Prudential ICICI Balanced Fund

Transcription

1 Prudential ICICI Balanced Fund An open ended Balanced Fund Offer Document Issue of Units of Rs.10/- per Unit at NAV based prices on an on-going basis. Sponsores: Prudential plc (formerly known as Prudential Corporation plc) (through its wholly owned subsidiary, Prudential Corporation Holdings Limited), Laurence Pountney Hill, London EC4R 0HH, UK; and ICICI Bank Limited (erstwhile ICICI Limited), Regd. Office: Landmark, Race Course Circle, Vadodara , India. Investment Manager: Prudential ICICI Asset Management Company Limited, Corp. Office: 8th Floor, Peninsula Tower, Peninsula Corporate Park, Ganpatrao Kadam Marg, Off Senapati Bapat Marg, Lower Parel, Mumbai Regd. Office: 206 Ashoka Estate, 2nd Floor, Barakhamba Road, New Delhi Trustee: Prudential ICICI Trust Limited, Regd. Office: 206 Ashoka Estate, 2nd Floor, Barakhamba Road, New Delhi The particulars of Prudential ICICI Balanced Fund, the mutual fund Scheme offered under this Offer Document, has been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended till date, and filed with the Securities and Exchange Board of India, and the Units being offered for public subscription have not been approved or disapproved by the Securities and Exchange Board of India nor has the Securities and Exchange Board of India certified the accuracy or adequacy of the Offer Document. This Offer Document contains information necessary for an investor to make an informed investment decision in the Scheme described herein. Investors should carefully read the Offer Document prior to making an investment decision and retain the Offer Document for future reference. Investors may note that this Offer Document remains effective until a material change occurs. Material changes shall be filed with SEBI and circulated to all Unitholders or may be publicly notified by advertisements in the newspapers subject to the applicable regulations. SMS INVEST to 8558 CALL or apply online at

2 Prudential ICICI Mutual Fund IMPORTANT NOTICE Investing in mutual fund schemes involves certain risks and considerations associated generally with making investments in securities. The value of the Scheme s investments may be affected generally by factors affecting financial markets, such as price and volume, volatility in interest rates, currency exchange rates, changes in regulatory and administrative policies of the Government or any other appropriate authority (including tax laws) or other political and economic developments. Consequently, there can be no assurance that the Schemes offered in this Offer Document would achieve the stated objectives. The NAV of the Units of the Schemes may fluctuate and can go up or down. Past performance of the schemes managed by the Sponsors or their affiliates or the Asset Management Company is not indicative of the future performance of the Schemes nor will the performance of the Schemes, following the commencement of the operations, be indicative of the Scheme s future performance. Prospective investors are advised to review this Offer Document carefully and in its entirety and consult their legal, tax and financial advisors to determine possible legal, tax and financial or any other consequences of subscribing to, purchasing or holding Units under the Schemes, before making an application to subscribe or purchase the Units. The Prudential ICICI Mutual Fund (the Fund) and the Prudential ICICI Asset Management Company Limited (the AMC), have not authorized any person to give any information or make any representations, either oral or written, not stated in this Offer Document in connection with issue of Units under the Schemes. Prospective investors are accordingly advised not to rely upon any information or representations not incorporated in this Offer Document. Any subscription, purchase or sale made by any person on the basis of statements or representations which are not contained in this Offer Document or which are inconsistent with the information contained herein shall be solely at the risk of the investor. Unitholders / investors are requested to read and understand the Offer Document, Key Information Memorandum and risk factors furnished with the schemes in which they seek to make investments or in which they have invested. Unitholders / Investors are urged not to rely upon or be misled by any oral promises or statements made by the distributors / intermediaries of the Mutual Fund and it is brought to the special attention of investors that the AMC / Mutual Fund will not be liable for mis-statement or communication by agents / distributors which are not previously expressly authorized / approved by the AMC / Mutual Fund. The AMC, Trust and Prudential ICICI Mutual Fund shall not be responsible for any claims made by the Unitholders / Investors based on such oral promises made by the distributors / intermediaries. The current Regulations impose certain restrictions and conditions on the AMC for entering into transactions with the Sponsors and their associates on behalf of the Fund. These restrictions include: a) Purchase or sale of securities through any broker associated with the Sponsors or through a firm which is an associate of the Sponsor(s) shall not exceed an average of 5% of the aggregate purchases and sale of securities made by the Fund in all its Schemes in a block of any three months. b) Utilization of the services of the Sponsors or any of their associates, for the purpose of any securities transactions and distribution and sale of securities shall be made only if a disclosure to this effect is made in the Offer Document and the brokerage or commission paid is also disclosed in the half yearly annual accounts of the mutual fund. c) The Mutual Fund Scheme shall not make any investment in: 1. any unlisted security of an associate or group company of the Sponsor; or 2. any security issued by way of private placement by an associate or group company of the Sponsor; or 3. the listed securities of group companies of the Sponsor which is in excess of 25% of its net assets. In this Offer Document, all references to $ are to United States of America Dollars, to Pound Sterling of United Kingdom and Rs. to Indian Rupees. The Reference Exchange Rate between the United States Dollar and the Indian Rupee has been taken at $1 = Rs and UK and Indian Rupee at 1 =Rs This Offer Document is dated August 30,

3 Prudential ICICI Balanced Fund TABLE OF CONTENTS S.N. Particulars Page No. 1 Highlights Risk Factors and Special Considerations SECTION I 3 Due Diligence Certificate Definitions Summary - Prudential ICICI Balanced Fund Constitution of the Mutual Fund a) The Sponsors b) The Trustee Company i) Directors ii) Rights and Obligations of the Trustee iii) Trusteeship Fees c) Management of Asset Management Company i) Board of Directors of the AMC ii) Powers, Duties & Responsibilities of the AMC iii) Key Employees of AMC & relevant experience iv) Fund Manager v) Compliance Officer vi) Investor Relations Officer d) Auditors e) Registrar f) Custodian SECTION II 7 Investment Objectives & Policies Prudential ICICI Balanced Fund Fundamental Attributes of the Scheme a) Type of the Scheme b) Investment Objectives c) Investment Pattern d) Change in Investment Pattern e) Terms of the Scheme f) Change in Fundamental Attributes g) Investment Strategy and Risk Control h) Position in Debt Market in India i) Fixed Income Securities j) Port Folio Turnover k) Procedure followed for investment decisions l) Trading in Derivatives m) Investment Restrictions for the Scheme n) Underwriting by the Fund o) Computation of Net Asset Value p) Accounting Policies & Standards SECTION III 8 Units & The Offer on an on-going basis General Information a) Minimum Subscription Amount b) Offer Price for on-going subscriptions c) Minimum Amount for Application d) New Fund Offer Expenses e) Investment Options offered i) Growth Option ii) Dividend Option iii) Dividend Reinvestment

4 Prudential ICICI Mutual Fund f) Section 54EA and 54EB Plans i) 54EA Investment Plan ii) 54EB InvestmentPlan g) Pledge of Units for Loans h) Systematic Investment Plan (SIP) i) Systematic Withdrawal Plan (SWP) j) Systematic Transfer Plan (STP) k) Flexible Lifetime Investment Programme l) How to Switch m) Who can Invest? n) How to apply? i) Purchase of units on on-going basis ii) Purchase Price iii) Applicable NAV iv) How to Purchase units on an on-going basis v) NRIs, FIIs vi) Mode of Payment on Repatriation Basis vii) Mode of Payment on Non-Repatriation Basis viii) Application under Power of Attorney / Body Corporate / Registered Society / Trust / Partnership viii) Joint Applicants ix) Nomination Facility o) Redemption of Units i) Redemption Price ii) Applicable NAV iii) How to Redeem? iv) Payment of Proceeds v) Non receipt of communication by Investors vi) Redemption by NRIs/FIIs vii) Effect of Redemptions viii) Fractional Units ix) Signature mismatch cases x) Right to Limit Redemptions xi) Suspension of Sale and Redemption of Units xii) Permanent Account Number (PAN) xiii) Unique Identification Number (UIN) xiv) Dormant Account Locking SECTION IV Fees, Expenses and Load Structure a) Load Structure of the Scheme b) Fees and Expenses of the Scheme i) New Fund Offer Expenses ii) Recurring Expenses c) Fees and Expenses of the Past Scheme i) New Fund Offer Expenses of past Schemes ii) Condensed Financial Information SECTION V Unitholders Rights and Services a) Investors Services b) Ease of Transactions i) Customer Service Centres in major metros ii) Process transactions in a timely manner c) Problem Resolution d) Information about the Scheme e) NAV Information

5 Prudential ICICI Balanced Fund f) Disclosure of information under the Regulations g) Rights of Unitholders of the Scheme h) Duration of the Scheme/winding up i) Procedure and manner of Winding up j) Tax Benefits ) To the Mutual Fund ) To the Unitholders Income received from Mutual Fund Long Term Capital Gains i) For Individuals and HUFs ii)for Partnership Firms / NRI / Indian Companies Foreign Companies iii)for Non-resident Indians iv) For FIIs Income received in Mutual Fund Capital Losses Section 80C ) Tax Deducted At Source ) Exemption from Tax on Capital Gains arising on Transfer of Units held for more than 12 months ) Investments by Charitable and Religious trusts ) Wealth Tax k) Unclaimed redemption amount SECTION VI Other Matters a) Unitholders Grievances Redressal Mechanism b) Associate Transactions c) Details of Investment in Companies that hold more than 5% of NAV of Schemes managed by the AMC d) Penalties and Pending Litigations e) Borrowing by the Mutual Fund f) Stock lending by Mutual Fund g) Policy on offshore investment by the Scheme and the Plans thereunder h) Inter-Scheme Transfers i) General Information i) Power to make Rules ii) Power to remove Difficulties iii) Scheme to be binding on the Unitholders iv) Documents available for Inspection

6 Prudential ICICI Mutual Fund 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 fund management to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, over GBP187 billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as of December 31, Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval in 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 total assets of about Rs.1,67,659 crore at March 31, 2005 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 560 branches and extension counters and over 1,900 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh, and South Africa. (Source: Overview at ). ICICI Bank was formerly a wholly owned subsidiary of ICICI Ltd, an Indian financial institution. Fund Management expertise Prudential plc is a leading international financial services group providing retail financial products and services and fund management to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, over GBP 187 billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as of December 31, Prudential ICICI Asset Management Company Limited, the Investment Manager to the Prudential ICICI Mutual Fund, manages assets over Rs. 17,915 crores as of July 31, 2005 through 22 schemes. It is one of the largest asset management companies in the country. Investment Objective: is to generate long term capital appreciation and current income from a portfolio that is invested in equity and equity related securities as well as in fixed income securities. High Liquidity - Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices subject to applicable load provisions. The Fund will, under normal circumstances, endeavour to despatch redemption cheques within 3 Business Days. Please see Para Redemption of Units on page 48 for details of Redemption. Load Entry Load: i. For investment of less than Rs. 5 crores: Entry load at 2.25% of applicable Net Asset Value (NAV) ii. For investment of Rs. 5 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 of Units. No entry load will be charged in respect of switch transaction from one equity scheme of the Fund to another equity scheme of the Fund. Subject to the Regulations, the Trustee reserves the right to modify/alter the load structure and may decide to introduce a differential load structure on the Units subscribed/redeemed on any Business Day. Investment Options: The investors under the Plan will have the choice of a Growth Option or a Dividend Option. Dividend Reinvestment facility available. Investors who hold units in any of the open ended schemes of the Fund may switch all or part of their holdings to the Scheme on an ongoing basis. No entry load will be charged in respect of switch transaction from one equity scheme of the Fund to another equity scheme of the Fund. Further, under Flexible Lifetime Investment Programme, investors may choose to alter the allocation of their investment among the schemes in order to meet their changing circumstances during their lifetime. Transparency The NAV is calculated and disclosed at the close of every Business Day. In addition, the AMC will disclose details of the portfolio at least on a half-yearly basis. For details on tax update, please refer page 73 of this document. Investors in the Scheme are not being offered any guaranteed returns. Investors are advised to consult their Legal /Tax and other Professional Advisors in regard to tax/legal implications relating to their investments in the Scheme and before making decision to invest in the Scheme or redeem the Units in the Scheme. 6

7 Prudential ICICI Balanced Fund RISK FACTORS AND SPECIAL CONSIDERATIONS 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. Investment decisions made by the AMC may not always be profitable. 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 other accretions and additions to the corpus set up by the Sponsors. Prudential ICICI Balanced Fund is the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects and returns. The NAVs of Prudential ICICI Balanced Fund may be affected by changes in the general market conditions, factors and forces affecting capital markets in particular, level of interest rates, various market related factors and trading volumes, settlement periods and transfer procedures. In the event of receipt of inordinately large number of redemption requests or of a restructuring of the Scheme s portfolios, there may be delays in the redemption of Units. Please see Page 51 for Right to Limit Redemptions in this Offer Document. The Scheme may use various derivatives and hedging products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders interest. In case the Scheme utilizes any derivatives under the Regulations, the Scheme may, in certain situations, be exposed to risks associated with the use of derivatives. Investors in the Scheme are not being offered any guaranteed returns. The Scheme, under normal circumstances, proposes to invest about 60% of its corpus in equity and equity related securities and about 40% in debt and money market securities. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of these investments. Different segments of the Indian financial markets have different settlement periods and such periods may be extended significantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases due to settlement problems could cause the Scheme to miss certain investment opportunities. By the same rationale, the inability to sell securities held in the Scheme s portfolio due to the absence of a well developed and liquid secondary market for debt securities would result, at times, in potential losses to the Scheme, in case of a subsequent decline in the value of securities held in the Scheme s portfolio. As per the prevailing tax laws, in respect of Open Ended Equity Oriented Scheme, where more than 50% of the corpus of the Scheme is invested in equity shares, per provisions of Section 115R of the Act, no additional income tax is payable on the income distributed by the Schemes for the period upto March 31, In the event that investible funds of more than 50% of the total proceeds of the scheme are not invested in equity shares of domestic companies, the Fund will be liable to pay tax on such distributed income by the Scheme as per the provisions of the Finance Act, From time to time and subject to the regulations, the sponsors, the mutual funds and investment Companies managed by them, their affiliates, their associate companies, subsidiaries of the sponsors and the AMC may invest in either directly or indirectly in the scheme. The funds managed by these affiliates, associates and/ or the AMC may acquire a substantial portion of the Scheme. Accordingly, redemption of units held by such funds, affiliates/associates and sponsors may have an adverse impact on the units of the Scheme because the timing of such redemption may impact the ability of other unitholders to redeem their units `The Scheme may invest in other schemes managed by the AMC or in the schemes of any other Mutual Funds, provided it is in conformity to the investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments. The Scheme may also invest in ADRs / GDRs as permitted by Reserve Bank of India and Securities and Exchange Board of India. To the extent that some part of the assets of the Plans may be invested in securities denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by the changes in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital also may be hampered by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment. The Fund may use derivatives instruments like Stock Index Futures, Interest Rate Swaps, Forward Rate Agreements, or other derivative instruments for the purpose of hedging and portfolio balancing, as permitted under the Regulations and guidelines. Usage of derivatives will expose the Scheme to certain risks inherent to such derivatives. The Scheme may also use various derivatives and hedging products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders interest. In case the Scheme utilizes any derivatives under the Regulations, the Scheme may, in certain situations, be exposed to price risks. From time to time and subject to the regulations, the AMC may invest in this Scheme. The decision to invest in the Scheme by the AMC will be based on parameters specified by the Board of the AMC. Further, as per the Regulation, in case the AMC invests in any of the schemes managed by it, it shall not be entitled to charge any fees on such investments. 7

8 Prudential ICICI Mutual Fund As per SEBI circular dated December 12, 2003 ref SEBI/IMD/CIR No. 10/22701/03 and AMFI s communication having ref. No.35/MEM-COR/55/04-05 dated December 31, 2004, each scheme and individual plan(s) under the schemes should have a minimum of 20 investors and no single investor should account for more than 25% of the corpus of such scheme/plan(s). In case of non-fulfillment with either of the above two conditions in a three months time period or the end of succeeding calendar quarter, whichever is earlier, from the close of the New Fund Offer (NFO) of open ended schemes or on an ongoing basis for each calendar quarter, the schemes /plans shall be wound up by following the guidelines prescribed by SEBI and the investor s money would be redeemed at applicable NAV. SEBI has, vide its Circular No.SEBI/IMD/CIR No.1/42529/05, further clarified that the foresaid Circular would be applicable at the Portfolio level. For determining the holding by single investor above 25% limit, the average of daily holding by each such investor over the quarter would be considered. If the holding by such investor exceeds 25% limit over the quarter, rebalancing period of one month would be allowed and thereafter 15 days notice shall be given to the investor to redeem his exposure over the 25% limit within 15 days. In case, if the investor fails to redeem his exposure over 25%, it would lead to automatic redemption by the Mutual Fund on the applicable NAV on the 15th day of the notice period. Different types of securities in which the scheme would invest as given in the offer document carry different levels and types of risk. Accordingly the scheme s risk may increase or decrease depending upon its investment pattern. E.g. corporate bonds carry a higher amount of risk than Government securities. Further even among corporate bonds, bonds which are AAA rated are comparatively less risky than bonds which are AA rated. 8

9 Prudential ICICI Balanced Fund Sponsors Prudential plc Laurence Pountney Hill, London EC4R DHH, United Kingdom ICICI Bank Limited Landmark, Race Course Circle, Vadodara , India Asset Management Company Prudential ICICI Asset Management Company Limited Registered Office 206 Ashoka Estate, 2nd Floor, 24 Barakhamba Road, New Delhi Telephone: Fax : Corporate Office 8th Floor, Peninsula Tower, Peninsula Corporate Park, Ganpatrao Kadam Marg, Off Senapati Bapat Marg, Lower Parel, Mumbai Telephone: Fax: Trustee Prudential ICICI Trust Limited 206 Ashoka Estate, 2nd Floor, 24 Barakhamba Road, New Delhi Registrar Computer Age Management Services Private Limited Unit : Prudential ICICI Mutual Fund A&B Lakshmi Bhavan 609 Anna Salai Chennai Auditors to the Scheme N. M. Raiji & Company Universal Insurance Building Sir Phiroze Shah Mehta Road Mumbai Custodian HDFC Bank Limited Sandoz House Dr. Annie Besant Road Worli Mumbai Legal Advisors A.R.A. LAW 1st Floor, Agra Building, 121, M.G. Road, Fort, Mumbai

10 Prudential ICICI Mutual Fund SECTION I DUE DILIGENCE CERTIFICATE It is confirmed that: i) The draft Offer Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time. ii) All legal requirements connected with the launching of the Schemes 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. Place : Mumbai Ranganth Athreya Date : August 30, 2005 Sr. Vice President Legal, Compliance and Company Secretary Note: The Due Diligence Certificate as stated above was submitted to SEBI. 10

11 Prudential ICICI Balanced Fund DEFINITIONS In this Offer Document, the following words and expressions shall have the meaning specified herein, unless the context otherwise requires: Asset Management Company or AMC or Investment Manager Applicable NAV Business Day Custodian FII ICICI Bank Investment Management Agreement NAV NRI Offer Document Prudential RBI SEBI The Balanced Fund / The Scheme The Fund or Mutual Fund The Trustee Prudential ICICI Asset Management Company Limited (erstwhile ICICI Asset Management Company Limited), the Asset Management Company incorporated under the Companies Act, 1956, and registered with SEBI to act as an Investment Manager for the Schemes of Prudential ICICI Mutual Fund The NAV applicable for purchases/ redemptions/switches, based on the time of the Business Day on which the application is accepted. A day other than (1) Saturday and Sunday or (2) a day other than a day on which the Stock Exchange, Mumbai and National Stock Exchange are closed whether or not the Banks in Mumbai are open. (3) a day on which the Sale and Redemption of Units is suspended by the Trustee/AMC. Provided switches between equity and debt schemes will not be allowed when it is a non-business day in debt Scheme on account of local bank holiday or banks in Mumbai are closed. HDFC Bank Limited, Mumbai, acting as Custodian to the Schemes, or any other custodian who is approved by the Trustee and has been granted registration by SEBI under the Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996 as amended from time to time. Foreign Institutional Investors, registered with SEBI under Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, ICICI Bank Ltd. The Agreement dated September 3, 1993 entered into between Prudential ICICI Trust Limited (erstwhile ICICI Trust Limited) and Prudential ICICI Asset Management Company Limited (erstwhile ICICI Asset Management Company Limited) as amended from time to time. Net Asset Value of the Units of each Scheme and Options, if any, thereunder, calculated on every Business Day in the manner provided in this Offer Document or as may be prescribed by Regulations from time to time. Non-Resident Indian This document issued by Prudential ICICI Mutual Fund, offering Units of Prudential ICICI Balanced Fund for subscription, at NAV based prices. Prudential plc (formerly known as Prudential Corporation plc) of the U.K. and includes, wherever the context so requires, its wholly owned subsidiary Prudential Corporation Holdings Limited. Reserve Bank of India, established under the Reserve Bank of India Act, 1934, as amended from time to time. Securities and Exchange Board of India established under Securities and Exchange Board of India Act, 1992, as amended from time to time. Prudential ICICI Balanced Fund Prudential ICICI Mutual Fund (erstwhile ICICI Mutual Fund), a trust set up under the provisions of Indian Trusts Act, The Fund is registered with SEBI vide Registration No.MF/003/93/6 dated October 13, 1993 as ICICI Mutual Fund and has obtained approval from SEBI for change in name to Prudential ICICI Mutual Fund vide SEBI s letter dated April 16, Prudential ICICI Trust Limited (erstwhile ICICI Trust Limited), a company set up under the Companies Act, 1956, and approved by SEBI to act as the Trustee for the schemes of Prudential ICICI Mutual Fund. 11

12 Prudential ICICI Mutual Fund The Regulations Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended from time to time Trust Deed Trust Fund Unit Unit holder The Trust Deed dated August 25, 1993 establishing ICICI Mutual Fund, (subsequently renamed Prudential ICICI Mutual Fund) as amended from time to time. Amounts settled/contributed by the Sponsors towards the corpus of the Prudential ICICI Mutual Fund and additions/accretions thereto. The interest of an investor which consists of one undivided share in the Net Assets of the relevant Scheme A holder of Units in the Scheme of Prudential ICICI Balanced Fund and the Plans and Options offered under the Fund, as contained in this Offer Document. 12

13 Prudential ICICI Balanced Fund Summary Prudential ICICI Child Care Plan Name of the Scheme Prudential ICICI Balanced Fund. Structure Open Ended Balanced Fund Offer Price for On-going subscriptions Based on the Applicable NAV of the Scheme, subject to entry load provisions. Features The primary investment objective of the Scheme is to seek to generate long-term capital appreciation and current income from a portfolio that is invested in equity and equity related securities as well as in fixed income securities. However, there can be no assurance that the investment objectives of the Scheme will be realized. In order to avail of the tax concessions available under Section 115R of the Income-tax Act, 1961, it is envisaged that investible funds of more than 50% of the total proceeds of the Scheme will be invested in the equity shares of domestic companies. Application Amount On an on-going basis, the Minimum application amount is Rs.5,000 per application (plus in multiples of Re.1). Additional investments should be for a minimum of Rs. 500 and in multiples thereof. Initial Issue Expenses The initial issue expenses were limited to 1% of the amount mobilized under the Scheme during the Initial Offer Period. Flexible Lifetime Investment Programme The Fund will allow investors the flexibility to alter the allocation of their investments amongst the designated Schemes offered by the Fund in order to meet their changing investment needs or risk profiles by switching between the Schemes of the Fund. It is the intention of the Fund to enable investors in the Scheme to switch between the present open-ended schemes and the future schemes, which may be included in the Flexible Lifetime Investment Programme. Please refer to page 44 for more details of the Flexible Lifetime Investment Programme. Liquidity On an ongoing basis, an investor can purchase and redeem Units on every Business Day at NAV based prices, subject to the prevailing load structure. (Please refer to page 49 for Redemption Price and page 45 for Purchase Price). The Units of the Scheme are not listed on any exchange. The Fund will, under normal circumstances, endeavour to despatch the redemption cheques within 3 Business Days from the date of acceptance of the redemption request at any of the Customer Service Centres Transparency NAV will be determined on every Business Day, except in special circumstances described on page 51. NAV of the Scheme shall be made available at all Customer Service Centres of the AMC. The AMC shall also endeavour to have the NAV published in a daily newspaper and updated on AMC s website ( AMC shall update the NAVs on the website of Association of Mutual Funds in India - AMFI ( by 8.00 p.m. every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI and SEBI by the next day. If the NAVs are not available before commencement of business hours on the following day due to any reason, the Fund shall issue a press release providing reasons and explaining when the Fund would be able to publish the NAVs. The Mutual Fund shall disclose the full portfolio and mail the same to the Unitholders semi-annually. Repatriation facility NRIs/FIIs have been granted a general permission by RBI [Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000] for investing in / redeeming units of the schemes subject to conditions set out in the aforesaid regulations. Eligibility for Trusts Religious and Charitable Trusts are eligible to invest in the Scheme under the provisions of section 11(5)(xii) of the Income-tax Act, 1961 read with Rule 17C of Income-tax Rules,

14 Prudential ICICI Mutual Fund CONSTITUTION OF THE MUTUAL FUND 14 ICICI Mutual Fund, which has been renamed as Prudential ICICI Mutual Fund ( the Mutual Fund or the Fund ) has been constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882). The Mutual Fund was registered with SEBI on October 13, ICICI Mutual Fund was established by erstwhile ICICI Ltd. (Since merged with ICICI Bank Ltd), by execution of a Trust Deed dated August 25, 1993 by contributing Rs. 10 lacs. Prudential plc, through its wholly owned subsidiary, Prudential Corporation Holdings Limited (PCHL), has contributed an amount of Rs.12.2 lacs to the corpus of the Fund and has received permission for such contribution from the RBI vide letter No: CO.FID (I) 4940/10/I (221) dated April 25, SEBI has approved the change in name of the Fund to Prudential ICICI Mutual Fund vide its letter IIMARP / 88 / 98 dated April 16, A deed of amendment to the Trust Deed dated August 25, 1993 was executed and registered. The Sponsors of the Fund, ICICI Bank Limited and Prudential plc. have proposed to transfer their Shareholding in the Prudential ICICI Asset Management Co. Ltd. (AMC) and Prudential ICICI Trust Ltd. (Trust Company) whereby Prudential Plc will transfer 6% of the paid-up capital in AMC and Trust Company to ICICI Bank Limited. Further ICICI Venture Funds Management Company Limited will also transfer its 15% of the paid-up capital in AMC and Trust Company to ICICI Bank Limited. This transfer when effected will result in ICICI Bank holding 51% and Prudential Plc. (through PCHL) holding 49% of the paid up equity share capital of the AMC and Trust Company. AMC has informed SEBI of the proposed transfer. SEBI has vide its letter IMD/RK/42692/05 dated June 15, 2006 taken note of the proposed transfer. 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 fund management to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, over GBP187 billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as of December 31, Given below is a brief summary of Prudential s financials: Year ended December 31 (Rs. crores) Description Total Income 295, , ,926 Profit Before Tax 5,159 2,778 3,841 Profit After Tax 3,397 1,651 3,563 Shareholders Funds 33,975 26,015 29,110 Earnings per share (Rs.) Equity Capital (5 Pence per share) Free Reserves 33,031 25,221 28,316 Net-worth 33,975 26,015 29,110 Book Value per share (Rs.) Percentage of dividend per share % 320% 520% Dividend per share (in Pence) 15.84P 16.00P 26.00P ICICI Bank Limited Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval in 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 total assets of about Rs.1,67,659 crore at March 31, 2005 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 560 branches and extension counters and over 1,900 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh and South Africa. (Source: Overview at ICICI Bank was formerly a wholly owned subsidiary of ICICI Ltd, an Indian financial institution. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI s shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank s acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal Pursuant to the Scheme of Amalgamation effective March 30, 2002, among ICICI, ICICI Personal Financial Services, ICICI Capital Services and ICICI Bank, sanctioned by the High Court of Gujarat and the High Court of Judicature at Bombay and approved by the Reserve Bank of India, ICICI, ICICI Personal Financial Services and ICICI Capital Services were merged with ICICI Bank in an all-stock merger. ICICI Bank is the surviving legal entity in the amalgamation.