investment Management Agreement and the compensation paid under the agreement.

ii. Service contracts with affiliates – whether the company has charged higher fees than outside contractors for the sameservices.

iii. Securities transactions involving affiliates to the extent such transaction are permitted.

iv. Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connectionwith personal securities transactions.

28


v. The reasonableness of fees paid to sponsors, asset management company and any others for services provided.

vi. Principal underwriting contracts and renewals

vii. Any service contracts with the associates of the company.

In terms of the Investment Management Agreement and the Regulations, the AMC is entitled to an investment managementfee at 1.25% per annum of the average net assets for a corpus up to Rs.100 crores and at 1.00% per annum for the corpusamount in excess of Rs.100 crores. Further, as per the Regulations, for the schemes launched on no load basis, the AssetManagement Company is entitled to collect an additional management fees not exceeding 0.50% of the average net assetsoutstanding in each financial year.

ii) Key Employees of the AMC and relevant experience

Name of the Employee Age Designation Educational Total No. of Assignments(Years) Qualifications Years of Experience / Held During the Last

Type & Nature of 10 YrsExperience

Mr. Pankaj Razdan 36 Managing BSc. (Electronics) Over 13 years of Managing Director –Director B. Tech (Electronics experience in sales and Prudential ICICI AMC

Engineering) distribution. since January 2004

Deputy CEO –Prudential ICICI AMC –March 2003 toDecember 2003.

Vice President / SeniorVice President & Head -Sales & Distribution -Prudential ICICI AMC -2000 February 2003.

Vice President - West &North Zone PrudentialICICI AMC - 1999 –2000.

Head -Distribution -Karvy Securities Limited- 1997 – 1998.

Marketing Manager -HMG Financial ServicesLimited - 1992 – 1993.

Mr. Nilesh Shah 35 Chief Investment B.Com, A.C.A. Grad Over 13 years of Chief InvestmentOfficer C.W.A. experience in fund Officer – Prudential

management and ICICI AMC Limited –portfolio management June 2004 till date.

Director and ChiefInvestment Officer –

Franklin TempletonAMC India Pvt. Ltd. –Sept 2002 to May2004.

Chief InvestmentOfficer – FranklineTempleton AMC IndiaPvt. Ltd. – January 2000to September 2002.

Portfolio Manager –Fixed Income – FranklinTempleton AMC IndiaPvt. Ltd. – March 1997to January 2000.

Head – StructuredProducts – ICICISecurities and FinanceCompany Limited – April1992 to February 1997.


29



Mr. Vasant Sanzgiri 44 Senior Vice Bsc (Life Sciences), Over 18 years Vice President / SeniorPresident & MMS (Personnel experience in area Vice President & HeadHead Human Management) of Human Resources Human ResourcesResources Management Prudential ICICI AMC -

2000 to date.

General Manager -Human Resources -Owens Cornning IndiaLimited - 1998 – 2000.

General ManagerHuman Resources –DCW Home Products -1996 – 1998.

Regional HumanResource & QualityManager - Modi Xerox- 1995 –1996.

Manager, HumanResources - CyanamidIndia - 1992 – 1995.

Manager – HumanResources - IndianHotels Limited - 1990 –1992.

Mr. Kalyan Prasath 38 Vice President – PGDSM (NIIT), B.Sc Over 19 years of Vice President –Information work experience in Information Technology-Technology areas of Information Prudential ICICI AMC

Technology June 2001 onwards.

Birla Global – AssistantVice President fromFeb’97 to April, 2001.

DGP Windsor India Ltd.– Manager from Sept’94 to Jan’97.

Universal Luggage Mfg.Co. Ltd. - Asst.Manager from Nov’90to Sept’94.

NIIT/CCIT – CourseConductor from May‘89 to Oct’90

ECIL – SystemDeveloper from June’88 to April ‘89

Associated Systems –Software Developerfrom July’85 to April ’88.

Mr. Ranganath Athreya 39 Sr. Vice Associate -Institute Over 16 yrs of Sr. Vice President –President–Legal, of Company experience in Compliance Legal, Compliance andCompliance and Secretaries of India. and Company Company Secretary,Company Bachelors Degree Secretarial functions Prudential ICICI AMCSecretary (General Laws), Jan 14, 02 onwards.

PGDCP Head CorporateCommunication andCompany Secretary -IDBI Bank June 1997 to12th Jan 2002

30




Chief ManagerMerchant Banking andCompany Secretary -Karnataka Bank Ltd.from 1992-97Company SecretaryLakshmi Motor Credit(Now TVS Finance)1989-92

Mr. Ashok Suvarna 33 Vice President MBA (Finance) Over 12 yrs of January 2005:Operations B. Com. experience in Vice President -

Operations Operations PrudentialICICI AMC LimitedApril 98 till December 04Prudential ICICI AMCLtd. handlingOperations, Projects &Quality AssuranceMarch 94 till March 98SBI FundsManagement Limitedhandling Operations

Mr. Pankaj Kaji 52 Senior Fund B.Com 34 yrs Fund Manager-Manager Prudential ICICI AMC-

2002 till date.Deutsche Bank,Mumbai (Vice-President-MoneyMarket) 1994-2002,ANZGrindlays Bank (FundsManager)-1986-1994

Mr. Chaitanya Pande 33 Fund Manager PGDM from IMI, 10 Years Manager – FundNew Delhi, ManagementBSc from Sept 16th 2002 till dateSt. Stephens – Fund Manager –College, New Delhi Prudential ICICI AMC

LimitedJan 2000 to Sep 2002Manager – FundManagementJF Asset Management(India) Pvt. LimitedMay 1995 to Jan 2000Investment AnalystJF Asset Management(India) Pvt. Limited

Mr. Anil Sarin 38 Senior Fund PGDBM, Institute 11 years as Fund Prudential ICICI AMCManager of Management Management and Limited – April 2004 till

Technology (IMT) Portfolio Management date as Senior FundManager.Kotak Securities,Private Client Group –From October 2003 toMarch 2004 as VicePresident – PortfolioManagerBirla Sun Life AMC Ltd.– From January 1996 toSeptember 2003 asManager, Assistantvice-President, FundManager


31



SBI FundsManagement Ltd. FromMarch 1994 toDecember 1995 – asAsst. Manager, FundManager

Mr. Yogesh Bhatt 36 Associate Vice A.C.A. Grad C.W.A. 13 years as Equity Prudential ICICI AssetPresident – Dealer Management Co. Ltd.Investments From June 28, 2004 till

date as Associate VicePresident – Investments

Sushil FinanceConsultants Ltd. From1999 to June 2004 asEquity Dealer/Strategist

Falcon BrokeragePrivate Limited. – From1996 to 1999 as EquityDealer

Sushil FinanceConsultants Ltd. From1991 to 1996 as EquityDealer/Strategist

Mr. B. Ramakrishna 39 Chief Financial B’Com, A.C.A Grad. Over 13 years of Prudential ICICI AMCOfficer CWA experience in Corporate Ltd. from September

Planning, Investor 23, 2004 till date.Relations, Financial Marico Industries Ltd. asPlanning General Manager –

Corporate Financefrom September, 1998to September, 2004.ITC Agrotech Ltd. asCommercial Managerfrom February, 1993 toAugust, 1998.

Mr. Rahul Goswami 32 Senior Fund B.Sc., M.B. A. 9 years – Fund Prudential ICICI AssetManager Management - Debt Management Co. Ltd.

From July 6, 2004 tilldate as Senior FundManagerFranklin TempletonAsset Management (I)Pvt. Ltd. from October2002 to July 2004 asFund Manager.UTI Bank Ltd. fromJanuary 2000 toOctober 2002 asManager – Investmentsand Merchant BankingSMIFS Securities Ltd.from June 1998 toJanuary 2000 as SeniorDealer – Debt SalesKhandwala FinancesLtd. from October 1997to June 1998 as SeniorDealer – Debt Sales.RR Financial ConsultantsLimited from December1995 to October 1997as Manager – DebtSales

32




Mr. S Naren 38 Vice President – B.Tech – IIT Madras Over 15 years of Prudential ICICI AMC Investments PGDM – IIM experience in Fund Ltd. from October,

Calcutta Management, Equity 2004 till date.Research, Operations etc. Refco Sify Securities

India Pvt. Ltd. as Headof Research fromNovember, 2003 toOctober, 2004HDFC Securities Ltd. asVice President fromSeptember, 2000 toMarch, 2002 and asDirector & COO fromMarch, 2002 toNovember, 2003Yoha Securities as CEOfrom December, 1995to September, 2000

Mr. Anand Gupta 30 Dealer & Fund B.COM, PGDBA 11 years in execution, June 2003 to May 2005Manager from Institute Of sales trading and sales. as AVP-Institutional

Technology & sales with Refco-SifyManagement (ITM) Securities Ltd.

June 1998 to May 2003with Birla SunlifeSecurities Ltd in SalesTrading And Sales.Nov. 1993 to May 1998with AnagramSecurities ltd inexecution and salestrading.

Mr. Jignesh Shah 33 Sr. Fund B.Com, CFA 11 years as Equity Prudential ICICI AMCManager Analyst Limited – Joined May

05Reliance Capital – fromJan 04 – August 04 asEquity AnalystFour DimensionsSecurities – from Sept03 to Jan 04 as EquityAnalystRefco-Sify Securities –from July 02 to Sept 03– as Equity AnalystNirmal Bang Securities– as Equity AnalystPresage FinancialServices – as EquityAnalystMahesh Kothari Shares& Stock Brokers – fromAug 93 - as EquityAnalyst

Mr. Prashant Kothari 25 Fund Manager PGDM 2 Years as Equity Prudential ICICI AMCAnalyst and Fund Limited – FundManager Manager from

September 2004Prudential ICICI AMCLimited – Equity Analystfrom May 2003


33



Mr. Deven Sangoi 35 Senior Fund B.E. (Electronics) Over all 10 years of Prudential ICICI AMCManager M.B.A. (Finance) equity market Limited – September,

experience. (5 years 2005 as Senior Fundof Fund management Manager.experience.) Birla Sun Life AMC Ltd.

– From February 2000to September 2005 asManager, Assistant VicePresident, FundManagerAlchemy Share andtock Brokers Pvt. Ltd.From June 1994 toFebruary 2000 – asSenior Analyst

Mr. Chintan A. Haria 23 Assistant to the MCom, ACA, ICWA Holding position as an Nonedealer Asst. to the Dealer in

Prudential ICICI AssetManagement Company

Mr. Manish Kumar 23 Research PGDM, Indian 3.5 months of experience June 2005-AugustAnalyst Institute of Manage- of which 2 months in 2005: - Management

ment, Ahmedabad the insurance industry Associate at TATA AIGand 1.5 months in Life InsuranceEquity Research.

Mr Pranay Sinha 25 Credit Research PGDM, Institute 6 months experience in Prudential ICICI AMCAnalyst Institute of Credit research and Limited – Nov 2005 till

Management credit risk analysis date as Credit ResearchCalcutta (IIMC) analyst

UTI Bank- Jube 2005 tillOct 2005 in credit riskside.

Mr. Prashant Poddar 25 Research PGDBM, Indian 5 months in AIG AIG - 5 months asAnalyst Institute of (Insurance) Management Trainee

Management (General Management(Lucknow) role) in Insurance

As indicated above, at present a team comprising of eleven Fund Managers are involved in fund management/ researchactivities. The past experience of these employees is indicated above.

All the above key personnel are based at the Corporate Office of AMC

iv) Fund Manager

The investments under the Scheme will be managed by the Fund Manager, Mr. Anil Sarin. His qualifications and experienceare as under:

Scheme Name Fund Manager Qualification Experience

Prudential ICICI Fusion Mr. Anil Sarin PGDBM, Institute ofFund Management Technology (IMT) 11 years as Fund

Management andPortfolio Management

v) Compliance Officer

The Compliance Officer for the Fund is:

Mr. Ranganath AthreyaSenior Vice President- Compliance, Legal and Company SecretaryPrudential ICICI Asset Management Company Ltd.8th Floor, Peninsula Tower, Peninsula Corporate Park,Ganpatrao Kadam Marg, Off Senapati Bapat Marg,Lower Parel, Mumbai 400 013.

vi) Investor Relations Officer

Investor Relations Officer for the Fund is Ms. Leena Johnson and she may be contacted at the corporate office of the AMCat Mumbai.

34


d) Auditors

N. M. Raiji & Co., Chartered Accountants, Mumbai have expressed their willingness to act as Auditors for the Schemeoffered under this Offer Document and have been appointed as Auditors by the Trustee.

e) Registrar

Computer Age Management Services Private Limited, Unit: Prudential ICICI Mutual Fund, r A&B Lakshmi Bhavan, 609 AnnaSalai, Chennai 600 006 as Registrar for the Scheme. The Registrar is registered with SEBI under registration No:INR000002813. As Registrar to the Scheme, CAMS will handle communications with investors, perform data entry servicesand dispatch Account Statements. The AMC and the Trustee have satisfied themselves that the Registrar can provide theservices required and has adequate facilities and the system capabilities.

f) Custodian

HDFC Bank Limited, Mumbai has been appointed as Custodian for the Scheme mentioned in the Offer Document. TheCustodian has been registered with SEBI and has been awarded registration No.IN/CUS/001 dated February 2, 1998. TheTrustee propose to enter into a Custodian Agreement with the Custodian and the salient features of the said Agreementwould be as under:

(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) Be responsible for the loss or damage to the assets belonging to the Scheme due to negligence on its part or on thepart of its approved agents and

(f) Segregate assets of each Scheme.

Further, the Custodian shall not assign, transfer, hypothecate, pledge, lend, use or otherwise dispose any assets or property,except pursuant to instruction from the Trustee/AMC or under the express provisions of the Custodian Agreement.

The Custodian shall also not deal, on its own account, in securities purchased or sold by the Mutual Fund without making anadequate disclosure to SEBI and the Trustee/AMC.

The Custodian will be entitled to remuneration for its services in accordance with the terms of the Custodian Agreement.


35

SECTION II

INVESTMENT OBJECTIVES & POLICIES

FUNDAMENTAL ATTRIBUTES OF THE SCHEME

a) Type of the Scheme

A Closed-ended Equity fund

b) Investment Objectives

The Scheme is a close-ended diversified equity Scheme, with a maturity period of 5 years, that seeks to generate long-termcapital appreciation by investing predominantly in equity and equity related instruments of companies across large, midand small market capitalization.

However, there can be no assurance that the investment objective of the Scheme will be realized

c) Investment Pattern and investment policies

The Scheme is closed-ended equity scheme investing in a fusion of stocks across different industries, market capitalization,and sectors. Prudential ICICI Fusion Fund will look at investment opportunities in companies representing all possible levelsof market capitalization and using growth investment styles. Under normal circumstances at least 90% of the funds isproposed to be invest in equity and equity related instruments. The fund would be diversified as this fund proposes toinvest in large, mid or small caps fund segments.

The fund may move upto 30% in debt securities if risk reward ratio is favorable for such allocation.

Subject to the Regulations, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities:

1) Equity and equity related securities including convertible bonds and debentures and warrants carrying the right toobtain equity shares.

2) Securities created and issued by the Central and State Governments and/or repos/reverse repos in such GovernmentSecurities as may be permitted by RBI (including but not limited to coupon bearing bonds, zero coupon bonds andtreasury bills)

3) Securities guaranteed by the Central and State Governments (including but not limited to coupon bearing bonds, zerocoupon bonds and treasury bills)

4) Debt securities issued by domestic Government agencies and statutory bodies, which may or may not carry a Central/State Government guarantee

5) Corporate debt securities (of both public and private sector undertakings)

6) Securities issued by banks (both public and private sector) as permitted by SEBI from time to time and developmentfinancial institutions

7) Money market instruments permitted by SEBI, having maturities of up to one year, in call money market or in alternativeinvestment for the call money market.

8) Certificate of Deposits (CDs)

9) Commercial Paper (CPs)

10) Indian Securitised Debt. The Scheme will not invest in foreign securitised debt.

11) The non-convertible part of convertible securities

12) Any other domestic fixed income securities

13) Derivative instruments like Interest Rate Swaps, Forward Rate Agreements, Stock Index Futures and such other derivativeinstruments permitted by SEBI.

14) ADRs / GDRs as permitted by Reserve Bank of India and Securities and Exchange Board of India

Subject to the Regulations, the securities mentioned above could be listed, unlisted, privately placed, secured, unsecured,rated or unrated and of varying maturity. The securities may be acquired through New Fund Offerings (NFOs), secondarymarket operations, private placement, rights offers or negotiated deals. The Scheme may also enter into repurchase andreverse repurchase obligations in all securities held by it as per the guidelines and regulations applicable to such transactions.

Under normal circumstances, the asset allocation under the Scheme will be as follows:

Type of security Approx. Allocation Risk Profile(% of corpus)**

Equity & equity related securities 70% to 100% Medium to High

Debt, Money Market Instruments* & call money+ 0% to 30% Low to Medium

Note: * Including securitised debt of upto 20% of the net assets** Including derivatives instruments to the extent of 50% of the net assets and ADR/GDR to the extent of 15% of the

net assets+ Subject to RBI restrictions on participation in call money market.

36


above percentages would be adhered to at the point of investment in a stock. The portfolio would be reviewed regularly toaddress any deviations from the aforementioned allocations due to market changes.

Considering the inherent characteristics of the scheme, equity positions would have to be built-up gradually, and also soldoff gradually. This would necessarily entail having large cash position before the portfolio is fully invested and duringperiods when equity positions are being sold off to book profits/losses or to meet redemption needs.

It may be noted that no prior intimation/indication would be given to investors when the composition/asset allocationpattern under the scheme undergo changes within the permitted band as indicated above or for a defensive positioning ofthe portfolio with a view to protect the interest of the unitholders on a temporary basis. The investors/unitholders canascertain details of asset allocation of the scheme as on the last date of each month on AMC’s website at www.pruicici.com.

The securities mentioned in the asset allocation pattern could be listed, unlisted, privately placed, secured or unsecured.The securities may be acquired through secondary market purchases, Initial Public Offering (IPO), other public offers, PrivatePlacement, right offers (including renunciation) and negotiated deals.

d) Change in Investment Pattern

Subject to the Regulations, the asset allocation pattern indicated above may change from time to time, keeping in viewmarket conditions, market opportunities, applicable regulations and political and economic factors. It must be clearlyunderstood that the percentages stated above are only indicative and not absolute and that they can vary substantiallydepending upon the perception of the Investment Manager, the intention being at all times to seek to protect the interestsof the Unit holders. 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 Schemeshall be effected only in accordance with the provisions of sub regulation (15A) of Regulation 18 of the Regulations, asdetailed later in this document.

e) Terms of the Scheme

1) Liquidity

To provide liquidity to investors, the Fund proposes to provide repurchase facility at Quarterly intervals (for details, pleaserefer to page no.36). The investors may redeem the units on the stipulated dates for redemption as mentioned in this offerdocument on page no.36 at NAV based prices, subject to the prevalent exit load provisions. The Fund will, under normalcircumstances, endeavour to dispatch redemption cheques within T+3 Business Day from the date of acceptance of theredemption request at any of the official point(s) of transaction(s). This service standard will apply only at the centers whereRBI handles clearing directly and is able to transfer funds from Mumbai on the same-day-value basis. In respect of all non-RBI centers, for redemption payments, AMC will take additional day(s) – not exceeding 3 Business Days- that wouldessentially be linked to the time taken by banks to clear funds at such Non-RBI centers.

The Units of the Scheme will not be listed on any exchange, for the present.

a) Redemption on Maturity

The Scheme will come to an end on maturity date of the Scheme i.e. completion of 5 years period from the date ofallotment. On maturity of the Scheme, the outstanding Units shall be redeemed and proceeds will be paid to theUnitholder.

If the Date stipulated for Repurchase facility/ Redemption/ Maturity is a day which is a non-business day for the scheme,the redemption requests shall be accepted or the Scheme will mature, as the case may be, on the next business day forthe Scheme.

b) Payment of Maturity Proceeds

The Fund will sell the outstanding investments constituting the portfolio of the Scheme at the time of maturity of theScheme. The securities listed on the Exchange would be sold on the Exchange. In case of securities which are not listedand debt securities, the AMC would initiate the process of asking for quotes from potential buyers / marketintermediaries. The AMC shall ensure that the sale of the outstanding Portfolio Investments is at fair market value orat the highest bid.

In the event that the proceeds of sale of the outstanding Portfolio Investments are insufficient to redeem the units infull, neither the AMC nor the Trustee shall be liable to the Unitholders provided that they have complied with theprocedure set out above and have acted in good faith and in the best interest of the Unitholders.

c) Repurchase facility

To provide liquidity to investors, the Fund proposes to provide repurchase facility at quarterly intervals on every 15th Dayfrom the end of each Quarter.

If such date happens to be the non-business day, repurchase facility would be available on following Business Day ofthe said date.

The investors may redeem the units, before the maturity date, on the date stipulated above at NAV based prices (Pleaserefer to “Redemption Price” on page 54), subject to the following exit load structure:


37








Listing: Presently, Trustee does not intend to list the units of the Scheme on the Stock Exchange.

2. Fees and Expenses

a. New Fund Offer expenses

The new fund offer expenses charged to the Scheme in this Offer Document will be limited to 3.75% of the amountmobilised under the New Fund Offer. Under the Regulations, the Scheme is entitled to charge new fund offer expensesup to a maximum of 6% of initial resources raised under the Scheme. The new fund offer expenses charged to theScheme may be amortised over a period not exceeding five years and would be included in the NAV. For details pleaserefer page 57.

b. Recurring Expenses

The details of recurring expenses of the Scheme, on an annual basis, have been stated on Page 58. As per theRegulations, the maximum recurring expenses that can be charged to the Scheme shall be subject to a percentage limitof weekly net assets as in the table below:

First Rs. 100 crore Next Rs. 300 crore Next Rs. 300 crore Over Rs. 700 crore

2.50% 2.25% 2.00% 1.75%

Subject to Regulations and this Offer Document, expenses over and above the prescribed limit shall be borne by theAsset Management Company.

c. Load

� Entry Load

The Trustees for the present does not intent to charge any entry load on the investments made.

� Exit Load

For the redemptions made before the Maturity Date of the Scheme, i.e redemptions made during the repurchasefacility period, the following exit load structure will be applicable:







However, the Trustee shall have a right to prescribe or modify the load structure with prospective effect subject toa maximum prescribed under the Regulations.

Subject to the Regulations, the Trustee reserves the right to modify/alter the load structure and may decide to introducea differential load structure on the Units subscribed/redeemed on any Business Day. Such changes will be applicable forprospective investments. The Trustee shall arrange to display a notice in the Customer Service Centers of the AMCbefore the change of the then prevalent load structure. The addendum detailing the changes in load structure will beattached to offer documents and abridged offer documents. The addendum will also be circulated to all the distributors/brokers so that the same can be attached to all the offer documents and abridged offer documents in stock. Thisaddendum will also be sent along with the newsletter to the unitholders immediately after the changes. Changes in

38


the load structure may be stamped in the acknowledgement slip issued by the Fund after the changes in load structure.All loads including CDSC for each scheme shall be maintained in a separate account and may be utilised towardsmeeting the selling and distribution expenses. Any surplus in this account may be credited to the scheme, wheneverfelt appropriate by the AMC.

f) Changes in Fundamental Attributes

The Trustees shall ensure that no change in the fundamental attributes of the Scheme or the trust or fee and expensespayable or any other change, which would modify the Scheme and affects the interests of Unit holders is carried out unless:

� a written communication about the proposed change is sent to each Unit holder and an advertisement is given in oneEnglish daily newspaper having nationwide circulation as well as in a newspaper published in the language of theregion where the Head Office of the mutual fund is situated; and

� the Unitholders are given an option to exit at the prevailing Net Asset Value without any exit load.

g) Investment Strategy - The Investment manager shall consider the following aspects for identifying the stocks to invest in:

� The fund proposes to take long term call on stocks, which in an opinion of the Fund Manager offer better return overa long period.

� The fund proposes to concentrate on business and economic fundamentals driven by in-depth research techniques,employing strong stock selection. Stock-picking process proposed to be adopted is generally a “bottom-up” approach,seeking to identify companies with above-average profitability supported by sustainable competitive advantages andalso to use a “top-down” discipline for risk control by ensuring representation of companies from various industries.

� On account of liquidity/risk considerations of the mid and small cap segment, the Fund would generally take a smallerexposure over a large number of companies.

� In stocks selection process, AMC proposes to consider stocks with long-term growth prospects but currently tradingat modest relative valuations given certain financial measurements such as their price-to-earnings ratios, dividendincome potential, and earnings power.

The Board of Directors of Prudential ICICI Trust Limited (The Trustee) at its meeting held on May 30, 2000 approved theproposal for the AMC using the various portfolio hedging techniques and adopting the risk control mechanism under theportfolios of the schemes of the Fund.

Accordingly, the Scheme may use derivatives instruments like Stock/ Index Futures, Interest Rate Swaps, Forward RateAgreements or such other derivative instruments as may be introduced from time to time for the purpose of hedging andportfolio balancing, within a permissible limit of 50% of portfolio, which may be increased as permitted under theRegulations and guidelines from time to time.

The SEBI has issued guidelines for participation in Derivative trading by Equity schemes of Mutual Funds vide its circulardated February 6, 2004, to determine permissible limits for participation in derivative trading by all equity schemes of theFund. In accordance with the same following will be the Common Derivative Positions and Limits as approved by the Boardof Directors of AMC, subject to overall permissible limit for derivative trading being at 50% of the portfolio of the Scheme:

Sr. No. Derivative Action Description Limit under the Scheme

1 Index futures Buy Buy futures against cash to protect To the extent of cash /against rising market equivalents in the portfolio. Max.

limit (50%) of portfolio

2 Index futures Sell Hedging of portfolio against Up to (100%) of equity portionexpected market downturn of the fund

3 Index Options - Call Buy Buy index calls against cash To the extent of cash /(existing /expected) to protect equivalents in the portfolio. Max.against rising market limit (100%) of portfolio

4 Index Options - Call Sell Covered Call Sale- against existing Up to (100%) of equity portionportfolio of the fund

5 Index Options - Put Buy Buy index puts to hedge existing Up to (100%) of equity portionportfolio of the fund

6 Index Options - Put Sell Covered Put Sale- Possible top sell To the extent of cash /index puts against existing / equivalents in the portfolio. Max.expected cash limit (50%) of portfolio

7 Stock futures Buy Buy against cash to protect against To the extent of cash /rising share prices equivalents in the portfolio. Max.

limit (50%) of portfolio; per scriplimit (100%)

8 Stock futures Sell Sell against existing stock – Hedging To the extent of the particularagainst downside on existing stock scrip holding in the portfolio; perin the face of expected volatility in scrip limit 100%)the stock price


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Sr. No. Derivative Action Description Limit under the Scheme

9 Stock options - Call Buy Buy against cash to protect against To the extent of cash /rising share prices equivalents in the portfolio. Max.

limit (50%) of portfolio; per scriplimit (100%)

10 Stock options - Call Sell Sell against existing stock To the extent of the particularscrip holding in the portfolio; perscrip limit 100%)

11 Stock options - Put Buy Purchase against existing stock. To the extent of the particularHedging against downside on scrip holding in the portfolio; perexisting stock in the face of expected scrip limit 100%)volatility in the stock price

12 Stock options - Put Sell Covered Put Sale against cash To the extent of cash /equivalents in the portfolio. Max.limit (50%) of portfolio; per scriplimit (100%)

Note: The per scrip limit disclosed above is as % of the holding in the scrip and not as a % of the portfolio of the scheme.

Securitisation and Portfolio Sale

The Scheme will seek to invest in securitised debt upto 20% of the net assets of the scheme only when the returns from suchportfolio are expected to be higher than the other available securities at the time of making an investment. In making thedecision to invest upto 20% in securitised debt, it will be ensured that the ratings, risk profiles and the returns of securitiseddebt instruments are compared with other equivalent eligible debt securities before making an investment decision.

The Scheme will adhere to the per issuer exposure limits with reference to securitised debt as specified under the SEBIRegulations. Also in terms of SEBI Regulations, the issuer of the securitised debt would be considered to be the originatorof underlying receivables of assets and not the Trust/SPV.

Asset securitisation is a process whereby commercial or consumer credits are packaged and sold in the form of financialinstruments. A typical process of asset securitisation involves sale of specific Receivables to a Special Purpose Vehicle (SPV)set up in the form of a trust or a company. The SPV in turn issues financial instruments (e.g., promissory notes, pass throughcertificates or other debt instruments) to investors, such instruments evidencing the beneficial ownership of the investorsin the Receivables. The financial instruments are rated by an independent credit rating agency. An Investor’s Agent isnormally appointed for providing trusteeship services for the transaction.

On the recommendation of the credit rating agency, additional credit support (Credit Enhancement) may be provided inorder that the instrument may receive the desired level of rating. Typically the servicing of the Receivables is continued by theseller in the capacity of the Servicer. Cash flows, as and when they are received, are passed onto the investors. Features ofsecuritisation transactions include:

� Absolute true sale of assets to an SPV (with defined purposes and activities) in trust for the investors;

� Reliance by the investors on the performance of the assets for repayment - rather than the credit of the Originator (theseller) or the Issuer (the SPV);

� Consequent to the above, “Bankruptcy Remoteness” from the Originator;

� Support for timely payments, inter-alia, in the form of suitable credit enhancements, if required;

� ?Securitised debt paper usually achieves a high investment grade credit rating;

� There is a diversification of economic risks as credit risk is spread over a diversified group of obligors.

Investment strategy for securitised debt

The Scheme will predominantly invest only in those securitisation issuances, which have AAA rating indicating the highestlevel of safety from credit risk point of view at the time of making an investment.

Risk Analysis on underlying asset classes in Securitisation:

Generally available Asset Classes for securitisation in India

Commercial Vehicles

Auto and Two wheeler pools

Mortgage pools(residential housing loans)

Personal Loan, credit card and other retail loans

Corporate loans/receivables

In terms of specific risks attached to securitisation, each asset class would have different underlying risks, however, residentialmortgages are supposed to be having lower default rates as an asset class. On the other hand, repossession and subsequentrecovery of commercial vehicles and other auto assets is fairly easier and better compared to mortgages. Some of the assetclasses such as personal loans, credit card receivables etc., being unsecured credits in nature, may witness higher defaultrates. As regards corporate loans/receivables, depending upon the nature of the underlying security for the loan or thenature of the receivable the risks would correspondingly fluctuate. However, the credit enhancement stipulated by rating

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agencies for such asset class pools is typically much higher and hence their overall risks are comparable to other AAA ratedasset classes.

Investment exposure of the Scheme with reference to Securitised Debt:

The Scheme will predominantly invest only in those securitisation issuances which have AAA rating indicating the highestlevel of safety from credit risk point of view at the time of making an investment.

The Scheme may invest in various type of securitisation issuances, including but not limited to Asset Backed Securitisation,Mortgage Backed Securitisation, Personal Loan Backed Securitisation, Collateralized Loan Obligation / Collateralized BondObligation and so on.

The Scheme does not propose to limit its exposure to only one asset class or to have asset class based sub-limits as it willprimarily look towards the AAA rating of the offering.

The Scheme will conduct an independent due diligence on the cash margins, collateralisation, guarantees and other creditenhancements and the portfolio characteristic of the securitisation to ensure that the issuance fits in to the overall objectiveof the investment in high investment grade offerings irrespective of underlying asset class.

Position of Debt Market in India

The debt market in India is estimated at about Rs.900,000 crores as of now. A bulk of the debt market consists ofGovernment Securities. Other instruments available currently include Corporate Debentures, Bonds issued by FinancialInstitutions, Commercial Paper, Certificates of Deposits and Securitized Debt. Securities in the Debt market typically varybased on their tenure and rating. Government Securities have tenures from one year to thirty years whereas the maturityperiods of the Corporate Debt varies from one year to ten years. Securities may be both listed and unlisted but this does notimpact liquidity of the instruments. Most of the transactions in the debt market are conducted over telephone and areentered on principal-to-principal basis. The yields and liquidity on various securities, currently, are as under:

Issuer Instrument Maturity Yields Liquidity

GOI Treasury Bill 91 days 5.15-5.20%* HighGOI Treasury Bill 364 days 5.55-5.60%* HighGOI Short Dated 1-3 Yrs 5.65-6.30%** HighGOI Medium Dated 3-5 Yrs 6.30-6.70%** HighGOI Long Dated 5-10 Yrs 6.60-7.10%** HighCorporates Taxable Bonds (AAA) 1-3 Yrs 6.10-6.70%*** MediumCorporates Taxable Bonds (AAA) 3-5 Yrs 6.60-7.30%*** Low to mediumCorporates CPs (P1+) 3 months 5.50-5.90%* Medium to HighCorporates CPs (P1+) 1 Yr 5.95-6.20%* Medium

*Money Market yield

**Semi-annual yield

***Annualised yield

Fixed Income securities

The AMC aims to identify securities, which offer superior levels of yield at lower levels of risks. With the aim of controllingrisks rigorous in depth credit evaluation of the securities proposed to be invested in will be carried out by the investmentteam of the AMC. The credit evaluation includes a study of the operating environment of the issuer, the past track recordas well as the future prospects of the issuer, the short as well as longer-term financial health of the issuer. Rated debtinstruments in which the Scheme invests will be of investment grade as rated by a credit rating agency. The AMC will beguided by the ratings of Rating Agencies such as CRISIL, CARE, ICRA and Duff and Phelps Credit Rating India Limited or anyother agency approved by SEBI, for this purpose. In case a debt instrument is not rated, such investments shall be made byan internal committee constituted by AMC to approve the investment in un-rated debt securities in terms of the parametersapproved by the Board of Trustees and the Board of Asset Management Company.

In addition, the investment team of the AMC will study the macro economic conditions, including the political, economicenvironment and factors affecting liquidity and interest rates. The AMC would use this analysis to attempt to predict thelikely direction of interest rates and position the portfolio appropriately to take advantage of the same.

The Scheme could invest in Fixed Income Securities issued by government, quasi government entities, corporate issuers,structured notes and multilateral agencies in line with the investment objectives of the Scheme as permitted by SEBI fromtime to time

h) Portfolio Turnover

Portfolio turnover is defined as the aggregate of purchases and sales after reducing all subscriptions and redemptions andderivative transactions therefrom and calculated as a percentage of the average assets under management of the Schemeduring a specified period of time.

The AMC’s portfolio management style is conducive to a low portfolio turnover rate. However, the AMC will take advantageof the opportunities that present themselves from time to time because of the inefficiencies in the securities markets. TheAMC will endeavour to balance the increased cost on account of higher portfolio turnover with the benefits derivedtherefrom.


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i) Procedure followed for investment decisions

a) The Fund Manager of each scheme is responsible for making buy/sell decisions in respect of the securities in therespective scheme portfolios, subject to final approval by the Chief Investment Officer. The investment decisions aremade and approved on daily basis keeping in view the market conditions and all relevant aspects.

b) The AMC has an Internal Investment Committee comprising of the Managing Director, the Chief Investment Officer,Fund Managers who meet at periodic intervals. The Investment Committee, at its meetings, reviews the performanceof the schemes and general market outlook and formulates broad investment strategy.

The Chief Executive Officer who chairs the Investment Committee Meetings guides the deliberations at InvestmentCommittee. He, on an ongoing basis, reviews the portfolios of the schemes and gives directions to the Chief InvestmentOfficer, where considered necessary. It is the ultimate responsibility of the Chief Investment Officer to ensure that theinvestments are made as per the internal/Regulatory guidelines, Scheme investment objectives and in the best interestof the unitholders of the respective schemes.

The AMC has a team comprising of ten Fund Managers. All of these are involved in preparation of research reports.

c) The Managing Director makes a presentation to the Board of AMC at each of its meetings indicating the performanceof the schemes. The performance of the schemes is reviewed by the Board with reference to the appropriate benchmarksas also the performance of the schemes of the competition.

The benchmark for the Scheme will be Nifty Junior.

The performance will be placed before the Investment Committee as well as the Board of Directors of the AMC and theTrustee Company in each of their meetings.

The Managing Director brings to the notice of the Board specific factors, if any, which are impacting the performanceof any individual scheme. The Board on consideration of all relevant factors may, if necessary, give directions to AMC.Similarly, the performance of the schemes is submitted to the Trustees. The Managing Director explains to the Trusteesthe details on Schemes’ performance vis-à-vis the benchmark returns.

d) Subsequent to the issue of Circular No.MFD/CIR/9/120/2000 dated November 24, 2000, the AMC constituted aninternal committee to approve the investment in un-rated debt securities. All such investments, as and when are made,will be placed before the Board of Directors of AMC for its review.

e) The AMC has been recording investment decisions since the receipt of instructions from SEBI, in terms of SEBI’s circularno. MFD/CIR/ 6 / 73 /2000 dated July 27, 2000.

j) Exposure to Derivatives

The Scheme may use derivatives instruments like Stock/ Index Futures, Interest Rate Swaps, Forward Rate Agreements orsuch other derivative instruments as may be introduced from time to time for the purpose of hedging and portfoliobalancing, within a permissible limit of 50% of portfolio, which may be increased as permitted under the Regulations andguidelines from time to time

The following information provides a basic idea as to the nature of the derivative instruments proposed to be used by theScheme and the risks attached there with.

Advantages of Derivatives

The volatility in Indian markets both in debt and equity has increased over last few months. Derivatives provide uniqueflexibility to the Scheme to hedge part of its portfolio. Some of the advantages of specific derivatives are as under:

Index Futures

a) Investment in Stock Index Futures can give exposure to the index without directly buying the individual stocks.Appreciation in Index stocks can be effectively captured through investment in Stock Index Futures.

b) Subject to Regulations, the Fund can sell futures to hedge against market movements effectively without actuallyselling the stocks it holds.

Interest Rate Swaps and Forward rate Agreements

Bond markets in India are not very liquid. Investors run the risk of illiquidity in such markets. Investing for short-term periodsfor liquidity purposes has its own risks. Investors can benefit if the Fund remains in call market for the liquidity and at thesame time take advantage of fixed rate by entering into a swap. It adds certainty to the returns without sacrificing liquidity.

The following are illustrations how derivatives work:

Basic Details: Fixed to floating swap

Notional Amount: Rs. 5 Crores

Benchmark: CRISIL COMPOSITE BOND FUND INDEX

Deal Tenor: 3 months (say 91 days)

Documentation : International Securities Dealers Association(ISDA).

Let us assume the fixed rate decided was 10%

At the end of three months, the following exchange will take place:

Counter party 1 pays: compounded call rate for three months, say 9.90%

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Counter party 2 pays fixed rate: 10%

In practice, however, the difference of the two amounts is settled. Counter party 2 will pay Rs 5 Crores *0.10%* 91/365 =Rs. 12,465.75

Thus the trade off for the Fund will be the difference in call rate and the fixed rate payment and this can vary with the callrates in the market. Please note that the above example is given for illustration purposes only and the actual returns may varydepending on the terms of swap and market conditions.

Basic Structure of a Stock Index Future

The Stock Index futures are instruments designed to give exposure to the equity market indices. The Stock Exchange,Mumbai and The National Stock Exchange have started trading in index futures of 1, 2 and 3-month maturities. The pricingof an index future is the function of the underlying index and short-term interest rates.

Example:

Assumptions:

1 month BSE 30 Future

Spot Index: 4900

Future Price on day 1: 4920

Fund buys 10,000 futures

Date of settlement

Future price = Closing spot price = 4950

Profits for the Fund = (4950-4920)*10000 = Rs 300,000

Please note that the above example is given for illustration purposes only.

The net impact for the Fund will be in terms of the difference between the closing price of the index and cost price (ignoringmargins for the sake of simplicity). Thus, it is clear from the example that the profit or loss for the Fund will be the differenceof the closing price (which can be higher or lower than the purchase price) and the purchase price. The risks associated withindex futures are similar to the one with equity investments. Additional risks could be on account of illiquidity and hencemis-pricing of the future at the time of purchase.

Valuation of Derivative Products

a) The traded derivatives shall be valued at market price in conformity with the stipulations of sub clauses (i) to (v) of clause1 of the Eighth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amendedfrom time to time.

b) The valuation of un-traded derivatives shall be done in accordance with the valuation method for un-traded investmentsprescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Schedule to the Securities and Exchange Board of India(Mutual Funds) Regulations, 1996 as amended from time to time.

k) Investment Restrictions for the Scheme

Pursuant to the Regulations and amendments thereto, the following investment restrictions are presently applicable to theScheme:

1) The new fund offer expenses in respect of any Scheme will not exceed 6% of the Funds raised under that Scheme.

2) A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer, whichare rated not below investment grade by a credit rating agency authorised to carry out such activity under the SEBI Act.Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board ofTrustees and the Board of Asset Management Company. Provided that, such limit shall not be applicable for investmentsin government securities and money market instruments. Provided further that investment within such limit can bemade in mortgage backed securitised debt which are rated not below investment grade by a credit rating agencyregistered with SEBI. With respect to investments in securitized debt (mortgage backed securities/asset backed securities),issuer would be considered to be the originator of underlying receivables of assets such as mortgage backed securities/asset backed securities / collaterialised debt obligations etc. in which the scheme/plan has invested and not the Trust/SPV.

3) A mutual fund scheme shall not invest more than 10% of its NAV in un rated debt instruments issued by a single issuerand the total investment in such instruments shall not exceed 25% of the NAV of the scheme. All such investmentsshall be made by an internal committee constituted by AMC to approve the investment in un-rated debt securities interms of the parameters approved by the Board of Trustees and the Board of Asset Management Company.

Debentures, irrespective of any residual maturity period (above or below one year), shall attract the investment restrictionsas applicable for debt instruments as specified under Clause 2 & 3 above.

4) The Fund under all its schemes shall not own more than 10% of any company’s paid up capital carrying voting rights.

5) Transfer of investments from one scheme to another scheme in the same Mutual Fund is permitted provided:

a) Such transfers are done at the prevailing market price for quoted instruments on spot basis (spot basis shall havethe same meaning as specified by a Stock Exchange for spot transactions); and

b) The securities so transferred shall be in conformity with the investment objective of the scheme to which suchtransfer has been made.


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6) The Scheme may invest in other schemes under the same AMC or any other Mutual Fund without charging any fees,provided the aggregate inter-scheme investment made by all the schemes under the same management or in schemesunder management of any other asset management company shall not exceed 5% of the Net Asset Value of the Fund.No investment management fees shall be charged for investing in other schemes of the Fund or in the schemes of anyother mutual fund.

7) The Fund shall get the securities purchased transferred in the name of the Fund on account of the concerned scheme,wherever investments are intended to be of a long-term nature.

8) The Fund may buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relativesecurities and in all cases of sale, deliver the securities and will not make any short sales or engage in carry forwardtransaction or badla finance. Provided that mutual funds shall enter into derivatives transactions in a recognised stockexchange for the purpose of hedging and portfolio balancing, in accordance with the guidelines issued by SEBI.

9) All the Scheme’s investments will be in transferable securities (whether in capital markets or money markets) or bankdeposits or in money at call as in privately placed debentures as securitised debt.

10) No loans for any purpose can be advanced by the Scheme.

11) Presently the Scheme does not propose to engage in Stock lending activities. However, the Scheme can, with theTrustees prioir approval, engage in Stock Lending activities in future subject to necessary disclosures to the unitholdersand in accordance with stock lending scheme of SEBI.

12 No mutual fund scheme shall make any investments in;

a) any unlisted security of an associate or group company of the sponsor; or

b) any security issued by way of private placement by an associate or group company of the Sponsor; or

c) the listed securities of group companies of the Sponsor which is in excess of 25% of the net assets of the schemeof the Mutual Fund.

13) No mutual fund scheme shall invest more than 10% of its NAV in equity shares of any one company.

14) No Close-ended mutual fund scheme shall invest more than 10% of its NAV in unlisted equity shares or equity relatedinstruments.

15) The Fund shall not borrow except to meet temporary liquidity needs of the Fund for the purpose of repurchase/redemption of units or payment of interest and dividend to the Unitholders. Such borrowings shall not exceed morethan 20% of the net assets of the individual scheme and the duration of the borrowing shall not exceed a period of 6months.

16) Pending deployment of funds of a scheme in securities in terms of investment objectives of the Scheme, the AMC caninvest the funds of the Scheme in short term deposits of scheduled commercial banks or in call deposits.

17) The Scheme may also use various hedging and derivative products from time to time, as are available and permitted bySEBI, in an attempt to protect and enhance the interests of the Unitholders at all times.

18) The Mutual Fund having an aggregate of securities which are worth Rs.10 crores or more, as on the latest balance sheetdate, shall subject to such instructions as may be issued from time to time by the Board, settle their transactionsentered on or after January 15, 1998 only through dematerialised securities. Further, all transactions in governmentsecurities shall be in dematerialised form.

l) Underwriting by the Fund

Subject to the Regulations, the Scheme may enter into underwriting agreements after the Fund obtains a certificate ofregistration in terms of the Securities and Exchange Board of India (Underwriters) Rules and the Securities and ExchangeBoard of India (Underwriters) Regulations, 1993, authorizing it to carry on activities as underwriters.

The capital adequacy norms for the purpose of underwriting shall be the net assets of the Scheme and the underwritingobligation of the Scheme shall not at any time exceed the total net asset value of the Scheme.

m) Computation of Net Asset Value

The NAV of the Units of the Scheme will be computed by dividing the net assets of the Scheme

by the number of Units outstanding on the valuation date. The Fund shall value its investments according to the valuationnorms, as specified in Schedule VIII of the Regulations, or such norms as may be prescribed by SEBI from time to time. Thebroad valuation norms are detailed below:

1. Traded Securities

(i) The securities shall be valued at the last quoted closing 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 lastquoted closing price on the stock exchange where the security is principally traded.

(iii) When on a particular valuation day, a security has not been traded on the Principal stock exchange, the value at whichit is traded on another stock exchange may be used.

(iv) When a security (other than debt securities) is not traded on any stock exchange on a particular valuation day, the valueat which it was traded on the selected stock exchange, as the case may be, on the earliest previous day may be usedprovided such date is not more than thirty days prior to valuation date.

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When a debt security (other than Government Securities) is not traded on any stock exchange on any particular valuationday, the value at which it was traded on the principal stock exchange or any other stock exchange, as the case may be, on theearliest previous day may be used provided such date is not more than fifteen days prior to valuation date. When a debtsecurity (other than Government Securities) is purchased by way of private placement, the value at which it was bought maybe used for a period of fifteen days beginning from the date of purchase.

2. Thinly Traded Securities

(i) Thinly Traded Equity/Equity Related Securities:

“When trading in an equity/equity related security (such as convertible debentures, equity warrants, etc.) in amonth is both less than Rs. 5 lacs and the total volume is less than 50,000 shares, it shall be considered as a thinlytraded security and valued accordingly”.

For example, if the volume of trade is 100,000 and value is Rs. 400,000, the share does not qualify as thinly traded.Also if the volume traded is 40,000, but the value of trades is Rs. 600,000, the share does not qualify as thinlytraded.

In order to determine whether a security is thinly traded or not, the volumes traded in all recognised stockexchanges in India may be taken into account.

(ii) Thinly Traded Debt Securities:

A debt security (other than Government Securities) shall be considered as a thinly traded security if on thevaluation date, there are no individual trades in that security in marketable lots (currently Rs 5 crore) on theprincipal stock exchange or any other stock exchange.

A thinly traded debt security as defined above would be valued as per the norms set for non-traded debt security.

3. Non Traded Securities

When a security (other than Government Securities) is not traded on any stock exchange for a period of thirty days priorto the valuation date, the scrip must be treated as a ‘non traded’ security.

VALUATION OF NON-TRADED / THINLY TRADED SECURITIES

Non traded/ thinly traded securities shall be valued “in good faith” by the asset management company on the basis of thevaluation principles laid down below:

(i) Non-traded / thinly traded equity securities:

(a) Based on the latest available Balance Sheet, net worth shall be calculated as follows:

(b) Net Worth per share = [share capital + reserves (excluding revaluation reserves) – Misc. expenditure and DebitBalance in P&L A/c] Divided by number of Paid up Shares.

(c) Average capitalisation rate (P/E ratio) for the industry based upon either BSE or NSE data (which should befollowed consistently and changes, if any noted with proper justification thereof) shall be taken and discountedby 75% i.e. only 25% of the Industry average P/E shall be taken as capitalisation rate (P/E ratio). Earnings per shareof the latest audited annual accounts will be considered for this purpose.

(d) The value as per the net worth value per share and the capital earning value calculated as above shall be averagedand further discounted by 10% for ill-liquidity so as to arrive at the fair value per share.

(e) In case the EPS is negative, EPS value for that year shall be taken as zero for arriving at capitalised earning.

(f) In case where the latest balance sheet of the company is not available within nine months from the close of theyear, unless the accounting year is changed, the shares of such companies shall be valued at zero.

(g) In case an individual security accounts for more than 5% of the total assets of the scheme, an independent valuershall be appointed for the valuation of the said security.

To determine if a security accounts for more than 5% of the total assets of the scheme, it should be valued by theprocedure above and the proportion which it bears to the total net assets of the scheme to which it belongs wouldbe compared on the date of valuation.

(ii) (a) Non Traded /Thinly Traded Debt Securities of Upto 182 Days to Maturity:

As the money market securities are valued on the basis of amortization (cost plus accrued interest till the beginningof the day plus the difference between the redemption value and the cost spread uniformly over the remainingmaturity period of the instruments) a similar process should be adopted for non-traded debt securities withresidual maturity of upto 182 days, in the absence of any other standard benchmarks in the market. Debtsecurities purchased with residual maturity of upto 182 days are to be valued at cost (including accrued interest tillthe beginning of the day) plus the difference between the redemption value (inclusive of interest) and cost spreaduniformly over the remaining maturity period of the instrument. In case of a debt security with maturity greaterthan 182 days at the time of purchase, the last valuation price plus accrued interest should be used instead ofpurchase cost. All other non traded Non Government debt instruments shall be valued using the method suggestedin (ii)(b).


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ii) (b) Non Traded/ Thinly Traded Debt Securities of Over 182 Days to Maturity

For the purpose of valuation, all Non Traded Debt Securities would be classified into “Investment grade” and“Non Investment grade” securities based on their credit ratings. The non-investment grade securities wouldfurther be classified as “Performing” and “Non Performing” assets

� All Non Government investment grade debt securities, classified as not traded, shall be valued on yield tomaturity basis as described in the applicable SEBI circular.

� All Non Government non investment grade performing debt securities would be valued at a discount of 25%to the face value

� All Non Government non-investment grade non-performing debt securities would be valued based on theprovisioning norms.

Valuation of Unlisted Equity Shares

Unlisted equity shares of a company shall be valued “in good faith” on the basis of the valuation principles laid downbelow:

a. Based on the latest available audited balance sheet, net worth shall be calculated as lower of (i) and (ii) below:

i. Net worth per share = [share capital plus free reserves (excluding revaluation reserves) minus Miscellaneousexpenditure not written off or deferred revenue expenditure, intangible assets and accumulated losses]divided by Number of Paid up Shares.

ii. After taking into account the outstanding warrants and options, Net worth per share shall again be calculatedand shall be = [share capital plus consideration on exercise of Option/Warrants received/receivable by theCompany plus free reserves(excluding revaluation reserves) minus Miscellaneous expenditure not written offor deferred revenue expenditure, intangible assets and accumulated losses] divided by {Number of Paid upShares plus Number of Shares that would be obtained on conversion/exercise of Outstanding Warrants andOptions}

The lower of (i) and (ii) above shall be used for calculation of net worth per share and for further calculationin (c) below.

(b) Average capitalisation rate (P/E ratio) for the industry based upon either BSE or NSE data (which should befollowed consistently and changes, if any, noted with proper justification thereof) shall be taken and discountedby 75% i.e. only 25% of the Industry average P/E shall be taken as capitalisation rate (P/E ratio). Earnings per shareof the latest audited annual accounts will be considered for this purpose.

(c) The value as per the net worth value per share and the capital earning value calculated as above shall be averagedand further discounted by 15% for illiquidity so as to arrive at the fair value per share.

The above methodology for valuation shall be subject to the following conditions:

i. All calculations as aforesaid shall be based on audited accounts.

ii. In case where the latest balance sheet of the company is not available within nine months from the close ofthe year, unless the accounting year is changed, the shares of such companies shall be valued at zero.

iii. If the net worth of the company is negative, the share would be marked down to zero.

iv. In case the EPS is negative, EPS value for that year shall be taken as zero for arriving at capitalised earning.

v. In case an individual security accounts for more than 5% of the total assets of the scheme, an independentvaluer shall be appointed for the valuation of the said security. To determine if a security accounts for morethan 5% of the total assets of the scheme, it should be valued in accordance with the procedure as mentionedabove on the date of valuation.

vi. At the discretion of the AMC and with the approval of the trustees, an unlisted equity share may be valued ata price lower than the value derived using the aforesaid methodology.

Valuation of securities with Put/Call Options

The option embedded securities would be valued as follows:

Securities with call option

The securities with call option shall be valued at the lower of the value as obtained by valuing the security to finalmaturity and valuing the security to call option.

In case there are multiple call options, the lowest value obtained by valuing to the various call dates and valuingto the maturity date is to be taken as the value of the instrument.

Securities with Put option

The securities with put option shall be valued at the higher of the value as obtained by valuing the security to finalmaturity and valuing the security to put option

In case there are multiple put options, the highest value obtained by valuing to the various put dates and valuingto the maturity date is to be taken as the value of the instruments.

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Securities with both Put and Call option on the same day

The securities with both Put and Call option on the same day would be deemed to mature on the Put/Call day andwould be valued accordingly.

(i) Government securities

Government securities will be valued at yield to maturity based on the prevailing market rate

Illiquid Securities

(a) Aggregate value of “illiquid securities” of scheme, which are defined as non-traded, thinly traded andunlisted equity shares, shall not exceed 15% of the total assets of the scheme and any illiquid securities heldabove 15% of the total assets shall be assigned zero value.

Provided that in case any scheme has illiquid securities in excess of 15% of total assets as on September 30,2000 then such a scheme shall within a period of two years bring down the ratio of illiquid securities withinthe prescribed limit of 15% in the following time frame:

(i) all the illiquid securities above 20% of total assets of the scheme shall be assigned zero value onSeptember 30, 2001.

(ii) All the illiquid securities above 15% of total assets of the scheme shall be assigned zero value onSeptember 30, 2002.

(b) All funds shall disclose as on March 31 and September 30 the scheme-wise total illiquid securities in valueand percentage of the net assets while making disclosures of half yearly portfolios to the unitholders. In thelist of investments, an asterisk mark shall also be given against all such investments, which are recognised asilliquid securities.

(c) Mutual Funds shall not be allowed to transfer illiquid securities among their schemes w.e.f. October 1, 2000.

(d) In respect of closed ended funds, for the purposes of valuation of illiquid securities, the limits of 15% and20% applicable to open-ended funds should be increased to 20% and 25% respectively.

(e) Where a scheme has illiquid securities as at September 30, 2001 not exceeding 15% in the case of an open-ended fund and 20% in the case of closed fund, the concessions of giving time period for reducing theilliquid security to the prescribed limits would not be applicable and at all time the excess over 15% or 20%shall be assigned nil value.

v) Value of “Rights” entitlement

a) Until they are traded, the value of the “rights” entitlement would be calculated as:

Vr = n/m x (Pex – Pof)

where

Vr = Value of rights

n = no. of rights Offered

m = no. of original shares held

Pex = Ex-Rights price

Pof = Rights Offer price

b) Where the rights are not traded pari-passu with the existing shares, suitable adjustments would be made to thevalue of rights. Where it is decided not to subscribe for the rights but to renounce them and renunciations arebeing traded, the rights would be valued at the renunciation value.

vi) Expenses and Incomes Accrued

All expenses and incomes accrued up to the valuation date shall be considered for computation of NAV. For thispurpose, major expenses like management fees and other periodic expenses would be accrued on a day-to-day basis.The minor expenses and income will be accrued on a periodic basis, provided the non daily accrual does not affect theNAV calculations by more than 1%.

vii) Changes in securities and in number of units

Any changes in securities and in the number of units will be recorded in the books not later than the first valuation datefollowing the date of transaction. If this is not possible, given the frequency of NAV disclosure, the recording may bedelayed up to a period of seven days following the date of the transaction, provided as a result of such non recording,the NAV calculation shall not be affected by more than 1%.

The valuation guidelines as outlined above are as per prevailing Regulations and are subject to change from time totime in conformity with changes made by SEBI.

viii) Valuation of Derivative Products

(i) The traded derivatives shall be valued at market price in conformity with the stipulations of sub clauses (i) to (v) ofclause 1 of the Eighth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.

(ii) The valuation of untraded derivatives shall be done in accordance with the valuation method for untradedinvestments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Schedule to the Securities and ExchangeBoard of India (Mutual Funds) Regulations, 1996.


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NAV of units under the Scheme shall be calculated as shown below :

Market or Fair Value of Scheme’s investments + Current Assets

- Current Liabilities and Provision

NAV (Rs.) =_____________________________________________________

No. of Units outstanding under Scheme

The NAV of the Scheme will be calculated as of the close of every Business Day. The valuation of the Scheme’s assets andcalculation of the Scheme’s NAV shall be subject to audit on an annual basis and such regulations as may be prescribedby SEBI from time to time.

n) Accounting Policies & Standards

In accordance with the Regulations, the AMC will follow the accounting policies and standards, as detailed below:

a) The AMC, for each Scheme , shall keep and maintain proper books of account, records and documents, so as to explainits transactions and to disclose at any point of time the financial position of the Scheme and, in particular, give a trueand fair view of the state of affairs of the Fund.

b) For the purposes of the financial statements, the Scheme and its Plans shall mark all investments to market and carryinvestments in the balance sheet at market value. However, since the unrealized gain arising out of appreciation oninvestments cannot be distributed, provision shall be made for exclusion of this item when arriving at distributableincome.

c) Dividend income earned by the Scheme and its Plans shall be recognized, not on the date the dividend is declared, buton the date the share is quoted on an ex-dividend basis. For investments, which are not quoted on the stock exchange,dividend income would be recognized on the date of declaration of dividend.

d) In respect of all interest-bearing investments, income shall be accrued on a day to day basis as it is earned. Therefore,when such investments are purchased, interest paid for the period from the last interest due date up to the date ofpurchase should not be treated as a cost of purchase but shall be debited to Interest Recoverable Account. Similarly,interest received at the time of sale for the period from the last interest due date up to the date of sale must not betreated as an addition to sale value but shall be credited to Interest Recoverable Account.

e) In determining the holding cost of investments and the gains or loss on sale of investments, the “average cost”method shall be followed for each security.

f) Transactions for purchase or sale of investments shall be recognized as of the trade date and not as of the settlementdate, so that the effect of all investments traded during a financial year are recorded and reflected in the financialstatements for that year. Where investment transactions take place outside the stock market, for example, acquisitionthrough private placement or purchases or sales through private treaty, the transaction would be recorded, in the eventof a purchase, as of the date on which the Scheme obtains an enforceable obligation to pay the price or, in the eventof a sale, when the Scheme obtains an enforceable right to collect the proceeds of sale or an enforceable obligation todeliver the instruments sold.

g) Bonus shares to which the Scheme and the Plans thereunder becomes entitled shall be recognized only when theoriginal shares on which the bonus entitlement accrues are traded on the stock exchange on an ex-bonus basis.Similarly, rights entitlements shall be recognized only when the original shares on which the right entitlement accruesare traded on the stock exchange on an ex-right basis.

h) Where income receivable on investments has accrued but has not been received for the period specified in theguidelines issued by the Board, provision shall be made by debiting to the revenue account the income so accrued inthe manner specified by guidelines issued by the Board.

i) When units are sold in the Scheme and its Plans, an appropriate part of the sale proceeds shall be credited to anEqualization Account and when units are repurchased an appropriate amount shall be debited to Equalization Account.The net balance on this account shall be credited or debited to the Revenue Account. The balance on the EqualizationAccount debited or credited to the Revenue Account shall not decrease or increase the net income of the Fund but isonly an adjustment to the distributable surplus. It shall therefore be reflected in the Revenue Account only after the netincome of the Fund is determined.

j) When units are sold, after considering the equalization as above, the difference between the sale price and the facevalue of the Unit, if positive, shall be credited to reserves and if negative, shall be debited to reserve, the face valuebeing credited to Capital Account. Similarly, when the Units are repurchased, after considering the equalization asabove, the difference between the purchase price and face value of the Unit, if positive, shall be debited to reserves and,if negative, shall be credited to reserves, the face value being debited to the Capital Account.

k) The cost of investments acquired or purchased shall include brokerage, stamp charges and any charge customarilyincluded in the broker’s bought note. In respect of privately placed debt instruments any front-end discount offeredshall be reduced from the cost of the investment.

l) Underwriting commission shall be recognized as revenue only when there is no devolvement on the Scheme and itsPlans. Where there is devolvement on the Scheme and the Plans thereunder, the full underwriting commission receivedand not merely the portion applicable to the devolvement shall be reduced from the cost of the investment.

The accounting policies and standards outlined above are as per the existing Regulations and are subject to change as perchanges in the Regulations.

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Guidelines For Identification and Provisioning for Non Performing Assets (Debt Securities) For Mutual Funds

(A) Definition of a Non Performing Asset (NPA)

An ‘asset’ shall be classified as non performing, if the interest and/or principal amount have not been received orremained outstanding for one quarter from the day such income / instalment has fallen due.

(B) 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 due date for interestis 30.06.2002, it will be classified as NPA from 01.10.2002.

(C) Treatment of income accrued on the NPA and further accruals

After the expiry of the 1st quarter from the date the income has fallen due, there will be no further interest accrual onthe asset i.e. if the due date for interest falls on 30.06.2002 and if the interest is not received, accrual will continue till30.09.2002 after which there will be no further accrual of income. In short, taking the above example, from thebeginning of the 2nd quarter there will be no further accrual on income.

On classification of the asset as NPA from a quarter past due date of interest, all interest accrued and recognized in thebooks of accounts of the Fund till the date, should be provided for. For e.g. if interest income falls due on 30.06.2002,accrual will continue till 30.09.2002 even if the income as on 30.06.2002 has not been received. Further, no accrual willbe done from 01.10.2002 onwards. Full provision will also be made for interest accrued and outstanding as on30.06.2002.

(D) Provision for NPAs – Debt Securities

Both secured and unsecured investments once they are recognized as NPAs call for provisioning in the same mannerand where these are related to close ended scheme the phasing would be such that to ensure full provisioning priorto the closure of the scheme or the scheduled phasing which ever is earlier.

The value of the asset must be provided in the following manner or earlier at the discretion of the fund. Fund will nothave discretion to extend the period of provisioning. The provisioning against the principal amount or instalmentsshould be made at the following rates irrespective of whether the principal is due for repayment or not.

� 10% of the book value of the asset should be provided for after 6 months past due date of interest i.e. 3 monthsform 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 of interest i.e. 6 monthsfrom 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 due date 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 due date 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 past due date of theinterest 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 the prescribedvaluation method.

(E) Reclassification of assets

Upon reclassification of assets as ‘performing assets’:

1. In case a company has fully cleared all the arrears of interest, the interest provisions can be written back in full.

2. The asset will be reclassified as performing on clearance of all interest arrears and if the debt is regularly servicedover the next two quarters.

3. In case the company has fully cleared all the arrears of interest, the interest not credited on accrual basis would becredited 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 theprovision 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% afterevery subsequent quarter where both instalments and interest were in default earlier.

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

(F) 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 accrual basis. The asset will becontinued to be classified as NPA for these two quarters.

During this period of two quarters although the asset is classified as NPA no provision needs to be made for theprincipal if the same is not due and outstanding


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If part payment is received towards principal, the asset continues to be classified as NPA and provisions are continuedas per the norms set at (D) above. Any excess provision will be written back.

Some of the investments made by mutual funds may become non-performing (NPAs) or illiquid at the time of maturity/closure of schemes. In due course of time, these NPAs and illiquid securities may be realised by the mutual funds i.e.after the winding up of the schemes.

Such amount would be distributed, if it is substantial and is realised within two years, to the old investors. In case theamount is not substantial or it is realised after two years, it may be transferred to the Investor Education Fundmaintained by each mutual fund as specified in SEBI circular MFD/CIR/9/120/2000 dated November 24, 2000. Thedecision as to the determination of substantial amount shall be taken by the trustees of mutual funds after consideringthe relevant factors.

(G) Classification of Deep Discount Bonds as NPAs

Investments in Deep Discount Bonds can be classified as NPAs, if any two of the following conditions are 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 (D) above as soon as the asset is classified as NPA.

Full provision can be made if the rating comes down to grade ‘D’

(H) Reschedulement of an asset

In case any company defaults either interest or principal amount and the fund has accepted a Reschedulement of theschedule of payments, then the following practice may be adhered to:

(i) In case it is a first Reschedulement and only interest is in default, the status of the asset namely, ‘NPA’ may becontinued and existing provisions should not be written back. This practice should be continued for two quartersof regular servicing of the debt. Thereafter, this be classified as ‘performing asset’ and the interest provided maybe written back.

(ii) If the Reschedulement is done due to default in interest and principal amount, the asset should be continued asnon-performing for a period of 4 quarters, even though the asset is continued to be serviced during these 4quarters regularly. Thereafter, this can be classified as ‘performing asset’ and all the interest provided till such dateshould be written back.

(iii) If the Reschedulement is done for a second/third time or thereafter, the characteristic of NPA should be continuedfor eight quarters of regular servicing of the debt. The provision should be written back only after it is reclassifiedas ‘performing asset’.

(I) Disclosure in the Half Yearly Portfolio Reports

The mutual funds shall make scripwise disclosures of NPAs on half yearly basis along with the half yearly portfoliodisclosure.

The total amount of provisions made against the NPAs shall be disclosed in addition to the total quantum of NPAs andtheir proportion of the assets of the mutual fund scheme. In the list of investments an asterisk mark shall be givenagainst such investments, which are recognized as NPAs. Where the date of redemption of an investment has lapsed,the amount not redeemed shall be shown as ‘Sundry Debtors’ and not investment provided that where an investmentis redeemable by installments that will be shown as an investment until all installments have become overdue.

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SECTION III

UNITS & THE NEW FUND OFFER

General Information

a) Minimum Subscription Amount

The scheme seeks to raise a minimum subscription of Rs.1 Lakh during the New Fund Offer. There is no maximum amountproposed to be collected under the Scheme during the New Fund Offer

b) Offer Price

The corpus of the Scheme will be divided into Units having a face value of Rs.10 each. Units can be purchased at this priceduring the New Fund Offer, subject to new fund offer expenses and entry load, as stated in this offer document.

c) Minimum Amount for Application

The minimum application amount for the Scheme is Rs.5000 (plus in multiple of Re.1).

d) New Fund Offer Expenses

The new fund offer expenses charged to the Scheme in this Offer Document will be limited to 3.75% of the amountmobilised under the New Fund Offer (NFO). Under the Regulations, the Scheme is entitled to charge new fund offerexpenses up to a maximum of 6% of initial resources raised under the Scheme. The new fund offer expenses charged to theScheme may be amortised over a period not exceeding five years and would be included in the NAV. However, the samewould not be included in the NAV for determination of Investment management and Trustee fees. The above is as per theSEBI Regulations. The same is illustrated as under:

Face value A Rs. 10.00Entry Load B NilIssue Price (A+B) C 10.00NFO Expenses (3.75% of A) D Re. 0.3750Maximum NFO Expenses (B+D) E Re. 0.3750NFO expenses borne out of Entry load F NilBalance NFO expenses to be charged to the Scheme (E-F) G 0.3750Amount available for investment for every Rs. 10 (C-E) H 9.625Amortisation of new fund offer expenses per unit per day for 5 years (G/1825 days) I Re.0.0002Balance NFO expenses to be carried forward (G-I) J Re. 0.3748NAV on first day (A-I) K 9.9998

The above example is for the illustration purpose only. The actual NAV will vary depending on the extent of actual NFOexpenses being charged to the Scheme within the permitted range as defined in this offer document and whether the newfund offer expenses are amortised or are charged to the Scheme without amortisation. The above example is also subjectto rounding-off.

e) Options and Investment plans offered under the Scheme

Investors under the Prudential ICICI Fusion Fund have the choice of a Growth Option or a Dividend Option at present. Therewill be two separate NAVs, one for the Growth Option and another for the Dividend Option, after declaration of the firstdividend under the Scheme. Both the Options viz., Growth and Dividend will share the same portfolio.

i) Growth Option – For Capital Appreciation

The Scheme will not declare any dividends under this option. The income earned by the Scheme will remain investedin the Scheme and will be reflected in the Net Asset Value. This Option is suitable for investors who are not looking forregular income.

ii) Dividend Option – For Regular Income

This option is suited for investors seeking regular income through dividends declared by the Scheme. The Trustee mayapprove the distribution of dividends by the AMC out of the net surplus of the Scheme. To the extent the net surplusis not distributed, the same will remain invested in the Scheme and be reflected in the NAV. The dividends declared, ifany, will be paid-out to the investors.

The Dividend option will be the default option and hence if an investor fails to specify the option applied for, he will beallotted units under the Dividend option of the Scheme.

The Trustees reserve right to introduce any other option(s) under the Scheme at a later date, by providing a notice to theinvestors on the AMC’s website and by issuing a press release, prior to introduction of such option(s).

f) Pledge of Units for loans

The Units can be pledged by the Unitholders as security for raising loans subject to the conditions of the lending institution.The Registrar will take note of such pledge / charge in its records.


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g) How to Switch

Unit holders of the existing schemes of Prudential ICICI Mutual Fund have the right to switch their units/ investments to thePrudential ICICI Fusion Fund during the New Fund Offer (NFO) only.

For switch-in requests received during the New Fund Offer of the Scheme, the switch-outs requests from the Source schemewill be effected based on the applicable NAV of the Source scheme, as on the last day of the NFO. Whereas the switch-inrequests under the Scheme will be processed on the date of the allotment of the Units in case of switches received duringthe New Fund Offer. AMC shall not be liable for losses incurred, if any, by the investor due to the time lag between switch-outs happening on the last day of NFO and the Switch-in into the Scheme to be processed on the Allotment date.

Unitholders of the existing schemes intending to switch in during the NFO are requested to fill in fresh application form ofthis Scheme.

h) Who can Invest?

The following persons are eligible and may apply for subscription to the Units of the Scheme (subject, wherever relevant, topurchase of units of Mutual Funds being permitted under respective constitutions and relevant statutory regulations):

� Resident adult individual either singly or jointly (not exceeding three)

� Minor through parent/lawful guardian

� Companies, Bodies Corporate, Public Sector Undertakings, association of persons or bodies of individuals and societiesregistered under the Societies Registration Act, 1860 (so long as the purchase of units is permitted under the respectiveconstitutions)

� Religious and Charitable Trusts under the provisions of 11(5)(xii) of Income-tax Act, 1961 read with Rule 17C ofIncome-Tax Rules, 1962

� Partnership Firms

� Karta of Hindu Undivided Family (HUF)

� Banks & Financial Institutions

� Non-resident Indians/Persons of Indian origin residing abroad (NRIs) on full repatriation basis or on non-repatriationbasis

� Foreign Institutional Investors (FIIs) registered with SEBI on full repatriation basis (subject to RBI approval, if any)

� Army, Air Force, Navy and other para-military funds

� Scientific and Industrial Research Organizations

� Mutual fund schemes, as may be permitted by SEBI from time to time.

� Any other category of investor who may be notified by Trustees from time to time by display on the website of the AMC.

l) How to apply?

i) New Fund Offer

Application Forms will be available at the official Point of Acceptance of Transactions as notified by the Fund.

Kindly retain the acknowledgement slip initialled/stamped by the collecting agency.

ii) Resident Investors – Mode of Payment

Investors may make payments for subscription to the Units of the Scheme by local cheque/bank draft, drawn on anybank branch. Cheques/demand drafts should be drawn in favour of “Prudential ICICI Fusion Fund”, and must becrossed “Account Payee Only”. Cash will not be accepted at the Customer Service Centres.

The cheque/demand draft should be payable at the Centre where the application is lodged. The cheque/demand draftshould be drawn on any Bank which is situated at and is a member/sub-member of the Bankers’ Clearing House.Cheques/demand drafts drawn on a Bank not participating in the Clearing House will not be accepted.

Payments by Stock invests and out-station and/or post-dated cheques will not be accepted. Bank charges forout-station demand drafts (as defined herein) will not be borne by the AMC.

The Fund will reimburse demand draft charges subject to maximum of Rs. 10,000/- per transaction for purchase ofunits by investors residing at location where the AMC Customer Service Centers/ Collection Centers are not located asper the table below:

Amount of Investment Rate of Charges for Demand Draft(s)

Upto Rs.10,000/- At actual subject to a maximum of Rs. 50/-

Above Rs.10,000/- Rs. 2/- per Rs. 1000/-

AMC reserves the right to refuse the reimbursement of demand draft charges, in case of investments made by the sameapplicant(s) through multiple applications at its own discretion which will be final and binding on the investor.

Investors residing at places other than where the AMC Customer Service Centers/ Collection Centers are located, arerequested to make the payment by way of demand draft(s) after deducting bank charges as per the rates indicated inthe above table. It may be noted that additional charges, if any, incurred by the investor over and above the levelsindicated above will not be borne by the Fund.

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No demand draft charges will be reimbursed by the Fund for purchase of Units by investors residing at such locationswhere the Customer Service Centers/Collection Centers of the AMC are located.

The Trustee shall have absolute discretion to accept/reject any application for purchase of Units, if in the opinion of theTrustee, increasing the size of Scheme’s Unit capital is not in the general interest of the Unitholders, or the Trustee forany other reason believes it would be in the best interest of the Schemes or its Unitholders to accept/reject such anapplication.

(iii) NRIs, FIIs

NRIs:

In terms of Schedule 5 of Notification no. FEMA 20/2000 dated May 3, 2000, RBI has granted general permission toNRIs to purchase, on a repatriation basis units of domestic mutual funds. Further, the general permission is alsogranted to NRIs to sell the units to the mutual funds for repurchase or for the payment of maturity proceeds, providedthat the units have been purchased in accordance with the conditions set out in the aforesaid notification.

For the purpose of this section, the term “mutual funds” is as referred to in Clause (23D) of Section 10 of Income-TaxAct 1961.

However, NRI investors, if so desired, also have the option to make their investment on a non-repatriable basis.

In case of NRI investments, the applications and the Rupee Draft have to be accompanied by the debit certificate fromthe bank on which cheque is drawn. .

In case the debit certificate is not provided, the AMC reserves the right to reject the application of the NRI investors.

FIIs :

In terms of Schedule 5 of Notification no. FEMA 20/2000 dated May 3, 2000. RBI has granted general permission toa registered FII to purchase on a repatriation basis units of domestic mutual funds subject to the conditions set out inthe aforesaid notification. Further, the general permission is also granted to FIIs to sell the units to the mutual funds forrepurchase or for the payment of maturity proceeds, provided that the units have been purchased in accordance withthe conditions set out in the aforesaid notification.

For the purpose of this section, the term “mutual funds” is as referred to in Clause (23D) of Section 10 of Income-TaxAct 1961.

The Rupee Draft in case of NRI and FII investments should drawn in favour of – “Prudential ICICI Fusion Fund –NRI/FII A/c”

iv) Mode of Payment on Repatriation basis

FIIs may pay their subscription amounts either by way of inward remittance through normal banking channels or outof funds held in Foreign Currency Account or Non-resident Rupee Account maintained by the FII with a designatedbranch of an authorized dealer with the approval of the RBI subject to the terms and conditions set out in the aforesaidnotification.

In case Indian rupee drafts are purchased abroad or from Foreign Currency Accounts or Non-resident Rupee Accountsan account debit certificate from the Bank issuing the draft confirming the debit shall also be enclosed.

In case of NRIs and persons of Indian origin residing abroad, payment may be made by way of Indian Rupee draftspurchased abroad and payable at the collecting bank branch locations of ICICI Bank or by way of cheques drawn onNon-Resident (External) (NRE) Accounts payable at par at Mumbai. Payments can also be made by means of rupee draftspayable at Mumbai and purchased out of funds held in NRE Accounts / FCNR Accounts.

All cheques/drafts should be made out in favour “Prudential ICICI Fusion Fund – NRI/FII A/c” and crossed“Account Payee Only”. In case Indian Rupee drafts are purchased abroad or from FCNR/NRE A/c. an account debitcertificate from the Bank issuing the draft confirming the debit shall also be enclosed.

v) Mode of payment on Non-Repatriation basis

In case of NRIs /Persons of Indian origin seeking to apply for Units on a non-repatriation basis, payments may be madeby cheques/demand drafts drawn out of Non-Resident Ordinary (NRO) accounts/ Non-Resident Special Rupee (NRSR)accounts and Non Resident Non-Repatriable (NRNR) accounts payable at the city where the Application Form isaccepted. In case the necessary details are not provided, then the prevalent provision of the SEBI Regulations shallapply.

vi) Investments of the minor investor on attaining majority

Upon attaining majority, a minor has to write to the fund, giving his specimen signature duly authenticated by hisbanker as well his new bank mandate, PAN details, UIN details (if applicable as per prevalent SEBI Guidelines) in orderto facilitate the Fund to update its records and permit the erstwhile minor to operate the account in his own right.

vii) Application under Power of Attorney/ Body Corporate/ Registered Society/ Trust/ Partnership

Every investor, depending on the category under which he/she/ it falls, is required to provide the relevant documentsalongwith the application form as may be prescribed by AMC.

In case of an application under the Power of Attorney or by a limited company, body corporate, registered society, trustor partnership etc., the relevant Power of Attorney or the relevant resolution or authority to make the application as thecase may be, or duly certified copy thereof, along with the memorandum and articles of association/bye-laws must belodged at the Registrar’s Office at the time of submission of application.


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In case an investor has issued Power of Attorney (POA) for making investments, switches, redemptions etc. under hisfolio, both the signature of the investor and the POA holder have to be clearly captured in the POA document to beaccepted as a valid document. At the time of making redemption / switches the fund would not be in a position toprocess the transaction unless, POA holder’s signature is available in the POA or proof of identity alongwith signatureis produced along with the POA.

viii) Joint Applicants

In the event an Account has more than one registered owner, the first-named holder (as determined by reference to theoriginal Application Form) shall receive the Account Statement, all notices and correspondence with respect to theAccount, as well as the proceeds of any redemption requests or dividends or other distributions. In addition, suchUnitholders shall have the voting rights, as permitted, associated with such Units, as per the applicable guidelines.

Applicants can specify the ‘mode of holding’ in the Application Form as ‘Jointly’ or ‘Anyone or Survivor’. In the case ofholding specified as ‘Jointly’, redemptions and all other requests relating to monetary transactions would have to besigned by all joint holders. However, in cases of holding specified as ‘Anyone or Survivor’, any one of the Unitholderswill have the power to make redemption requests, without it being necessary for all the Unitholders to sign. However,in all cases, the proceeds of the redemption will be paid to the first-named holder.

ix) Nomination Facility

The Scheme provides for the nomination facility as permitted under the Regulations.

Nomination Forms are available alongwith the application forms at any of the Customer Service Centres of the AMC.

It may, however, be noted that in the event of death of the Unitholder and in the event a nominee has been named, thenominee shall stand transposed in respect of the Units held by the Unit holder. Such nominee (new Unit holder) willhold the Units in trust for and on behalf of the estate of the original Unit holder and his / her legal heirs. Such paymentsmade by the AMC shall be full and valid discharge of the AMC / Fund from all further liabilities in respect of the sumsso paid.

The AMC shall have the right to ask for any additional information / documentation as it may deem necessary to satisfyitself as to the identity of the Nominee/ Claimant including but not limited to procuring an Indemnity Bond.

Where the units are held by more than one person jointly, the joint unitholders may together nominate a person inwhom all the rights in the units shall vest in the event of death of all the joint unit holders.

j) Issuance of Units

Subject to receipt of minimum subscription amount, full allotment will be made to all valid applications received during theNew Fund Offer. Allotment of units will be completed not later than 30 days after the close of the New Fund Offer.

k) Account Statements

An Account Statement will be sent by ordinary post to each Unitholder, stating the number of Units allotted, not later than30 days from the close of New Fund Offer.

In case the investor provides the e-mail address, the Fund will provide the Account Statement only through e-mail message.The Account Statements shall be non-transferable. If the Unitholder so desires, non-transferable unit certificates will beissued within six weeks of the receipt of request for the certificate.

Allotment of Units and despatch of Account Statements to FIIs will be subject to RBI approval.

l) Refunds

In accordance with the Regulations, if the Scheme fails to collect the minimum subscription amount specified on Page 50,the Fund shall be liable to refund the money to the applicants.

In addition to the above, refund of subscription money to applicants whose applications are invalid for any reasonwhatsoever will commence immediately after the allotment process is completed. Refunds will be completed within sixweeks of the close of the New Fund Offer. If the Fund refunds the amount after six weeks, interest @ 15% per annum shallbe paid by the AMC. Refund orders will be marked “A/c. Payee only” and drawn in the name of the applicant in the case ofsole applicant and in the name of the first applicant in all other cases. All refund cheques will be sent by Registered PostA.D.

As per the directives issued by SEBI, it is mandatory for applicants to mention their bank account numbers in theirapplications for purchase or Redemption of Units.

Further any application without the mandatory details such as the bank mandate are liable to be rejected.

If the Unitholder fails to provide the Bank mandate, the request for redemption would be considered as not valid and theFund retains the right to reject/withhold the redemption until a proper bank mandate is furnished by the Unitholder andthe provision with respect of penal interest in such cases will not be applicable/ entertained.

m) Redemption of Units

The Units can be redeemed on the dates when repurchase facility is provided (i.e., sold back to the Fund), at the ApplicableNAV (hereinafter defined), subject to adjustment of exit load, if applicable, commencing from not later than 30 days afterthe close of the New Fund Offer. Redemption requests can be made by unit holders in amounts, with a minimum of Rs 500and multiples thereof.

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A Unit holder may request redemption of a specified amount or a specified number of Units, (subject to the minimumredemption amount as mentioned above) the number of Units specified will be considered for deciding the redemptionamount. If only the redemption amount is specified by the Unit holder, the Fund will divide the redemption amount sospecified by the Applicable NAV based price to arrive at the number of Units.

In case an investor has purchased Units on more than one Business Day, the Units purchased prior in time (i.e. those Unitswhich have been held for the longest period of time) will be deemed to have been redeemed first i.e. on a First-in-First-Outbasis.

Unitholders may also request for redemption of their entire holding and close the account by indicating the same at theappropriate place in the Redemption Request Form.

i) Redemption Price

The Redemption Price of the Units will be based on the Applicable NAV subject to the prevalent exit load provisions.The Redemption Price of the Units will be computed as follows:

Redemption Price = Applicable NAV * (1-Exit Load, if any).

The redemption will be at Applicable NAV based prices subject to applicable load structure. Please see section “ LoadStructure” on page 57 for details of exit load

However, subject to the maximum load as permitted under the Regulations, the Trustee has a right to fix, from time totime, the exit load payable by the investors under the Scheme. Notice of the changes in the load structure shall be madeby a suitable display in the Customer Service Centres of the AMC and will be communicated to the intermediaries andinvestors in the matter prescribed by SEBI as outlined in Page 57.

The Fund shall ensure that the Redemption Price is not lower than 95% of the NAV.

ii) Applicable NAV

(i) Purchases including switch ins: Investors can subscribe to the Units of the Scheme at Face value during the NewFund Offer Period only.

In respect of valid applications received upto closing business hours of the last day of New Fund Offer Period bythe Mutual Fund alongwith a local cheque or a demand draft payable at par at the place where the application isreceived, the units will be issued at par.

No applications will be accepted after the cut-off time by the Mutual Fund.

In respect of valid applications with outstation cheques/ demand drafts not payable at par at the place where theapplication is received also, the units will be issued at par.

(ii) Redemptions: In respect of valid applications received upto the cut-off time on the business day on whichrepurchase facility is provided as prescribed on page no. 36 by the Mutual Fund, same day’s closing NAV shall beapplicable.

No applications will be accepted after the cut-off time on the business day on which repurchase facility is providedby the Mutual Fund, as stated above.

Cut-off time for Purchases on the last day of New Fund Offer Period and for redemptions 3.00 p.m.

(iii) Cooling-off period for web based transactions

For all web-based transactions under the schemes of Prudential ICICI Mutual Fund, entered through the websiteof the fund viz. www.pruicici.com, there would be a cooling off period of 30 minutes before the respective cut-offtimes for purchase and sale transactions.

For purchase transactions through the website of the Fund, following rules will apply:

(a) Internet Banking: As stated above, provided the electronic bank confirmation is received simultaneously forweb-based transactions using internet banking.

(b) Applications accompanied by physical cheques/ Demand Drafts: The units will be issued at par, on receipt ofphysical transaction request at the nearest official point of transaction of the AMC within 3 business daysfrom the date of transaction.

iv) Redemption on Maturity

The units will be compulsorily redeemed in full, without any action on part of the unitholders on the completionof 5 years from the date of allotment.

v) Payment of Maturity Proceeds

The Fund will sell the outstanding investments constituting the portfolio of the Scheme at the time of maturity ofthe Scheme. The securities listed on the Exchange would be sold on the Exchange. In case of securities which arenot listed and debt securities, the AMC would initiate the process of asking for quotes from potential buyers /market intermediaries. The AMC shall ensure that the sale of the outstanding Portfolio Investments is at fairmarket value or at the highest bid.

In the event that the proceeds of sale of the outstanding Portfolio Investments are insufficient to redeem the unitsin full, neither the AMC nor the Trustee shall be liable to the Unitholders provided that they have complied withthe procedure set out above and have acted in good faith and in the best interest of the Unitholders.


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vi) Payment of Maturity Proceeds to NRIs/FIIs

Credit balances in account of the NRI/FII will be subject to any procedures laid down by the RBI. Such maturityproceeds will be paid by means of a rupee cheque payable to the designated NRE/NRO account of the unit holderor by a US dollar (or any other currency) draft drawn at the exchange rates prevailing at that time and subject to RBIprocedures and approvals and subject to deduction of tax at source, as applicable. All bank charges in connectionwith such payment will have to be borne by the unit holder and / or the Scheme by way of ongoing expenses.

Payment to NRI/FII unit holder will be subject to the relevant laws/guidelines of the Reserve Bank of India as areapplicable from time to time (subject to deduction of tax at source as applicable).

a. Wherever the investment is made on repatriation basis, the amount representing the dividend and maturityproceeds may be remitted through normal banking channel or credited to NRE/FCNR/NRO/NRNR account ofthe non-resident investor.

b. Where the investment is made by remittance from abroad through normal banking channel or by debit toNRE/FCNR/NRO account of the non-resident investor on non-repatriation basis, the dividend and maturityproceeds may be credited to the NRO/NRNR account of the non-resident investor.

c. Where the investment is made by debit to NRNR account of the non-resident investor, the dividend andmaturity proceeds shall be credited to NRNR account of the non-resident investor.

d. In case of FIIs, dividend and maturity proceeds will be paid by means of rupee cheque payable to the SpecialNon- Resident Rupee Account maintained with a designated bank.

The Fund will not be liable for any delays or for any loss on account of exchange fluctuations, while converting therupee amount in US Dollar or any other currency.

As per the directives issued by SEBI, it is mandatory for applicants to mention their bank account numbersin their applications for purchase or redemption of Units. If the Unitholder fails to provide the Bank mandate,the request for redemption would be considered as not valid and the Fund retains the right to reject/withhold theredemption until a proper bank mandate is furnished by the Unitholder and the provision with respect of penalinterest in such cases will not be applicable/ entertained.

A fresh Account Statement/ Transaction Confirmation Statement will be sent by the Registrar to the redeeminginvestors, indicating the new balance to the credit in the Account.

The Fund may close a Unitholder’s account if, as a consequence of redemption, the balance falls below Rs.5,000and a period of 30 (thirty) days has elapsed after the issue of notice to the Unitholder by the AMC requesting himto bring the amount in the account to the minimum described above and the Unitholder fails to do so.

If a Unitholder makes a redemption request immediately after purchase of Units, the Fund shall have a right towithhold the redemption request till sufficient time has elapsed to ensure that the amount remitted by him (forpurchase of Units) is realized and the proceeds have been credited to the Scheme’s Account. However, this is onlyapplicable if the value of redemption is such that some or all of the freshly purchased Units may have to beredeemed to effect the full redemption.

vi) Non receipt of email communication by Investors

When an investor has communicated his/her e-mail address and has provided consent for sending communicationonly through email, the Mutual Fund / Registrars are not responsible for email not reaching the investor and forall consequences thereof.

The Investor shall from time to time intimate the Mutual Fund / its transfer agents about any changes in the emailaddress.

viii) Effect of Redemptions

The Unit Capital and Reserves of the Scheme will stand reduced by an amount equivalent to the product of thenumber of Units redeemed and the Applicable NAV as on the date of redemption.

ix) Fractional Units

Since a request for redemption or purchase is generally made in Rupee amounts and not in terms of number ofUnits of the Scheme, an investor may be left with Fractional Units. Fractional Units will be computed and accountedfor up to two decimal places. However, Fractional Units will in no way affect the investor’s ability to redeem theUnits, either in part or in full standing to the Unitholder’s credit.

x) Signature mismatch cases

While processing the redemption / switch out request in case the AMC / Registrar come across a signaturemismatch, then the AMC/ Registrar reserves the right to process the redemption only on the basis of supportingdocuments confirming the identity of the investors. List of such documents would be notified by AMC from timeto time on its website.

xi) Right to Limit Redemptions

After complying with the regulatory requirements, the Trustee and the Board of Directors of the AMC may, in thegeneral interest of the Unitholders of the Scheme offered under this Offer Document and keeping in view theunforeseen circumstances/unusual market conditions, limit the total number of Units which may be redeemed onany Business Day to 5% of the total number of Units then in issue, or such other percentage as the Trustee maydetermine.

56


Any Units, which by virtue of these limitations are not redeemed on a particular Business Day, will be carriedforward for Redemption to the next Business Day, in order of receipt. Redemptions so carried forward will bepriced on the basis of the Applicable NAV (subject to the prevailing load) of the Business Day on which Redemptionis made. Under such circumstances, to the extent multiple Redemption requests are received at the same time ona single Business Day, Redemptions will be made on pro-rata basis, based on the size of each Redemption request,the balance amount being carried forward for Redemption to the next Business Day(s).

Suspension or restriction of repurchase/ redemption facility under any scheme of the mutual fund shall be madeapplicable only after obtaining the approval from the Boards of Directors of the AMC and the Trustees. Afterobtaining the approval from the AMC Board and the Trustees, intimation would be sent to SEBI in advanceproviding details of circumstances and justification for the proposed action shall also be informed.

xii) Suspension of Sale and Redemption of Units

The Trustee and the Board of Directors of the AMC may decide to temporarily suspend determination of NAV ofthe Scheme offered under this Document, and consequently sale and redemption of Units, in any of the followingevents:

1. When one or more stock exchanges or markets, which provide basis for valuation for a substantial portion ofthe assets of the Scheme are closed otherwise than for ordinary holidays.

2. When, as a result of political, economic or monetary events or any circumstances outside the control of theTrustee and the AMC, the disposal of the assets of the Scheme is not reasonable, or would not reasonably bepracticable without being detrimental to the interests of the Unitholders.

3. In the event of breakdown in the means of communication used for the valuation of investments of theScheme, without which the value of the securities of the Scheme cannot be accurately calculated.

4. During periods of extreme volatility of markets, which in the opinion of the AMC are prejudicial to theinterests of the Unitholders of the Scheme.

5. In case of natural calamities, strikes, riots and bandhs.

6. In the event of any force, majeure or disaster that affects the normal functioning of the AMC or the Registrar.

7. If so directed by SEBI.

In the above eventualities, the time limits indicated above, for processing of requests for purchase and redemptionof Units will not be applicable.

Suspension or restriction of repurchase/ redemption facility under any scheme of the mutual fund shall be madeapplicable only after obtaining the approval from the Boards of Directors of the AMC and the Trustees. Afterobtaining the approval from the AMC Board and the Trustees, an intimation would be sent to SEBI in advanceproviding details of circumstances and justification for the proposed action shall also be informed.

xiii) Permanent Account Number (PAN)

If the application is for 50,000 or more, then the PAN and IT Circle/Ward/District (if available) of the applicantshould be mentioned and a copy of PAN Card/Form 60/ 61 should be attached with the application form. In caseof any person who does not have a permanent account number shall make a declaration in Form No.60/61. Anyapplication form without these details will not be accepted by the fund.

xiv) Unique Identification Number (UIN)

As per the directives issued by SEBI, obtaining / quoting UIN has been temporarily suspended. If it is mademandatory in future, for applicants who are termed as specified investor, to quote UIN (Unique IdentificationNumber) (allotted under SEBI MAPIN Regulation) in the application form, any application form without thesedetails may not be accepted by the fund.

xv) Dormant Account Locking

Investment Folios under which there are no transactions for last 24 months shall be classified as dormant folios.Redemption, change of address and change of bank requests in such accounts will be put through only aftersecondary checks and such additional safeguards that may be stipulated from time to time.


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SECTION IV

LOAD STRUCTURE, FEES AND EXPENSES

A) LOAD STRUCTURE OF THE SCHEME

� Entry Load

The Trustees for the present does not intent to charge any entry load on the investments made.

� Exit Load

For the redemptions made before the Maturity Date of the Scheme, i.e redemptions made during the repurchasefacility period, the following exit load structure will be applicable:






5 If the amount sought to be redeemed is invested for a period of more than four yearsfrom the date of allotment but redeemed before the date of maturity of the Scheme. 1.00%


Subject to the Regulations, the Trustee reserves the right to modify/alter the load structure and may decide to introducea differential load structure on the Units subscribed/redeemed on any Business Day. Such changes will be applicable forprospective investments. The Trustee shall arrange to display a notice in the Customer Service Centers of the AMCbefore the change of the then prevalent load structure. The addendum detailing the changes in load structure will beattached to offer documents and abridged offer documents. The addendum will also be circulated to all the distributors/brokers so that the same can be attached to all the offer documents and abridged offer documents in stock. Thisaddendum will also be sent along with the newsletter to the Unitholders immediately after the changes. Changes inthe load structure may be stamped in the acknowledgement slip issued by the Fund after the changes in load structure.All loads including CDSC for each scheme shall be maintained in a separate account and may be utilised towardsmeeting the selling and distribution expenses. Any surplus in this account may be credited to the scheme, wheneverfelt appropriate by the AMC.

B) FEES AND EXPENSES OF THE SCHEME

As per the provisions of the Regulations, read with the amendments thereto, the following fees and expenses will becharged to the Scheme:

i. New Fund Offer Expenses

The new fund offer expenses charged to the Scheme in this Offer Document will be limited to 3.75% of the amountmobilised under the New Fund Offer. Under the Regulations, the Scheme is entitled to charge new fund offer expensesup to a maximum of 6% of initial resources raised under the Scheme. The new fund offer expenses charged to theScheme may be amortised over a period not exceeding five years and would be included in the NAV. However, the samewould not be included in the NAV for determination of Investment management and Trustee fees. The above is as perthe SEBI Regulations. The same is illustrated as under:

Face value A Rs. 10.00Entry Load B NilIssue Price (A+B) C 10.00NFO Expenses (3.75% of A) D Re. 0.3750Maximum NFO Expenses (B+D) E Re. 0.3750NFO expenses borne out of Entry load F NilBalance NFO expenses to be charged to the Scheme (E-F) G 0.3750Amount available for investment for every Rs. 10 (C-E) H 9.625Amortisation of new fund offer expenses per unit per day (G/1825 days) I Re.0.0002Balance NFO expenses to be carried forward (G-I) J Re. 0.3748NAV on first day (A-I) K 9.9998

The above example is for the illustration purpose only. The actual NAV will vary depending on the extent of actual NFOexpenses being charged to the Scheme within the permitted range as defined in this offer document and whether theinitial expenses are amortised or are charged to the Scheme without amortisation. The above example is also subjectto rounding-off.

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i. Estimated Recurring Expenses

Description (% per annum of average net assets)

Investment Management Fee 1.25Trustee Fee 0.05Custodian Fee 0.20Marketing & Selling 0.50Registrar & Transfer Agent 0.10Audit Costs 0.01Costs of Investor Communications 0.12Cost of Funds Transfer 0.14Costs for A/c Statements, Dividend etc. 0.11Cost of Statutory Advertisements 0.01Other Expenses 0.01Total Recurring Expenses 2.50

The purpose of the above table is to assist the investor in understanding the various costs and expenses that aninvestor in the Scheme will bear. These estimates are based on a corpus size of Rs.1 crore under the Scheme and wouldchange to the extent assets are lower or higher. If the corpus size is in excess of Rs.1 crore, the above mentionedrecurring expenses in the Scheme would change. The above expenses are subject to inter-se change and may increase/decrease as per actual and/or any change in the Regulations.

These estimates have been made in good faith as per information available to the AMC and the total expenses may bemore than as specified in the table above. However, as per the Regulations, the total recurring expenses that can becharged to the Scheme in this Offer Document shall be subject to the applicable guidelines. Expenses over and abovethe permitted limits will be borne by the AMC.

The recurring expenses of the Schemes, and the additional management fee shall be as per the limits prescribed underSub-Regulations (6) of Regulations 52 of the Regulations and shall not exceed the limits prescribed thereunder.

As per the Regulations, the maximum recurring expenses that can be charged to the 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. 300 crore Over Rs. 700 crore

2.50% 2.25% 2.00% 1.75%

Subject to Regulations, expenses over and above the prescribed limit shall be borne by the Asset ManagementCompany.

C) EXPENSES OF THE PAST SCHEMES

(i) New Fund Offer expenses of the past Schemes

During the last one fiscal year, ICICI Mutual Fund launched Prudential ICICI Fixed Maturity Plan Series 25 - Quarterly Plan,Prudential ICICI Discovery Fund, Prudential ICICI Fixed Maturity Plan Series 25 - 15 Months Plan, Prudential ICICI FixedMaturity Plan - Series 26 - Quarterly Plan, Prudential ICICI Fixed Maturity Plan - Series 25 - Yearly Plan, Prudential ICICI LongTerm Floating Rate Plan, Prudential ICICI Emerging S.T.A.R. (Stock Targeted At Returns) Fund, Prudential ICICI Plan I (a closeended scheme), Prudential ICICI Blended Plan, Prudential ICICI Infrastructure Fund and Prudential ICICI Services IndustriesFund on, August 10, 2004, August 16, 2004, August 17, 2004, August 31, 2004, September 9, 2004, September 15,2004, October 28, 2004, March 24, 2005, April 28, 2005, July 28, 2005 and October 13, 2005 respectively.

New Fund Offer Expenses - Comparison of Estimated To Actual

The New Fund Offer Expenses relating to Prudential ICICI Fixed Maturity Plan Series 25 - Quarterly Plan, Prudential ICICIDiscovery Fund, Prudential ICICI Fixed Maturity Plan Series 25 - 15 Months Plan, Prudential ICICI Fixed Maturity Plan - Series26 - Quarterly Plan, Prudential ICICI Fixed Maturity Plan - Series 25 - Yearly Plan, Prudential ICICI Long Term Floating RatePlan and Prudential ICICI Plan I were borne by the AMC.


59

Emerging S.T.A.R. Fund Blended Plan - Plan A Blended Plan - Plan B Infrastructure Fund Services Industries Fund

Description Estimated - Actuals - Estimated - Actuals - Estimated - Actuals - Estimated - Actuals - Estimated - Actuals -% to Target % to % to Target % to % to Target % to % to Target % to % to Target % to

Amount Subscription Amount Subscription Amount Subscription Amount Subscription Amount Subscription

Advertising, printing andother marketing expenses * 0.0000 * 0.0922 * 0.0921 * 0.2063 * 0.3615

Collection, Registrar andBank charges * 0.0300 * 0.0020 * 0.0028 * 0.0414 * 0.0379

Selling Commissions * 0.2700 * 0.0000 * 0.0000 * 0.7264 * 0.6787

Total 3.7500 0.3000 3.7500 0.0942 3.7500 0.0950 3.7500 0.9741 3.7500 1.0782

Target Amount/Amount Rs.1 Lakh Rs.198.38 Rs.1 Lakh Rs. 963.80 Rs.1 Lakh Rs.365.07 Rs.1 Lakh Rs. 1397.92 Rs.1 Lakh Rs. 656.57Mobilised crores crores crores crores crores

Note:* The New Fund Offer expenses charged to the Scheme, as per Offer Document were limited to 3.75% of the amount mobilized under the New Fund Offer Period.

ii) Condensed Financial Information:

a) Condensed Financial Information for the period ended March 31, 2003.

Monthly Fixed Maturity Fixed Maturity Fixed Maturity Gilt TreasuryIncome Plan Plan - Plan – Plan – 1 Year

Qtly 1 Half Yearly 1 Yearly 1 Plus Plan***

Historical Per Unit StatisticsDate of Allotment November 10, December 20, December 20, December 20, April 30,

2000 2000 2000 2000 2001NAV at the beginning of the year (Rs.)Growth Option 11.7643 11.2079 11.1988 11.2644 -Dividend Option - 10.0378 10.2373 10.1970 10.0213Monthly Option 10.1792 - - -Quarterly Option 10.2228 - - - -Half Yearly Option 10.2187 - - - -Net Income per unit 1.02 0.14 5.90 13.82 N.A.Dividends - - - -Monthly option 0.6692 - - - -Quarterly option 0.6963 - - - -Half-Yearly Option 0.7346 - - - -Transfer to Reserves - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 10.69% 7.99% 7.97% 8.27% -Benchmark Index Crisil MIP $ $ $ -

Blended IndexReturn compared to Benchmark Index 1.60% # # # -Net Assets end of period (Rs. Crore) 275.36 34.98 0.51 0.43 -NAV at the end of the periodGrowth Option 12.7427 11.9131 11.9083 11.9840 -Dividend Option - 10.6695 10.8855 10.8482 -Monthly Option 10.3323 - - - -Quarterly Option 10.3550 - - - -Half Yearly Option 10.3177 - - - -Institutional Option – Monthly Dividend 10.6701Ratio of Recurring Exps to Net Assets 1.58% 0.55% 0.55% 0.60% 0.30%Ratio of Recurring Exps to Net Assets-Institutional Plan-Annualised 0.25%

60


Fixed Fixed Fixed Fixed Fixed Fixed Child Child ShortMaturity Maturity Maturity Maturity Maturity Maturity Care Care Term

Plan - Plan - Plan - Plan - Plan - Plan - Plan- Plan- PlanQuarterly Quarterly Half Yearly 2 Yearly 3 Yearly 4 Gift Study

2 3 Yearly 2 Option Option

Historical Per UnitStatisticsDate of Allotment January February March March June Sept. August August October

22, 2001 20, 2001 22, 2001 22, 2001 21, 2001 20, 2001 31, 2001 31, 2001 25, 2001NAV at the beginning ofthe year (Rs.) 11.16 10.89Growth Option 11.0390 11.0555 10.8363 11.0292 10.6753 10.4381 10.3915Dividend Option 10.1450 10.0855 10.0388 10.0110 10.6753 10.4381 - - 10.0433Net Income per unit 3.00 1.69 2.25 0.61 0.69 269.99 0.20 0.57 1.14Dividends 0.1847 0.1788 - - - - - - 0.0924Transfer to Reserves - - - - - - - - -Compounded AnnualisedReturns (Based on NAVsof Growth Option) 7.68% 7.86% 6.84% 8.44% 8.22% 7.48% 4.16% 8.76% 8.47%Benchmark Index $ $ $ $ $ $ Crisil Crisil MIP Crisil

Balanced Blended CompositeFund Index Index Bond Fund

Return compared toBenchmark Index $ $ $ $ $ $ -0.76% -1.88% -2.49%Net Assets end of period(Rs. Crore) 0.92 5.51 0.04 10.51 20.41 0.01 10.72 12.36 1078.83NAV at the end of the period 10.67 11.42Growth Option 11. 7551 11.7293 11.4328 11.7817 11.5055 11.1635 11.2323Dividend Option 10.6074 10.5122 10.5916 10.6939 11.5055 11.1635 - - 10.7561Institutional Option Growth - - - - - - - - 11.2345Ratio of Recurring Exps toNet Assets 0.55% 0.55% 0.55% 0.60% 0.60% 0.60% 2.00% 1.50% 1.00%Ratio of Recurring Exps toNet Assets-Institutional Plan-Annualised - - - - - - - - 0.80%

Fixed Index Fund Long Sweep Plan Fixed FixedMaturity Term Plan Maturity Maturity

Plan - One Year One YearYearly 5 Plan – Plan –

Series 6 Series 7

Historical Per Unit StatisticsDate of Allotment March 22, February 26, March 28, March 6, June 28, August 19,

2002 2002 2002 2002 2002 2002NAV at the beginning of the year (Rs.) 9.5200 10.0520 # #Growth Option 10.0354 10.0096Dividend Option - - - - - -Net Income per unit 0.85 (0.44) 0.79 0.20 0.66 0.32Dividends - - - - - -Transfer to Reserves - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 8.43% -15.45% 13.52% 5.15% 6.55%* 3.14%*Benchmark Index $ Nifty Crisil Crisil Liquid $ $

Composite Fund IndexBond Fund

Return compared to Benchmark Index # 0.89% 3.16% -1.10% # #Net Assets end of period (Rs. Crore) 93.77 13.51 234.34 22.86 139.96 1.27NAV at the end of the period 8.3278 11.3634 10.5508 10.6555 10.3140Growth Option 10.8643 - - - - -Dividend Option 10.8643 - - - - -Ratio of Recurring Exps to Net Assets 0.60% 1.25% 0.60% 1.03% 0.60% 0.60%Ratio of Recurring Exps to Net Assets-Institutional Plan-Annualised - - - - - -


61

Fixed Flexible Dynamic SPIcE Fixed FloatingMaturity Income Plan Plan Maturity Rate Plan

Plan – Plan –Yearly 8*** Yearly 12

Historical Per Unit StatisticsDate of Allotment September 17, September 27, October 31, January 10, March 21, March 29,

2002 2002 2002 2003 2003 2003NAV at the beginning of the year (Rs.) # # # # # #Net Income per unit NA 0.73 (0.15) (0.04) 0.01 0.004Dividends - - - - - -Transfer to Reserves - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) Nil 7.74%* 2.80%* -9.40%* 0.19%* 0.05%*Benchmark Index $ I-Sec Si-Bex Nifty SENSEX $ CRISIL Liquid

Fund IndexReturn compared to Benchmark Index # 4.20% 0.14% -0.16% # @@Net Assets end of period (Rs. Crore) 0.00 587.77 78.31 19.35 42.23 528.11NAV at the end of the period - 10.7745 10.2799 30.4342 10.0046Growth Option 10.0191Dividend Option - - - - - -Institutional Option Growth 10.0208Ratio of Recurring Exps to Net Assets 0.60% 1.00% 2.00% 0.80% 0.75% 0.75%Ratio of Recurring Exps to Net Assets-Institutional Plan-Annualised - - - 0.20% -

Notes:1. Returns since inception are for the growth plan in each case.2. While arriving at Net Income per unit, Income Equalisation Reserve and mark to market has not been considered and it is calculated on the

basis of closing units as of March 31, 2003.3. The Compounded annualized returns of each scheme are computed from inception of the Scheme till the end of the period of the respective

condensed financial information whereas the returns compared to benchmark index are computed for the financial year.* Fixed Maturity One Year Plan – Series 6, 7, 8, Fixed Maturity Plan – Yearly 12, Prudential ICICI Flexible Income Plan, Prudential ICICI

Dynamic Plan, SENSEX Prudential ICICI Exchange Traded Fund and Prudential ICICI Floating Rate Plan have not completed one year sincethe date of their launch. Returns are computed in absolute terms and for Growth Options only from the date of allotment. The NAV on thedate of allotment is taken as Rs.10 for computation of returns

*** All the units holders under the schemes- Prudential ICICI Gilt Fund Treasury 1 Year Plus Plan and Prudential ICICI Fixed Maturity Yearly PlanSeries 8 have redeemed their unit holdings and units are nil as on 31/03/03

# These Schemes were launched during the year and these schemes were not in existence at the beginning of the year.$ Appropriate benchmark index is not available.@@ Since the units under Scheme were allotted on March 29, 2003 the return compared to Benchmark Index detail is not provided.

c) Condensed Financial Information for the period ended March 31, 2004

Fixed Maturity Fixed Maturity Child Care Plan- Child Care Plan-Plan – Yearly 3^ Plan - Yearly 4^ Gift Option Study Option

Historical Per Unit StatisticsDate of Allotment June 21, 2001 Sept 20, 2001 August 31, 2001 August 31, 2001NAV at the beginning of the year (Rs.) 10.67 11.42Growth Option 11.5055 11.1635 - -Dividend Option - - - -@@ Net Income per unit N.A. N.A. 1.45 1.10Dividends 0.7908 - - -Transfer to Reserves - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) N.A N.A. 29.52% 14.32%Benchmark Index $ $ Nifty Crisil MIP BlendedIndexReturn compared to Benchmark Index $ $ 1.81% 5.02%Net Assets end of period (Rs. Crore) N.A N.A. 25.10 21.87NAV at the end of the period - - 19.51 14.13Growth Option - - - -Dividend Option - - - -Ratio of Recurring Exps to Net Assets 0.60% 0.57% 2.00% 1.50%

62


Short Fixed Index Long Term Sweep Fixed FixedTerm Maturity Fund Plan Plan Maturity MaturityPlan Plan – One Year One Year

Yearly 5 Plan – Plan –Series 6@ Series 7^

Historical Per Unit StatisticsDate of Allotment October 25, March 22, February 26, March 28, March 6, July 21, August 19,

2001 2002 2002 2002 2002 2003 2002NAV at the beginning of the year (Rs.) 8.3278 10.5508 10.6555 10.3140Growth Option 11.2323 10.8643 - 11.3634 - - -Dividend Option 10.7561 - - - - - -Institutional Option - Growth 11.2345 - - - - - -@@ Net Income per unit 1.1672 0.4563 1.9315 1.2781 0.2800 1,269.5603 NADividends 0.8039 - - - - - -Fortnightly Dividend Option 0.5644 - - - - - -Institutional Fortnightly Dividend Option 0.5995 - - - - - -Institutional Dividend Option 0.6027 - - - - - -Transfer to Reserves - - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 7.58% 6.19% 22.07% 11.26% 4.53% 29.37%* NABenchmark Index Crisil Short $ Nifty Crisil Crisil Liquid $ $

Term Composite Fund IndexBond Fund Bond Fund

IndexReturn compared to Benchmark Index 0.51% $ 1.13% 0.12% -0.45% $ $Net Assets end of period (Rs. Crore) 1,176.93 5.72 21.88 245.28 59.90 0.02 N.A.NAV at the end of the period - 11.2941 15.1811 12.3924 10.9616 12.9370 N.A.Growth Option 11.9441 - - - - - -Dividend Option 10.6050 - - - - - -Institutional Option Growth 11.9703 - - - - - -Institutional Option - Dividend 10.8415Institutional Fortnightly Option –Dividend 10.8443 - - - - - -Dividend (Fortnightly) 10.6052 - - - - - -Ratio of Recurring Exps to Net Assets 1.00% 0.60% 1.25% 0.60% 1.00% 0.60% 0.60%Ratio of Recurring Exps to Net Assets-Institutional Plan-Annualised 0.80% - - - - - -

Flexible Flexible Dynamic SPIcE Fixed Floating Fixed FixedIncome Income Plan Maturity Rate Plan Maturity Maturity

Plan Plus Plan – Plan – Plan – NRIPlan^ Yearly 12 NRI Series Series 4 –

4 – Half Quarterly^Yearly

Historical Per Unit StatisticsDate of Allotment September May 22, October 31, January 10, March 17, March 28, October 21, October 21,

27, 2002 2003 2002 2003 2003 2003 2003 2003NAV at the beginning of the year (Rs.) 10.7745 # 10.2799 30.4342 10.0046 # #Growth Option - - - - 10.0191 - - -Institutional Option - Growth - - - - 10.0208 - - -@@ Net Income per unit 1.4298 N.A. 8.6880 19.3355 0.6369 0.1441 0.2498 N.A.Dividends 0.1200 - - - - 0.0182 - 0.1090Dividend Option (Quarterly) 0.4000Divide4nd Option (fortnightly) - - -Transfer to Reserves - - - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 12.48% N.A. 55.75% 52.60% 5.97% *5.04% *2.50% N.A.Benchmark Index I-Sec N.A. Nifty BSE $ CRISIL $ $

Composite SENSEX Liquid FundIndex Index

Return compared to Benchmark Index -2.26% N.A. 1.06% 1.60% $ 0.66% $ $Net Assets end of period (Rs. Crore) 822.16 N.A. 109.35 15.67 44.90 512.71 65.10 N.A.NAV at the end of the period N.A. - 56.2998 - - 10.2498Growth Option 11.9432 18.7310 10.6156 10.5040Dividend Option 10.6894 - 8.0733 - - 10.0421 N.A.Quarterly Option 10.6894 - - - - - - -Institutional Option Growth - - - - 10.6762 - - -Ratio of Recurring Exps to Net Assets 1.00% 0.50% 2.08% 0.80% 0.75% 0.75% 0.10% 0.55%Ratio of Recurring Exps to Net Assets-Institutional Plan-Annualised - - - - 0.20% -


63

Fixed Gilt Fund Fixed Fixed Gilt Fund IncomeMaturity Investment Maturity Maturity Treasury Multiplier

Plan – NRI Plan - Plan – NRI Plan – Plan - FundSeries 6 – PF Option Series 8 – Series 23 PF Option

Quarterly^ Quarterly^

Historical Per Unit StatisticsDate of Allotment November 21, November 19, December 17, December 15, February 11, March 30,

2003 2003 2003 2003 2004 2004NAV at the beginning of the year (Rs.) # # # # # #@@ Net Income per unit NA 0.1975 NA 0.1635 0.0435 -0.0132Dividends 0.1103 - 0.1121 - - -Option A - - - 0.1375 - -Transfer to Reserves - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) NA *2.91% NA *1.53% *1.63% *-0.76%Benchmark Index $ I-Sec Li Bex $ $ I-Sec Si Bex CRISIL

CompositeBond Fund

IndexReturn compared to Benchmark Index $ 0.36% $ $ 0.64% -0.80%Net Assets end of period (Rs. Crore) NA 111.14 NA 66.04 43.31 238.70NAV at the end of the period NA 10.2906 NA 10.1633 9.9240Option B - - - 10.1532 - -Option C - - - 10.1342 - -Option D - - - 10.1342 - -Option E - - - 10.1354 - -Option F - - - 10.1238 - -Option G - - - 10.1371 - -Option H - - - 10.1336 - -Ratio of Recurring Exps to Net Assets 0.56% 1.10% 0.55% 0.49% 1.50% 2.09%

Fixed Fixed Advisor Advisor Advisor Advisor AdvisorMaturity Maturity Series – Series – Series – Series – Series –

Plan – Plan – Aggressive Cautious Moderate Very VerySeries 24 Series 24 - Plan Plan Plan Aggressive Cautious– Yearly Quarterly Plan Plan

Historical Per Unit Statistics

Date of Allotment March March December December December December December20, 2004 20, 2004 18, 2003 18, 2003 18, 2003 18, 2003 18, 2003

NAV at the beginning of the year (Rs.) # # # # # # #@@ Net Income per unit 0.0174 0.0163 0.0712 0.1110 0.0502 0.3141 0.2754Dividends - - - - - - -Transfer to Reserves - - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) *0.18% *0.17% *-0.02% *2.75% *1.64% *-1.41% *1.42%Benchmark Index $ $ $$ $$ $$ $$ $$Return compared to Benchmark Index $ $ -1.07% 1.53% 0.55% -2.34% 0.20%Net Assets end of period (Rs. Crore) 71.09 91.95 30.12 130.00 49.39 28.41 25.24NAV at the end of the period 10.0176 10.0169 9.9982 10.2753 10.1643 9.8586 10.1419Dividend Plan – NRI Option - - 9.5898 9.9692 9.7985 - -Ratio of Recurring Exps to Net Assets 0.20% 0.22% 0.53% 0.33% 0.43% 0.66% 0.19%

Notes:

1) Returns since inception are for the growth plan in each case except in case of Fixed Maturity Plan – NRI Series 4 – Half Yearly where thereis no Growth Option. For Fixed Maturity Plan – Yearly Series 23 the returns have been calculated on the basis of the NAV of Option H.

2) While arriving at Net Income per unit, Income Equalisation Reserve and mark to market has not been considered and it is calculated on thebasis of closing units as of March 31, 2004.

3) The Compounded annualized returns of each scheme are computed from inception of the Scheme till the end of the period of the respectivecondensed financial information whereas the returns compared to benchmark index are computed for the financial year.* Fixed Maturity One Year Plan – Series 6, Prudential ICICI Floating Rate Plan, Fixed Maturity Plan – NRI Series 4 – Half Yearly,

Prudential ICICI Gilt Fund Investment Plan & Treasury Plan – PF Option, Fixed Maturity Plan – NRI Series 8 – Quarterly, FixedMaturity Plan – Yearly Series 23, Prudential ICICI Income Multiplier Fund, Fixed Maturity Plan – Series 24 – Quarterly and Yearly andPrudential ICICI Advisor Series – Aggressive, Cautious, Moderate, Very Aggressive and Very Aggressive Plans have not completed oneyear since the date of their launch. Returns are computed in absolute terms and for Growth Options only from the date of allotment.The NAV on the date of allotment is taken as Rs.10 for computation of returns

* * Un-audited.# These Schemes were launched during the year and these schemes were not in existence at the beginning of the year.$ Appropriate benchmark index is not available.@ All the unitholders under Prudential ICICI Fixed Maturity Plan – One Year Plus Series – 6 have redeemed their units on July 14, 2003

and there was fresh subscription on July 21, 2003 at Rs. 10.00, hence, simple absolute returns have been calculated.

64


@@ The Net Income per unit mentioned has excluded Income equalisation & marked to market calculated on the basis of market value ofnet assets of the Scheme on the valuation date, divided by the number of units outstanding on that date. It may be noted that, as itmerely indicates the net income per unit on the valuation date calculated based upon outstanding units of the scheme on the givendate, it is subject to vary from time to time and does not reflect any income / loss of the scheme.

^ All the unit holders under Prudential ICICI Fixed Maturity Yearly Plan Series 3, 4 & 7, Fixed Maturity Plan – NRI Series 4, 6 & 8 –Quarterly Option and Prudential ICICI Flexible Income Plus Plan have redeemed their units and unit balance are nil as on the date ofthis report.

$$ As provided in the offer document the Benchmark Indices for various Plans under Prudential ICICI Advisor Series are as given below:

Benchmark Indices Aggressive Cautious Moderate Very Aggressive Very CautiousPlan Plan Plan Plan Plan

Nifty 65 % 20% 50% 90% NACrisil Composite Bond Fund Index 30% 60% 35% NA 40%Crisil Liquid Fund Index 5% 20% 15% 10% 60%

d) Condensed Financial Information for the period ended March 31, 2005

Child Care Plan- Child Care Plan- Short Term Plan Index FundGift Option Study Option

Historical Per Unit StatisticsDate of Allotment 31-Aug-01 31-Aug-01 25-Oct-01 26-Feb-02NAV at the beginning of the year (Rs.) 19.51 14.13 15.1811Growth Option 11.9440Dividend Option 10.6050Quarterly OptionInstitutional Growth 11.9703Institutional Dividend 10.8415Institutional Fortnightly Dividend 10.8443Fortnightly Dividend 10.6052@@ Net Income per unit 4.99 1.82 0.78 48.92Dividend Option/Plan A Dividend 0.4571Dividend Option Institutional/Plan B Dividend Option 0.4865Fortnightly Dividend Option 0.4839Institutional Fortnightly Dividend Option 0.5204Compounded Annualised Returns(Based on NAVs of Growth Option) 26.86% 12.11% 6.91% 19.24%Benchmark Index Nifty Crisil MIP Crisil Short Term Nifty

Blended Index Bond Fund IndexReturn compared to Benchmark Index 6.44% 4.55% 2.33% -1.30%Net Assets end of period (Rs. Crore) 41.37 26.98 518.24 1.53NAV at the end of the periodGrowth Option 23.46 15.0645 12.5777 17.2347Dividend Option 10.6981Institutional Growth 12.6301Institutional Dividend 10.9396Institutional Fortnightly Dividend 10.9069Fortnightly Dividend 10.6706Ratio of Recurring Exps to Net Assets forRegular Plans/Plan A % 2.00 1.50 1.00 1.25Ratio of Recurring Exps to Net Assets forInstitutional Plans/Plan B % 0.8Transfer to Reserves Nil Nil Nil Nil


65

Long term Plan Sweep Plan @Fixed FlexibleMaturity One Income Plan

Year Plan –Series 6

Historical Per Unit StatisticsDate of Allotment 28-Mar-02 6-Mar-02 29-Jul-04 27-Sep-02NAV at the beginning of the year (Rs.) 10.9616 *Growth Option 12.3924 11.9432Dividend Option 10.6894Quarterly Option 10.6894@@ Net Income per unit 32.83 1.12 0.35 0.36Dividends (inclusive of distribution tax if, any)Dividend Option/Plan A Dividend 1.9999 0.4000Quarterly Option 0.5000Compounded Annualised Returns(Based on NAVs of Growth Option) 10.93% 4.22% 3.43% 8.14%Benchmark Index Crisil Composite Crisil Liquid Fund $ CRISIL

Bond Fund Index CompositeBond Fund

Return compared to Benchmark Index 10.25% -0.59% $ 1.66%Net Assets end of period (Rs. Crore) 1.32 10.81 224.49 101.71NAV at the end of the periodGrowth Option 13.6654 11.3529 10.3433 12.1710Dividend Option 10.1893 10.4863Quarterly Option 10.4135Ratio of Recurring Exps to Net Assetsfor Regular Plans % 0.60 1.00 0.25 1.00Transfer to Reserves Nil Nil Nil Nil

Dynamic Plan SENSEX Gilt Fund Gilt FundPrudential ICICI Investment Treasury

Exchange Plan - Plan -Traded Fund PF Option PF Option

Historical Per Unit StatisticsDate of Allotment 31-Oct-02 10-Jan-03 19-Nov-03 11-Feb-04NAV at the beginning of the year (Rs.) 56.2998 10.2906 10.1633Growth Option 18.731Dividend Option 8.0733@@ Net Income per unit 1.31 830.77 0.18 0.21Compounded Annualised Returns(Based on NAVs of Growth Option) 50.56% 35.34% 3.08% 3.93%Benchmark Index Nifty BSE SENSEX I-Sec Li Bex I-Sec Si BexReturn compared to Benchmark Index 26.30% 0.74% 3.48% -0.97%Net Assets end of period (Rs. Crore) 266.72 0.55 118.23 111.20NAV at the end of the periodGrowth Option 26.8776 65.7990 10.4224 10.4466Dividend Option 11.5918Ratio of Recurring Exps to Net Assets for Regular Plans % 2.42 0.80 1.10 1.50Transfer to Reserves Nil Nil Nil Nil

Income Multiplier Plan Fixed Maturity Plan –Series 24 – Yearly

Historical Per Unit StatisticsDate of Allotment 30-Mar-04 20-Mar-04NAV at the beginning of the year (Rs.) 9.924 10.0176@@ Net Income per unit 0.45 0.25Compounded Annualised Returns(Based on NAVs of Growth Option) *8.84% 5.14%Benchmark Index Crisil MIP Blended Index $Return compared to Benchmark Index 7.50% $Net Assets end of period (Rs. Crore) 128.08 142.77NAV at the end of the periodGrowth Option 10.8862 10.5308Ratio of Recurring Exps to Net Assets for Regular Plans % 2.15 0.20Transfer to Reserves Nil Nil

66


Advisor Advisor Advisor Advisor AdvisorSeries - Series - Series - Series-Very Series-Very

Aggressive Cautious Moderate Aggressive CautiousPlan Plan Plan Plan Plan

Historical Per Unit StatisticsDate of Allotment 18-Dec-03 18-Dec-03 18-Dec-03 18-Dec-03 18-Dec-03NAV at the beginning of the year (Rs.) 9.9982 10.2753 10.1643 9.8586 10.1419Growth Option 9.9982 10.2753 10.1643Dividend NRI Option 9.5898 9.9692 9.7985@@ Net Income per unit 1.73 0.38 1.30 2.93 0.51Compounded Annualised Returns(Based on NAVs of Growth Option) 13.81% 5.86% 8.58% 17.45% 4.69%Benchmark Index $$ $$ $$ $$ $$Return compared to Benchmark Index 8.53% 2.14% 5.59% 11.10% 3.77%Net Assets end of period (Rs. Crore) 10.82 46.11 15.87 10.59 13.97NAV at the end of the periodGrowth Option 11.8089 10.7587 11.1156 12.2955 10.6066Dividend Option 11.8089 10.7587 11.1156 12.2955 10.6066Ratio of Recurring Exps to Net Assets for Regular Plans % 0.55 0.35 0.45 0.70 0.20Transfer to Reserves Nil Nil Nil Nil Nil

Discovery Fund @Fixed Maturity Plan- Fixed Maturity Plan --Series 25-Quarterly Series 25 (15months)

Historical Per Unit StatisticsDate of Allotment 16-Aug-04 10-Aug-04 17-Aug-04NAV at the beginning of the year (Rs.) # # #@@ Net Income per unit 1.58 0.27 0.48Dividends (inclusive of distribution tax if, any) - 0.2656 -Compounded Annualised Returns(Based on NAVs of Growth Option) * 33.3% *3.44% *3.03%Benchmark Index S&P CNX Nifty $ $Return compared to Benchmark Index 6% $ $Net Assets end of period (Rs. Crore) 214.92 279.88 174.09NAV at the end of the periodGrowth Option 13.33 10.3025Dividend Option 13.33Quarterly Option 10.0748Institutional Growth 10.3248Institutional DividendRatio of Recurring Exps to Net Assets for Regular Plans % 2.41 0.15 0.60Ratio of Recurring Exps to Net Assets for Institutional Plans % 0.25Transfer to Reserves Nil Nil Nil

Fixed Maturity @ Fixed Emerging @Fixed @Fixed PrudentialPlan–Series Maturity S.T.A.R. Fund Maturity Maturity ICICI Plan I

25-Yearly Plan Plan–Series Plan– Series Plan– Series26-Quarterly 5 - Yearly 12 - Yearly

Historical Per Unit StatisticsDate of Allotment 10-Sep-04 31-Aug-04 28-Oct-04 31-Dec-04 14-Dec-04 24-Mar-05NAV at the beginning of the year (Rs.) # # # N.A. N.A #@@ Net Income per unit 0.49 0.24 2.08 0.19 0.21 0.02Dividends(inclusive of distribution tax if, any) 0.2522 0.4400Dividend OptionCompounded Annualised Returns(Based on NAVs of Growth Option) *3.025% *3.04% *18.2% 1.53% 1.55% 0.16%Benchmark Index $ $ CNX Nifty $ $ Crisil Compo-

Junior site BondFund Index

Return compared to Benchmark Index $ $ -4.38% $ $ 0.05757%Net Assets end of period (Rs. Crore) 35.17 279.64 131.14 127.99 406.39 183.03NAV at the end of the periodGrowth Option 10.2671 10.0493 11.82 10.1535 10.1549 10.0156Dividend Option 10.0418 11.82 10.1535 10.0156Institutional Growth 10.1587 10.1653 10.0160


67

Institutional Dividend 10.1587 10.0160Ratio of Recurring Exps to Net Assetsfor Regular Plans % 0.40 0.15 2.42 0.46 0.67 0.45Ratio of Recurring Exps to Net Assetsfor Institutional Plans % 0.25 0.32 0.25Transfer to Reserves Nil Nil Nil Nil Nil Nil

Floating Rate Plan Long Term Floating Rate Plan

Historical Per Unit StatisticsDate of Allotment March 28, 2003 15-Sep-04NAV at the beginning of the year (Rs.) #Growth Option – Plan A 10.5040 -Dividend Option – Plan A 10.0421 -@@ Net Income per unit 0.35 0.15Dividend Option – Plan A 0.3082 0.25 Dividend Option – Plan B 0.4812 0.10 Dividend Option – Plan C 0.3308 -Daily Dividend Option – Plan A 0.2941 -Daily Dividend Option – Plan B 0.3075 -Daily Dividend Option – Plan C 0.3122 -Compounded Annualised Returns(Based on NAVs of Growth Option) 4.95% 2.64%*Benchmark Index CRISIL Liquid Fund CRISIL Liquid Fund IndexReturn compared to Benchmark Index -5.94% 0.31%Net Assets end of period (Rs. Crore) 2877.70 668NAV at the end of the period -Plan A - Growth 10.3193 10.2649Plan A- Dividend 10.0069 10.0148Plan B - Growth 11.0208 10.2921Plan B- Dividend 10.0438 10.0105Plan C - Growth 10.3434 -Plan C- Dividend 10.0072 -Daily Dividend Option – Plan A 10.0012 -Daily Dividend Option – Plan B 10.0012 -Daily Dividend Option – Plan C 10.0013 -Ratio of Recurring Exps to Net Assets-Plan A 1.00% 1.25Ratio of Recurring Exps to Net Assets-Plan B 0.75% 0.75Ratio of Recurring Exps to Net Assets-Plan C 0.65% 0.75Transfer to Reserves Nil Nil

Notes:1) Returns since inception are for the growth plan in each case except under Fixed Maturity Plan – Quarterly Series 24, Fixed Maturity Plan –

Quarterly Series 25, Fixed Maturity Plan – Quarterly Series 26 for which returns have been calculated after adjusting declaration of dividend.2) The additional Plan viz. Plan A, Plan B & Plan C were introduced in Prudential ICICI Floating Rate Plan on July 29, 2004. The existing option

was assigned as Plan B and returns for the scheme has been computed using Plan B - Growth Option. Similarly in case of Prudential ICICILong Term Floating Rate Plan returns have been computed using Plan A - Growth Option.

3) While arriving at Net Income per unit, Income Equalization Reserve and mark to market has not been considered and it is calculated on thebasis of closing units as of March 31, 2005.

4) The Compounded annualized returns of each scheme are computed from inception of the Scheme till the end of the period of the respectivecondensed financial information whereas the returns compared to benchmark index are computed for the financial year.* Prudential ICICI Income Multiplier Plan, Fixed Maturity Plan Series 24 –Yearly Options and Prudential ICICI Discovery Fund, Prudential

ICICI long Term Floating Rate Plan, Fixed Maturity Plan Series 25 – Quarterly, Yearly, 15 Months Plan, Fixed Maturity Plan Series 26 –Quarterly plan, Prudential ICICI Emerging S.T.A.R. (Stock Targeted At Return) Fund have not completed one year from the date of theirlaunch. Returns are computed in absolute terms and for Growth Options only from the date of allotment. The NAV on the date ofallotment is taken as Rs.10 for computation of returns

* * Un-audited.# These Schemes were launched during the year and these schemes were not in existence at the beginning of the year.$ Appropriate benchmark index is not available.@ All the unitholders under Prudential ICICI Fixed Maturity Plan – One Year Plus Series – 6, Prudential ICICI Fixed Maturity Plan –Series

– 12, Prudential ICICI Fixed Maturity Plan –Series – 5, Prudential ICICI Fixed Maturity Plan - Quarterly Series – 25, Prudential ICICIFixed Maturity Plan - Quarterly Series – 26 have redeemed their units on July 28, 2004 & September 21, 2004, April 5, 2004 & April21, 2004 respectively and there was fresh subscription on July 29, 2004, September 28, 2004, December 14, 2004 & December 31,2004 at Rs. 10.00, hence, simple absolute returns have been calculated by considering the date of reopening of the plan, as a date ofallotment.

@@ The Net Income per unit mentioned has excluded Income equalization & marked to market calculated on the basis of market value ofnet assets of the Scheme on the valuation date, divided by the number of units outstanding on that date. It may be noted that, as itmerely indicates the net income per unit on the valuation date calculated based upon outstanding units of the scheme on the givendate, it is subject to vary from time to time and does not reflect any income / loss of the scheme.

68


^ All the unit holders under Prudential ICICI Fixed Maturity Plan Series 23 and Prudential ICICI Fixed Maturity Plan -Series 24 -Quarterlyhave redeemed their units and unit balance are nil as on the date of this report.



Nifty 70% 15% 40% 90% NACrisil Composite Bond Fund Index 25% 70% 40% NA 30%Crisil Liquid Fund Index 5 % 15% 20% 10% 70%

e) Condensed Financial Information for the period ended January 10, 2006.**SENSEX Floating Gilt Fund Gilt Fund Income Fixed

Prudential Rate Plan Investment Treasury Multiplier MaturityICICI Exchange Plan-PF Plan-PF Fund Plan-Series

Traded Fund Option Option 24 – Yearly

Historical Per Unit StatisticsDate of Allotment 10-Jan-03 28-Mar-03 19-Nov-03 11-Feb-04 30-Mar-04 20-Mar-04NAV at the beginning ofthe year (Rs.)Growth Option/Plan A 65.799 10.3193 10.4224 10.4466 10.8862 10.5308Dividend Option/Plan A 10.0069Institutional Growth/Plan B 11.0208Institutional Dividend/Plan B 10.0438Institutional Plus Growth Option / Plan C 10.3434Institutional Plus Dividend / Plan C 10.0072Daily Dividend / Plan A Daily Dividend 10.0012Institutional Dividend Daily / Plan BDaily Dividend 10.0012Institutional Plus Dividend daily / Plan CDaily Dividend 10.0013Net Income per unit 14.3755 0.5101 0.5132 0.3884 0.7845 0.5459Dividends (inclusive of distributiontax if, any)Dividend Option/Plan A Dividend 0.3903 0.5000Dividend Option Institutional/Plan BDividend Option 0.4107Dividend Option Institutional Plus/Plan CDividend option 0.4167Dividend Option Super Institutional Plus/Plan D Dividend option 0.0647Quarterly OptionSuper Institutional Plus Daily/Plan DDividend Daily 0.0823Institutional Plus Daily/Plan C Dividend Daily 0.4284Institutional Option Div (daily)/Plan BDividend Daily 0.4206Dividend Option Daily/Plan A Dividend Daily 0.4104Compounded Annualised Returns(Based on NAVs of Growth Option) 41.86% 5.12% 4.04% 4.03% 13.81% 5.39%Benchmark Index BSE Sensex CRISIL Liquid I-Sec Li Bex I-Sec Si Bex Crisil MIP $

Fund Blended IndexReturn compared to Benchmark Index 0.42% 0.46% (1.28%) (1.30%) 6.72% $Net Assets end of period (Rs. Crore) 0.80 2281.29 83.78 79.84 247.95 75.30NAV at the end of the periodGrowth Option / Plan A 95.9846 10.7421 10.8872 10.7857 12.5955 10.9975Dividend Option /Plan A 10.0185 12.0425Super Institutional Plus/Plan D Growth Option 10.0854Super Institutional Plus/Plan D Dividend option 10.0188Institutional Growth / Plan B 11.4946Institutional Dividend / Plan B 10.0562Institutional Plus Growth Option / Plan C 10.7965Institutional Plus Dividend / Plan C 10.0194Daily Dividend / Plan A Daily Dividend 10.0020Institutional Dividend Daily / Plan BDaily Dividend 10.0020Institutional Plus Dividend daily / Plan CDaily Dividend 10.0020Institutional Plus Dividend daily / Plan DDaily Dividend 10.0000Ratio of Recurring Exps to Net Assets forRegular Plans/Plan A % 0.80 1.00 1.10 1.50 2.14 0.20Ratio of Recurring Exps to Net Assets forInstitutional Plans/Plan B % 0.75Ratio of Recurring Exps to Net Assets forInstitutional Plus Plan/Plan C % 0.65Ratio of Recurring Exps to Net Assets forSuper Institutional Plan/Plan D % 0.50Transfer to Reserves Nil Nil Nil Nil Nil Nil


69

Advisor Advisor Advisor Advisor AdvisorSeries– Series– Series– Series– Very Series– Very

Aggressive Cautious Moderate Aggressive CautiousPlan Plan Plan Plan Plan

Historical Per Unit StatisticsDate of Allotment 18-Dec-03 18-Dec-03 18-Dec-03 18-Dec-03 18-Dec-03NAV at the beginning of the year (Rs.)Growth Option / Plan A 11.8089 10.7587 11.1156 12.2955 10.6066Dividend Option /Plan A 11.8089 10.7587 11.1156 12.2955 10.6066@@ Net Income per unit 2.2330 1.1660 2.2264 4.0520 0.3847Compounded Annualised Returns(Based on NAVs of Growth Option) 25.64% 8.75% 17.63% 33.48% 4.90%Benchmark Index $$ $$ $$ $$ $$Return compared to Benchmark Index 28.28% 9.00% 17.72% 35.32% 3.54%Net Assets end of period (Rs. Crore) 8.57 10.33 10.72 8.17 10.38NAV at the end of the periodGrowth Option / Plan A 16.0231 11.8929 13.9860 18.1598 11.0377Dividend Option /Plan A 16.0231 11.8929 13.9860 18.1598 11.0377Ratio of Recurring Exps to Net Assets forRegular Plans/Plan A % 0.55 0.35 0.45 0.70 0.20Transfer to Reserves Nil Nil Nil Nil Nil

Discovery Fund Long Term Fixed Maturity EmergingFloating Rate Plan– Series 25 S.T.A.R. (Stocks

Plan (15months) Targeted AtReturns) Fund

Historical Per Unit StatisticsDate of Allotment 16-Aug-04 15-Sep-04 17-Aug-04 28-Oct-04NAV at the beginning of the year (Rs.)Growth Option / Plan A 13.33 10.2649 10.3025 11.82Dividend Option /Plan A 13.33 10.0148 11.82Quarterly OptionInstitutional Growth / Plan B 10.2921 10.3248Institutional Dividend / Plan B 10.0105@@ Net Income per unit 2.1886 0.4752 0.2429 3.1621Dividends (inclusive of distribution tax if, any)Dividend Option/Plan A Dividend 2.50 0.3662 1.00Dividend Option Institutional/Plan B Dividend Option 0.3890Dividend Option Institutional Plus/Plan CDividend option 0.0850Compounded Annualised Returns(Based on NAVs of Growth Option) 73.89% 5.13% 4.89% 85.90%Benchmark Index S&P CNX Nifty CRISIL Liquid $ CNX Nifty Junior

Fund IndexReturn compared to Benchmark Index 20.12% 0.44% $ 40.17%Net Assets end of period (Rs. Crore) 973.17 916.02 250.85 378.94NAV at the end of the periodGrowth Option / Plan A 21.73 10.6828 10.6919 21.08Dividend Option /Plan A 18.43 10.0497 19.69Institutional Growth / Plan B 10.7449 10.7435Institutional Dividend / Plan B 10.0544Institutional Plus Growth Option / Plan C 10.0242Ratio of Recurring Exps to Net Assets for Regular Plans/Plan A % 2.19 1.25 0.60 2.36Ratio of Recurring Exps to Net Assets for Institutional Plans/Plan B % 0.85 0.25Ratio of Recurring Exps to Net Assets for Institutional Plans/Plan C % 0.75Transfer to Reserves Nil Nil Nil Nil

70


Fixed Fixed Prudential Blended Blended Infra- ServicesMaturity Maturity ICICI Plan I Plan A Plan B structure Industries

Plan – Plan – Fund FundSeries 5 Series 12

Historical Per Unit StatisticsDate of Allotment 31-Dec-04 14-Dec-04 24-Mar-05 31-May-05 31-May-05 31-Aug-05 30-Nov-05NAV at the beginning of the year (Rs.)Growth Option / Plan A 10.1535 10.1549 10.0156Dividend Option /Plan A 10.1535 10.0156Quarterly OptionInstitutional Growth / Plan B 10.1587 10.1653 10.016Institutional Dividend / Plan B 10.1587 10.016@@ Net Income per unit 0.5193 0.4756 0.3823 -0.1223 0.1547 0.7540 0.0919Dividend Option/Plan A Dividend 0.25 0.23Dividend Option Institutional/Plan BDividend Option 0.13Compounded Annualised Returns(Based on NAVs of Growth Option) 5.82% 5.57% *4.32% *4.08% *3.60% *20.40% *5.50%Benchmark Index $ $ Crisil Crisil Short Crisil Short CNX Nifty CNX Nifty

Composite Term Bond Term Bond Index IndexBond Fund Fund Index Fund Index

IndexReturn compared to Benchmark Index $ $ 0.35% 1.44% 0.86% (0.35%) (0.72%)Net Assets end of period (Rs. Crore) 133.02 420.09 190.15 740.09 341.71 1303.73 634.67NAV at the end of the periodGrowth Option / Plan A 10.5987 10.5997 10.4322 10.4076 10.3597 12.04 10.55Dividend Option /Plan A 10.5987 10.4322 10.1545 10.1270 12.04 10.55Institutional Growth / Plan B 10.6207 10.6397 10.4489 10.3019Institutional Dividend / Plan B 10.6207 10.4489 10.1276Ratio of Recurring Exps to Net Assetsfor Regular Plans/Plan A % 0.45 0.67 0.45 1.50 1.50 1.89 2.17Ratio of Recurring Exps to Net Assetsfor Institutional Plans/Plan B % 0.25 0.32 0.25 1.00Transfer to Reserves Nil Nil Nil Nil Nil Nil Nil

Notes:

1) Returns since inception are for the growth plan in each case.2) The additional Plan viz. Plan A, Plan B & Plan C were introduced in Prudential ICICI Floating Rate Plan on July 29, 2004. The existing option

was assigned as Plan B and returns for the scheme has been computed using Plan B - Growth Option. Similarly in case of Prudential ICICI LongTerm Floating Rate Plan returns have been computed using Plan A - Growth Option.

3) While arriving at Net Income per unit, Income Equalization Reserve and mark to market has not been considered and it is calculated on thebasis of closing units as of January 10, 2006.

4) The Compounded annualized returns of each scheme are computed from inception of the Scheme till the end of the period of the respectivecondensed financial information whereas the returns compared to benchmark index are computed for the financial year.

5) Units for Prudential ICICI Fixed Maturity Plan –Series 25 - Quarterly, Prudential ICICI Fixed Maturity Plan –Series 6 – Yearly, Prudential ICICIFixed Maturity Plan –Series 26 - Quarterly, Prudential ICICI Fixed Maturity Plan –Series 25 - Yearly were made nil on 11 August, 2005, 18August 2005, 1 September, 2005 and 27 September, 2005 respectively.

* Prudential ICICI Plan I, Prudential ICICI Blended Plan A & B, Prudential ICICI Infrastructure Fund and Prudential ICICI Services IndustriesFund have not completed one year from the date of their launch. Returns are computed in absolute terms and for Growth Options onlyfrom the date of allotment. The NAV on the date of allotment is taken as Rs.10 for computation of returns.

* * Un-audited.

$ Appropriate benchmark index is not available.

@ All the unitholders under Prudential ICICI Fixed Maturity Plan –Series – 12, Prudential ICICI Fixed Maturity Plan –Series – 5 haveredeemed their units on April 5, 2004 & April 21, 2004 respectively and there was fresh subscription on December 14, 2004 & December31, 2004 at Rs. 10.00, hence, simple absolute returns have been calculated by considering the date of reopening of the plan, as a date ofallotment.

@@ The Net Income per unit mentioned has excluded Income equalization & marked to market calculated on the basis of market value ofnet assets of the Scheme on the valuation date, divided by the number of units outstanding on that date. It may be noted that, as itmerely indicates the net income per unit on the valuation date calculated based upon outstanding units of the scheme on the given date,it is subject to vary from time to time and does not reflect any income / loss of the scheme.



Nifty 70% 15% 40% 90% NACrisil Composite Bond Fund Index 25% 70% 40% NA 30%Crisil Liquid Fund Index 5% 15% 20% 10% 70%


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SECTION VI

UNITHOLDERS RIGHTS & SERVICES

a) Investor Services

The Fund believes in providing the investors with a superior service to make the investors’ experience in dealing with theFund an efficient and satisfactory one. In order to achieve these goals, the Fund will endeavour to continuously establishand upgrade systems to handle transactions efficiently and resolve any investor grievances promptly.

b) Ease of Transactions

The Fund intends to make every transaction for the investor a simple and convenient one. The Fund plans to provide thefollowing services: -

i) Customer Service Centres in major metros

The AMC presently has Customer Service Centres in various cities. Over a period of time, the AMC may add furtherCustomer Service Centres and/or sales offices in other cities. Unitholders can go to these Service Centres / Sales Officesfor enquiries and transactions during business hours.

ii) Process transactions in a timely manner

Under the Regulations, the Fund/ the Registrar / AMC shall despatch to the Unitholders the dividend warrants, if any,within thirty days of the date of declaration of dividend and the Redemption proceeds within ten Business Days fromthe date of acceptance / deemed acceptance of the request for Redemption or repurchase proceeds, as the case may be.

Under normal circumstances, the Fund will endeavour to complete all monetary transactions within 3 Business Daysfrom the date of acceptance of a transaction request. Ordinarily, non-monetary transactions or requests will beprocessed, (with the exception of issue of Unit certificates) within 7 Business Days. Investors should note that completionof monetary/ non-monetary transactions within 3/7 Business Days as indicated above would be done on “best efforts”basis and completion of all such transactions are subject to the time limits as prescribed under the Regulations.

c) Problem Resolution

The Fund will follow-up with Customer Service Centres and Registrar on complaints and enquiries received from investorsfor resolving them promptly.

For this purpose, Msr. Leena Johnson has been appointed the Investor Relations Officer. She can be contacted at theCorporate Office of the AMC. The address and phone numbers are:

503, 5th Floor, Peninsula TowerPeninsula Corporate ParkGanpatrao Kadam Marg,Off Senapati Bapat MargLower Parel Mumbai 400 013Phone: (91)(22) 24997000Fax : (91)(22) 24997029

d) Information about the Scheme

The Fund will publish an abridged summary of an audited annual report of the Scheme as on March 31 of each year, andan abridged Scheme wise annual report shall be mailed to all Unitholders, not later than six months from March 31 of eachyear. The abridged annual report shall contain such details as are required under the Regulations.

The Fund shall before the expiry of one month from the close of each half year, that is as on March 31 and September 30,publish its unaudited financial results in one English daily newspaper circulating all India and in a newspaper published inthe language of the region where the Head Office of the Fund is situated and update the same on AMC’s website atwww.pruicici.com within 60 days from the close of each half year, in the prescribed format.

The AMC will disclose the NAV of Schemeon every Business Day.

The Fund shall before the expiry of one month from the close of each half year (31st March and 30th September) send to theUnitholders a complete statement of Scheme’s portfolio or if such statement is not sent to the Unitholders, it will bepublished by way of an advertisement in one English daily circulating in the whole of India and in a newspaper publishedin the language of the region where the head office of the mutual fund is situated.

e) NAV Information

The NAV of the Scheme will be calculated daily and announced by the Fund on each Business Day. The information on NAVmay be obtained by the Unitholders, on any day, by calling the office of the AMC or any of the Customer Service Centres oron the Website of the AMC www.pruicici.com. The Fund will use its best endeavour to publish NAVs daily, in at least twodaily newspapers. Further, the AMC shall endeavour to publish Purchase and Redemption prices of Units daily in anewspaper with all India circulation.

AMC shall update the NAVs on the website of Association of Mutual Funds in India - AMFI (www.amfiindia.com) by 8.00-p.m. every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI and SEBI by the next day.If the NAVs are not available before commencement of business hours on the following day due to any reason, the Fundshall issue a press release providing reasons and explaining when the Fund would be able to publish the NAVs.

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f) Disclosure of information under the Regulations

The Fund will, not later than six months after the close of each financial year (March 31), publish through an advertisement,an abridged Annual Report relating to the Scheme and mail to the Unitholders an abridged scheme wise annual report. Itis anticipated that the first such publication will be for the period ending March 31, 2006 after the roll-over of the schemeas an open ended fund. Further, the full text of the Annual Report will be available for inspection at the office of the Fund.A copy of the Annual Report will be sent to Unit holders, free of cost, on specific request.

The Fund shall before the expiry of one month from the close of each half year, that is as on March 31 and September 30,publish its unaudited financial results in one English daily newspaper circulating all India and in a newspaper published inthe language of the region where the Head Office of the Fund is situated and update the same on AMC’s website atwww.pruicici.com within 60 days from the close of each half year, in the prescribed format.

g) Rights of Unitholders of the Scheme

1. Unitholders of the Scheme have a proportionate right in the beneficial ownership of the assets of that Scheme.

2. The Trustee is bound to make such disclosures to the Unitholders as are essential in order to keep them informed aboutany information known to Trustee which may have an adverse bearing on their investments.

3. The appointment of an AMC for the Fund can be terminated by majority of the Trustee or by 75% of the Unitholdersof the Scheme of the Fund and any change in the appointment of the AMC shall be subject to the prior approval of SEBIand the Unitholders of the Scheme.

4. The Trustee is obliged to convene a meeting on a requisition of 75% of the Unitholders of the Scheme.

5. 75% of the Unitholders of a Scheme and the Plan thereunder can pass a resolution to wind up the Scheme.

6. Unitholders have the right to inspect all the documents listed under “Documents Available for Inspection”.

7. The Trustee shall obtain the consent of the Unitholders:

a) whenever required to do so by SEBI, in the interest of Unitholders

b) whenever required to do so on the requisition made by three-fourths of the Unitholders of the Scheme.

c) when the Trustee decides to wind up or prematurely redeem the units.

8. The Trustees shall ensure that no change in the fundamental attributes of any scheme or the trust or fee and expensespayable or any other change which would modify the scheme and affects the interests of unit holders is carried outunless:

a) a written communication about the proposed change is sent to each Unitholder and

b) an advertisement is given in one 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; and

c) the Unitholders are given an option to exit at the prevailing Net Asset Value without any exit load.

9. Subject to the Regulations and the guidelines issued by SEBI, the consent of the Unitholders of the Scheme will beobtained through voting, by mail. Detailed modalities of the same, including the principles for entitlement of votes foreach Unitholder will be finalized in consultation with and after obtaining the approval of SEBI and the Trustee.

10. Annual report containing accounts of the AMC would be displayed on the websites of the Fund (i.e. pruicici.com)Unitholders, if they so desire, may request for the annual report of the AMC.

h) Duration of the Scheme /Winding up

The duration of the Scheme is limited till the maturity of the scheme unless rolled over. The AMC, the Fund and the Trusteereserve the right to make such changes/alterations the Scheme (including the charging of fees and expenses) offered underthis Offer Document to the extent permitted by the applicable Regulations. However, in terms of the Regulations, a Schememay be wound up after repaying the amount due to the Unitholders:

1. On happening of any event, which in the opinion of the Trustee, requires the Scheme to be wound up, OR2. If seventy five percent (75%) of the Unitholders of the Schemes pass a resolution that the Scheme be wound up, OR3. If SEBI so directs in the interest of the Unitholders, OR4. In case of non-fulfillment of two conditions prescribed in terms of minimum number of investors and minimum

holding by single investor vide SEBI circular No. SEBI/IMD/CIR No.10/22701/03 dated December 12, 2003, OR.

5. On Maturity of the Scheme.

Where the Scheme is so wound up, the Trustee shall give notice of the circumstances leading to the winding up of theScheme to:

1. SEBI and,2. In two daily newspapers with circulation all over India and in one vernacular newspaper with circulation in Mumbai.

On and from the date of the publication of notice of winding up, the Trustee or the Investment Manager, as the case maybe, shall:

1. Cease to carry on any business activities in respect of the Scheme so wound up;2. Cease to create or cancel Units in the Scheme;3. Cease to issue or redeem Units in the Scheme.


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i) Procedure and manner of Winding up

Other than for winding up of the Scheme on the maturity, the Trustee shall call a meeting of the Unitholders of the Schemeto approve by simple majority of the Unitholders present and voting at the meeting for authorizing the Trustee or any otherperson to take steps for the winding up of the Scheme.

The Trustee or the person authorized above shall dispose of the assets of the Scheme in the best interest of the Unitholdersof the Scheme.

The proceeds of sale realized in pursuance of the above, shall be first utilized towards discharge of such liabilities as are dueand payable under the Scheme and after meeting the expenses connected with such winding up, the balance shall be paidto Unitholders in proportion to their respective interest in the assets of the Scheme, as on the date the decision for windingup was taken.

On completion of the winding up, the Trustee shall forward to SEBI and the Unitholders a report on the winding up,detailing the circumstances leading to the winding up, the steps taken for disposal of the assets of the Scheme beforewinding up, net assets available for distribution to the Unitholders and a certificate from the auditors of the Fund.

Notwithstanding anything contained herein above, the provisions of the Regulations in respect of disclosures of half-yearlyreports and annual reports shall continue to be applicable until winding up is completed or the Scheme ceases to exist.

After the receipt of the report referred to above, if SEBI is satisfied that all measures for winding up of the Scheme have beencomplied with, the Scheme shall cease to exist.

j) Tax benefits of investing in the Mutual Fund

The following information is provided only for general information purpose. In view of the individual nature of tax benefitseach investor is advised to consult with his or her own tax consultant with respect to the specific tax implications arising outof their participation in the scheme.

The Scheme’s auditors, N. M. Raiji and Co. have confirmed that based on the law in force, the following benefits may accrueto the respective assesses:

Based on the law in force and after considering the amendments made in the Income Tax Act, 1961 (“the Act”) by theFinance Act, 2005, yhe Scheme’s auditors, N. M. Raiji and Co. have confirmed that the following benefits may accrue to therespective assesses:

1. TO THE FUND

The Income of the Fund registered under the Securities and Exchange Board of India Act, 1992 (15 of 1992) orregulations made there under will be exempt from income tax in accordance with the provisions of section 10(23D) ofthe Act. The income received by the Fund is not liable for deduction of tax at source.

As per section 115R, the Mutual Funds are liable to pay additional income tax on the income distributed by it.

Under the provisions of section 115R of the Act, additional income tax is payable at different rates on incomedistributed to different class of unitholders. The Mutual Funds will be liable to pay additional income tax at the rate of12.50% plus applicable surcharge on the income distributed by the Fund to Individuals and HUFs and at the rate of20% plus applicable surcharge on the income distributed to any other assessees. Levy of education cess at the rate of2% is also applicable on total tax payable. However, in respect of open-ended equity oriented funds, no additionalincome tax is payable on income distributed by the Fund.

2. SECURITIES TRANSACTION TAX

Securities Transaction Tax (“STT”) is applicable on transactions of purchase or sale of units of Equity Oriented Fundentered into on a recognized stock exchange or sale of units of Equity Oriented Fund to the Mutual Fund.

The Finance Act, 2005 has revised the rates for levy of STT under Chapter VII of the Finance (No. 2) Act 2004 with effectfrom June 01, 2005.

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The STT rates as applicable from June 1, 2005 are given in the following table:

Taxable Securities Transaction Rate Payable by

Purchase of a unit of an equity oriented fund, where -

� the transaction of such purchase is entered into in a recognised stock 0.1% Purchaserexchange; and

� the contract for the purchase of such unit is settled by the actual deliveryor transfer of such unit.

Sale of a unit of an equity oriented fund, where -

� the transaction of such sale is entered into in a recognised stock 0.1% Sellerexchange; and

� the contract for the sale of such unit is settled by the actual delivery ortransfer of such unit.

Sale of a unit of an equity oriented fund, where -

� the transaction of such sale is entered into in a recognised stock 0.02% Sellerexchange; and

� the contract for the sale of such unit is settled otherwise than by theactual delivery or transfer of such unit.

Sale of unit of an equity oriented fund to the Mutual Fund itself. 0.2% Seller

Mutual Fund is responsible for collecting the STT from every person who sells the unit to it at the rate of 0.2%.

The term “Equity Oriented Fund” for the purpose of STT, has been defined to mean a fund where the investible fundsare invested by way of equity shares in domestic companies to the extent of more than 50% of the total proceeds ofsuch fund and which has been set up under a scheme of a Mutual Fund. Further, it is provided that the percentage ofequity share holding of the fund shall be computed with reference to the annual average of the monthly averages ofthe opening and closing figures.

3. TO THE UNITHOLDERS

3.1 INCOME RECEIVED FROM MUTUAL FUND

According to section 10(35) of the Act, any income received in respect of units of Mutual Fund specified undersection 10(23D) will be exempt from income tax in the hands of the unit holders. Further, it has been clarified thatincome arising from transfer of units of Mutual Fund shall not be exempt under section 10(35).

3.2 LONG TERM CAPITAL GAINS ON TRANSFER OF UNITS

Under Section 10(38), Long Term Capital Gain on sale of units of Equity Oriented Funds are exempt from IncomeTax in the hands of unit holders, provided such transactions are entered into a recognised stock exchange or suchunits are sold to the Mutual Fund and are chargeable to STT.

In respect of capital gains that are not exempted under section 10(38), the provisions for taxation of long-termcapital gains for different categories of assessees are explained hereunder:

i) For Individuals and HUFs

Long-term Capital Gains in respect of Units of Mutual Fund held for a period of more than 12 months will bechargeable under section 112 of the Act, at a rate of 20% plus surcharge, as applicable and cess. CapitalGains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Indexnotified by the Central Government and expenditure incurred wholly and exclusively in connection with suchtransfer. 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 capitalgains 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 applicablesurcharge and cess, provided the long term capital gains are computed without substituting indexed cost inplace of cost of acquisition.

ii) 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 chargeableunder section 112 of the Act at a rate of 20% plus surcharge, as may be applicable and cess. Capital gainswould be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notifiedby 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 apply concessional rate of 10% plus applicablesurcharge and cess, provided the long term capital gains are computed without substituting indexed cost inplace of cost of acquisition.

iii) For Non-resident Indians

Under section 115E of the Act for non-resident Indians, income by way of long-term capital gains in respectof Units is chargeable at the rate of 20% plus applicable surcharge and cess. Such long-term capital gainswould be calculated without indexation of cost of acquisition.


75

Non-resident Indians may opt for computation of long term capital gains as per section 112, which is morebeneficial.

iv) For Overseas Financial Organisations, including Overseas Corporate Bodies and Foreign InstitutionalInvestors 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 inforeign currency held for a period of more than 12 months will be chargeable to tax at the rate of 10%, plusapplicable surcharge and cess. Such gains would be calculated without indexation of cost of acquisition.

3.3 SHORT TERM CAPITAL GAINS ON TRANSFER OF UNITS

Section 111A provides that short-term capital gains arising on sale of units of Equity Oriented Funds are chargeableto income tax at a concessional rate of 10% plus applicable surcharge and cess, provided such transactions areentered into on a recognised stock exchange or such units are sold to the Mutual Funds and are chargeable to STT.Further, Section 48 provides that no deduction shall be allowed in respect of STT paid for the purpose ofcomputing Capital Gains.

In respect of capital gains not chargeable under section 111A, the provisions for taxation of short-term capitalgains for different categories of assessees is explained hereunder:

Short term Capital Gains in respect of Units held for a period of not more than 12 months is added to the totalincome. Total income including short-term capital gains is chargeable to tax as per the relevant slab rates.

Income Tax Rates

The maximum income tax rates for various categories of assessees for AY 2006-07 are as under:

Resident individuals and HUF 30% plus surcharge and cess

Partnership Firms 30% plus surcharge and cess

Indian companies 30% plus surcharge and cess

Non Resident Indians 30% plus surcharge and cess

Foreign Companies 40% plus surcharge and cess

With regards to individuals and HUF having a total income exceeding Rs. 10,00,000, Partnership Firms and IndianCompanies, a surcharge of 10% on the income tax is applicable. Individuals and HUFs having total income lessthan Rs. 10,00,000 are not liable to surcharge. A surcharge of 2.5% on the income tax would be applicable in thecase of Foreign Companies.

Further, education cess at the rate of 2% on the income tax (including applicable surcharge) would be applicablefor all categories of assessees.

3.4 CAPITAL LOSSES

Losses under the head “Capital Gains” cannot be set off against income under any other head. Further within thehead “Capital Gains”, losses arising from the transfer of long-term capital assets cannot be adjusted againstgains arising from the transfer of a short-term capital asset. However, losses arising from the transfer of short-termcapital assets can be adjusted against gains arising from the transfer of either a long-term or a short-term capitalasset.

Under Section 10(38), Long Term Capital Gains on sale of units of Equity Oriented Fund are exempt from IncomeTax provided certain conditions are fulfilled. Hence, losses arising from such type of transaction of sale of units ofEquity Oriented Fund would not be eligible for set-off against taxable capital gains.

Unabsorbed long-term capital loss (other than that relating to sale of equity shares and units of Equity OrientedFund as stated in para above) can be carried forward and set off against the long-term capital gains arising in anyof the subsequent eight assessment years.

Unabsorbed short-term capital loss can be carried forward and set off against the income under the head CapitalGains in any of the subsequent eight assessment years.

According to section 94(7) of the Act, if any person buys or acquires units within a period of three months priorto the record date fixed for declaration of dividend or distribution of income and sells or transfers the same withina period of nine months from such record date, then losses arising from such sale to the extent of income receivedor receivable on such units, which are exempt under the Act, will be ignored for the purpose of computing hisincome chargeable to tax.

Further, Sub-section (8) of Section 94 provides that, where additional units have been issued to any personwithout any payment, on the basis of existing units held by such person then the loss on sale of original units shallbe ignored for the purpose of computing income chargeable to tax, if the original units were acquired withinthree months prior to the record date fixed for receipt of additional units and sold within nine months from suchrecord date. However, the loss so ignored shall be considered as cost of acquisition of such additional units heldon the date of sale by such person.

3.5 Section 80C as introduced by the Finance Act, 2005, provides that from the total income of an individual and HUF,deduction for an amount paid or deposited in certain eligible schemes or investments would be available, subjectto a maximum amount of Rs. 1,00,000.

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According to clause (xiii) and clause (xx) to sub-section 2, any subscription to any units of Mutual Fund notifiedunder Section 10(23D) would qualify for deduction under the aforesaid section provided

§ the plan formulated in accordance with a scheme notified by the Central Government; or

§ approved by CBDT on an application made by the Mutual Fund and the amount of subscription to such unitsis subscribed only in eligible issue of capital of any company.

4. TAX DEDUCTION AT SOURCE

4.1 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 the Fund as perthe provisions of section 10(35), section 194K and section 196A.

4.2 For Capital Gains

(i) 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 section194K) vide circular no. 715 dated August 8, 1995 issued by the Central Board for Direct Taxes (CBDT).

(ii) In respect of Non- Resident Unit holders

Under section 195 and section 196B of the Act, tax shall be deducted at source in respect of capital gains asunder:

a. In case of non resident other than a company -

� Long term capital gains1 20% plus surcharge and cess

� Short term capital gains2 30% plus surcharge and cess

b. In case of foreign company -

� Long term capital gains1 20% plus surcharge and cess

� Short term capital gains 40% plus surcharge and cess

c. In case of Offshore Fund as defined in 115AB –

� Long term capital gains1 10% plus surcharge and cess1 Except for gains arising from sale of unit of Equity Oriented Funds, which are exempt under section 10(38) of

the Act.2 Short-term capital gains arising from transfer of equity mutual fund units will be subject to tax @ 10%.

As per circular no. 728 dated October 1995 by CBDT, in the case of a remittance to a country with which a DoubleTaxation Avoidance Agreement (DTAA) is in force, the tax should be deducted at the rate provided in the FinanceAct of the relevant year or at the rate provided in DTAA whichever is more beneficial to the assessee.

5. EXEMPTION FROM TAX ON CAPITAL GAINS ARISING ON TRANSFER OF UNITS HELD FOR MORE THAN 12MONTHS

Under section 54EC of the Act

As provided under section 54EC, and subject to the conditions specified therein, where an assessee has made capitalgains from the transfer of units held in Mutual Fund Scheme for a period exceeding 12 months and the assessee hasany time within a period of 6 months after the date of such transfer, invested the whole of the capital gains in the longterm specified assets i.e., in bonds redeemable after 3 years issued by the National Bank for Agriculture and RuralDevelopment, or by the National Highways Authority of India or by the Rural Electrification Corporation Limited or byNational Housing Bank or by the Small Industries Development Bank of India, such capital gains shall be exemptedfrom tax on capital gains under section 54EC of the Income Tax Act, 1961. However, if the assessee has invested onlya part of the capital gains, he will be eligible for the proportionate exemption.

Section 54EC provides that where any investment has been allowed as a deduction under this section the same shallnot be allowed as deduction in Section 80C.

Under section 54ED of the Act

Under Section 54ED and subject to the conditions specified therein, capital gains arising from the transfer of units heldin the Mutual Fund Scheme for a period exceeding 12 months will be exempt, if the assessee has, any time within aperiod of 6 months after the date of such transfer, invested the whole of the capital gains in acquiring equity sharesforming part of an eligible issue of capital. However, if the assessee has invested only a part of the capital gains, he willbe eligible for the proportionate exemption. An eligible issue of capital means an issue of equity shares offered forsubscription to the public by a public company formed and registered in India.

Section 54ED provides that where any investment has been allowed as a deduction under this section the same shallnot be allowed as deduction in Section 80C.

6. INVESTMENTS BY CHARITABLE AND RELIGIOUS TRUSTS

Units of a Mutual fund Scheme referred to in clause 23D of section 10 of the Income Tax Act, 1961, constitute aneligible avenue for investment by charitable or religious trusts per rule 17C of the Income Tax Rules, 1962, read withclause (xii) of sub-section (5) of section 11 of the Income Tax Act, 1961.


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7. WEALTH TAX

Units held under the Mutual Fund Scheme are not treated as assets within the meaning of section 2(ea) of the WealthTax Act, 1957 and are, therefore, not liable to Wealth-Tax.

k) Unclaimed redemption amount

The unclaimed Redemption amount may be deployed by the Mutual Fund in call money market or money market instrumentsonly and the investors who claim these amounts during a period of three years from the due date shall be paid at theprevailing Net Asset Value. After a period of three years, this amount will be transferred to a pool account and the investorscan claim the amount at NAV prevailing at the end of the third year. The income earned on such funds will be used for thepurpose of investor education. The AMC will make continuous efforts to remind the investors through letters to take theirunclaimed amounts. Further, the investment management fee charged by the AMC for managing unclaimed amounts shallnot exceed 50 basis points.

Unclaimed Dividend / Redemptions in respect of the open ended funds normally represent the time lag between fundingof the respective accounts (with bank) by the AMC and the time taken for presentation of redemption/dividend warrants bythe investors. No significant delay in the process is noticed. Hence the details in respect of open-ended funds is notmentioned.

Details in respect of Prudential ICICI Premier are given below -

As of March 31, 2005 As of January 10, 2006

Unclaimed Redemption Amount - Rs.5.74 crores of 26,249 Investors Rs. 5.21 crores of 24,370 InvestorsPremier Redeemed

Unclaimed Redemption Amount - Rs.3.42 Crores of 5,212 Investors Rs. 2.76 Crores of 4,623 InvestorsPremier Rolled Over Redeemed

Unclaimed Dividend Amount Rs. 0.03 Crores Rs. 0.03 Crores

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SECTION VII

OTHER MATTERS

a) UNITHOLDER GRIEVANCES REDRESSAL MECHANISM

Investor grievances are normally received at AMC office or at the Customer Service Centres or directly by the Registrar. Allgrievances are forwarded to the Registrar for their necessary action. The complaints are closely followed up with theRegistrar to ensure timely redresses and prompt investor service. Given below is the complaint history for the last threefiscal years:

ICICI Premier ICICI Power #

01/04/2002 to 31/03/2003

Complaints/ Requests received during the period 700 Not applicable

Redressed during the period 699 Not applicable

Pending as on March 31, 2003 5 Not applicable

01/04/2003 to 31/3/2004




01/04/2004 to 31/03/2005




01/04/2005 to 10/01/2006



Pending as on January 10, 2006 5 Not applicable

#Status reported till the Record Date of Conversion. Name changed to Prudential ICICI Power with effect fromSeptember 27, 2001. The status on investor complaints consequent to conversion is reported separately.

The above two funds were launched in 1994. . ICICI Power has been converted in to an open-ended fund w.e.f.September 27, 2001. Consequent to conversion its name is changed to Prudential ICICI Power. Further, ICICI Premier wasrolled over for a further period of 5 years in February 1999 and is open for repurchase w.e.f. February 7, 2001 andredeemed in February 2005. The pending investor complaints / requests pertain to, inter-alia, Issue of duplicate certificates,non receipt of certificates, non receipt of redemption/dividend warrants, revalidation of dividend warrants, name correction,change of address of the Unitholder, registration of death cases, registration of Power of Attorney, transfer/transmissionof Units etc. All investor grievances are normally redressed within a period of 15 days of their receipt, subject to theinformation furnished by the Unitholder is complete and accurate. If such information is not provided/not available withthe Registrars to the above Schemes, the matter is further followed up with the investors. Investor complaints arecontinuously monitored with the Registrar to the Schemes.


79

Data relating to the period April 1, 2005 to January 10, 2006

Scheme Opening Complaints Complaints ComplaintsPending Received redressed pending

Prudential ICICI Growth Plan Nil 6 6 NilPrudential ICICI Income Plan Nil 32 32 NilPrudential ICICI Liquid Plan Nil 0 0 NilPrudential ICICI FMCG Fund Nil 1 1 NilPrudential ICICI Tax Plan Nil 40 40 NilPrudential ICICI Gilt Fund Nil 2 2 NilPrudential ICICI Balanced Fund Nil 18 18 NilPrudential ICICI Technology Fund Nil 13 13 NilPrudential ICICI Monthly Income Plan Nil 13 13 NilPrudential ICICI Fixed Monthly Plan Nil 0 0 NilPrudential ICICI Child Care Plan Nil 4 4 NilPrudential ICICI Power Nil 24 24 NilPrudential ICICI Short Term Plan Nil 0 0 NilPrudential ICICI Long Term Plan Nil 0 0 NilPrudential ICICI Index Fund Nil 1 1 NilPrudential ICICI Sweep Plan Nil 0 0 NilPrudential ICICI Flexible Income Plan Nil 0 0 NilPrudential ICICI Dynamic Plan Nil 8 8 NilSensex Prudential ICICI Exchange Traded Fund Nil 0 0 NilPrudential ICICI Floating Rating Plan Nil 0 0 NilPrudential ICICI Advisory Series 0 0 NilPrudential ICICI Income Multiplier Fund Nil 5 5 NilPrudential ICICI Long Term Floating Rate Plan Nil 0 0 NilPrudential ICICI Emerging Star Nil 10 10 NilPrudential ICICI Discovery Fund Nil 11 11 NilPrudential ICICI Plan I Year Plus Nil 2 2 NilPrudential ICICI Blended Plan Nil 0 0 NilPrudential ICICI Infrastructure Fund Nil 12 12 NilPrudential ICICI Services Industries Fund Nil 5 5 Nil

Total Nil 207 207 Nil

Details of investor complaints received from SEBI

For the Period Complaints Complaints ComplaintsReceived redressed pending

Financial Year 2002-2003 17 15 5Financial Year 2003-2004 30 33 2Financial Year 2004-2005 48 45 5

April 1, 2005 to January 10, 2006 29 33 1

80


b) ASSOCIATE TRANSACTIONS

Investment in Group Companies:

Details of investments made by the schemes in securities of Sponsor i.e. ICICI Bank Ltd. (erstwhile ICICI Ltd.) during theprevious three financial years are as follows:

Scheme name/Nature of investment F.Y F.Y F.Y April 1, 2005 to2002-2003 2003-2004 2004-2005 January 10, 2006

Investment in Bonds of ICICI Bank Ltd.

Prudential ICICI Long Term Floating Rate Plan - - - 50,006,674

Prudential ICICI Income Plan 818,794,702 15,00,00,000 - -

Prudential ICICI Liquid Plan 10,891,898 10,00,00,000 - -

Prudential ICICI Short Term Plan 58,913,072 - - 50,529,403

Prudential ICICI FMP Yearly Series 12 - - - 203,436,745

Investment in NSE Linked Mibor Deposits /Term Deposit of ICICI Bank Ltd

Prudential ICICI Balanced Fund - - - 250,200,000

Prudential ICICI Blended Plan - Plan A - - - 1,332,700,000

Prudential ICICI Blended Plan - Plan B - - - 490,000,000

Prudential ICICI Discovery Plan - - - 45,000,000

Prudential ICICI Dynamic Plan - - - 22,500,000

Prudential ICICI Child Care Gift Plan - - - 72,500,000

Prudential ICICI Growth Plan - - - 14,000,000

Prudential ICICI Income Multiplier Fund - - - 150,100,000

Prudential ICICI Infrastructure Fund - - - 118,500,000

Prudential ICICI Child Care Study Plan - - - 54,100,000

Prudential ICICI Liquid Plan 200,000,000 13,250,000,000 1,680,000,000 8,000,000,000

Prudential ICICI Monthly Income Plan - - 500,000,000 425,400,000

Prudential ICICI Power - - - 62,500,000

Prudential ICICI Services Industries Fund - - - 66,000,000

Prudential ICICI Flexible Income Plan - - 100,000,000 -

Prudential ICICI Short Term Plan - 1,250,000,000 - -

Prudential ICICI Income Multiplier Plan - - 80,000,000 -

Prudential ICICI Long Term Floating Rate Plan - - 140,000,000 -

Prudential ICICI Fixed Maturity Plan – Yearly Series 23 5,000,000,000 16,000,000 - -

Prudential ICICI Fixed Maturity Plan – Yearly Series 12 50,000,000 21,700,000 - -

Prudential ICICI Fixed Maturity Plan – Yearly Series 6 - 200,000,000 - -

Prudential ICICI Fixed Maturity Plan – NRI Series 4 – - 127,000,000 - -Half Yearly

in equity shares of ICICI Bank Ltd

Prudential ICICI Balanced Fund - - 4,418,418 57,808,069

Prudential ICICI Dynamic Plan - - - 92,684,872

Prudential ICICI Dynamic Plan - - 59,000 -

Prudential ICICI Growth Plan - - 29,443,706 54,540,034

Prudential ICICI Index Fund 3,491,370 4,094,680 264,135 632,070

Prudential ICICI Infrastructure Fund 106,720,923

Prudential ICICI Monthly Income Plan - - 5,884,612 -

Prudential ICICI Power - - 35,328,722 213,571,771

Prudential ICICI Services Industries Fund 161,239,301

SENSEX Prudential ICICI Exchange Traded Fund 6,327,798 4,144,321 - 664,219

TOTAL 6,148,418,840 15,122,939,001 2,581,224,610 12,095,334,081

% to the net assets of the Mutual Fund 6.77% 10.55% 1.69% 5.32%

The above details are as on the last day of each period


81

Underwriting obligations with respect to issues of Associate Companies:

The AMC has, till date, not entered into any underwriting contracts in respect of any public issue made by any of itsassociate companies.

Subscription in issues lead managed by ICICI Securities Ltd. [erstwhile ICICI Securities & Finance Company Limited (I-Sec)]

ICICI Securities Ltd. (erstwhile ICICI Securities F.Y 2002-2003 F.Y 2003-2004 F.Y. 2004-2005and Finance Co. Ltd.)

Prudential ICICI Power Nil *41,080,800 240,827,754Prudential ICICI Income Plan 200,000,000 Nil NilPrudential ICICI Liquid Plan Nil Nil 750,000,000Prudential ICICI Growth Plan Nil *47,483,650 161,791,526Prudential ICICI Tax Plan Nil *2,187,500 10,312,874Prudential ICICI Child Care Plan – Gift Plan Nil Nil 28,922,878Prudential ICICI Child Care Plan – Study Plan Nil Nil 5,704,228Prudential ICICI Monthly Income Plan Nil *21,828,505 430,256,768Prudential ICICI Balanced Fund Nil *12,968,855 75,974,024Prudential ICICI Dynamic Plan Nil *11,610,665 57,794,214Prudential ICICI Technology Fund Nil Nil 6,613,818Prudential ICICI Income Multiplier Fund Nil 3,932,175 126,604,402Prudential ICICI Discovery Fund Nil Nil 35,137,272Prudential ICICI Flexible Income Plan Nil Nil 250,000,000Prudential ICICI Floating Rate Plan Nil Nil 250,000,000Prudential ICICI Short Term Plan Nil Nil 250,000,000Prudential ICICI Long Term Plan Nil Nil 150,000,000 Prudential ICICI Emerging S.T.A.R. Fund Nil Nil 22,932,282

TOTAL 200,000,000 141,092,150 2,852,872,040

During the period April 1, 2004 to January 10, 2006 no subscription was made in issues lead managed by its Associates

* Includes Prudential ICICI Mutual Fund’s subscription to the issue of Maruti Udyog Ltd. through JM Morgan StanleySecurities Pvt. Ltd. This declaration has been made as a matter of disclosure to the investors.

Subscription in issues lead managed by ICICI Bank Limited

(Amount in Rupees)

Name of the Scheme F.Y 2002-2003

Prudential ICICI Income Plan Nil

Prudential ICICI Liquid Plan 1,450,000,000

Prudential ICICI Short Term Plan 603,220,568

Prudential ICICI Monthly Income Plan 445,762,855

Prudential ICICI Flexible Income Plan 300,000,000

Financial year 2003-2004 onwards no subscription was made in issues lead managed ICICI Bank Limited

The above investments were considered sound. Before making an investment, AMC evaluated the same on merits and onarms’ length basis and in accordance with the objectives of the scheme.

82


Transactions with Associate Companies:

(Amount in Rupees)

F.Y. F.Y. F.Y. April 1, 2005 to2002-2003 2003-2004 2004-2005 January 10, 2006

ICICI Bank Limited – Bank Charges

Prudential ICICI Balanced Fund 825,500 935,260 815,320.88 356,081

Prudential ICICI Discovery Fund Nil Nil 420,883.85 717,185

Prudential ICICI Dynamic Plan 112 770,817 596,182.19 608,655

Prudential ICICI Emerging S.T.A.R. Fund Nil Nil 276,590.68 168,402

Prudential ICICI Flexible Income Plan 398,750 933,012 664,748.93 133,067

Prudential ICICI Floating Rating Plan Nil 333,309 778,929.20 696,314

Prudential ICICI FMCG Fund 427,000 63,040 125,546.25 43,176

Prudential ICICI Fixed Maturity Plan – Quarterly Series 25 Nil Nil Nil 4,357

Prudential ICICI Fixed Maturity Plan – Yearly Series 12 Nil Nil 23,902.59 36,018

Prudential ICICI Fixed Maturity Plan – Yearly Series 24 Nil Nil 23,902.59 36,018

Prudential ICICI Child Care Plan-Gift Plan 350 56,396 189,274.57 35,956

Prudential ICICI Gilt Fund – Investment 889,297 811,421 563,502.79 48,363

Prudential ICICI Gilt Fund – PF Option Nil Nil Nil 22,877

Prudential ICICI Gilt Fund – Treasury 825,762 185,029 343,961.51 10,847

Prudential ICICI Gilt Fund – Treasury - PF Option Nil Nil 351,541.67 21,948

Prudential ICICI Growth Plan 827,049 958,392 796,978.96 407,374

Prudential ICICI Income Multiplier Fund Nil Nil 391,109.02 129,584

Prudential ICICI Income Plan 1,326,708 1,133,115 1,025,720.67 142,375

Prudential ICICI Liquid Plan 889,394 688,562 1,797,358.07 4,847,265

Prudential ICICI Long Term Floating Rate Plan Nil Nil 52,070.35 28,991

Prudential ICICI Long Term Plan Nil 68,619 63,709.85 18,171

Prudential ICICI Monthly Income Plan 825,665 945,772 1,322,413.33 660,178

Prudential ICICI Plan I Nil Nil 3,449.00 0

Prudential ICICI Power 15 958,588 1,136,605.09 1,145,095

Prudential ICICI Short Term Plan 825,715 1,012,692 601,179.91 216,294

Prudential ICICI Child Care Plan-Study Plan 730 15,689 54,234.48 28,827

Prudential ICICI Tax Plan 1501 470,030 218,904.50 123,999

Prudential ICICI Technology Fund 831,405 145,052 757,591.16 289,971

Prudential ICICI Cautious Plan Nil Nil 30,164.02 18,569

Prudential ICICI Moderate Plan Nil Nil 44,826.81 21,546

Prudential ICICI Very Aggressive Plan Nil Nil 11,955.03 11,907

Prudential ICICI Very Cautious Plan Nil Nil 20,906.92 18,941

Prudential ICICI Aggressive Plan Nil Nil 15,367.90 21,576

Prudential ICICI Blended Plan Plan A Nil Nil Nil 7,680,134

Prudential ICICI Blended Plan – Plan B Nil Nil Nil 2,688,117

Prudential ICICI Services Industries Fund Nil Nil Nil 315,558

Prudential ICICI Infrastructure Fund Nil Nil Nil 1,624,994

Prudential ICICI Index Fund Nil Nil Nil 17,070

Prudential ICICI Gilt Fund – Investment - PF Option Nil 200 355,160.83 0

Prudential ICICI Fixed Maturity –Quarterly Plan - Series 24 Nil Nil 14 0

ICICI Premier Nil 38,341 Nil 0

Prudential ICICI Index Fund Nil 73 Nil 0

Prudential ICICI Fixed Maturity Plan Quarterly series 2 50 Nil Nil 0

Prudential ICICI Fixed Maturity Plan Yearly series 1 Nil 82 Nil 0

Prudential ICICI Fixed Maturity Plan Yearly series 3 661 Nil Nil 0

Prudential ICICI Sweep Plan Nil 1,174 Nil 0

Prudential ICICI Fixed Maturity Plan – Yearly Series 23 Nil 46 Nil 0


83


ICICI Bank Limited – Brokerage

Prudential ICICI Growth Plan 1287401 4,921,497 2,222,891.29 1,278,422


Prudential ICICI Blended Plan – Plan A Nil Nil Nil 4,265,791

Prudential ICICI Blended Plan – Plan B Nil Nil Nil 1,029,463

Prudential ICICI Balanced Fund 371,333 1,228,809 2,104,082.04 653,657

Prudential ICICI Tax Plan 182,185 317,554 692,570.09 3,159,544

Prudential ICICI Technology Fund 688,780 1,141,174 749,131.93 459,854

Prudential ICICI Power 82,382 19,893,911 13,886,378.13 4,914,714

Prudential ICICI Child Care Plan-Study Plan 240,792 331,695 365,272.39 223,083

Prudential ICICI Child Care Plan-Gift Plan 368,251 440,987 740,634.98 656,397

Prudential ICICI Dynamic Plan 1,402,785 3,995,832 2,647,414.31 8,762,549

Prudential ICICI Discovery Fund Nil Nil 4,288,947.01 13,404,072

Prudential ICICI Emerging S.T.A.R. (Stock Targeted Nil Nil 10659160 3,886,114

At Returns) Fund

Prudential ICICI Income Plan 18,404,188 19,652,833 4,341,734 774,392

Prudential ICICI Index Fund Nil Nil Nil 11,390


Prudential ICICI Monthly Income Plan 2,178,352 3,794,594 3,974,498 1,355,165

Prudential ICICI Income Multiplier Fund Nil 346,122 575,892 803,104

Prudential ICICI Liquid Plan 13,452,007 14,253,329 5,385,319 4,973,103

Prudential ICICI Liquid Institutional Plus Nil Nil Nil 3,394,936

Prudential ICICI Short Term Plan 15,237,064 8,976,641 825,812 1,288,403

Prudential ICICI Flexible Income Plan 2,512,861 6,755,437 2,125,857.63 200,970

Prudential ICICI Long Term Floating Rate Plan Nil Nil 1,073,757 1,771,562

Prudential ICICI Long Term Plan 137 636 589 104,195

Prudential ICICI Gilt Fund – Treasury 147,943 67,126 151,169 151,053

Prudential ICICI Gilt Fund Treasury – PF Option Nil 157,604 209,973 121,353

Prudential ICICI Gilt Fund – Investment 4,448,085 5,051,182 3,127,133 1,146,363

Prudential ICICI Gilt Fund Investment Plan – PF Option Nil 1,893,378 623,790 396,620

Prudential ICICI Floating Rate Plan 995 349,724 4,664,522 3,905,415

Prudential ICICI Fixed Maturity Plan – Series 25 – Quarterly Plan Nil Nil 13,497 43,397

Prudential ICICI Fixed Maturity Plan – Series 26 Nil Nil Nil 7,369

Prudential ICICI Fixed Maturity Plan – Series 26 – Quarterly Plan Nil Nil 50,035 17,057

Prudential ICICI Fixed Maturity Plan Yearly series 6 378,438 Nil 21,506 17,154

Prudential ICICI Very Cautious Plan Nil 285,110 239,660 60,360

Prudential ICICI Cautious Plan Nil 345,285 637,190 57,016

Prudential ICICI Moderate Plan Nil 1,189,032 150,881 32,205

Prudential ICICI Agressive Plan Nil 1,283,833 191,735 28,160

Prudential ICICI Very Agressive Plan Nil 1,741,893 91,386 20,821

Prudential ICICI Income Plan – Institutional Option Nil Nil 110,819 Nil

Prudential ICICI Short Term Plan – Institutional Option Nil Nil 880,662 Nil

Prudential ICICI Liquid Plan – Institutional Option Nil Nil 10,862,559 Nil

Prudential ICICI Fixed Maturity Plan – Series 24 – Quarterly Nil 4,781 65,716 Nil

Prudential ICICI Fixed Maturity Plan – Series 25 –15 Months Plan Nil Nil 54,933 Nil

Prudential ICICI Fixed Maturity Plan – Series 25 – Yearly Plan Nil Nil 21,300 Nil

Prudential ICICI Fixed Maturity Plan Yearly series 5 156,198 46,342 93,300 Nil

Prudential ICICI Fixed Maturity Plan Yearly series 6 – Nil Nil 12,610 NilInstitutional Option

Prudential ICICI Fixed Maturity Plan Yearly series 12 Nil Nil 468,993 Nil

Prudential ICICI Fixed Maturity Plan Yearly series 12 – Nil Nil 100,771 NilInstitutional Option

Prudential ICICI Fixed Maturity Plan Half-Yearly series 1 39,558 809 Nil Nil

Prudential ICICI Fixed Maturity Plan Half-Yearly series 2 977 305 Nil Nil

Prudential ICICI Fixed Maturity Plan Quarterly series 1 11,929 1,944 Nil Nil

Prudential ICICI Fixed Maturity Plan Quarterly series 2 11,668 6,709 Nil Nil

Prudential ICICI Fixed Maturity Plan Quarterly series 3 4676 270 Nil Nil

Prudential ICICI Fixed Maturity Plan Yearly series 2 8,611 809 Nil Nil

Prudential ICICI Fixed Maturity Plan Yearly series 3 98,754 145,555 Nil Nil

Prudential ICICI Fixed Maturity Plan Yearly series 4 88 66 Nil Nil

84



Prudential ICICI Fixed Maturity Plan Yearly series 7 600 Nil Nil Nil

Prudential ICICI Fixed Maturity Plan Yearly series 1 109,263 1,262 24,300 Nil

Prudential ICICI Index Fund 29,945 33,828 Nil Nil

Prudential ICICI Fixed Maturity Plan – Deposit Plus NRI Series 4 – Nil 107,638 Nil NilQuarterly Plan



Prudential ICICI Sweep Plan Nil 831,586 Nil Nil

Prudential ICICI Fixed Maturity Plan – Series 24 – Yearly Nil 26,250 Nil Nil

ICICI Infotech Services Limited – Service Charges

ICICI Premier 1,597,609 1,030,481 Nil Nil

Prudential ICICI Balanced Fund Nil 202,835 94,838.66 Nil

Prudential ICICI Discovery Fund 2,270.82 Nil

Prudential ICICI Dynamic Plan Nil 426,905 202,725.69 Nil

Prudential ICICI Flexible Income Plan Nil 483,577 132,305.83 Nil

Prudential ICICI Floating Rate Plan Nil 8,765 113,464.72 Nil

Prudential ICICI FMCG Fund Nil 73,357 36,543.47 Nil

Prudential ICICI Child Care Plan – Gift Option Nil 67,493 100,344.93 Nil

Prudential ICICI Gilt fund – Investment Option Nil 112,830 50,661.05 Nil

Prudential ICICI Gilt Fund Investment Plan – PF Option Nil 12,916 9,356.83 Nil

Prudential ICICI Gilt Fund – Investment Plan -Treasury Option Nil 11,584 11,885.67 Nil

Prudential ICICI Gilt Fund – Treasury Option–PF Option Nil 11,584 5,862.14 Nil

Prudential ICICI Growth Plan Nil 490,222 267,988.55 Nil

Prudential ICICI Income Multiplier Fund Nil Nil 162,342.54 Nil

Prudential ICICI Income Plan Nil Nil 947,307.36 Nil

Prudential ICICI Liquid Plan Nil 683,225 608,337.90 Nil

Prudential ICICI Long Term Plan Nil 523 2,746.06 Nil

Prudential ICICI Monthly Income Plan Nil 630,504 596,595.37 Nil

Prudential ICICI Power Nil 1,182,127 804,016.71 Nil

ICICI Premier Redeemed 671,043 376,805 25,922.52 Nil

Prudential ICICI Short Term Plan Nil 233,911 74,132.94 Nil

Prudential ICICI Child Care Plan – Study Plan Nil 60,391 39,095.52 Nil

Prudential ICICI Tax Plan Nil 231,565 271,738.07 Nil

Prudential ICICI Technology Fund Nil 519,188 255,000.52 Nil

Prudential ICICI Fixed Maturity Plan – Half Yearly Nil 190 Nil Nil

Prudential ICICI Fixed Maturity Plan – Half Yearly 2 Nil 552 Nil Nil

Prudential ICICI Fixed Maturity Plan – Quarterly Nil 1,216 Nil Nil

Prudential ICICI Fixed Maturity Plan – Quarterly Series 2 Nil 281 Nil Nil

Prudential ICICI Fixed Maturity Plan – Quarterly Series 3 Nil 467 Nil Nil

Prudential ICICI Fixed Maturity Plan – Yearly Series 3 Nil 699 Nil Nil




Prudential ICICI Income Plan Nil 1,809,367 Nil Nil

Prudential ICICI Fixed Maturity Plan – Deposit Plus NRI Series 6 – Nil 110 Nil NilQuarterly Plan

Prudential ICICI Flexible Income Plus Plan Nil 56 Nil Nil

Prudential ICICI Fixed Maturity Plan-Quarterly Series 24 Ni l Nil 618.83 Nil

Prudential ICICI Fixed Maturity Plan – Yearly Series 1 Nil 247 112.35 Nil

Prudential ICICI Fixed Maturity Plan – Yearly Series 12 Nil 3,946 151.86 Nil

Prudential ICICI Fixed Maturity Plan – Yearly Series 2 Nil 972 32.98 Nil

Prudential ICICI Fixed Maturity Plan-Yearly Series 24 Nil Nil 259.89 Nil

Prudential ICICI Fixed Maturity Plan – Yearly Series 5 Nil 2,199 48.60 Nil

Prudential ICICI Agressive Plan Ni l Nil 33,223.68 Nil

Prudential ICICI Cautious Plan 34,199.76 Nil

Prudential ICICI Moderate Plan Ni l Nil 34,421.13 Nil

Prudential ICICI Very Aggressive Plan Ni l Nil 187,383.70 Nil

Prudential ICICI Very Cautious Plan Ni l Nil 12,328.63 Nil


85


ICICI Capital Services Limited – Brokerage

Prudential ICICI Power 297 Nil Nil Nil

Prudential ICICI Income Plan 54,912 Nil Nil Nil

Prudential ICICI Liquid Plan Nil Nil Nil Nil

Prudential ICICI Growth Plan 89,950 Nil Nil Nil

Prudential ICICI FMCG Fund 508 Nil Nil Nil

Prudential ICICI Tax Plan 774 Nil Nil Nil

Prudential ICICI Balanced Fund 1,281 Nil Nil Nil

Prudential ICICI Technology Fund 8,648 Nil Nil Nil

Prudential ICICI Monthly Income Plan 2,849 Nil Nil Nil

Prudential ICICI Child Care Plan – Gift Plan 1,656 Nil Nil Nil

Prudential ICICI Child Care Plan – Study Plan 2,176 Nil Nil Nil

ICICI Brokerage Service Limited – brokerage onsecondary market transactionsPrudential ICICI Balanced Plan 666,606 133,467 762,989 650,014

Prudential ICICI Dynamic Plan 148,729 933,145 555,997 1,343,471

Prudential ICICI FMCG Fund 181,297 90,180 74,022 85,237

Prudential ICICI Child Care Plan – Gift Plan 4736 42,294 163,412 65,525

Prudential ICICI Growth Plan 958,939 800,418 725,906 892,653

Prudential ICICI Income Multiplier Plan Nil Nil 46,684 155,794

Prudential ICICI Monthly Income Plan 185,121 894,866 738,221 221,344

Prudential ICICI Power 188,388 1,199,499 1,282,221 1,725,823

Prudential ICICI Child Care Plan – Study Plan 7,329 4,200 1,917 6,440

Prudential ICICI Technology Plan 70,270 131,250 387,399 16,758

Prudential ICICI Tax Plan 131,833 64,383 36,354 124,672

Prudential ICICI Discovery Fund Nil Nil 678,319 1,002,781

Prudential ICICI Emerging S.T.A.R. Nil Nil 304,029 289,491

Prudential ICICI Blended Plan A Nil Nil Nil 201,555


Prudential ICICI Blended Plan – Plan B Nil Nil Nil 4,910

Prudential ICICI Services Industries Fund Nil Nil Nil 539,296

ICICI Securities Ltd. (erstwhile ICICI Securities andFinance Co. Ltd.)Prudential ICICI Growth Plan 85,833 409 15 Nil

Prudential ICICI FMCG Fund 350,693 3,690 566 505

Prudential ICICI Balanced Fund 1,047,772 80,076 72,177 247

Prudential ICICI Tax Plan 38 48 25 25

Prudential ICICI Technology Fund 10,196 13,811 23,338 9,809

Prudential ICICI Power 386,599 Nil Nil 11

Prudential ICICI Child Care Plan – Gift Plan Nil Nil 349 84

Prudential ICICI Dynamic Plan Nil Nil 4 4

Prudential ICICI Income Plan 5,013,417 489,647 378,844 11

Prudential ICICI Monthly Income Plan 433 1,610 1,254 158

Prudential ICICI Liquid Plan 61,087 14,792 30,197 30,673

Prudential ICICI Gilt Fund – Investment 488,396 89,250 37,663 7,898

Prudential ICICI Gilt Fund – Treasury Investment Plan Nil Nil Nil 1,144

Prudential ICICI Short Term Plan 556,652 Nil Nil 81

Prudential ICICI Flexible Income Plan 113,550 Nil Nil Nil

Prudential ICICI Gilt Fund Investment Plan– PF Nil 54,000 7,572 13,447

Prudential ICICI Gilt Fund – Treasury 915,425 Nil Nil Nil

Prudential ICICI Liquid Plan – Institutional Option Nil Nil 98,801 Nil

Prudential ICICI Liquid Plan – Institutional Plus Option Nil Nil Nil 25,497

Prudential ICICI Floating Rate Plan Nil Nil 21,583 46,957

Prudential ICICI Fixed Maturity Plan– Series 25 – Quarterly Option Nil Nil 6,205 Nil

Prudential ICICI Fixed Maturity Plan Quarterly series 1 Nil Nil Nil Nil

ICICI Web Trade Ltd. - BrokeragePrudential ICICI Growth Plan 65,558 164,231 167,620 180,318

Prudential ICICI FMCG Fund 17,816 71,497 65,161 707,930

Prudential ICICI Balanced Fund 19,825 123,010 103,015 120,477

86



Prudential ICICI Blended Plan – Plan A Nil Nil Nil 24,040

Prudential ICICI Blended Plan – Plan B Nil Nil Nil 7,662

Prudential ICICI Tax Plan 18,649 54,802 205,137 1,223,359

Prudential ICICI Technology Plan 96,558 280,824 167,897 140,576

Prudential ICICI Power 34,638 389,141 199,823 179,817

Prudential ICICI Dynamic Plan 116,879 222,863 101292 403,560

Prudential ICICI Discovery Plan Nil Nil 393,245 388,117

Prudential ICICI Emerging S.T.A.R. Nil Nil 519,226 544,332

Prudential ICICI Income Plan 100,224 133,875 29,367 20,036

Prudential ICICI Monthly Income Plan 14,535 54,933 32,105 19,893

Prudential ICICI Income Multiplier Fund Nil 9,905 13,158 64,088


Prudential ICICI Liquid Plan 30,358 54,016 99,228 97,806

Prudential ICICI Short Term Plan 6,981 12,152 12,816 22,287

Prudential ICICI Flexible Income Plan 7,878 19,992 12,243 4,219

Prudential ICICI Gilt Treasury 2,522 4,109 4004 1,471

Prudential ICICI Gilt Investment 19,178 24,084 7715 1,450

Prudential ICICI Liquid Plan – Institutional Option Nil Nil 40,105 4,446

Prudential ICICI Floating Rate Plan Nil Nil 27,972 32,744

Prudential ICICI Very Cautious Plan Nil 374 1,513 680

Prudential ICICI Cautious Plan Nil 3,126 6,944 1,797

Prudential ICICI Moderate Plan Nil 48,414 16,814 6,079

Prudential ICICI Agressive Plan Nil 107,480 31,686 40,052

Prudential ICICI Very Aggressive Plan Nil 153,655 69,192 54,905

Way2Wealth Securities Pvt. Ltd. - Brokerage

Prudential ICICI Growth Plan 296,840 183,048 165,070.66 66,995


Prudential ICICI Blended Plan – Plan A Nil Nil Nil 7,125

Prudential ICICI Blended Plan – Plan B Nil Nil Nil 701

Prudential ICICI Balanced Fund 21,361 53,462 157,922.82 59,366

Prudential ICICI Tax Plan 19,215 31,402 57,441.66 207,811

Prudential ICICI Technology Plan 310,26 73,652 140,888.74 45,691

Prudential ICICI Power 13,190 1,653,262 639,208.35 109,553

Prudential ICICI Child Care Plan – Study Plan 38,778 31,800 34,364 19,903

Prudential ICICI Child Care Plan – Gift Plan 46,186 33,307 45,117.25 48,480

Prudential ICICI Dynamic Plan 39,621 186,391 235,528.31 276,679

Prudential ICICI Discovery Plan Nil Nil 648.988.55 407,705

Prudential ICICI Emerging Star Nil Nil 435,476.06 161,291

Prudential ICICI Income Plan 2,179,850 1,115,698 316,944.95 98,049

Prudential ICICI Infrastructure Fund Nil Nil Nil 736,956

Prudential ICICI Monthly Income Plan 870,075 433,742 272,730.29 80,511

Prudential ICICI Income Multiplier Fund Nil 142,919 62,779.49 42,449

Prudential ICICI Index Fund 9,167 1,161 Nil 1,002

Prudential ICICI Liquid Plan 334,862 256,382 123,567.98 44,839

Prudential ICICI Short Term Plan 931,228 14,21,883 102,356.72 60,103

Prudential ICICI Flexible Income Plan 38,849 930,438 109,029.52 4,227

Prudential ICICI Gilt Treasury 7730 8,058 5030.14 3,289

Prudential ICICI Gilt Fund Treasury Plan – PF Option Nil 7,075 38.86 9,612

Prudential ICICI Gilt Investment 273,439 449,987 400,147.41 133,727

Prudential ICICI Gilt Investment – PF Nil Nil 4,670.32 3,017

Prudential ICICI Liquid Plan – Institutional Option Nil Nil 33,188.02 6,545

Prudential ICICI Short Term Plan – Institutional Option Nil Nil 31,585.07

Prudential ICICI Floating Rate Plan Nil 64,734 224,269.33 23,534

Prudential ICICI Long Term Floating Rate Plan Nil Nil 9,650 13,819

Prudential ICICI Fixed Maturity Plan – Series 24 – Quarterly Plan Nil Nil 125.12

Prudential ICICI Fixed Maturity Plan – Yearly Series 12 Nil Nil 2515.82

Prudential ICICI Very Cautious Plan Nil 39,866 19,731.76 679

Prudential ICICI Cautious Plan Nil 44,693 90,796.75 5,532

Prudential ICICI Moderate Plan Nil 129,366 29,562.67 6,251


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Prudential ICICI Agressive Plan Nil 68,075 16,786.39 3,270

Prudential ICICI Very Agressive Plan Nil 18,578 5,875.57 1,148

Prudential ICICI Fixed Maturity Plan – Yearly series 6 Nil Nil 400.00 Nil

Prudential ICICI Fixed Maturity Plan – Quarterly I (14,409) 1,611 Nil Nil

Prudential ICICI Fixed Maturity Plan – Quarterly II 51 21 Nil Nil

Prudential ICICI Fixed Maturity Plan – Quarterly III 29 Nil Nil Nil

The percentage of brokerage paid to ICICI Brokerage Services Limited (IBSL) was @0.26% and for ICICI Web Trade [email protected]% of transaction value and the same was in line with the norms relating to brokerage payments for secondary markettransactions of the Fund. The total business given to IBSL amounted to Rs.14.098 lakhs, Rs.12,927.72 lakhs, Rs. 15,603.41lakhs and Rs. 31,943 lakhs during the year 2002-2003, 2003-2004 and 2004-2005 respectively. From the period April 1,2005 to January 10, 2006 the total business given to IBSL amounted to Rs. 59,076 lakhs. Further, IBSL was paid a sum ofRs. 307,712 in connection with the rollover of ICICI Premier scheme towards service charges, in the year 1998-99.

During the period from April 1, 2000 to January 10, 2006 total business given to ICICI Web Trade Ltd. and ICICI SecuritiesLimited amounted to Rs. 1,252 lakhs and Rs. 994 lakhs respectively.

Dealings with Associate Companies

The AMC may, from time to time, for the purpose of conducting its normal business, use the services of the Sponsor,subsidiaries of its Sponsors/ associate companies of AMC. Such entities as on the date of this document include ICICI Bank,a scheduled commercial bank, ICICI Infotech Services Limited, a registrar and transfer agent; ICICI Brokerage ServicesLimited, a brokerage house, ICICI Venture Funds Management Company Limited, a venture funds management company,ICICI Securities and Finance Company Limited (I Sec), an investment bank, ICICI Prudential Life Insurance Company Limitedcarrying out insurance business, ICICI Web Trade Limited an online brokerage firm and Way2Wealth Securities PrivateLimited. The AMC may utilize the services of these group companies and any other subsidiary or associate company of theSponsors/AMC established or to be established at a later date in case such an associate company is in a position to providethe requisite services to the AMC. The AMC will conduct its business with the aforesaid companies on commercial termsand on an arm’s length basis and at the then prevailing market rates to the extent permitted under the applicable lawsincluding the Regulations, after an evaluation of the competitiveness of the pricing offered by the associate companies andthe services to be provided by them.

Associate transactions, if any carried out, will be as per the Regulations and the limits prescribed there under. The Regulationscurrently prescribe the following limits:

The mutual fund scheme shall not make any investment in;

1. any unlisted security of an associate or group company of the Sponsor; or

2. any security issued by way of private placement by an associate or group company of the Sponsor; or

3. the listed securities of group companies of the Sponsor which is in excess of 25% of the net assets of such scheme.

The above restrictions and limits are also applicable to this Scheme. The AMC will, before investing in the securities of thegroup companies of the sponsor, evaluate such investments, the criteria for the evaluation being the same as is applied toother similar investments to be made under the Scheme. Investments under the Scheme in the securities of the groupcompanies will be subject to the limits under the Regulations.

C) Details of investments in companies that hold more than 5% of NAV of Schemes managed by the AMC, as onJanuary 10, 2006

Deccan Chronicle Holdings Ltd.Name of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Monthly Income Plan 39,200 12,777,240.00 0.27

Prudential ICICI Dynamic Plan 1,510,799 492,444,934.05 6.74

Prudential ICICI Emerging S.T.A.R. (Stocks Targeted At Returns) Fund 693,698 226,110,863.10 5.97

Prudential ICICI Income Multiplier 19,609 6,391,553.55 0.26

Prudential ICICI Power 703,746 229,386,008.70 2.85

Prudential ICICI Technology Fund 359,147 117,063,964.65 8.35

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Grasim Industries LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Infrastructure Fund 468,276 666,614,299.80 5.11Prudential ICICI - Discovery Fund 216,847 308,692,546.85 3.17Prudential ICICI Blended Plan - A 1,925 2,740,333.75 0.04Prudential ICICI Blended Plan - B 20,825 29,645,428.75 0.87Prudential ICICI Dynamic Plan 91,662 130,485,440.10 1.79Prudential ICICI Income Multiplier Fund 9,380 13,352,899.00 0.54Prudential ICICI Index Fund 113 160,861.15 0.59Prudential ICICI Power 107,890 153,586,809.50 1.91Prudential ICICI Spice Fund 97 137,851.55 1.73Prudential ICICI Growth Plan 59,233 84,321,137.15 2.96

Debt – Debentures / Bonds

Prudential ICICI Short Term Plan 140 398,950,639.46 2.83Prudential ICICI Income Multiplier 100 101,488,966.80 4.09

Hero Honda LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Balanced Fund 75,986 64,306,951.80 2.05Prudential ICICI Power 181,202 153,351,252.60 1.90Prudential ICICI Index Fund 246 208,189.80 0.76Prudential ICICI Growth Plan 98,207 83,112,584.10 2.92Prudential ICICI Discovery Fund 400,000 338,520,000.00 3.48Prudential ICICI Tax Plan 51,952 43,966,977.60 1.96Prudential ICICI –Monthly Income Plan 20,000 16,926,000.00 0.36Prudential ICICI Income Multiplier 33,140 28,046,382.00 1.13Prudential ICICI Spice Fund 132 111,619.20 1.40

Hindustan Zinc LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Emerging S.T.A.R. (Stocks Targeted At Returns) Fund 123,147 35,337,031.65 0.93

Hindalco Industries LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Infrastructure Fund 2,738,751 212,662,781.65 1.63Prudential ICICI Monthly Income Plan 333,288 50,343,152.40 1.06Prudential ICICI Balanced Fund 1,009,813 120,462,253.65 3.83Prudential ICICI Blended Plan – B 29,625 1,307,943.75 0.04Prudential ICICI Child Care Gift Plan 157,534 23,795,510.70 3.31Prudential ICICI Dynamic Plan 1,316,575 198,868,653.75 2.72Prudential ICICI Growth Plan 776,818 117,338,358.90 4.12Prudential ICICI Income Multiplier Fund 100,000 4,415,000.00 0.18Prudential ICICI Index Fund 1,772 243,073.60 0.89Prudential ICICI Power 1,212,525 129,701,901.25 1.61Prudential ICICI Spice Fund 1,309 172,387.35 2.17Debt – Debentures / BondsPrudential ICICI Fixed Maturity Plan – 25 – 15 month option 30 301,257,435.20 12.01Prudential ICICI Balanced Fund 600,000 60,009,144.22 1.91Prudential ICICI Income Multiplier 1,000,000 100,015,239.68 4.03Prudential ICICI Short Term Plan 65 647,658,017.30 4.60Prudential ICICI Sweep Plan 500,000 50,007,620.11 12.58Prudential ICICI Liquid Plan 1,400,015 291,739,105.77 0.38


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Hindustan Lever LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Spice Fund 1,456 273,728.00 3.44Prudential ICICI Index Fund 2,718 513,837.90 1.87Prudential ICICI Monthly Income Plan 100,000 18,905,000.00 0.40Prudential ICICI Child Care Gift Plan 50,000 9,452,500.00 1.31

HCL Technologies Limited

Name of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Balanced Fund 107,186 62,409,048.50 1.99Prudential ICICI Services Industries Fund 246,488 143,517,638.00 2.26Prudential ICICI Power 201,730 117,457,292.50 1.46Prudential ICICI Index Fund 395 229,988.75 0.84Prudential ICICI Dynamic Plan 188,605 109,815,261.25 1.50

Jet Airways India Ltd


Equity

Prudential ICICI Index Fund 108 127,769.40 0.46Prudential ICICI Services Industries Fund 127,192 150,474,495.60 2.37

MICO - Motor Industries Co. Limited


Equity

Prudential ICICI Discovery Fund 140,000 403,921,000.00 4.15

Maruti Udyog LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Spice Fund 114 74,225.40 0.93

Prudential ICICI Index Fund 355 231,832.75 0.84

Nahar Spinning Mills Ltd


Equity

Prudential ICICI Discovery Fund 313,787 79,984,306.30 0.82

PTC India Limited (erstwhile PowerTrading Corporation Ltd.)


Equity

Prudential ICICI Power 1,374,179 83,824,919.00 1.04Prudential ICICI Tax Plan 125,000 7,625,000.00 0.34Prudential ICICI Services Industries Fund 1,654,363 100,916,143.00 1.59Prudential ICICI Infrastructure Fund 1,245,966 76,003,926.00 0.58

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Raymond India LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI - Discovery Fund 557,313 229,640,821.65 2.36

Prudential ICICI Tax Plan 169,101 69,678,067.05 3.10


Prudential ICICI Liquid Plan 60 600,000,000.00 0.79

Tata Sons Ltd.Name of Scheme Quantity Amount (Rs.) % of NAV


Prudential ICICI Fixed Maturity Plan Series 5 Yearly Plan 10 100,098,222.56 7.53

Tata Consultancy Services LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Balanced Fund 27,885 46,637,662.50 1.49Prudential ICICI Dynamic Plan 25,000 41,812,500.00 0.57Prudential ICICI Services Industries Fund 101,977 170,556,532.50 2.69Prudential ICICI Index Fund 591 988,447.50 3.60Prudential ICICI Income Multiplier 20,500 34,286,250.00 1.38Prudential ICICI Spice Fund 127 212,299.55 2.67Prudential ICICI Technology Fund 49,190 82,270,275.00 5.87Prudential ICICI Growth Plan 34,891 58,355,197.50 2.05

Videsh Sanchar Nigam LimitedName of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Technology Fund 77,035 29,261,744.75 2.09Prudential ICICI Blended Plan – Plan A 578,550 219,762,217.50 2.97Prudential ICICI Blended Plan – Plan B 103,950 39,485,407.50 1.16Prudential ICICI Index Fund 351 133,327.35 0.49


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NB: Some fines and cost orders of $1000 and below made by State Insurance Departments in the US are excluded fromthe above

Associates of ICICI Bank

ICICI Securities Limited (ICICI Securities)

1. ICICI Securities was awarded two penalty points by SEBI for non-submission of the Letter of Offer in the Rightsissues of Siroplast Limited and Thane Electricity Company Limited during 1995 and one penalty point for non-submission of post-issue report in the public issue for Shree Rajasthan Texchem Limited.

2. Two warning letters were issued by SEBI on October 2, 1998 in the public issue of Hindustan Motors Limited andon July 11, 2000 in the public issue of Cadilla Healthcare Limited respectively.

ICICI Brokerage Services Limited (ICICI brokerage)

1. The NSE had, in its letter dated November 26, 2002 reference no NSE/INSP/ACT/2001-02/31487, reprimandedICICI Brokerage and levied a penalty of Rs. 30,000/- subsequent to an inspection done by it. The penalty was withrespect to the purported violations of short sales (three instances on March 9, 2001 and one instance on March12, 2001) and the transfer of client shares to own account (12 instances during February-March 2001). However,ICICI Brokerage had made a representation to NSE requesting a waiver of the penalties, since these arose fromgenuine technical difficulties in the internet trading systems of ICICI Web Trade Limited, which had been usingICICI Brokerage to execute the trades on NSE. ICICI Brokerage had therefore requested NSE for a review of thepenalty and submitted all necessary documents in support of this. NSE accepted ICICI Brokerage’s representationand waived the above penalty.

2. SEBI had issued a show cause notice to ICICI Brokerage with regard to the agency business done on behalf of oneof its clients in the shares of Global Trust Bank. ICICI Brokerage replied to the show cause notice denying the

D) PENALTIES & PENDING LITIGATIONS

I. Cases of penalties awarded by SEBI under the SEBI act or any of its regulations or any other regulatory body against thesponsor of the mutual fund or any company associated with the sponsor in any capacity such as the asset managementcompany, trustee company/board of trustees, or any of the directors or key personnel of the asset managementcompany and trustee company:

ICICI Bank: Nil

Prudential Plc. & its associates:

Date Company Description of Sanction

27 January 1997 Prudential Personal Equity PlansLimited (PPEPL)

PPEPL was reprimanded and fined £75,000 by IMROfor breaches of IMRO rules relating to its PEPbusiness:

- failed to carry out reconciliations and correctionsof PEP client money accounts- failed to notify IMRO that these had not beendone

- failed to have adequate compliance arrangementsin specific areas of its business.

April 1999 M&G Financial Services Limited(M&GFSL)

Following a regular Inland Revenue PEP audit,M&GFSL have reached agreement to pay thefollowing:

- missing application forms - £550

- incorrect handling of void PEPs - £3,250

- accepting “paid for” as well as “free” shares duringthe take-on of Norwich Union windfall shares - £600plus repayment of any wrongly claimed tax credits.

29 October 2001 The Prudential AssuranceCompany Limited (PAC)

PAC was fined £650,000 by PIA for failures in itspensions review procedures relating specifically todelays in making payments of redress to supplementpension policy benefits of those who had retiredand beneficiaries of those who had died; and itsrecord-keeping.

6 March 2003 Scottish Amicable Life plc (SAL) SAL was fined £750,000 by the FSA in respect ofsales of mortgage endowments by its tied agents in2000. Advisers did not place appropriate emphasison identifying whether customers were prepared totake the risk that the endowment might not performwell enough to pay off the mortgage.

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allegations and findings of SEBI. Thereafter, SEBI granted a personal hearing on November 24, 2003. Subsequentto the hearing, SEBI vide its letter dated February 5, 2004 issued a show cause notice to ICICI Brokerage as to whythe penalty of suspension of registration of ICICI Brokerage Services Limited for a period of four months asrecommended by the enquiry officer should not be imposed. ICICI Brokerage had vide its letter dated February 23,2004 submitted its reply to the said show cause notice denying all the allegations and the findings of the enquiryofficer and that the charges against ICICI Brokerage stated in the show cause notice of February 5, 2004 beaccordingly withdrawn. Further, ICICI Brokerage was granted a personal hearing before the Chairman, SEBI onMarch 18, 2004 wherein ICICI Brokerage was represented by its legal counsels. ICICI Brokerage re-iterated that itdenied the allegations and findings of SEBI as stated in their show cause notice and also that the findings of SEBIwere based merely on inferences and surmises without any proof of guilt or market manipulation part of ICICIBrokerage. A written submission of the arguments presented at the personal hearing was also forwarded to SEBI.The Chairman, SEBI vide order dated September 9, 2004 discharged ICICI Brokerage from the proceedings in thesaid matter.

3. As per normal practise, the BSE/NSE and SEBI from time to time conduct inspections of its member/registeredbrokers. Accordingly, a regular inspection was conducted by SEBI of ICICI Brokerage’s books for the period April,2001 to March, 2003. The inspection report had brought out certain irregularities such as difference of tradedetails in under separate accounts maintained by us; PAN not being quoted on contract notes in some cases andnon-segregation of clients and our own funds. In this regard SEBI has vide its letter dated March 23, 2004 advisedICICI Brokerage to rectify the irregularities and warned it not to repeat the same in future.

4. The NSE levied a penalty of Rs. 1,22,500/- on ICICI Brokerage for delayed submission of the ‘WDM segment’Annual Compliance Report for 2002-2003. Whilst the fine has been debited, ICICI Brokerage has replied to theNSE stating its factual position and requested a reversal of the above penalty. The NSE thereafter placed the matterbefore its Disciplinary Action Committee, which has reduced the penalty to Rs. 1 lakh. ICICI Brokerage has soughta review of the said penalty. Upon review, NSE vide letter dated February 15, 2005 has absolved ICICI Brokerage ofthe iregularity and has waived the penalty.

ICICI venture Funds Management Company Limited (ICICI Venture)

1. ICICI Equity Fund (the “Fund”), a fund managed by the ICICI Venture was originally registered with the SEBI as aVenture Capital Fund under the SEBI (Venture Capital Funds) Regulations, 1996 (hereinafter the “Regulations”).The Fund de-registered from SEBI in the year 2002. In this process, the Fund first amended its Private PlacementMemorandum (PPM) and pursued investment objectives permitted under the amended PPM before completingthe de-registration formalities. During the course of its investment activity, the Fund invested in certain securities,which were in excess of the limitations and restrictions imposed by the then prevailing Regulations. SEBI was ofthe view that the Fund should have completed the de-registration formalities before pursuing investments in theaforesaid securities. The Fund suo moto communicated these developments to SEBI and initiated a dialogue toconclude and regularize this matter. Upon consideration of the voluntary disclosures and representations made byICICI Venture, SEBI vide its letter dated January 9, 2003 communicated that the above procedural lapse had beenviewed seriously and advised ICICI Venture to take due care in future and improve its compliance mechanisms andstandards to avoid recurrence of such incidents.

2. SEBI, Madras had issued a show cause notice dated May 31, 2002 to ICICI Venture alleging contravention of sub-Regulation 1 and sub-regulation 3 of Regulation 6 (for the year 1997) and sub-regulation 1 and sub-regulation2 of Regulation 8 (for the years 1998, 1999, 2000 and 2001) of the Securities and Exchange Board of India(Substantial Acquisition of Shares and Takeovers) Regulation, 1997 for failure/delay in making the disclosure of itsshareholding in Vimta Labs Limited. Adjudication proceedings were held. Based on the submissions made byICICI Venture, SEBI vide order dated November 1, 2002 exonerated ICICI Venture from liability.

ICICI Investment Management Company Limited (ICICI Investment Management)

1. ICICI Investment Management is the asset management company of “ICICI Securities Fund”, a mutual fundregistered with the SEBI. SEBI had issued on May 22, 2000, a warning letter to ICICI Investment ManagementLimited for the lack of due diligence while submitting the offer document for ICICI CBO Fund.

AMC: Nil

The Trustee: Nil

II. Any pending material litigation proceedings incidental to the business of the mutual fund to which the sponsorof the mutual fund or any company associated with the sponsor in any capacity such as the AMC, Board oftrustees/trustee company or any of the directors or key personnel is a party. Any pending criminal cases oreconomic offence cases against the sponsor or any company associated with the sponsor in any capacity such asAMC, Board of Trustees/Trustee Company or any of the directors or key personnel.

Criminal Cases Against ICICI Bank and / or its Directors

1. A criminal complaint (614 of 2001) was filed before the 4th Additional Chief Metropolitan Magistrate, Bangaloreagainst ICICI Bank by Pelicorp Limited upon termination of the Direct Selling Agent Agreement between itself andICICI Bank pursuant to certain RBI guidelines. ICICI Bank filed a criminal petition for quashing the complaint in theKarnataka High Court, which has granted interim stay in the matter. The matter is pending disposal.

2. A criminal complaint (1648 of 2001) was filed against ICICI Bank by Rajiv Aggarwal before the Chief JudicialMagistrate, Jaipur for wrongful dishonour of cheques. ICICI Bank has filed a revision petition in the High Court atJaipur for quashing the order passed by the lower court. The High Court has stayed the proceedings of the lowercourt. Final arguments in the revision are yet to take place.


93

3. A criminal complaint (353 of 2003) was filed before the Additional Chief Metropolitan Magistrate, New Delhi byMr. Anoop G. Chaudhury against ICICI Bank’s Managing Director & Chief Executive Officer Shri K.V.Kamath, forsale of a vehicle, which had been involved in an accident. The investigation officer has filed the investigation reportin the Court. The matter is pending hearing.

4. A criminal complaint (64 of 2002) was filed against 36 individuals including Mr. K. V. Kamath M.D. and CEO beforethe Court of the Chief Metropolitan Magistrate, Patiala House, New Delhi by Mr. M. M. Sehgal, the promoter ofSehgal Papers Limited (SPL). ICICI as part of a consortium of lenders led with IFCI Limited as lead institution hadextended financial assistance to SPL. No summons has been issued to ICICI so far. Only a copy of the complaintfiled by the Complainant has been served on ICICI.

5. Five criminal complaints (9419/S/2002 to 9423/S/2002) were filed against ICICI Bank before the 39th Court ofPresidency Metropolitan Magistrate at Mumbai by the Municipal Corporation of Greater Mumbai (BMC) forviolation of Section 471 of the BMC Act read with Section 328-A thereof on grounds of non-payment of licencefees for the illuminated signboards at its ATM centres. ICICI Bank filed a writ petition (2377 of 2002) in theBombay High Court challenging the applicability of the provisions of Sections 328 & 328-A of the BMC Act inrespect of the ATM centres. The writ petition was dismissed. In appeal, ICICI Bank filed an SLP (24215 of 2002) inthe Supreme Court. The Supreme Court has granted a stay against all prosecutions and proceedings by BMC inthis regard. The Metropolitan Magistrate stayed the proceedings before it till the final disposal of SLP.

Further, the BMC has also filed two similar complaints (88/M/2003 and 89/M/2003) before the 27th Court ofPresidency Metropolitan Magistrate at Mumbai, against ICICI Bank. ICICI Bank submitted a copy of the SupremeCourt’s order to the Magistrate. The matter is pending disposal.

6. A criminal complaint (1472/ of 2002) was filed against ICICI Home Finance Company Limited (ICICI HFC) and alsoagainst some of ICICI Bank’s Directors before the Metropolitan Magistrate’s 26th Court at Borivli, Mumbai, by Ms.Dipali Gopani for alleged wrongful recovery of Rs. 3,150/- and non-return of title deeds. The complaint has beensubsequently withdrawn against certain directors and is now pending against Ms. Lalita D. Gupte, Ms. KalpanaMorparia. An application for discharge of the Directors has been filed in the trial court, which is pending disposal.

7. A complaint (752 of 1997) was filed against 3i Infotech Services Ltd (erstwhile ICICI Infotech Services Limited) inthe Consumer Redressal Forum, Hyderabad District, by a shareholder of ICICI, Shri. M.P.Jain regarding transfer offive shares inspite of a stop transfer request having been made by him which has since been disposed off. A crimenumber 152 of 2001 was also filed against ICICI and 3i Infotech Ltd (erstwhile ICICI Infotech Limited) before theXI Metropolitan Magistrate, Secunderabad by the shareholder. The Magistrate has referred the matter to MarredpallyPolice Station, Secunderabad for investigation. ICICI filed a petition in the Andhra Pradesh High Court forquashing the criminal complaint filed before the XI Metropolitan Magistrate, Secunderabad and the High Courthas granted a stay on the investigations being undertaken by the police department till further orders.

8. A criminal complaint was filed before the Judicial Magistrate First Class, Bhiwandi by Shri Sheikh Mohd. KhalidMunnavar a car insurance policy holder, for the alleged non-cognizable offences of criminal intimidation etc.,against three officers of ICICI Lombard General Insurance Company Limited. Shri K V Kamath, MD & CEO of ICICIBank Limited has also been named as accused in the complaint though no specific allegations are made againsthim except describing him as one of the officers of ICICI Lombard, and making an allegation that all four officersconspired in committing the offences. Shri K.V Kamath is a Non Executive Director on the board of ICICI Lombard.A writ petition was filed before the High Court, Mumbai seeking quashing of the criminal complaint on thegrounds, inter alia, that it is false and baseless and the facts are contradictory. The High Court passed an Order,staying the proceedings before the Judicial Magistrate First Class, Bhiwandi. Thus, the proceedings in CriminalComplaint No. 2887 of 2002 filed against Shri K.V. Kamath and others are stayed.

9. Vijay Shankar Prasad the complainant – one of the debenture holder of Lloyds Finance & Investment CompanyLimited (LFICL) had filed a criminal complaint (Case No. - 2064(C) of 2000) for non receipt of interest andredemption amount from the aforesaid company, in the Court of Chief Judicial Magistrate, Patna (CJM). As ICICIBank Ltd is acting as Trustees he has inter alia, impleaded Mr. K.V.Kamath, Managing Director, ICICI Ltd. The CJMcourt had taken cognizance of the offence and issued summons for appearance of the accused. Aggrieved by suchdirection, a criminal revision application was filed before the Sessions Judge, Patna. Upon hearing, the revisionapplication was admitted and directions were issued staying the proceedings before CJM court and records werealso called from the lower Court. The matter is fixed for hearing on April 29, 2005

10. Shri Madan Gopal,. the complainant - one of debenture holder of Modern Denim Limited (MDL) had filed acriminal complaint (Case No. - 2175(C) of 2001) for non receipt of interest and redemption amount from theaforesaid company, in the Court of Chief Judicial Magistrate, Patna (CJM). As ICICI Bank Ltd is acting as Trusteeshe has inter alia, impleaded Shri Narayan Vaghul, Chairman ICICI Ltd. The CJM court had taken cognizance of theoffence and issued summons for appearance of the accused. Aggrieved by such direction, a criminal revisionapplication was filed before the Sessions Judge, Patna. Upon hearing, the revision application was admitted anddirections were issued for staying the proceedings before CJM court and records were also called from the lowerCourt. The mater is fixed for hearing on April 29, 2005. However, the company has since paid the outstandingdues of the debenture holder and to this effect a Memorandum of Understanding (MOU) has also been executedbetween the complainant and the Company

11. The Enforcement Officer (Central) had filed a criminal complaint (Case No. - C/3606/03) before the ChiefMetropolitan Magistrate, Kolkata (CMM) impleading Shri Prafulla Ranjan, Branch Manager and Shri K V Kamath,CEO & MD for violation of the provisions of Equal Remuneration Act 1976. ICICI Bank has already taken up the

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matter and replied to Labor Enforcement Officer (Central), Kolkata (LEO) and the Chief Labor Commissioner(Central), Ministry of Labor, Government of India, New Delhi for withdrawal of the complaint upon compliance ofall the observations made by the LEO. Criminal revision application has been filed before High Court, Calcutta andthe proceedings before CMM Court has been stayed till further order

12. Seema Mungale has filed a criminal complaint (1876 of 2003) against ICICI Bank & all its Directors alleging thatICICI Bank has filed a false criminal complaint under section 138 of The Negotiable Instruments Act , against herby making false statements. ICICI Bank filed a writ petition in the Bombay High Court for quashing the complaintagainst the Directors and an interim order has been passed staying the criminal proceedings in the Magistrate’scourt at Pune against eleven Directors. A separate writ petition for quashing of the complaint has been filed in TheBombay High Court. The criminal case before the Magistrate at Pune and Writ Petitions filed at High Court,Bombay are pending disposal.

13. Shri Deobrat Prasad has filed a criminal Complaint no. 153/04 before the Judicial Magistrate at Jamshedpur fortaking forcible possession of his vehicle. In the complaint he has also inpleaded Shri K V Kamath, MD & CEO ofICICI Bank. Summons were issued in this regard. An application had been filed before the High Court of Jharkhandat Ranchi for quashing the proceedings in the said criminal complaint. The Ranchi High Court has passed an orderstaying further proceedings in the matter. Pursuant to such directionsthe Judicial Magistrate, Jamshedpur has alsostayed further proceedings in the matter

14. Three criminal complaints (2412/S/2003, 2413/S/2003 and 2414/S/2003) were filed by Inspectors, Security GuardsBoard, Greater Bombay & Thane District, in the year 2000 against erstwhile ICICI Limited (Since merged into ICICIBank) (“ICICI”) and Shri K.V.Kamath, M.D. & CEO, before the Metropolitan Magistrate, Mumbai, under theMaharashtra Private Security Guards Act, 1981 on the grounds that security guards were engaged from exemptedsecurity agencies even though ICICI was registered with the Security Guards’ Board. The earlier notices in thisregard were replied to stating that registration is only in respect of residential quarters for employees and not inrespect of other establishments. ICICI Bank has filed a writ petition in the Bombay High Court for quashing of thecomplaint, which is pending disposal.

15. Two criminal complaints (2415/S/2003 and 2416/S/2003) were filed by Inspectors, Security Guards Board, GreaterBombay & Thane District, in the year 2000 against ICICI Bank before the Metropolitan Magistrate, Mumbai, underthe Maharashtra Private Security Guards Act, 1981, on the grounds that security guards have been engaged fromunexempted security agencies. ICICI Bank has taken a stand that the exemption of security agencies continued onaccount of a previous High Court Order in the writ petition filed by certain security agencies. The complaints arepending disposal.

16. Two criminal complaints (2347/S/2003 and 2349/S/2003) were filed by Inspectors, Security Guards Board, GreaterBombay & Thane District, in the year 2001 against ICICI Bank before the Metropolitan Magistrate, Mumbai, underthe Maharashtra Private Security Guards Act, 1981 on the grounds that security guards have been engagedfrom unexempted security agencies. ICICI Bank has replied stating that the Security Guards were deployed on trialbasis and are being replaced by Armed Guards. The complaints are pending disposal.

17. Dinesh Kumar Singh an advocate has filed Criminal Contempt Proceedings against Directors of ICICI Bank Ltd inthe Hon’ble High Court of Allahabad. The complainant alleges that his car was repossessed enroute his journeyto court and hence he was prevented from attending the court. The matter is pending disposal.

Criminal Cases against associates of ICICI Bank

ICICI Home Finance Company Limited (ICICI Home Finance)

1. A criminal complaint (1472/ of 2002) was filed against ICICI Home Finance Company Limited (ICICI HFC) and alsoagainst some of ICICI Bank’s Directors before the Metropolitan Magistrate’s 26th Court at Borivli, Mumbai, by Ms.Dipali Gopani for alleged wrongful recovery of Rs. 3,150/- and non-return of title deeds. The complaint has beensubsequently withdrawn against certain directors and is now pending against Ms. Lalita D. Gupte, Ms. KalpanaMorparia. An application for discharge of the Directors has been filed in the trial court, which is pending disposal.There is a stay on this matter by the Bombay High Court hence no next date is given

AMC

1. One of the Investors under Prudential ICICI Growth Plan had made investment to the tune of Rs. 50,00,000 undersection 54EB of the Income Tax Act, 1961. In accordance with the legal opinion of the counsel of the Fund, theFund is of the view that investments under section 54EB of the Income Tax Act, 1961 read with CBDT notificationno. 10247 dated December 19, 1996 and the Offer Document of Prudential ICICI Growth Plan, the units had tobe locked-in for a period of seven years from the date of investment. However, the Investor had disputed this standand had filed a petition against Prudential ICICI Asset Management Company Limited as one of the respondentsin the Honourable Delhi High court seeking the direction of the Court for premature redemption of units. SEBIvide its order dated September 4, 2000, rejected the petitioner’s claim for premature redemption of units.

The Petitioner has subsequently approached the Securities Appellate Tribunal seeking release of money due uponredemption of units and payment of interest there on. The matter has been heard by the Tribunal and the Tribunaldismissed the petition of the investor.

The investor has, once again, filed a writ in the High Court of Delhi challenging the order of the Tribunal. Thismatter was listed before Hon’ble Delhi High court for final arguments in the regular hearing list.

The Trustee : Nil


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III. Any deficiencies in the systems and operations of the sponsor of the mutual fund or any company associated withthe sponsor in any capacity such as the AMC or the trustee company which SEBI has specifically advised to bedisclosed in the offer document, or which has been notified by any other regulatory agency.

ICICI Bank & Its associates: Nil

Prudential plc. & Its associates


1995 Prudential Corporation plc (PC) PC was publicly criticised by the London StockExchange for the manner in which it dealt withauthorisation of a dealing in Prudential sharesby its then Chief Executive.

December 1997 The Prudential Assurance Company The FSA issued a section 60 notice and a publicLimited (PAC) statement criticising PAC’s compliance

arrangements with respect to its direct salesforce.

AMC: Nil

The Trustee: Nil

IV. Any enquiry/adjudication proceedings under the SEBI Act and the regulations made there under, against thesponsor of the mutual fund or any company associated with the sponsor in any capacity such as the AMC, Boardof Trustees/Trustee Company or any of the directors or key personnel of the AMC:

ICICI Bank & Its Associates: Nil

Prudential Corporation plc & its associates:


April 1994/ The Prudential Assurance In relation to The Prudential Assurance CompanyMarch 1995 Company Limited (PAC) Limited (PAC). LAUTRO approached PAC in April

1994 with a request for its co-operation in aninformal review to validate LAUTRO’s pensionrules for the future. Prudential agreed to co-operate. LAUTRO subsequently expressed variousconcerns about the Prudential’s approach topension transfers. The review was placed on aformal footing in March 1995. Following furtherdiscussions with LAUTRO, LAUTRO agreed notto take any disciplinary action and no chargeswere brought.

1995-1997 The Prudential Assurance A number of writs were issued by SIB from 1995Company Limited (PAC) to 1997 in connection with the mis-selling of

personal pensions, mainly where a personalpension was taken out in preference tooccupational scheme membership but in somecases where an occupational scheme benefit wastransferred to a personal pension.

Some were for protective purposes pendingreview of the sale under the SIB guidance; othersproceeded and many have reached settlementvia consent orders on the basis of payment offull compensation but without an admission ofliability.

November/ Pru Banking ITC Advertising Complaints Reports. ComplaintsDecember 1997 were received from 3 viewers. An advertisement

for a Prudential 60 Day Notice Account offered arate of 7.5% gross per annum on £10,000 andincluded the statement “you won’t find a betterrate of interest for £10,000.”

Two viewers objected that a “better rate” of7.6% could be obtained on £10,000 in a Legal& General 60 Day Notice Account. The thirdviewer objected that the rate of 7.5% in factincluding a 1% loyalty bonus which only appliedafter £10,000 had been held in the account for12 months.

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Assessment: Following a complaint on 17October 1997, the ITC drew Teletext’s attentionto a higher rate of interest that was apparentlybeing paid on a Legal & General accountcomparable to the Prudential’s. Teletextimmediately removed the Prudentialadvertisement from air pending investigations.These revealed that whilst Legal & General hadintroduced a rate of 7.6% on 10 October 1997,Prudential had not matched this rate until 17October 1997. In addition, whilst Prudential’sadvertising agency had on 15 October 1997requested Teletext to amend the rate to 7.6%from 20 October 1997, press advertising for thePrudential account had reflected the higher rateon 17 October 1997.

Teletext confirmed that the headline rate wasstated gross of a 1% loyalty bonus which wasonly paid if the account was still open after 12months and only two withdrawals had beenmade. They agreed that this was a significantcondition which should have been made clearand instructed that subsequent advertising forthis Prudential account should include details.

The ITC agreed that the advertising had beenmisleading during the period that Legal &General had been offering a higher rate thanPrudential and considered that the omission ofdetails about the 1% loyalty bonus hadalso rendered the advertisement misleading.

Teletex had already removed the advertisementfrom air and would not permit it to return untilthe relevant amendments were made.

Decision: Complaints upheld.

August 1998 The Prudential Assurance Following an article in The Guardian concerningCompany Limited (PAC) possible pensions mis-selling, the PIA will be

investigating 2 cases.

1998 The Prudential Assurance An objection was received via the TradingCompany Limited (PAC) Standards Department to a leaflet that claimed

“Save around £100 on home insurance”. Thecomplainant, who was given a quote for £16more than his existing policy, challenged whetherthe savings were generally attainable.

Adjudication: The complaint was upheld. Theadvertisers submitted a summary of theirresearch which showed that nine-tenths ofcustomers who had switched their homeinsurance to Prudential had saved an average of£97.99. They argued that the claim was neithera price promise nor a guarantee that Prudentialwould always be the cheapest. The Authoritynoted that the leaflet stated elsewhere that “Youcould save money ...”. It considered, however,that the claim implied that switching to theadvertisers’ household insurance policies alwayssaved customers money. Because that was nottrue, the Authority asked the advertisers not touse the claim again.

1998 The Prudential Assurance 2 Complaints about advertisements in theCompany Limited (PAC) national press:

1. An objection to a national press advertisementthat was headlined “Prudential announce a ratechange of great interest to savers” and featured


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a table of interest rates for the advertisers’ 60Day Notice Account . One column of the tablewas headed “Monthly Rates (inc loyalty bonus)”and quoted annual interest rates for those whohave their interest paid monthly. A footnote stated“The rates include a loyalty bonus of 1% grosspa (0.8% net pa) calculated daily and paidannually on the anniversary date. This is paidprovided the account is still open and in thepreceding 12 months no more than twowithdrawals have been made and the balancehas not been less than £2,000.” The complainantobjected that the advertisement was misleadingbecause the loyalty bonus was not paid until theanniversary date.

Adjudication: Complaint upheld. The advertiserssaid they believed the footnote explained thatmonthly interest was calculated excluding theloyalty bonus but accepted that the presentationof the advertisement could be confusing. TheAuthority considered that the advertisement wasmisleading and it welcomed the advertisers’intention to amend future advertisements tostate monthly interest rates without the loyaltybonus, which they will show separately.

2. An objection to a national press advertisementthat was headlined “Why you’ll be better offwith Prudential because we’re No. 1 in our field”.The complainant challenged the claim.

Adjudication: Complaint upheld. The advertiserssubmitted evidence that showed they werenumber one in some but not all the aspects oftheir pension and life insurance business. TheAuthority accepted that the advertisers claim wasacceptable in relation to pensions and lifeinsurance but considered that their informationdid not adequately substantiate the generalclaim that the advertisers were “No. 1” in theirfield. The Authority asked the advertisers tospecify in future the sectors in which they couldshow they were “No. 1”.

May 2001 National Planning Corporation State of Florida (Division of Securities & Finance)(NPC) fined NPC $10,000 for failing to register two

branch offices. NPC were also required to sign aStipulation and Consent Agreement.

December 2001 National Planning Corporation NPC have established a $6m claimants’ fund after(NPC) agreement with New York Attorney General

(NYAG). This follows HYAG investigation into saleof payphones and leaseback arrangements ofETS payphones by representatives of NPC. NYAGallege that the sale constituted an unregisteredsecurities offering.

January 2002 Prudential Nominees Limited (PNL) PNL was fined £5,000 by OPRA following adetermination regarding the Ledo LimitedPension Plan (a SSAS) for which PNL is pensionertrustee. The fine is in respect of failing to appointan auditor and other procedural failures.

January 2002 Jackson National Life (JNL) JNL have reached a settlement of Haggan caseand the Andrews, Dunn and Gales cases linkedto it for a sum of $10m. Finalised in January2002, the terms of the settlement are confidentialand should not be disclosed to third parties.


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- Despite the Haggan settlement above, furtherlitigation regarding Ultimate interest sensitivepolicies continues in Michigan, Ill inois,Mississippi and Louisiana. JNL continue to tryand resolve Ultimate ‘vanishing premium’complaints on a fair and reasonable basis in orderto avoid litigation where possible.

AMC: Nil

The Trustee: Nil

E) BORROWING BY THE MUTUAL FUND

Under the Regulations, the Fund is allowed to borrow to meet its temporary liquidity needs of the Fund for the purpose ofrepurchase, redemption of units or payment of interest or dividend to the Unitholders. Further, as per the Regulations, theFund shall not borrow more than 20% of the Net Assets of the Scheme and the duration of such borrowing shall not exceeda period of six months. The Fund may raise such borrowings after approval by the Trustee from any of its Sponsors/Associate/Group Companies/Commercial Banks in India or any other entity at market related rates prevailing at the timeand 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 a cost, which would be dealt with in consultation with the Trustees.

F) STOCK LENDING BY THE MUTUAL FUND

Presently, the Scheme does not propose to engage in Stock lending activities. However, the Scheme can, with the Trusteesprioir approval, engage in Stock Lending activities in future subject to necessary disclosures to the unitholders and inaccordance with stock lending scheme of SEBI

G) POLICY ON OFFSHORE INVESTMENTS BY THE SCHEME

SEBI Regulations currently permit mutual funds to invest in ADRs/GDRs issued by Indian companies and notified foreignsecurities subject to certain prescribed limits. SEBI vide its circular no. SEBI/MFD/CIR No.02 /6855/ 03 dated April 4, 2003have allowed the mutual funds to make investments in equity of listed overseas companies which have a shareholding ofat least 10% in an Indian company listed on a recognised stock exchange in India (as on January 31 of the year ofinvestment).

Accordingly, SEBI has permitted each mutual fund to invest up to 10% of their net assets as on January 31, 2003 forinvestment in foreign securities, subject to a maximum of US$ 50 million for each mutual fund irrespective of the size of theassets as specified in SEBI circular MFD/CIR/18/21826/2002 dated November 7, 2002 remains unchanged.

In terms of Annual Monetary and Credit Policy for the year 2003-2004, RBI has decided to accord general permission tomutual funds for their overseas investments within the overall cap - US $ 1.0 billion, once SEBI’s approval has beenobtained. This general permission will be available until further notice.

It is the Investment Manager’s belief that investment in ADRs/GDRs/ overseas securities offer new investment and portfoliodiversification opportunities into multi-market and multi-currency products. However, such investments also entail additionalrisks. Such investment opportunities may be pursued by the Investment Manager provided they are considered appropriatein terms of the overall investment objectives of the Scheme. Since the Scheme would invest only partially in ADRs/GDRs/overseas securities, there may not be readily available and widely accepted benchmarks to measure performance of theScheme. To manage risks associated with foreign currency and interest rate exposure, the Fund may use derivatives forefficient portfolio management including hedging and in accordance with conditions as may be stipulated by SEBI/RBI fromtime to time.

Offshore investments will be made subject to any/all approvals, conditions thereof as may be stipulated by SEBI/RBI andprovided such investments do not result in expenses to the Fund in excess of the ceiling on expenses prescribed by andconsistent with costs and expenses attendant to international investing. The Fund may, where necessary, appoint otherintermediaries of repute as advisors, custodian/ sub-custodians etc. for managing and administering such investments. Theappointment of such intermediaries shall be in accordance with the applicable requirements of SEBI and within thepermissible ceilings of expenses. The fees and expenses would illustratively include, besides the investment managementfees, custody fees and costs, fees of appointed advisors and sub-managers, transaction costs, and overseas regulatory costs.

� Risks attached with investments in ADRs/GDRs/ overseas securities:

To the extent that the assets of the Schemes will be invested in securities denominated in foreign currencies, the IndianRupee equivalent of the net assets, distributions and income may be adversely affected by the changes in the value ofcertain foreign currencies relative to the Indian Rupee. The repatriation of capital also may be hampered by changes inregulations concerning exchange controls or political circumstances as well as the application to it of the other restrictionson investment.

H) INTER-SCHEME TRANSFERS

The Fund may undertake inter-Scheme transfers under the Scheme. If such transfers are done they will be effected based onthe closing prices of the Principal Stock Exchange and in conformity with Regulations. In case of securities which are nottraded on the Principal Stock Exchange / any other exchange, the inter-Scheme transfers will be affected based on fairvaluation to be arrived at by the AMC with the approval of the Trustee.



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The inter scheme transfer of equity shares will be done at the weighted average traded price of the day of transfer either onthe National Stock Exchange or the Bombay Stock Exchange, where ever the volumes are higher.

I) GENERAL INFORMATION

� Power to make Rules

Subject to the Regulations, the Trustee may, from time to time, prescribe such terms and make such rules for the purposeof giving effect to the Scheme with power to the AMC to add to, alter or amend all or any of the terms and rules that maybe framed from time to time.

� Power to remove Difficulties

If any difficulties arise in giving effect to the provisions of the Scheme, the Trustee may, subject to the Regulations, doanything not inconsistent with such provisions, which appears to it to be necessary, desirable or expedient, for the purposeof removing such difficulty.

� Scheme to be binding on the Unitholders:

Subject to the Regulations, the Trustee may, from time to time, add or otherwise vary or alter all or any of the features ofinvestment plans and terms of the Scheme after obtaining the prior permission of SEBI and Unitholders (where necessary),and the same shall be binding on all the Unitholders of the Scheme and any person or persons claiming through or underthem as if each Unitholder or such person expressly had agreed that such features and terms shall be so binding.

� DOCUMENTS AVAILABLE FOR INSPECTION

1. Memorandum and Articles of Association of the Trustee Company and the AMC

2. Custodian Agreement between Trustee and HDFC Bank

3. Investment Management Agreement

4. Trust Deed and amendments thereto

5. Mutual Fund Registration Certificate

6. Consent of Registrar to act in the said capacity

7. Consent of Auditors to act in the said capacity

8. Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereof from time to time.

9. Indian Trust Act, 1882.

Notwithstanding anything contained in this document, the provisions of the SEBI (Mutual Funds) Regulations, 1996and the Guidelines thereunder shall be applicable.

Note: The Scheme under this Offer Document was approved by the Directors of Prudential ICICI Trust Limited by circulation onAugust 3, 2005.

For and on behalf of the Board of Directors ofPrudential ICICI Asset Management Company Limited

Sd/-

Pankaj RazdanManaging Director

Place : MumbaiDate : January 20, 2006

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