Assets Under Management Rs. 56, Crore (As on December 31, 2007)

Transcription

1 Assets Under Management Rs. 56, Crore (As on December 31, 2007)

2

3 From the Managing Director s Desk Nimesh Shah Managing Director & Chief Executive Officer A year of milestones As our industry notches up another year to its impressive growth, let me thank you all for the faith and support you have invested in us. As Young says "Faith builds the bridge from this old world to the new", and it is this faith that would help us chart our course in the next phase of growth. In the journey over the years we have been able to successfully cross many milestones in our endeavor to make your money work hard for you. Some of the major milestones that we crossed in the year 2007 are: Crossing the Rs.50,000 Crore AUM mark in the month of May. It is not the just number that we are proud of, but a reflection of your trust in your AMC winning the prestigious Readers Digest Gold Award for "Trusted Brand 2007" for the second year in running. Recognition from the industry and peers by receiving the Lipper Fund Award 2007 for the Best Overall Fund Group Over 3 years. International acclaim for Chaitanya Pande, Co-Head Fixed Income by being named the "The Most Astute Local Currency Bond Investor - INDIA" by The Asset Asian Currency Bond Benchmark Awards Successful launch of our Call Centre & CRM (Customer Relationship Management) representing our constant endeavor in investing in technology and infrastructure for building scalability, improving service delivery and enhancing productivity in the business. Introduced Real Estate as an asset class to our product bouquet portfolio by launching India's first Real Estate oriented Mutual Fund was also a year, which witnessed major milestones being crossed by the Indian Capital Markets. The SENSEX crossed the 20,000 mark despite the events that plagued the markets in the second half. Global sub-prime crises, domestic political situation, directives from the market regulators with respect to P-Notes did not dampen the investor's confidence in the Indian growth story. Going forward, Indian equities still look strong for A strong economy fueled by domestic factors still carries a positive story for our capital markets, more capable of handling global slowdown than many peers. Valuations are still at a discount to the Chinese markets and with strong domestic and overseas inflows, the India growth story seems intact and likely to continue. We at ICICI Prudential suggest a prudent asset allocation will help you weather these volatilities in the long run. With asset classes like gold and real estate that have made a beginning in 2007, asset allocation will play a more than ever important role in the time to come. A key to asset allocation would be risk adjusted returns that would assist in your decision while allocating your monies in different asset classes. On the pure equity side, I would like to recommend the ICICI Prudential FUSION III, a close-ended equity that we would be launching on 8th January This product will help you to maintain the discipline on investing in equities for the longer term and not be swayed by the ups and downs of the equity markets. The fund will base its portfolio on the three pillars of the India Growth Story viz. Infrastructure, Consumption and Services. It is a first of its kind wherein the fusion of different investment opportunities across market caps and investment themes makes it an ideal investment vehicle for investors who seek wealth creation in the long run. In our endeavor to offer you the right products, I would also like to bring forth our forthcoming offering "FMP 33" which is being launched on 8th January A product, which offers you downside protection with 100% participation in the nifty returns, this is the first time that such a structured product is being offered through the Mutual Fund route. The fund with its prudent mix in Equity linked debentures and fixed income brings forth a product, which helps you in maximizing your risk-adjusted returns from your investments. Going forward it will be our endeavor to reach across to you in a more proactive manner through increasing our geographical footprint. Built on the strong foundation of people and processes, the geographical expansion will help us take one more step towards you. I would like to conclude by once again thanking you for your support and trust reposed on us. We are very proud to count you as a member of our investor family and deeply appreciate your trust in us as we continue to help you realize your and your family's financial goals. Wishing you a very prosperous

4 The Market Equity Market Snapshot Technicals Investments by Institutions Year ended Year ended in cash segment (Rs. Cr.) Dec. 06 Dec. 07 FIIs (Net Purchases / Sales) MFs (Net Purchases / Sales) Avg Daily Open Interest (Rs. Cr.) Index Futures Stock Futures Index Options Stock Options Total Avg Daily Volumes (Rs. Cr.) CASH Segment BSE NSE Total Derivative Segment NSE Avg Advance Decline Ratio BSE Ratio NSE Ratio esh Shah Deputy Managing Director Chief Investment Officer Valuation Ratios Dec Dec.2007 P/E ratio- Sensex (trailing P/E ratio- Nifty (trailing) Price/Book Value Ratio-Sensex Price/Book Value Ratio-Nifty Dividend Yield-Sensex Dividend Yield-Nifty Indices Movement % change % change Dec 05-Dec 06 Dec 06-Dec 07 Sensex Nifty BSE Mid Cap BSE Small Cap BSE Auto BSE Teck Index BSE Healthcare BSE FMCG Bankex BSE PSU BSE Consumer Durables BSE Oil & Gas BSE Capital Goods BSE Metals Market Sentiments Sensex gained 4.7% on the back of the Fed rate cut and strong Indian economic data. The sentiment was bullish as fundamentals remained fairly grounded. The mid/small-cap indices finally swung back into action and outperformed their large-cap peers, suggesting improvement in overall market sentiment and renewed confidence in the growth potential and performance of small and mid-cap companies. Indian markets outperformed the Asian peers, relatively less affected by the feared US recession. FIIs remained net buyers ($1.38bn net inflow Dec '07 v. $1.43bn outflow Nov '07) despite some year-end profit booking during the month on account of growing unease over US economic outlook, exhibiting their preference for Indian equities. Domestic participation remained high as MFs were net buyers for the month. IT pivotals posted losses as Indian rupee firmed up against the dollar. Realty, Consumer Durables, Banks outperformed and Oil & Gas stocks gained during the month. SEBI allowed institutions to short sell w.e.f. Feb 1, while the govt allowed all registered trusts to invest in shares of listed companies. Market participants view these announcements as positive. Global Events: Central banks across the globe seem to be walking a tightrope as they look for creative ways to solve the credit crisis then by simply slashing interest rates. While, BoE cut its benchmark interest rate by 25bps to 5.5% reflecting concerns that global credit slump poses downside risks to the outlook for both inflation and economic growth further ahead, ECB, however, put itself in "wait-and-see mode". In order to help global credit markets navigate through the year-end, the Fed along with ECB, BoE, Swiss National Bank and Bank of Canada announced the launch of temporary term auction facility. BoJ refrained from raising interest rates as it lowered its assessment of the economy saying 'growth will slow for the time being.' Undeterred so far, driven by booming exports, the Chinese economy expanded 11% in 2007 despite rate hikes and investment curbs. Indicating that global growth is at a bigger risk, central banks in the advanced economies are leaning towards monetary easing even at the risk of inflation hangover. Analysts expect slow growth and rising inflation to test central bankers to the full in Outlook: The year 2007 delivered more than 47% return on Sensex on emergence of domestic investors and re-rating of Indian markets on the back of China H Share valuations. As we step into 2008, Indian economy seems to be in fine shape, more capable of handling global slowdown than many peers. Globally, subprime related issues are resulting into credit squeeze. Banks are worried to carry out normal borrowing and lending amongst each other. ECB and US Fed are pumping liquidity to ensure that credit squeeze does not result into recession. Our feel is that with minor hiccups central banks world over will be able to stimulate global economy with series of rate cuts, pumping of liquidity and pro-growth statements. Indian economy aided by domestic growth is likely to be an oasis of growth among the global desert. Q3FY08 results are likely to be in line with market expectations, except for some treasury gains or losses which are difficult to forecast. Big queue of IPOs and QIPs expected in 4QFY08 will keep up the supply pressure and also maintain momentum. FIIs, after turning sellers of Indian equities in 3QFY08 will have to think twice before selling in Chinese markets are running at higher valuation than Indian markets and as long as that gap is maintained, there is not much worry on the de-rating of Indian valuations. The domestic investors led by retail, insurance companies and mutual funds are taking lead over FIIs in participating in Indian equities. Net-net, the outlook for Indian equities in 2008 seems to be positive on the back of: Economy, which is likely to grow above global average based on domestic factors. Valuations which are at premium over other EMs but at discount to China H share market. Domestic investors now stepping up to take lead over FIIs. The factors to watch out for 2008, apart from usual factors like higher oil prices, global recession, political risk etc will be strengthening of USD and bounce back of US economy, which may happen in late 2008 with new US President and new Treasury Secretary, taking some hard measures to cut deficit and weak USD helping US exports. The other worry will be Chinese inflation, which seems to be running high and may force PBoC to take aggressive measure to soft-land the economy. This in turn could correct Chinese H share valuations and put pressure on Indian valuations. In lighter vein, Chinese inflation and US recession is something that we need to watch out for. Equity markets on back of solid economic fundamentals had wide diversion in terms of sector performance. Auto, Technology, FMCG and Healthcare sectors underperformed the broad market while Capital Goods, metals, Oil & Gas outperformed. Sector rotation will become key for performance in Valuations seem to be factoring in flawless execution in record time on unprecedented scale in sectors like Power, Utilities and Capital Goods. Our past experience suggests that though it is difficult to predict the timing, more often than not, such high expectations are difficult to meet on a sustained basis. However, the differential this time compared to is that the worry is on the valuations and not the business per se. We recommend our investors to follow the time-tested methods of asset allocation and systematic investment. Today, the Indian equity market is like an airplane flying at feet. You are likely to experience some turbulence but it is unlikely that the airplane will O v e r v i e w crash or get hijacked. Just sit back and enjoy the ride and whenever the turbulence comes, take advantage of opportunity to increase your participation in India Growth Story. Asset Allocation Guide: This asset allocation guide helps you to determine the suggested equity exposure at different valuations levels based on the Sensex. ATTRACTIVE 12x -15x STRETCHED 23x plus FAIR VALUE PLUS 20x -23x FAIR 16x -19x CHEAP 9x -11x 1-Jan Jan Feb Mar Apr May Jun-06 9-Jul-06 5-Aug-06 1-Sep Sep Oct Nov Dec Jan Feb-07 9-Mar-07 5-Apr-07 2-May May Jun Jul Aug Sep Oct-07 7-Nov Fixed Income Market Snapshot Sentiment Index: Positive Valuation levels of the Sensex based on Q3FY09 earnings estimate of Rs.1020 Suggested Equity Allocation (Assuming 50% equity allocation as neutral) Impact on Interest Rates FACTORS Short Term Medium Term (1-3 Months) (3-6 Months) Inflation POSITIVE NEUTRAL WPI based inflation remained subdued at 3.45% YoY as on Dec 22, as the govt indicated that fuel prices may be raised in the coming days. India, which imports 3/4ths of its energy needs has kept the fuel prices unchanged though global crude oil prices zoomed to $100 a barrel - a rise of 79% YoY. The inflation has remained within the comfort zone of RBI and is expected to remain there even though there could be some upward bias in the coming months. Money Supply NEUTRAL NEUTRAL M3 grew by 22.8% YoY as on Dec 21, slightly slower than the ~24% YoY increase last month. However, despite the moderation, it continues to exceed RBI's target of % for this fiscal year. Advance tax outflows estimated at Rs.350bn kept the liquidity strained for most part of the month. RBI helped ease the liquidity scenario by injecting cash into the banking system through purchase of securities at the repo window amounting to Rs.47bn in the three weeks upto Dec 21 and refrained from any MSS auctions. Government spending, bond redemption and interest payments in early Jan are expected to lead to an improvement in the liquidity scenario. RBI has absorbed huge liquidity through MSS and CRR hikes. We expect RBI to maintain adequate liquidity. Credit Demand POSITIVE NEUTRAL Non-food credit offtake has moderated to 22.2% YoY as on Dec 22, 2007, continuing to signal a slowdown in personal and housing loans. Banks have suggested that busy season credit demand also seems to have moderated, which should lend some comfort to RBI. The Finance Minister hinted that the govt seems to have achieved the soft landing in the economy, with the credit growth moderation. That given, the govt would like to see the lending rates falling by about 50bps soon in order to prevent a further slowdown in the growth momentum. Government Borrowings NEUTRAL NEGATIVE Despite an increase in the MSS ceiling, the RBI didn't sell any bonds under the MSS in Dec '07. The supply of longer tenor bonds also shrunk, supporting the curve at the longer end. The fiscal deficit was at 63.8% of budget estimate for FY08 compared to 72.8% same time last year, indicating that the govt has managed to keep its expenditure under control, while buoyant economy generated higher revenues. Non-debt capital receipts showed an impressive growth with 93.8% budget target achieved by Nov-end. We expect govt to meet its FRBM target to reduce fiscal deficit to 3.3% of GDP for FY08, down from 3.5% in FY07. Foreign Exchange Market POSITIVE NEUTRAL The rupee remained range-bound during the month, as RBI continued to support the rupee through the forex interventions. Forex reserves were at US$275bn as on Dec 22, 2007, as portfolio inflows from FIIs resumed towards the end of the month. The Rupee has appreciated approximately 12% against the US dollar so far this fiscal. With the Fed rate cuts, the pressure on rupee to appreciate is likely to only go further up. To manage inflows, we see RBI continuing with its intervention policy, while allowing gradual appreciation. RBI Policy NEGATIVE NEGATIVE There is no doubt that RBI is worried about higher than target money supply growth and will keep trying to maintain control over monetary conditions. RBI is uncomfortable with volatile capital flows, as record overseas purchases of local equities and accelerating FDI helped the Indian rupee post its biggest annual gain in 34 years and indicated that it would continue to intervene in order to curb volatility. We expect RBI to leave interest rates unchanged in its monetary policy meeting Jan 29, given benign inflation scenario. High inflationary expectations would prevent any softening in the near term. Market Sentiment POSITIVE NEUTRAL 10-year benchmark G-Sec yields eased to 11-month lows to 7.70% as demand was triggered by expectations of improvement in liquidity scenario, resulting in tightening of spreads at the long-end. The 25bps Fed rate cut was more or less priced in by the market. No announcement of MSS and lower than expected inflation further boosted the sentiment causing a steep decline in yields. OUTLOOK 2007 witnessed a determined RBI managing appreciating rupee, record inflows, rising inflation and falling export competitiveness. Interest rate became an effect rather than cause of policy. We expect the RBI to hold on to policy rates on fear of inflationary expectations in 4QFY08. The markets however will make a determined effort to bring yields lower on back of US Fed rate cuts and soft-landing of economy. We expect the shape of yield curve, which is more or less like a straight line right now to come down at shorter end and resemble a proper yield curve. We expect innovative structures like asset-backed instruments and real estate exposure to provide higher yields and give decent payoff to investors. We manage investment in these instruments with great care and discipline to ensure high credit quality and better rates. We recommend investors to look at long term gilt funds/high yield FMPs and asset-backed funds for better returns in 2008.

5 ICICI Prudential Dynamic Plan Open Ended Diversified Equity Fund Style Box Fund Manager : Sankaran Naren (Managing this fund since Sept., 2006 & total 17 yrs of experience in fund management, equity research, operation etc.) Indicative Investment Horizon: 3 yrs & more Inception date: Fund Size: Rs. 2, crores NAV (As on 31-Dec-2007): Growth option : Rs Dividend option : Rs Institutional Option-I : Rs **Expense Ratio : Retail option : 1.88% Institutional option-i : 1.00% (Please refer to page no. 53 for Additional Information & page no. 44 for dividend history) Rs invested at inception: Dynamic Plan Vs S&P CNX Nifty 996, , , , , , , , ,000 96,000 CAGR Dynamic Plan: 53.82%; Benchmark: 43.42% Past performance may or may not be sustained in future. Performance Record *- Cumulative Option *Returns < 1Year : Absolute, > = 1Year : CAGR. Benchmark is S&P CNX Nifty. For computation of returns the allotment NAV has been taken as Rs Performance of Dividend Plan is subject to applicability of Dividend Distribution Tax. Past performance may or may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non business days. Quantitative Indicators: Average P/E : Average P/BV : 4.46 Average Dividend Yield : 0.82 Annual Turnover Ratio : 1.89 times Rs Rs Oct-02 Dec-02 Feb-03 Apr-03 Jun-03 Aug-03 Oct-03 Dec-03 Feb-04 Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dynamic Plan 54.40% 42.15% 30.97% 40.52% Last 6 Months Last 1 year Dynamic Plan S&P CNX Nifty 52.30% 51.96% 53.82% 43.43% 41.18% 43.42% Last 3 years Last 5 years S&P CNX Nifty Since Inception Avg. Monthly Returns in Various Market Conditions (Absolute) % 6.03% When the Benchmark is up When the Benchmark is down -4.79% -5.29% Dynamic Plan S&P CNX Nifty Since inception data. Benchmark is S&P CNX Nifty. For computation of returns the allotment NAV has been taken as Rs Past performance may or may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non business days. Std Dev : 6.47% Sharpe Ratio^ : 0.49 Beta : 0.86 R squared : 0.69 turnover has been computed as the ratio of the lower value of average purchase and average sales, to the average net assets in the past one year (since inception for schemes that have not completed a year). The figures are not netted for derivative transactions. ^ Risk-free rate based on the last 3 month T-Bill cut-off of 7.35%. Fund Manager's Comment The fund maintained an average equity exposure at ~84% during the month with 2% allocation to Nifty Futures, indicating a cautious stance. The fund has increased exposure to Ferrous Metals, Telecom (RComm) and Industrial Products while it has booking substantial profits in Software before the Q3FY08 results. Medium term investment of funds for capital appreciation by managing cash and equity portfolio Company/Issuer Mkt Value (Rs. Lakh) % to NAV Reliance Industries Ltd 30, % National Thermal Power Corporation Ltd 12, % ICICI Bank Ltd 12, % Zee Entertainment Enterprises Ltd 10, % Deccan Chronicle Holdings Ltd 10, % Mahindra & Mahindra Ltd 8, % Federal Bank Ltd 8, % Indian Hotels Company Ltd 7, % Texmaco Ltd 6, % Aditya Birla Nuvo Ltd 6, % Orient Paper & Industries Ltd 5, % Tata Tea Ltd 5, % Patel Engineering Ltd 5, % Bharati Airtel Ltd 4, % Reliance Communications Ventures Ltd 4, % Sterlite Optical Technologies Ltd 4, % Tata Consultancy Services Ltd 4, % Alembic Ltd 3, % Larsen & Toubro Ltd 3, % Grasim Industries Ltd 3, % Steel Authority of India Ltd 3, % Cadila Healthcare Ltd 3, % Marico Industries Ltd 3, % Asian Paints Ltd 3, % Coromandel Fertilisers Ltd 3, % Kalyani Steels Ltd 2, % Apollo Tyres Ltd 2, % Greaves Cotton Limited 2, % AIA Engineering Ltd 2, % Glenmark Pharmaceuticals Ltd 2, % Shree Renuka Sugars Ltd 2, % Mukand Ltd 1, % Subex Azure Ltd 1, % United Phosphorus Ltd 1, % HT Media Ltd 1, % Max India Ltd 1, % Sundaram Clayton Ltd 1, % HCL Technologies Limited-Futures % Containers Corporation of India Ltd % Ranbaxy Laboratories Ltd % Nestle India Limited % Dr. Reddy s Laboratories Ltd % ITC Ltd % BGR Energy Systems Ltd' % Nifty Futures 4, % Treasury Bills 22, % 91 Day T Bill (MD 25/01/2008) 22, % CPs, CDs and Term Deposits 17, % ICICI Bank Ltd 9, % Jammu & Kashmir Bank Ltd 6, % Canara Bank Ltd % Cash, CBLO & Reverse Repo 2, % Other Current Assets (2,941.26) -1.17% Total Net Assets 245, Top Ten Holdings Sector Allocation* SIP Returns: As on 31-Dec-2007 Period SIP Start Date Total Amount Total No. Market Value SIP Invested of Units Returns 1 Year SIP 31-Jan-07 12, , % 3 Year SIP 31-Jan-05 36, , % 5 Year SIP 31-Jan-03 60, , , % Since Inception 31-Oct-02 63, , , % Past performance may or may not be sustained in future. Assume Rs invested every month. The high level of returns come from the sharp appreciation in market, in the year 2003, 2005 & Transportation Pesticides Fertilizers Auto Ancillaries Construction Textiles - Products Software Hotels Ferrous Metals Auto Telecom Services Cement Industrial Products Industrial Capital Goods Pharmaceuticals Power Consumer Non-Durable Banks Media & Entertainment Petroleum Products 0.34% 0.58% 1.28% 1.40% 2.05% 2.46% 2.79% 2.96% 3.42% 3.51% 3.86% 3.90% 4.02% 4.08% 4.56% 5.12% 6.36% *Pertains to the equity investments only. 8.45% 8.72% 12.34% 1 1

6 ICICI Prudential Power Open Ended Diversified Equity Fund Style Box Fund Manager : Anand Shah (Managing this fund since June, 2007 & total experience of over 6.7 yrs in equity reaserch & funds management) Indicative Investment Horizon: 5 yrs & more Inception date: Fund Size: Rs. 1, crores NAV (As on 31-Dec-2007): Growth option : Rs Dividend option : Rs Institutional option-i : Rs **Expense Ratio : Diversified Retail option : 1.99% Institutional option- I : 1.00% (Please refer to page no. 53 for Additional Information & page no. 44 for dividend history) Rs invested at inception: Power Plan Vs S&P CNX Nifty 1,406,056 1,206,056 1,006, , , , ,056 6,056 Oct-94 Jan-96 May-97 Sep-98 Jan-00 Power S&P CNX Nifty CAGR Power: 20.80%; Benchmark: 12.48% Past performance may or may not be sustained in future. Performance Record* - Growth Option Rs Rs *Returns < 1Year : Absolute, > = 1Year : CAGR. Benchmark is S&P CNX Nifty. For computation of returns the allotment NAV has been taken as Rs Performance of Dividend Plan is subject to applicability of Dividend Distribution Tax. Past performance may or may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non business days. Avg. Monthly Returns in Various Market Conditions (Absolute) May-01 Aug-02 Dec-03 Apr-05 Aug % 42.15% 49.55% 49.03% 55.73% 36.44% 43.43% 41.18% Last 6 Months Power Last 1 years Last 3 years Last 5 years S&P CNX Nifty 20.80% 12.48% Since Inception Long term investment of funds for capital appreciation in a blend of large and midcap portfolio Company/Issuer Mkt Value (Rs. Lakh) % to NAV Reliance Industries Ltd 9, % Sterlite Industries (India) Limited 7, % Zee Entertainment Enterprises Ltd 6, % Steel Authority of India Ltd 5, % Bharati Airtel Ltd 5, % Tata Power Company Ltd 5, % Patel Engineering Ltd 5, % Larsen & Toubro Ltd 5, % Mahindra & Mahindra Ltd 5, % SREI Infrastructure Finance Ltd 5, % ICICI Bank Ltd 5, % Sun Pharmaceutical Industries Ltd 4, % Bharat Heavy Electricals Ltd 4, % Tata Consultancy Services Ltd 4, % Siemens India Ltd 4, % Infosys Technologies Ltd 4, % Aditya Birla Nuvo Ltd 4, % HT Media Ltd 3, % Bank of Baroda Ltd 3, % Grasim Industries Ltd 3, % Cairn India Ltd 3, % Kotak Mahindra Bank Ltd 3, % National Thermal Power Corporation Ltd 3, % Punjab National Bank Ltd 3, % Indiabulls Real Estate Ltd 3, % Union Bank of India Ltd 3, % State Bank of India Ltd 3, % Kalyani Steels Ltd 2, % Wire & Wireless India Ltd 2, % IVRCL Infrastructure & Projects Ltd 2, % Deccan Chronicle Holdings Ltd 2, % AIA Engineering Ltd 2, % Century Textiles & Industries Ltd 2, % Containers Corporation of India Ltd 2, % Television Eighteen India Ltd. 2, % Cadila Healthcare Ltd 2, % Jain Irrigation Systems Ltd 2, % Plethico Pharmaceuticals Ltd 1, % HCL Technologies Limited 1, % Mundra Port and Special Economic Zone Ltd 1, % Reliance Communications Ventures Ltd % BGR Energy Systems Ltd' % Treasury Bills 3, % 91 Day T Bill (MD 25/01/2008) 3, % CPs, CDs and Term Deposits 2, % Rabo India Finance Ltd 1, % ICICI Bank Ltd % Cash, CBLO & Reverse Repo % Other Current Assets (195.02) -0.11% Total Net Assets 166, Top Ten Holdings Sector Allocation* Transportation 2.15% Oil 2.17% % 6.78% Textiles - Products 2.42% Industrial Products 2.83% Finance 3.15% When the Benchmark is down Auto 3.31% Cement 3.75% - When the Benchmark is up Telecom Services 4.05% - Non-Ferrous Metals 4.51% % Ferrous Metals 5.39% % Pharmaceuticals 5.51% Power S&P CNX Nifty Power 5.57% Since inception data. Benchmark is S&P CNX Nifty. For computation of returns Petroleum Products 5.60% the allotment NAV has been taken as Rs Past performance may or Software 6.02% may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non Construction 7.14% business days. Industrial Capital Goods 8.78% Quantitative Indicators: Media & Entertainment 11.36% Average P/E : 31.8 Std Dev : 6.21% Average P/BV : 5.14 Sharpe Ratio^ : 0.48 Banks 13.08% Average Dividend Yield : 0.68 Beta : 0.89 Annual Turnover Ratio : 1.73 times R squared : turnover has been computed as the ratio of the lower value of *Pertains to the equity investments only. average purchase and average sales, to the average net assets in the past one year (since inception for schemes that have not completed a year). The SIP Returns: As on 31-Dec-2007 figures are not netted for derivative transactions. Period SIP Start Date Total Amount Total No. Market Value SIP ^ Risk-free rate based on the last 3 month T-Bill cut-off of 7.35%. Invested of Units Returns Fund Manager's Comment 1 Year SIP 31-Jan-07 12, , % 3 Year SIP 31-Jan-05 36, , % The fund maintained an average equity exposure of ~97% during the month with not too many changes from the last month. The fund has marginally 5 Year SIP 31-Jan-03 60, , , % increased exposure to Banks (Union Bank), while holding in Consumer Non- Since Inception 1-Oct , , ,476, % Durables (ITC) was reduced to zero on profit booking and exposure in Cement (ACC) was reduced. Past performance may or may not be sustained in future. Assume Rs invested every month. The high level of returns come from the sharp appreciation in market, in the year 2003, 2005 &

7 ICICI Prudential Fusion Fund-Series II Close-ended Diversified Equity Scheme Fund Manager : Anand Shah (Managing this fund since inception & total experience of 6.7 yrs in equity reaserch & funds management) Indicative Investment Horizon: 3 yrs and more Inception date: Fund Size: Rs. 1, crores NAV (As on 31-Dec-2007): Growth option : Rs Dividend option : Rs Institutional Growth Option : Rs **Expense Ratio : Retail option : 2.01% Institutional option-i : 1.22% Style Box Style Value Blend Growth Size Large (Please refer to page no. 53 for Additional Information & page no. 44 for dividend history) Performance Record *- Growth Option % 43.97% Last 6 Months Fusion Fund - series II 56.80% 60.63% Since Inception S&P CNX Nifty Mid Small *Returns < 1Year : Absolute, > = 1Year : CAGR. Benchmark is S&P CNX Nfty Index. For computation of returns the allotment NAV has been taken as Rs Performance of Dividend Plan is subject to applicability of Dividend Distribution Tax. Past performance may or may not be sustained in future. 30-Jun-07 was a non business day. Avg. Monthly Returns in Various Market Conditions (Absolute) % 6.71% When the Benchmark is up Fusion Fund Seires II When the Benchmark is down -0.13% S&P CNX Nifty -1.88% Since inception data. Benchmark is S&P CNX Nifty. For computation of returns the allotment NAV has been taken as Rs Past performance may or may not be sustained in future. 30-Jun-07 was a non business day. Exploit the long-term investment potential in small & mid-cap segment Company/Issuer Mkt Value (Rs. Lakh) % to NAV SREI Infrastructure Finance Ltd 6, % Zee Entertainment Enterprises Ltd 5, % Subhiksha Trading Services Pvt Ltd 5, % Dishman Pharmaceuticals & Chemicals Ltd 4, % Reliance Industries Ltd 4, % Time Technoplast Ltd 4, % Tata Consultancy Services Ltd 4, % Allied Digital Services Ltd 4, % Suzlon Energy Ltd 3, % Electrosteel Castings Ltd 3, % HT Media Ltd 3, % Entertainment Network India Ltd 3, % Shree Renuka Sugars Ltd 3, % Kalyani Steels Ltd 3, % Sterlite Industries (India) Limited 3, % AIA Engineering Ltd 2, ABG Heavy Industries Ltd 2, % ICICI Bank Ltd 2, % Gujarat NRE Coke Ltd 2, % Bharati Airtel Ltd 2, % Coromandel Fertilisers Ltd 2, % Cadila Healthcare Ltd 2, % PTC India Ltd 2, % Cairn India Ltd 2, % Ratnamani Metals & Tubes Ltd 2, % Pantaloon Retail (India) Ltd 2, % Kirloskar Oil Engines Ltd 2, % Ceat Ltd 2, % Usha Martin Ltd 2, % IVRCL Infrastructure & Projects Ltd 2, % Deccan Chronicle Holdings Ltd 2, % Sasken Communications Technologies Ltd 2, % Federal Bank Ltd 2, % Nagarjuna Construction Company Ltd 2, % Prime Focus Ltd 2, % Maytas Infra Ltd 2, % Sterlite Industries Limited-Futures 1, % Television Eighteen India Ltd. 1, % MphasiS Ltd 1, % Punjab National Bank Ltd 1, % 3i Infotech Ltd 1, % Elecon Engneering Co Ltd 1, % Max India Ltd 1, % Mukand Ltd 1, % ETC Networks Ltd 1, % Kaveri Seed Company Ltd 1, % Advanta India Ltd % Arshiya International Ltd % ION Exchange India Ltd % Glenmark Pharmaceuticals Ltd % CHI Investments Ltd % Vardhaman Textiles Ltd % Vimta Labs Ltd % Monnet Ispat Ltd % Geometric Software Solutions Ltd % Ansal Housing & Construction Ltd % Esab India Ltd % BGR Energy Systems Ltd' % Treasury Bills 2, % 91 Day T Bill (MD 25/01/2008) 2, % CPs, CDs and Term Deposits 1, % ICICI Bank Ltd 1, % Cash, CBLO & Reverse Repo % Other Current Assets 1, % Total Net Assets 144, Top Ten Holdings Quantitative Indicators: Average P/E : Average P/BV : 4.5 Average Dividend Yield: 0.58 Annual Turnover Ratio: 0.93 times Std Dev : 5.01% Sharpe Ratio^ : 0.92 Beta : 0.53 R squared : 0.50 turnover has been computed as the ratio of the lower value of average purchase and average sales, to the average net assets in the past one year (since inception for schemes that have not completed a year). The figures are not netted for derivative transactions. ^ Risk-free rate based on the last 3 month T-Bill cut-off of 7.35%. Sector Allocation* Healthcare Services 0.43% Textiles - Cotton 0.48% Transportation 0.67% Pesticides 0.69% Auto Ancillaries 1.67% Oil 1.78% Power 1.82% Telecom Services 1.93% Minerals/Mining 1.93% Consumer Non-Durable 2.26% Fertilizers 2.60% Chemicals 2.96% Petroleum Products 3.09% Non-Ferrous Metals 3.51% Banks 4.73% Construction 4.86% Retailing 5.17% Finance 5.27% Pharmaceuticals 5.70% Industrial Capital Goods 6.40% Ferrous Metals 6.98% Industrial Products 7.37% Software 10.01% Media & Entertainment 13.94% 1 1 *Pertains to the equity investments only. 7

8 ICICI Prudential Emerging S.T.A.R. Fund Open Ended Diversified Equity Fund Style Box Fund Manager : Deven Sangoi (Managing this fund since Sept., 2006 & overall 11 yrs of equity market experience & 5 yrs of fund management experience) Indicative Investment Horizon: 3 years & more Inception date: Fund Size: Rs. 1, crores NAV (As on 31-Dec-2007): Growth option : Rs Dividend option : Rs Institutional option-i : Rs **Expense Ratio : Retail option : 2.07% Institutional option-i : 1.00% (Please refer to page no. 53 for Additional Information & page no. 44 for dividend history) Rs invested at inception: Emerging S.T.A.R Fund Vs NIFTY Junior 490, , , , , , , ,000 90,000 CAGR Emerging S.T.A.R. Fund : 61.84%; Benchmark : 49.44% Past performance may or may not be sustained in future. Performance Record *- Growth Option *Returns < 1Year : Absolute, > 1Year : CAGR. Benchmark is Nifty Junior. For computation of returns the allotment NAV has been taken as Rs Performance of Dividend Plan is subject to applicability of Dividend Distribution Tax. Past performance may or may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non business days. Avg. Monthly Returns in Various Market Conditions (Absolute) Quantitative Indicators: Average P/E : Average P/BV : 5.21 Average Dividend Yield : 0.49 Annual Turnover Ratio : 0.48 times Rs Rs Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Emerging S.T.A.R. Fund NIFTY Junior Index 75.19% 61.91% 61.84% 56.95% 41.56% 43.56% 49.44% 41.02% Last 6 Months Last 1 years Emerging S.T.A.R. Fund 7.19% 6.33% When the Benchmark is up Emerging S.T.A.R Fund Last 3 years Since Inception NIFTY Junior Index When the Benchmark is down -5.90% -7.06% Nifty Junior Index Since inception data. Benchmark is Nifty Junior. For computation of returns the allotment NAV has been taken as Rs Past performance may or may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non business days. Std Dev : 7.56% Sharpe Ratio^ : 0.46 Beta : 0.95 R squared : 0.70 turnover has been computed as the ratio of the lower value of average purchase and average sales, to the average net assets in the past one year (since inception for schemes that have not completed a year). The figures are not netted for derivative transactions. ^ Risk-free rate based on the last 3 month T-Bill cut-off of 7.35%. Fund Manager s Comment The fund maintained an average equity exposure of ~96% during the month, indicating stock picking at lower levels. The fund has increased allocation to Finance and Software, while taking fresh positions in Consumer Non-Durable, Minerals/Mining. Company/Issuer Mkt Value (Rs. Lakh) % to NAV SIP Returns: As on 31-Dec-2007 Period SIP Start Date Total Amount Total No. Market Value SIP Invested of Units Returns 1 Year SIP 31-Jan-07 12, , % 3 Year SIP 31-Jan-05 36, , , % Since Inception 28-Oct-04 40, , , % Past performance may or may not be sustained in future. Assume Rs invested every month. The high level of returns come from the sharp appreciation in market, in the year 2005 & Long term investment of funds for capital appreciation on a mid-cap portfolio India Infoline Ltd 8, % Deccan Chronicle Holdings Ltd 6, % Sintex Industries Ltd 5, % Patel Engineering Ltd 5, % Welspun Gujarat Stahl Roh Ltd 4, % Phillips Carbon Black Ltd 3, % TRF Ltd 3, % AIA Engineering Ltd 3, % Provogue (India) Ltd 3, % Dishman Pharmaceuticals & Chemicals Ltd 2, % Prime Focus Ltd 2, % Webel SL Energy Ltd 2, % Mukand Ltd 2, % Sterlite Optical Technologies Ltd 2, % Jagran Prakashan Pvt Ltd 2, % Nagarjuna Construction Company Ltd 2, % RPG Transmission Ltd 2, % Aditya Birla Nuvo Ltd 2, % Megasoft Ltd 2, % Nucleus Software Exports Ltd 1, % Geodesic Information Systems Ltd 1, % Kalyani Steels Ltd 1, % India Cements Ltd 1, % Finolex Cables Ltd 1, % Bosch Chassis Systems India Ltd 1, % Glenmark Pharmaceuticals Ltd 1, % Ruchi Soya Industries Ltd 1, % Subhash Projects & Marketing Ltd 1, % Madras Cements Ltd 1, % Rico Auto Industries Ltd 1, % Subex Azure Ltd 1, % 3i Infotech Ltd 1, % Solectron EMS India Ltd 1, % Kirloskar Ferrous Industries Ltd 1, % All Cargo Global Logistics Ltd 1, % Havells India Ltd % Stone India Ltd % Ramco Industries Ltd % Beck India Ltd % Graphite India Ltd % Tech Mahindra Ltd % Nitin Fire Protection Industries Ltd % Solectron Centum Electronics Ltd % Birla Corporation Ltd % Gujarat NRE Coke Ltd % Shriram Transport Finance Company Ltd % Orient Paper & Industries Ltd % BGR Energy Systems Ltd % CPs, CDs and Term Deposits 3, % Jammu & Kashmir Bank Ltd 2, % ICICI Bank Ltd 1, % Cash, CBLO & Reverse Repo 1, % Other Current Assets (1,216.15) -1.17% Total Net Assets 106, Top Ten Holdings Sector Allocation* Minerals/Mining Chemicals Textiles - Cotton Transportation Consumer Non-Durable Power Pharmaceuticals Cement Textiles - Products Auto Ancillaries Finance Industrial Capital Goods Construction Software Ferrous Metals Media & Entertainment Industrial Products 0.63% 0.85% 0.92% 0.99% 1.49% 2.36% 4.33% 4.88% 5.00% 6.55% 8.03% 8.08% 8.34% 8.87% 9.44% 11.56% 13.57% 1 1 *Pertains to the equity investments only.

9 ICICI Prudential Tax Plan Open Ended Diversified Equity Fund Style Box Fund Manager : Sankaran Naren (Managing this fund since Oct., 2005 & over 17 yrs of experience in fund management, equity research, operation etc.) Amit Mehta (Managing this fund since Dec 07 & experience of 2.7 yrs in engineering & banking) Indicative Investment Horizon: 3 yrs & more Inception date: Fund Size: Rs. 1, crores NAV (As on 31-Dec-2007): Growth option : Rs Dividend option : Rs **Expense Ratio : 2.14% (Please refer to page no. 53 for Additional Information & page no. 44 for dividend history) Rs invested at inception: Tax Plan Vs S&P CNX Nifty 1,450,000 1,250,000 1,050, , , , ,000 50,000 CAGR Tax Plan: 35.91%; Benchmark : 19.88% Past performance may or may not be sustained in future. Performance Record *- Growth Option Aug-99 Jan-01 May-02 Tax Plan *Returns < 1Year : Absolute, > = 1Year : CAGR. Benchmark is S&P CNX Nifty. For computation of returns the allotment NAV has been taken as Rs Performance of Dividend Plan is subject to applicability of Dividend Distribution Tax. Past performance may or may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non business days. Oct-03 Mar-05 S&P CNX Nifty Rs Rs Jul % 42.15% 54.40% 44.25% 39.78% 40.68% 43.43% 41.18% 35.91% Last 6 Months Last 1 year Tax Plan Last 3 years Last 5 years S&P CNX Nifty 19.88% Since Inception Avg. Monthly Returns in Various Market Conditions (Absolute) % When the Benchmark is up Tax Plan When the Benchmark is down -5.22% S&P CNX Nifty -5.34% Since inception data. Benchmark is S&P CNX Nifty. For computation of returns the allotment NAV has been taken as Rs Past performance may or may not be sustained in future. 30-Dec-06, 31-Dec-06 & 30-Jun-07 were non business days. Medium term investment of funds with tax benefits for capital appreciation Company/Issuer Mkt Value (Rs. Lakh) % to NAV Reliance Industries Ltd 9, % Sadbhav Engineering Ltd 7, ICICI Bank Ltd 4, % 4.18% Tata Tea Ltd 3, % Zee Entertainment Enterprises Ltd 3, Cadila Healthcare Ltd 3, % 2.97% Zuari Industries Ltd 2, % Vishal Retail Ltd 2, Gillette India Ltd 2, % 2.49% Kesoram Industries Ltd 2, % ING Vysya Bank Ltd Orient Paper & Industries Ltd 2, , % 2.15% Crompton Greaves Ltd 2, % Numeric Power Systems Ltd 3i Infotech Ltd 2, , % 1.97% HT Media Ltd 2, % Aditya Birla Nuvo Ltd Kotak Mahindra Bank Ltd 2, , % 1.88% Kalyani Steels Ltd 1, % Bharat Electonics Ltd Pantaloon Retail (India) Ltd 1, , % 1.84% Poleplex Corporation Ltd 1, % Sundaram Clayton Ltd Hindustan Dorr-Oliver Ltd 1, , % 1.62% Reliance Communications Ventures Ltd 1, % Peninsula Land Ltd Corporation Bank Ltd 1, , % 1.38% Apollo Hospitals Enterprises Ltd 1, % Deccan Chronicle Holdings Ltd Cairn India Ltd 1, , % 1.24% Kirloskar Brothers Ltd 1, % Megasoft Ltd FDC Ltd 1, , % 1.14% H.E.G. Ltd 1, % Mahindra & Mahindra Ltd Tech Mahindra Ltd 1, , % 1.00% Paper Products Ltd 1, % Clariant Chemicals (India) Ltd India Glycols Ltd % 0.89% Hindustan Sanitaryware & Industries Ltd % NIIT Tech Ltd Kalpataru Power Transmission Ltd % 0.81% Asian Paints Ltd % Ceat Ltd Rane Madras Ltd % 0.65% Gujarat NRE Coke Ltd % Zee News Ltd Venky's (India) Ltd % 0.58% Sun Pharma Advanced Research Co. Ltd % Firstsource Solutions Ltd Precision Pipes Ltd % 0.43% Gwalior Chemical Industries Ltd % MM Forgings Ltd Sundaram Brake Linings Ltd % 0.30% Precot Mills Ltd % Alembic Ltd Provogue (India) Ltd % 0.25% CHI Investments Ltd % Varun Industries Ltd Rane Brake Linings Ltd % 0.01% BGR Energy Systems Ltd' % Treasury Bills 91 Day T Bill (MD 25/01/2008) % 0.96% Cash, CBLO & Reverse Repo 3, % Other Current Assets % Total Net Assets 103, Top Ten Holdings Sector Allocation* Power 0.01% Finance 0.23% Textiles - Cotton 0.30% Minerals/Mining 0.64% Auto 1.04% Oil 1.24% Healthcare Services 1.27% Telecom Services 1.44% Ferrous Metals 1.93% Cement 2.15% Chemicals 2.17% Textiles - Products 2.19% Fertilizers 2.76% Retailing 4.39% Pharmaceuticals 4.96% Industrial Products 5.27% Software 5.44% Auto Ancillaries 6.20% Media & Entertainment 7.02% Consumer Non-Durable 8.22% Construction 8.28% Industrial Capital Goods 8.39% Petroleum Products 9.47% Banks 9.87% 1 *Pertains to the equity investments only. Quantitative Indicators: Average P/E : Average P/BV : 3.99 Average Dividend Yield : 0.89 Annual Turnover Ratio : 1.93 times Std Dev : 7.08% Sharpe Ratio^ : 0.39 Beta : 0.81 R squared : 0.51 turnover has been computed as the ratio of the lower value of average purchase and average sales, to the average net assets in the past one year (since inception for schemes that have not completed a year). The figures are not netted for derivative transactions. ^ Risk-free rate based on the last 3 month T-Bill cut-off of 7.35%. SIP Returns: As on 31-Dec-2007 Period SIP Start Date Total Amount Total No. Market Value SIP Invested of Units Returns 1 Year SIP 31-Jan-07 12, , % 3 Year SIP 31-Jan-05 36, , % 5 Year SIP 31-Jan-03 60, , , % Since Inception 19-Aug , , , % Past performance may or may not be sustained in future. Assume Rs invested every month. The high level of returns come from the sharp appreciation in market, in the year 2003, 2005 &

10 ICICI Prudential Indo Asia Equity Fund Open Ended Diversified Equity Fund Fund Managers : Sankaran Naren (Managing this fund since inception & over 17 yrs of experience in fund management, equity research, operation etc.) Amit Mehta (Managing this fund since inception & experience of 2.7 yrs in engineering & banking) Indicative Investment Horizon: 3 yrs & more Inception date: Fund Size: Rs crores NAV (As on 31-Dec-2007): Growth option : Rs Dividend option : Rs Institutional Growth Option : Rs **Expense Ratio : Retail option : 1.89% Institutional option-i : 1.89% (Please refer to page no. 53 for Additional Information) Performance Record *- Growth Option 8.40% 8.20% 7.80% 7.60% 7.40% 7.20% 7.00% 6.80% 6.60% 6.40% 8.3% Since Inception Indo Asia 7.04% Benchmark Style Box *Returns < 1Year : Absolute, > = 1Year : CAGR. Benchmark is 65% of S&P CNX Nifty + 35% of MSCI AC Far East Free ex-japan Index. For computation of returns the allotment NAV has been taken as Rs Performance of Dividend Plan is subject to applicability of Dividend Distribution Tax. Past performance may or may not be sustained in future. Long term capital appreciation by investing in blend of Indian & Asian Equities Company/Issuer Mkt Value (Rs. Lakh) % to NAV IOF Asian Equity Fund 26, % Reliance Industries Ltd 8, % ICICI Bank Ltd 4, % Zee Entertainment Enterprises Ltd 3, % Grasim Industries Ltd 3, % Steel Authority of India Ltd 3, % Mahindra & Mahindra Ltd 3, % Larsen & Toubro Ltd 3, % Asian Paints Ltd 2, % HCL Technologies Limited 2, % Aditya Birla Nuvo Ltd 2, % Bharati Airtel Ltd 2, % Reliance Communications Ventures Ltd 2, % Tata Power Company Ltd 2, % Bharat Electonics Ltd 2, % Dr. Reddy s Laboratories Ltd 1, % Ahluwalia Contractors Ltd 1, % Gas Authority of India Ltd 1, % Tata Consultancy Services Ltd 1, % Sterlite Industries (India) Limited 1, % Cairn India Ltd 1, % Cummins India Ltd 1, % Oil & Natural Gas Company Ltd 1, % NIIT Tech Ltd % Deccan Chronicle Holdings Ltd % Infosys Technologies Ltd % Karur Vysya Bank Ltd % BGR Energy Systems Ltd' % Cash, CBLO & Reverse Repo 6, % Other Current Assets (1,417.56) -1.48% Total Net Assets 94, Top Ten Holdings Sector Allocation* Industrial Products 1.32% Non-Ferrous Metals 1.65% Gas 1.73% Construction 1.78% Pharmaceuticals 1.94% Power 2.35% Textiles - Products 2.66% Oil 2.67% Consumer Non-Durable 3.03% Auto 3.43% Ferrous Metals 3.47% Cement 3.88% Media & Entertainment 4.84% Telecom Services 5.01% Industrial Capital Goods 5.64% Software 5.67% Banks 5.69% Petroleum Products 9.17% *Pertains to the Indian equity investments only. 10