Dividend Yield Equity FundDividend Yield Equity FundAn Open-Ended Equity fund

NFO Period: April 25, 2014 to May 09, 2014

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Why Now?1

Dividend yield - Explained2

Why Dividend Yield strategy?3

Some opportunities in the current market4

ICICI Prudential Dividend Yield Equity Fund5

Contents

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• Election is an important event for the markets

• Past Experience on election results day

• Deployment strategy

Why now?

4

• On 14 May and 17 May (two trading days post results), Sensex dropped by 16.56%

• Past experience shows that stocks that underperformed on the election result day – gave good returns post elections.

Source: BSE, NSE, Returns are absolute. Past performance may or may not be sustained in future.

2004 - Election and Markets

Index Name 14th May to 17th May 2004 (%) 18th May to 31st Dec 2004 (%)CNX Auto -14.61 38.53CNX Bank Nifty -25.16 65.71CNX Finance -23.32 60.25CNX FMCG -13.52 39.74CNX Infrastructure -23.43 64.54CNX IT -15.59 67.44CNX Metal -24.16 116.97CNX Pharma -10.87 34.66CNX Service -21.43 66.12

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• Between 15- 18 May (two trading days around results), Sensex gained 17.34% and hit upper circuit twice.

• In 2009, the defensives which underperformed initially, outperformed in the ensuing period.

Source: BSE, NSE, Returns are absolute. Past performance may or may not be sustained in future.

2009 - Election and Markets

Index Name 15th May to 18th May 2009 (%) 19th May to 31st Dec 2009 (%)CNX Auto 15.03 68.12CNX Bank Nifty 18.81 33.44CNX Finance 19.49 31.04CNX FMCG 8.66 27.55CNX Infrastructure 19.15 3.24CNX IT 12.43 73.59CNX Metal 17.57 78.05CNX Pharma 11.81 36.63CNX Service 17.34 20.59

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Dividend yield - Explained

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Stock Returns – Price appreciation and Dividend

Possible Returns From a Stock

Profits Generated by a Company

Dividend Paid Out

Dividend YieldDividend Distributed / Common Stock Price Capital Appreciation

Reinvested in Business for Future Growth

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• Relatively more stable business models with a history of consistent profitability,

and a dividend payment track record

• Companies pay dividends after attaining a sustainable level of growth.

• Need to pay dividends tends to make the management more accountable to

shareholders and less prone to taking unwanted risks.

• The share price of these companies tends to display low volatility.

Characteristics of Dividend paying companies

Why Dividend Yield strategy?

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10Source: www.nseindia.com. Past performance may or may not be sustained in future

• High Dividend yield can be a sign of undervalued markets.

• Markets rallied post 2003-04, when dividend yield of nifty was at all time high. Similar trend was seen post 2008-09.

Dividend yield and Nifty

0

0.5

1

1.5

2

2.5

3

3.5

0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

CNX Nifty Index Dividend Yield - CNX Nifty Index

Markets rally after dividend yields peak out

11Source: Credit Suisse

• Volatility measured against annualized standard deviation (of Top 100 companies by market cap of BSE) has been tangibly lower among companies that paid dividends compared to those that did not distribute profits.

Share prices of Dividend paying companies tend to be less volatile

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

0% 10% 20% 30% 40% 50% 60% 70%

Dividend Payout

Std. Deviation (ann.) v/s Dividend PayoutStandard Deviation

High dividendpay-out companieshave low volatility

• The compounding effect of dividend income over time has contributed equity total return.

12Source: www.nseindia.com

Dividends are an Important Source of Total Return

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2007 2008 2009 2010 2011 2012 2013

CNX Div Opportunities Index CNX Nifty Total Return Index

13Source: www.nseindia.com. Past performance may or may not be sustained in future

• CNX Dividend Opportunities Index tend to outperform in up-trending and down-trending markets.

Performance in up and down markets

-60.00%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

2007 2008 2009 2010 2011 2012 2013

CNX Nifty CNX Dividend Opportunities

14Source: Motilal Oswal Securities Ltd

Globally dividend yield indices have outperformed.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

S&P 500 Dividend Aristocrats Index S&P 500

Index values rebased to 1000

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Dividends remain a key driver of total return globally.

0

50

100

150

200

250

300

350

400

MSCI EUROPE MSCIAUSTRALIA

MSCI USA MSCI JAPAN MSCI AC ASIA xJAPAN

Dividend return (%) Price return (%)

Source: Kotak Securities; Bloomberg

Returns since 1998

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Some opportunities in the current market

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Source: Kotak Securities This illustration is to explain how a dividend yielding company has performed on a long term basis. This is to explain the concept of dividend yielding company as a suitable investment avenue. It is necessary to note that there can be many other factors that can have impact on the performance of the company in the stock market. Past performance may or may not be sustained in future. The stock/sector mentioned above does not constitute any recommendation by ICICI Prudential Mutual Fund/AMC.

Some opportunities in the current market

• In FY09, a high dividend yield signalled an ensuing rise in the stock’s market cap.

• Current valuations provides good potential opportunity.

A mid-cap IT companyMarket Cap (INR cr) Dividend Yield (%)

Dividend Yield Market Cap

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

Source: Kotak Securities

18This illustration is to explain how a dividend yielding company has performed on a long term basis. This is to explain the concept of dividend yielding company as a suitable investment avenue. It is necessary to note that there can be many other factors that can have impact on the performance of the company in the stock market. Past performance may or may not be sustained in future. The stock/sector mentioned above does not constitute any recommendation by ICICI Prudential Mutual Fund/AMC.

Some opportunities in the current market

• In FY 03, dividend yield of a PSU bank was more than 3%, post which the market cap increased from Rs 2,700 cr to Rs 13,500 cr.

• Similar trend can be seen post 2009.• There are ample stock picking opportunities available in the current market.

PSU Banks offer high dividend yieldMarket Cap (INR cr) Dividend Yield (%)

Dividend Yield Market Cap

-

1.0

2.0

3.0

4.0

5.0

6.0

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

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• Long term wealth creation solution• An open ended equity fund that aims for growth by primarily investing in equity and equity related

instruments, which offer attractive dividend yield.* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

HIGH RISK(BROWN)

This product is suitable for investors who are seeking*:

(BLUE) investors understand that their principal will be at low risk

(YELLOW) investors understand that their principal will be at medium risk

(BROWN) investors understand that their principal will be at high risk

Note: Risk may be represented as:

Dividend Yield Equity FundDividend Yield Equity FundAn Open-Ended Equity fund

The Product

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• An open ended equity fund that aims to:

• Invest at least 80% of assets in companies that have dividend yield greater than the dividend yield of CNX Nifty Index (last released /published by NSE), at the time of investment.

• Identify high dividend stocks within the framework of valuations and fundamentals.

• Invest in high-quality companies with proven records of paying and growing dividends.

• Invest across market cap

About the fund

21Source: Bloomberg

Dividend Yield Strategy can be broken down into:

Quality

• Disciplined companies generating good returns

• Strong market positions

• Stable cash-flows and

• Ability to increase dividends year after year.

Assets • Strong physical asset base giving more pricing control.

• Ability to increase dividend across different economic environments

Rapid Growth• Rapid structural growth by virtue of their geography, industry or

product line.

• Good capital discipline

Our Framework

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Source: Motilal Oswal Securities Ltd

• Companies with good dividend policies tend to perform well in up and down markets.

• The company was consistently increasing its pay-out ratio during 2004-09.

• The increase in dividends was factored in the stock price by the market participants.

This illustration is to explain how a dividend yielding company has performed on a long term basis. This is to explain the concept of dividend yielding company as a suitable investment avenue. It is necessary to note that there can be many other factors that can have impact on the performance of the company in the stock market. Past performance may or may not be sustained in future. The stock/sector mentioned above does not constitute any recommendation by ICICI Prudential Mutual Fund/AMC.

Dividend Yield Strategy - QUALITY

FMCG companyMarket Cap (INR cr) Dividend Pay-out %

0

20

40

60

80

100

120

0

50000

100000

150000

200000

250000

300000

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Payout Market Cap

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• Companies with strong physical asset base have the ability to pay consistent dividends across different economic environments.

Source: Kotak Securities This illustration is to explain how a dividend yielding company has performed on a long term basis. This is to explain the concept of dividend yielding company as a suitable investment avenue. It is necessary to note that there can be many other factors that can have impact on the performance of the company in the stock market. Past performance may or may not be sustained in future. The stock/sector mentioned above does not constitute any recommendation by ICICI Prudential Mutual Fund/AMC.

Dividend Yield Strategy - ASSETS

Oil & Gas companyMarket Cap (INR cr) Dividend Pay-out %

0

5

10

15

20

25

30

35

40

45

0

50000

100000

150000

200000

250000

300000

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Payout Market Cap

Source: Kotak Securities

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• These companies can benefit from rapid structural growth by virtue of their geography, industry or product line.

• Because of good capital discipline, these companies could generate strong cash flows allowing dividends to increase at a swift rate.

This illustration is to explain how a dividend yielding company has performed on a long term basis. This is to explain the concept of dividend yielding company as a suitable investment avenue. It is necessary to note that there can be many other factors that can have impact on the performance of the company in the stock market. Past performance may or may not be sustained in future. The stock/sector mentioned above does not constitute any recommendation by ICICI Prudential Mutual Fund/AMC.

Dividend Yield Strategy - RAPID GROWTH

Large cap IT companyMarket Cap (INR cr) Dividend Pay-out %

Payout Market Cap

05101520253035404550

0

50000

100000

150000

200000

250000

300000

350000

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

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Portfolio

Investable Universe(Attractive Dividend Yield Companies*)

Data Integrity Screens• Industry Trends • Growth Prospects

• Track Record and Consistency of Dividend Payments

Valuation & Fundamental verification• Business Fundamentals • Quality of ManagementR

ecur

ring

proc

ess

Daily Risk control

*Attractive dividend yield means dividend yield greater than the dividend yield of CNX Nifty Index, last released /published by NSE, at the time of investment.

Investment Approach

Type of scheme An open ended equity scheme

Investment Objective The investment objective of the Scheme is to provide medium to long term capital gains and/or dividend distribution by investing in a well diversified portfolio of predominantly equity and equity related instruments, which offer attractive dividend yield. However, there can be no assurance that the investment objectives of the scheme will be realized.

Options Direct Plan – Growth and Dividend (Reinvestment & Payout Option)Regular Plan – Growth and Dividend (Reinvestment & Payout Option)

Minimum Application Amount Rs 5,000 (plus in multiple of Rs.1)

Min. Add. Application Amount Rs 1,000 (plus in multiple of Re.1)

Min. Redemption Amount Rs 500 (plus in multiple of Re.1)

Entry Load Not Applicable

Exit Load For investments upto 18 months – 1% of applicable NAV

Benchmark Index CNX Dividend Opportunities Index

Fund Manager# Mr. Mrinal Singh and Mr. Vinay Sharma

26#Ashwin Jain will be the fund manager for overseas investments

Scheme Features

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.All figures and other data given in this document are as on 31st March 2014 unless stated otherwise. 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 from time 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 written consent 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 other financial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund.

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, including information 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 made available 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 looking statements 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 countries globally, 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 and employees, 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 from the 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 decision taken on this material.

Disclaimers