Why Invest in Equities?

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Why Invest in Equities?

*Consult your tax advisor for more details. Source BSE India, Data as of Apr 30, 2021. Income Distribution cum Capital Withdrawal Option.

Capital Appreciation

Inflation adjusted returns

Tax Advantage*

Goal based investing

Liquidity

Potential Capital Appreciation in the form of Capital Gains & IDCW

Minimises the impact of Inflation on wealth creation over longterm

Returns on equity investments are subject to lower taxobligations relative to other asset classes

Probability of achieving mid to long term goals increases wheninvesting in equities. E.g. Rs. 1 Lakh invested in S&P BSE Sensex in 1979, is valued at Rs. 4.88 Crs today

Investments in open-ended mutual funds are liquid in nature andcan be withdrawn anytime when need arises subject to exit loadterms

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Our Outlook on Equities

• Global Central Banks’ policy stance, pace of earnings growth &

policies of newly elected US Gov. key triggers for equity markets

• Post COVID led slowdown, Indian economy recovery on track

and well placed fundamentally. Long Term Growth story remains

intact

• Volatility may prevail in near term given the evolving

developments around Pandemic situation & Global growth

recovery

• Barring few pockets of the market, valuations in certain pockets

still reasonable. Constructive on adding equities in staggered

manner

• Investing in select opportunities with reasonable valuations

across Marketcap may be beneficial for investors seeking Wealth

Creation in long term 3

Flexicap Funds and Investing Benefits

FLEXICAP DYNAMIC DIVERSIFICATION RISK MITIGATION MARKET CYCLES

Flexicap Fundsare schemes that

can invest in opportunities

across Marketcap spectrum

A flexicap schemeat any given point

in time, can bedynamically

overweight/under-weight across

Large/Mid/Smallcap depending on the

attractiveness

This may lead to more

investment choices thereby

leading to diversification

A diversified investment may mitigate the risk associated with

investing solely in large/mid/smallcaps

A flexicap schememay do well across

different market cycles given the

dynamic nature of the scheme in

navigating across market

capitalization

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Flexicap Funds – Positioning

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Potentia

l R

eturns

Potential Risk

Largecap

FLEXICAP

Large &

Midcap

Multicap

Midcap

Smallcap

A Flexicap Fund has the flexibility to move across Large, Mid and Smallcaps basis Valuations. Hence, flexicaps can act as good compounders over long

term with low potential risks relative to mid & smallcaps

Min. 80% in Largecaps

Min. 35% each in Large

& Midcaps

Min. 25% each in Large, Mid &

Smallcaps

Min. 65% in Midcaps

Min. 65% in Smallcaps

Positioning and Mandate is as per SEBI Mutual Funds Categorization

No capping across

Marketcap

PRESENTINGICICI Prudential

FLEXICAP FUND

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About ICICI Prudential Flexicap Fund

INVESTMENT PHILOSOPHY

Aim to identify and invest in opportunities across market caps through an in-house Marketcap model

INVESTMENT APPROACH

Mix of top-down and bottom-up approach toidentify opportunities in large, mid and small cap space respectively

SECURITY SELECTION

Stocks will be selected basisvarious factors such as, macros, companyfundamentals, valuations, etc.

INVESTMENT PROCESS

•The Fund Manager decides the Marketcap attractiveness basis prevailing market conditions

•The Fund Management team identifies opportunities in that particular segment

INVESTMENT UNIVERSE

Opportunities from S&PBSE 500 universe will be considered for investment

RE-BALANCING

The Large/Mid/Smallcap allocation will be assessed andre-balanced on a periodicbasis, based on the in-housemodel

The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.

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About ICICI Prudential Flexicap Fund

Based on the in-house Marketcap model

Staggered Manner of deployment in Equity based on various internal asset allocation & valuation models

Adequate capping on stock concentration

Middle of the diversified space (moderate) as themarket-cap allocation would be manageddynamically

Marketcap Allocation

Deployment Approach

Stock Diversification

Risk Reward


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ICICI Prudential Flexicap Fund – Investment Style

Please note, the above list is indicative and not exhaustive. P/E – Price to Earnings, P/B – Price to Book. The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.

TOP-DOWN + BOTTOM-UP APPROACH

TOP-DOWN APPROACH

Used primarily to vet opportunities in the largecap space and focuses on factors like –

Economic indicators

Policy response

Growth

Inflation

Global Macros

Future earnings potential

Future project pipeline

BOTTOM-UP APPROACH

Used primarily to vet opportunities in the mid and smallcap space and focuses on factors like –

Growth outlook

Opportunity size

Management Track record

Historical return ratios

Valuations

HOW ISICICI Prudential

FLEXICAP FUNDdifferent?

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Market Cap Allocation Range*

*The above range is indicative and may vary basis prevailing macro economic scenario and market valuations. The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.

Largecap Range

50-100%

Mid & SmallcapRange

0-50%

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• Markets may remain volatile with uncertainties regarding Global Central Bank’s stimulus stance, pace of

vaccination drives and Domestic & Global growth

• Largecaps in such a scenario may help in limiting downside and providing liquidity to the portfolio

• We also believe that the economic recovery is on track with limited lockdowns, expected improvement in pace of

vaccination and continued Govt. and RBI support to spur Growth

• Hence, mid & smallcaps may be better positioned to capture potential upside from expected economic recovery.

Therefore, given the current macro scenario and market valuations, tentative Marketcap allocation may be as

follows

The in-house Marketcap Model

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Following parameters and other economic indicators will be considered for ascertaining Marketcap allocation

Select Parameters of in-house Marketcap model

Market Cap Weight as a % of totalMarketcap

Valuation

Relative Strength Index (RSI) Differential

Please note, The above factors are not exhaustive, the scheme may or may not use the above factors. In order to manage the scheme and to ensure that the Scheme attains its investment objective, the AMC has developed an in-house model to invest across market caps in a structured manner. The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio ofthe scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.

Marketcap weight as a % of total Marketcap

As seen historically, Mid and Smallcap valuations (as a % of total Marketcap), are attractive postcorrections.

The model considers this parameter while arriving at final allocation

Source – Edelweiss Research. Data as of May 2021. GFC- Global Financial Crisis, NBFC – Non Banking Financial Company. Total Marketcap calculation includes top 1000 companies by Mcap. Midcap is top 101 to 250 companies by marketcap and Smallcap is 251st company by marketcap until 1000th company by marketcap listed on NSE Past performance may or may not sustain in future

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Post GFC Post US

Taper

Tantrums

Pre -

NBFC

Crisis

6.0%

9.0%

12.0%

15.0%

18.0%

Jun-05

May-06

Apr-07

Mar-08

Mar-09

Feb-10

Jan-11

Dec-11

Dec-12

Nov-13

Oct-14

Sep-15

Sep-16

Aug-17

Jul-

18

Jul-

19

Jun-20

May-21

Mid and Smallcap as a % of total Marketcap

Midcap Smallcap

Valuations – Mid & Smallcaps Vs. Largecaps

The model considers Price to Book Value (P/B) discount/premium of Mid & Smallcaps Vs. Largecaps

Source: NSE India. Data as of May 2021. GFC- Global Financial Crisis, NBFC – Non Banking Financial Company. Nifty 100 Index is considered for Largecaps

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Post GFC Post US

Taper

Tantrums

Pre -

NBFC

Crisis-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Mar/06

Mar/07

Feb/08

Feb/09

Jan

/1

0

Dec/1

0

Dec/1

1

Nov/12

Oct/13

Oct/14

Sep/1

5

Au

g/16

Au

g/17

Jul/

18

Jul/

19

Jun

/2

0

May/2

1

Mid and Smallcap Premium/Discount over Largecaps

Nifty Midcap 150 P/B Discount Nifty Smallcap 250 P/B Discount

The model also considers RSI difference Mid and Smallcaps Vs. Largecaps to ascertain whether they are in the overbought/oversold territory

Relative Strength Index (RSI) Difference

The above chart is for illustration purpose only

Mid/Smallcaps overbought to Largecaps –Reduce Exposure

Mid/Smallcaps oversold to Largecaps –Increase Exposure

IF THE RSI INDICATES:

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ICICI Prudential Flexicap Fund – An overlay of Macro Factors

GDP – Gross Domestic Product. Please note, the above list is indicative and not exhaustive and the scheme may also consider other macro indicators. The asset allocation and investment strategy willbe as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.

The scheme can also take cues from various macro-economic indicators and accordingly take market cap and theme/sector call

Current Account Deficit/Surplus

Fiscal Deficit GDP growth & Credit Growth

Inflation Tax Revenues Capacity Utilization & Corporate

Profitability

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ICICI Prudential

FLEXICAP MODEL –Similar to Sea Voyage

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A sturdy ship tonavigate across different weather conditions

POSSIBLE WEATHER CONDITIONS WHILE ON SEA

Cyclone

Rogue Waves

Extreme Heat

REQUIREMENTS FOR SEA ROUTE EXPLORATION

POSSIBLE MARKET CONDITIONS WHILE INVESTING

Overbought Markets

Oversold Markets

Volatile Markets

REQUIREMENTS FOR FLEXICAP INVESTING

ICICI Prudential Marketcap Model –Similar To Sea Route Exploration

A robust model that aims to work across all market conditions and allocates appropriately betweenLarge/Mid/Smallcap


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North

East

A compass fornavigating and coursecorrection

West

South

DIRECTION NAVIGATION WHILE ON SEA

REQUIREMENTS FOR ROUTE NAVIGATION

MARKET DIRECTIONS WHILE INVESTING

Sector Attractiveness

Attractiveness of LARGE/MID/SMALLCAP



An indicator that aims to determine & fine tuneMarketcapattractiveness


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Captain of the ship to assess risk factors, speed, time, etc.

GUIDANCE & OTHER INPUTS WHILE ON SEA

Speed

Timing of Halts

Measures to Counter Bad Weather

REQUIREMENTS FOR GUIDANCE & INPUTS

GUIDANCE WHILE INVESTING

Macro Economic Indicators

Global Indicators



Fund Managers to assess macro economic factors forfine-tuning marketcap allocation


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WHY

ICICI Prudential

FLEXICAP FUND NOW?

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Valuations Perspective

Currently, Valuations are not cheap, Business Cycle is recovering, Positive Triggers include Economic recovery,earnings growth, etc. Negative triggers may be rising US 10Y Treasury yields and inflation. Sentiments are not

very euphoric

Market V aluations

P/E or P/B helps in ascertaining whether

the market is expensive or cheap

Business C ycle

Indicators like capacity utilization / credit growth

help in gauging the strength of business cycle

T riggers

Triggers are events which can chart the

course of market direction (positive/negative)

S entiments

Sentiments helps in understanding investors

affinity towards the equity market

Buy – Valuations Cheap

Sell – Valuations Expensive

Buy – Cycle is weak/recovering

Sell – Cycle is Strong

Negative Triggers –

e.g. COVID-19,

Positive Triggers –

e.g. earnings growth

Buy – Negative Sentiments

Sell – Positive Sentiments

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ICICI Prudential Flexicap Fund – A mixed bag

IF NEGATIVE TRIGGERS IN ACTION, LARGECAPS MAY:

IF POSITIVE TRIGGERS IN ACTION, MID & SMALLCAPS MAY:

Help to limit downside as large companies usually have better riskmanagement abilities compared to mid & smallcaps

This may provide the portfolio with stability

Largecaps may be able to deliver better returns owing to limited downside compared to mid & smallcaps

Fundamentally strong mid/smallcap companies will have good re-rating

potential

With improving growth & profitability, mid/smallcaps may

deliver Multibagger returns

Mid/Smallcaps in an upmarket may lead to better capital appreciation

than in a down market

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ICICI Prudential Flexicap Fund –A flexible and controlled approach (Marketcap Model)

The selection board of a national cricket team has the flexibility to select any player, but they need to exercise right control while selecting players for a particular format. Similarly, ICICI Prudential Flexicap Fund has the flexibility to invest across large, mid and small cap but to create a portfolio conducive for a particular market environment there is Marketcap Model coupled with Macro

factors which helps creating long-term wealth

The above example/analogy is for illustration purpose only

Test Cricket One Day T-20

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Just as a potter initially applies deft touch for creating a desired object, similarly, ICICI Prudential Flexicap Fund will in the initial phase, use a gradual equity deployment approach for portfolio construction

ICICI Prudential Flexicap Fund –Intended Initial Deployment Approach

Initial Deployment Approach for ICICI Prudential Flexicap Fund

• Taking into consideration, the market valuations at thisjuncture which are not cheap, the deployment of the schemecan take place judiciously based on the market conditions

• We may take cues on near-term equity allocation based onour various internal asset allocation and equity valuationmodels during the deployment phase

The above example/analogy is for illustration purpose only. Please note the investment strategy and asset allocation will be as per SID of the Scheme

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Key Takeaways About The Scheme

Mix of Top-Down & Bottom-up approach

Based on In-house Marketcap Model

Well defined deploymentapproach basis market

conditions

Marketcap Model ensures flexibility albeit with control

Opportunistic & Dynamic in terms of Marketcap allocation

In-house model coupled with overlay of macro factors suitable

for wealth creation

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Portfolio Features

NFO Period June 28, 2021 to July 12, 2021

Type of Scheme An open ended dynamic equity scheme investing across large cap, mid cap & small cap stocks

PlansICICI Prudential Flexicap Fund – Regular Plan &

ICICI Prudential Flexicap Fund – Direct Plan

Options

Minimum Application Amount

Growth & IDCW

Rs. 5,000 (plus in multiples of Re.1)

Minimum Additional Application Amount Rs. 1,000 (plus in multiples of Re.1

Minimum Redemption Amount Any amount

Entry Load

Exit LoadLess than 12 Months 1% of applicable NAV

More than 12 Months Nil

Not applicable

Fund Manager Rajat Chandak

Benchmark Index S&P BSE 500 TRI

In addition to the fund manager managing this fund, overseas investment will be managed by Ms. Priyanka Khandelwal. IDCW – Income Distribution cum Capital Withdrawal Option. Payment of IDCW is subject to availability of distributable surplus and Trustee approval. Pursuant to payment of IDCW , the NAV of the scheme falls to the extent of IDCW payout. When units are sold and sale price (NAV) is higher than face value of the unit, a portion of sale price that represents realized gains is credited to an Equalization Reserve Account and which can be used to pay IDCW. IDCW can be distributed out of investors capital (Equalization Reserve), which is part of sale price that represents realized gains. In case the unit holder has opted for IDCW payout option, the minimum amount for IDCW payout shall be 100 (net of statutory levy, if any), else the IDCW would be mandatorily reinvested. IDCW Payout -Payout of Income Distribution cum capital withdrawal option; IDCW Reinvestment - Reinvestment of Income Distribution cum capital withdrawal option.

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SIP / SWP / STP Available

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.All figures and other data given in this document are dated. The same may or may not be relevant at a future date. The AMC takes no responsibility of updating any data/information in this material fromtime to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior writtenconsent of ICICI Prudential Asset Management Company Limited. Prospective investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and otherfinan- cial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. Data source: Bloomberg, except as mentioned specifically.

Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, includinginforma- tion developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been madeavailable to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy,reasonableness and / or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”,“should”, “believe” and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ materially from those suggested by the forward lookingstatements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countriesglobally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates,equity prices or other rates or prices etc. ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel andemployees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising fromthe use of this material in any manner. Further, the information contained herein should not be construed as forecast or promise. The recipient alone shall be fully responsible/are liable for any decisiontaken on this material.

Riskometer & Disclaimer

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It may be noted that risk-o-meter specified above is based on the scheme characteristics. The same shall be updated in accordance with provisions of SEBI circular dated October 5, 2020 on Product labelling in mutual fund

schemes on ongoing basis

ICICI Prudential Flexicap Fund (An open ended dynamic equity scheme investing across large cap, mid cap & small cap stocks) is suitable for investors who are seeking*:

• Long Term wealth creation

• An open ended dynamic equity scheme investing across large cap, mid cap & small cap stocks

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Documents

Why Invest in Equities?