PRUDENTIAL ICICI FMCG FUND - Kotak Mahindra · PDF filePrudential ICICI FMCG Fund 3 TABLE OF CONTENTS S.N. Particulars Page 1 Highlights

Sponsors:Prudential plc (formerly known as Prudential Corporation plc, through its wholly owned subsidiary, PrudentialCorporation Holdings Limited), Laurence Pountney Hill, London EC4R0HH, United Kingdom

ICICI Limited, ICICI Towers, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051.

Investment Manager:Prudential ICICI Asset Management Company LimitedCorp. Office: Contractor Building, 3rd Floor, 41, R. Kamani Marg, Ballard Estate, Mumbai 400 038.Regd. Office: 206 Ashoka Estate, 2nd Floor, 24 Barakhamba Road, New Delhi 110 001.

Trustee:Prudential ICICI Trust LimitedRegd. Office: 206 Ashoka Estate, 2nd Floor, 24 Barakhamba Road, New Delhi 110 001.

PrudentialICICI

FMCG Fund

An open endedgrowth scheme by

Prudential ICICIMutual Fund

Issue of Units of Rs.10 perunit at NAV based prices

on an on-going basis

This Offer Document contains information necessary for aninvestor to make an informed investment decision in theScheme described herein. Investors should carefully readthe Offer Document prior to making an investment decisionand retain the Offer Document for future reference.

The particulars of Prudential ICICI FMCG Fund, the mutual fund Scheme offered under this Offer Document, have beenprepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amendedfrom time to time and filed with the Securities and Exchange Board of India and the Units being offered for publicsubscription have not been approved or disapproved by the Securities and Exchange Board of India nor has the Securitiesand Exchange Board of India certified the accuracy or adequacy of the Offer Document.

Investors may note that this Offer Document remainseffective until a material change occurs. Material changesshall be filed with SEBI and circulated to all Unitholders ormay be publicly notified by advertisements in the newspaperssubject to the applicable regulations.

PRUDENTIAL ICICI

www.pruicici.com

FMCG FUNDO F F E R D O C U M E N T

Offer open for on-going purchase and sale

Prudential ICICI Mutual Fund

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IMPORTANT NOTICE

Investing in mutual fund schemes involves certain risks and considerations associated generally with making investments insecurities. The value of the Plan’s investments may be affected generally by factors affecting financial markets, such as price andvolume, 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 and the Plans thereunder offered in this Offer Document would achieve the stated objectives.The NAV of the Units of the Plans may fluctuate and can go up or down. Past performance of the schemes managed by theSponsors or their affiliates or the Asset Management Company is not indicative of the future performance of the Scheme norwill the performance of the Scheme, following the commencement of the operations, be indicative of the Scheme’s futureperformance.

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), havenot authorized 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 Plans. Prospective investors are accordingly advised not to rely upon anyinformation 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.

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

a) Purchase or sale of securities through any broker associated with the Sponsors shall not exceed an average of 5% of theaggregate purchases and sale of securities made by the Fund in all its Schemes. The limit of 5% shall apply for a block ofany 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:

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

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

b) 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.48.00 and UK£ and Indian Rupee at 1£=Rs.75.00.

This Offer Document is dated August 20, 2003.

Prudential ICICI FMCG Fund

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TABLE OF CONTENTSS.N. Particulars Page

1 Highlights ................................................................................................................................................ 52 Due Diligence Certificate ....................................................................................................................... 83 Definitions ............................................................................................................................................... 94 Summary - Prudential ICICI FMCG Fund ................................................................................................ 115 Constitution of the Mutual Fund ........................................................................................................... 12

a) The Sponsors ................................................................................................................................... 12b) The Trustee Company ....................................................................................................................... 13

i) Directors .................................................................................................................................... 13ii) Rights and Obligations of the Trustee ....................................................................................... 15iii) Trusteeship Fees ......................................................................................................................... 17

c) Management of Asset Management Company ................................................................................ 17i) Board of Directors of the AMC .................................................................................................. 18ii) Powers, Duties & Responsibilities of the AMC........................................................................... 20iii) Key Employees of AMC & relevant experience ........................................................................... 21iv) Fund Manager ........................................................................................................................... 24v) Compliance Officer .................................................................................................................... 24vi) Investor Relations Officer ........................................................................................................... 24

d) Auditors ............................................................................................................................................ 24e) Registrar ........................................................................................................................................... 24f) Custodian ......................................................................................................................................... 24

6 Investment Objectives & Policies – Prudential ICICI FMCG Fund ......................................................... 257 Fundamental Attributes of the Scheme ............................................................................................... 25

1) Type of the Scheme ........................................................................................................................... 252) Investment Objectives ....................................................................................................................... 253) Investment Pattern ............................................................................................................................ 255) Change in Investment Pattern .......................................................................................................... 256) Terms of the Scheme ......................................................................................................................... 257) Change in Fundamental Attributes ................................................................................................... 268) Investment Strategy and Risk Control ............................................................................................... 269) Procedure followed for investment decisions ................................................................................... 2910) Risk Factors and Special Considerations ........................................................................................... 3011) Investment Restrictions for the Scheme ............................................................................................ 3312) Underwriting by the Fund ................................................................................................................. 3413) Computation of Net Asset Value ...................................................................................................... 34

8 Units & Initial Offer ............................................................................................................................... 40General Information ................................................................................................................................. 401) Minimum Subscription Amount ....................................................................................................... 402) Offer Price for on-going subscriptions ............................................................................................. 403) Initial Issue Expenses ........................................................................................................................ 404) Investment Options offered .............................................................................................................. 42

Section 54EA and 54EB Plans ........................................................................................................... 42a) 54EA Plan .................................................................................................................................. 42b) 54EB Plan .................................................................................................................................. 42

6) Pledge of Units for Loans .................................................................................................................. 427) Systematic Investment Plan (SIP) .................................................................................................. 428) How to Switch .................................................................................................................................. 439) Who can Invest? .............................................................................................................................. 4410) How to apply? .................................................................................................................................. 44

a ) Purchase of units after the Initial Offer Period ........................................................................ 44b) Purchase Price ......................................................................................................................... 44c) How to Purchase units on an on-going basis ........................................................................ 45d) NRIs, OCBs, FIIs .......................................................................................................................... 45e) Mode of Payment on Repatriation Basis .................................................................................... 45f) Mode of Payment on Non-Repatriation Basis ............................................................................ 45g) Joint Applicants ......................................................................................................................... 46h) Nomination Facility .................................................................................................................... 46


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11) Redemption of Units ...................................................................................................................... 46a) Redemption Price ....................................................................................................................... 47b) Applicable NAV .......................................................................................................................... 47c) How to Redeem? ....................................................................................................................... 47d) Payment of Proceeds .................................................................................................................. 47e) Redemption by NRIs/FIIs ............................................................................................................ 48f) Effect of Redemptions ............................................................................................................... 48g) Fractional Units .......................................................................................................................... 48h) Right to Limit Redemptions ....................................................................................................... 48i) Suspension of Sale and Redemption of Units ........................................................................... 49

12) Load Structure ................................................................................................................................ 501) Load Structure of the Scheme .................................................................................................... 502) Fees and Expenses of the Scheme .............................................................................................. 50

a) Initial Issue Expenses .......................................................................................................... 50b) Recurring Expenses ............................................................................................................ 50

3) Fees and Expenses of the Existing Scheme ................................................................................. 51a) Annual Scheme Recurring Expenses ................................................................................... 53b) Condensed Financial Information ...................................................................................... 58

13) Unitholders Rights and Services .................................................................................................. 701) Investors Services .................................................................................................................... 702) Ease of Transactions ............................................................................................................... 70

a ) Customer Service Centres in major metros ................................................................... 70b) Process transactions in a timely manner ........................................................................ 70

3) Problem Resolution ................................................................................................................. 704) Information about the Scheme ................................................................................................ 705) NAV Information ........................................................................................................................ 716) Disclosure of information under the Regulations .................................................................. 717) Rights of Unitholders of the Scheme ...................................................................................... 718) Duration of the Scheme/winding up. ....................................................................................... 719) Procedure and manner of Winding up .................................................................................... 7210) Tax Benefits .............................................................................................................................. 72

I) To the Mutual Fund ............................................................................................................ 72II) To the Unitholders ............................................................................................................ 72

A) Income received from Mutual Fund ......................................................................................... 72B ) Long Term Capital Gains ......................................................................................................... 73

i) For Individuals and HUFs ................................................................................................. 73ii) For Partnership Firms and Indian Companies ............................................................... 73iii) For Non- resident Indians ................................................................................................ 73iv) For FIIs .............................................................................................................................. 73

C ) Short term Capital Gains ......................................................................................................... 73D ) Tax Deduction at Source on Capital Gains ............................................................................. 73E ) Exemption from Tax on Capital Gains arising on Transfer of Units held for more than

12 months ................................................................................................................................ 74F ) Investments by Charitable and Religious trusts .................................................................... 74G) Wealth Tax ................................................................................................................................ 74

14) Other Matters ................................................................................................................................. 751) Unitholders Grievances Redressal Mechanism .................................................................... 752) Associate Transactions ........................................................................................................... 763) Details of Investment in Companies that hold more than 5% of NAV of Schemes managed

by the AMC ............................................................................................................................... 814) Penalties and Pending Litigations .......................................................................................... 835) Borrowing by the Mutual Fund ................................................................................................. 906) Inter-Scheme Transfers ........................................................................................................... 917) General Information ................................................................................................................. 91

a ) Power to make Rules ....................................................................................................... 91b) Power to remove Difficulties ............................................................................................. 91c) Scheme to be binding on the Unitholders ....................................................................... 91d) Documents available for Inspection ................................................................................ 91


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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 31 December 2002, overGBP155 billion of funds under management, more than 12 million customers and over 15,000 employees, worldwide.

Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approvalin recognizing 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 an asset base of Rs. 106,812 crore. ICICI Bank provides a broad spectrumof financial services to individuals and companies. This includes mortgages, car and personal loans, credit and debit cards,corporate and agricultural finance. The Bank services a growing customer base of more than 7 million customers and 6million bondholder accounts through a multi-channel access network. This includes about 450 branches and extensioncounters, 1675 ATMs, call centres and Internet banking (Source: Press Release dated May 23, 2003 at www.icicibank.com).ICICI Bank posted a net profit of Rs.1, 206 crore for the year ended March 31, 2003. ICICI Bank is the only Indian companyto be rated above the country rating by the international rating agency Moody’s and the only Indian company to beawarded an investment grade international credit rating. The Bank enjoys the highest AAA (or equivalent) rating from allleading Indian rating agencies.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-ownedsubsidiary.

Fund Management expertise – Prudential plc is a leading international financial services group providing retail financialproducts and services and fund management to many millions of customers worldwide. As a group Prudential plc has, asof 31 December 2002, over GBP155 billion of funds under management, more than 12 million customers and over15,000 employees, worldwide.

Prudential ICICI Asset Management Company Limited, the Investment Manager to the Prudential ICICI Mutual Fund,manages assets over Rs. 13,000 crores as of July 31, 2003 through 16 schemes. It is one of the largest asset managementcompanies in the country.

● Investment Objectives: The primary objective of the Scheme is to generate long term capital appreciation throughinvestments made primarily in equities of select group of companies in the FMCG Sector. The AMC will be broadly guided,while investing the corpus of the Scheme, among other criteria, by the market capitalization of the companies. Accordingly,the NAV of the Scheme is linked to equity performance of such companies. However, there can be no assurance that theinvestment objective of the Scheme will be realized.

● Long-term growth in the Indian economy may lead to higher purchasing power and increased consumption of FastMoving Consumer Goods. At the same time, the existing consumer base is largely shielded from economic downturns,given that most of these goods are daily necessities. In all, the industry exhibits ideal characteristics in terms of growthprospects as well as low macro economic risks.

● Liquidity - Being an open-ended Scheme, Units may be redeemed on every Business Day at NAV based prices. The Fundwill, under normal circumstances, endeavour to dispatch redemption cheques within 3 Business Days from the date ofacceptance of the redemption request at any of the Customer Service Centers.

● Transparency – The NAV is calculated and disclosed at the close of every Business Day. In addition the AMC disclosesportfolio of the Scheme at quarterly rests on the web site of the AMC www.pruicici.com.

● Investors who hold units in any of the open-ended schemes of the Fund may switch all or part of their holdings to theschemes offered under this Offer Document on an ongoing basis. No entry load will be charged in respect of switchtransaction from one equity scheme of the Fund to another equity scheme of the Fund. Further, under the FlexibleLifetime Investment Programme, investors may choose to alter the allocation of their investment among the MutualFund’s various schemes in order to meet their changing circumstances during their lifetime.

● The following Tax benefits are available as per the Finance Act, 2003:

● Finance Act 2003 has inserted section 10(35), whereby any income received in respect of units of Mutual Fund specifiedunder clause (23D) of Section 10 will be exempt from income tax in the hands of the unit holders.

● Long-term Capital Gains in respect of Units held for a period of more than 12 months will be chargeable under section112 of the Income-Tax Act, 1961, at a rate of 20% plus surcharge, as applicable.

● As provided under section 54EC of the Income Tax Act, 1961, where an assessee has made capital gains from the transferof units held in the Mutual Fund Scheme for a period exceeding 12 months and the assessee has at any time within aperiod of 6 months after the date of such transfer, invested such capital gains in the long term specified assets, suchcapital gains shall be exempted from tax on capital gains under section 54EC of the Income Tax Act 1961.

● As provided in Section 54ED, where an assessee has made capital gains arising from the transfer of units held in theMutual Fund Scheme for a period exceeding 12 months will be exempt, if the assessee has, any time within a period of 6months after the date of such transfer, invested the whole of the capital gains in acquiring equity shares forming part ofan eligible issue of capital. However, if the assessee has invested only a part of the capital gains, he will be eligible for theproportionate exemption. An eligible issue of capital means an issue of equity shares offered for subscription to thepublic by a public company formed and registered in India.

● 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/legalimplications relating to their investments in the Scheme and before making decision to invest in the Schemeor redeem the Units in the Scheme.


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RISK FACTORS● Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that

the objectives 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

the factors 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

contribution of an amount of Rs 22.2 lacs collectively made by them towards setting up the Fund and such otheraccretions and additions to the corpus set up by the Sponsors.

● Prudential ICICI FMCG 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 NAV of the FMCG Fund may be affected by changes in the general level of interest rates and trading volumes.● The NAV of the FMCG Fund may be affected by settlement periods and transfer procedures.

● In the event of receipt of inordinately large number of redemption requests or of a restructuring of the Plans’s portfolios,there may be delays in the redemption of Units. As per the guidelines issued by SEBI, in the event of failure to dispatch theredemption or repurchase proceeds within 10 working days, the AMC is liable to pay interest to the Unit holders @ 15%p.a. If the Unit-holder fails to provide the Bank mandate, the request for redemption would be considered as not valid andthe Fund retains the right to withhold the redemption until a proper bank mandate is furnished by the Unit-holder andthe provision with respect of penal interest in such cases will not be applicable/ entertained.

● The liquidity of the Scheme’s investments is inherently restricted by trading volumes in the securities of the companies inwhich it invests.

● Investors in the Scheme are not being offered any guaranteed returns.● The Scheme’s investments will be predominantly in equities of a select group of companies in the FMCG Sector. The AMC

will be broadly guided, among other factors, while investing the Corpus of the Scheme, by the market capitalization ofcompanies. Accordingly, the NAV of the Scheme is linked to the equity performance of such companies.

● From time to time and subject to the Regulations, the Sponsors, the mutual funds and investment companies managedby them, their affiliates, their associate companies, subsidiaries of the sponsors and the AMC may invest either directly orindirectly in the Scheme. The funds managed by these affiliates, associates, the Sponsors, subsidiaries of the Sponsorsand/or the AMC may acquire a substantial portion of the Scheme’s Units and collectively constitute a major investor in theScheme. Accordingly, redemption of Units held by such funds, affiliates/associates and Sponsors may have an adverseimpact on the Units of the Scheme because the timing of such redemption may impact the ability of the other Unitholdersto redeem their Units.Changes in Government policy in general and changes in tax benefits applicable to mutual fundsmay impact the returns to investors in the Scheme

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

● 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 Plans 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 29.

● The Fund may use derivatives instruments like Stock Index Futures(in case of Growth Plan), Interest Rate Swaps,Forward Rate Agreements (in case of Income Plan and Liquid Plan) or other derivative instruments for the purposeof hedging and portfolio balancing, as permitted under the Regulations and guidelines.

Risks attached with the use of derivatives: As and when the schemes trade in the derivatives market there are riskfactors and issues concerning the use of derivatives that investors should understand. Derivative products are specializedinstruments that require investment techniques and risk analyses different from those associated with stocks and bonds.The use of a derivative requires an understanding not only of the underlying instrument but of the derivative itself.Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assessthe risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. Thereis the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred toas the “counter party”) to comply with the terms of the derivatives contract. Other risks in using derivatives include the riskof mis pricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlyingassets, rates and indices.Risks associated with stock lending : The risks in lending portfolio securities, as with other extensions of credit, consistof the failure of another party, in this case the Approved Intermediary, to comply with the terms of agreement entered intobetween the lender of securities i.e. the Scheme and the approved intermediary. Such failure to comply can result in thepossible loss of rights in the collateral put up by the borrower of the securities, the inability of the Approved Intermediaryto return the securities deposited by the lender and the possible loss of any corporate benefits accruing to the lender fromthe securities deposited with the Approved Intermediary.

Scheme Specific Risk Factors● Interest Rate Risk: As with all debt securities, changes in interest rates may affect the Plan’s Net Asset Value as the prices


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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.Indian debt markets can be volatile leading to the possibility of price movements up or down in fixed incomesecurities and thereby 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., willbe unable to make timely principal and interest payments on the security). Because of this risk corporate debenturesare sold at a higher yield above those offered on Government Securities, which are sovereign obligations and freeof credit risk. Normally, the value of a fixed income security will fluctuate depending upon the changes in theperceived level of credit risk as well as any actual event of default. The greater the credit risk, the greater the yieldrequired for someone to be compensated for the increased risk.

● Reinvestment Risk: This risk refers to the interest rate levels at which cash flows received from the securities in thePlan 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.Investors are urged to study the terms of the Offer Document carefully before investing in this Scheme, and to retainthis Document for future reference.

Sponsors

Prudential plcLaurence Pountney Hill,London EC4R DHH,United KingdomICICI Bank LimitedLandmark,Race Course Circle,Vadodara 390 007, IndiaAsset Management CompanyPrudential ICICI Asset Management Company LimitedRegistered Office

206 Ashoka Estate, 2nd Floor,24 Barakhamba Road,New Delhi – 110 001Corporate Office3rd Floor, Contractor Building.41, R. Kamani MargBallard EstateMumbai 400 038.TrusteePrudential ICICI Trust Limited206 Ashoka Estate, 2nd Floor,24 Barakhamba Road,New Delhi – 110 001RegistrarComputer Age Management Services Pvt. LimitedA & B Lakshmi Bhavan,609 Anna SalaiChennai 600 006Auditors to the SchemeN. M. Raiji & CompanyUniversal Insurance BuildingSir Phiroze Shah Mehta RoadMumbai 400 001CustodianHDFC Bank LimitedSandoz HouseDr. Annie Besant Road, WorliMumbai 400 018Legal Advisors:A.R.A. LAWAgra Building,1st Floor, 121, M.G. Road,Fort, Mumbai - 400 023


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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 andthe guidelines 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 the Government of India and any other competent authority in this behalf, have been duly complied with.

iii) The disclosures made in the Offer Documents are true, fair and adequate to enable the investors to make a wellinformed decision regarding investment in the proposed Scheme.

iv) The intermediaries named in the Offer Document are registered with SEBI and till date such registration is valid.

P lace : Mumbai Ranganath AthreyaDate : August 20, 2003. Vice President – Finance, Compliance

& Company Secretary

Note: The Due Diligence Certificate as stated above was submitted to SEBI.


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DEFINITIONSIn 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 Limited (erstwhile ICICIInvestment Manager Asset Management Company Limited), the Asset Management Company

incorporated under the Companies Act, 1956, and registered with SEBIto act as an Investment Manager for the schemes of Prudential ICICIMutual Fund

Applicable NAV The NAV applicable for purchases or redemptions is the Net Asset Valueper Unit at the close of the Business Day on which the application isaccepted.

Business Day A day other than (1) Saturday and Sunday or (2) a day other than a dayon which the Stock Exchange, Mumbai and National Stock Exchange areclosed whether or not the Banks in Mumbai are open. (3) a day on whichthe Sale and Redemption of Units is suspended by the Trustee/AMC.

Provided that the days when the banks at any centre where the AMC’sCustomer Service Centers are located, are closed due to a local holiday,such days will be treated as non Business Days at such centres for thepurposes of accepting fresh subscriptions. However, if the AMCs officesin such centres are open on such local holidays, then redemption andswitch requests will be accepted at those centres, provided it is a BusinessDay for such scheme on an overall basis.

Custodian HDFC Bank Limited, Mumbai, acting as Custodian to the Scheme, or anyother custodian who is approved by the Trustee and has been grantedregistration by SEBI under the Securities and Exchange Board of India(Custodian of Securities) Regulations, 1996 as amended from time totime..

FII Foreign Institutional Investors, registered with SEBI under Securities andExchange Board of India (Foreign Institutional Investors) Regulations,1995.

FMCG Fund Prudential ICICI FMCG Fund

ICICI Bank ICICI Bank Limited

Investment Management Agreement The Agreement dated September 3, 1993 entered into betweenPrudential ICICI Trust Limited (erstwhile ICICI Trust Limited) and PrudentialICICI Asset Management Company Limited (erstwhile ICICI AssetManagement Company Limited) as amended from time to time.

NAV Net Asset Value of the Units of the Scheme (and Options, if any, 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.

OCB Overseas Corporate Bodies, firms and societies which are held directlyor indirectly but ultimately to the extent of at least 60% by NRIs andtrusts in which at least 60% of the beneficial interest is held irrevocablyby such persons.

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

Prudential Prudential plc, of the U.K. and includes, wherever the context so requires,its wholly owned subsidiary Prudential Corporation Holdings Limited.

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 Securities andExchange Board of India Act, 1992, as amended from time to time.

The Fund or Mutual Fund Prudential ICICI Mutual Fund (erstwhile ICICI Mutual Fund), a trust setup under the provisions of Indian Trusts Act, 1882. The Fund is registeredwith SEBI vide Registration No.MF00393/6 dated October 13, 1993 asICICI Mutual Fund and has obtained approval from SEBI for change inname to Prudential ICICI Mutual Fund vide SEBI’s letter dated April 16,1998.


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The Trustee Prudential ICICI Trust Limited (erstwhile ICICI Trust Limited), acompany set up under the Companies Act, 1956, and approved bySEBI to act as the Trustee for the schemes of Prudential ICICI MutualFund

The Scheme Prudential ICICI FMCG Fund (including, as the context permits, eitherthe Growth Option or the Dividend Option or both the Options underthe scheme)

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

Trust Deed The Trust Deed dated August 25, 1993 establishing ICICI Mutual Fund,(subsequently renamed Prudential ICICI Mutual Fund) as amended fromtime 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 in theNet Assets of the Scheme.

Unit holder A holder of Units in the Scheme of Prudential ICICI FMCG Fund offeredunder this Offer Document.


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SUMMARY –PRUDENTIAL ICICI FMCG FUNDName of the Scheme Prudential ICICI FMCG Fund.

Structure Open Ended Growth Scheme

Offer Price for on-going subscriptions Based on the Applicable NAV of the Scheme, subject to entry loadprovisions.

Features The Scheme seeks to generate long term capital appreciation throughinvestments made primarily in equities of select group of companies inFMCG Sector. The AMC will, among other criteria, be broadly guided bythe market capitalization of companies while investing the corpus ofthe Scheme. Accordingly, the NAV of the Scheme is linked to equityperformance of such companies.

Application Amount Minimum Rs.5,000/- per application and in multiples of Re.1/- thereafter.

Initial Issue Expenses The initial issue expenses to be charged under the Scheme were limitedto 1% of the amount mobilised.

Flexible LifetimeInvestment Programme The Fund will allow investors the flexibility to alter the allocation of their

investments amongst the designated Schemes offered by the Fund inorder to meet their changing investment needs or risk profiles byswitching between the Schemes of the Fund. Furthermore, it is theintention to enable investors in the Scheme to switch between thepresent open-ended schemes and the future Schemes which may beincluded in the Flexible Lifetime Investment Programme. Please refer topage 42 for more details of the Flexible Lifetime InvestmentProgramme.

Liquidity On an on-going basis, an investor can purchase and redeem Unitson every Business Day at NAV based prices, subject to the prevailingload structure. (Please refer to page 47 for Redemption Price andpage 44 for Purchase Price).

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

The Fund will, under normal circumstances, endeavor to despatchthe redemption cheques within 3 Business Days from the date ofacceptance of the redemption request at any of the Customer ServiceCenters.

Transparency NAV will be determined on every Business Day, except in specialcircumstances described on page 47. NAV of the Scheme shall bemade available at all Customer Service Centers of the AMC. TheAMC shall endeavor to also have the NAV published in a dailynewspaper and updated on AMC’s website (www.pruicici.com).

AMC shall update the NAVs on the website of Association of MutualFunds in India - AMFI (www.amfiindia.com) by 8.00-p.m. every BusinessDay. In case of any delay, the reasons for such delay would be explainedto AMFI and SEBI by the next day. If the NAVs are not available beforecommencement of business hours on the following day due to anyreason, the Fund shall issue a press release providing reasons andexplaining when the Fund would be able to publish the NAVs.

The Mutual Fund shall disclose the full portfolio of the Scheme everyhalf year.

Repatriation facility NRIs/PIOs/OCBs/FIIs have been granted a general permission by RBI[Schedule 5 of the Foreign Exchange Management (Transfer or Issue ofSecurity by a Person Resident Outside India) Regulations, 2000] forinvesting in / redeeming units of the schemes subject to conditions setout in the aforesaid regulations.

Eligibility for Trusts Religious and Charitable Trusts are eligible to invest in the Scheme underthe provisions of 11(5)(xii) of Income Tax Act, 1961 read with Rule 17Cof Income Tax Rules, 1962.


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CONSTITUTION OF THE MUTUAL FUNDICICI 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 ICICI, by execution of a Trust Deed dated August 25, 1993. Prudential plc, through itswholly owned subsidiary, Prudential Corporation Holdings Limited, has contributed an amount of Rs.12.2 lacs to the corpusof the Fund and has received permission for such contribution from the RBI vide letter No: CO.FID(I)4940/10/I.07.02.200(221)97-98 dated April 25, 1998. SEBI has approved the change in name of the Fund to Prudential ICICI Mutual Fund vide its letterIIMARP / 88 / 98 dated April 16, 1998. A deed of amendment to the Trust Deed dated August 25, 1993 was executed andregistered.

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 31 December 2002, over GBP155billion of funds under management, more than 12 million customers and over 15,000 employees, worldwide.

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

Year ended December 31 (Rs. crores)

Description 2003 2002 2001 2000(Half year (Year ended (Year ended (Year ended

ended June 30) December 31) December 31) December 31Unaudited

Total Income 130,085 253,033 188,748 133,124

Profit Before Tax 1,435 3,562 2,833 6,968

Profit After Tax 1,023 3,304 2,862 4,878

Shareholders’ Funds 26,981 26,988 29,063 29,578

Earnings per share (Rs.) 4.64 11.63 17.14 22.22

Equity Capital (5 Pence per share) 736 736 736 728

Free Reserves 26,245 26,252 28,327 28,850

Net-worth 26,981 26,988 29,063 29,578

Book Value per share (Rs.) 134.91 134.94 145.32 149.38

Percentage of dividend per share 106% 520% 508% 490%

Dividend per share (in Pence) 5.3P 26.00P 25.4P 24.5P(Interim)

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 an asset base of Rs. 106,812 crore. ICICI Bank provides a broad spectrum offinancial services to individuals and companies. This includes mortgages, car and personal loans, credit and debit cards,corporate and agricultural finance. The Bank services a growing customer base of more than 7 million customers and 6 millionbondholder accounts through a multi-channel access network. This includes about 450 branches and extension counters,1675 ATMs, call centres and Internet banking (Source: Press Release dated May 23, 2003 at www.icicibank.com). ICICI Bankposted a net profit of Rs.1, 206 crore for the year ended March 31, 2003. ICICI Bank is the only Indian company to be ratedabove the country rating by the international rating agency Moody’s and the only Indian company to be awarded an investmentgrade international credit rating. The Bank enjoys the highest AAA (or equivalent) rating from all leading Indian ratingagencies.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was originally a wholly-ownedsubsidiary of ICICI.


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Given below is a brief summary of ICICI Bank’s financials:(Rs. in crores)

Year ended Year ended *Year endedMarch 31, 2001 March 31, 2002 March 31, 2003

Total Income 1462.13 2726.59 12,526.88Profit After Tax 161.09 258.3 1,206.18Free Reserves @ 1092.26 5632.41 6,320.65Net Worth 1302.43 6244.96 6933.31Earnings per Share (Rs.) (diluted) 8.13 11.61 19.65Book Value per Share (Rs.) 59.11 101.95 113.10Dividend 20% 20% 75%Paid Up Capital (Equity) $ 220.36 612.55 612.66(Preference) # 0 350 350

* The results for the year ended March 31, 2003 include the result of erstwhile ICICI Limited and its subsidiaries, ICICIPersonal Financial Services Limited and ICICI Capital Services Limited, amalgamated with the Bank w.e.f. March 30, 2002.The financial s for the current periods are not comparable 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,during the 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,redeemable at par on April 20, 2018. As per the notification received from Ministry of Finance, the restriction of section12(1) of the Banking Regulation Act, 1949, prohibiting banks established after 1944 from holding preference shares, isnot applicable to the Bank for a specified period.

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 erstwhile ICICI and is under process of being transferredto ICICI Bank Ltd. ICICI Bank will hold 30% of the paid-up capital of the AMC and the balance 15% will be held by a subsidiaryof ICICI Bank Ltd. (ICICI Venture Funds Management Company Limited), in order to ensure adherence with the provisions ofSection 19(2) of the Banking Regulation Act, 1949.

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 TrustDeed dated August 25, 1993 as amended from time to time. Prudential plc, through its wholly owned subsidiary, PrudentialCorporation Holdings Limited, U.K. holds 55% of the shares of the Trustee, whereas the balance 45% shareholding of theTrustee company is being held by erstwhile ICICI and is under a process of being transferred to ICICI Bank Ltd and its GroupCompany.

i) The Directors of the Trustee Company are:

The Directors of the Trustee Company are:

Mr. Natesan Vaidheeswaran Iyer Partner(S/o. Mr. Chinnaswamy Natesan Iyer) C.C. Chokshi & Co., Mumbai73, Jupiter Apartments C.C. Chokshi & Co., Ahmedabad41, Cuffe Parade C.C. Chokshi & Co., BarodaMumbai 400 005 C.C. Chokshi & Co., New DelhiChartered Accountant C.C. Chokshi & Co., Goa

Deloitte Haskins & Sells, MumbaiDeloitte Haskins & Sells (National Firm), MumbaiDeloitte Haskins & Sells, AhmedabadDeloitte Haskins & Sells, BarodaDeloitte Haskins & Sells, New DelhiDeloitte Haskins & Sells, CalcuttaTouche Ross & Co., ChennaiTouche Ross & Co., MumbaiTouche Ross & Co., AhmedabadTouche Ross & Co., BarodaDirectorCCC Services Co. Pvt. Ltd., Mumbai (Chairman)Deloitte Touche Tohmatsu (Global Board)NSE.IT Limited, MumbaiDiscount and Finance House of India Ltd, MumbaiNational Commodity & Derivatives Exchange Limited


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Mr. Vishnu Bhagwandas Haribhakti Partner(S/o. Late Mr. Bhagwandas Haribhakti) Haribhakti & Co., MumbaiFlat No.51, 5th Floor V.B. Haribhakti Associates, MumbaiMaker Tower ‘B’ Haribhakti Shah & Co., AhmedabadCuffe Parade V.B. Haribhakti & Co., New DelhiMumbai 400 005 V.B. Haribhakti & Co., ChennaiChartered Accountant V.B. Haribhakti & Co., Bangalore

V.B. Haribhakti & Co., JodhpurV.B. Haribhakti & Co., CalcuttaV.B. Haribhakti & Co., JaipurDirectorBajaj Electricals LtdRohit Pulp and Paper Mills Company Ltd.The Simplex Mills Company Ltd.The Anglo-French Drug Co.(Eastern) Ltd.Ester Industries Ltd.Lakshmi Automatic Loom Works Ltd.Tilaknagar Industries Ltd.Hindustan Composites Ltd.Mutual Mecaplast Ltd (Alternate Director)Haribhakti MRI Corporate Services Pvt.Ltd.Moores Rowland Consulting Pvt. Ltd.TrusteeBombay Rotary Midtown TrustThe Pransukhlal Mafatlal Hindu Swimming Bath and Boat Club TrustV.B. Haribhakti Charitable TrustIndian Merchants’ Chamber Platinum Jubilee Endowment TrustCouncil for Fair Business PracticesManaging Committee MemberIndian Merchant ChamberThe Associated Chambers of Commerce and Industry of India

Mr. Eruch .B. Desai Partner(S/o. Mr. Byramsha Desai) Mulla & Mulla & Craigie Blunt & Caroe81, Sonarica Director33-A, Pedder Road Birla Global Finance Ltd.Mumbai 400 026 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.Ispat Metallics India Ltd.Matsushita Lakhanpal Battery India LtdNew Age International Private Ltd.National Panasonic India Private Ltd.Siltap Chemicals Ltd.Widia (India) Ltd.(Alternate)

Mr. Rajendra A. Shah Partner(S/o. Mr. Ambalal Shah) Crawford Bayley & CompanyPanorama, 2nd Floor Chairman & Alternate Director203, Walkeshwar Road Fulford India Ltd.Mumbai 400 006 ChairmanSolicitor & Advocate Godfrey Phillips India Ltd

Pfizer LimitedRoche Scientific Company (I) Pvt. Ltd.Vice ChairmanColgate Palmolive India LtdDirectorAtul LtdAsian Paints(India) LtdThe Bombay Dyeing & Mfg. Co. Ltd.BASF India LtdColour Chem Ltd


15

Deepak Fertilizers & Petrochemicals Corporation Ltd.Abott India Ltd. (Formerly known as Knoll Pharmaceuticals Ltd.)Abott Healthcare Pvt. Ltd. (Formerly known as Knoll InternationalPvt. Ltd.)Nicholas Piramal India LtdProcter & Gamble Hygienic and Healthcare Ltd.Philips India Ltd.W.D. Consumer Products Pvt. Ltd.Alternate DirectorBASF Industries Pvt. LtdCentury Enka Ltd.Clariant (India) Ltd.Modicare Pvt. Ltd.RPG Life Sciences LtdSchrader Duncan Ltd.Uhde India Ltd.Wockhardt Ltd.Shaw Wallace & Co. Ltd.Committee MemberIndo German Chamber of CommerceBombay Chamber of CommercePresidentSociety of Indian Law Firms (Western Region)

Mr. Nagesh D. Pinge* Nominee Director (on behalf of ICICI Bank Limited)(S/o. Dinkar Shripad Pinge) Jindal Vijaynagar Steel Co. Ltd.D-408/1, Viman Darshan Jindal Thermal Power Co. Ltd.28-29 Swami Nityanand Marg SWIL LimitedAndheri (East) Videocon International Ltd.Mumbai 400069 The India Cements LimitedGeneral Manager –Risk, Compliance andAudit Group – ICICI Bank Ltd.

Mr. Sham P. Subhedar* Senior Advisor(S/o. Mr. Pandharinath Subhedar) Prudential Corporation Asia Ltd.1, Gulmohar DirectorS.V. Road Peter Pan Travels Services Pvt. Ltd.Vile Parle (W) SAS Management Consultants and Office Services Pvt. Ltd.Mumbai 400 056 ICICI Prudential Life Insurance Company Ltd.Consultant Prudential Process Management Services Pvt. Ltd.

*Mr. Nagesh Pinge is a General Manager (Head-Risk, 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.

Rights and Obligations of the Trustee

Pursuant to the Deed of Trust dated August 25, 1993 constituting the Mutual Fund and in terms of the SEBI (Mutual Funds)Regulations, 1996, the rights and 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.


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3. The Trustee shall ensure that the AMC has been diligent in empanelling the brokers, in monitoring securitiestransactions with 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 dealtwith any 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 Regulationsand the provisions of the Scheme.

6. The Trustee is required to ensure that the AMC has been managing the schemes independently of other activitiesand has taken adequate steps to ensure that the interest of investors of one Scheme are not compromised withthose of any other Scheme 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 theRegulations and 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 toimmediately inform 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 thevalue of 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 theTrust Deed.

11. The Trustee is required to take steps to ensure that the transactions of the Fund are in accordance with the provisions ofthe Trust 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 is required to obtain the consent of the Unitholders of the Scheme:

a. When the Trustee is required to do so by SEBI in the interest of the Unitholders; or

b. Upon a requisition made by three-fourths of the Unitholders of the Scheme; or

c. If a majority of the Trustees decide to wind up the Scheme or prematurely redeem the Units; or

d. The Trustee 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, shall be carriedout unless:

i) a written communication about the proposed change is sent to each Unitholder and an advertisement is givenin one English daily newspaper having nationwide circulation as well as in a newspaper published in thelanguage of the region where the Head Office of the mutual fund is situated; and

ii) the unit holders are given an option to exit at the prevailing Net Asset Value without any exit load.

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

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

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

17. 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.

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

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

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

21. 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 orfront running 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.


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22. 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.

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

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

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

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

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

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

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

iii. Selection of the asset management company’s independent directors

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

v. Selecting and nominating individuals to fill independent directors vacancies.

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

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

viii. Principal underwriting contracts and renewals

ix. Any service contracts with the associates of the asset management company.

28. 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.

29. SEBI circular no. MFD/CIR/10/ 15895 /2002 dated August 20, 2002 provides that the meetings of the Trustees shall beheld at least once in every two calendar months and at least six such meetings should be held every year. Further, as perthe Regulations, 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.

During the period from April 1, 2002 to July 31, 2003, six meetings of the Directors of the Trustee were held. The Trustee’ssupervisory role is discharged by reviewing the information and the operations of the Fund based on reports submittedat the Board Meetings of the Trustee, by reviewing the reports being submitted by the Internal Auditor and the bi-monthly, quarterly and half-yearly compliance reports. The Trustee also conducts a detailed review of the half-yearly andannual accounts of the schemes of the Fund and discusses the matters arising there from with the Statutory Auditors ofthe 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 suchcapacity of a sum, presently computed at the rate of upto 0.05% of the amount, being the aggregate of the Trust Fund andUnit Capital of all the Schemes put together on April 1 of each year or a sum of Rs.5 lacs, whichever is higher. The Trustee maycharge further fees 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. Theamendment authorizes the Trustee to decide upon the Trusteeship Fee to be charged from the Mutual Fund at the beginningof each financial year (April 1 to March 31), subject to the maximum limit of 0.05% to be arrived at as indicated above. Theamendment does not in 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 establishedby ICICI as its wholly owned subsidiary, to act as the Investment Manager of the ICICI Mutual Fund vide the InvestmentManagement Agreement dated September 3, 1993. Consequent to a review of long-term business strategy of the AMC, it wasdecided to further strengthen commitment to the individual investor segment. As a part of this Scheme, Prudential plc.(formerly known as Prudential Corporation plc.) of the UK (Prudential) was inducted as the new joint venture partner.

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 the AMC. Whereas the balance 45% shareholding in the AMCis being held by erstwhile ICICI and is under process of being transferred to ICICI Bank Ltd., that would hold 30% of the paid-up capital of AMC and the balance 15% will be held by a subsidiary of ICICI Bank Ltd. (ICICI Venture Funds ManagementCompany Limited), in order to ensure adherence with the provisions of Section 19(2) of the Banking Regulation Act, 1949.

I-AMC was approved by SEBI to act as the Investment Manager of ICICI Mutual Fund vide its letter No.IIMARP/MF/22356 dated


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October 12, 1993. Consequent to the restructuring of shareholding pattern as stated above, SEBI vide its letterNo.IIMARP\631\98 dated March 11, 1998 accorded its approval for the induction of Prudential plc (through its wholly ownsubsidiary, Prudential Corporation Holdings Limited) as a shareholder of the AMC. The AMC has applied and securedapproval from the Registrar of Companies, Delhi and Haryana, for its change of name to Prudential ICICI AssetManagement Company Limited, vide letter No.21/55-54135/320 dated March 26, 1998.

The AMC will manage the schemes of the Fund, including the Scheme mentioned in this Offer Document, in accordancewith the provisions of Investment Management Agreement, the Trust Deed, the Regulations and the objectives of eachof the schemes.

AMC has obtained registration from SEBI vide Registration No.INP000000373 dated February 29, 2000 read with arenewed certificate 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 noobjection for the AMC undertaking PMS activities subject to the AMC complying with the requirements as envisaged inRegulation 24(2) of SEBI (Mutual Funds) Regulations, 1996. The AMC has commenced the Portfolio Managementactivities, after complying with the regulatory requirements.

i) Board of Directors of the AMC

Mr. Ajay SrinivasanPrudential Corporation Asia, Suites 2910-14, Two Pacific Place, 88, Queensway, Hongkong.

Mr. Srinivasan is the Managing Director of Funds Prudential Corporation Asia responsible for its mutual funds / InstitutionalFunds business in Asia. Mr. Srinivasan was the Managing Director of the Prudential ICICI Asset Management Company Ltd.during the period March 1998 to December 2000 and was responsible for the development of business of the Company andits 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 and wasalso head of the fund management function. Prior to his tenure at ITC Threadneedle, Mr. Srinivasan was a member of the ITCGroup’s Financial Services Division and was responsible for establishing, planning and running several businesses at 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 the feasibility of several projectsin 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.

Mr. Ananda Mukerji301, Radhika Apartments, Off. Sayani Road, Prabhadevi, Mumbai 400 025

Mr. Ananda Mukerji has a B Tech degree in Mechanical Engineering from the Indian Institute of Technology, Kharagpur and aPost-graduate Diploma in Management from the Indian Institute of Management, Kolkata. He has over 17 years experienceincluding 11 years at ICICI during which he set up and managed a number of businesses including the infrastructure finance,structured finance and advisory businesses. He also worked as Executive Assistant to the Managing Director & CEO, and Headof Strategy. Since January 2002, he has headed ICICI OneSource Limited, the ICICI group’s Business Process Outsourcing (BPO)arm, as its Managing Director & CEO.

Mr. P H RavikumarInfinity Park, 602, 6th Floor, 244, Bhandar Gully, Mahim, Mumbai- 400 016.

Mr. P H Ravikumar has started his career with Bank of India in 1972. He has wide experience in banking, and joined ICICI BankLtd. in 1994. He headed its corporate banking operations, including corporate credit and treasury. In April 2001, he moved toICICI Limited as a Senior General Manger, in charge of its western and southern regional offices. Subsequent to the merger ofICICI with ICICI Bank, he was responsible for the key business segments of emerging corporates and agribusiness in theWholesale Banking Group of the Bank. He is currently the Managing Director and CEO of National Commodity and DerivativesExchange Ltd.

Mr. P H Ravikumar has a Bachelor of Commerce degree and he is a Certified Associate of the Indian Institute of Bankers.

Mr. K. S. MehtaC-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. Hehas 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). Heis a former Member of the Advisory Committee on Primary Markets set up by SEBI, a Former Director on the Board of the


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National 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. N. Ganga Ram703 Golden Castle, Sundar Nagar, Road No 2, Kalina, Santacruz (E), Mumbai 400 098

Mr. Ganga Ram is a Development Banker with extensive experience in corporate finance and management.

Mr. Ganga Ram, after serving as a Commercial Bank Executive for over 8 years, joined Reserve Bank of India / IndustrialDevelopment Bank of India (IDBI) in 1965. He worked with IDBI for 27 years and retired as Executive Director in September1992. At IDBI, Mr. Ganga Ram was associated with policy formulation and operations. Mr. Ganga Ram was with UnitTrust of India for a brief period as Adviser in investments from January to August 1993. Mr. Ganga Ram worked as aConsultant to the World Bank and Asian Development Bank on several projects.

Mr. Ganga Ram is at present on the Boards of several companies. He is also on four committees of the National StockExchange of India Limited.

Mr. Ganga Ram holds a Master of Arts degree in Economics from the University of Madras. He is a Certified Associate ofthe Indian Institute of Bankers and Fellow of the Economic Development Institute, World Bank, Washington.

Mr. Dadi EngineerSea Shells, 13, Darabsha Road, Off. Napeansea Road, Mumbai 400 036

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

Mr. Engineer is the President of the Managing Committee of Bombay Incorporated Law Society and served as the RepresentativeMember of the Governing Council of the Bar Association of India. He has also been associated with the various committees setup by Bombay Chamber of Commerce and Industry and Associated Chambers of Commerce and Industry.

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

Mr. B. R. Gupta6B, 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, 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 of thelife insurance industry, specifically in the areas of investment, marketing, underwriting and administration. Mr. Gupta alsoworked 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, hefunctioned 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 toSchoolNet India Ltd., an initiative of IL&FS.

Mr. Gupta is a M.A in English and has a LL.B. degree besides being a Fellow of Insurance Institute of India.

Mr. Pradip P. Shah72A, 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, followinghis separation from the management of the Indocean Fund which he helped establish in October 1994, in association withaffiliates 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 in foundingCRISIL in 1988. While at CRISIL, Mr. Shah was instrumental in technology transfer to and the training of personnel of RatingAgency 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 Development FinanceCorporation (HDFC) in 1977. Before joining HDFC, Mr. Shah was a Project Officer at the Industrial Credit and InvestmentCorporation of India Limited (‘ICICI’). Mr. Shah has also served as a consultant to USAID, the World Bank and the AsianDevelopment 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.

Mr. Shailendra BhandariQuest End, 3rd Floor, 47, Cuffe Parade, Mumbai - 400 005

Mr. Bhandari is the Managing Director of the Prudential ICICI Asset Management Company Ltd. and is responsible for


20

development of the business of the Company and its day-to-day management. Prior to joining AMC, for about sevenmonths, Mr. Bhandari was working as a Consultant for application of Information Technology in the field of Finance &Banking. Since September 1994 to November 1999, Mr. Bhandari was associated with HDFC Bank Ltd. as Treasurerand Executive Director - Head of Capital Markets. At HDFC Bank, Mr. Bhandari’s main responsibilities included overseeingand development the entire Capital Markets and Private Banking functions of the bank, including the Treasury (ForeignExchange, Derivatives, Money Markets) as well as trading in Debt and equities and Investment Advisory Services.

During the period from May 1992 to August 1994, Mr. Bhandari was the Chief Executive, Citicorp Securities & InvestmentsLtd., a group entity of Citibank N.A., India.

Mr. Bhandari has a Masters Degree in Management from the Indian Institute of Management, Ahmedabad. He has a Bachelor’sDegree in Economics from St. Stephens’ College, University of Delhi.

ii) Powers, Duties and Responsibilities of the AMC

The duties and responsibilities of the AMC shall be governed by the Regulations and the Investment Management Agreement.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 as perthe set strategies and policies;

(g) to make and give receipts, releases and other discharges for moneys payable to the Trust and for the claims and demandsof 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 operate thesame;

(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 proper careand 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 connection withpersonal securities transactions.

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 1% of the average net assetsoutstanding in each financial year.


21

iii) Key Employees of the AMC and relevant experience:

Name of the Employee Age Designation Educational Total No. of Years Assignments Held (Years) Qualifications of Experience/Type During the Last 10 Yrs

& Nature of Experience

Mr. Shailendra Bhandari 44 Managing Director Post Graduate Over 22 years of Managing Director PrudentialDiploma in experience in the areas ICICI AMC – from DecemberManagement, of Treasury, Risk 2000 till date.Indian Institute of Management, Operations, December 1999 to NovemberManagement, Technology, and Business 2000 IT Consultancy in the fieldAhmedabad, Development of Finance & Banking atBachelor of Arts- Auckland, New Zealand.Economics, St. September 1994 - Nov. 1999-Stephen’s College, Treasurer & Executive Director -University of Delhi, Head Of Capital Markets of

HDFC Bank Ltd., Mumbai, IndiaMay 1992 - Aug 1994: ChiefExecutive of Citicorp Securities &Investments Ltd. in Mumbai

Mr. Pankaj Razdan 34 Deputy CEO BSc. (Electronics) Over 9 years of experience Vice President / Senior ViceB. Tech (Electronics in sales and distribution. President & Head - Sales &Engineering) Distribution - Prudential ICICI AMC

- 2000 onwards.Vice President - West & North ZonePrudential ICICI AMC - 1999 –2000.Head -Distribution -Karvy SecuritiesLimited - 1997 – 1998.Marketing Manager - HMGFinancial Services Limited - 1992 –1993.Graduate Engineer Trainee / DesignEngineer – Nelco Ltd. 1992.

Mr. Dileep Madgavkar 39 Chief Investment Officer Associate of Institute Over 14 years of Chief Investment Officer –of Chartered experience in treasury and Prudential ICICI AMC - 1998 toAccountants of India, fund management. date.B.Com (Hons.) Financial Analyst & Consultant -

1993 to 1998.Manager Equities & PMS – ANZGrindlays Bank - 1989 – 1993.

Mr. Vasant Sanzgiri 42 Senior Vice President & BSc ( Life Sciences), Over 15 years Vice President / Senior ViceHead Human Resources MMS (Personnel experience in area of President & Head Human

Management) Human Resources Resources Prudential ICICI AMC -Management 2000 to date.

General Manager - HumanResources - Owens Cornning IndiaLimited - 1998 – 2000.General Manager HumanResources – DCW Home Products- 1996 – 1998.Regional Human Resource &Quality Manager - Modi Xerox -1995 –1996.Manager, Human ResourcesCyanamid India - 1992 – 1995.Manager – HumanResources - Indian Hotels Limited -1990 – 1992.

Mr. Kalyan Prasath 36 Vice President – PGDSM(NIIT), B.Sc Over 15 years of work Vice President – InformationInformation Technology experience in areas of Technology - Prudential ICICI AMC

Information Technology June 2001 onwards.Birla Global – Assistant VicePresident from Feb’97 to April,2001.DGP Windsor India Ltd. – Managerfrom Sept ’94 to Jan’97.Universal Luggage Mfg. Co. Ltd. -Asst. Manager from Nov’90 toSept’94.NIIT/CCIT – Course Conductor fromMay ‘89 to Oct’90ECIL – System Developer from June’88 to April ‘89Associated Systems – SoftwareDeveloper from July’85 to April ’88.


22

Mr. Ranganath Athreya 37 Vice President – Finance Associate -_Institute Over 13 yrs of experience in Vice President – Finance,Legal,

Legal, Compliance and of Company Compliance and Company Compliance and CompanyCompany Secretary Secretaries of India. Secretarial functions Secretary, Prudential ICICI AMC

Bachelors Degree Jan 14, 02 onwards.(General Laws), Head Corporate CommunicationPGDCP and Company Secretary - IDBI Bank

June 1997 to 12th Jan 2002Chief Manager Merchant Bankingand Company Secretary -Karnataka Bank Ltd. from 199297Company Secretary Lakshmi MotorCredit (Now TVS Finance) 1989-92

Mr. Mrugank Paranjape 36 Vice President PGDM from Over 13 yrs of experience May 2002 - to-date : Vice PresidentOperations and Project IIM, Ahmedabad in Operatios and projects - Prudential ICICI AMC Limited

B. Tech. (Electrical) April 2001 - May 2002from IIT, Powai Chief Technology Officer - Reliance

Logistics Pvt. LimitedDec 1999 - March 2001Director - Infoline.com Limited &MD - India Infoline Securities LimitedJuly 1997 - Nov 1999Regional Business Manager -Deutsche Bank A.G, CustodyServicesJuly 1996 to June 1997Director - WI Carr Securities Pvt.LimitedNov 1995 to July 1996Director - ING Barings Securities(India) Pvt. LimitedNov 1994 - Oct 1995Vice President Operations, IIT InvestTrust LimitedMay 1990 - Oct 1994Citibank N.A Global ConsumerBusiness Manager

Mr. R. Murali Krishnan 42 Fund Manager ACS, CAIIB, PGDPM Over 10 years of Fund Manager – Prudential ICICI& IR, B.Com. experience in Investment AMC - 1998 to date.

Management Sr. Research Analyst ICICI AMC1995 – 1998.Research Analyst ICICI AMC 1993- 1995.Research Analyst – CanbankMutual Fund 1991 –1993.

Mr. Sanjay Mehrotra 37 Associate Vice President MMS, Marketing, Over 13 years of Associate Vice President –- Investments B.Com experience in Investment Investments - Prudential ICICI AMC

Management - 1999 to date.Manager – Investments -PrudentialICICI AMC - 1999.Dealer - Prudential ICICI AMC -1998 – 1999.Assistant Manager - ICICI AMC -1993 – 1998.Manager Sound Craft Marketing -1992 – 1993.Dealer – Treasury Tata FinanceLimited - 1992.Executive – Growmore Research &Assets - 1990 – 1992.

Mr. N. Krishna Kumar 33 Senior Fund Manager C.A., ICWA. Over 8 years of work Sr. Fund Manager - Prudential ICICIexperience AMC - 1999 to date.

Vice President – Equity Sales -Dresdner Klienwort Benson India -1997 – 1999.Research Analyst – UTI SecuritiesExchange Limited - 1995 – 1997.Executive Infar India Limited - 1993


23

– 1995.Mr. Mihir Vora 33 Fund Manager Post Graduate Over 7 years experience in Sr. Fund Manager – Prudential

Diploma in Investment Management ICICI AMC - 2000 to dateManagement and Product Development Fund Manager - SBI Funds(IIM Lucknow), Management Limited - 1998 –B.E. (Mechanical) 2000.

Chief Dealer, Dealer (SecondaryMarket Equity) - SBI FundsManagement Limited - 1997 –1998.Portfolio Manager - SBI FundsManagement Limited - 1995 –1997.Deputy Manager (ProductDevelopment) - SBI FundsManagement Limited - 1994 –1995.Management Trainee Gujarat StateFertilisers Company Limited - 1991– 1992.

Mr. Venugopal K. 30 Fund Manager PGDBA – ICFAI Over 4 years experience in Fund Manager - Prudential ICICIBusiness School, Investment Management AMC - 2000 to date.MA (Economics), Dealer - Pennar InvestmentsB.Com. Limited - 1997 – 2000.

Mr. Vivekanand Ramakrishnan 35 Manager – Credit Ph.D. (University of Over 6 years experience in Manager – Credit AnalystAnalyst Southern California), Credit Analysis. Prudential ICICI AMC - 2001 to

MS (University of date.Southern California), Manager – Rating (BusinessB. Tech. (IIT Madras). Development & Marketing) Crisil -

1995 – 2001Marketing Executive -Vikram Ispat- 1994 – 1995.

Mr. Pankaj Kaji 50 Senior Fund Manager B.Com 30 yrs Fund Manager- Prudential ICICIAMC- 2002 till date.Deutsche Bank, Mumbai (VicePresident-Money Market) 19942002, ANZ Grindlays Bank (FundsManager)-1986-1994

Mr. Chaitanya Pande 31 Fund Manager PGDM from IMI, 7 yrs 5 Months Sept 16th 2002 till date – FundNew Delhi, Manager – Manager – Prudential ICICI AMCBSc from Fund Management LimitedSt. Stephens Jan 2000 to Sep 2002College, New Delhi Manager – Fund Management

JF Asset Management (India) Pvt.LimitedMay 1995 to Jan 2000Investment AnalystJF Asset Management (India) Pvt.Limited

Mr. Chandresh Kumar Nigam 34 Senior Fund Manager B TECH, PGDM, IIM 12 Yrs. – Fund From July 2003 till date- PrudentialCALCUTTA, AISSCE Management ICICI Asset Management Company

Ltd.,- Equity Fund Management;From April 1993 – June 2003- ZurichAsset management – Equity FundManagement;May1991 – April 1993- SBI capitalMarkets Limited- Fund

Management

As indicated above, at present a team comprising of nine Fund Managers and one Research Analyst are involved inequity research. The past experience of these employees is indicated above.

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


24

iv) Fund Manager :

The investments under the Scheme will be managed by the Chief Investment Officer, Mr. Dileep Madgavkar. His qualificationsand experience are as under:

Scheme Name Fund Manager Qualification Experience

Prudential ICICI Mr. Dileep Madgavkar Associate of Institute of Over 14 years of experienceFMCG Fund Chartered Accountants in treasury and fund

B.Com (Hons.) (Cal. Univ.) management.

v) Compliance OfficerThe Compliance Officer for the Fund is:Mr. Ranganath AthreyaVice President- Finance, Compliance and Company SecretaryPrudential ICICI Asset Management Company Ltd.Contractor Building, 3rd Floor41, R.Kamani Marg, Ballard Estate,Mumbai 400 038

vi) Investor Relations Officer

Investor Relations Officer for the Fund is Mr. Gautam Guha and he may be contacted at the corporate office of the AMC atMumbai.

D) AUDITORS

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

E) REGISTRAR

Computer Age Management Services (P) Limited, A&B Lakshmi Bhavan, 609 Anna Salai, Chennai 600006(CAMS) have beenappointed as Registrar for the Scheme. The Registrar is registered with SEBI under registration No: INR000002813. AsRegistrars to the Scheme, CAMS will handle communications with investors, perform data entry services and despatch AccountStatements. The AMC and the Trustee have satisfied themselves that the Registrar can provide the services required and hasadequate 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 has entered into a Custodian Agreement with the Custodian and the salient features of the said Agreement are:

(a) Provide post-trading and custodial services to the Mutual Fund.

(b) Ensure benefits due on the holdings are received.

(c) Provide detailed management information and other reports as required by the AMC.

(d) Maintain confidentiality of the transactions.

(e) Be responsible for the loss or damage to the assets belonging to the Scheme due to negligence on its part or on the partof its approved agents.

(f) Segregate assets of each Scheme.

(g) 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.

(h) The Custodian shall also not deal, on its own account, in securities purchased or sold by the Mutual Fund without makingan adequate 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.


25

SECTION IIINVESTMENT OBJECTIVES & POLICIES

Prudential ICICI FMCG FundFundamental Attributes of the Scheme

Type of the Scheme

An open-ended growth Scheme, seeking to generate long-term capital appreciation.

Investment Objective

The primary objective of the Scheme is to generate long-term capital appreciation through investments made primarily inequities of a select group of companies in the FMCG Sector. The AMC will be broadly guided, while investing the Corpus ofthe Scheme, among other criteria, by the market capitalization of the companies. Accordingly, the NAV of the Scheme is linkedto equity performance of such companies. However, there can be no assurance that the investment objective of the Scheme willbe realized

Investment Pattern

The corpus of the Scheme will be invested primarily in equity shares and in equity related securities. The Scheme will also investits corpus in debt and money market instruments, in order to manage its liquidity requirements from time to time, and undercertain circumstances, to protect the interests of the Unit holders.

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

Sr. Type of security Approximate Allocation Risk ProfileNo. (% of Corpus)

1 Equities & Equity related securities of 90% Medium to highselect group of FMCG companies.

2 Debt and money market securities 10% Low to medium

Note: If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that suchinvestments will not, normally, exceed 5% of the corpus of the Scheme.

Investors may note that securities, which provide higher returns typically, display higher volatility. Accordingly, the investmentportfolio of the Scheme would reflect moderate to high volatility in its equity and equity related investments and low tomoderate volatility in its debt and money market investments. As the investments are proposed to be made in the equities ofselect FMCG companies, the performance of the Scheme is closely linked to performance of companies in the FMCG sector.

Change in Investment Pattern

Subject to the Regulations, the asset allocation pattern indicated above may change from time to time, keeping in view marketconditions, market opportunities, applicable regulations and political and economic factors. It must be clearly understoodthat the percentages stated above are only indicative and not absolute and that they can vary substantially depending uponthe perception of the Investment Manager, the intention being at all times to seek to protect the interests of 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 Schemesshall be effected only in accordance with the provisions of sub regulation (15A) of Regulation 18 of the Regulations, asdetailed later in this document.

Terms of the Scheme

a) Liquidity

On an on-going basis, an investor can purchase and redeem Units on every Business Day at NAV based prices.

i. Redemption of Units

The Units can be redeemed (i.e. sold back to the Fund) on every Business Day at the Redemption Price (hereinafterdefined). The redemption request can be made for any amount of Rs.500 or more. Redemption can also be made forthe total number of units standing to the credit of investor at the time of closure of account, even though suchredemption is for less than Rs.500/.

ii. Redemption Price

The redemption will be at Applicable NAV based prices. Please refer to “Redemption Price” on page 47.

iii. Payment of Proceeds

All redemption requests received prior to the cut-off time (3 pm), (please refer to “Payment of Proceeds” on Page 47)on any Business Day at the Customer Service Centers will be considered accepted on that Business Day, subject to theredemption requests being complete in all respects, and will be priced on the basis of Redemption Price for that day.Requests received after the cut-off time will be treated as though they were accepted on the next Business Day. Pleaserefer to (Page 48) “Right to Limit Redemptions” and “Suspension of Sale and Redemption of Units”.


26

As per the Regulations, the Fund shall despatch redemption proceeds within 10 Business Days of receiving theredemption request. However, under normal circumstances, the Fund will endeavor to despatch the redemptionproceeds within 3 Business Days of acceptance of the redemption request.

b) Listing Being an open ended Scheme, the Units of the Scheme are not listed on any stock exchange.

c) Fees and Expenses

i. Initial Issue Expenses: Initial Issue Expenses charged to the schemes were at 1% of the amount mobilisedunder the Scheme in the Initial Offer Period. Accordingly, for every Rs. 5,000 mobilised under the Schemeduring the Initial Offer Period, Rs 4950/- were invested and the balance amount of Rs.50/- was utilised bythe Fund to meet the Initial Issue costs. Under the Regulations, the Fund is entitled to charge Initial IssueExpenses upto a maximum of 6% of initial resources raised under the Scheme.

ii. Recurring Expenses: The details of recurring expenses of the Scheme, on an annual basis, have been statedon Page 88. The estimated recurring expenses for the Scheme are currently at 2.50% p.a. of the average netassets for the first Rs.100 crores.

As per the Regulations, the maximum recurring expenses that can be charged to the Scheme shall be subjectto a percentage limit of weekly net assets as in the table below:

First Rs. 100 crore Next Rs. 300 crore Next Rs. 300 crore Over Rs. 700 crore2.50% 2.25% 2.00% 1.75%

Subject to Regulations and this Offer Document, expenses over and above the prescribed limit shall beborne by the Asset Management Company.

Load:

Entry Load:i. For investments of less than Rs. 10 Lakhs : Entry load at 2.25% of applicable Net Asset Value (NAV).ii. For investment of Rs.10 Lakhs and above but upto Rs. 3 crores: Entry load at 1.75% of applicable

Net Asset Value (NAV)iii. For investment of Rs. 3 crores and above: Entry load is Nil.

Exit Load:

On an on-going basis, the Trustee, for the present does not intend to charge an exit load on redemption ofUnits.

Subject to the Regulations, the Trustee reserves the right to modify/alter the load structure andmay decide to introduce a differential load structure on the Units subscribed/redeemed on anyBusiness Day. Such changes will be applicable for prospective investments. The Trustee shall arrangeto display a notice in the Customer Service Centers of the AMC before the change of the thenprevalent load structure. The addendum detailing the changes in load structure will be attached tooffer documents and abridged offer documents. The addendum will also be circulated to all thedistributors / brokers so that the same can be attached to all the offer documents and abridgedoffer documents in stock. This addendum will also be sent along with the newsletter to the unitholdersimmediately after the changes. Changes in the load structure may be stamped in theacknowledgement slip issued by the Fund after the changes in load structure. The load collectedfrom the Unitholders will be credited to a separate account and will be offset against distributionand marketing expenses. Surplus of load, if any, charged over planned marketing and distributionexpenses to be defrayed will be credited to the Scheme whenever felt appropriate by the AMC.

Changes in Fundamental Attributes

The Trustees shall ensure that no change in the fundamental attributes of the Scheme and the Plans thereunder or the trustor fee and expenses payable or any other change which would modify the Scheme and the Plans thereunder and affects theinterests 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 oneEnglish daily newspaper having nationwide circulation as well as in a newspaper published in the language of the regionwhere 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.

Investment Strategy

The Fast Moving Consumer Goods Market

Fast Moving Consumer Goods (FMCG) are products that are typically purchased and used/consumed on a regular basis or atfrequent intervals. Typical examples of such products are soaps, detergents, toothpastes, shampoos, safety razors, atta, rice,chocolates etc.


27

The market potential for Fast Moving Consumer Goods in India is large given that it has the 2nd largest population in theworld. Today, consumption of branded fast moving consumer goods is low in Indian households, given the prevailing lowlevels of per capita income.

The following data illustrates the levels of consumption in developed economies and India, during 1997-98, of some FMCGproducts. The developed economies’ per capita consumption levels are many times the consumption levels in the Indianeconomy, indicating the growth potential for these products in India.

Product India DevelopedEconomies

Soaps 0.4 kgs 1.7 kgsDetergent 2.7 kgs 9.7 kgs

Tooth paste 51 ml 277 mlHair-care 11 g 767 gIce-cream 0.1 litre 5.7 litres

Source : Probity, CLSA

Long term growth in the Indian economy leading to an increase in household per capita income, along with favourable shiftsin the demographic profile in terms of income and age distribution, will lead to increased penetration and per capitaconsumption of fast moving consumer goods. At the same time, FMCG products are largely shielded from economic downturns,given that most of these consumer goods are daily necessities. Accordingly, the industry exhibits ideal characteristics in termsof growth prospects as well as low macro economic risks.

New entrants face entry barriers in terms of establishing a new brand and setting up a distribution system. Therefore, existingplayers face less risk of competition in the industry.

The industry predominantly consists of multinational companies operating for a long time in the country, having establishedbrands and well entrenched distribution networks. Such companies typically have very strong balance sheets with low leverage,good amount of cash and cash equivalents, and low proportion of investments in non-core assets. The companies show highreturns on investment in absolute terms as well as compared to other industries.

Two key segments of the Indian FMCG sector and those that are expected to be the most significant growth areas are (i)Personal care and (ii) Processed Foods.

The Personal care Market

The personal care market in India comprises daily use items like soaps, detergents, skin care, toothpastes, shampoos, cosmetics,shaving products, contact lenses etc. The following shows the large listed companies that operate in this segment.

● Colgate Palmolive India Ltd.● Dabur India Ltd.

● Godrej Soaps Ltd.● Henkel Spic India Ltd.● Hindustan Lever Ltd.

● Gillette India Ltd.● Marico Industries Ltd.● Nirma Ltd

● Procter & Gamble India Ltd.● Reckitt & Coleman of India Ltd.

The Processed foods Market

The processed foods market presently comprises of Rice, Atta, Salt, Edible Oil, Processed fruit products like jams & soups,noodles, snacks like biscuits and chocolates, beverages like tea & coffee etc. The following shows the large listed companiesoperating in this segment.

● Britannia Industries Ltd.

● Cadbury India Ltd.● Dabur India Ltd.● Hindustan Lever Ltd.

● Marico Industries Ltd.● Nestle India Limited● Smithkline Beecham Consumer Healthcare Ltd.

● Tata Tea Ltd


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The market capitalization of the above and other important FMCG companies are indicated below.

Market Capitalisation of FMCG Companies as on July 31, 2003

Company Name Market Capitalisation(in Rs. Million)

Archies Limited 380.93

Asian Paints (India) Ltd 25,605.4Bata India Ltd 2,144.2Britannia Industries Ltd. 14,059.89

Colgate-Palmolive (India) Ltd. 19,861.75Dabur India Ltd. 15,501.93Gillette India Ltd. 12,144.51

Glaxo Smithkline Consumer Healthcare Ltd. 12,039.48Godfrey Phillips India Ltd. 3,798.68Godrej Consumer Products Ltd. 7,131.46

Henkel SPIC India Ltd 2,397.60Hindustan Lever Ltd. 373,330.95I T C Ltd. 182,069.74

Marico Industries Ltd. 5,133.00Mcdowell & Company Ltd. 2,495.49Nestle India Ltd. 54,118.14

Nirma Ltd. 25,501.62Procter & Gamble Hygiene and Health Care Ltd 10,175.10Tata Tea Ltd. 11,696.54

United Breweries Ltd 1,766.00

It may be noted that the AMC may, keeping in view the market outlook, individual company performance, marketcapitalization and other relevant factors, add/delete the names of companies in Personal Care/ Foods Sector, to thelist of above companies. Similarly, the AMC may, at any time during the Scheme period, decide to include companiesin other sectors which form part of Fast Moving Consumer Goods Industry.

It may be noted that the current universe consists of companies that operate on the Personal Care and ProcessedFoods market which satisfy the minimum market capitalization criteria of Rs.500 million. In future, if more companiessatisfy the above requirements, the Investment Manager may include such companies in the investible universe.

An analysis of the companies in the Personal Care and Processed Foods segments shows that they have performed well in thefive years ending 2002 as compared to the overall market in terms of growth as well as returns on investments.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Sales 5 Y earCompoundedAnnual GrowthR ate (1997-

2002)

Net Profit 5 Y earCompoundedAnnual GrowthR ate (1997-

2002)

R eturn on CapitalEmployed 5 Y earAverage (1997-

2002)

R eturn on Equity5 Y ear Average(1997-2002)

BSE Sensex 30Companies

S&P CNX FMCG IndexCompanies

Source: Capitaline 2000


29

As a testimony to this fact, the out-performance of the sector index v/s. the BSE Sensex as on July 31, 2001 is given in the tablebelow:

Reference Date CNX FMCG Sensex Outperformance of Index Returns Returns FMCG Index v/s Sensex

1-Jan-99 10.00% 9.00% 1.00%

1-Jan-00 -7.00% -33.00% 26.00%

1-Jan-01 -4.00% 16.00% 12.00%

The Personal Care and Processed Food companies offer good business prospects, management quality, sound financialstrengths and low risks. Given this, AMC believes that the prevailing valuations can be sustained. The low consumption levelsof branded consumer goods provides good potential for demand growth, given the long term growth potential of theeconomy. The likelihood of steady earnings growth as a result, and sustained valuations, should lead to steady capitalappreciation in these stocks.

In the last two years, the sector has under-performed as shown below. This is primarily due to three consecutive sub-normalmonsoons. However, the AMC believes that the long-term fundamentals remain intact for this sector.

Reference Date CNX FMCG Sensex Outperformance of Index Returns Returns FMCG Index v/s Sensex

1-Jan-01 -18.3% -4.1% -14.2%

1-Jan-02 -10.4% 16.8% -27.2%

1-Jan-03 2.6% 11.9% -9.3%

Portfolio Turnover

Portfolio turnover is defined as the aggregate of purchases and sales as a percentage of the corpus of the Scheme during aspecified period of time. The portfolio turnover shall generally not exceed 75% per year, once the entire corpus is invested andexcluding the portfolio turnover caused on account of fresh inflows into the Scheme and money placed on call deposits. Thisis, however, indicative and may change keeping in mind the circumstances and Unit holders’ interest.

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 the respectivescheme portfolios, subject to final approval by the Chief Investment Officer. The investment decisions are made andapproved 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, FundManagers and the Research Analyst who meet at periodic intervals. The Investment Committee, at its meetings, reviewsthe performance of 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 interest ofthe unitholders of the respective schemes.

The AMC has a team comprising of nine Fund Managers and one Research Analyst. All of these are involved in preparationof research reports.

C. The Managing Director makes a presentation to the Board of AMC at each of its meetings indicating the performance ofthe schemes. The performance of the schemes is reviewed by the Board with reference to the appropriate benchmarks asalso the performance of the schemes of the competition.

For Prudential ICICI FMCG Fund, the performance of the scheme will be benchmarked with CNX FMCG Index. Theperformance of the Scheme is reviewed by the Board with the benchmark as also the performance of the schemes of thecompetitions

The Managing Director brings to the notice of the Board specific factors, if any, which are impacting the performance ofany 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 Trustees thedetails 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 an internalcommittee to approve the investment in un-rated debt securities. All such investments, as and when are made, will beplaced 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.

F. The Chief Executive Officer of the AMC shall ensure that the mutual fund complies with all the provisions of SEBI (Mutual


30

Fund) Regulations, 1996, as amended from time to time, including all guidelines, circulars issued in relation thereto fromtime to time and that the investments made by the fund managers are in the interest of the unit holders and shall also beresponsible for the overall risk management function of the mutual fund.

G. The Fund managers shall ensure that the funds of the Scheme/ schemes are invested to achieve the investment objectivesof the schemes and in the interest of the unit holders.

Risk Factors and Special Considerations

1. 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 the Scheme. The various factors which impact the value of the Scheme’s investmentsinclude, but are not limited to, fluctuations in the equity and bond markets, fluctuations in interest rates, prevailingpolitical and economic environment, changes in government policy, factors specific to the issuer of the securities, tax laws,liquidity of the underlying instruments, settlement periods,trading volumes etc.

2. The past performance of the mutual funds managed by the Sponsors and their affiliates/associates is not indicative of thefuture performance of the Scheme.

3. Investment decisions made by the AMC may not always be profitable.

4. 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.

5. Prudential ICICI FMCG Fund is the name of the Scheme and is not in any manner indicative of the quality of the Scheme,its future prospects or returns.

6. From time to time and subject to the Regulations, the Sponsors, the Mutual Funds and investment companies managedby them, their affiliates, their associate companies, subsidiaries of the Sponsors, and the AMC may invest either directlyor indirectly in the Scheme. The funds managed by these affiliates, associates, the Sponsors, subsidiaries of the Sponsorsand /or the AMC may acquire a substantial portion of the Scheme’s Units and collectively constitute a major investor in theScheme. Accordingly, redemption of Units held by such funds, affiliates/associates and Sponsors may have an adverseimpact on the Units of the Scheme because the timing of such redemption may impact the ability of other Unit holders toredeem their Units.

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

8. The Scheme proposes to invest substantially in equity and equity related securities. The Scheme will, to a lesser extent, alsoinvest in debt and money market securities. Trading volumes, settlement periods and transfer procedures may restrict theliquidity of these investments. Different segments of the Indian financial markets have different settlement periods andsuch periods may be extended significantly by unforeseen circumstances. The inability of the Scheme to make intendedsecurities purchases due to settlement problems could cause the Scheme to miss certain investment opportunities. By thesame rationale, the inability to sell securities held in the Scheme’s portfolio due to the absence of a well developed andliquid secondary market for debt securities would result, at times, in potential losses to the Scheme, in case of a subsequentdecline in the value of securities held in the Scheme’s portfolio.

9. The Scheme’s investments will be predominantly in equities of a select group of companies in the FMCG Sector. The AMCwill be broadly guided, among other factors, while investing the corpus of the Scheme, by the market capitalization ofcompanies. Accordingly, the NAV of the Scheme is linked to the equity performance of such companies.

10. The Scheme may also use various derivatives and hedging products from time to time, as would be available andpermitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unit holders’ interest.

11. 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, in its solediscretion to limit redemptions (including suspending redemption) under certain circumstances, as described on page 48under the section titled “Right to Limit Redemptions”.

12. In case the Scheme undertakes stock lending under the Regulations, the Scheme may, at times, be exposed to counterparty risk.

13. In case the Scheme utilizes any derivatives, under the Regulations, the Scheme may, in certain situations, be exposed toprice risks.

14. The Scheme may, subject to Regulations, invest in securities issued/traded in other countries. Such investments, if made,will be subject to, among others, foreign exchange/currency risks.

Trading in Derivatives

SEBI vide its circular no. MFD/CIR/011/061/2000 dated February 1, 2000 has permitted all the mutual funds to participate inthe derivatives trading subject to observance of guidelines issued by SEBI in this behalf. In terms of SEBI guidelines, trading in


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derivatives by the mutual funds should be restricted to hedging and portfolio balancing and the Fund has to comply with theprescribed disclosure requirements.

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 Fund 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 hedgingand portfolio balancing, as permitted under the Regulations and guidelines.

Exposure to Derivatives:

The respective schemes of Prudential ICICI Mutual Fund shall, under normal circumstances, not have exposure of more than25% of its net assets in the derivative instruments. The AMC in times of market volatility and other abnormal marketconditions increase such exposure in derivative instruments up to maximum of 50% of net assets under each scheme with aview to protecting the interests of the investors under the schemes.

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

i) 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. Appreciationin 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 actually sellingthe stocks it holds.

ii) 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 the sametime 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 Structure of an Interest Rate Swap

Floating Interest Rate

Counter Party 1 Fixed Interest Rate Counter Party 2

In the above illustration,Basic Details: Fixed to floating swapNotional Amount: Rs. 5 CroresBenchmark: NSE MIBORDeal 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%

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 call ratesin 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.

iii) 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, Mumbaiand The National Stock Exchange have started trading in index futures of 1, 2 and 3-month maturities. The pricing of an indexfuture is the function of the underlying index and short-term interest rates.

�

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Example:

Assumptions:1 month BSE 30 FutureSpot Index: 4900Future Price on day 1: 4920Fund buys 10,000 futures

Date of settlementFuture 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 hencemispricing of the future at the time of purchase.

iv) Risks attached with the use of derivatives:

As and when the schemes trade in the derivatives market there are risk factors and issues concerning the use of derivatives thatinvestors should understand. Derivative products are specialized instruments that require investment techniques and riskanalyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only ofthe underlying instrument but of the derivative itself. Derivatives require the maintenance of adequate controls to monitor thetransactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price orinterest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failureof another party (usually referred to as the “counter party”) to comply with the terms of the derivatives contract. Other risks inusing derivatives include the risk of mis pricing or improper valuation of derivatives and the inability of derivatives to correlateperfectly with underlying assets, rates and indices.

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

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) of clause1 of the Eighth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amendedfrom time to time.

ii. The valuation of untraded derivatives shall be done in accordance with the valuation method for untraded 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.

v) Risk attached with the use of Interest Rate Derivatives:

While Interest Rate Derivatives are powerful new tools, the investor should understand instrument and its risk-return profile.The Derivatives unlike plain cash market instrument, requires greater expertise and it could cause damage if used withoutproper analysis. It driven by the demand & supply of money, monetary & credit policy viz. Bank rate, Repo rate etc., exchangerate policy, inflation, economic growth & investment avenues etc. The use of a derivative requires an understanding not onlyof the underlying instrument but also of the derivative itself. Even a small price movement in the underlying security could havea large impact on their value.

vi) Advantages and Risks attached with investments in ADRs/GDRs:

It is AMC’s belief that the investment in ADRs/GDRs/overseas securities offer new investment and portfolio diversificationopportunities into multi-market and multi-currency products. However, such investments also entail additional risks. Suchinvestment opportunities may be pursued by the AMC provided they are considered appropriate in terms of the overallinvestment objectives of the schemes. Since the Schemes would invest only partially in ADRs/GDRs/overseas securities, theremay not be readily available and widely accepted benchmarks to measure performance of the Schemes. To manage risksassociated with foreign currency and interest rate exposure, the Fund may use derivatives for efficient portfolio managementincluding hedging and in accordance with conditions as may be stipulated by SEBI/RBI from time to time.

To the extent that the assets of the Schemes will be invested in securities denominated in foreign currencies, the Indian Rupeeequivalent of the net assets, distributions and income may be adversely affected by the changes in the value of certain foreigncurrencies relative to the Indian Rupee. The repatriation of capital also may be hampered by changes in regulations concerningexchange controls or political circumstances as well as the application to it of the other restrictions on investment.

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 other


33

intermediaries 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 the permissibleceilings of expenses. The fees and expenses would illustratively include, besides the investment management fees, custodyfees and costs, fees of appointed advisors and sub-managers, transaction costs, and overseas regulatory costs.

3) Risks associated with stock lending :

The risks in lending portfolio securities, as with other extensions of credit, consist of the failure of another party, in this casethe approved intermediary, to comply with the terms of agreement entered into between the lender of securities i.e. theScheme and the approved intermediary. Such failure to comply can result in the possible loss of rights in the collateral put upby the borrower of the securities, the inability of the approved intermediary to return the securities deposited by the lender andthe possible loss of any corporate benefits accruing to the lender from the securities deposited with the approved intermediary.

Scheme Specific Risk Factors

● Interest Rate Risk: As with all debt securities, changes in interest rates may affect the Plan’s Net Asset Value as the pricesof securities generally increase as interest rates decline and generally decrease as interest rates rise. Prices of long-termsecurities generally fluctuate more in response to interest rate changes than do short-term securities. Indian debt marketscan be volatile leading to the possibility of price movements up or down in fixed income securities and thereby to possiblemovements in the NAV.

● Liquidity or Marketability Risk: This refers to the ease with which a security can be sold at or near to its valuation yield-to-maturity (YTM). The primary measure of liquidity risk is the spread between the bid price and the offer price quoted bya 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 are soldat a higher 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 the Planare reinvested. The additional income from reinvestment is the “interest on interest” component. The risk is that the rateat which interim cash flows can be reinvested may be lower than that originally assumed.

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

Investment Restrictions for the Schemes

Pursuant to the Regulations and amendments thereto, the following investment restrictions are presently applicable to eachPlan under the Scheme:

1) The initial issue expenses in respect of any Plan will not exceed 6% of the Funds raised under that Plan.

2) A mutual fund scheme (each Plan) shall not invest more than 15% of its NAV in debt instruments issued by a single issuerwhich are rated not below investment grade by a credit rating agency authorised to carry out such activity under the SEBIAct. 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 be madein mortgage backed securitised debt which are rated not below investment grade by a credit rating agency registered withSEBI.

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 investments shallbe made by an internal committee constituted by AMC to approve the investment in un-rated debt securities in terms ofthe 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 have thesame 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 such transferhas been made.

6) The Scheme/Plans 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


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investment management fees shall be charged for investing in other schemes of the Fund or in the schemes of any othermutual 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/ Plans.

11) The Fund may lend securities 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 scheme ofthe Mutual Fund.

13) In case of sector/industry specific scheme, the upper ceiling on investments may be in accordance with the weightage ofthe scrips in the representative sectoral index/sub index as disclosed in the offer document or 10% of the NAV of thescheme whichever is higher.

14) No open-ended mutual fund scheme shall invest more than 5% 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/ redemptionof units or payment of interest and dividend to the Unitholders. Such borrowings shall not exceed more than 20% of thenet assets of the individual scheme and the duration of the borrowing shall not exceed a period of 6 months.

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

17) The Scheme/Plans may also use various hedging and derivative products from time to time, as are available and permittedby SEBI, 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 transactions enteredon or after January 15, 1998 only through dematerialised securities. Further, all transactions in government securitiesshall be in dematerialised form.

l) Underwriting by the Fund

Subject to the Regulations, the Scheme and the Plans thereunder may enter into underwriting agreements after the Fundobtains a certificate of registration in terms of the Securities and Exchange Board of India (Underwriters) Rules and theSecurities and Exchange Board 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 its Plans and theunderwriting obligation of the Scheme and the Plans shall not at any time exceed the total net asset value of the Scheme andits Plans.

m) Computation of Net Asset Value

The NAV of the Units of the schemes will be computed by dividing the net assets of the schemes by the number of Unitsoutstanding on the valuation date. The Fund shall value its investments according to the valuation norms, as specified inSchedule VIII of the Regulations, or such norms as may be prescribed by SEBI from time to time. The broad valuation norms aredetailed 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, thevalue at which it was traded on the selected stock exchange, as the case may be, on the earliest previous day may beused provided 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 particularvaluation day, the value at which it was traded on the principal stock exchange or any other stock exchange, as thecase may be, on the earliest previous day may be used provided such date is not more than fifteen days prior tovaluation date. When a debt security (other than Government Securities) is purchased by way of private placement,the value at which it was bought may be 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 a monthis both less than Rs. 5 lacs and the total volume is less than 50,000 shares, it shall be considered as a thinly tradedsecurity 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 thinly traded.

In order to determine whether a security is thinly traded or not, the volumes traded in all recognised stock exchangesin 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 the valuationdate, there are no individual trades in that security in marketable lots (currently Rs 5 crore) on the principal stockexchange 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:

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

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

Average capitalisation rate (P/E ratio) for the industry based upon either BSE or NSE data (which should be followed consistentlyand changes, if any noted with proper justification thereof) shall be taken and discounted by 75% i.e. only 25% of theIndustry average P/E shall be taken as capitalisation rate (P/E ratio). Earnings per share of the latest audited annual accounts willbe considered for this purpose.

The value as per the net worth value per share and the capital earning value calculated as above shall be averaged and furtherdiscounted by 10% for ill-liquidity so as to arrive at the fair value per share.

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

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

In case an individual security accounts for more than 5% of the total assets of the scheme, an independent valuer shall beappointed 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 the procedureabove and the proportion which it bears to the total net assets of the scheme to which it belongs would be compared on thedate 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 beginning of the dayplus the difference between the redemption value and the cost spread uniformly over the remaining maturity period of theinstruments) a similar process should be adopted for non-traded debt securities with residual maturity of upto 182 days,in the absence of any other standard benchmarks in the market. Debt securities purchased with residual maturity of upto182 days are to be valued at cost (including accrued interest till the beginning of the day) plus the difference between theredemption value (inclusive of interest) and cost spread uniformly over the remaining maturity period of the instrument.In case of a debt security with maturity greater than 182 days at the time of purchase, the last valuation price plus accruedinterest should be used instead of purchase cost. All other non traded Non Government debt instruments shall bevalued using the method suggested in (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 Investmentgrade” securities based on their credit ratings. The non-investment grade securities would further be classified as “Performing”and “Non Performing” assets

All Non Government investment grade debt securities, classified as not traded, shall be valued on yield to maturity basis asdescribed 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 the provisioningnorms.

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 down below:

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

Net worth per share = [share capital plus free reserves (excluding revaluation reserves) minus Miscellaneous expenditure notwritten off or deferred revenue expenditure, intangible assets and accumulated losses] divided by Number of Paid up Shares.

After taking into account the outstanding warrants and options, Net worth per share shall again be calculated and shall be =[share capital plus consideration on exercise of Option/Warrants received/receivable by the Company plus free reserves(excludingrevaluation reserves) minus Miscellaneous expenditure not written off or deferred revenue expenditure, intangible assets andaccumulated losses] divided by {Number of Paid up Shares plus Number of Shares that would be obtained on conversion/exercise of Outstanding Warrants and Options}

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

Average capitalisation rate (P/E ratio) for the industry based upon either BSE or NSE data (which should be followed consistentlyand changes, if any, noted with proper justification thereof) shall be taken and discounted by 75% i.e. only 25% of theIndustry average P/E shall be taken as capitalisation rate (P/E ratio). Earnings per share of the latest audited annual accounts willbe considered for this purpose.

The value as per the net worth value per share and the capital earning value calculated as above shall be averaged and furtherdiscounted 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:

All calculations as aforesaid shall be based on audited accounts.

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

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

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

In case an individual security accounts for more than 5% of the total assets of the scheme, an independent valuer shall beappointed for the valuation of the said security. To determine if a security accounts for more than 5% of the total assets of thescheme, it should be valued in accordance with the procedure as mentioned above on the date of valuation.

At the discretion of the AMC and with the approval of the trustees, an unlisted equity share may be valued at a price lower thanthe 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 final maturity andvaluing the security to call option.

In case there are multiple call options, the lowest value obtained by valuing to the various call dates and valuing to the maturitydate 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 final maturityand 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 valuing to thematurity date is to be taken as the value of the instruments.

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 and would bevalued accordingly.


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(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 and unlisted equityshares, shall not exceed 15% of the total assets of the scheme and any illiquid securities held above 15% of the totalassets 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 thensuch a scheme shall within a period of two years bring down the ratio of illiquid securities within the prescribed limit of15% in the following time frame:

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

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

(b) All funds shall disclose as on March 31 and September 30 the scheme-wise total illiquid securities in value and percentageof the net assets while making disclosures of half yearly portfolios to the unitholders. In the list of investments, an asteriskmark shall also be given against all such investments, which are recognised as illiquid 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% and 20%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 fundand 20% in the case of closed fund, the concessions of giving time period for reducing the illiquid security to theprescribed 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 the valueof rights. Where it is decided not to subscribe for the rights but to renounce them and renunciations are beingtraded, 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 this purpose,major expenses like management fees and other periodic expenses would be accrued on a day-to-day basis. The minorexpenses and income will be accrued on a periodic basis, provided the non daily accrual does not affect the NAVcalculations 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, theNAV calculation shall not be affected by more than 2%.

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

viii) Valuation of Derivative Products :

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.

The valuation of untraded derivatives shall be done in accordance with the valuation method for untraded 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.


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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.

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 interest is30.06.2000, it will be classified as NPA from 01.10.2000.

(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 on theasset i.e. if the due date for interest falls on 30.06.2000 and if the interest is not received, accrual will continue till30.09.2000 after which there will be no further accrual of income. In short, taking the above example, from the beginningof 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 30.06.2000,accrual will continue till 30.09.2000 even if the income as on 30.06.2000 has not been received. Further, no accrual willbe done from 01.10.2000 onwards. Full provision will also be made for interest accrued and outstanding as on 30.06.2000.

(D) Provision for NPAs – Debt Securities.

Both secured and unsecured investments once they are recognized as NPAs call for provisioning in the same manner andwhere these are related to close ended scheme the phasing would be such that to ensure full provisioning prior to theclosure 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 not havediscretion to extend the period of provisioning. The provisioning against the principal amount or instalments should bemade 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 months form thedate 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 months from thedate 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. 9months 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. 12months 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 the interest i.e.15 months form the date of classification of the assets as NPA.

Book value for the purpose of provisioning for NPAs shall be taken as a value determined as per the prescribed valuationmethod.

This can be explained by an illustration:

Let us consider that interest income is due on a half yearly basis and the due date falls on 30.06.2000 and the interest isnot received till 1st quarter after due date i.e. 30.09.2000. This provisioning will be done in following phased manner:

10% provision 01.01.2001 6 months past due date of interest i.e. 3 months form the date of classification ofasset as NPA (01.10.2000)

20% provision 01.04.200120% provision 01.07.2001

25% provision 01.10.200125% provision 01.01.2002


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Thus, 1 1/2; years past the due date of income or 1 1/4; year from the date of classification of the ‘asset’ as an NPA, the‘asset’ will be fully provided for. If any instalment is fallen due, during the period of interest default, the amount ofprovision should be instalment amount or above provision amount, whichever is higher.

(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 serviced overthe 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 the provisionof principal was made due to the interest defaults only.

50% of the asset provided for in the books will be written back at the end of the 2nd quarter and 25% after everysubsequent 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 in fulland 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 the principalif the same is not due and outstanding

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

(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 quarters ofregular servicing of the debt. Thereafter, this be classified as ‘performing asset’ and the interest provided may bewritten back.

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

(iii) If the Reschedulement is done for a second/third time or thereafter, the characteristic of NPA should be continued foreight quarters of regular servicing of the debt. The provision should be written back only after it is reclassified as‘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 given againstsuch investments which are recognized as NPAs. Where the date of redemption of an investment has lapsed, the amountnot redeemed shall be shown as ‘Sundry Debtors’ and not investment provided that where an investment is redeemableby instalments that will be shown as an investment until all instalments have become overdue.

(J) Effective date for implementation / switchover to the current norms :

The above norms are being implemented by the Fund with effect from 01.10.2000.


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SECTION III

UNITS & THE INITIAL OFFERGeneral Information

Minimum Subscription Amount

During the Initial Offer Period of Prudential ICICI FMCG Fund, minimum subscription amount prescribed in terms of the earlieroffer document was Rs. 1 crore and for details of the actual amount of collections during the initial offer period please referpage 40.

There is no maximum amount in regard to the corpus of the Schemes on an on-going basis.

Offer Price for on-going subscriptions:

The units of the respective schemes are available for subscription at Applicable NAV based prices, subject to entry loadprovisions.

(i) Initial Issue Expenses

Initial issue expenses of the Scheme were estimated as under:

Category of expense % to target mobilisation

Advertisement and other Marketing expenses 0.25Collection and Registrar 0.10Printing and distribution 0.25Bank charges & other expenses 0.15Selling Commissions 1.00

Total 1.75%

The above percentages were arrived at based on a target mobilisation of Rs. 1 crore. However, the amount charged to theScheme was limited to 1% of the amount mobilised during the Initial Offer Period.

The details of the schemes launched prior to the date of this document and the Initial Issue Expenses charged thereunder areas follows:

Name of the Scheme Date of launch Initial Issue Expenses chargedto the Scheme (as per the disclosure

made in the Offer Documents)

Prudential ICICI Income Plan June 4, 1998 NilPrudential ICICI Growth Plan June 4, 1998 NilPrudential ICICI Liquid Plan June 4, 1998 NilPrudential ICICI FMCG Fund February 15, 1999 1%Prudential ICICI Tax Plan July 9, 1999 1%Prudential ICICI Gilt Fund July 21, 1999 NilPrudential ICICI Balanced Fund September 20, 1999 1%Prudential ICICI Technology Fund January 7, 2000 1.75%Prudential ICICI Monthly Income Plan September 28, 2000 NilPrudential ICICI Fixed Maturity Plan December 20, 2000 NilPrudential ICICI Gilt Fund –Treasury 1 Year Plus Plan April 26, 2001 NilPrudential ICICI Child Care Plan July 16, 2001 Gift Plan : 2.50%

Study Plan: 1.50%Prudential ICICI Short Term Plan October 18, 2001 NilPrudential ICICI Index Fund February 15, 2002 1.50%Prudential ICICI Sweep Plan February 27, 2002 NilPrudential ICICI FMP Yearly- Series 5 March 22, 2002 NilPrudential ICICI Long Term Plan March 26, 2002 NilPrudential ICICI FMP 1 Year Plus Plan – Series 6 June 27, 2002 NilPrudential ICICI FMP One Year Plus Plan - Series 7 August 19, 2002 NilPrudential ICICI FMP One Year Plus Plan – Series 8 September 16, 2002 NilPrudential ICICI Flexible Income Plan September 16, 2002 NilPrudential ICICI Dynamic Plan October 7, 2002 2.50%*Sensex Prudential ICICI Exchange Traded Fund January 6, 2003 1.00%Prudential ICICI FMP One Year Plus Plan – Series 12 March 17, 2003 NilPrudential ICICI Floating Rate Fund March 28, 2003 NilPrudential ICICI Flexible Income Plus Plan May 22, 2003 Nil

*Actual expenses charged to this scheme were limited to 1.33%.


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Given below are the details of actual aggregate issue expenses incurred under the above mentioned funds:

(% of amount mobilized)

Category of Expenses Liquid, FMCG Fund Tax Plan Gilt Fund Balanced TechnologyIncome and Fund Fund

Growth Plans

Collections During IPO(Rs in crores) 173 71.60 50.76 150.01 197.58 509.00

Marketing, promotion andadvertisement 1.80 1.40 0.33 0.15 0.45 0.27

Brokerage and commission 0.09 0.93 1.06 0.02 1.01 1.49

Registrar, bank and professionalcharges 0.05 0.12 0.04 0.01 0.01 0.04

Total 1.94 2.45 1.43 0.18 1.47 1.80


Category of Monthly Fixed Gilt Child Short Flexible DynamicExpenses Income Maturity Fund – Care Term Income Plan

Plan Plan Treasury Plan Plan Plan 1 Year

Plus Plan

Collections During IPO(Rs in crores) 48.67 80.31 100.037 10.62 127.94 243.83 17.64

Marketing, promotion andadvertisement 1.13 - 0.002 11.86 0.04 - -

Brokerage and commission 0.08 - - 1.42 0.15 - 1.33

Registrar, bank and professionalcharges 0.61 0.005 0.004 0.63 0.01 - -

Total 1.82 0.005 0.006 13.91* 0.20 - 1.33

* Expenses to the extent of 2.50% of the amount mobilized during the Initial Offer Period under Gift Plan and 1.50% underStudy Plan have been charged to the Scheme and the balance expenses have been borne by the AMC.


Category of Expenses Index Fund Sweep Plan Fixed Maturity Long Term Fixed MaturityPlan Yearly Plan – One Year Plus

Series 5 Plan Series 6

Collections During IPO(Rs in crores) 7.86 crores 10.00 Lakhs 4.19 crores 50.001 crores 132.73 CroresMarketing, promotion andadvertisement 0.15 Nil Nil Nil NilBrokerage and commission 0.13 Nil Nil Nil 0.23

Registrar, bank and professionalcharges 0.32 0.5 0.01 0.01 0.01

Total 0.6 0.5 0.01 0.01 0.24

Category of Expenses Fixed Maturity – Fixed Maturity – SPIcE**One Year Plus Plan One Year Plus Plan

Series 7** Series 8**

Collections During IPO (Rs in crores) 0.01 0.01 Lakh 21.28Lakh Crores

Marketing, promotion and advertisement Nil Nil Nil

Brokerage and commission Nil Nil NilRegistrar, bank and professional charges Nil Nil Nil

Total Nil Nil Nil

** Borne by the AMC.


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Investment plans offered under the Scheme.

Section 54EA and 54EB Investment Plans

Under Section 54EA and Section 54EB of the Income Tax Act, 1961, capital gain from the transfer of a long-term capital assetbefore the 1st day of April 2000, was exempt, in case net consideration and capital gain was invested in units of Mutual Fundfor the period of 3 years and 7 years respectively. Accordingly following investment options were available under the Scheme.

Sections 54EA and 54EB of the Income-tax Act, 1961, had been introduced by the Finance (No. 2) Act, 1996, with effect fromOctober 1, 1996 and consequently applicable to the transfer of long-term capital assets on or after this date till the 31st dayof March 2000. But investments already made by the existing unitholders under the above plans will continue as per thefollowing provisions:

Sections 54EA and 54EB deal with exemption from capital gains tax on the transfer of a long-term capital asset, if within sixmonths from the date of transfer, the net consideration / capital gains are invested in the acquisition of units of Mutual Fundreferred to in clause (23D) of Section 10 of the Income-tax Act, 1961.

54EA Investment Plan

Unit holders who chose this Plan could invest the whole or part of the net consideration arising from the transfer of a long-term capital asset in the Units of the Scheme. However, investors should note that the amount so invested would have tobe locked-in for a period of three years and the Units so allotted cannot be redeemed or switched to another Scheme,during the lock-in period of three years. This is subject to any change that may be affected in the Income-tax Act, 1961.

54EB Investment Plan

Unit holders who choose this Plan may invest the whole or part of the capital gains arising from the transfer of a long-termcapital asset in the Units of the Scheme. However investors should note that the amount so invested would have to belocked-in for a period of seven years and the Units so allotted cannot be redeemed or switched to another scheme,during the lock-in period of seven years. This is subject to any change that may be affected in the Income tax Act, 1961.

After the prescribed lock-in period has elapsed, Unit holders may redeem their Units at the Applicable NAV based pricesconsistent with the redemption procedure stated in ‘Redemption of Units’. The difference between the amount received onredemption and the original amount invested will be subject to the capital gains tax as per Section 112 of the Income Tax Act,1961.

To summarise :

Section 54EA Investment Plan Section 54EB Investment Plan

What amount can be invested Net consideration from sale of Capital gains from sale of capitaland when capital asset within 6 months of asset within 6 months of Sale of asset

sale of asset

Minimum Lock-in period 3 years 7 yearsBenefit to investor * Exemption from Capital gains tax Exemption from Capital gains tax

* Note : Please refer to the section on Tax Benefits

The stipulated lock-in period would be subject to any changes that may be effected in Income Tax Act including Sections 54EAand 54EB

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 his records.

Systematic Investment Plan (SIP)

The Unit holders of the Scheme can benefit by investing specific Rupee amounts periodically, for a continuous period. The SIPallows the investors to invest a fixed amount of Rupees every month or quarter for purchasing additional Units of the Schemeat NAV based prices. Investors can enroll themselves for SIP in the Scheme by ticking appropriate box on the application formor by subsequently making a written request to that effect to the Registrars.

The Unit holders opting for SIP may begin their investment with an amount of Rs.1,000 in the Scheme.

Unit holders who wish to invest on a monthly basis can invest a minimum of Rs.500 or multiples thereof on a monthly basisby providing the Registrar with at least eeight post-dated cheques, for a block of 8 months in advance.

Unit Holders wishing to invest on a quarterly basis must provide the Registrar or the Customer Service Centre with at least 4post-dated cheques, for a minimum of Rs.1000 per cheque for a block of twelve months each dated 31st March, 30th June,30th September and 31st December.

The cheques should be drawn in favour of “Prudential ICICI FMCG Fund and crossed “Account Payee Only”, and must bepayable at the centre where the applications are submitted to the Customer Service Centre.

On receipt of the post-dated cheques, the Registrar will send a letter to the Unit holder confirming that his/her name has beenincluded in the Systematic Investment Plan. The cheques will be presented on the dates mentioned on the cheque and subject


43

to realisation, Units will be allotted at the Purchase Price on the date of receipt of advice about the net realisation amount ofthe cheque. Within 3 Business Days of such allotment, a fresh Account Statement will be mailed to the Unit holder, indicatingthe new balance to his/her credit in the Account. An investor will have the right to discontinue the Systematic Investment Plan,subject to giving of 14 day(s) prior notice to the Registrar.

Here is an illustration of how the SIP can work for investors using hypothetical figures:

Suppose an investor would like to invest Rs.1,000/- under the Systematic Investment Plan on a quarterly basis, i.e. a totalamount of Rs.4,000/- through four post-dated cheques of Rs.1,000/- each dated 31st March, 30th June, 30th September and31st December.

Quarter Amount Invested (Rs.) Purchase Price (Rs.) No. of Units Purchased

I 1000 12 83.333II 1000 15 66.667

III 1000 11 90.909IV 1000 13 76.923

TOTAL 4000 - 317.832

Average cost per Unit = Rs.12.58 (i.e. Rs.4000/317.832 Units)

Systematic Withdrawal Plan (SWP)

Unit holders of the Scheme have the benefit of enrolling themselves in the Systematic Withdrawal Plan. The SWP allows theUnitholder to withdraw a specified sum of money each month from his investments in the Scheme. SWP is ideal for investorsseeking a regular inflow of funds for their needs. It is also ideally suited to retirees or individuals who wish to invest lumpsumand withdraw from the investment over a period of time. SWP shall not be available to investors under the 54EA and 54EBplans.

The Minimum amount which the Unit holder can withdraw is Rs. 500 and in multiples of Rs.500 thereof. The Unit holder mayavail of this plan by sending a written request to the Registrars. This plan will be available starting from not later than 91st dayafter the close of the Initial Offer Period.

The amount thus withdrawn by redemption will be converted into Units at Applicable NAV based prices and the number ofUnits so arrived at will be subtracted from the Units balance to the credit of that Unit holder. The Fund may close a Unit holder’saccount if the balance falls below Rs. 5,000 and the investor fails to invest sufficient funds to bring the value of the accountup to Rs 5,000 within 30 days, after a written intimation in this regard is sent to the Unit holder.

Unit holders may change the amount indicated in the SWP, subject to a minimum amount of Rs. 500 and in multiples thereof.The SWP may be terminated on a written notice by a Unit holder of the Scheme and it will terminate automatically if all Unitsare liquidated or withdrawn from the account or upon the Funds receipt of notification of death or incapacity of the Unitholder.

Flexible Lifetime Investment Programme

The ability to switch part or all of a Unit holder’s investments between the open ended Schemes offered by the Fund is animportant feature of this offer. Investors may choose to alter the allocation of their investment among the Schemes in order tomeet their changed investment needs, risk profiles or changing circumstances during their lifetime. A Unit holder is thereforeable to tailor his / her investment to his / her specific situation.

How to Switch

For investors in the FMCG Fund, switch facility is available on an-ongoing basis. The Unit holders will have the option to switchall or part of their investment from the Scheme to any of the other open-ended schemes offered by the Fund, which is availablefor investment at that time. To effect a switch, a Unit holder must provide clear instructions. A request for a switch may bespecified either in terms of amount or in terms of the number of units of the scheme from which the switch is sought. Suchinstructions may be provided in writing or by completing the Switch Request Slip provided in the transaction booklet andlodging the same on any Business Day at any of the Customer Service Centers or office of the Registrar. This form may also besent by post to the Registrar. An Account Statement reflecting the new holdings will be despatched to the Unit holders within3 Business Days of completion of switch transaction. With the prior consent of the Unitholder, the account statement will besent by e-mail only.

The switch will be effected by redeeming Units from the Scheme in which the Units are held and investing the net proceeds inthe other scheme(s), subject to the minimum balance applicable for the respective scheme(s).

The price at which the Units will be switched out of the Scheme will based on the Applicable NAV of the relevant scheme(s) andconsidering any exit/entry/ combination of entry and exit loads that the Trustees may approve from time to time.

At present, no entry load will be payable in respect of switch transaction from one equity scheme of Fund to anotherequity scheme of Fund.

The Applicable NAV for effecting the switch out of the existing open-ended funds will be the NAV of the Business Day on whichthe switch request, complete in all respects, is received by the AMC, subject to the cut-off time and other terms specified in theoffer document of the respective existing open-ended schemes.


44

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 individuals 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 of IncomeTax 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 (subject to RBI approval) oron non-repatriation basis.

● Overseas Corporate Bodies, firms and societies which are held directly or indirectly but ultimately to the extent of at least60% by NRIs and trusts in which at least 60% of the beneficial interest is similarly held irrevocably by such persons (OCBs),on full repatriation basis (subject to obtaining RBI approval)

● Foreign Institutional Investors (FIIs) registered with SEBI on full repatriation basis (subject to obtaining RBI approval)

● Army, Air Force, Navy and other para-military funds

● Scientific and Industrial Research Organizations.

· Mutual fund schemes

How to apply?

Purchase of Units after the Initial Offer Period

The Scheme is open for fresh subscriptions on an on-going basis. Applications by new investors (i.e. other than existing UnitHolder) must be for a minimum amount of Rs. 5,000/- and in multiples of Rs.500 thereafter. An existing Unit Holder can,however, purchase additional Units for any amount, subject to the minimum additional amount of Rs.500.

The Trustee shall have absolute discretion to accept/reject any application for purchase of Units, if in the opinion of the Trustee,increasing the size of Scheme’s Unit capital is not in the general interest of the Unit holders, or the Trustee for any other reasonbelieves it would be in the best interest of the Schemes or its Unit holders to accept/reject such an application.

a) Purchase Price

The purchase price of the Units, on an ongoing basis, will be based on the Applicable NAV. For Units issued on an on-goingbasis, at present an applicable entry load of is as follows:

i. For investments of less than Rs. 10 Lakhs : Entry load at 2.25% of applicable Net Asset Value (NAV).

ii. For investment of Rs.10 Lakhs and above but upto Rs. 3 crores: Entry load at 1.75% of applicable Net Asset Value(NAV)

iii. For investment of Rs. 3 crores and above: Entry load is Nil.

Purchase Price can be calculated using the following formula:

Purchase Price = Applicable NAV * (1+ Entry Load).

No entry load will be charged in respect of switch transaction from one equity scheme of the Fund to another equityscheme of the Fund.

Subject to the Regulations, the Trustee reserves the right to modify/alter the load structure and may decide tointroduce a differential load structure on the Units subscribed/redeemed on any Business Day. Such changes will beapplicable for prospective investments. The Trustee shall arrange to display a notice in the Customer Service Centersof the AMC before the change of the then prevalent load structure. The addendum detailing the changes in loadstructure will be attached to offer documents and abridged offer documents. The addendum will also be circulatedto all the distributors / brokers so that the same can be attached to all the offer documents and abridged offerdocuments in stock. This addendum will also be sent along with the newsletter to the unitholders immediately afterthe changes. Changes in the load structure may be stamped in the acknowledgement slip issued by the Fund after thechanges in load structure. The load collected from the Unitholders under each Plan will be credited to a separateaccount in the respective Plan accounts and will be offset against distribution and marketing expenses. Surplus ofload, if any, charged over planned marketing and distribution expenses to be defrayed will be credited to therespective Plans whenever felt appropriate by the AMC.


45

The Fund shall ensure that the Redemption Price is not lower than 93% of the NAV and the Purchase Price is not higher than107% of the NAV, provided that the difference between the Redemption Price and Purchase Price of the Units shall not exceedthe permissible limit of 7% of the purchase Price, as provided for under the Regulations.

b) How to Purchase?

The application forms for the purchase of Units of the Scheme will be available at the office of the AMC and the CustomerService Centers. New investors can purchase Units by completing an Application Form. Existing Unit holders may use thetransaction slip for additional purchases sent with the Account Statement or a new Application Form. Payment for purchaseof Units will be accepted only through a cheque or demand draft drawn payable at the centre where the application is lodged,drawn in favour of “Prudential ICICI FMCG Fund”. All such cheques/drafts must be crossed “Account Payee Only”. Investorsat places other than where the Customer Service Centres are located, are requested to make the payment without deductingthe demand draft charges. The Fund will not entertain any requests for payment of demand draft charges.

Outstation cheques will not be accepted under any circumstances.

Investors should complete the Application Form and deliver the same along with the cheque/draft at any of the CustomerService Centres of the AMC, listed on the last page of this Document.

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. If the Unit-holder fails to provide the Bank mandate, the requestfor redemption would be considered as not valid and the Fund retains the right to withhold the redemption until aproper bank mandate is furnished by the Unit-holder and the provision with respect of penal interest in such caseswill not be applicable/ entertained.

iv) NRIs, OCBs, FIIs

In terms of Schedule 5 of Notification no. FEMA 20/2000 dated May 3, 2000, RBI has granted general permission to NRIs/OCBs to purchase, on a repatriation basis units of domestic mutual funds. Further, the general permission is also granted toNRIs/OCBs to sell the units to the mutual funds for repurchase or for the payment of maturity proceeds, provided that the unitshave 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-Tax Act 1961.

However, NRI/OCB investors, if so desired, also have the option to make their investment on a non-repatriable basis.

FIIs :

In terms of Schedule 5 of Notification no. FEMA 20/2000 dated May 3, 2000. RBI has granted general permission to aregistered FII to purchase on a repatriation basis units of domestic mutual funds subject to the conditions set out in theaforesaid notification. Further, the general permission is also granted to FIIs to sell the units to the mutual funds for repurchaseor for the payment of maturity proceeds, provided that the units have been purchased in accordance with the conditions setout 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-Tax Act 1961.

v) Mode of Payment on Repatriation basis

FIIs may pay their subscription amounts either by way of inward remittance through normal banking channels or out offunds held in Foreign Currency Account or Non-resident Rupee Account maintained by the FII with a designated branchof 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 Accounts anaccount debit certificate from the Bank issuing the draft confirming the debit shall also be enclosed.

In case of NRIs, OCBs and persons of Indian origin residing abroad, payment may be made by way of Indian Rupee draftspurchased abroad and payable at Mumbai or by way of cheques drawn on Non-Resident (External) (NRE) Accountspayable at par at Mumbai. Payments can also be made by means of rupee drafts payable at Mumbai and purchased outof funds held in NRE Accounts / FCNR Accounts.

All cheques/drafts should be made out in favour “Prudential ICICI FMCG Fund “ and crossed “Account Payee Only”.In case Indian Rupee drafts are purchased abroad or from FCNR/NRE A/c. an account debit certificate from the Bankissuing the draft confirming the debit shall also be enclosed.

Applications from OCBs should be accompanied with OAC form from an Overseas Auditor/Chartered Accountant/Certified Public Accountant and should be sent to. the Registrar at Chennai, so as to reach them not later than seven daysof the application.

iv) Mode of payment on Non-Repatriation basis

In case of NRIs/OCBs/persons of Indian origin/ FIIs applying for Units on a non-repatriation basis, payments may be madeby cheques/demand drafts drawn out of Non-Resident Ordinary (NRO)/ Non Resident Special Rupee (NRSR) accounts andNon Resident Non-Repatriable (NRNR) accounts payable at the city where the Application Form is accepted.


46

Application under Power of Attorney/ Body corporate/Registered society/ Trust/ Partnership

In case of an application under Power of Attorney or by a limited company, body corporate, registered society, trust orpartnership, etc., the relevant Power of Attorney or the relevant resolution or authority to make the application as the case maybe, or duly certified copy thereof, along with the memorandum and articles of association/bye-laws must be lodged at theCustomer Service Centres alongwith the Application form.

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 the Account, aswell as the proceeds of any redemption requests or dividends or other distributions. In addition, such Unit holders shall havethe 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 of holdingspecified as ‘Jointly’, redemptions and all other requests relating to monetary transactions would have to be signed by all jointholders. However, in cases of holding specified as ‘Anyone or Survivor’, any one of the Unit holders will have the power to makeredemption requests, without it being necessary for all the Unit holders to sign. However, in all cases, the proceeds of theredemption will be paid to the first-named holder.

In case of death / insolvency of any one or more of the persons named in the Register of Unit holders as the joint holders ofany Units, the AMC, shall not be bound to recognise any person(s) other than the remaining holders. In all such cases, theproceeds of the Redemption will be paid to the first-named of such remaining Unit holders.

Nomination Facility

The AMC has provided this nomination facility as an additional feature. By provision of this facility the AMC is not in any wayattempting to grant any rights other than those granted by law to the nominee. A nomination in respect of the Units does notcreate an interest in the property after the death of the Unit holder.

The nominee shall receive the Units only as an agent and trustee for the legal heirs or legatees as the case may be.

All other issues pertaining to nomination facility and nominee/s shall be subject to the Nomination Rules as prescribedby AMC from time to time.

In the event of unfortunate event of the death of the Unit holder and in the event that a nominee has been named, thenominee shall stand transposed in respect of the Units held by the Unit holder. Such nominee (new Unit holder) will hold theUnits in trust for and on behalf of the estate of the original Unit holder and his / her legal heirs. Such payments made by theAMC shall be full and valid discharge of the AMC / Fund from all further liabilities in respect of the sums so paid.

The AMC shall have the right to ask for any additional information / documentation as it may deem necessary to satisfy itselfas 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 in whom allthe rights in the units shall vest in the event of death of all the joint unit holders.

Issuance of Units /Account Statements

Under normal circumstances, an Account Statement/Transaction Confirmation will be mailed to the investor, indicating thenumber of Units purchased / alloted within 3 Business Days of the acceptance of a valid application for purchase of Units underthe Scheme. With the prior consent of the Unitholder, the account statement will be sent by e-mail only. In the event of non-realization of any cheque or other instrument remitted by the investor, the transaction of crediting the Unitholder’s accountwill be reversed.

The Account Statements shall be non-transferable. If the Unitholder so desires, non-transferable unit certificates will be issuedwithin six weeks of the receipt of request for the certificate.

Any addition/ deletion of name from the folio of the unitholder is deemed as transfer of units. But the Units of the Scheme arenot transferable.

In view of the same, additions/ deletion of names will not be allowed under any folio of the Scheme.

The above provisions in respect of deletion of names will not be applicable in case of death of unitholder (in respect of jointholdings) as this is treated as transmission of units and not transfer.

All Units will rank pari passu, among Units within the same Option, i.e. either the dividend option or the growth option, or anyother option, as to assets, earnings and the receipt of dividend distributions, if any, as may be declared by the Trustee.

Allotment of Units and despatch of Account Statements to FIIs will be subject to RBI approval.

Redemption of Units

The Units can be redeemed (i.e., sold back to the Fund), at the Applicable NAV (hereinafter defined) on an on-going basis.Redemption requests can be made in amounts, with a minimum of Rs.500 or in multiples thereof.

A Unit holder may request redemption of a specified amount or a specified number of Units, (subject to the minimum) thenumber of Units specified will be considered for deciding the redemption amount. If only the redemption amount is specified


47

by the Unit holder, the Fund will divide the redemption amount so specified by the Applicable NAV based price to arrive at thenumber of Units.

In case an investor has purchased Units on more than one Business Day (either under the Initial Offer Period, or throughsubsequent purchases), the Units purchased prior in time (i.e. those Units which have been held for the longest period of time),will be deemed to have been redeemed first i.e. on a First-in-First-Out basis.

Unit holders 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.

Investors should note that the amount invested under the 54EA and 54EB Investment Plans will have to be locked-in for a period of 3 years and 7 years respectively and the Units so allotted cannot be redeemed during the specifiedlock-in period.

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. If the Unit-holder fails to provide the Bank mandate, the requestfor redemption would be considered as not valid and the Fund retains the right to withhold the redemption until aproper bank mandate is furnished by the Unit-holder and the provision with respect of penal interest in such caseswill not be applicable/ entertained.

a) Redemption Price

The Redemption Price of the Units will be based on the Applicable NAV, subject to prevalent exit load provisions. Presently theFund doesn’t charge any exit load for Prudential ICICI FMCG Fund.

Redemption Price can be calculated using the following formula:

Redemption Price = Applicable NAV * (1-Exit Load, if any).


Investors may note that the Trustee has a right to prescribe or modify the load structure with prospective effect and tointroduce an entry load or a combination of entry and exit loads or a differential load structure based on the tenor and theamount of investment, subject to the Regulations. Please refer to the section titled “Load” on page 50 for further details.

The Fund shall ensure that the Redemption Price is not lower than 93% of the NAV and the Purchase Price is not higher than107% of the NAV, provided that the difference between the Redemption Price and Purchase Price of the Units shall not exceedthe permissible limit of 7% of the Purchase Price, as provided for under the Regulations.

Applicable NAV

Applicable NAV is the Net Asset Value per Unit at the close of the Business Day on which the application is accepted. Anapplication will be considered accepted on that day, subject to it being complete in all respects and received prior to 3 p.m. onthat Business Day:

How to Redeem?

The redemption requests can be made on the transaction slip for redemption available at the Customer Service Centres of theAMC. The redemption request can be made at any of the Customer Service Centers as listed in this Offer Document.

In case the Units are standing in the names of more than one Unit Holder, where mode of holding is specified as ‘Jointly’,redemption requests will have to be signed by all joint holders. However, in cases of holding specified as ‘Anyone or Survivor’,any one of the Unit holders will 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 only to the first-named holder.

The Unit Holder may either request for mailing of the redemption proceeds to his/her address or collection of the same fromthe Customer Service Centre of AMC.

b) Payment of Proceeds

All redemption requests received prior to 3.00 p.m. on any Business Day will be considered accepted on that Business Day,subject to the redemption request being complete in all respects, and will be priced on the basis of the Applicable NAV (subjectto the applicable load) for that day. Where an application is received after the cut-off time, as above, the request will be deemedto have been received on the next Business Day. Please see page 48 ‘Right to Limit Redemption’ and ‘Suspension of Sale andRedemption of Units’.


48

As per the Regulations, the Fund shall despatch the redemption proceeds within 10 (ten) Business Days (working days) fromthe date of acceptance of redemption request at any of the Customer Service Centres or the office of the Registrar, in case ofa Redemption request being sent by post.

Under normal circumstances, the Fund will endeavour to despatch the redemption cheques within 3 Business Days from thedate of acceptance of the redemption request.

The redemption cheque will be issued in favour of the sole/first Unitholder’s registered name and bank account number andwill be sent to the registered address of the sole/first holder as indicated in the original Application Form. The redemptioncheque will be payable at par at all the places where the Customer Service Centres are located. The bank charges for collectionof cheques at all other places will be borne by the Unitholder.

In order to protect interest of the Unitholders from fraudulent encashment of cheques the current SEBI Regulationshas made it mandatory for Unitholders to mention their bank name and account numbers of the Unitholders in theirapplications for purchase or redemption of Units. The normal processing time may not applicable in situations wheresuch details are not provided by the Applicants/ Unitholders. The AMC will not be responsible for any loss arising outof fraudulent encashment of cheques or any delay or loss in transit.

If the Unit-holder fails to provide the Bank mandate, the request for redemption would be considered as not validand the Fund retains the right to withhold the redemption until a proper bank mandate is furnished by the Unit-holder and the provision with respect of penal interest in such cases will not be applicable/ entertained.

A fresh Transaction Confirmation will be sent by the Registrar to the redeeming investors, indicating the new balance to thecredit in the Account. With the prior consent of the Unitholder, the account statement will be sent by e-mail only.

The Fund may close a Unitholder’s account if, as a consequence of redemption, the balance falls below Rs. 5,000 and a periodof 30 (thirty) days has elapsed after the issue of notice to the Unitholder by the AMC requesting him to bring the amount inthe 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 to withhold theredemption request till sufficient time has elapsed to ensure that the amount remitted by him (for purchase of Units) is realizedand the proceeds have been credited to the Plan’s Account under Scheme. However, this is only applicable if the value ofredemption is such that some or all of the freshly purchased Units may have to be redeemed to effect the full redemption.

Redemption by NRIs/OCBs/FIIs

Credit balances in the account of an NRI/OCB/FIIs investor, may be redeemed by such investors in accordance with theprocedure described above and subject to any procedures laid down by the RBI, if any. Such redemption proceeds will be paidby means of a Rupee cheque payable to the NRI’s/OCBs/FIIs or by a foreign currency draft drawn at the then current rates ofexchange less bank charges thereof subject to RBI procedures and approvals.

In terms of the Schedule 5 of Notification no. FEMA 20/2000 dated May 3, 2000 issued under the Foreign Exchange ManagementAct, 1999 (FEMA) the RBI has granted general permission to NRIs/OCBs and FIIS who have purchased units issued by mutualfunds in accordance with the aforesaid notification to tender units to the mutual funds for repurchase or for the payment ofmaturity proceeds.

For the purpose of this section, the term “Mutual Funds” is as referred to in Clause (23D) of Section 10 of Income-Tax Act1961.

c) Effect of Redemptions

The Unit capital and Reserves of the Scheme will stand reduced by an amount equivalent to the product of the number of Unitsredeemed and the Applicable NAV as on the date of redemption.

d) Fractional Units

Since a request for redemption or purchase is generally made in Rupee amounts and not in terms of number of Units of theScheme, an investor may be left with Fractional Units. Fractional Units will be computed and accounted for up to three decimalplaces. However, Fractional Units will in no way affect the investor’s ability to redeem the Units, either in part or in full standingto the Unitholder’s credit.

e) Right to Limit Redemptions

After complying with the regulatory requirements, the Trustee and the Board of Directors of the AMC may, in the generalinterest of the Unit holders of the Scheme offered under this Offer Document and keeping in view the unforeseen circumstances/unusual market conditions, limit the total number of Units which may be redeemed on any Business Day to 5% of the totalnumber of Units then in issue, or such other percentage as the Trustee may determine.

Any Units, which by virtue of these limitations are not redeemed on a particular Business Day, will be carried forward forredemption to the next Business Day, in order of receipt. Redemptions so carried forward will be priced on the basis of theApplicable NAV (subject to the prevailing load) of the Business Day on which redemption is made. Under such circumstances,to the extent multiple redemption requests are received at the same time on a single Business Day, redemptions will be madeon pro-rata basis, based on the size of each redemption request, the balance amount being carried forward for redemption tothe next Business Day(s).


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f) 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 of the Schemeoffered under this Document, and consequently sale and redemption of Units, in any of the following events:

1. When one or more stock exchanges or markets, which provide basis for valuation for a substantial portion of the assetsof the Scheme is closed otherwise than for ordinary holidays.

2. When, as a result of political, economic or monetary events or any circumstances outside the control of the Trustee and theAMC, the disposal of the assets of the Scheme is not reasonable, or would not reasonably be practicable without beingdetrimental to the interests of the Unit holders.

3. In the event of breakdown in the means of communication used for the valuation of investments of the Scheme, withoutwhich 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 the interests 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 redemption of Unitswill not be applicable

Suspension or restriction of repurchase/ redemption facility under any scheme of the mutual fund shall be made applicableonly after obtaining the approval from the Boards of Directors of the AMC and the Trustees. After obtaining the approval fromthe AMC Board and the Trustees, an intimation would be sent to SEBI in advance providing details of circumstances andjustification for the proposed action shall also be informed.


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SECTION IV

LOAD STRUCTURE OF THE SCHEMEUnit holder Transaction Expenses or Sales Load:

Entry Load:

(i) For investments of less than Rs. 10 Lakhs : Entry load at 2.25% of applicable Net Asset Value (NAV).

(ii) For investment of Rs.10 Lakhs and above but upto Rs. 3 crores: Entry load at 1.75% of applicable Net Asset Value(NAV)

(iii) For investment of Rs. 3 crores and above: Entry load is Nil.

No entry load will be payable in respect of switch transaction from one equity scheme of Prudential ICICI to anotherequity scheme of Prudential ICICI

Exit Load:

On an on-going basis, the Trustee, for the present does not intend to charge an exit load on redemption of Units.


FEES AND EXPENSES OF THE SCHEME

As per the provisions of the Regulations, read with the amendments thereto, the following fee and expenses will be chargedto the Scheme:

Initial Issue Expenses

The total Initial Issue expenses chargeable to the Scheme as per current regulations are subject to a maximum of 6% of theamount collected during the Initial Offer Period. However, the Initial Issue expenses charged to the Scheme were limited to 1%of the amount mobilised during the Initial Offer Period.

Details of initial issue expenses under all the schemes launched by the Fund and extent to which the same werecharged to the respective schemes have been provided on page 40.

Estimated Recurring Expenses

(% per annum of average net assets)

Description FMCG Fund

Investment Management fee 1.25%Trustee Fee 0.05%Custodian Fee 0.30%Marketing & Selling 0.50%Registrar & Transfer Agent 0.10%Transaction Costs 0.05%Audit Costs 0.01%Costs of investor communications 0.04%Cost of Funds transfer 0.05%Costs for A/c statements, dividend etc. 0.05%Cost of statutory advertisements 0.05%Other expenses 0.05%

Total recurring expenses 2.50%

The purpose of the above table is to assist the investor in understanding the various costs and expenses that an investor in theScheme will bear. These estimates are based on a corpus size of Rs.1 crore under the Scheme, and would change, to extentassets are lower or higher. If the corpus size is in excess of Rs.1 crore, the above mentioned recurring expenses in the Schemewould change. The above expenses are subject to inter-se change and may increase/decrease as per actual and/or any changein the Regulations.


51

These estimates have been made in good faith as per information available to the AMC and the total expenses may be morethan as specified in the table above. However, as per the Regulations, the total recurring expenses that can be charged to theScheme in this Offer Document shall be subject to the applicable guidelines. Expenses over and above the permitted limits willbe borne by the AMC.

The recurring expenses of the Schemes, and the additional management fee shall be as per the limits prescribed under Sub-Regulations(6) of Regulations 52 of the Regulations and shall not exceed the limits prescribed thereunder.

FEES AND EXPENSES OF THE EXISTING SCHEMES.

ICICI Mutual Fund, prior to the joint venture with Prudential, had launched two closed ended growth schemes, ICICI Premier,launched on November 30, 1993 and ICICI Power, launched on August 24, 1994 (since converted into an open-endedscheme). Subsequent to the joint venture with Prudential, the Fund launched three open-ended schemes (Prudential ICICIGrowth Plan, Prudential ICICI Income Plan and Prudential ICICI Liquid Plan) on June 4, 1998 and one open ended scheme(Prudential ICICI FMCG Fund) on February 15, 1999. The Fund also launched Prudential ICICI Tax Plan, Prudential ICICI GiltFund, Prudential ICICI Balanced Fund, Prudential ICICI Technology Fund, Prudential ICICI Monthly Income Plan, PrudentialICICI Fixed Maturity Plan Prudential ICICI Child Care Plan, Prudential ICICI Index Fund, Prudential ICICI Dynamic Plan andSENSEX Prudential ICICI Exchange Traded Fund, on July 9,1999, July 21, 1999, September 20,1999, January 7, 2000, September28, 2000, December 20, 2000, July 16, 2001, February 15, 2002, October 7, 2002 and January 6, 2003 respectively. Thefollowing are the additional Plans under the existing Schemes of the Fund:

Sr. Additional Plan Existing Scheme Launch dateNo.

1. Prudential ICICI Gilt Fund - One Year Plus Plan Prudential ICICI Gilt Fund April 26, 2001

2. Prudential ICICI Short Term Plan Prudential ICICI Income Plan October 18, 2001

3. Prudential ICICI Long Term Plan Prudential ICICI Income Plan March 26, 2002

4. Prudential ICICI Sweep Plan Prudential ICICI Liquid Plan February 27, 2002

5. Prudential ICICI Fixed maturity Plan – Yearly 5 Prudential ICICI Fixed Maturity Plan March 22, 2002

6. Prudential ICICI Fixed Maturity Plan –One Year Plus Plan Prudential ICICI Fixed Maturity Plan June 27, 2002

7. Prudential ICICI FMP Yearly- Series 7 Prudential ICICI Fixed Maturity Plan August 19, 2002

8. Prudential ICICI Fixed Maturity Plan –One Year Plus Plan - Series 8 Prudential ICICI Fixed Maturity Plan September 16, 2002

9. Prudential ICICI Flexible Income Plan Prudential ICICI Income Plan September 16, 2002

10. Prudential ICICI Fixed Maturity Plan –One Year Plus Plan - Series 12 Prudential ICICI Fixed Maturity Plan March 17, 2003

11. Prudential ICICI Floating Rate Plan Prudential ICICI Income Plan March 28, 2003

12. Prudential ICICI Flexible Income Plus Plan Prudential ICICI Income Plan May 22, 2003

Given below are the details of estimated and actual Initial Public Issue expenses in respect of the above schemes:

INITIAL ISSUE EXPENSES – COMPARISON OF ESTIMATED TO ACTUALS

Description ICICI Premier ICICI Power

Estimated - % Actuals - % to Estimated - % Actuals -to Target Amount Subscription to Target Amount % to Subscription

Advertising Expenses 1.75 1.48 1.50 1.61

Commission to agents & brokers 2.00 1.36 1.75 2.53

Registrar Expenses 0.75 0.10 1.25 0.07

Printing & Mailing 1.00 0.24 1.00 0.42

Miscellaneous 0.50 0.36 0.50 0.40Total 6.00 3.54 6.00 5.03Target Amount/ AmountMobilised Rs.100 crore Rs.159 crore Rs.50 crore Rs.90.28 crore

The Initial Issue Expenses relating to Liquid Plan, Income Plan, Growth Plan, Gilt Plan, Monthly Income Plan, FixedMaturity Plan, Gilt Treasury- 1 Year Plus Plan, Short Term Plan, Sweep Plan, Long Term Plan, Fixed Maturity Plan-Yearly 5, Fixed Maturity Plan – One Year Plus Plan – Series 6, 7, 8 & 12 Prudential ICICI Flexible Income Plan, SENSEXPrudential ICICI Exchange Traded Fund, Prudential ICICI Floating Rate Fund and Prudential ICICI Flexible Income PlusPlan were borne by the AMC and the details thereof are furnished on page 69.

Initial Issue Expenses - Prudential ICICI FMCG Fund, Prudential ICICI Tax Plan, Prudential ICICI Balanced Fund, PrudentialICICI Technology Fund, Prudential ICICI Child Care Plan, Prudential ICICI Index Fund and Prudential ICICI Dynamic Plan


52

The Initial Issue Expenses charged to the Investors under Prudential ICICI FMCG Fund, Prudential ICICI Tax Plan, and PrudentialICICI Balanced Fund were limited to 1% of the amount mobilized during the Initial Offer Period. The initial issue expensescharged to Investors under Prudential ICICI Technology Fund were limited to 1.75% of the corpus mobilized under the InitialOffer Period. In respect of Prudential ICICI Child Care Plan, initial issue expenses to be charged to the Scheme are limited to2.50% of the amount mobilised during the initial offer period under Gift Plan and 1.50% under Study Plan. Under PrudentialICICI Index Fund, the initial issue expenses to be charged to the Scheme is limited to 1.50% of the amount mobilized duringthe initial offer period. Under Prudential ICICI Dynamic Plan, the initial issue expenses to be charged to the Scheme is limitedto 2.50% of the amount mobilized during the initial offer period(as mentioned in the offer document), whereas the actualinitial issue expenses charged to the scheme were limited to 1.33%.

The details of estimated Vs actual expenses are as under:

Description FMCG Fund Tax Plan Gilt Fund Balanced Fund Technology Fund

Estimated - Actual - % Estimated - Actual - % Estimated - Actual - % Estimated - Actual - % Estimated - Actual - %% to to % to to % to to % to to % to to

Target Subscription Target Subscription Target Subscription Target Subscription Target SubscriptionAmount Amount Amount Amount Amount

Advertising,printing andothermarketingexpenses 0.50 1.40 0.90 0.33 1.00 0.15 0.65 0.45 0.75 0.27

Collection,Registrar andBank charges 0.25 0.12 0.60 0.04 0.25 0.01 0.25 0.01 0.25 0.04

SellingCommissions 1.00 0.93 1.00 1.06 - 0.02 1.00 1.01 1.00 1.49

Total 1.75 2.45

2.50 1.43 1.25 0.18 1.90 1.47 2.00 1.80

TargetAmount/AmountMobilised Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

1.00 1.59 10.00 50.76 1.00 150.01 1.00 197.58 1.00 509crore crore lacs crores crore crores crore crores crore crores

Description Child Care Child Care Child Care Index Fund Dynamic PlanPlan – Plan – Plan-

Gift Plan Study Plan Gift &

Study Plan

Estimated - Estimated - Actual - % to Estimated - % Actual - % to Estimated - Actual -% to Target % to Target Subscription to Target Subscription % to Target % to

Amount Amount Amount Amount Subscription

Advertising, printing and othermarketing expenses 1.85 2.28 11.86 1.25 Nil 0.75 Nil

(includesSelling

Commission)

Collection, Registrar and Bankcharges 0.35 0.35 0.63 0.25 Nil 0.25 Nil

Selling Commissions 1.00 1.00 1.42 - Nil 1.50 1.33

Total 3.20 3.63 13.91 1.50 Nil 2.50 1.33

Target Amount/Amount Mobilised Rs. 1.00 Rs. 1.00 Rs.10.62 Rs. 1.00 Rs. 7.86 Rs. 7.86 Rs. 17.64

crore crore crores crore crores crores crores

Note:

1. The Initial Issue Expenses under FMCG Fund were more due to higher advertisement costs.

2. As disclosed in the offer document of Child Care plan, Expenses to the extent of 2.50% of the amount mobilized during the Initial Offer Period under GiftPlan and 1.50% under Study Plan have been charged to the Scheme and the balance expenses have been borne by the AMC.


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ANNUAL SCHEME RECURRING EXPENSES: AS ON JULY 31, 2003

As a % of Average weekly Net Assets

ICICI Premier ICICI Power

Description **2003-2004 2002-2003 2001-2002 2000-2001 **2003-2004 2002-2003 2001-2002 2000-2001(till 31.07.03) (till 31.07.03)

Investment management &Advisory fees 1.25 1.25 1.25 1.25 1.20 1.23 1.25 1.24Additional Fees (if any) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Trustee Fees 0.01 0.01 0.01 0.01 0.00 0.01 0.01 0.01Audit Fees 0.01 0.04 0.02 0.04 0.00 0.05 0.04 0.06Custodian Fees 0.01 0.01 0.04 0.14 0.01 0.04 0.09 0.22Registrar & Transfer Agent Fees 0.64 0.34 0.11 0.15 0.09 0.16 0.25 0.07Listing fees 0.00 0.06 0.03 0.03 0.00 0.00 0.05 0.05Bank charges 0.01 0.06 0.00 0.03 0.07 0.04 0.01 0.01Postal & Mailing Expenses 0.00 0.22 0.23 0.23 0.05 0.07 0.23 0.31Brokerages 0.00 0.00 - - 0.30 0.23 - -Advertising / Marketing /Printing Expenses 0.00 0.47 0.54 0.32 0.35 0.64 0.54 0.29Cost related to investorcommunication 0.00 0.02 - 0.17 0.00 0.00 - 0.08Other Expenses 0.57 0.02 0.27 0.11 0.38 0.00 0.03 0.16Total Annual Recurring Expenses 2.50 2.50 2.50 2.50 2.45 2.47 2.50 2.50

+ Renamed as Prudential ICICI Power consequent to its conversion into open-ended fund effective from September 27, 2001.** Unaudited.

ESTIMATED RECURRING EXPENSES-OPEN ENDED SCHEMESAs per the Offer Document for the Liquid Plan, Income Plan, Growth Plan, FMCG Fund, Tax Plan, Gilt Fund, Balanced Fund, Technology Fund, Monthly Income Plan,Gilt Treasury 1 Year Plus Plan, Fixed Maturity Plan, Short Term Plan, Child Care Plan, Index Fund, Power, Long Term Plan, Sweep Plan, Flexible Income Plan,Dynamic Plan, SPIcE, Floating Rate Plan and Flexible Income Plus Plan the following were the estimated recurring expenses.


Description Growth Income Liquid FMCG Tax Plan Gilt Fund BalancedPlan Plan Plan Fund Fund

Treasury InvestmentOption Option

Investment management & Advisory fees 1.25 1.25 0.70 1.25 1.25 0.75 0.75 1.25Additional Fees (if any) - - - - - - - -Trustee Fees 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05Custodian Fees 0.30 0.15 0.08 0.30 0.30 0.04 0.04 0.15Advertising, Marketing & Selling Expenses 0.50 0.25 0.03 0.50 0.50 0.02 0.02 0.20Registrar & Transfer Agents Fees 0.10 0.10 0.10 0.10 0.10 0.04 0.04 0.10Transaction Costs 0.05 0.05 0.02 0.05 0.05 - - 0.05Audit Fees 0.01 0.01 0.01 0.01 0.01 - - 0.01Cost related to Investor communications 0.04 0.04 0.01 0.04 0.04 0.02 0.02 0.03Cost of funds transfer 0.05 0.025 0.00 0.05 0.05 - - 0.05Cost of providing Account Statements,dividend distributions, etc. 0.05 0.025 0.00 0.05 0.05 0.05 0.05 0.03Cost of statutory advertisements 0.05 0.025 0.00 0.05 0.05 0.01 0.01 0.04Other Expenses 0.05 0.025 0.00 0.05 0.05 0.02 0.02 0.04Total Annual Recurring Expenses 2.50 2.00 1.00 2.50 2.50 1.00 1.00 2.00


Description Technology Monthly Gilt- Fixed Short Term Child Care Plan Index Fund Income Treasury Maturity Plan Fund

Plan 1 Year PlanPlus Plan Gift Plan Study Plan

Investment management & Advisory fees 1.25 1.25 0.75 0.70 0.75 1.25 1.25 0.70Additional Fees (if any) - - - - - - - -Trustee Fees 0.05 0.05 0.04 0.05 0.05 0.05 0.01 0.05Custodian Fees 0.30 0.20 0.04 0.05 0.04 0.16 0.10 0.10Advertising, Marketing & Selling Expenses 0.47 0.20 0.02 0.03 0.02 0.08 0.04 0.15 **Registrar & Transfer Agents Fees 0.08 0.12 0.04 0.08 0.05 0.12 0.10 0.10Transaction Costs 0.05 - - - - - - -Audit Fees 0.01 0.01 - 0.01 0.01 0.01 0.01 0.05Cost related to Investor communications 0.08 0.12 0.02 0.01 0.02 0.12 0.08 -Cost of funds transfer 0.05 0.14 - 0.01 - 0.10 0.10 0.05Cost of providing Account Statements,dividend distributions, etc. 0.08 0.11 0.05 0.02 0.04 0.11 0.11 -Cost of statutory advertisements 0.04 0.01 0.01 0.02 0.01 0.05 0.01 -Other Expenses 0.04 0.04 0.02 0.02 0.01 0.45* 0.44* 0.05Total Annual Recurring Expenses 2.50 2.25 1.00 1.00 1.00 2.50 2.25 1.25

* Includes insurance premium payable under Child Care Plan.** Includes Cost related to investor communication, A/c. Statement, dividend distribution and Statutory advertisement.


54


Description Prudential Long Term Sweep Plan Flexible Dynamic SPIcE Floating FlexibleICICI Power Plan Income Plan Plan Rate Plan Income

Plus Plan

Investment management & Advisory fees 1.25 1.25 0.75 1.00 1.00 0.60 0.45 0.50

Additional Fees (if any) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Trustee Fees 0.05 0.05 0.05 0.05 0.02 0.01 0.05 0.05

Custodian Fees 0.20 0.15 0.04 0.02 0.15 0.05 0.02 0.02

Advertising, Marketing & Selling Expenses 0.47 0.25 0.02 0.30 0.45 0.17 0.07 0.30

Registrar & Transfer Agents Fees 0.10 0.10 0.04 0.06 0.08 0.10 0.06 0.06

Transaction Costs 0.00 0.05 0.00 0.00 0.05 0.00 0.00 0.00

Audit Fees 0.01 0.01 0.00 0.01 0.01 0.01 0.01 0.01

Cost related to Investor communications 0.12 0.04 0.05 0.06 0.05 0.03 0.03 0.06

Cost of funds transfer 0.14 0.025 0.00 0.00 0.05 0.00 0.00 0.00

Cost of providing Account Statements,dividend distributions, etc. 0.11 0.025 0.08 0.00 0.05 0.03 0.00 0.00

Cost of statutory advertisements 0.01 0.025 0.02 0.00 0.05 - 0.00 0.00

Other Expenses 0.04 0.025 0.20 0.00 0.04 0.03 0.06 0.00

Total Annual Recurring Expenses 2.50 2.00 1.25 1.50 2.00 1.00 0.75 1.00

Actual Recurring Expenses as on July 31, 2003:

(% Per annum of average net assets)

Description Growth Plan Income Plan

**2003-2004 2002-2003 2001-2002 2000-2001 **2003-2004 2002-2003 2001-2002 2000-2001 (till (till @

31.07.03) 31.07.03)@



Trustee Fees 0.01 0.00 0.01 0.01 0.01 0.00 0.00 0.01

Custodian Fees 0.02 0.04 0.10 0.19 0.00 0.01 0.02 0.03

Registrar & Transfer Agent Fees 0.08 0.11 0.11 0.11 0.06 0.07 0.07 0.08

Bank Charges 0.02 0.04 0.01 0.01

Postal and Mailing Expenses 0.02 0.01 0.01 0.01 0.00 - - -

Brokerage 0.18 0.61 0.16 - 0.40 0.57 0.33 0.23

Advertisement/ Marketing / Printing expenses 0.37 0.43 0.76 0.87 0.06 0.17 0.15 0.26

Audit Fees 0.00 0.01 0.00 - 0.00 - - -

Other Expenses (including expenses aspermitted under the Regulations) 0.55 0.01 0.10 0.02 0.40 0.03 0.03 0.02


* Unaudited

@ This is the expenses ratio for the Scheme. The ratio for recurring expenses for Normal Plan and for Institutional Plan for the period ended March 31, 2003is 1.59% and 1.02% respectively and for the period ended July 31, 2003 is 1.59% and 1.10% respectively.


Description Liquid Plan FMCG Fund

**2003-2004 2002-2003 2001-2002 2000-2001 **2003-2004 2002-2003 2001-2002 2000-2001 (till @ (till

31.07.03)@ 31.07.03)



Trustee Fees 0.01 0.00 0.00 - 0.02 0.01 0.01 0.01

Custodian Fees 0.00 0.01 0.02 0.03 0.02 0.04 0.12 0.19


Bank Charges 0.00 0.01 - - 0.00 0.10 - -

Postal and Mailing Expenses 0.00 0.00 - 0.01 0.03 0.04 0.04 0.05

Brokerage 0.00 0.31 0.16 0.12 0.17 0.24 0.22 0.16

Advertisement/ Marketing / Printing expenses 0.02 0.04 0.02 0.03 0.37 0.24 0.12 0.08

Audit Fees 0.00 0.00 - - 0.00 0.03 0.02 0.04



* Unaudited.


Note: 1) Prudential ICICI Income Plan, Prudential ICICI Growth Plan and Prudential ICICI Liquid Plan were launched in June 1998.

2) Other expenses for the year 2000-2001 represent accrual of expenses as permitted under the Regulations.


55


Description Tax Plan Gilt Fund - Treasury Plan Gilt Fund - Investment Plan

*2003- 2002- 2001- 2000- *2003- 2002- 2001- 2000- *2003- 2002- 2001- 2000-2004 (till 2003 2002 2001 (till 2004 2003 2002 2001 2004 (till 2003 2002 200131.07.03) 31.07.03) 31.07.03)

Investment management &Advisory fees 1.25 1.25 1.25 1.25 0.45 0.56 0.75 0.75 0.40 0.52 0.75 0.75Additional Fees (if any) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Trustee Fees 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.01Custodian Fees 0.02 0.04 0.16 0.26 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Registrar & Transfer Agent Fees 0.12 0.11 0.11 0.13 0.05 0.06 0.06 0.07 0.04 0.06 0.06 0.07Bank Charges 0.00 0.01 - - 0.00 0.15 - - 0.00 0.03 - -Posting & Mailing 0.14 0.04 0.08 0.06 0.00 0.01 0.01 0.03 0.00 0.00 - 0.02Brokerages 0.23 0.15 0.12 0.01 0.20 0.09 0.12 0.01 0.29 0.39 0.24 0.04Advertisement/ Marketing /Printing expenses 0.00 0.51 0.27 0.12 0.08 0.18 0.02 0.05 0.00 0.10 0.05 0.06Audit Fees 0.00 0.03 0.02 0.04 0.00 0.03 0.01 0.02 0.00 0.00 - 0.01Other Expenses (includingexpenses as permitted underthe Regulations) 0.38 0.00 0.12 0.12 0.31 0.01 0.10 0.06 0.41 0.05 0.03 0.04

TOTAL ANNUAL RECURRINGEXPENSES 2.15 2.15 2.14 2.00 1.10 1.10 1.08 1.00 1.15 1.15 1.13 1.00

* Unaudited


Description Gilt Treasury Balanced Fund Technology Fund

One year Plus

Plan

2002- 2001- *2003- 2002- 2001- 2000- *2003- 2002- 2001- 2000-2003 2002 2004 (till 2003 2002 2001 2004 (till 2003 2002 2001

31.07.03) 31.07.03)

Investment management & Advisory fees 0.25 0.25 1.16 1.14 1.12 1.07 1.23 1.17 1.16 1.08Additional Fees (if any) - - 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Trustee Fees 0.02 - 0.02 0.01 0.01 0.01 0.05 0.02 0.03 0.02Custodian Fees - - 0.01 0.03 0.09 0.14 0.02 0.04 0.11 0.19Registrar & Transfer Agent Fees 0.03 0.02 0.08 0.10 0.10 0.10 0.10 0.11 0.11 0.11Bank Charges - - 0.04 0.05 - - 0.00 0.08 - -Posting & Mailing - 0.01 0.02 0.02 0.03 0.01 0.00 0.11 0.09 0.01Brokerages - - 0.45 0.59 0.45 0.26 0.73 0.49 0.37 0.08Advertisement/ Marketing / Printingexpenses - 0.02 0.00 0.39 0.46 0.61 0.14 0.38 0.48 0.80Audit Fees - - 0.00 0.01 0.01 - 0.00 0.01 0.01 -Other Expenses (including expenses aspermitted under the Regulations) - - 0.58 0.00 0.03 0.05 0.21 0.01 0.06 0.03

TOTAL ANNUAL RECURRING EXPENSES 0.30 0.30 2.36 2.34 2.30 2.25 2.48 2.42 2.41 2.32

* Unaudited

Note: Other expenses for the year 2000-2001 represent accrual of expenses as permitted under the Regulations.


Description Monthly Income Plan Fixed Maturity Plan Quarterly Series 1

*2003- 2002- 2001- 2000- *2003- 2002- 2001- 2000-2004 (till 2003 2002 2001 2004 (till 2003@ 2002 200131.07.03) 31.07.03)@

Investment management & Advisory fees 0.60 1.00 1.20 1.25 0.20 0.20 0.20 0.20Additional Fees (if any) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Trustee Fees 0.01 0.00 0.00 0.00 0.02 0.00 0.01 0.00Custodian Fees 0.01 0.01 0.03 0.03 0.01 0.00 0.02 0.02Registrar & Transfer Agent Fees 0.11 0.13 0.13 0.18 0.01 0.02 0.03 0.03Bank Charges 0.02 0.06 0.00 0.00 0.00 0.00 0.00 0.00Posting & Mailing Exp. 0.01 0.00 0.01 0.00 0.00 0.01 0.01 0.00Brokerages 0.39 0.17 0.34 0.38 0.00 0.09 0.21 0.13Advertisement/ Marketing / Printing expenses 0.20 0.19 0.18 0.03 0.00 0.17 0.03 0.10Audit Fees 0.00 0.00 0.01 0.01 0.00 0.02 0.00 0.00Other Expenses (including expenses aspermitted under the Regulations) 0.15 0.02 0.10 0.12 0.09 0.02 0.00 0.02


* Unaudited.



56


Description Fixed Maturity Plan Half yearly Series 1 Fixed Maturity Plan Yearly Series 1

*2003-2004 2002-2003 2001-2002 2000-2001 *2003-2004 2002-2003 2001-2002 2000-2001 (till (till

31.07.03) 31.07.03)


Additional Fees (if any) - - - - - - - -

Trustee Fees 0.02 0.01 0.01 - 0.03 0.01 0.01 -

Custodian Fees 0.00 0.01 0.02 0.01 0.00 0.01 0.01 0.01


Bank Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Posting & Mailing Exp. 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00

Brokerages 0.00 0.17 0.14 0.09 0.00 0.19 0.19 0.09

Advertisement/ Marketing / Printingexpenses 0.00 0.09 0.09 0.17 0.00 0.09 0.04 0.15

Audit Fees 0.00 0.02 0.01 0.07 0.00 0.01 0.01 0.02

Other Expenses (including expensesas permitted under the Regulations) 0.25 0.00 0.00 0.00 0.20 0.00 0.00 0.02


* Unaudited


Description Fixed Maturity Plan Quarterly Series 2 Fixed Maturity Plan Quarterly Series 3

*2003-2004 2002-2003 2001-2002 2000-2001 *2003-2004 2002-2003 2001-2002 2000-2001 (till (till

31.07.03) 31.07.03)


Additional Fees (if any) - - - - - - - -

Trustee Fees 0.01 0.03 0.00 0.00 0.01 0.01 0.02 0.00

Custodian Fees 0.00 0.01 0.02 0.02 0.00 0.01 0.02 0.02


Bank Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Posting & Mailing Exp. 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.00

Brokerages 0.19 0.16 0.23 0.10 0.19 0.08 0.16 0.19

Advertisement/ Marketing / Printingexpenses 0.00 0.08 0.04 0.07 0.00 0.26 0.08 0.04

Audit Fees 0.00 0.02 0.00 0.03 0.00 0.01 0.00 0.01



* Unaudited

First series of each Plan of Prudential ICICI Fixed Maturity Plan was launched on December 20, 2000

Note: Other expenses for the year 2000-2001 represent accrual of expenses as permitted under the Regulations.


Description Fixed Maturity Plan - Fixed Maturity Plan- Fixed Maturity Plan-Half Yearly Series 2 Yearly Series 2 Yearly Series 3

*2003- 2002- 2001- 2000- *2003- 2002- 2001- 2000- *2003- 2002- 2001-2004 2003 2002 2001 2004 2003 2002 2001 2004 2003 2002(till (till (till

31.07.03) 31.07.03) 31.07.03)

Investment management &Advisory fees 0.23 0.26 0.25 0.25 0.30 0.30 0.30 0.30 0.18 0.16 0.10

Additional Fees (if any) - - - - - - - - - - -

Trustee Fees 0.01 0.01 0.00 0.00 0.02 0.05 0.01 0.00 0.01 0.00 0.00

Custodian Fees 0.00 0.00 0.01 0.00 0.00 0.01 0.01 0.00 0.01 0.01 0.01

Registrar & Transfer Agent Fees 0.06 0.07 0.04 0.00 0.03 0.03 0.04 0.14 0.02 0.02 0.05

Bank Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Posting & Mailing Exp. 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.12 0.14

Brokerages 0.00 0.13 0.21 0.01 0.00 0.17 0.22 0.12 0.13 0.09 0.08

Advertisement/ Marketing / Printingexpenses 0.00 0.01 0.03 0.04 0.00 0.02 0.01 0.00 0.00 0.18 0.21

Audit Fees 0.00 0.07 0.01 0.25** 0.00 0.01 0.01 0.04 0.00 0.00 0.01

Other Expenses (including expensesas permitted under the Regulations) 0.20 0.00 0.00 0.00 0.25 0.01 0.00 0.00 0.25 0.02 0.00

Total Annual Recurring Expenses 0.55 0.55 0.55 0.55 0.60 0.60 0.60 0.60 0.60 0.60 0.60

** Units for Series 2 of Fixed Maturity Plan-Half Yearly Option was allotted on March 22, 2001 and actual amount of audit fee paid in the financial year 2000-2001 was Rs.735.00.

* Unaudited


57


Description Fixed Maturity Plan- Yearly Series 4 Child Care Plan – Gift Plan Child Care Plan – Study Plan*2003-2004 2002-2003 2001-2002 *2003-2004 2002-2003 2001-2002 *2003-2004 2002-2003 2001-2002

(till (till (till31.07.03) 31.07.03) 31.07.03)

Investment management &Advisory fees 0.33 0.30 0.30 1.25 1.25 1.25 1.25 1.25 1.25Additional Fees (if any) - - - - - - - - -Trustee Fees 0.01 0.01 0.00 0.01 0.00 0.00 0.01 0.00 0.00Custodian Fees 0.00 0.00 0.00 0.01 0.02 0.09 0.00 0.01 0.02Registrar & Transfer Agent Fees 0.01 0.03 0.05 0.10 0.10 0.11 0.10 0.10 0.08Bank Charges 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.01 0.00Posting & Mailing Exp. 0.05 0.00 0.00 0.13 0.05 0.05 0.07 0.00 0.00Brokerages 0.00 0.14 0.19 0.08 0.15 0.11 0.00 0.03 0.00Advertisement/ Marketing /Selling expenses 0.00 0.10 0.03 0.27 0.39 0.29 0.00 0.07 0.02Audit Fees 0.00 0.02 0.03 0.00 0.03 0.07 0.00 0.02 0.07Other Expenses (includingexpenses as permitted underthe Regulations) 0.20 0.00 0.00 0.15 0.00 0.03 0.07 0.01 0.06Total Annual RecurringExpenses 0.60 0.60 0.60 2.00 2.00 2.00 1.50 1.50 1.50

* Unaudited


Description Short Term Plan FMP Yearly 5 Long Term Plan Sweep Plan

*2003- 2002- 2001- *2003- 2002- 2001- *2003- 2002- 2001- *2003- 2002- 2001-2004 (till 2003 2002 2004 (till 2003 2002 2004 (till 2003 2002 2004 (till 2003 200231.07.03) 31.07.03) 31.07.03) 31.07.03)

Investment management &Advisory fees 0.39 0.45 0.74 0.30 0.30 0.30 0.45 0.44 0.70 0.45 0.48 0.74Additional Fees (if any) - - - - - - - - - - - -Trustee Fees 0.01 - - 0.12 0.01 - 0.01 - - 0.01 - -Custodian Fees 0.01 0.01 0.01 0.01 0.01 - - 0.01 - - - -Registrar & Transfer Agent Fees 0.02 0.04 0.04 0.04 0.02 - - - - - - -Bank Charges - 0.01 - - - - - -Posting & Mailing Exp. - - - - - - - 0.02 - - - -Brokerages 0.23 0.40 0.13 0.03 0.24 0.18 0.07 0.09 - - - -Advertisement/ Marketing /Printing expenses - 0.08 0.05 - 0.02 0.05 - 0.03 0.01 - 0.43 0.32Audit Fees - - 0.01 0.01 - 0.07 - - 0.09 - 0.11 0.19Other Expenses (includingexpenses as permitted underthe Regulations) 0.25 0.01 0.02 0.09 - - 0.07 0.01 - 0.54 0.01 -Total Annual Recurring Expenses 0.91 1.00 1.00 0.60 0.60 0.60 0.60 0.60 0.80 1.00 1.03 1.25

* Unaudited@ This is the expenses ratio for the Scheme. The ratio for recurring expenses for Normal Plan and for Institutional Plan for the period ended March 31, 2003

is 1.00% and 0.80% respectively and for the period ended July 31, 2003 is 1.00% and 0.80% respectively.


Description Index Plan FMP Yearly 6 FMP Yearly 7 Flexible Income Dynamic FMPPlan Plan Yearly 8

*2003- 2002- 2001- *2003- 2002- *2003- 2002- *2003- 2002- *2003- 2002- 2002-2004 (till 2003 2002 2004 (till 2003 2004 (till 2003 2004 (till 2003 2004 (till 2003 200331.07.03) 31.07.03) 31.07.03) 31.07.03) 31.07.03)

Investment management &Advisory fees 0.40 0.49 0.70 0.25 0.25 0.25 0.25 0.40 0.40 1.00 1.00 -Additional Fees (if any) - - - - - - - - - - - -Trustee Fees 0.02 0.01 - 0.02 - 0.01 - 0.01 - 0.01 - -Custodian Fees 0.13 0.05 - 0.01 0.01 - - - - 0.01 0.02 -Registrar & Transfer Agent Fees 0.23 0.32 0.07 0.02 0.02 0.02 0.02 0.01 0.01 0.10 0.15 0.10Bank Charges 0.01 - - - - 0.01 0.02 0.08 0.04 -Posting & Mailing Exp. - - - - - - - - - 0.02 - -Brokerages 0.14 0.19 - - 0.30 - 0.10 0.24 0.38 0.34 0.59 -Advertisement/ Marketing /Selling expenses 0.24 0.15 0.41 - 0.02 - 0.13 - 0.18 0.27 0.18 0.49Audit Fees - 0.02 0.07 - - - 0.10 - - - 0.01 -Other Expenses (includingexpenses as permitted underthe Regulations) 0.09 0.01 - 0.30 - 0.32 - 0.33 0.01 0.17 0.01 0.01Total Annual Recurring Expenses 1.25 1.25 1.25 0.60 0.60 0.60 0.60 1.00 1.00 2.00 2.00 0.60

*Unaudited


58


Description Floating Rate Plan FMP Yearly - 12 SPIcE FlexibleIncome

Plus Plan

*2003-2004 2002-2003 *2003-2004 2002-2003@ *2003-2004 2002-2003 *2003-2004(till (till (till (till

31.07.03) 31.07.03) @ 31.07.03) 31.07.03)

Investment management & Advisory fees 0.34 0.45 0.22 0.19 0.40 0.40 0.40

Additional Fees (if any) - - - - - - -

Trustee Fees 0.14 - 0.01 - - - -

Custodian Fees - - 0.01 - 0.02 0.02 -

Registrar & Transfer Agent Fees 0.07 0.10 0.01 0.01 0.13 0.23 -

Bank Charges 0.07 - - - - - -

Posting & Mailing Exp. - - - - - - -

Brokerages 0.05 0.01 0.07 0.10 - - -

Advertisement/ Marketing / Printing expenses 0.04 0.16 - - 0.09 0.08 -

Audit Fees - 0.02 - 0.11 0.00 0.04 -

Other Expenses (including expenses aspermitted under the Regulations) 0.04 - 0.24 - 0.16 0.03 0.10

Total Annual Recurring Expenses 0.75 0.74 0.56 0.41 0.80 0.80 0.50

* Unaudited


Condensed Financial Information

a. Condensed Financial Information for the period ended March 31, 2001.

Premier Power Growth Income Liquid FMCG

Historical Per Unit StatisticsDate of Allotment February 7, October 1, July 9, July 9, June 24, March 31,

1994 1994 1998 1998 1998 1999NAV at the beginning of the year (Rs.)Growth Option 11.93 20.48 31.14 12.54 11.7855 11.28Dividend Option - - 18.10 10.26 11.7855 10.29Net Income per unit (0.53) (7.28) (5.72) 1.18 0.99 (1.04)Dividends - - 1.20 1.1358@ 1.0278@ -Transfer to Reserves - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 1.32% 0.34% 23.19% 12.68% 9.71% -4.83%Benchmark Index Nifty Nifty Nifty N.A N.A CNX FMCGBenchmark Index Returns # # # # # # 6.74% N.A N.A -8.80%Net Assets end of period (Rs.crore) 56.58 34.34 327.62 2078.18 956.84 61.37NAV at the end of the period 10.10## 10.22Growth Option - - 17.67 13.85 12.9252 9.06Dividend Option - - 9.27 10.21 11.8316 8.30Ratio of Recurring Exps to Net Assets 2.50% 2.50% 2.27% 1.64% 0.98% 2.00%

Tax Plan Gilt Gilt Balanced Technology MonthlyTreasury Investment Fund Fund Income Plan

Historical Per Unit Statistics

Date of Allotment August 19, August 19, August 19, November 03, March 3, November 10,1999 1999 1999 1999 2000 2000

NAV at the beginning of the year (Rs.)Growth Option 20.10 10.9598 11.1684 12.92 8.74 #Dividend Option 14.61 10.3667 10.4637 11.98 8.74 #Net Income per unit (4.22) 1.70 1.24 (2.83) (5.18) 0.39Dividends - 1.0173@ 1.1370@ - - 0.4520@Transfer to Reserves - - - - - -Compounded Annualised Returns (Based onNAVs of Growth Option) 2.03% 12.28% 14.84% -12.21% -64.27% 5.50%*Benchmark Index Nifty N.A N.A Nifty E.T Mindex N.ABenchmark Index Returns -9.34% N.A N.A -9.76% -74.84% N.ANet Assets end of period (Rs. Crore) 55.14 90.46 190.63 237.35 178.94 72.78NAV at the end of the periodGrowth Option 10.33 12.0590 12.5063 8.32 3.30 10.5504Dividend Option 7.54 10.3315 10.5267 7.69 3.30Monthly Option 10.0910Quarterly Option 10.1817Half Yearly Option 10.1823

Ratio of Recurring Exps to Net Assets 2.00% 1.00% 1.00% 2.25% 2.32% 2.00%


59

Fixed Fixed Fixed Fixed Fixed Fixed FixedMonthly Monthly Monthly Monthly Monthly Monthly Monthly

Plan - Plan – Plan – Plan – Plan – Plan – Plan –Quarterly Half Yearly Yearly Quarterly Quarterly Half Yearly Yearly

Series 1 Series 1 Series 1 Series 2 Series 3 Series 2 Series 2


Date of Allotment December 20, December 20, December 20, January 22, February 20, March 22, March 22,2000 2000 2000 2001 2001 2001 2001

NAV at the beginning of the year (Rs.)

Growth Option # # # # # # #

Dividend Option # # # # # # #

Net Income per unit 0.1746 0.23 0.28 0.17 0.09 0.01 0.02

Dividends 0.6053@ 0.3666@ - - - - -

Transfer to Reserves - - - - - - -

Compounded Annualised Returns(Based on NAVs of Growth Option) 3.05%* 2.80%* 3.35%* 1.81%* 1.02%* 0.09%* 0.36%*

Benchmark Index N.A N.A N.A N.A N.A N.A N.A

Benchmark Index Returns N.A N.A N.A N.A N.A N.A N.A

Net Assets end of period (Rs. Crore) 130.74 2.51 10.06 9.75 80.94 3.26 95.08

NAV at the end of the period

Growth Option 10.3045 10.2803 10.3352 10.1812 10.1020 10.0093 10.0356

Dividend Option 10.0643 10.2803 10.3352 10.1812 10.1020 10.0093 10.0356

Ratio of Recurring Exps to Net Assets 0.50% 0.55% 0.60% 0.50% 0.50% 0.55% 0.60%

Notes:

The figures for Prudential ICICI Monthly Income Plan and Prudential ICICI Fixed Maturity Plan are for the period from the date of opening of the scheme.

Returns since inception are for the growth plan in each case.

In the absence of appropriate benchmarks for the schemes having debt as well as equity components, Nifty has been used as the benchmark index for the timebeing.

While arriving at Net Income per unit, Income Equalisation Reserve has not been considered and it is calculated on the basis of closing units.

* Prudential ICICI Fixed Maturity Plan and Prudential ICICI Monthly Income Plan have not completed one year since the date of their launch. Returns arecomputed 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 computationof returns.

@ Including distribution tax.

# These schemes were launched during the year and were not in existence at the beginning of the year.

## Dividend was declared under ICICI Premier for all the unitholders as on July 25, 1995 @Rs. 0.80 per unit. For computation of returns NAV of ICICI Premierhas been considered after adjusting the dividend declaration.

### As these schemes were launched before the launch of Nifty, benchmark index returns are not provided.

b. Condensed Financial Information for the period ended March 31, 2002.

Premier Power Growth Income Liquid FMCG


Date of Allotment February 7, October 1, July 9, July 9, June 24, March 31,1994 1994 1998 1998 1998 1999


Growth Option 10.10 10.22 17.67 13.85 12.9252 9.06

Dividend Option - - 9.27 10.21 11.8316 8.30

Net Income per unit 0.82 (2.37) (1.91) 1.85 1.06 (2.15)

Dividends - - 0.80 @1.5428 @0.8994 -

Transfer to Reserves - - - - - -

Compounded Annualised Returns(Based on NAVs of Growth Option) 2.82% 2.39% 20.40% 13.83% 9.21% -4.24%

Benchmark Index Nifty Nifty Nifty N.A N.A CNX FMCG

Return compared to Benchmark Index # # # # # # 4.43% N.A N.A -7.43%

Net Assets end of period (Rs.crore) 51.08 29.87 350.22 2711.89 1372.62 53.60


Growth Option ##11.54 11.94 19.98 16.21 13.9383 8.78

Dividend Option - - 9.71 10.33 11.8273 8.05



60

Tax Plan Gilt Treasury Gilt Balanced Technology Monthly Gilt Treasury Investment Fund Fund Income Plan 1 Year Plus

Plan

Historical Per Unit StatisticsDate of Allotment August 19, August 19, August 19, November 03, March 3, November 10, April 30,

1999 1999 1999 1999 2000 2000 2001


Growth Option 10.33 12.0590 12.5063 8.32 3.30 10.5504 #

Dividend Option 7.54 10.3315 10.5267 7.69 3.30

Monthly Option - - - - - 10.0910 -

Quarterly Option - - - - - 10.1817 -

Half Yearly Option - - - - - 10.1823 -

Net Income per unit (0.30) 1.92 2.20 (0.85) (1.81) 0.97 0.87

Dividends

Dividend Option - @1.2452 @2.5897 - - - @0.8321

Monthly option - - - - - @1.0230 -

Quarterly option - - - - - @1.0800 -

Half Yearly Option - - - - - @1.0965 -


Compounded Annualised Returns(Based on NAVs of Growth Option) 10.55% 12.23% 20.06% -3.01% -41.80% 12.44% 8.69%*

Benchmark Index Nifty N.A N.A Nifty ET Mindex N.A N.A

Return compared to Benchmark Index -6.45% N.A N.A -6.45% -51.05% N.A N.A



Growth Option 13.00 13.5238 16.1344 9.29 3.25 11.7643 -

Dividend Option 9.48 10.2799 10.8319 8.58 3.25 - 10.0213

Monthly Option - - - - - 10.1792 -

Quarterly Option - - - - - 10.2228 -

Half Yearly Option - - - - - 10.2187 -


Fixed Maturity Fixed Maturity Fixed Maturity Fixed Maturity Fixed MaturityPlan - Plan - Half Plan - Plan - Plan -

Quarterly 1 Yearly 1 Yearly 1 Quarterly 2 Quarterly 3


Date of Allotment December 20, December 20, December 20, January 22, February 20,2000 2000 2000 2001 2001


Growth Option 10.3045 10.2803 10.3352 10.1812 10.1020

Dividend Option 10.0643 10.2803 10.3352 10.1812 10.1020

Net Income per unit 32.49 2.48 1.05 4.17 2.05

Dividends @0.8781 @0.9015 @1.0473 @0.8543 @0.9234

Transfer to Reserves - - - - -

Compounded Annualised Returns(Based on NAVs of Growth Option) 9.34% 9.27% 9.77% 8.69% 9.49

Benchmark Index N.A N.A N.A N.A N.A

Return compared to Benchmark Index N.A N.A N.A N.A N.A

Net Assets end of period (Rs. Crore) 3.52 10.22 8.65 17.71 16.92


Growth Option 11.2079 11.1988 11.2644 11.0390 11.0555

Dividend Option 10.0378 10.2373 10.1970 10.1450 10.0855

Ratio of Recurring Exps to Net Assets 0.51% 0.55% 0.60% 0.54% 0.53%


61

Fixed Maturity Plan – Fixed Maturity Plan – Fixed Maturity Plan – Fixed Maturity Plan –Half Yearly 2 Yearly 2 Yearly 3 Yearly 4

Historical Per Unit StatisticsDate of Allotment March 22, 2001 March 22, 2001 June 21, 2001 September 20, 2001NAV at the beginning of the year (Rs.)Growth Option 10.0093 10.0356 # #Dividend Option 10.0093 10.0356 # -Net Income per unit 0.5520 0.99 0.67 0.39Dividends @0.7765 @0.9231 - -Transfer to Reserves - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 8.15% 10.03% 6.75%* 4.38%*Benchmark Index N.A N.A N.A N.AReturn compared to Benchmark Index N.A N.A N.A N.ANet Assets end of period (Rs. Crore) 0.16 102.28 7.80 6.36NAV at the end of the periodGrowth Option 10.8363 11.0292 10.6753 10.4381Dividend Option 10.0388 10.0110 10.6753 10.4381Ratio of Recurring Exps to Net Assets 0.55% 0.60% 0.60% 0.60%

Child Care Plan- Child Care Plan- Short term Plan Fixed Maturity Plan –Gift option Study option Yearly 5

Historical Per Unit StatisticsDate of Allotment August 31, 2001 August 31, 2001 October 25, 2001 March 22, 2002NAV at the beginning of the year (Rs.)Growth Option # # # #Dividend Option - - - -Net Income per unit 0.45 0.50 0.33 0.01Dividends - - 0.3430@ -Transfer to Reserves - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 11.60%* 8.90%* 3.92%* 0.35%*Benchmark Index Nifty N.A N.A N.AReturn compared to Benchmark Index 7.19 N.A N.A N.ANet Assets end of period (Rs. Crore) 7.38 7.85 418.32 85.40NAV at the end of the periodGrowth Option 11.16 10.89 10.3915 10.0354Dividend Option - - 10.0433 -Ratio of Recurring Exps to Net Assets 2.00% 1.50% 1.00% 0.60%

Index Fund Long term Plan Sweep PlanHistorical Per Unit StatisticsDate of Allotment February 26, 2002 March 28, 2002 March 6, 2002NAV at the beginning of the year (Rs.)Growth Option 10.0000 10.0000 10.0000Dividend Option - - -Net Income per unit 0.01 0.01 0.03Dividends - - -Transfer to Reserves - - -Compounded Annualised Returns (Based on NAVs of Growth Option) -4.80%* 0.10%* 0.52%*Benchmark Index Nifty N.A N.AReturn compared to Benchmark Index -5.03% N.A N.ANet Assets end of period (Rs. Crore) 7.73 50.05 5.31NAV at the end of the periodGrowth Option 9.52 10.0096 10.0520Dividend Option - - -Ratio of Recurring Exps to Net Assets 1.25% 0.80% 1.25%

Notes:Returns since inception are for the growth plan in each case except for Prudential ICICI Gilt Fund – One Year Plus Plan in which Growth Option is not available.From current year, while arriving at Net Income per unit, Income Equalisation Reserve and marked to market has not been considered and it is calculated on thebasis of closing units as on March 31, 2002.The Compounded annualized returns of each scheme are computed from inception of the Scheme till the end of the period of the respective condensed financialinformation whereas the returns compared to benchmark index are computed for the financial year.* Prudential ICICI Fixed Maturity Plan- Yearly 3,4 &5, Prudential ICICI Gilt Treasury 1 Year Plus Plan, Prudential ICICI Child Care Plan – Gift Plan & Study Plan,

Prudential ICICI Short Term Plan, Prudential ICICI Long Term Plan, Prudential ICICI Sweep Plan and Prudential ICICI Index Fund have not completed one yearsince 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 ofallotment is taken as Rs.10 for computation of returns.

@ Including distribution tax.# These Schemes were launched during the year and these schemes were not in existence at the beginning of the year.## Dividend was declared under ICICI Premier for all the unitholders as on July 25, 1995 @Rs. 0.80 per unit. For computation of returns NAV of ICICI Premier

has been considered after adjusting the dividend declaration.# # # As these schemes were launched before the launch of Nifty, Benchmark index returns are not provided.


62

Condensed Financial Information for the period ended March 31, 2003.

Premier Power Growth Income Liquid FMCG Tax Plan GiltTreasury

Historical Per Unit StatisticsDate of Allotment February 7, October 1, July 9, July 9, June 24, March 31, August 19, August 19,

1994 1994 1998 1998 1998 1999 1999 1999

NAV at the beginning of the year (Rs.) - - - - - - -NAV at the beginning of the year (Rs.) 11.54 11.94Growth Option 19.98 16.21 13.9383 8.78 13.00 13.5238Dividend Option - - 9.71 10.33 11.8273 8.05 9.48 10.2799Net Income per unit 1.70 1.22 (0.30) 1.56 0.87 0.25 0.83 1.46Dividends - 2.70 - 0.45 0.7558 - - 0.1910Transfer to Reserves - - - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) 3.41% 2.96% 13.26% 13.28% 8.68% -8.04% 3.79% 10.51%Benchmark Index Crisil Nifty Nifty Crisil Crisil CNXFMCG Nifty I-Sec

Balanced Composite Liquid Si-Bexfund Index Bond fund fund Index

Return compared to Benchmark Index @ @ 3.30% 0.44% 0. 64% 5.60% 1.56% -1.60%Net Assets end of period (Rs.crore) 15.70 31.68 275.91 3173.49 1544.91 33.47 24.14 34.50NAV at the end of the period (Rs.) 12.50 - - - - - - -Growth Option - 12.81 18.02 18.0347 14.8729 7.15 11.44 14.3534Dividend Option - 10.28 8.76 11.0188 11.8419 6.56 8.34 10.7122Monthly Option - - - - 11.8699 - - -Institutional Option Growth - - - 18.0374 14.8760 - - -Institutional Option Dividend - - - 11.0196 11.8419 - - -Ratio of Recurring Exps to Net Assets -Regular Plan -Annualised 2.50% 2.47% 2.33% 1.59% 0.99% 2.05% 2.15% 1.10%Ratio of Recurring Exps to Net Assets-Institutional Plan-Annualised - 1.10% 0.75%

Gilt Balanced Technology Monthly Fixed Fixed Fixed GiltInvestment Fund Fund Income Maturity Maturity Maturity Treasury

Plan Plan - Plan - Half Plan - 1 YearQtly 1 Yearly 1 Yearly 1 Plus

Plan ***Historical Per Unit StatisticsDate of Allotment Aug. 19, Nov. 03, Mar. 3, Nov. 10, Dec. 20, Dec. 20, Dec. 20, Apr. 30,

1999 1999 2000 2000 2000 2000 2000 2001

NAV at the beginning of theyear (Rs.)Growth Option 16.1344 9.29 3.25 11.7643 11.2079 11.1988 11.2644 -Dividend Option 10.8319 8.58 3.25 - 10.0378 10.2373 10.1970 10.0213Monthly Option - - - 10.1792 - - -Quarterly Option - - - 10.2228 - - - -Half Yearly Option - - - 10.2187 - - - -Net Income per unit 1.88 0.68 (0.35) 1.02 0.14 5.90 13.82N.A.Dividends 0.4320 - - - - - -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) 17.56% -1.90% -34.50% 10.69% 7.99% 7.97% 8.27% -Benchmark Index I –Sec Crisil ET Crisil MIP $ $ $ -

Si-Bex Balanced MINDEX BlendedFund Index Index

Return compared to Benchmark Index 2.65% 4.95% 6.58% 1.60% # # # -Net Assets end of period (Rs. Crore) 457.20 153.86 111.25 275.36 34.98 0.51 0.43 -NAV at the end of the periodGrowth Option 17.9508 9.37 2.72 12.7427 11.9131 11.9083 11.9840 -Dividend Option 11.5832 8.65 2.72 - 10.6695 10.8855 10.8482 -

Monthly Option - - - 10.3323 - - - -

Quarterly Option - - - 10.3550 - - - -

Half Yearly Option - - - 10.3177 - - - -

Institutional Option – Monthly Dividend 10.6701

Ratio of Recurring Exps to Net Assets 1.15% 2.34% 2.42% 1.58% 0.55% 0.55% 0.60% 0.30%

Ratio of Recurring Exps to Net Assets-Institutional Plan-Annualised 0.25%


63

Fixed Fixed Fixed Fixed Fixed Fixed Child Care Child Care ShortMaturity Maturity Maturity Maturity Maturity Maturity Plan – Plan – Term

Plan - Plan – Plan –Half Plan – Plan – Plan – Gift Study PlanQuarterly 2 Quarterly 3 Yearly 2 Yearly 2 Yearly 3 Yearly 4 Option Option


Date of Allotment Jan. 22, Feb. 20, Mar. 22, Mar. 22, Jun. 21, Sept. 20, Aug. 31, Aug. 31, Oct. 25,2001 2001 2001 2001 2001 2001 2001 2001 2001

NAV at the beginning of theyear (Rs.) 11.16 10.89

Growth Option 11.0390 11.0555 10.8363 11.0292 10.6753 10.4381 10.3915

Dividend Option 10.1450 10.0855 10.0388 10.0110 10.6753 10.4381 - - 10.0433

Net Income per unit 3.00 1.69 2.25 0.61 0.69 269.99 0.20 0.57 1.14

Dividends 0.1847 0.1788 - - - - - - 0.0924

Transfer to Reserves - - - - - - - - -

Compounded Annualised Returns(Based on NAVs of 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 CrisilBalanced Blended Composite

Fund Index Index Bond Fund

Return compared to BenchmarkIndex $ $ $ $ $ $ -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 1078.83

NAV at the end of the period 10.67 11.42

Growth Option 11. 7551 11.7293 11.4328 11.7817 11.5055 11.1635 11.2323

Dividend Option 10.6074 10.5122 10.5916 10.6939 11.5055 11.1635 - - 10.7561

Institutional Option Growth - - - - - - - - 11.2345

Ratio 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 Maturity Index Fund Long term Sweep Fixed Maturity Fixed MaturityPlan – Plan Plan One Year One Year

Yearly 5 Plan – Plan –Series 6 Series 7


Date of Allotment March 22, February 26, March 28, March 6, June 28, August, 19, 2002 2002 2002 2002 2002 2002

NAV at the beginning of the year (Rs.) 9.5200 10.0520 # #

Growth Option 10.0354 10.0096

Dividend Option - - - - - -

Net Income per unit 0.85 (0.44) 0.79 0.20 0.66 0.32

Dividends - - - - - -

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 CrisilComposite LiquidBond Fund Fund Index

$ $

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 1.27

NAV at the end of the period 8.3278 11.3634 10.5508 10.6555 10.3140

Growth Option 10.8643 - - - - -

Dividend Option 10.8643 - - - - -


Ratio of Recurring Exps to Net Assets-Institutional Plan - Annualised - - - - - -


64

Fixed Flexible Dynamic SPICE Fixed FloatingMaturity Income Plan Maturity Rate Plan

Plan – Plan Plan –Yearly 8*** Yearly 12


Date of Allotment September 17, September 27, October 31, January 10, March 21, March 29,2002 2002 2002 2003 2003 2003

NAV at the beginning of the year (Rs.) # # # # # #

Net Income per unit NA 0.73 (0.15) (0.04) 0.01 0.004

Dividends - - - - - -

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 Index

Return 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 42.23 528.11

NAV at the end of the period - 10.7745 10.2799 30.4342 10.0046

Growth Option 10.0191

Dividend Option - - - - - -

Institutional Option Growth 10.0208


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 closingunits 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 condensedfinancial 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, SENSEXPrudential ICICI Exchange Traded Fund and Prudential ICICI Floating Rate Plan have not completed one year since the date of their launch. Returns arecomputed 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 computationof returns

*** All the units holders under the schemes- Prudential ICICI Gilt Fund Treasury 1 Year Plus Plan and Prudential ICICI Fixed Maturity Yearly Plan Series 8 haveredeemed 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.

## Dividend was declared under ICICI Premier for all the unitholders as on July 25, 1995 @Rs. 0.80 per unit. For computation of returns NAV of ICICI Premierhas been considered after adjusting the dividend declaration.

$ Appropriate benchmark index is not available.

@ As these schemes were launched before the launch of the respective benchmarks, Benchmark indices returns are not provided

@@ Since the units under Scheme were allotted on March 29, 2003 the return compared to Benchmark Index detail is not provided..


65

Condensed Financial Information for the period ended July 31, 2003**.

Premier Power Growth Income Liquid FMCG Tax Plan GiltTreasury


Date of Allotment February 7, October 1, July 9, July 9, June 24, March 31, August 19, August 19,1994 1994 1998 1998 1998 1999 1999 1999

NAV at the beginning of the year (Rs.) 12.50 - - - - - - -

Growth Option - 12.80 18.02 18.0347 14.8729 7.15 11.44 14.3534

Dividend Option - 10.28 8.76 11.0188 11.8419 6.56 8.34 10.7122

Monthly Option - - - - - - - -

Quarterly Option - - - - - - - -

Half Yearly Option - - - - - - - -

Institutional Option - Growth - - - 18.0374 14.8760 - - -

Institutional Monthly Option – Div. - - - - 11.8699 - - -

Institutional Option - Dividend - - - 11.0196 11.8419 - - -

@@@ Net Income per unit 0.54 0.55 3.25 0.4848 0.2588 0.3818 1.85 0.6772

Dividends - 2.00 0.80 - - - 1.20 0.7100

Dividend Option (weekly) - - - - 0.2155 - - -

Institutional Dividend (Weekly) - - - - 0.2136 - - -

Monthly Option - - - - 0.2437 - - -


Quarterly Option -Institutional 0.2700

Half yearly Option - - - 0.6769 - - - -

Half yearly Option - Institutional - - - 0.6769 - - - -

Fortnightly Dividend Option - - - - - - - -

Institutional Fortnightly Dividend Option - - - - - - - -

Institutional Monthly Dividend Option - - - - 0.1733 - - -

Institutional Daily Dividend Option - 0.2091

Dividend Option Daily - 0.1994

Transfer to Reserves - - - - - - - -

Compounded Annualised Returns(Based on NAVs of Growth Option) 3.95% 7.04% 18.52% 13.39% 8.46% -1.51% 15.68% 10.91

Benchmark Index Crisil Nifty Nifty Crisil Crisil CNX FMCG Nifty I-SecBalanced Composite Liquid fund Si-Bex

fund Index Bond Indexfund Index

Return compared to Benchmark Index @ @ 9.56% -0.12% 0.18% 13.01% 34.27% 0.77%

Net Assets end of period (Rs.crore) 15.75 213.03 303.15 4,068.33 2,948.76 37.58 32.25 33.14

NAV at the end of the period ##13.28 - - - - - - -

Growth Option - 18.24 23.64 18.8918 15.1358 9.36 17.78 15.0556

Dividend Option - 12.60 10.68 10.8470 11.8340 8.59 11.74 10.5176

Dividend Option (Daily) - - - - 11.8508 - - -

Dividend (Fortnightly) - - - - - - - -

Monthly Option - - - - 11.8340 - - -


Half yearly Option - - - - - - - -

Institutional Option Growth - - - 18.9254 15.1508 - - -

Institutional Fortnightly Option –Dividend - - - - - - - -

Institutional Monthly Option – Dividend - - - - 11.9132 - - -

Institutional Option Dividend – Daily - - - - 11.8492 - - -

Institutional Option Dividend – Quarterly - - - 11.2894 - - - -

Institutional Option Dividend - - - 10.8654 11.8450 - - -

Ratio of Recurring Exps to Net Assets -

Regular Plan -Annualised 2.50% 2.45% 2.33% 1.59% 0.65% 2.05% 2.15% 1.10%

Ratio of Recurring Exps to Net Assets-

Institutional Plan - Annualised - - - 1.10% 0.48% - - -

** Un-audited


66

Gilt Balanced Technology Monthly Fixed Fixed FixedInvestment Fund Fund Income Maturity Maturity Maturity

Plan Plan - Plan - Half Plan -Qtly 1 Yearly 1 Yearly 1


Date of Allotment Aug. 19, Nov. 03, Mar. 3, Nov. 10, Dec. 20, Dec. 20, Dec. 20,1999 1999 2000 2000 2000 2000 2000


Growth Option 17.9508 9.37 2.72 12.7427 11.9131 11.9083 11.9840

Dividend Option 10.5832 8.65 - - 10.6695 10.8855 10.8482

Monthly Option - - - 10.3323 - - -

Quarterly Option - - - 10.3550 - - -

Half Yearly Option - - - 10.3177 - - -

Institutional Option - Growth - - - - - - -

Institutional Monthly Option – Div. - - - - - - -

Institutional Option - Dividend - - - - 10.6701 - -

@@@ Net Income per unit 1.2001 1.07 (0.16) 0.4748 11.8048 3.0928 0.5758

Dividends 1.3700 - - -

- 0.9947 -

Institutional Dividend 0.1692 - -

Dividend Option (weekly) - - - - - - -

Institutional Dividend (Weekly) - - - - - - -

Monthly Option - - - 0.2400 - - -


Half yearly Option - - - - - - -

Half yearly Option - Institutional - - - - - - -

Fortnightly Dividend Option - - - - - - -

Institutional Fortnightly Dividend Option - - - - - - -

Institutional Monthly Dividend Option - - - - - - -

Institutional Daily Dividend Option - - - - - - -

Dividend Option Daily - - - - - - -


Compounded Annualised Returns(Based on NAVs of Growth Option) 18.26% 3.81% -28.01% 11.35% 7.70% ###7.41% 7.58%

Benchmark Index I –Sec Crisil ET Crisil MIP $ $ $Li-Bex Balanced MINDEX Blended

Fund Index Index

Return compared to Benchmark Index 2.42% 8.23% 21.95% -1.21% # # #


NAV at the end of the period 3.26

Growth Option 19.3987 11.50 13.3961 12.1362 - 12.1693

Dividend Option 11.1191 10.62 - 10.0360 11.0151

Dividend Option (Daily) - - - - - - -

Dividend (Fortnightly) - - - - - - -

Monthly Option - - - 10.6149 - - -


Half yearly Option - - - 10.8466 - - -

Institutional Option Growth - - - - - - -

Institutional Fortnightly Option –Dividend - - - - - - -

Institutional Monthly Option – Dividend - - - - - - -

Institutional Option Dividend – Daily - - - - - - -

Institutional Option Dividend – Quarterly - - - - - - -

Institutional Option Dividend - - - - - - -

Ratio of Recurring Exps to Net Assets -Regular Plan -Annualised 1.15% 2.36% 2.48% 1.50% 0.55% 0.55% 0.60%

Ratio of Recurring Exps to Net Assets-Institutional Plan - Annualised - - - - 0.25% - -


67

Fixed Fixed Fixed Fixed Fixed Fixed Child Care Child CareMaturity Maturity Maturity Maturity Maturity Maturity Plan – Plan –

Plan - Plan – Plan –Half Plan – Plan – Plan – Gift StudyQuarterly 2 Quarterly 3 Yearly 2 Yearly 2 Yearly 3 Yearly 4 Option Option


Date of Allotment January 22, February 20, March 22, March 22, June 21, Sept 20, August 31, August 31,2001 2001 2001 2001 2001 2001 2001 2001

NAV at the beginning of the year (Rs.) 10.67 11.42

Growth Option 11.7551 11.7293 11.4328 11.7817 11.5055 11.1635 - -

Dividend Option 10.6074 10.5122 10.5916 10.6939 - - - -



Half Yearly Option - - - - - - - -

Institutional Option - Growth - - - - - - - -

Institutional Monthly Option – Div. - - - - - - - -

Institutional Option - Dividend - - - - - - - -

@@@ Net Income per unit 144.6180 0.1649 0.1781 0.2011 N.A. 0.1417 0.57 0.34

Dividends 0.0975 - - - 0.7908 - - -

Dividend Option (weekly) - - - - - - - -

Institutional Dividend (Weekly) - - - - - - - -




Half yearly Option - Institutional - - - - - - - -

Fortnightly Dividend Option - - - - - - - -

Institutional Fortnightly Dividend Option - - - - - - - -

Institutional Monthly Dividend Option - - - - - - - -

Institutional Daily Dividend Option - - - - - - - -

Dividend Option Daily - - - - - - - -

Transfer to Reserves - - - - - - - -

Compounded Annualised Returns(Based on NAVs of Growth Option) 7.58% 7.36% 6.50% 7.82% N.A 6.82% 17.69% 12.08%

Benchmark Index $ $ $ $ $ $ Nifty Crisil MIPBlended

Index

Return compared to Benchmark Index $ $ $ $ $ $ 6.83% 1.95%

Net Assets end of period (Rs. Crore) 0.0027 5.36 0.04 4.48 - 0.01 14.87 15.32

NAV at the end of the period 12.0214 - 11.3051 13.66 12.44

Growth Option - 11.8917 11.6024 11.9442

Dividend Option - 10.6578 10.7506 10.8409 - - - -

Dividend Option (Daily) - - - - - - - -

Dividend (Fortnightly) - - - - - - - -




Institutional Option Growth - - - - - - - -

Institutional Fortnightly Option –Dividend - - - - - - - -

Institutional Monthly Option – Dividend - - - - - - - -

Institutional Option Dividend – Daily - - - - - - - -

Institutional Option Dividend – Quarterly - - - - - - - -

Institutional Option Dividend - - - - - - - -

Ratio of Recurring Exps to Net Assets 0.55% 0.55% 0.55% 0.60% 0.60% 0.60% 2.00% 1.50%

Ratio of Recurring Exps to Net Assets-

Institutional Plan - Annualised - - - - - - - -


68

Short Term Fixed Index Fund Long term Sweep Fixed FixedPlan Maturity Plan Plan Maturity Maturity

Plan – One Year One YearYearly 5 Plan – Plan –

Series 6 @@ Series 7


Date of Allotment October 25, March 22, February 26, March 28, March 6, July 21, August, 19,2001 2002 2002 2002 2002 2003 2002

NAV at the beginning of the year (Rs.) 8.3278 10.5508 10.6555 10.3140

Growth Option 11.2323 10.8643 - 11.3634 - - -

Dividend Option 10.7561 - - - - - -

Monthly Option - - - - - - -

Quarterly Option - - - - - - -

Half Yearly Option - - - - - - -

Institutional Option - Growth 11.2345 - - - - - -

Institutional Monthly Option – Div. - - - - - - -

Institutional Option - Dividend - - - - - - -

@@@ Net Income per unit 0.2126 0.1621 0.1191 0.4157 0.1693 1,266.9209 0.1443

Dividends - - - - - - -

Dividend Option (weekly) - - - - - - -

Institutional Dividend (Weekly) 0.4534 - - - - - -




Half yearly Option - Institutional - - - - - - -

Fortnightly Dividend Option 0.2056 - - - - - -

Institutional Fortnightly Dividend Option 0.2189 - - - - - -

Institutional Monthly Dividend Option 0.2290 - - - - - -

Institutional Daily Dividend Option - - - - - - -

Dividend Option Daily - - - - - - -


Compounded Annualised Returns(Based on NAVs of Growth Option) 8.44% 7.31% 1.52% 14.12% 4.91% 2.97%* 4.58%*

Benchmark Index Crisil $ Nifty Crisil Index $ $Short term Composite CrisilBond Fund Bond Fund Liquid

FundIndex

Return compared to Benchmark Index 0.47% # 1.44% 0.51% -0.21% # #

Net Assets end of period (Rs. Crore) 2,291.81 5.75 12.66 246.23 33.69 0.02 1.28

NAV at the end of the period - 11.0066 10.2172 11.9400 10.6957 10.2974 10.4583

Growth Option 11.5362 - - - - - -

Dividend Option 10.5869 - - - - - -

Dividend Option (Daily) - - - - - - -

Dividend (Fortnightly) 10.5950 - - - - - -




Institutional Option Growth 11.5463 - - - - - -

Institutional Fortnightly Option –Dividend 10.8335 - - - - - -

Institutional Monthly Option – Dividend 10.8236 - - - - - -

Institutional Option Dividend – Daily - - - - - - -

Institutional Option Dividend – Quarterly - - - - - - -

Institutional Option Dividend - - - - - - -


Ratio of Recurring Exps to Net Assets-Institutional Plan - Annualised 0.80% - - - - - -


69

Flexible Flexible Dynamic SPICE Fixed Floating Income Income Plan Maturity Rate Plan

Plan Plus Plan Plan –Yearly 12

Historical Per Unit StatisticsDate of Allotment September 27, May 22, October 31, January 10, March 17, March 28,

2002 2003 2002 2003 2003 2003NAV at the beginning of the year (Rs.) 10.7745 # 10.2799 30.4342 10.0046Growth Option - - - - 10.0191 -Dividend Option - - - - - -Monthly Option - - - - - -Quarterly Option - - - - - -Half Yearly Option - - - - - -Institutional Option - Growth - - - - 10.0208 -Institutional Monthly Option – Div. - - - - - -Institutional Option - Dividend - - - - - -@@@ Net Income per unit 0.2459 0.2485 2.1186 0.9249 0.2390 0.2880Dividends 0.8000 - - - - -Dividend Option (weekly) - - - - - -Institutional Dividend (Weekly) - - - - - -Monthly Option - - - - - -Quarterly Option - - - - - -Half yearly Option - - - - - -Half yearly Option - Institutional - - - - - -Fortnightly Dividend Option - - - - - -Institutional Fortnightly Dividend Option - - - - - -Institutional Monthly Dividend Option - - - - - -Institutional Daily Dividend Option - - - - - -Dividend Option Daily - - - - - -Transfer to Reserves - - - - - -Compounded Annualised Returns(Based on NAVs of Growth Option) *14.54% *3.04% *35.92% *14.01% *2.78% *1.74%

Benchmark Index I-Sec I-Sec Nifty BSE $ CRISILComposite Composite SENSEX Liquid

Inded Inded FundReturn compared to Benchmark Index -0.53% 0.93% 10.92% 1.42% # 0.11%Net Assets end of period (Rs. Crore) 1,468.09 51.34 88.29 21 45.09 33.78NAV at the end of the period 10.3036 13.5915 38.2958 - 10.1737Growth Option 11.4541 10.2778Dividend Option 10.6399 - - - - -Dividend Option (Daily) - - - - - -Dividend (Fortnightly) - - - - - -Monthly Option - - - - - -Quarterly Option - - - - - -Half yearly Option - - - - - -Institutional Option Growth - - - - 10.2985 -Institutional Fortnightly Option –Dividend - - - - - -Institutional Monthly Option – Dividend - - - - - -Institutional Option Dividend – Daily - - - - - -Institutional Option Dividend – Quarterly - - - - - -Institutional Option Dividend - - - - - -Ratio of Recurring Exps to Net Assets 1.00% 0.50% 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 July 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, Fixed Maturity Plan – Yearly 12, Prudential ICICI Flexible Income Plan, Prudential ICICI Flexible Income Plus Plan, Prudential ICICI Dynamic

Plan, SENSEX Prudential ICICI Exchange Traded Fund and Prudential ICICI Floating Rate Plan have not completed one year since the date of their launch. Returns are computed in absoluteterms 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.*** All the units holder under the scheme Prudential ICICI Gilt Fund Treasury 1 Year Plus Plan and Prudential ICICI Fixed Maturity Yearly Plan Series 3 & 8 have redeemed and units are nil as

on 31/07/03# These Schemes were launched during the year and these schemes were not in existence at the beginning of the year.## Dividend was declared under ICICI Premier for all the unitholders as on July 25, 1995 @Rs. 0.80 per unit. For computation of returns NAV of ICICI Premier has been considered after adjusting

the dividend declaration.### All the units holder of Growth Option under the scheme Prudential ICICI Fixed Maturity Plan Half Yearly Series I have redeemed their units on 25/06/2003, thus returns have been calculated

on the basis of the NAV of dividend option after adjusting for the dividend declared.$ Appropriate benchmark index is not available.@ As these schemes were launched before the launch of the respective benchmarks, Benchmark indices returns are not provided@@ 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 for the period of 10 days.@@@ The Net Income per unit mentioned has excluded Income equalisation & marked to market calculated on the basis of market value of net assets of the Scheme on the valuation date, divided

by the number of units outstanding on that date. It may be noted that, as it merely indicates the market value of the scheme on the given date, it is subject to vary from time to timeand does not reflect any income / loss of the scheme.


70

SECTION V

UNIT HOLDERS RIGHTS & SERVICESInvestor Services

The Fund believes in providing the investor with a superior service to make the investors’ experience in dealing with the Fundan efficient and satisfactory one. In order to achieve these goals, the Fund will endeavor to continuously establish and upgradesystems to handle transactions efficiently and resolve any investor grievances promptly.

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:-

a. Customer Service Centres in major metros

The AMC presently has Customer Service Centres in five main cities and various other cities the details in respect of which arestated on the last page of this Offer Document. Over a period of time, the AMC will endeavor to add further Customer ServiceCentres and/or sales offices in other cities. Unit holders can go to these Service Centres / Sales Offices for enquiries andtransactions during business hours.

b. Process transactions in a timely manner

Under the Regulations, the Fund/ the Registrar / AMC shall despatch to the Unitholders the dividend warrants within thirtydays of the date of declaration of dividend and the redemption proceeds within ten Business Days from the 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 (three) Business Daysfrom the date of acceptance of a transaction request. Ordinarily, non-monetary transactions or requests will be processed,(with the exception of issue of Unit certificates) within 7 (seven) Business Days. Investors should note that completion ofmonetary/ non-monetary transactions within 3 / 7 Business Days as indicated above would be done on “best efforts” basisand completion of all such transactions are subject to the time limits as prescribed under the Regulations.

Problem Resolution

The Fund will follow-up with Customer Service Centres and Registrar on complaints and enquiries received from investors withan endeavor to resolve them promptly.

For this purpose, Mr. Gautam Guha has been appointed the Investor Relations Officer. He can be contacted at the CorporateOffice of the AMC. The address and phone numbers are :

Contractor Building 3rd Floor41, R. Kamani MargBallard Estate, Mumbai 400 038Phone: (91)(22) 22679676Fax : (91)(22) 22679677e-mail: [email protected]

Information about the Scheme

The Fund will publish an abridged summary of an audited annual report of the Schemes as on March 31 of each year, throughan advertisement and an abridged Scheme wise annual report shall be mailed to all Unitholders, not later than six monthsfrom March 31 of each year. 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 in thelanguage of the region where the Head Office of the Fund is situated and update the same on AMC’s website at www.pruicici.comwithin 30 days and 60 days in two different formats prescribed in terms of SEBI’s circular dated April 20, 2001 and on AMFIweb site (www.amfiindia.com) before the expiry of one month from the close of each half-year, in the prescribed format.

Further the Fund shall also disclose the half-yearly scheme portfolios on its web site at www.pruicici.com and on AMFI web site(www.amfiindia.com) in the prescribed format before the expiry of one month from the close of each half-year.

The AMC will disclose the NAV of each Plan on 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 Plan’s portfolios or if such statement is not sent to the Unitholders, it will be publishedby way of an advertisement in one English daily circulating in the whole of India and in a newspaper published in the languageof the region where the head office of the mutual fund is situated. .

Account Statements

The AMC shall endeavor to mail Account Statements within 3 (three) Business Days for purchases, redemptions and switches.


71

NAV Information

The NAV of the Scheme will be calculated daily and announced by the Fund on each Business Day. The information on NAV maybe obtained by the Unit holders, on any day, by calling the office of the AMC or any of the Investor Service Centres or on thewebsite of the AMC www.pruicici.com. The Fund will use its best endeavour to publish NAVs daily, in at least two dailynewspapers. Further, AMC shall endeavour to publish the Purchase & Redemption prices of Units daily in a newspaper with allIndia 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.everyday. In case of any delay, the reasons for such delay would be explained to AMFI and SEBI by the next day. If the NAVs arenot available before commencement of business hours on the following day due to any reason, the Fund shall issue a pressrelease providing reasons and explaining when the Fund would be able to publish the NAVs.

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, anabridged Annual Report relating to the Scheme and mail to the Unitholders an abridged scheme wise annual report. 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 besent 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 having all India circulation and in a newspaper publishedin the 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 30 days and 60 days in two different formats prescribed in terms of SEBI’s circular dated April 20,2001 and on AMFI’s website at www.amfiindia.com within 30 days from the close of each half year, in the prescribed formats.

Further the Fund shall also disclose the half-yearly scheme portfolios on its web site at www.pruicici.com and on AMFI web site(www.amfiindia.com) in the prescribed format before the expiry of one month from the close of each half-year.

Rights of Unit holders of a Schemes

1. Unitholders of a Plan have a proportionate right in the beneficial ownership of the assets of that Plan.

2. When the Fund declares dividend (if any) under the Scheme, the Fund shall dispatch the dividend warrants to theUnitholders within 30 days from the date of declaration of dividend. In terms of the Regulations, the Redemptionproceeds will be dispatched within ten Business Days from the date of acceptance / deemed acceptance of the request forRedemption or repurchase proceeds, as the case may be.

3. 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.

4. The appointment of an AMC for the Fund can be terminated by majority of the Trustee or by 75% of the Unitholders ofthe Scheme of the Fund and any change in the appointment of the AMC shall be subject to the prior approval of SEBI andthe Unitholders of the Scheme and the Plans thereunder.

5. The Trustee is obliged to convene a meeting on a requisition of 75% of the Unitholders of the Scheme and the Plansthereunder.

6. 75% of the Unitholders of a Scheme and the Plan thereunder can pass a resolution to wind up the Scheme and the Plansthereunder.

7. Unitholders have the right to inspect all the documents listed under “Documents Available for Inspection”.

8. 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 and the plansthereunder.

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

9. 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 Unitholdersare 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 Plans 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.

10. Annual report containing accounts of the AMC would be displayed on the websites of the Fund (i.e. www.pruicici.com)Unitholders, if they so desire, may request for the annual report of the AMC.

Duration of the Schemes / Winding up

The duration of the Schemes is perpetual. The AMC, the Fund and the Trustee reserve the right to make such changes/


72

alterations to all or any of the three Schemes (including the charging of fees and expenses) offered under this Offer Documentto the extent permitted by the applicable Regulations. However, in terms of the Regulations a Scheme may be wound up afterrepaying the amount due to the Unit holders:

1. On happening of any event, which in the opinion of the Trustee, requires the Scheme to be wound up, OR

2. If seventy five percent (75%) of the Unit holders of the Schemes pass a resolution that the Scheme be wound up, OR

3. If SEBI so directs in the interest of the Unit holders

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 having a 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.

Procedure and manner of Winding up

The Trustee shall call a meeting of the Unit holders of the relevant schemes to approve by simple majority of the Unit holderspresent and voting at the meeting for authorising the Trustee or any other person to take steps for the winding up of theschemes.

The Trustee or the person authorised above, shall dispose of the assets of the scheme concerned in the best interest of the Unitholders of the Scheme.

The proceeds of sale realised in pursuance of the above, shall be first utilised 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 paid toUnit holders in proportion to their respective interest in the assets of the Scheme, as on the date the decision for winding upwas taken.

On completion of the winding up, the Trustee shall forward to SEBI and the Unit holders a report on the winding up, detailingthe circumstances leading to the winding up, the steps taken for disposal of the assets of the Scheme before winding up, netassets available for distribution to the Unit holders and a certificate from the auditors of the Fund.

Notwithstanding anything contained here in 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.

TAX BENEFITS OF INVESTING IN THE MUTUAL FUND

The following information is provided for only general information purposes. In view of the individual nature of tax benefits,each 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:

1. TO THE FUND

The Income of the Fund registered under Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulations madethereunder will be exempt from income tax in accordance with the provisions of section 10(23D) of the Act. The incomereceived by the Fund is not liable for deduction of tax at source.

The Finance Act 2003 has amended the provisions of section 115R of the Act, whereby the Mutual Fund will be liable to payadditional income tax at the rate of 12.5% plus applicable surcharge, on the income distributed by the Fund.

In view of the above amendment made by the Finance Act 2003, the Fund not being an open-ended equity oriented fundwould be liable to pay additional tax on the income distributed by it on or after April 1, 2003.

2. TO THE UNITHOLDERS

2.1 INCOME RECEIVED FROM MUTUAL FUND

Finance Act 2003 has inserted section 10(35), whereby any income received in respect of units of Mutual Fund specified underclause (23D) of section 10, in respect of Assessment Year 2004-2005 will be exempt from income tax in the hands of the unitholders. Further, it has been clarified that income arising from transfer of units of Mutual Fund shall not be exempt undersection 10(35).

In view of the amendment, no tax would be payable by unit holders in respect of income distributed by the Fund and no taxneeds to be deducted at source thereon by the Fund.


73

2.2 LONG TERM CAPITAL GAINS ON TRANSFER OF UNITS

i) For Individuals and HUFs

Long-term Capital Gains in respect of Units held for a period of more than 12 months will be chargeable under section 112of the Act, at a rate of 20% plus surcharge, asif applicable. Capital gains would be computed after taking into account cost ofacquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly andexclusively in connection with such transfer.

In the case, where taxable income as reduced by long term capital gains is below the exemption limit, the long term capitalgains will be reduced to the extent of the shortfall and only the balance long term capital gains will be charged at the flat rateof 20% plus surcharge, as may be applicable.

It is further provided that an assessee will have an option to apply concessional rate of 10%, plus surcharge, provided the longterm capital gains are computed without substituting indexed cost in place 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 chargeable under section 112of the Act at a rate of 20% plus surcharge, as may be applicable. Capital gains would be computed after taking into accountcost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred whollyand exclusively in connection with such transfer.

It is further provided that an assessee will have an option to seek concessional rate of 10%, plus surcharge, as applicable, tolong term capital gains computed without adjusting for cost for indexation.

(iii) For Non-resident Indians

Under section 115E of the Act for non-resident Indians, income by way of long-term capital gains in respect of Units ischargeable at the rate of 20% plus applicable surcharge. Such long-term capital gains would be calculated without indexationof cost of acquisition.

Non-resident Indians may opt for computation of long term capital gains as per section 112, which is more beneficial.

(iv) For Overseas Financial Organisations, including Overseas Corporate Bodies and Foreign Institutional Investorsfulfilling conditions laid down under section 115AB (Offshore Fund) :

Under section 115AB of the Act, income by way of long term capital gains in respect of units purchased in foreign currencyheld for a period of more than 12 months will be chargeable to tax at the rate of 10%, plus surcharge, as may be applicable.Such gains would be calculated without indexation of cost of acquisition.

2.3 SHORT TERM CAPITAL GAINS

Short term Capital Gains in respect of Units held for a period of not more than 12 months is added to the total income. Totalincome including short-term capital gains is chargeable to tax as per the relevant slab rates.

Income Tax Rates

The maximum tax rates applicable to different categories of assessees are as follows:

Resident individuals and HUF 30% plus surcharge

Partnership Firms 35% plus surcharge

Indian companies 35% plus surcharge

Non Resident Indians 30% plus surcharge

Foreign Companies 40% plus surcharge

As per the Finance Act 2003, a surcharge of 2.5% on the income tax would be applicable for all categories of assesses exceptin the case of individuals and HUF. With regards to individuals and HUF having a total income exceeding Rs. 850,000, asurcharge of 10% has been levied by the Finance Act 2003.

2.4 SHORT TERM CAPITAL LOSSES

According to sub-section (7) of section 94, if any person buys or acquires units within a period of three months prior to therecord date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of threemonths from such record date, then capital losses arising from such sale to the extent of dividend or income received orreceivable on such units, which are exempt under the Act, will be ignored for the purpose of computing his income chargeableto tax.

2.5 TAX DEDUCTION AT SOURCE

2.5.1 For Income in respect of units:

In view of the amendments made by the Finance Act 2003 in section 10(35), section 194K and section 196A, no tax shall bededucted in respect of any income credited or paid on or after April 1, 2003 in respect of units of the Fund.

2.5.2 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 section 194K) videcircular no.715 dated August 8, 1995 issued by the Central Board for Direct Taxes (CBDT).


74

(ii) In respect of Non- Resident Unit holders:

Under section 195 of the Income Tax Act, 1961, tax shall be deducted at source in respect of capital gains as under:

a. In case of non resident other than a company any other person -

Ø Long term capital gains 20% plus surcharge

Ø Short term capital gains 30% plus surcharge

b. In case of foreign company -


Ø Short term capital gains 40% plus surcharge

c.. In case of Offshore Fund as defined in 115AB –


As per circular no. 728 dated October 1995 by CBDT, in the case of a remittance to a country with which a Double TaxationAvoidance Agreement (DTAA) is in force, the tax should be deducted at the rate provided in the Finance Act of the relevant yearor at the rate provided in DTAA whichever is more beneficial to the assessee.

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

Under section 54EC of the Act

As provided under section 54EC of the Income Tax Act, 1961, where an assessee has made capital gains from the transfer ofunits held in Mutual Fund Scheme for a period exceeding 12 months and the assessee has any time within a period of 6months after the date of such transfer, invested the whole of the capital gains in the long term specified assets i.e., in bondsredeemable after 3 years issued by the National Bank for Agriculture and Rural Development, or by the National HighwaysAuthority of India or by the Rural Electrification Corporation Limited or by National Housing Bank or by the Small IndustriesDevelopment Bank of India, such capital gains shall be exempted from tax on capital gains under section 54EC of the IncomeTax Act 1961. However, if the assessee has invested only a part of the capital gains, he will be eligible for the proportionateexemption.

Under section 54ED of the Act

Under Section 54ED, capital gains arising from the transfer of units held in the Mutual Fund Scheme for a period exceeding 12months will be exempt, if the assessee has, any time within a period of 6 months after the date of such transfer, invested thewhole of the capital gains in acquiring equity shares forming part of an eligible issue of capital. However, if the assessee hasinvested only a part of the capital gains, he will be eligible for the proportionate exemption. An eligible issue of capital meansan issue of equity shares offered for subscription to the public by a public company formed and registered in India.

2.6 INVESTMENTS BY CHARITABLE AND RELIGIOUS TRUSTS IN THE PLAN

Units of a Mutual fund Scheme referred to in clause 23D of section 10 of the Income Tax Act, 1961, constitute an eligibleavenue for investment by charitable or religious trusts per rule 17C of the Income Tax Rules, 1962, read with clause (xii) of sub-section (5) of section 11 of the Income Tax Act, 1961.

2.7 WEALTH TAX

Units held under the Mutual Fund Scheme are not treated as assets within the meaning of section 2(ea) of the Wealth Tax Act,1957 and are, therefore, not liable to Wealth-Tax.

2.8 GIFT TAX

Units of the Mutual Fund may be given as a gift and no gift tax will be payable either by the donor or the donee, as the Gift TaxAct has been abolished.

UNCLAIMED REDEMPTION / DIVIDEND 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 the prevailingNet Asset Value. After a period of three years, this amount will be transferred to a pool account and the investors can claim theamount at NAV prevailing at the end of the third year. The income earned on such funds will be used for the purpose ofinvestor education. The AMC will make a continuous efforts to remind the investors through letters to take their unclaimedamounts. Further, the investment management fee charged by the AMC for managing unclaimed amounts shall not exceed 50basis points.

Unclaimed Dividend / Redemptions in respect of the open ended funds normally represent the time lag between funding ofthe respective accounts (with bank) by the AMC and the time taken for presentation of redemption/dividend warrants by theinvestors. No significant delay in the process is noticed. Hence the details in respect of open-ended funds is not mentioned.

Details in respect of Prudential ICICI Premier are given below –

As of March 31, 2003 As of July 31, 2003

Unclaimed Redemption Amount Rs. 8.28 Crores in respect of Rs. 7.69 Crores in respect of36,632 investors 34,180 investors

Unclaimed Dividend Amount Rs.0.03 Crores Rs. 0.03 Crores


75

SECTION VI

OTHER MATTERSUNIT HOLDER 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 the Registrarto ensure timely redresses and prompt investor service. Given below is the complaint history for the last three fiscal years:

ICICI Premier ICICI Power #

01/04/2000 to 31/03/2001

Complaints/ Requests received during the period 4549 2491

Redressed during the period 4545 2485

Pending 4 6

01/04/2001 to 31/03/2002

Complaints/ Requests received during the period 1011 1209#

Redressed during the period 1011 1215#

Pending as on March 31, 2002 4 Nil

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 31/07/2003

Complaints/ Requests received during the period 193 Not applicable

Redressed during the period 196 Not applicable

Pending as on July 31, 2003 2 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 was rolled over for afurther period of 5 years in February 1999 and is open for repurchase w.e.f. February 7, 2001. The pending investor complaints/ requests pertain to, inter-alia, Issue of duplicate certificates, non receipt of certificates, non receipt of redemption/dividendwarrants, revalidation of dividend warrants, name correction, change of address of the Unitholder, registration of death cases,registration of Power of Attorney, transfer/transmission of Units etc. All investor grievances are normally redressed within aperiod of 15 days of their receipt, subject to the information furnished by the Unitholder is complete and accurate. If suchinformation is not provided/not available with the Registrars to the above Schemes, the matter is further followed up with theinvestors. Investor complaints are continuously monitored with the Registrar to the Schemes.

The details relating to the fifteen open ended schemes launched by the Fund are as under:

Data relating to the period July 1998 to July 31, 2003

Scheme Complaints Complaints ComplaintsReceived redressed pending

Prudential ICICI Growth Plan 499 499 Nil

Prudential ICICI Income Plan 997 997 Nil

Prudential ICICI Liquid Plan 148 148 Nil

Prudential ICICI FMCG Fund 401 401 Nil

Prudential ICICI Tax Plan 393 393 Nil

Prudential ICICI Gilt Fund 129 129 Nil

Prudential ICICI Balanced Fund 478 478 Nil

Prudential ICICI Technology Fund 1981 1981 Nil

Prudential ICICI Monthly Income Plan 108 108 Nil

Prudential ICICI Fixed Monthly Plan 17 17 Nil


76

Prudential ICICI Child Care Plan 173 173 Nil

Prudential ICICI Power 125 125 Nil

Prudential ICICI Short Term Plan 3 3 Nil

Prudential ICICI Long Term Plan Nil Nil Nil

Prudential ICICI Sweep Plan Nil Nil Nil

Prudential ICICI Flexible Income Plan 7 7 Nil

Prudential ICICI Dynamic Plan 9 9 Nil

Prudential ICICI Floating Rating Plan 0 0 Nil

Prudential ICICI Index Fund-S&P CNX Nifty Plan 7 7 Nil

Sensex Prudential ICICI Exchange Traded Fund Nil Nil Nil

Total 5475 5475 Nil

ASSOCIATE TRANSACTIONS

Details of investments made by the schemes in securities of Sponsor i.e. ICICI Ltd. during the previous three financial years areas follows:

(Amount in Rupees)

Scheme name/Nature of investment April 1, 2003 to F.Y 2002-2003 F.Y. 2001-2002 F.Y. 2000-2001July 31, 2003

Amount Amount Amount

Investment in Bonds of ICICI Bank Ltd

ICICI Premier - - - 10,154,285

Prudential ICICI Income Plan 826,653,797 818,794,702 1,027,466,435 526,108,245

Prudential ICICI Balanced Fund - - 17,991,012 18,873,656

Prudential ICICI Liquid Plan 11,178,820 10,891,898 39,359,762 186,921,910

Prudential ICICI Short Term Plan 59,171,324 58,913,072 61,800,122 -

Prudential ICICI Monthly Income Plan - - - 50,771,423

Investment in NSE Linked Mibor Deposits /Term Deposit of ICICI Bank Ltd

Prudential ICICI Liquid Plan - 200,000,000 1,500,000,000 -

Prudential ICICI Short Term Plan - - - -

Prudential ICICI Power - - 20,000,000 -

ICICI Premier - - 20,000,000 -

Prudential ICICI Balanced Fund - - 80,000,000 -

Prudential ICICI Floating Rate Fund - 5,000,000,000

Prudential ICICI Flexible Income Plan - 50,000,000

Investment in equity shares of ErstwhileICICI Ltd

ICICI Power Nil Nil Nil Nil

Prudential ICICI Tax Plan Nil Nil Nil Nil

Prudential ICICI Index Fund Nil Nil 1,031,715 Nil

Investment in equity shares of ICICI Bank Ltd

Prudential ICICI Index Fund 3,087,987 3,491,370 592,862 Nil

Sensex Prudential ICICI Exchange Traded Fund 6,520,680 6,327,798 Nil Nil

TOTAL 906,612,608 6,148,418,840 2,768,241,908 792,829,519

% to the net assets of the Mutual Fund 0.69% 6.77% 4.19% 1.69%


77

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 its associatecompanies.

Subscription in issues lead managed by ICICI Securities Ltd. [erstwhile ICICI Securities & Finance Company Limited (I-Sec)]

(Amount in Rupees)

Name of the Scheme F.Y. 2000-2001 F.Y. 2001-2002 F.Y 2002-2003 April 1, 2003to July 31, 2003

ICICI Premier Nil Nil Nil Nil

Prudential ICICI Power Nil Nil Nil *6,675,000

Prudential ICICI Income Plan 700,000,000 50,000,000 200,000,000 Nil

Prudential ICICI Liquid Plan 600,000,000 250,000,000 Nil Nil

Prudential ICICI Growth Plan Nil Nil Nil *21,925,000

Prudential ICICI Tax Plan Nil Nil Nil *2,187,500

Prudential ICICI Monthly Income Plan Nil Nil Nil *6,100,000

Prudential ICICI Balanced Fund 50,000,000 Nil Nil *6,087,500

Prudential ICICI Dynamic Plan Nil Nil Nil *5,712,500

TOTAL 1,350,000,000 300,000,000 200,000,000 Nil

* ICICI Securities Ltd. [erstwhile ICICI Securities & Finance Company Limited (I-Sec)] was a lead manager to the public issue ofMaruti Udyog Ltd. along with other lead managers. It may be noted that, Prudential ICICI Mutual Fund has subscribed to thesaid issue through JM Morgan Stanley Securities Pvt. Ltd. This declaration has been made as a matter of disclosure to theinvestors.

Subscription in issues lead managed by ICICI Bank Limited

(Amount in Rupees)

Name of the Scheme F.Y. 2001-2002 F.Y 2002-2003 April 1, 2003 to July 31, 2003

Prudential ICICI Income Plan 72,728,496 Nil Nil

Prudential ICICI Liquid Plan 23,142,034 1,450,000,000 Nil

Prudential ICICI Short Term Plan Nil 603,220,568 Nil

Prudential ICICI Monthly Income Plan 36,628,268 445,762,855 Nil

Prudential ICICI Flexible Income Plan Nil 300,000,000 Nil

Subscription in issues lead managed by ICICI Capital Services Limited

(Amount in Rupees)

Name of the Scheme F.Y. 2001-2002 F.Y 2002-2003 April 1, 2003 toJuly 31, 2003

Prudential ICICI Income Plan 540,000,000 Nil Nil

Prudential ICICI Short Term Plan 10,000,000 Nil Nil

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.


78

Transactions with Associate Companies:

(Amount in Rupees)

F.Y. F.Y. F.Y. April 1, 2003 to2000-2001 2001-2002 2002-2003 July 31, 2003

ICICI Bank Limited – Bank ChargesICICI Premier Nil 470 Nil NilPrudential ICICI Power Nil 3345 15 202,500Prudential ICICI Income Plan 556,012 1,724,925 1,326,708 202,500Prudential ICICI Liquid Plan 890,864 1,839,595 889,394 202,500Prudential ICICI Growth Plan 873,445 755,177 827,049 202,500Prudential ICICI FMCG Fund 729,701 674,607 427,000 NilPrudential ICICI Tax Plan 773,856 620,145 1501 NilPrudential ICICI Gilt Fund – Treasury 378,505 901,716 825,762 NilPrudential ICICI Gilt Fund – Investment 748,544 949,692 889,297 67,500Prudential ICICI Gilt Fund –1 Year plus Nil 150 Nil NilPrudential ICICI Balanced Fund 763,247 724479 825,500 202,500Prudential ICICI Technology Fund 815,647 879,799 831,405 NilPrudential ICICI Monthly Income Plan 243,150 901065 825,665 202,500Prudential ICICI Fixed Maturity Plan Quarterly series 1 50,000 37,707 Nil NilPrudential ICICI Fixed Maturity Plan Quarterly series 2 Nil 4,979 50 NilPrudential ICICI Fixed Maturity Plan Quarterly series 3 Nil 15,748 Nil NilPrudential ICICI Fixed Maturity Plan Half-Yearly series 1 Nil 150 Nil NilPrudential ICICI Fixed Maturity Plan Half-Yearly series 2 Nil 150 Nil NilPrudential ICICI Fixed Maturity Plan Yearly series 1 Nil 150 Nil NilPrudential ICICI Fixed Maturity Plan Yearly series 2 Nil 150 Nil NilPrudential ICICI Fixed Maturity Plan Yearly series 3 Nil 200 661 NilPrudential ICICI Fixed Maturity Plan Yearly series 4 Nil Nil Nil NilPrudential ICICI Fixed Maturity Plan Yearly series 5 Nil 248 Nil NilPrudential ICICI Child Care Plan-Gift Plan Nil 3,644 350 NilPrudential ICICI Child Care Plan-Study Plan Nil 12,681 730 NilPrudential ICICI Short Term Plan Nil 423,699 825,715 202,500Prudential ICICI Flexible Income Plan Nil Nil Nil 202,500Prudential ICICI Flexible Income Plus Plan Nil Nil 398,750 NilPrudential ICICI Dynamic Plan Nil Nil 112 202,500Prudential ICICI Floating Rating Plan Nil Nil Nil 135,000ICICI Bank Limited – BrokeragePrudential ICICI Income Plan 8,816 1,396,509 18,399,247 4,614,382Prudential ICICI Liquid Plan 23,058 3,530,911 13,234,241 2,422,780Prudential ICICI Growth Plan 74,949 945,779 1287401 450,960Prudential ICICI FMCG Fund 9,654 9,095 36,865 125,383Prudential ICICI Tax Plan 5,536 104,654 182,185 42,153Prudential ICICI Gilt Fund – Treasury 353 26,546 147,943 10,657Prudential ICICI Gilt Fund – Investment 688 145,086 4,448,085 1,242,463Prudential ICICI Balanced Fund 69,119 64,065 371,333 183,898Prudential ICICI Technology Fund 74,429 103,779 688,780 211,515Prudential ICICI Monthly Income Plan 2,269 119,431 2,178,352 297,377Prudential ICICI Fixed Maturity Plan Quarterly series 1 Nil 11,171 11,929 1,944Prudential ICICI Fixed Maturity Plan Quarterly series 2 117,707 1,308 11,668 5,164Prudential ICICI Fixed Maturity Plan Quarterly series 3 Nil 139,294 4676 177Prudential ICICI Fixed Maturity Plan Half-Yearly series 1 Nil 15,815 39,558 809Prudential ICICI Fixed Maturity Plan Half-Yearly series 2 Nil 949 977 167Prudential ICICI Fixed Maturity Plan Yearly series 1 Nil 239 109,263 1,262Prudential ICICI Fixed Maturity Plan Yearly series 2 Nil Nil 8,611 336Prudential ICICI Fixed Maturity Plan Yearly series 3 Nil Nil 98,754 145,555Prudential ICICI Fixed Maturity Plan Yearly series 4 Nil 33 88 66Prudential ICICI Fixed Maturity Plan Yearly series 5 Nil 1,719 156,198 36,622Prudential ICICI Fixed Maturity Plan Yearly series 6 Nil Nil 378,438 Nil


79

Prudential ICICI Fixed Maturity Plan Yearly series 7 Nil Nil 600 NilPrudential ICICI Child Care Plan-Gift Plan Nil 93,326 368,251 96,636Prudential ICICI Child Care Plan-Study Plan Nil 49,857 240,792 88,243Prudential ICICI Power Nil 360 82,382 1,134,114Prudential ICICI Index Fund Nil Nil 29,945 NilPrudential ICICI Short Term Plan – Institutional Option Nil Nil 232,866 980,421Prudential ICICI Long Term Plan Nil Nil 137 154Prudential ICICI Flexible Income Plan Nil Nil 2,512,861 1,079,989Prudential ICICI Dynamic Plan Nil Nil 1,402,785 863,504Prudential ICICI Liquid Plan – Institutional Option Nil Nil 217,766 1,335,944Prudential ICICI Income Plan – Institutional Option Nil Nil 4,941 120,937Prudential ICICI Floating Rate Plan Nil Nil 995 48,126Prudential ICICI Short Term Plan Nil Nil 15,004,198 1,686,376ICICI Infotech Services Limited – Service ChargesICICI Premier 751,000 583,330 Nil 341,339ICICI Premier Redeemed Nil 19,930 Nil 92,333ICICI Capital Services Limited – BrokeragePrudential ICICI Power Nil 93 297 NilPrudential ICICI Income Plan 8,949487 13,376,665 54,912 NilPrudential ICICI Liquid Plan 2,959812 6,894,164 Nil NilPrudential ICICI Growth Plan 1,471,248 775,807 89,950 NilPrudential ICICI FMCG Fund 87,149 53,229 508 NilPrudential ICICI Tax Plan 118,162 75,314 774 NilPrudential ICICI Gilt Fund – Treasury 365,289 538,777 Nil NilPrudential ICICI Gilt Fund – Investment 683,334 2,248,509 Nil NilPrudential ICICI Balanced Fund 800,532 407,530 1,281 NilPrudential ICICI Technology Fund 1,804,955 1,954,540 8,648 NilPrudential ICICI Monthly Income Plan 448,893 1,350,164 2,849 NilPrudential ICICI Fixed Maturity PlanQuarterly series 1 14,589 282,228 Nil NilPrudential ICICI Fixed Maturity PlanQuarterly series 2 Nil 280,957 Nil NilPrudential ICICI Fixed Maturity PlanQuarterly series 3 Nil 97,344 Nil NilPrudential ICICI Fixed Maturity PlanHalf-Yearly series 1 Nil 263,080 Nil NilPrudential ICICI Fixed Maturity PlanHalf-Yearly series 2 Nil 40,312 Nil NilPrudential ICICI Child Care Plan – Gift Plan Nil Nil 1,656 NilPrudential ICICI Child Care Plan – Study Plan Nil Nil 2,176 NilICICI Brokerage Service Limited –brokerage on secondary market transactionsPrudential ICICI Premier 3,425 Nil Nil NilPrudential ICICI Balanced Plan Nil 9,000 666,606 9,600Prudential ICICI Growth Plan Nil 191,000 958,939 25,000Prudential ICICI Power Nil 2,000 188,388 146,680Prudential ICICI FMCG Fund Nil Nil 181,297 74,738Prudential ICICI Tax Plan Nil 2,000 131,833 3,990Prudential ICICI Technology Plan Nil 72,000 70,270 NilPrudential ICICI Monthly Income Plan Nil Nil 185,121 192,734Prudential ICICI Child Care Plan – Gift Plan Nil Nil 4736 NilPrudential ICICI Child Care Plan – Study Plan Nil Nil 7,329 NilPrudential ICICI Dynamic Plan Nil Nil 148,729 296,326ICICI Securities Ltd. (erstwhile ICICI Securitiesand Finance Co. Ltd.) brokerage on secondarymarket transactionsPrudential ICICI Dynamic Plan Nil Nil 5,940 Nil


80

ICICI Securities Ltd. (erstwhile ICICI Securitiesand Finance Co. Ltd.) BrokeragePrudential ICICI Income Plan 11,073,162 11,843,754 5,013,417 7,742Prudential ICICI Liquid Plan 199,485 4,791,362 61,087 71Prudential ICICI Growth Plan 18,051,819 1,365,584 85,833 382Prudential ICICI FMCG Fund 398,987 278,856 350,693 1,536Prudential ICICI Gilt Fund – Treasury 652,634 310,339 915,425 NilPrudential ICICI Gilt Fund – Investment 739,749 808,124 488,396 5,525Prudential ICICI Balanced Fund 8,177,865 2,195,439 1,047,772 19,255Prudential ICICI Technology Fund 4,194,879 396,549 10,196 69Prudential ICICI Tax Plan Nil 155 38 14Prudential ICICI Monthly Income Plan Nil 1,278 433 118Prudential ICICI Fixed Maturity PlanQuarterly series 1 Nil 274 Nil NilPrudential ICICI Short Term Plan Nil Nil 556,652 NilPrudential ICICI Flexible Income Plan Nil Nil 113,550 NilPrudential ICICI Power Nil Nil 386,599 NilICICI Web Trade Ltd. BrokeragePrudential ICICI Growth Plan Nil 190188 65,558 19,265Prudential ICICI Income Plan Nil 1,549 100,224 30,629Prudential ICICI Liquid Plan Nil Nil 30,358 14,356Prudential ICICI FMCG Fund Nil 921 17,816 10,836Prudential ICICI Tax Plan Nil 1,182 18,649 7,215Prudential ICICI Balanced Fund Nil 301 19,825 3981Prudential ICICI Technology Plan Nil 6,140 96,558 36,528Prudential ICICI Gilt Treasury Nil Nil 2,522 638Prudential ICICI Gilt Investment Nil Nil 19,178 5,362Prudential ICICI Monthly Income Plan Nil Nil 14,535 3,932Prudential ICICI Short Term Plan Nil Nil 6,981 1,707Prudential ICICI Power Nil Nil 34,638 32,600Prudential ICICI Flexible Income Plan Nil Nil 7,878 3,665Prudential ICICI Dynamic Plan Nil Nil 116,879 31,066ICICI Web Trade Limited – brokerage onsecondary market transactionsPrudential ICICI Growth Plan Nil Nil 4,582 NilWay2Wealth Securities Pvt. Ltd.Prudential ICICI Power Nil Nil 14,088 394,393Prudential ICICI Growth Plan Nil Nil 296,840 37,911Prudential ICICI Income Plan Nil Nil 2,179,850 312,353Prudential ICICI Liquid Plan Nil Nil 482,923 85,168Prudential ICICI FMCG Fund Nil Nil 1,168 483Prudential ICICI Tax Plan Nil Nil 19,215 3,214Prudential ICICI Balanced Fund Nil Nil 21,361 3,874Prudential ICICI Technology Plan Nil Nil 310,26 34,376Prudential ICICI Gilt Treasury Nil Nil 9,182 1,494Prudential ICICI Gilt Investment Nil Nil 347,823 62,966Prudential ICICI Monthly Income Plan Nil Nil 870,075 81,681Prudential ICICI Fixed Maturity Plan – Quarterly I Nil Nil 13,618 1,611Prudential ICICI Fixed Maturity Plan – Quarterly II Nil Nil 68 17Prudential ICICI Fixed Maturity Plan – Quarterly III Nil Nil 29 NilPrudential ICICI Index Fund Nil Nil 9,167 NilPrudential ICICI Short Term Plan Nil Nil 1,202,107 330,267Prudential ICICI Child Care Plan – Gift Plan Nil Nil 46,186 6,836Prudential ICICI Child Care Plan – Study Plan Nil Nil 38,778 6,350Prudential ICICI Flexible Income Plan Nil Nil 63,924 28,778Prudential ICICI Dynamic Plan Nil Nil 39,621 53,372


81

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 secondarymarket transactions of the Fund. The total business given to IBSL amounted to Rs.14.098 lakhs, Rs. 1,391.54 lakhs,Rs.8,106.27 lakhs and 12,927.72 lakhs during the year 1999-2000, 2000-2001, 2001-2002 and 2002-2003 respectively.Further, during the period from April 1, 2003 to July 31, 2003, total business given to IBSL amounted to Rs. 4,974.96lakhs. Further, IBSL was paid a sum of Rs. 305,650 in connection with the rollover of ICICI Premier scheme towardsservice charges, in the year 1998-99.

During the period from April 1, 2000 to July 31, 2003, total business given to ICICI Web Trade Ltd. and ICICI SecuritiesLimited amounted to Rs. 449.52 lakhs and 30.05 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 Services Limited,a brokerage house, ICICI Venture Funds Management Company Limited, a venture funds management company, ICICI Securitiesand Finance Company Limited (I Sec), an investment bank, ICICI Prudential Life Insurance Company Limited carrying outinsurance business, ICICI Web Trade Limited an online brokerage firm and Way2Wealth Securities Private Limited. The AMCmay utilize the services of these group companies and any other subsidiary or associate company of the Sponsors/AMCestablished or to be established at a later date in case such an associate company is in a position to provide the requisiteservices to the AMC. The AMC will conduct its business with the aforesaid companies on commercial terms and on an arm’slength basis and at the then prevailing market rates to the extent permitted under the applicable laws including the Regulations,after an evaluation of the competitiveness of the pricing offered by the associate companies and the services to be providedby them.

Associate transactions, if any carried out, will be as per the Regulations and the limits prescribed thereunder. 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 on July31, 2003:

Hero Honda Limited

Name of Scheme Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Index Plan 6,321 1,687,075 1.33

Sensex Prudential ICICI Exchange Traded Fund 13,402 3,562,252 1.70

HCL Technologies Limited Hindustan Lever Limited

Name of Scheme Quantity Amount (Rs.) % of NAV Quantity Amount (Rs.) % of NAV

Equity

Prudential ICICI Child Care Plan –Study - - - 671,256 4,217,300 2.76

Prudential ICICI Index Fund 9,108 1,488,247 1.18 69,579 11,866,698 9.38

Prudential ICICI Power 447,936 72,767,203 3.39 - - -

Sensex Prudential ICICI ExchangeTraded Fund 19,354 3,144,057 1.50 147,568 25,108,695 11.96

Prudential ICICI Technology Fund 660,139 107,239,581 8.84 - - -

Prudential ICICI FMCG Fund - - - 409,858 69,737,339 18.54

Prudential ICICI Dynamic Plan 296,077 48,097,709 5.39 - - -


82

ICICI Bank Ltd.


Debentures / Bonds of erstwhile ICICI Ltd.)

Prudential ICICI Short term Plan 10,000 59,171,324 0.26

Prudential ICICI Income Fund 150,000 826,653,797 2.04

Prudential ICICI Liquid Plan 2,000 11,178,820 0.04

Equity

Prudential ICICI Index Plan 19,403 3,087,987 2.44


Videsh Sanchar Nigam Limited


Equity

Prudential ICICI Index fund 8,964 1,036,687 0.82

Larsen & Toubro Limited


Debenture/Bonds/Commercial Paper

Prudential ICICI Short Plan 5 54,864,045 0.24

Equity

Prudential ICICI Balanced Fund 168,000 49,148,400 3.54

Prudential ICICI Child Care Plan – Gift 17,000 4,973,350 3.34

Prudential ICICI Growth Plan 426,932 124,898,957 4.12

Prudential ICICI Index Fund 7,862 2,296,490 1.81

Prudential ICICI Power 286,000 83,669,300 3.90


Prudential ICICI Child Care Plan – Study 7,000 2,047,850 1.34

NSE Linked Mibor Deposits/ Term Deposit

Prudential ICICI Liquid Plan 10 100,000,000 0.40

Prudential ICICI Short Plan 25 250,000,000 1.10

Wipro Limited


Equity


Prudential ICICI Technology Fund 20,000 18,859,000 1.55

Hindalco Industries Limited



Prudential ICICI Income Plan 1,000,820 1,354,040,752 3.32

Prudential ICICI Short Term Plan 305 171,429,961 0.76

Prudential ICICI Monthly Income Plan 5 51,402,389 1.82

Prudential ICICI Flexible Income Plan 20 205,609,556 1.42

Equity




83

Grasim Industries Limited



Prudential ICICI Income Plan 240 668,609,610 1.64

Prudential ICICI Short Term Plan 40 201,795,342 0.89

Prudential ICICI Monthly Income Plan 500,000 17,060,612 0.60

Equity


Prudential ICICI Dynamic Plan 73,001 39,570,192 4.44

Prudential ICICI Growth Plan 181,464 98,362,561 3.24

Prudential ICICI Monthly Income Plan 28,999 15,718,908 0.56

Prudential ICICI Power 125,000 67,756,250 3.16


Maruti Udyog Limited


Equity

Prudential ICICI Tax Plan 84,286 15,226,266 4.72

IDBI Bank



Prudential ICICI Income Plan 25,005 732,917,444 1.80

Prudential ICICI Liquid Plan 1,524,500 2,154,684,705 8.68

Prudential ICICI Monthly Income Plan 500 50,180,393 1.78

Prudential ICICI Premier 2,000 50,614,799 32.13

Equity

Prudential ICICI Tax Plan 360,000 15,804,000 4.90

PENALTIES & PENDING LITIGATIONS

CASES OF PENALTIES AWARDED BY SEBI UNDER THE SEBI ACT OR ANY OF ITS REGULATIONS OR ANY OTHER REGULATORYBODY AGAINST THE SPONSOR OF THE MUTUAL FUND OR ANY COMPANY ASSOCIATED WITH THE SPONSOR IN ANY CAPACITYSUCH AS THE ASSET MANAGEMENT COMPANY, TRUSTEE COMPANY/BOARD OF TRUSTEES, OR ANY OF THE DIRECTORS ORKEY PERSONNEL OF THE ASSET MANAGEMENT COMPANY AND TRUSTEE COMPANY:

ICICI Bank: Nil.

ICICI : Nil

AMC: Nil

Prudential Plc.

Financial Services Authority (FSA)

In October 2001, following a visit in early 1999, the Personal Investment Authority fined the Company £650,000. This relatedto delays in paying redress to supplement the pensions of those who had retired and the benefits of the beneficiaries of thosewho had died, and to its record keeping.

M&G

Following a regular Inland Revenue Personal Equity Plans(PEP) audit, M&G have reached agreement to pay the following:

missing application forms - £550

incorrect handling of void PEPs - £3205

accepting “paid for” as well as “free” shares during the take-on of Norwich Union windfall shares - £600 + repayment of anywrongly claimed tax credits

i. Investment Management Regulatory Organisation (IMRO)

In December 1996, Prudential Personal Equity Plans Limited underwent an IMRO disciplinary procedure.

In January 1997, the IMRO fined Prudential Personal Equity Plans Limited £70,000 for breaches of the Client Money Regulationsand related breaches which had occurred several years before.


84

The breaches were caused through the inability of systems to cope automatically with crediting individual investors’ accountswith dividends declared in respect of the underlying investments in personal equity plans. The dividends were handledmanually, were not credited in time and mistakes arose, requiring insignificant amounts of compensation to be paid toinvestors.

ANY PENDING MATERIAL LITIGATION PROCEEDINGS, OTHER THAN ORDINARY ROUTINE LITIGATION INCIDENTAL TO THEBUSINESS OF THE MUTUAL FUND TO WHICH THE SPONSOR OF THE MUTUAL FUND OR ANY COMPANY ASSOCIATED WITH THESPONSOR IN ANY CAPACITY SUCH AS THE AMC, BOARD OF TRUSTEES/TRUSTEE COMPANY OR ANY OF THE DIRECTORS OR KEYPERSONNEL IS A PARTY. ANY PENDING CRIMINAL CASES OR ECONOMIC OFFENCE CASES AGAINST THE SPONSOR OR ANYCOMPANY ASSOCIATED WITH THE SPONSOR IN ANY CAPACITY SUCH AS AMC, BOARD OF TRUSTEES/TRUSTEE COMPANY ORANY OF THE DIRECTORS OR KEY PERSONNEL.

AMC: 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, the Fund is of theview that investments under section 54EB of the Income Tax Act, 1961 read with CBDT notification no. 10247 dated December19, 1996 and the Offer Document of Prudential ICICI Growth Plan, the units had to be locked-in for a period of seven yearsfrom the date of investment. However, the Investor had disputed this stand and had filed a petition against Prudential ICICIAsset Management Company Limited as one of the respondents in the Honourable Delhi High court seeking the direction ofthe Court for premature redemption of units. SEBI vide its order dated September 4, 2000, rejected the petitioner’s claim forpremature redemption of units.

The Petitioner has subsequently approached the Securities Appellate Tribunal seeking release of money due upon redemptionof units and payment of interest there on. The matter has been heard by the Tribunal and the Tribunal dismissed the petitionof the investor.

The investor has, once again, filed a writ in the High Court of Delhi challenging the order of the Tribunal. This matter was listedbefore Hon’ble Delhi High court for final arguments in the regular hearing list.

Mr. K S Mehta – A Director of AMC:

Mr. K S Mehta has been made party in some of the cases relating to dishonour of cheques issued by M/s. Paam PharmaceuticalsLtd, Delhi, in which he was a Director. The dishonour of cheques took place after he had resigned from the Board. He has neverheld any shares in the company nor he was involved in any day-to-day affairs of the company. The matters are sub-judice.

ICICI Bank Ltd.:

There are no litigations whose likely outcome will have a material adverse effect on the operations of the Company. However,following are the pending litigation/disputes/defaults etc. against ICICI Bank as on December 16, 2002, listing out criminalprosecutions launched against ICICI Bank and/or its working Directors and Suits filed against ICICI Bank involving a claimamount of Rs. 10 lacs and more. (Claims involving an amount of less than Rs. 10 lacs are produced in the table below).

1. Three criminal complaints have been filed against ICICI Limited (since merged with ICICI Bank Limited) before theMetropolitan Magistrate, Mumbai, under the Maharashtra Private Security Guards Act, 1981 on technical grounds thatsecurity guards have been engaged from exempted security agencies even though ICICI Bank Ltd is registered with theSecurity Guards’ Board. ICICI Bank Ltd has earlier replied to the notices stating that registration is only in respect of ICICIBank’s residential quarters at Andheri and not in respect of other establishments of ICICI Bank Ltd.

2. Two criminal complaints have been filed against ICICI Bank Limited before the Metropolitan Magistrate, Mumbai, underthe Maharashtra Private Security Guards Act, 1981, on technical grounds that security guards have been engaged fromunexempted security agencies. ICICI Bank Ltd has taken a stand that the exemption of security agencies continued onaccount of High Court Order.

3. One case was filed by the Union of Security Guards at Bandra Kurla Complex against ICICI Limited (since merged withICICI Bank Limited) in the Industrial Court claiming difference in wages on the ground that ICICI Bank Ltd is engagingsecurity guards, which is not correct. ICICI Bank Ltd has filed a detailed reply inter alia pointing out that the engagementof security guards was for temporary period, which came to an end on September 30,2000. The Union had filed a writpetition in the Bombay High Court against the Order of the Industrial Court vacating the earlier status quo order, whichhas been dismissed. The appeal filed by the Union in the Bombay High Court (Division Bench) has been dismissed. TheUnion has withdrawn the case from the Industrial Court. The Union has raised an industrial dispute and thereafter hasfiled another writ petition in Bombay High Court inter alia seeking direction for reference of the industrial dispute toIndustrial Tribunal and restraining ICICI Bank Ltd from terminating the security guards. No stay has been granted and theearlier order for maintaining status quo has expired. The said industrial dispute has been referred to the IndustrialTribunal.

4. Walsons Industries Products Inc. has filed in the Mumbai High Court a suit against ICICI Limited (since merged with ICICIBank Limited) for recovery of US$653,000 alleging that three bills should be paid by ICICI Bank Ltd in terms of a letter ofcredit as done in the case of five previous bills since they formed part of the same transaction. ICICI Bank Ltd has put upa defence stating that all documents received through Bank of Nova Scotia are on collection basis, each one of them beingan independent transaction by itself without any supporting commitment from ICICI Bank Ltd through the letter of credit.The court has granted us unconditional leave to defend the case.


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5. Municipal Corporation of Greater Mumbai (BMC) has filed 5 cases against ICICI Bank for violating of Section 471 of theBMC Act read with Sec. 328-A on ground of non-payment of license fees for the illuminated sign boards at ICICI Bank’sATM centres. ICICI Bank filed a Writ Petition challenging the applicability of the provisions of Sec. 328 & 328-A of BMCAct in respect of the ATM Centres. The Writ Petition stood dismissed. As against the dismissal order, ICICI Bank filed aSpecial Leave Petition on November 14, 2002 in the Supreme Court.

6. A suit has been filed by M.B. Industries Limited a with the High Court at Kolkata claiming a decree of Rs.10.25 crores fromICICI Limited (since merged with ICICI Bank Limited), IDBI and IFCI in 1997. ICICI Bank’s share of the total claim amountis approximately Rs. 2 crores. The Kolkata High Court has not granted any relief to the company. However leave wasgranted to ICICI Bank, IDBI and IFCI to file recovery suits against the the company. IDBI as the lead, has filed joint suit withICICI Bank and IFCI before DRT, Kolkata, against the company. ICICI Bank’s claim in the suit is Rs. 191 lakhs. IDBI as thelead, has filed application u/s 22 (1) of SICA before the BIFR for permission to continue with legal proceedings against thecompany. The BIFR has recently granted permission to continue with legal proceedings against the company. The BIFR hasrecently granted permission to continue with legal proceedings against the company. The suit is adjourned to January 17,2003.

7. Shri Vijay Shankar Prasad one of the debenture holder of of Lloyds Finance & Investment Co. Ltd. had filed a Criminalcomplaint against the company its officials and has also impleaded Shri K V Kamath, MD & CEO of ICICI Bank Ltd.Summons were issued for personal appearance of Shri Kamath against which we have filed an application under Section205 of CRPC before the Magistrate Court and the same has been allowed. We have also filed criminal revision petitionbefore the Sessions Judge and the Hon’ble Judge has admitted the revision application, called for the records from theMagistrate Court and hence the proceedings before the Magistrate Court has been stayed. The matter is posted onJanuary 3, 2003.

8. A criminal complaint has been filed before the Metropolitan Magistrate at Ahmedabad by a Debenture holder of WesternIndia Shipyards Limited, against the Company, its Directors and against us as Debenture Trustees. The basic complaintarises out of forfeiture of amounts paid by the Debenture holder for Partly Convertible Debentures allotted to her sincecall money has not been paid. This is a civil matter and the complaint is likely to be dismissed. ICICI Bank Ltd has filed apetition in the Hon’ble High Court of Gujarat for quashing of the criminal complaint. The Hon’ble High Court of Gujarathas stayed the criminal proceedings qua ICICI Bank Ltd and its Nominee Director.

9. The Peerless General Finance & Invest. Co. Ltd., one of the debenture holder of Essar Oil Ltd. (in which ICICI Ltd. which hasbeen merged with ICICI Bank Ltd. (ICICI Bank) is acting as trustees) has filed a suit against Essar Oil Ltd. and others beforethe City Civil Court, Calcutta for non-receipt of redemption amount and interest. ICICI Bank has been impleaded asDefendents. We have filed our Written Statement before the City Civil Court, Kolkata.

10. A suit was filed by Anagram Finance Limited in November 1998 for recovery of a sum of Rs.6.83 crores from EZY SlideFasterners Limted. Summonses have been served on the EZY Slide Fasterners Limted. They have not filed appearance andICICI Bank is going to pray for a decree. EZY Slide Fasterners Limited filed a separate suit for recovery of Rs 7.18 crores,being the loss allegedly suffered by them on account of breach by Anagram of Subscription Agreement dated April4,1995 for subscribing to 420,000 Zero Interest Fully Convertible Debentures. The matter has not come up for argumentstill date.

11. The Union of contract labourers has raised an industrial dispute and thereafter filed a writ petition in the Bombay HighCourt inter alia seeking direction for reference of the industrial dispute to the Industrial Tribunal and for continuation ofarrangement of payment of wages in the meantime beyond December 31, 2001. However, the High court has notextended the date of the said arrangement. The said industrial dispute has been referred to the Industrial Tribunal.

12. A complaint was filed against Wipro Limited and all its Directors including Mr. K.V. Kamath, in his capacity as NomineeDirector on the Board Wipro Limited before the Court of Judicial Magistrate, Bhavanagar by the Gujarat Pollution ControlBoard alleging that effluents were being discharged without proper treatment. Shri K. V. Kamath is Managing Directorand CEO of ICICI Bank Limited. Shri K.V. Kamath was not a director of Wipro Limited as on the date of alleged offence.Special Leave Petition on behalf of the directors is filed before the Supreme Court challenging the order of the High Courtof Gujarat dismissing the application for quashing the said complaint. The Special Leave Petition has been admitted andthe criminal complaint has been stayed.

13. A shareholder of erstwhile ICICI since merged with ICICI Bank Ltd. had filed a complaint before the Consumer RedressalForum, Hyderabad District against ICICI Infotech Services Limited regarding transfer of five shares inspite of stop transferrequest by him. The District Forum dismissed his complaint. The shareholder appealed against the Order of the DistrictForum and the appeal was admitted by the A.P State Consumer Disputes Redresal Commission and directed ICICI BankLtd to pay compensation and costs. An amount of Rs. 12,500/- was accordingly paid to the complainant . However, theshareholder also has filed a criminal complaint against ICICI Bank Ltd and ICICI Infotech Services Ltd, before the XIMetropolitan Magistrate, Secunderabad and the The Hon’ble magistrate has referred the matter to Marredpally PoliceStation, Secunderabad for investigation. We have filed a quash petition before the Hon’ble High Court of Andhra Pradesh(APHC) for quashing the criminal complaint filed before the XI Metropolitan Magistrate, Secunderabad and APHC hasgranted stay on the investigations being undertaken by the police department till further orders.

14. ICICI Bank Ltd has filed a joint suit together with other banks and financial institutions in DRT Delhi against EsslonSynthetics Ltd. and its Managing Director (in his capacity as guarantor) for recovery of dues, The guarantor has filed a


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counter claim for an amount of Rs. 100 crore against ICICI Bank Ltd and other parties to the suit who were signatories tothe hiving off arrangement of the Company’s Fibres Division and LML Limited (Scooters Division) into separate companies.

15. A joint suit was filed by all lenders with IFCI as the lead against Best Boards Limited for recovery of dues in DRT, Delhi. TheCompany has filed a counter claim of Rs. 600 lacs against all lenders (including ICICI Bank Ltd) on the ground that IFCI,as the lead institution, refused to give its consent for sale of the plant & machinery and has alleged that there wereprospective buyers who were willing to pay a sum of Rs. 600 lacs thereby causing loss to the Company.

16. Pelicorp Limited has filed a criminal complaint against ICICI Bank Limited and Mr. H.N.Sinor, Joint Managing Director ofICICI Bank Limited and the writ petition has been filed for quashing the said complaint and high court has grantedinterim stay on the criminal complaint.

17. A complaint was filed against Wipro Limited and all its director including Mr. Nachiket Mor, in his capacity as NomineeDirector on the Board of Wipro Limited before the Court of Judicial Magistrate, Jalgaon by the Food Inspector, Food andDrug Administration alleging that the Vanaspati produced did not contain the specified requirements. Mr. Nachiket Moris Executive Director of ICICI Bank Limited. Special Leave Petition on behalf of the Directors is filed before the SupremeCourt Challenging the order of the High Court of Maharashtra dismissing the application for quashing the said complaint,the same is admitted and the criminal complaint has been stayed.

18. A Criminal Complaint has been filed against ICICI Bank Limited and Mr. H.N. Sinor, Joint Managing Director of ICICI BankLimited before the Chief Judicial Magistrate, Jaipur for offense for wrongful dishonor of cheques. We have filed revisionbefore the High Court at Jaipur. The Hon’ble Court was pleased to admit the revision and stay the proceedings pendingbefore the Chief Judicial Magistrate.

19. Shri Madan Gopal one of the debenture holders of Modern Denim Ltd. has filed a criminal complaint against thecompany its officials and has also impleaded Shri N Vaghul, Chairman of ICICI Bank Ltd. Summons were issued forpersonal appearance of Shri Vaghul against which ICICI Bank has filed an application under Section 205 of CrPC beforethe Magistrate Court (enclosing a medical certificate) and the same has been allowed. We have also filed a criminalrevision petition before the Sessions Judge and the Hon’ble Judge has admitted the revision application, called for therecords from the Magistrate Court and hence the proceedings before the Magistrate Court have been stayed. The matteris posted on January 02, 2003.

20. A Criminal Complaint has been filed before the Metropolitan Magistrate’s 26th Court at Borivli, Mumbai by Ms DipaliGopani against ICICI Home Finance Company Limited, Shri K V Kamath, Shri Vaghul, Smt Gupte, Shri S Mukherji, SmtMorparia, and certain other Directors of erstwhile ICICI Limited. A Criminal Application has been filed on behalf of thesaid five Directors and all other Directors in the Bombay High Court for quashing the complaint and in the interim for stayof the complaint against the Directors. The High Court has disposed of the said Criminal Application on December 13,2002, after recording the statement of the Complainant that she would be withdrawing the Complaint against allDirectors except those who are Directors of ICICI Home Finance Company Limited.

21. On April 12, 1999 ICICI had filed a suit before Hon’ble Bombay High Court (being Suit no 2203 of 1999) against MardiaChemicals Limited [MCL] for recovery of outstanding amount of Rs 135 crores (approx). Thereafter on July 16, 2002 ICICIissued a notice under the Securitisation And Restructuring Of Financial Assets & Enforcement of Security Interest Ordinance,2002 demanding payment of outstanding amount of Rs 293.49 crores. Thereafter on August 30, 2002 MCL has filed asuit in the City Civil Court at Ahmedabad against ICICI Bank Limited, Shri K V Kamath & Smt Lalita D Gupte for purportedamount of Rs.56,31,44,00,000/-. We have been advised that the suit filed is not tenable, bad in law and motivated stepsbeing adopted by MCL to thwart our recovery proceedings. We have filed an application under Order 7 Rule 11 of theCode of Civil Procedure for the dismissal of the suit on the grounds of limitation, jurisdiction and no cause of actionagainst ICICI Bank Limited, Shri Kamath and Smt Gupte. We have been granted time to file our written statement tillDecember 17, 200. The matter is coming up for hearing on December 11, 2002.

22. On October 30, 2002, Shin-etsu Chemicals Private Limited [Shin-etsu] filed a suit before Supreme Court of New York(being Complaint no. 603711of 2002) against ICICI Bank Limited [ICICI Bank] for compensatory damages of US$ 1,000,000plus interest for the alleged dishonouring by ICICI Bank of the letter of credit issued by ICICI Bank in favour of Shin-etsu.ICICI Bank has not agreed to make payments under the Letter of Credit as one of the terms of the Letter of Credit has notbeen complied with. We have on record a legal opinion from our Solicitors confirming that ICICI Bank was well withintheir rights not to make payments under the Letter of Credit. The reply to the complaint has been drafted by our counselwhich is being filed.

23. A criminal complaint has been filed by the Inspector of Legal Metrology at Andheri, Mumbai Court for violation of Rule8(1)(a) and (b) of Weights and Measures (Packaged Commodities) Rules, 1977 against Godrej Consumer Products Limitedand all its directors including Mr. Anupam Puri, a non-whole-time director of ICICI Bank, for not keeping the areasurrounding the quantity declaration on a pack of Shaving Cream free from printed information. The offence iscompoundable under the provisions of the Weights and Measures (Packaged Commodities) Rules, 1977 and the saidCompany has applied for the same.”

24. In April 2001, a suit has been filed against Vision Organics Limited for recovery of Rs. 31.27 crores before DRT, Ahmedabad.In the said suit the Company has filed a counter claim against the Bank for Rs 23 Crores and recently paid Court Fees afterthe Bank raised the objection.


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(Rs. in crores)

Sr. Nature of claim Cases with Cases withNo. Monetary Claim no specific

monetaryclaim

Number Amount Number

1. Suits/legal proceedings filed by shareholders/ bond holders of ICICI Bank Limited 214 0.28 232

2. Suits/legal proceedings filed by debenture holders againstICICI Bank Limited as Debenture Trustees. 12 11.29 190

3. Suits filed by lessees/hirers seeking injunction againstICICI Bank Limited taking possession of vehicles pursuant tolease/hire purchase agreements and other suits filed byretail customers. 139

4. Miscellaneous suits/ legal proceedings in the course of business. 63 0.53 50

ANY DEFICIENCIES IN THE SYSTEMS AND OPERATIONS OF THE SPONSOR OF THE MUTUAL FUND OR ANY COMPANY ASSOCIATEDWITH THE SPONSOR IN ANY CAPACITY SUCH AS THE AMC OR THE TRUSTEE COMPANY WHICH SEBI HAS SPECIFICALLY ADVISEDTO BE DISCLOSED IN THE OFFER DOCUMENT, OR WHICH HAS BEEN NOTIFIED BY ANY OTHER REGULATORY AGENCY.

Capital Markets : ICICI Bank acts as bankers to the market offerings of companies on account of raising of equity or debt, buyback of equity and for acquisition of equity on account of takeovers. These companies are required to maintain the subscriptionfunds with the bankers to the offering until the allotment of shares/buy back of shares and the refund of excess subscriptionis completed. This process generally takes about 15 to 30 days, resulting in short-term deposits with ICICI Bank.

SEBI had issued a notice in the matter of North Star Gems (India) Ltd to show cause as to why Bhadra, Ahmedabad branch ofthe erstwhile Bank of Madura should not be suspended from conducting merchant banking activities for a period of 6months. ICICI Bank filed its detailed reply with SEBI. SEBI in terms of their Order dated October 16,2002 took note of the factthat RBI had not indicated any malafide actions on the part of bank officials and also the fact that the Bank had takendisciplinary action against the concerned employees and issued a warning to Bhadra Branch of ICICI Bank with furtherdirection to that Branch to act with due skill, care and diligence while acting as Banker to an Issue.

Debenture Trusteeship: The erstwhile ICICI Limited had provided debenture trusteeship services since 1983, and acted astrustee for the holders of convertible and non-convertible debentures issued in the public and private markets. During SEBI’sinspection of the Debenture Trustee operations of the erstwhile ICICI Limited, observations on certain shortcomings weremade by SEBI in its inspection report. The erstwhile ICICI Limited had initiated suitable action based on SEBI report and hadsubmitted a detailed reply to SEBI. The matter is being examined by SEBI. The erstwhile ICICI Limited had subsequently, witha view to exit this business, been divesting the portfolio of debenture trusteeship in favour of other debenture trustees. ICICIBank continues to act as a debenture trustee for the remaining companies for which the erstwhile ICICI Limited were debenturetrustees. ICICI Bank has been permitted by SEBI to act as a debenture trustee.

SUBSIDIARIES

1. ICICI Securities and Finance Company Limited (ICICI Securities): ICICI Securities was set up in February 1993 to provideinvestment-banking services to investors. ICICI Securities has three main business lines-

Corporate advisory and Mergers and AcquisitionsFixed income; and Equities

With the merger of erstwhile ICICI Limited with ICICI bank becoming effective, ICICI Bank holds 99.92% of the share capitalof ICICI Securities. ICICI Securities is a Merchant Banker, Underwriter and Portfolio Manager registered with SEBI. Also ICICISecurities is a Primary Dealer registered with RBI engaged in acquisition and trading of Government Securities.

Currently ICICI Securities provides services such as issue management underwriting, placement of debt and equity, corporateadvisory services including mergers, amalgamations and spin offs, capital structuring, valuations and fairness opinion reportsand as a Primary Dealer actively involved in money market operations, and trading in securities. It also provides specialisedservices in the areas of private equity syndication and privatisation of government entities. In addition, ICICI Securities has aresearch team, which identifies investment opportunities and provides timely investment advice to clients. ICICI Securities isamongst the largest arranger of funds in Debt and Equity segments and also amongst the leading advisors in Mergers andAcquisitions. It is also amongst the highest capitalized Investment Banks in India with net worth of Rs.3,191.80 million as onMarch 31, 2002.

ICICI Securities was awarded two penalty points by SEBI for non-submission of Letter of Offer in the Rights issues of SiroplastLimited and Thane Electricity Supply Co. Ltd. during 1995 and one penalty point for non-submission of post-issue report inthe Public Issue for Shree Rajasthan Texchem Ltd. Further, warning letters were issued by SEBI on October 2, 1998 for lack of


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due diligence in the issue of Hindustan Motors Ltd. and on July 11, 2000 in connection with dissemination of information toinvestors in the issue of Cadila Healthcare Limited.

ICICI Securities was issued a warning letter by RBI on May 30, 2001 on the bouncing of SGL form on a government securitiestransaction on May 4, 2001. Before this, RBI had issued four such letters on January 9, 1997, February 23, 1999, June 13, 2000and January 18, 2001. However penal action is initiated by RBI only in case of three consecutive instances of bouncing in theperiod of six months i.e. April-Sept. and /or October-March. Hence no penal action was taken in above instances.

RBI reduced the liquidity support limit for ICICI Securities by Rs.25 crore for a period of three months from October 7, 2002until January 6, 2003, for delayed submission of bid in the treasury bill auction conducted on September 25, 2002. Earlier, areduction in the liquidity support limit by Rs.1.50 crore was imposed for shortfall in bidding commitment on April 7, 2000,which was reset to original level with effect from October 9, 2000.

2. ICICI Investment Management Company Limited: ICICI Investment Management Company Limited (“ICICI InvestmentManagement”) had been incorporated on March 9, 2000 as a 100% subsidiary of erstwhile ICICI Limited (ICICI) and obtainedcertificate of commencement of business on March 14, 2000. The authorised share capital of ICICI Investment Managementis Rs.25 crore and the paid-up share capital is Rs.10,00,07,000. Consequent to the amalgamation of ICICI with ICICI Bankbecoming effective on May 3, 2002, ICICI Investment Management has become a 100% subsidiary of ICICI Bank.

The main object of ICICI Investment Management is to carry on the business activities in respect of the management of mutualfunds, unit trusts, offshore funds, pension funds, provident funds, venture capital funds, insurance funds, and to act asmanagers, consultants, advisors, administrators, attorneys, agents, or representatives of or for mutual funds, unit trusts,offshore funds, pension funds, provident funds, venture capital funds or insurance funds formed or established in India orelsewhere by ICICI Investment Management or any other person (whether incorporated or not) or by any government, state,local authority, association, institution (whether incorporated or not) or any other agency or organisation and to act asFinancial Advisors and Investment Advisors, and to render such financial management, financial consultancy and advisoryservices to individuals, companies, corporations, trusts and other entities as supplemental activities of ICICI InvestmentManagement and as do not conflict with the fund management activities.

ICICI Investment Management is the asset management company of “ICICI Securities Fund”, a Mutual Fund registered withthe Securities and Exchange Board of India.

SEBI had issued a warning letter on May 22, 2000 to ICICI Investment Management for lack of due diligence while submittingthe offer document for ICICI CBO Fund-I.

Prudential plc.

Financial Services Authority (FSA)– Scottish Amicable

Following a visit in January 2001 the FSA raised concerns about the implementation by Scottish Amicable Life of requirementsissued by the Personal Investment Authority in December 1999 concerning the sales of mortgage endowment policies.

The Company agreed to review policies sold since that date; the matter has not been concluded.

i. FSA - Prudential

The Prudential Assurance Company Limited has twice been criticised for failing to meet its pension mis-selling review deadlines.The first occasion was by the FSA in 1997.

In December 1997, the FSA issued a section 60 notice and a public statement criticising the Company’s compliance arrangementswith respect to its direct sales force.

ii. London Stock Exchange

Prudential Corporation plc was publicly criticised by the London Stock Exchange in 1995 for the manner in which it dealt withauthorisation of a dealing by its then chief executive in Prudential shares.

ANY ENQUIRY/ADJUDICATION PROCEEDINGS UNDER THE SEBI ACT AND THE REGULATIONS MADE THERE UNDER, AGAINSTTHE SPONSOR OF THE MUTUAL FUND OR ANY COMPANY ASSOCIATED WITH THE SPONSOR IN ANY CAPACITY SUCH AS THEAMC, BOARD OF TRUSTEES/TRUSTEE COMPANY OR ANY OF THE DIRECTORS OR KEY PERSONNEL OF THE AMC:

iii. Prudential plc

PIA investigations:

Prudential Assurance Company Limited: Following an article in “The Guardian” in August 1998 concerning possiblepensions mis-selling, the PIA will be investigating 2 cases.

SIB cases

Prudential Assurance Company Limited: A number of writs were issued from 1995 to 1997 in connection with the mis-selling of personal pensions, mainly where a personal pension was taken out in preference to occupational scheme membershipbut in some cases where an occupational scheme benefit was transferred to a personal pension.

Some were for protective purposes pending review of the sale under the SIB guidance; others proceeded, and many havereached settlement via consent orders on the basis of payment of full compensation but without an admission of liability.


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ITC Advertising Complaints Reports

(Pru Banking): Complaints were received in November/December 1997 from 3 viewers. An advertisement for a Prudential 60Day Notice Account offered a rate of 7.5% gross per annum on £10,000 and included the statement “you won’t find a betterrate of interest for £10,000”.

Two viewers objected that a “better rate” of 7.6% could be obtained on £10,000 in a Legal and General 60 day NoticeAccount. The third viewer objected that the rate of 7.5% in fact included a 1% loyalty bonus, which only applied after £10,000had been held in the account for 12 months.

Assessment: Following a complaint on 17 October 1997, the ITC drew the Teletext’s attention that a higher rate of interest wasapparently being paid on a Legal and General account comparable to the Prudential’s. Teletext immediately removed thePrudential advertisement from air pending investigations. These revealed that whilst Legal and General had introduced a rateof 7.6% on 10 October 1997, Prudential had not matched this rate until 17 October 1997. In addition, whilst Prudential’sadvertising agency had, on 15 October 1997, requested Teletext to amend the rate to 7.6% from 20 October 1997, pressadvertising for the Prudential account had reflected the higher rate on 17 October 1997.

Teletext confirmed that the headline rate was stated gross of a 1% loyalty bonus, which was only paid if the account was stillopen after 12 months and only two withdrawals had been made. They agreed that this was a significant condition whichshould have been made clear and instructed that subsequent advertising for this Prudential account should include details.

The ITC agreed that the advertising had been misleading during the period the Legal and General had been offering a higherrate than Prudential and considered that the omission of details about the 1% loyalty bonus had also rendered the advertisingmisleading.

Teletext had already removed the advertisement from air and would not permit it to return until the relevant amendments weremade.

The complaints were upheld.

iv. Complaint via Trading Standards Department

The Prudential Assurance Company Limited: An objection (in 1998) was received via the Trading Standards Department to aleaflet that claimed “Save around £100 on home insurance”. The complainant, who was given a quote for £16 more than hisexisting policy, challenged whether the savings were generally attainable.

Adjudication: The complaint was upheld. The advertisers submitted a summary of their research, which showed that ninetenths of customers who had switched their home insurance to Prudential had saved an average of £97.99. They argued thatthe claim was neither a price promise nor a guarantee that Prudential would always be the cheapest. The Authority noted thatthe leaflet stated elsewhere that “You could save money …..” It considered, however, that the claim implied that switching tothe advertisers’ household insurance policies always saved customers money. Because that was not true, the Authority askedthe advertisers not to use the claim again.

v. Complaints about advertisements in the national press

1 The Prudential Assurance Company Limited: An objection (in 1998) to a national press advertisement that washeadlined “Prudential announce a rate change of great interest to savers” and featured a table of interest rates for theadvertisers’ 60 Day Notice Account . One column of the table was headed “Monthly Rates (inc loyalty bonus)*” and quotedannual interest rates for those who have their interest paid monthly. A footnote stated “The rates include a loyalty bonus of1% gross pa (0.8% net pa) calculated daily and paid annually on the anniversary date. This is paid provided the account is stillopen and in the preceding 12 months no more than two withdrawals have been made and the balance has not been less than£2,000.” The complainant objected that the advertisement was misleading because the loyalty bonus was not paid until theanniversary date.

Adjudication: Complaint upheld. The advertisers said they believed the footnote explained that monthly interest was calculatedexcluding the loyalty bonus but accepted that the presentation of the advertisement could be confusing. The Authorityconsidered that the advertisement was misleading and it welcomed the advertisers’ intention to amend future advertisementsto state monthly interest rates without the loyalty bonus, which they will show separately.

The Prudential Assurance Company Limited: An objection (in 1998) to a national press advertisement that was headlined“Why you’ll be better off with Prudential because we’re No. 1 in our field”. The complainant challenged the claim.

Adjudication: Complaint upheld. The advertisers submitted evidence that showed they were number one in some but not allthe aspects of their pension and life insurance business. The Authority accepted that the advertisers claim was acceptable inrelation to pensions and life insurance but considered that their information did not adequately substantiate the generalclaim that the advertisers were “No. 1” in their field. The Authority asked the advertisers to specify in future the sectors inwhich they could show they were “No. 1”.

The Prudential Assurance Company Limited (PAC): LAUTRO approached PAC in April 1994 with a request for its co-operation in an informal review to validate LAUTRO’s pension rules for the future. Prudential agreed to co-operate. LAUTROsubsequently expressed various concerns about the Prudential’s approach to pension transfers. The review was placed on aformal footing in March 1995. Following further discussions with LAUTRO, LAUTRO agreed not to take any disciplinary actionand no charges were brought.


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State of Florida (Division of Securities & Finance) fined National Planning Corporation (NPC) $10,000 for failing to register twobranch offices. NPC were also required to sign a Stipulation and Consent Agreement.

OPRA fined Prudential Nominees Ltd (PNL) £5000 following a determination regarding the Ledo Limited Pension Plan (a SSAS)for which PNL is pensioneer trustee. The fine is in respect of failing to appoint an auditor and other procedural failures. Wehave asked for reconsideration at OPRA Council meeting in March 2002.

National Planning Corporation (NPC) have established a $6m claimants funds after agreement with New York AttorneyGeneral (NYAG). This follows NYAG investigation into sale of payphones and leaseback arrangements of ETS payphones byrepresentatives of NPC. NYAG allege that the sale constituted an unregistered securities offering.

Jackson National Life (JNL) have reached a settlement of Haggan case and the Andrews Dunn and Gales cases linked to it fora sum of $10m. Finalised in January 2002 - the terms of the settlement are confidential and should not be disclosed to thirdparties.

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 time and applicableto similar borrowings. The security for such borrowings, if required, will be as determined by the Trustee. Such borrowings, ifraised, may result in a cost, which would be dealt with in consultation with the Trustees.

No borrowings have been raised under any of the Schemes of the Fund, as of the date of this Offer Document.

f) STOCK LENDING BY THE MUTUAL FUND

Subject to the Regulations and the applicable guidelines, the Scheme and the Plans thereunder may, if the Trustee permits,engage in stock lending. Stock lending means the lending of stock to another person or entity for a fixed period of time, at anegotiated compensation. The securities lent will be returned by the borrower on expiry of the stipulated period. Please seepage 8 on risks attached with stock lending. Each Plan, under normal circumstances, shall not have exposure of more than50% of its net assets in stock lending. The Plan may also not lend more than 50% of its net assets to any one intermediary towhom securities will be lent. The AMC shall report to the Trustee on a quarterly basis as to the level of lending in terms of value,volume and the names of the intermediaries and the earnings/losses arising out of the transactions, the value of collateralsecurity offered etc. The Trustees shall offer their comments on the above aspect in the report filed with SEBI under sub-regulation 23(a) of Regulation 18.

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, 2003 haveallowed the mutual funds to make investments in equity of listed overseas companies which have a shareholding of at least10% in an Indian company listed on a recognised stock exchange in India (as on January 31 of the year of investment).

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 been obtained.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 appropriate interms of the overall investment objectives of the Scheme and the Plans thereunder. Since the Scheme and the Plans thereunderwould invest only partially in ADRs/GDRs/overseas securities, there may not be readily available and widely accepted benchmarksto measure performance of the Scheme and the Plans thereunder. To manage risks associated with foreign currency andinterest rate exposure, the Fund may use derivatives for efficient portfolio management including hedging and in accordancewith conditions as may be stipulated by SEBI/RBI from time 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 the permissibleceilings of expenses. The fees and expenses would illustratively include, besides the investment management fees, custodyfees and costs, fees of appointed advisors and sub-managers, transaction costs, and overseas regulatory costs.


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H) INTER-SCHEME TRANSFERS

The Fund may undertake inter-Scheme transfers under the Scheme. If such transfers are done they will be effected based on theclosing prices of the Principal Stock Exchange and in conformity with Regulations. In case of securities which are not traded onthe Principal Stock Exchange / any other exchange, the inter-Scheme transfers will be affected based on fair valuation to bearrived at by the AMC with the approval of the Trustee.

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 purpose ofgiving effect to the Scheme with power to the AMC to add to, alter or amend all or any of the terms and rules that may beframed 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, do anythingnot inconsistent with such provisions, which appears to it to be necessary, desirable or expedient, for the purpose of removingsuch 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), andthe same shall be binding on all the Unitholders of the Scheme and any person or persons claiming through or under them asif 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 Registrars 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 the offer document the provisions of the SEBI (Mutual Funds) Regulations,1996 and the Guidelines thereunder shall be applicable.

Note : The Scheme under this Offer Document was approved by the Directors of Prudential ICICI Trust Limited by circulationon January 7, 1999

For and behalf of the Board of Directors of

PRUDENTIAL ICICI ASSET MANAGEMENT COMPANY LIMITED

Sd/-

Shailendra BhandariManaging Director

Place : Mumbai

Date : August 20, 2003