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Prudential ICICI Gilt Fund The particulars of the Prudential ICICI Gilt Fund, the mutual fund Scheme offered under this Offer Document, have 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. 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. Issue of Units of Rs.10/- per Unit at NAV based prices on an on-going basis. An open ended dedicated Gilt Fund Offer Document SMS INVEST to 8558 CALL 1600 22 2273 or apply online at www.pruicici.com 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 390 007, 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 400 013. Regd. Office: 206 Ashoka Estate, 2nd Floor, Barakhamba Road, New Delhi 110 001. Trustee: Prudential ICICI Trust Limited, Regd. Office: 206 Ashoka Estate, 2nd Floor, Barakhamba Road, New Delhi 110 001.

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  • Prudential ICICI Gilt Fund

    The particulars of the Prudential ICICI Gilt Fund, the mutual fund Scheme offered under this Offer Document, have 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. 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.

    Issue of Units of Rs.10/- per Unit at NAV based prices on an on-going basis.

    An open ended dedicated Gilt Fund

    Offer Document

    SMS INVEST to 8558

    CALL 1600 22 2273or apply online at www.pruicici.com

    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 390 007, 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 400 013. Regd. Office: 206 Ashoka Estate, 2nd Floor, Barakhamba Road, New Delhi 110 001.

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

  • Investing in mutual fund schemes involves certain risks and considerations associated generally with making investments insecurities. The value of the Scheme’s investments may be affected generally by factors affecting financial markets, such as priceand volume, volatility in interest rates, currency exchange rates, changes in regulatory and administrative policies of the Governmentor any other appropriate authority (including tax laws) or other political and economic developments. Consequently, there canbe no assurance that the Scheme offered in this Offer Document would achieve the stated objectives. The NAV of the Units of theScheme may fluctuate and can go up or down. Past performance of the schemes managed by the Sponsors or their affiliates orthe Asset Management Company is not indicative of the future performance of the Scheme nor will the performance of theScheme, 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 andfinancial advisors to determine possible legal, tax and financial or any other consequences of subscribing to, purchasing orholding Units under the Scheme, before making an application to subscribe or purchase the Units.

    The Prudential ICICI Mutual Fund (the Fund) and the Prudential ICICI Asset Management Company Limited (the AMC), have notauthorized any person to give any information or make any representations, either oral or written, not stated in this OfferDocument in connection with issue of Units under the Scheme. Prospective investors are accordingly advised not to rely uponany information or representations not incorporated in this Offer Document. Any subscription, purchase or sale made by anyperson on the basis of statements or representations which are not contained in this Offer Document or which are inconsistentwith the information contained herein shall be solely at the risk of the investor.

    Unitholders / investors are requested to read and understand the Offer Document, Key Information Memorandum and riskfactors furnished with the scheme in which they seek to make investments or in which they have invested. Unitholders / Investorsare urged not to rely upon or be misled by any oral promises or statements made by the distributors / intermediaries of theMutual 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 / Investorsbased 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 Sponsorsand 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 theSponsor(s) shall not exceed an average of 5% of the aggregate purchases and sale of securities made by the Fund in all itsSchemes 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 anddistribution and sale of securities shall be made only if a disclosure to this effect is made in the Offer Document and thebrokerage or commission paid is also disclosed in the half yearly annual accounts of the mutual fund.

    c) The Mutual Fund Scheme shall not make any investment in:

    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 Kingdomand “Rs.” to Indian Rupees. The Reference Exchange Rate between the United States Dollar and the Indian Rupee has beentaken at $1 = Rs.43.59 and UK£ and Indian Rupee at 1£=Rs.79.3621.

    This Offer Document is dated September 19, 2005.

  • Prudential ICICI Gilt Fund

    3

    .................................................................................................................................................................. 62. Risk Factors & Special Consideration ...................................................................................................................... 83. Due Diligence Certificate ....................................................................................................................................... 114. Definitions .............................................................................................................................................................. 125. Summary – Prudential ICICI Infrastructure Fund ................................................................................................. 146. Constitution of the Mutual Fund ........................................................................................................................... 16

    a) The Sponsors .................................................................................................................................................... 16b) The Trustee Company ....................................................................................................................................... 17

    i. Directors .................................................................................................................................................... 17ii. Rights and Obligations of the Trustee ....................................................................................................... 18iii. Trusteeship Fees ......................................................................................................................................... 20

    c) Management of Asset Management Company (AMC) ..................................................................................... 20i. Board of Directors of the AMC .................................................................................................................. 21ii. Powers, Duties & Responsibilities of the AMC ........................................................................................... 23iii. Key Employees of AMC & relevant experience ........................................................................................... 24iv. Fund Manager ........................................................................................................................................... 29v. Compliance Officer .................................................................................................................................... 29vi. Investor Relations Officer ........................................................................................................................... 29

    d) Auditors ............................................................................................................................................................ 29e) Registrar ............................................................................................................................................................ 29f) Custodian ......................................................................................................................................................... 30

    7. Investment Objectives & Policies .......................................................................................................................... 31a) Type of the Scheme ........................................................................................................................................... 31b) Investment Objective ......................................................................................................................................... 31c) Investment Pattern ............................................................................................................................................ 31d) Liquidity Support from RBI ................................................................................................................................ 31e) Change in Investment Pattern ........................................................................................................................... 31f) Terms of the Scheme ......................................................................................................................................... 31g) Changes in Fundamental Attributes ................................................................................................................. 32h) Investment Strategy .......................................................................................................................................... 33i) Portfolio Turnover ............................................................................................................................................. 33j) Procedure followed for investment decisions ................................................................................................... 33k) Trading in derivatives ........................................................................................................................................ 34l) Investment Restrictions for the Scheme ............................................................................................................ 35m) Underwriting by the Fund ................................................................................................................................. 36n) Computation of Net Asset Value ....................................................................................................................... 36o) Accounting Policies & Standards ....................................................................................................................... 36

    8. Units & The New Fund Offer ................................................................................................................................. 38General Information ................................................................................................................................................ 38a) Minimum Subscription Amount ........................................................................................................................ 38b) Offer Price for Ongoing Subscriptions .............................................................................................................. 38c) Minimum Amount for Application ................................................................................................................... 38d) Expenses of New Fund Offer ............................................................................................................................. 38e) Investment Options offered under the Plans of the Scheme ............................................................................. 38

    i. Growth Option .......................................................................................................................................... 38ii. Dividend Option ........................................................................................................................................ 38iii. Dividend Reinvestment facility ................................................................................................................... 39iv. Automatic Encashment Plan (AEP) ............................................................................................................. 39

    f) Section 54EA and 54EB Investment Plans .......................................................................................................... 40g) Pledge of Units for Loans .................................................................................................................................. 40h) Systematic Transfer Plan (STP) ............................................................................................................................ 40i) Flexible Lifetime Investment Programme ........................................................................................................... 41j) How to Switch ................................................................................................................................................... 41k) Who can Invest? ................................................................................................................................................ 42

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    Prudential ICICI Mutual Fund

    l) How to Apply? .................................................................................................................................................. 42i) Purchase of units on on-going basis ......................................................................................................... 42ii) Purchase Price ............................................................................................................................................ 42iii) Applicable NAV .......................................................................................................................................... 43iv) Cut-off time for Purchase ........................................................................................................................... 43v) How to Purchase the Units on an on-going basis? .................................................................................... 43vi) NRIs & FIIs .................................................................................................................................................. 44vii) Mode of Payment on Repatriation basis .................................................................................................... 44viii) Mode of payment on Non-Repatriation basis ............................................................................................ 44ix) Application under Power of Attorney/ Body Corporate/Registered Society/ Trust/ Partnership .................. 44x) Joint Applicants ......................................................................................................................................... 44xi) Nomination Facility .................................................................................................................................... 45

    m) Issuance of Units/Account Statements .............................................................................................................. 45n) Redemption of Units ......................................................................................................................................... 45

    i) Redemption Price ....................................................................................................................................... 45ii) Applicable NAV .......................................................................................................................................... 46iii) Cooling-off period for web based transactions ......................................................................................... 46iv) How to Redeem? ....................................................................................................................................... 46v) Payment of Proceeds .................................................................................................................................. 46vi) Non receipt of email communication by Investors ..................................................................................... 47vii) Redemption by NRIs/ FIIs ............................................................................................................................ 47viii) Effect of Redemptions ............................................................................................................................... 47ix) Fractional Units .......................................................................................................................................... 47x) Signature mismatch cases .......................................................................................................................... 47xi) Right to Limit Redemptions ....................................................................................................................... 48xii) Suspension of Sale and Redemption of Units ............................................................................................ 48xiii) Permanent Account Number (PAN) ............................................................................................................ 48xiv) Unique Identification Number (UIN) ........................................................................................................... 48xv) Dormant Account Locking ......................................................................................................................... 48

    9. Load Structure, Fees and Expenses ...................................................................................................................... 491) Load Structure of the Scheme ........................................................................................................................... 492) Fees and Expenses of the Scheme ..................................................................................................................... 49

    a) New Fund Offer Expenses .......................................................................................................................... 49b) Estimated Recurring Expenses ................................................................................................................... 49

    3) Expenses of the Past Schemes ........................................................................................................................... 50i. New Fund Offer Expenses - Comparison of estimated to actual ................................................................ 50ii. Condensed Financial Information .............................................................................................................. 51

    10. Unitholders Rights and Services ........................................................................................................................... 70a) Investors Services .............................................................................................................................................. 70b) Ease of Transactions .......................................................................................................................................... 70

    i. Customer Service Centers in major metros ................................................................................................ 70ii. Process transactions in a timely manner .................................................................................................... 70

    c) Problem Resolution .......................................................................................................................................... 70d) Information about the Scheme ......................................................................................................................... 70e) NAV Information ............................................................................................................................................... 70f) Disclosure of information under the Regulations ............................................................................................. 71g) Rights of Unitholders of the Scheme ................................................................................................................ 71h) Duration of the Scheme/Winding up ................................................................................................................ 71i) Procedure and manner of Winding up .............................................................................................................. 72j) Tax Benefits ....................................................................................................................................................... 72

    1) To the Fund ................................................................................................................................................ 722) Securities Transaction Tax ........................................................................................................................... 723) To the Unitholders ..................................................................................................................................... 73

    A. Income received from mutual fund ..................................................................................................... 73B. Long term capital gains on transfer of units ....................................................................................... 73

    i. For Individuals and HUFs ............................................................................................................. 73

  • Prudential ICICI Gilt Fund

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    ii. For Partnership Firms, Non-Residents, Indian Companies/Foreign Companies ........................... 73iii. For Non-resident Indians ............................................................................................................. 73iv. For Overseas Financial Organisations and Foreign Institutional Investors

    fulfilling conditions laid down under section 115AB (Offshore Fund ......................................... 73C. Short term capital gains ...................................................................................................................... 73

    D. Tax deduction at source ...................................................................................................................... 74

    E. Exemption from tax on capital gains arising on transfer of units held for more than 12 months ...... 75

    F. Investments by charitable and religious trusts in the plan .................................................................. 75

    G. Wealth Tax .......................................................................................................................................... 75k) Unclaimed redemption amount ........................................................................................................................ 75

    11. Other Matters ........................................................................................................................................................ 76a) Unitholders Grievances Redressal Mechanism .................................................................................................. 76b) Associate Transactions ...................................................................................................................................... 77c) Details of Investment in Companies that hold more than 5% of NAV of Schemes managed by the AMC ....... 84

    d) Penalties and Pending Litigations ..................................................................................................................... 86e) Borrowing by the Mutual Fund ......................................................................................................................... 92f) Inter-Scheme Transfers ...................................................................................................................................... 92g) General Information ......................................................................................................................................... 93

    • Power to make Rules ................................................................................................................................. 93• Power to remove Difficulties ...................................................................................................................... 93• Scheme to be binding on the Unitholders ................................................................................................. 93• Documents available for Inspection ........................................................................................................... 93

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    Prudential ICICI Mutual Fund

    � The Sponsors of the Fund are ICICI Bank Limited (erstwhile ICICI Limited) and Prudential plc. of the United Kingdom (UK).

    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 taxof 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 560branches and extension counters and over 1,900 ATMs. ICICI Bank offers a wide range of banking products and financialservices to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries andaffiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bankset up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on itsdomestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom,Canada and Russia, branches in Singapore and Bahrain and representative offices in the United States, China, United ArabEmirates, Bangladesh and South Africa. (Source: Overview at www.icicibank.com).

    ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-ownedsubsidiary. ICICI’s shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of MaduraLimited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal2001 and fiscal 2002.

    Pursuant to the Scheme of Amalgamation effective March 30, 2002, among ICICI, ICICI Personal Financial Services, ICICICapital Services and ICICI Bank, sanctioned by the High Court of Gujarat and the High Court of Judicature at Bombay andapproved by the Reserve Bank of India, ICICI, ICICI Personal Financial Services and ICICI Capital Services were merged withICICI Bank in an all-stock merger. ICICI Bank is the surviving legal entity in the amalgamation.

    Prudential plc is a leading international financial services group providing retail financial products and services and fundmanagement to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, overGBP187 billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as ofDecember 31, 2003.

    Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval inrecognizing ICICI Bank Ltd. as a co-sponsor consequent to the merger of ICICI Ltd. with ICICI Bank Ltd.

    � Fund Management expertisePrudential plc is a leading international financial services group providing retail financial products and services and fundmanagement to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, overGBP187 billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as ofDecember 31, 2003.Prudential ICICI Asset Management Company Limited, the Investment Manager to the Prudential ICICI Mutual Fund,manages assets over Rs. 21,426 crores as of August 31, 2005 through 23 schemes. It is one of the largest asset managementcompanies in the country.

    � Investment Objective - Prudential ICICI Gilt Fund is a Scheme which seeks to generate regular returns through investmentin gilts. This Scheme will invest only in Government Securities and will not invest in equity or corporate debt securities. Giltscarry no risk of default in payment of principal or interest, though gilt securities do carry a price risk.Provident Funds, Pension Funds, Superannuation Funds and Gratuity Funds are eligible to invest in the Scheme.

    � High Liquidity - Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV basedprices. The Fund will, under normal circumstances, endeavor to despatch redemption cheques within 1 Business Day fromthe date of acceptance of the redemption request at any of the Customer Service Centers of AMC. This service standard willapply only at the centers where RBI handles clearing directly and is able to transfer funds from Mumbai on the same-day-value basis. In respect of all non-RBI centers, for redemption payments, AMC will take additional day(s) – not exceeding 3Business Days – that would essentially be linked to the time taken by banks to clear funds at such Non-RBI centers.

    � As the Scheme is dedicated exclusively to investments in Government Securities, RBI has approved the Scheme for availingthe liquidity support upto 20% of the outstanding stock of investments in government securities, including treasury billsheld in the Scheme. This will help the Scheme, if necessary, to meet its liquidity needs.

    � The investors under the Scheme may choose between the following investment Plans/Options:

    Sr. No. Investment Plan Options

    1. Treasury Plan GrowthGrowth – AEPDividend (Quarterly & Half-yearly)

    2. Investment Plan GrowthGrowth – AEPDividend (Half-yearly)

    3. Treasury PF Option GrowthGrowth – AEP

    4. Investment PF Option GrowthGrowth – AEP

    Facility for dividend reinvestment is also available under the dividend option.

  • Prudential ICICI Gilt Fund

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    � Entry / Exit Load: For the present, on an on-going basis the investors under the Scheme and the Plans thereunder arerequired to pay an entry and exit load as below:

    Sr. No. Investment Plan Entry Load Exit Load

    1. Treasury Plan Nil Nil

    2. Investment Plan Nil Nil

    3. Treasury Plan – PF Option Nil For amounts sought to be redeemed/switched beforecompletion of 365 days – 0.80% of the applicableNAV

    For amounts sought to be redeemed/switched aftercompletion of 365 days - Nil

    4. Investment Plan – PF Option Nil For amounts sought to be redeemed/switched beforecompletion of 365 days – 0.60% of the applicableNAV

    For amounts sought to be redeemed/switched aftercompletion of 365 days - Nil

    All New Fund Offer expenses for the Scheme were borne by the AMC and have not been charged to the Scheme.

    � Investors in the Scheme/Plans are not being offered any guaranteed returns.

    � Investors are advised to consult their Legal /Tax and other Professional Advisors in regard to tax/legal implicationsrelating to their investments in the Scheme and before making decision to invest in the Scheme or redeem theUnits in the Scheme.

  • 8

    Prudential ICICI Mutual Fund

    � Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that theobjectives 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 thefactors and forces affecting the capital markets.

    � Past performance of the Sponsors, AMC/Fund does not indicate the future performance of the Schemes of the Fund.

    � The Sponsors are not responsible or liable for any loss resulting from the operation of the Scheme beyond the contributionof an amount of Rs 22.2 lacs collectively made by them towards setting up the Fund and such other accretions and additionsto the corpus set up by the Sponsors.

    � Prudential ICICI Gilt Fund is the name of the Scheme and does not in any manner indicate either the quality of the Schemeor its future prospects and returns.

    � The NAV of the Scheme may be affected by changes in the general level of interest rates and trading volumes, settlementperiods and transfer procedures.

    � The Scheme may use various derivatives and hedging products from time to time, as would be available and permitted bySEBI, in an attempt to protect the value of the portfolio and enhance Unitholders interest. In case the Scheme utilizes anyderivatives under the Regulations, the Scheme may, in certain situations, be exposed to risks associated with the use ofderivatives.

    � Investors in the Scheme are not being offered any guaranteed returns.

    � From time to time and subject to the Regulations, the Sponsors, the mutual funds and investment companies managed bythem, their affiliates, their associate companies, subsidiaries of the sponsors and the AMC may invest either directly orindirectly in the Scheme. The funds managed by these affiliates, associates, the Sponsors, subsidiaries of the Sponsors and/or the AMC may acquire a substantial portion of the Scheme’s Units and collectively constitute a major investor in theScheme. Accordingly, redemption of Units held by such funds, affiliates/associates and Sponsors may have an adverseimpact on the Units of the Scheme because the timing of such redemption may impact the ability of the other Unitholdersto redeem their Units.

    � The Scheme may invest in other schemes managed by the AMC or in the schemes of any other Mutual Funds, provided it isin 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.

    � Changes in Government policy in general and changes in tax benefits applicable to mutual funds may impact the returnsto investors in the Scheme

    � The Fund may use derivatives instruments like Interest Rate Swaps, Forward Rate Agreements or other derivative instrumentsfor the purpose of hedging and portfolio balancing, as permitted under the Regulations and guidelines. Usage of derivativeswill 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 andpermitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders’ interest. In casethe Scheme utilizes any derivatives under the Regulations, the Scheme may, in certain situations, be exposed toprice risks.

    � From time to time and subject to the regulations, the AMC may invest in this Scheme. The decision to invest in the Schemeby 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 chargeany fees on such investments.

    � 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 havea 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 succeedingcalendar quarter, whichever is earlier, from the close of the New Fund Offer (NFO) of open ended schemes or on an ongoingbasis for each calendar quarter, the schemes /plans shall be wound up by following the guidelines prescribed by SEBI andthe 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 applicableat the Portfolio level. For determining the holding by single investor above 25% limit, the average of daily holding by eachsuch 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 redeemhis exposure over the 25% limit within 15 days. In case, if the investor fails to redeem his exposure over 25%, it would leadto 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 typesof risk. Accordingly the scheme’s risk may increase or decrease depending upon its investment pattern. E.g. corporate bondscarry a higher amount of risk than Government securities. Further even among corporate bonds, bonds which are AAArated are comparatively less risky than bonds which are AA rated.

    � Risks attached with the use of derivatives: As and when the schemes trade in the derivatives market there are risk factorsand issues concerning the use of derivatives that investors should understand. Derivative products are specialized instruments

  • Prudential ICICI Gilt Fund

    9

    that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of aderivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivativesrequire the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that aderivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibilitythat a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the “counterparty”) to comply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mis pricing orimproper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates andindices.

    Scheme Specific Risk Factor:

    � Generally, when interest rates rise, prices of fixed income securities fall and when interest rates drop, the prices increase. Theextent of fall or rise in prices is a function of the existing coupon, days to maturity and the increase or decrease in interestrates. Price-risk is not unique to government securities but is true for all fixed income securities. The default risk however, inrespect of Government securities is zero. Therefore, their prices are influenced only by movement in interest rates in thefinancial system. On the other hand, in the case of corporate or institutional fixed income securities, such as bonds ordebentures, prices are influenced by credit standing of the issuer as well as the general level of interest rates.

    � Even though the Government securities market is more liquid compared to other debt instruments, on occasions, therecould be difficulties in transacting in the market due to extreme volatility or unusual constriction in market volumes or onoccasions when an unusually large transaction has to be put through.

    � Mutual funds being vehicles of securities investments are subject to market and other risks and there can be no guaranteeagainst loss resulting from investing in the Scheme. The various factors which impact the value of the Scheme’s investmentsinclude, but are not limited to, fluctuations in the bond markets, fluctuations in interest rates, prevailing political andeconomic environment, changes in government policy, tax laws, liquidity of the underlying instruments, settlement periods,trading volumes etc.

    � The inability of the Scheme to make intended securities purchases due to settlement problems could cause the Scheme tomiss certain investment opportunities. By the same rationale, the inability to sell securities held in the Scheme’s portfoliodue to the extraneous factors that may impact liquidity would result, at times, in potential losses to the Scheme, in case ofa subsequent decline in the value of securities held in the Scheme’s portfolio.

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    Prudential ICICI Mutual Fund

    Sponsors

    Prudential plcLaurence Pountney Hill,London EC4R DHH,United Kingdom

    ICICI Bank LimitedLandmark,Race Course Circle,Vadodara 390 007,India

    Asset Management Company

    Prudential ICICI Asset Management Company Limited

    Registered Office206 Ashoka Estate, 2nd Floor,24 Barakhamba Road,New Delhi – 110 001Telephone: 022 - 24997000 Fax : 022 - 24997029

    Corporate Office8th Floor, Peninsula Tower, Peninsula Corporate Park,Ganpatrao Kadam Marg, Off Senapati Bapat Marg,Lower Parel, Mumbai 400 013.Telephone: 022 - 24997000 Fax: 022 - 24997029

    Trustee

    Prudential ICICI Trust Limited206 Ashoka Estate, 2nd Floor,24 Barakhamba Road,New Delhi – 110 001

    Registrar

    Computer Age Management Services Private LimitedUnit : Prudential ICICI Mutual FundA&B Lakshmi Bhavan609 Anna Salai, Chennai 600 006

    Auditors to the Scheme

    N. M. Raiji & CompanyUniversal Insurance BuildingSir Phiroze Shah Mehta RoadMumbai 400 001

    Custodian

    HDFC Bank LimitedSandoz HouseDr. Annie Besant RoadWorliMumbai 400 018

    Legal Advisors

    A.R.A. LAW1st Floor,Agra Building,121, M.G. Road,Fort, Mumbai - 400 023

  • Prudential ICICI Gilt Fund

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    It is confirmed that:

    i) The draft Offer Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and theguidelines and directives issued by SEBI from time to time.

    ii) All legal requirements connected with the launching of the Scheme and also the guidelines, instructions, etc. issued by theGovernment of India and any other competent authority in this behalf, have been duly complied with.

    iii) The disclosures made in the Offer Document are true, fair and adequate to enable the investors to make a well-informeddecision regarding investment in the proposed Scheme.

    iv) The intermediaries named in the Offer Document, according to the information given to the AMC, are registered with SEBIand till date such registration is valid.

    Place: Mumbai Ranganath AthreyaDate: September 19, 2005 Sr. Vice President –Legal, Compliance,

    & Company Secretary

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

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    Prudential ICICI Mutual Fund

    In this Offer Document, the following words and expressions shall have the meaning specified herein, unless the contextotherwise requires:

    Asset Management Company or AMC or Prudential ICICI Asset Management Company Limited (formerly, ICICIInvestment Manager Asset Management Company Limited), the Asset Management

    Company incorporated under the Companies Act, 1956, and registeredwith SEBI to act as an Investment Manager for the schemes of PrudentialICICI Mutual Fund.

    Applicable NAV for Purchase Applicable NAV is the Net Asset Value per Unit at the close of theBusiness Day on which the application is accepted.

    An application will be considered accepted on that day, subject to itbeing complete in all respects and received prior to the cutoff time onthat Business Day.

    Applicable NAV for Redemption Applicable NAV is the Net Asset Value per Unit at the close of theBusiness Day on which the application is accepted.

    Business Day A day other than (i) Saturday and Sunday, (ii) a day on which the banksin Mumbai or National Stock Exchange or the Reserve Bank of India areclosed (iii) a day on which there is no RBI clearing / settlement ofsecurities; or (iv) a day on which the Sale and Redemption of Units issuspended by the Trustee.Provided that the days when the banks at any centre where the AMCCustomer Service Centres are located, are closed due to a local holiday,such days will be treated as non-Business Days at such centres for thepurposes of accepting fresh subscriptions. However, if the AMCs officesin such centres are open on such local holidays, then redemption andswitch requests will be accepted at those centres provided it is a BusinessDay for the Scheme on an overall basis.

    Custodian HDFC Bank Limited, Mumbai, acting as Custodian to the Schemes, orany other custodian who is approved by the Trustee and has beengranted registration by SEBI under the Securities and Exchange Boardof India (Custodian of Securities) Regulations, 1996 as amended fromtime to time.

    FII Foreign Institutional Investors, registered with SEBI under Securitiesand Exchange Board of India (Foreign Institutional Investors)Regulations, 1995, as amended from time to time.

    Gilts or Government Securities Securities created and issued by the Central Government and/or aState Government (including Treasury Bills) or Government Securitiesas defined in the Public Debt Act, 1944, as amended from time to time.

    ICICI Bank ICICI Bank Limited

    Investment Management Agreement The Agreement dated September 3, 1993 entered into betweenPrudential ICICI Trust Limited (formerly, ICICI Trust Limited) andPrudential ICICI Asset Management Company Limited (formerly, ICICIAsset Management Company Limited), as amended from time to time.

    Investment Plan A Plan under the Prudential ICICI Gilt Fund

    Investment Plan PF Option A Plan under the Prudential ICICI Gilt Fund

    NAV Net Asset Value of the Units of the Scheme and the Plans and Optionstherein, calculated on every Business Day in the manner provided inthis Offer Document or as may be prescribed by Regulations from timeto time.

    NRI Non-Resident Indian

    Offer Document This document issued by Prudential ICICI Mutual Fund, offering Unitsof Prudential ICICI Gilt Fund, for subscription, at NAV based prices.

    Prudential Prudential plc (formerly known as Prudential Corporation plc), of theU.K. and includes, wherever the context so requires, its wholly ownedsubsidiary Prudential Corporation Holdings Limited.

    Prudential ICICI Gilt Fund or Gilt Fund Prudential ICICI Gilt Fund and the Plans and Options comprised therein,as the context may permit.

    RBI Reserve Bank of India, established under the Reserve Bank of India Act,1934, as amended from time to time.

  • Prudential ICICI Gilt Fund

    13

    SEBI Securities and Exchange Board of India, established under Securitiesand Exchange Board of India Act, 1992, as amended from time totime.

    The Fund or Mutual Fund Prudential ICICI Mutual Fund (erstwhile ICICI Mutual Fund), a trust setup under the provisions of Indian Trusts Act, 1882. The Fund isregistered with SEBI vide Registration No.MF00393/6 dated October13, 1993 as ICICI Mutual Fund and obtained approval from SEBI forchange in name to Prudential ICICI Mutual Fund vide SEBI’s letterdated April 16, 1998.

    The Trustee Prudential ICICI Trust Limited (erstwhile ICICI Trust Limited), a companyset up under the Companies Act, 1956, and approved by SEBI to act asthe Trustee for the schemes of Prudential ICICI Mutual Fund.

    The Scheme Prudential ICICI Gilt Fund and/or the Plans and either the GrowthOption or the Dividend Option contained there in, as the context maypermit.

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

    Treasury Plan A Plan under the Prudential ICICI Gilt Fund.

    Treasury Plan PF Option A Plan under the Prudential ICICI Gilt Fund

    Trust Deed The Trust Deed dated August 25, 1993 establishing ICICI Mutual Fund,(subsequently renamed Prudential ICICI Mutual Fund), as amendedfrom time to time.

    Trust Fund Amounts settled/contributed by the Sponsors towards the corpus ofthe Prudential ICICI Mutual Fund and additions/accretions thereto.

    Unit The interest of an investor which consists of one undivided share inthe Net Assets of the Scheme.

    Unitholder A holder of Units in the Scheme of Prudential ICICI Gilt Fund and thePlans and Options offered under the Scheme, as contained in thisOffer Document.

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    Prudential ICICI Mutual Fund

    Prudential ICICI Gilt Fund

    Structure Open Ended dedicated Gilt Fund

    Offer Price for on-going Subscriptions: Based on the Applicable NAV of the Scheme, subject to entry loadprovisions, if any.

    Features The Scheme seeks to generate regular returns through investmentsmade in Gilts. The investors may choose between a Treasury Plan, anInvestment Plan, a Treasury Plan - PF Option and an Investment Plan -PF Option.

    As the investment portfolios of all the Plans/Options under the Schemesare different there will be separate NAVs for each of the Plan/Option.

    All the Plans under the Scheme offers a Growth Option and a GrowthAEP Option whereas a Dividend Option is available under Treasury andInvestment Plan. Dividend reinvestment facility is also available underthe respective Dividend option.

    There can be no assurance that the investment objective of the Scheme/Plan will be realized.

    Application Amount Minimum application amount under the Scheme and all the Plansthereunder is Rs.25,000 (plus in multiples of Re. 1). Additionalinvestments should be for a minimum of Rs.5,000.

    New Fund Offer Expenses The New Fund Offer expenses were borne by the AMC and were notcharged to the Scheme.

    Flexible life time Investment Programme The Fund will allow investors the flexibility to alter the allocation oftheir investments amongst the designated schemes offered by theFund in order to meet their changing investment needs or risk profilesby switching between the schemes of the Fund. It is the intention ofthe Fund to enable investors in the Scheme to switch between thepresent open ended schemes and the future schemes which may beincluded in the Flexible Lifetime Investment Programme. Please refer topage 41 for more details of the Flexible Lifetime Investment Programme.

    Liquidity On an on-going basis, an investor can purchase and redeem Units onevery Business Day at NAV based prices, subject to the prevailing loadstructure. (Please refer to page 45 for Redemption Price and page 42for Purchase Price).

    The Units of the Scheme are not listed on any exchange.

    The Fund will, under normal circumstances, endeavour to dispatchredemption cheques within 1 Business Day from the date of acceptanceof the redemption request at any of the Customer Service Centers ofAMC. This service standard will apply only at the centers where RBIhandles clearing directly and is able to transfer funds from Mumbai onthe same-day-value basis. In respect of all non-RBI centers, forredemption payments, AMC will take additional day(s) – not exceeding3 Business Days- that would essentially be linked to the time taken bybanks to clear funds at such Non-RBI centers.

    Transparency NAV will be determined on every Business Day, except in specialcircumstances described on page 48. NAV of the Scheme shall bemade available at all Customer Service Centers of the AMC. The AMCshall endeavor to also have the NAV published in two daily newspapersand updated on the AMC’s web site _ www.pruicici.com.

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

    The Mutual Fund will disclose the full portfolio of the Scheme everyquarter.

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    15

    Repatriation facility NRIs/PIOs/FIIs have been granted a general permission by RBI [Schedule5 of the Foreign Exchange Management (Transfer or Issue of Securityby a Person Resident Outside India) Regulations, 2000] for investing in/ redeeming units of the schemes subject to conditions set out in theaforesaid regulations.

    Eligibility for Provident Funds Provident Funds, Pension Funds, Superannuation Funds and GratuityFunds are eligible to invest in the Scheme.

    Eligibility for Trusts Religious and Charitable Trusts are eligible to invest in the Schemeunder the provisions of 11(5)(xii) of Income Tax Act, 1961 read withRule 17C of Income Tax Rules, 1962.

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    Prudential ICICI Mutual Fund

    CONSTITUTION OF THE MUTUAL FUND

    ICICI Mutual Fund, which has been renamed as Prudential ICICI Mutual Fund (“the Mutual Fund” or “the Fund”) has beenconstituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882). The Mutual Fund wasregistered with SEBI on October 13, 1993.

    ICICI Mutual Fund was established by erstwhile ICICI Ltd. (Since merged with ICICI Bank Ltd), by execution of a Trust Deed datedAugust 25, 1993. Prudential plc, through its wholly owned subsidiary, Prudential Corporation Holdings Limited, has contributedan amount of Rs.12.2 lacs to the corpus of the Fund and has received permission for such contribution from the RBI vide letterNo: CO.FID (I) 4940/10/I.07.02.200 (221) 97-98 dated April 25, 1998. SEBI has approved the change in name of the Fund toPrudential ICICI Mutual Fund vide its letter IIMARP / 88 / 98 dated April 16, 1998. A deed of amendment to the Trust Deed datedAugust 25, 1993 was executed and registered.

    An Amendatory Agreement was entered into between Prudential Plc. and ICICI Bank Ltd on May 27, 2005 for transfer of 6% ofthe Shareholding of Prudential Plc. in Prudential ICICI Asset Management Co. Ltd (AMC) and Prudential ICICI Trust Co. Ltd.(Trustee Company) to ICICI Bank Ltd. Consequent to the said transfer, with effect from August 26, 2005 ICICI Bank Limited holdsshares aggregating to 51% of the share capital of AMC and Turstee Company, whereas the balance 49% is held by PrudentialPlc. of UK, through its wholly owned subsidiary, Prudential Corporation Holdings Limited.

    AMC has informed SEBI of the proposed transfer. SEBI has vide its letter IMD/RK/42692/05 dated June 15, 2005 taken note ofthe proposed transfer.

    a) Sponsors

    ICICI Bank Limited

    Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval inrecognizing ICICI Bank Ltd. as a co-sponsor consequent to the merger of ICICI Ltd. with ICICI Bank Ltd.

    ICICI Bank is India’s second-largest bank with total assets of about Rs.1,67,659 crore at March 31, 2005 and profit after tax ofRs. 2,005 crore for the year ended March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 560branches and extension counters and over 1,900 ATMs. ICICI Bank offers a wide range of banking products and financialservices to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries andaffiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank setup its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domesticbanking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada andRussia, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates,Bangladesh and South Africa. (Source: Overview at www.icicibank.com).

    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 equityoffering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of Madura Limited in an all-stockamalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002.

    Pursuant to the Scheme of Amalgamation effective March 30, 2002, among ICICI, ICICI Personal Financial Services, ICICI CapitalServices and ICICI Bank, sanctioned by the High Court of Gujarat and the High Court of Judicature at Bombay and approved bythe 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.

    Given below is a brief summary of ICICI Bank’s financials:

    (Rs. in crores)

    *Year ended *Year ended *Year ended *Year endedMarch 31, 2002 March 31, 2003 March 31,2004 March 31, 2005

    Total Income 2726.59 12,526.88 11,958.96 12,826.04

    Profit After Tax 258.3 1,206.18 1,637.10 2,005.20

    Free Reserves @ 5632.41 6,320.65 7,394.16 11,813.20

    Net Worth 6244.96 6933.31 8,010.56 12,549.98

    Earnings per Share (Rs.) (diluted) 11.61 19.65 26.44 27.33

    Book Value per Share (Rs.) 101.95 113.10 129.96 170.33

    Dividend 20% 75% 75% 85%

    Paid Up Capital (Equity) $ 612.55 612.66 616.40 736.78

    (Preference) # 350 350 350 350

    * The results include the result of erstwhile ICICI Limited and its subsidiaries, ICICI Personal Financial Services Limited andICICI Capital Services Limited, amalgamated with the Bank w.e.f. March 30, 2002. The financials for the current periods arenot comparable with the earlier periods.

    @ Excludes revaluation reserve

    $ Includes in 2002, Rs. 392.67 crores for shares to be issued to shareholders of ICICI Limited on amalgamation, further,during the year ended March 31, 2003, the Bank allotted 3,000 shares pursuant to exercise of employee stock options.

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    17

    # Represents in 2002, face value of 350 preference shares to be issued to shareholders of ICICI Ltd on amalgamation,redeemable at par on April 20, 2018. As per the notification received from Ministry of Finance, the restriction of section12(1) of the Banking Regulation Act, 1949, prohibiting banks established after 1944 from holding preference shares, is notapplicable to the Bank for a specified period.

    Note: ICICI Bank has raised Rs. 324600 Crores of equity in April 2004 (including a green shoe option)

    An Amendatory Agreement was entered into between Prudential Plc. and ICICI Bank Ltd on May 27, 2005 for transfer of 6% ofthe Shareholding of Prudential Plc. in Prudential ICICI Asset Management Company Limited (AMC) to ICICI Bank Ltd. Consequentto the said transfer, with effect from August 26, 2005 ICICI Bank Limited holds shares aggregating to 51% of the share capitalof AMC, whereas the balance 49% is held by Prudential Plc. of UK, through its wholly owned subsidiary, Prudential CorporationHoldings Limited.

    Prudential plc (formerly known as Prudential Corporation plc)

    Prudential plc is a leading international financial services group providing retail financial products and services and fundmanagement to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, over GBP187billion of funds under management, more than 16 million customers and over 22,500 employees worldwide as of December 31,2003.

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

    (Rs. crores)

    Year ended December 31

    Description 2004 2003 2002

    Total Income 295,529 249,649 272,926Profit Before Tax 5,159 2,778 3,841Profit After Tax 3,397 1,651 3,563Shareholders’ Funds 33,975 26,015 29,110Earnings per share (Rs.) 15.95 8.58 18.65Equity Capital (5 Pence per share) 944 794 794Free Reserves 33,031 25,221 28,316Net-worth 33,975 26,015 29,110Book Value per share (Rs.) 142.75 130.07 145.55Percentage of dividend per share 316.80% 320% 520%Dividend per share (in Pence) 15.84P 16.00P 26.00P

    b) The Trustee Company (The Trustee) - Prudential ICICI Trust Limited

    Prudential ICICI Trust Limited, a company incorporated under the Companies Act, 1956 is the Trustee to the Fund vide TrustDeed dated August 25, 1993 as amended from time to time.

    An Amendatory Agreement was entered into between Prudential Plc. and ICICI Bank Ltd on May 27, 2005 for transfer of6% of the Shareholding of Prudential Plc. in Prudential ICICI Trust Co. Ltd. (Trustee Company) to ICICI Bank Ltd. Consequentto the said transfer, with effect from August 26, 2005 ICICI Bank Limited holds shares aggregating to 51% of the sharecapital of the Trustee Company, whereas the balance 49% is held by Prudential Plc. of UK, through its wholly ownedsubsidiary, Prudential Corporation Holdings Limited.

    i) The Directors of the Trustee Company are:

    Mr. Eruch B. Desai Partner(S/o. Mr. Byramsha Desai) Mulla & Mulla & Craigie Blunt & Caroe81, Sonarica Director33-A, Pedder Road Birla Global Finance Ltd.Mumbai 400 026 Bekaert Industries Pvt. Ltd.Solicitor and Advocate The Century Textiles & Industries Ltd.

    Dolphin Fisheries & Trading Pvt.Ltd.Hercules Hoists Ltd. (Alternate director)Hindalco Industries Ltd.Matsushita Lakhanpal Battery India Ltd.Kennametal Widia (India) Ltd. (Alternate)Supreme Industries Ltd.

    Mr. Nagesh D. Pinge* Nominee Director (on behalf of ICICI Bank Limited)(S/o. Dinkar Shripad Pinge) The India Cements LimitedD-408/1, Viman Darshan Rama Newsprint and Papers Ltd.28-29 Swami Nityanand MargAndheri (East)Mumbai 400069Senior General Manager – Complianceand Audit Group – ICICI Bank Ltd.

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    Prudential ICICI Mutual Fund

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

    Mr. D. J. Balaji Rao Director(S/o D. B. Jagannath Rao) Ashok Leyland Ltd. ChennaiD-103, Adarsh Residency Bajaj Auto Ltd.47th Cross (2nd Main) 3M INDIA Ltd., BangaloreJayanagar, 8th Block South East Asia Marine Engg. & Construction Ltd.,Bangalore – 560082 Kolkata

    Graphite India Ltd., KolkataEnnore Foundries Ltd.

    Mr . M S Parthasarathy Managing Trustee(S/o Late M.S. Tiruvenkatachari) SFL Shares TrustB2 Ashok Svasti, 33 Balakrishna Road DirectorValmiki Ngr, Tiruvanmiyur Sundaram Home Finance Ltd., ChennaiChennai – 600041

    *Mr. Nagesh Pinge is a Senior General Manager – Compliance and Audit Group of ICICI Bank Limited and Mr. S.P.Subhedar is a Senior Advisor to the Prudential Corporation Asia Limited, a wholly owned subsidiary of Prudential plc.

    ii) Rights and Obligations of the Trustee under the Trust Deed and the Regulations

    Pursuant to the Deed of Trust dated August 25, 1993 constituting the Mutual Fund and in terms of the Regulations therights and obligations of the Trustee are as under:

    1. The Trustee shall have a right to obtain from the AMC such information as is considered necessary by it.

    2. The Trustee shall ensure before the launch of any scheme that the Asset Management Company has:

    i. systems in place for its back office, dealing room and accounting;

    ii. appointed all key personnel including fund manager(s) for the scheme(s) and submitted to the Trustee theirbio-data which shall contain the educational qualifications, past experience in the securities market withinfifteen days of their appointment;

    iii. appointed auditors to audit the accounts of the schemes;

    iv. appointed a compliance officer to comply with regulatory requirements and to redress investor grievances.

    v. appointed registrars and laid down parameters for their supervision;

    vi. prepared a compliance manual which is updated by including all the provisions of regulations and guidelinesissued by SEBI from time to time and designed internal control mechanisms including internal audit systemscommensurate with the size of the mutual fund.

    vii. Specified norms for empanelment of brokers and marketing agents.

    3. The Trustee shall ensure that the AMC has been diligent in empanelling the brokers, in monitoring securitiestransactions with brokers and avoiding undue concentration of business with any broker.

    4. The Trustee is required to ensure that the AMC has not given any undue or unfair advantage to any associate ordealt with any of the associates of the AMC in any manner detrimental to the interests of the Unitholders.

    5. The Trustee is required to ensure that the transactions entered into by the AMC are in accordance with theRegulations and the provisions of the Scheme.

    6. The Trustee is required to ensure that the AMC has been managing the schemes independently of other activitiesand has taken adequate steps to ensure that the interest of investors of one Scheme are not compromised withthose of any other Scheme or of other activities of the AMC.

    7. The Trustee is required to ensure that all the activities of the AMC are in accordance with the provisions of theRegulations and shall exercise general and specific due diligence as required under the Regulations.

    8. Where the Trustee has reason to believe that the conduct of the business of the Fund is not in accordance withthese Regulations and the provisions of Scheme it is required to take such remedial steps as are necessary by it andto immediately inform SEBI of the violation and the action taken by it.

    9. Each Director of the Trustee is required to file with the Trust the details of each securities transaction, which exceedthe value of Rs.1 lakh on a quarterly basis.

    10. The Trustee is accountable for and is required to be the custodian of the Fund’s property of the respective Schemeand to hold the same in trust for the benefit of the Unitholders in accordance with the Regulations and theprovisions of the Trust Deed.

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    19

    11. The Trustee is required to take steps to ensure that the transactions of the Fund are in accordance with theprovisions of the Trust Deed.

    12. The Trustee is responsible for the calculation of any income due to be paid to the Mutual Fund and also of anyincome received in the Mutual Fund for the holders of the units of any scheme in accordance the Regulations andthe Trust Deed.

    13. The Trustee shall obtain the consent of the Unitholders:

    a) whenever required to do so by SEBI, in the interest of Unitholders

    b) whenever required to do so on the requisition made by three-fourths of the Unitholders of the Scheme.

    c) when the Trustee decides to wind up or prematurely redeem the units.

    14. The Trustees shall ensure that no change in the fundamental attributes of any scheme or the trust or fee andexpenses payable or any other change which would modify the scheme and affects the interests of unit holders iscarried out unless:

    - a written communication about the proposed change is sent to each Unitholder and

    - an advertisement is given in one English daily newspaper having nationwide circulation as well as in anewspaper published in the language of the region where the Head Office of the mutual fund is situated;and

    - the Unitholders are given an option to exit at the prevailing Net Asset Value without any exit load.

    Subject to the Regulations and the guidelines issued by SEBI, the consent of the Unitholders of the Scheme will beobtained through voting, by mail. Detailed modalities of the same, including the principles for entitlement ofvotes for each Unitholder will be finalized in consultation with and after obtaining the approval of SEBI and theTrustee.

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

    16. The Trustee is required to review quarterly, all transactions carried out between the Fund, the AMC and itsassociates.

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

    18. The Trustee is required to periodically review all service contracts such as custody arrangements and transferagency, and satisfy itself that such contracts are executed in the interest of the Unitholders.

    19. The Trustee is required to ensure that there is no conflict of interest between the manner of deployment of its networth by the AMC and the interest of the Unitholders.

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

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

    22. The Trustee has to furnish to SEBI on a half yearly basis:-

    a) a report on the activities of the Fund covering the details as prescribed by SEBI;

    b) a certificate stating that the Trustees have satisfied themselves that there have been no instances of selfdealing or front running by any of the Trustee, directors and key personnel of the AMC;

    c) a certificate to the effect that the AMC has been managing the schemes independently of any other activitiesand in case any activities of the nature referred to in sub Regulation (2) of Regulation 24 of the Regulationshave been undertaken, the AMC has taken adequate steps to ensure that the interest of the Unitholders isprotected.

    23. The independent Directors of the Trustee are required to give their comments on the report received from theAMC regarding the investments by the Mutual Fund in the securities of the group companies of the sponsors.

    24. No amendments to the Trust Deed shall be carried out without the prior approval of SEBI and Unitholdersapproval/ consent will be obtained where it affects the interests of Unitholders as per the procedure / provisionslaid down in the Regulations.

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

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

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

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

    a) The Investment Management Agreement and the compensation paid under the agreement.

    b) Service contracts with affiliates – whether the asset management company has charged higher fees thanoutside contractors for the same services.

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    Prudential ICICI Mutual Fund

    c) Selection of the asset management company’s independent directors

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

    e) Selecting and nominating individuals to fill independent directors vacancies.

    f) Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders inconnection with personal securities transactions.

    g) The reasonableness of fees paid to sponsors, asset management company and any others for servicesprovided.

    h) Principal underwriting contracts and renewals

    i) Any service contracts with the associates of the asset management company.

    29. Notwithstanding anything contained in sub-regulations (1) to (25) of regulation 18 of the Regulations, theTrustees shall not be held liable for acts done in good faith if they have exercised adequate due diligence honestly.

    30. SEBI circular no. MFD/CIR/10/ 15895 /2002 dated August 20, 2002 provides that the meetings of the Trusteesshall be held at least once in every two calendar months and at least six such meetings should be held every year.Further, as per the Regulations, for the purposes of constituting the quorum for the meetings of the Trustees, atleast one Independent Trustee or Director should be present during such meetings.

    During the year 2003 – 2004, six meetings of the Directors of the Trustees were held and during the period fromApril 1, 2005 to August 31, 2005, three meetings of the Directors of the Trustee were held. The Trustee’ssupervisory role is discharged by reviewing the information and the operations of the Fund based on reportssubmitted at the Board Meetings of the Trustee, by reviewing the reports being submitted by the Internal Auditorand the bi-monthly, quarterly and half-yearly compliance reports. The Trustee also conducts a detailed review ofthe half-yearly and annual accounts of the schemes of the Fund and discusses the matters arising there from withthe Statutory Auditors of the Fund.

    iii) Trusteeship Fees

    Pursuant to the Deed of Trust constituting the Fund, the Fund is authorized to pay the Trustee a fee for its services in suchcapacity of a sum, presently computed at the rate of upto 0.05% of the amount, being the aggregate of the Trust Fund andUnit Capital of all the Schemes put together on April 1 of each year or a sum of Rs.5 lacs, whichever is higher. The Trusteemay charge further fees as permitted from time to time under the Trust Deed and the Regulations.

    SEBI has, in terms of its letter No.MFD/LV/059/00 dated January 31, 2000 approved an amendment to Trust Deed. Theamendment authorizes the Trustee to decide upon the Trusteeship Fee to be charged from the Mutual Fund at thebeginning of each financial year (April 1 to March 31), subject to the maximum limit of 0.05% to be arrived at as indicatedabove. The amendment does not in any way, adversely impact or alter the interests of Unitholders under the existingschemes of the Fund.

    C) MANAGEMENT OF ASSET MANAGEMENT COMPANY (AMC)

    ICICI Asset Management Company Limited (I-AMC), a company registered under the Companies Act, 1956, was establishedby ICICI as its wholly owned subsidiary, to act as the Investment Manager of the ICICI Mutual Fund vide the InvestmentManagement Agreement dated September 3, 1993. Consequent to a review of long-term business strategy of the AMC, itwas decided to further strengthen commitment to the individual investor segment. As a part of this Scheme, Prudential plc.(formerly known as Prudential Corporation plc.) of the UK (Prudential) was inducted as the new joint venture partner.

    I-AMC was approved by SEBI to act as the Investment Manager of ICICI Mutual Fund vide its letter No.IIMARP/MF/22356dated October 12, 1993. Consequent to the restructuring of shareholding pattern as stated above, SEBI vide its letterNo.IIMARP\631\98 dated March 11, 1998 accorded its approval for the induction of Prudential plc (through its wholly ownsubsidiary, Prudential Corporation Holdings Limited) as a shareholder of the AMC. The AMC has applied and securedapproval from the Registrar of Companies, Delhi and Haryana, for its change of name to Prudential ICICI Asset ManagementCompany Limited, vide letter No.21/55-54135/320 dated March 26, 1998.

    An Amendatory Agreement was entered into between Prudential Plc. and ICICI Bank Ltd on May 27, 2005 for transfer of6% of the Shareholding of Prudential Plc. in I-AMC to ICICI Bank Ltd. Consequent to the said transfer, with effect fromAugust 26, 2005 ICICI Bank Limited holds shares aggregating to 51% of the share capital of Prudential ICICI AssetManagement Company Limited (AMC), whereas the balance 49% is held by Prudential Plc. of UK, through its wholly ownedsubsidiary, Prudential Corporation Holdings Limited.

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

    AMC has obtained registration from SEBI vide Registration No.INP000000373 dated February 29, 2000 read with arenewed certificate dated February 27, 2003, to act as a Portfolio Manager under SEBI (Portfolio Managers) Regulations,1993. Further, the Mutual Funds Division of SEBI, vide its letter no. MFD/LV/248/2000 dated May 10, 2000, conveyed its noobjection for the AMC undertaking PMS activities subject to the AMC complying with the requirements as envisaged inRegulation 24(2) of SEBI (Mutual Funds) Regulations, 1996. The AMC has commenced the Portfolio Management activities,after complying with the regulatory requirements. The same are not in conflict with the mutual fund activities. Further, SEBIvide its letter dated May 31, 2005 having reference no. IMD/RK/41539/05 has conveyed its no objection for the AMC toundertake Advisory Services to Offshore Funds.

  • Prudential ICICI Gilt Fund

    21

    i) Board of Directors of the AMC

    Mr. Mark NorbomPrudential Corporation Asia, One International Finance Centre 13 Floor, 1 Harbour View Street, Central, HongKong.

    Mr. Mark Norbom graduated from Pennsylvania State University with a B.S. degree in Economics in 1980.

    Mr. Norbom began his career at GE in 1980 and served in a number of senior management positions in the US and in Asia.Prior to joining Prudential, Mr. Norbom was President and CEO for GE Japan with responsibility for all of GE’s activities inJapan. Mr. Norbom’s ten years experience in Asia also included being Head of GE Capital Taiwan, Country President of GECapital Indonesia, CEO of GE Capital Thailand, and National Executive of GE Thailand. Presently, Mr. Norbom is a ChiefExecutive of Prudential Corporation Asia with responsibility for Prudential’s business interests across the region. Mr.Norbom oversees Prudential’s extensive network of 23 life insurance, general insurance, retail mutual funds and institutionalasset management operations across 12 countries in Asia: China, India, Taiwan, Hong Kong, Singapore, Malaysia, Korea,Japan, Vietnam, Indonesia, the Philippines, and Thailand.

    Mr. Ajay SrinivasanPrudential Corporation Asia, One International Finance Centre 13 Floor, 1 Harbour View Street, Central, HongKong

    Mr. Srinivasan is Chief Executive, Fund Management, Prudential Corporation Asia responsible for its mutual funds /Institutional Funds business in Asia. Mr. Srinivasan was the Managing Director of the Prudential ICICI Asset ManagementCompany Ltd. during the period March 1998 to December 2000 and was responsible for the development of business ofthe Company and its day-to-day management.

    Mr. Srinivasan has significant experience in managing asset management companies. As the Deputy Chief Executive of ITCThreadneedle AMC. Mr. Srinivasan was part of the team responsible for making policy for ITC Threadneedle AMC Ltd andwas also head of the fund management function. Prior to his tenure at ITC Threadneedle, Mr. Srinivasan was a member ofthe ITC Group’s Financial Services Division and was responsible for establishing, planning and running several businessesat ITC, including the stock broking business, Over the Counter Exchange business, the private equity business and investmentbanking business. Mr. Srinivasan began his career at ICICI where, as a part of project appraisal team, he assessed thefeasibility of several projects in various sectors.

    Mr. Srinivasan has a Post Graduate Diploma in Business Management from Indian Institute of Management, Ahmedabad,specializing in finance. He has a Bachelor’s Degree in Economics (Honours) from St. Stephens’ College, New Delhi.

    Mr. N. S. KannanFlat 201, Radhika Apts., 930 TPS IV, Off Sayani Road, Prabhadevi, Mumbai 400 025.

    Mr. N.S. Kannan has completed a Mechanical Engineering from the Regional Engineering College, Trichy and has a Post-graduate Diploma in Management from the Indian Institute of Management, Bangalore. He is also a Chartered FinancialAnalyst from the Institute of Chartered Financial Analyst of India, Hyderabad. Mr. Kannan has about 16 years experienceincluding 13 years at ICICI during which he has managed a number of activities including the project finance, structuredfinance and treasury operations. He started his career with SRF Limited in 1986 and was deputed to SRF Nippon densoLimited in 1987 as an Executive – Project Planning He joined ICICI Ltd. in 1991 as a Project Officer. Subsequent to the mergerof ICICI with ICICI Bank, he was responsible for the treasury operations including structured finance and strategy activitiesof the Bank as a Treasury Head. He was CFO & Treasurer of ICICI Bank before moving to his current position of ExecutiveDirector at ICICI Prudential Life Insurance Co. Ltd.

    Mr. K. S. MehtaC-70 Panchsheel Enclave, New Delhi 11 0017

    Mr. Mehta is a Senior Partner of S.S. Kothari & Co., Chartered Accountants, and heads the firm’s management consultancydivision. Mr. Mehta specializes in corporate financial planning, restructuring, project financing and working capital control.He has an in-depth knowledge of industry in his capacity as Director of some of the leading companies and as a managementconsultant.

    Mr. Mehta is a Member of the Managing Committee of Federation of Indian Chambers of Commerce and Industry (FICCI).He is a former Member of the Advisory Committee on Primary Markets set up by SEBI, a Former Director on the Board of theNational Stock Exchange of India Limited and is the past President of PHD Chamber of Commerce & Industry.

    Mr. Mehta is a FCA and has a Bachelor of Commerce (Hons.) Degree.

    Mr. Dadi EngineerFlat no.4, 1st Floor, Shiv Shanti Bhuvan, 146 M. Karve Road, Opp. The Oval, Mumbai – 400 020.

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

    Mr. Engineer is the President of the Managing Committee of Bombay Incorporated Law Society and served as theRepresentative Member of the Governing Council of the Bar Association of India. He has also been associated with thevarious committees set up by Bombay Chamber of Commerce and Industry and Associated Chambers of Commerce andIndustry.

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

  • 22

    Prudential ICICI Mutual Fund

    Mr. B. R. Gupta6B, Sheetal Apartments, Lokhandwala Complex, Andheri (W) , Mumbai400 053.

    Mr. Gupta is the former Executive Director of the Life Insurance Corporation of India (LIC). He was working as Consultant(Investment) to GIC of India till December 2000.

    Mr. Gupta has worked with LIC for over 35 years in various capacities and has had extensive experience in the operations ofthe life insurance industry, specifically in the areas of investment, marketing, underwriting and administration. Mr. Guptaalso worked in the investment department of the LIC for 10 years and headed the department as Executive Director. He wasresponsible for managing LIC’s portfolio comprising a variety of investments. Subsequent to his retirement, till May 1999,he functioned as the Investment Advisor to LIC.

    Mr. Gupta is on the Boards of several companies and had been a Member of “The Administrative Committee of InsuranceInstitute of India”, “The Committee of NSE on Development of the Debt Market in India”, “The Executive Committee of theNSE” and “The Advisory Committee on Secondary Market Operations of SEBI”. At present Mr. Gupta is an Advisor to IL&FSAcademy for Insurance & Finance Ltd., an initiative of IL&FS Group. Mr. Gupta is a M.A in English and has a LL.B. degreebesides being a Fellow of Insurance Institute of India.

    Mr. Pradip P. Shah72A, Embassy Apartments, 46, Nepean Sea Road, Bombay 400 006.

    Mr. Pradip P. Shah started IndAsia, a private equity investment and corporate finance advisory company in April 1998,following his separation from the management of the Indocean Fund which he helped establish in October 1994, inassociation with affiliates of Soros Fund Management and Chemical Venture Partners (now Chase Capital Partners).

    Prior to starting Indocean, he was the Managing Director of the Credit Rating and Information Services of India Limited(‘CRISIL’), India’s first and the largest credit rating agency. Mr. Shah was one of the team members, which assisted infounding CRISIL in 1988. While at CRISIL, Mr. Shah was instrumental in technology transfer to and the training of personnelof Rating Agency Malaysia Berhad and The Israeli Securities Rating Company.

    Prior to founding of CRISIL, Mr. Shah assisted as a member of the project team in founding the Housing DevelopmentFinance Corporation (HDFC) in 1977. Before joining HDFC, Mr. Shah was a Project Officer at the Industrial Credit andInvestment Corporation of India Limited (‘ICICI’). Mr. Shah has also served as a consultant to USAID, the World Bank and theAsian Development Bank.

    Mr. Shah holds an MBA from Harvard Business School and is a qualified Chartered Accountant as well as a Cost Accountantand ranked first in India in the Chartered Accountancy examination.

    Dr. (Mrs.) Swati A Piramal95A, Benzer Terrace, Abdul Gaffar Khan Road, Worli Sea Face, Mumbai 400 018.

    Dr. Swati A. Piramal, is a Medical Doctor (M.B.B.S.) from the University of Bombay. Dr. Piramal graduated with a MastersDegree from Harvard School of Public Health, Boston USA, where she had the unique honour of being selectedCommencement Speaker at the 1992 Graduation Ceremony.

    Dr. Swati A. Piramal is the Director-Strategic Alliances & Communications of Nicholas Piramal India Limited. Her currentresponsibilities include Research & Development, Information Technology, Medical Services, and Knowledge Managementfor the Healthcare Group of Piramal Enterprises.

    Under her leadership, Piramal Enterprises has made significant progress in Discovery Research for discovering and patentingnew NCEs, new Drug Delivery Systems, Clinical Research for planning clinical trials, new drug protocols and pharmacokineticslabs, herbal Research for DNA fingerprinting and standardization of Ayurveda, the setting up of a Business R & D programmein the Company (BDRD.

    Dr. Piramal is a Member of the Drugs Technical Advisory Board and the Maharashtra Bi