ICICI PMS

Disclosure Document for Portfolio Management Services

Being Offered by ICICI PRUDENTIAL ASSET MANAGEMENT COMPANY LIMITED

-

-

-

The Disclosure Document has been filed with the Board along with the certificate in the prescribed format in terms of Regulation 14 of the SEBI (Portfolio Managers) Regulations, 1993 as amended from time to time.

The purpose of the Disclosure Document is to provide essential information about the portfolio services in a manner to assist and enable the investors in making informed decision for engaging a Portfolio Manager.

The Disclosure Document contains the necessary information about the Portfolio Manager, required by an investor before investing, and the investors are advised to retain the document for future reference.

PRINCIPAL OFFICER: Mr. Nimesh Shah - Managing Director Tel no. 91-22-26428000 Email: nimesh_shah@icicipruamc.com

Dated: February 28, 2012

1

Sr. No. 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

Particulars Highlights Definitions Description (i) History, Present Business and Background of the Portfolio Manager (ii) Promoters of the Portfolio Manager, directors and their background: (iii) Top 10 Group companies/ firms of the Portfolio Manager on turnover basis (iv) Details of the services being offered Penalties & pending litigation Services Offered (i) Investment objectives and policies (ii) Types of services / products offered (iii) Policies including the types of securities in which Portfolio Manager generally invests/ will generally invest (iv) The policies for investments in associates/ group companies of the Portfolio Manager Risk Factors (i) Client Representation (ii) Disclosure in respect of transactions with related parties as per the standards specified by ICAI. The Financial Performance of the AMC Performance of the Portfolio Manager for the last three years Nature of expenses Tax Benefits Accounting policies Investors services (i) Investor Relation Officer (ii) Grievance redressal and dispute settlement mechanism

Page No. 3 5 6 7 18 18 20 20-29

29-55 55-58

58 58 62 64 70 71-72

DISCLAIMER CLAUSE: The Disclosure Document has been prepared in accordance with the SEBI (Portfolio Managers) Regulations, 1993 and filed with SEBI. This Document has neither been approved nor disapproved by SEBI nor has SEBI certified the accuracy or adequacy of the contents of the Document.

2

HIGHLIGHTS I. ICICI Prudential Asset Management Company Ltd. (the AMC) obtained a license

from Securities and Exchange Board of India (SEBI) for offering Portfolio Management Services in February 2000. The AMC was the first Asset Management Company to have obtained the same. The Portfolio Management Services are being offered by “ICICI Prudential Portfolio Managers”, a division of the AMC. ICICI Prudential Asset Management Company is a joint venture between 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 Rs. 4,062.34 billion (US$ 91 billion) at March 31, 2011 and profit after tax of Rs. 51.51 billion (US$ 1,155 million) for the year ended March 31, 2011. The Bank has a network of 2,575 branches and 8,003 ATMs in India, and has a presence in 19 countries, including India.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

Prudential plc is an international financial services group with significant operations in Asia, the US and the UK. They serve over 25 million customers and together manage £340 billion of assets (as of December 31, 2010). Prudential is one of the best capitalised insurers in the world with an Insurance Groups Directive (IGD) capital surplus estimated at £4.3 billion (as of December 31, 2010 before final dividend).

II.

FUND MANAGEMENT EXPERTISE The AMC is the investment manager to ICICI Prudential Mutual Fund, and it manages average assets of over Rs. 69,472.08 crore as on December 31, 2011 through 53 schemes. It is one of the leading asset management companies in the country.

ICICI Prudential Mutual Fund has emerged as one of the largest private sector mutual fund in India with a rapidly growing family of over 2.84 million investors as on January 31, 2012. The AMC in addition to acting as the Investment Manager to ICICI Prudential Mutual Fund commenced the activities of the Portfolio Manager, from the first week of October 2000.

As on January 31, 2012, the AMC has been rendering portfolio management services to 6,039 clients with assets under management to the extent of Rs. 1,688.14 crore.

Investors under the Portfolio Management are not being offered any guaranteed returns.

3

Investors are advised to consult their Legal /Tax and other Professional Advisors in regard to tax/legal implications relating to their investments under Portfolio Management before making decision to invest or redeem the portfolio under the Portfolio Management.

4

2)

DEFINITIONS:: In this Disclosure Document, the following words and expressions shall have the meaning specified herein, unless the context otherwise requires: Asset Management Company or ICICI Prudential Asset Management AMC or Portfolio Manager or Company Limited, (the Asset Management Company Company) incorporated under the Companies Act, 1956, and registered with SEBI to act as a Portfolio Manager in terms of SEBI (Portfolio Managers) Regulations, 1993 vide Registration No. PM/INP000000373 dated February 29, 2000 which has been renewed from time to time.

AUM

Assets Under Management

Advisory Services

Advisory Services means services whereby the Portfolio Manager provides advise to the Clients on investments as described in the Agreement between the Client and the Portfolio Managers.

Portfolio

Portfolio means the total holdings of securities and funds belonging to any person/investor.

Client

Client means any person/entity who/which enters into the Agreement with the Portfolio Manager for availing the Portfolio Management Services.

Discretionary Portfolio Management Discretionary Portfolio Management Services Services mean Portfolio Management Services provided by the Portfolio Manager exercising its sole and absolute discretion to invest in respect of the Client’s account in any type of security as per an Agreement relating to portfolio management and to ensure that all benefits accrue to the Client’s Portfolio, for an agreed fee structure entirely at the Client’s risk.

Non-discretionary Management Services

Portfolio Non-discretionary Portfolio Management Services mean a Portfolio Management Services under which the Portfolio Manager, subject to express prior instructions issued by the Client from time to time in writing, for an agreed fee structure and for a definite described period, invests in respect of the Client’s

5

account in any type of security entirely at the Client’s risk and ensure that all benefits accrue to the Client’s Portfolio.

ICICI Bank

ICICI Bank Limited

FII

Foreign Institutional with SEBI

Investment Amount

The money or securities accepted by the Portfolio Manager from the Client in respect of which the portfolio management services are to be rendered by the Portfolio Manager.

NRI

Non-Resident Indian

Disclosure Document

This document issued by ICICI Prudential Asset Management Company Limited for offering portfolio management services and prepared in terms of Schedule V of the SEBI (Portfolio Managers) Regulations, 1993.

Prudential

Prudential plc, of the U.K. and includes (wherever the context so requires) its wholly owned subsidiary Prudential Corporation Holdings Limited. Neither ICICI Prudential Asset Management Company Limited nor Prudential plc is affiliated with Prudential Financial Inc, a company whose principal place of business is in the United States of America.

RBI

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

SEBI

Securities and Exchange Board of India established under Securities and Exchange Board of India Act, 1992, as amended from time to time

The Regulations

Securities and Exchange Board of India (Portfolio Managers) Rules and Regulations, 1993 as amended from time to time

The Agreement

The agreement executed between the Portfolio Manager and its clients in terms of Regulation 14 of SEBI (Portfolio Managers) Regulations, 1993 and any modifications or amendments thereto issued by the Securities and Exchange Board of India

Investor

registered

6

3)

DESCRIPTION (i) History, Present Business and Background of the Portfolio Manager ICICI Prudential Asset Management Company Limited (the AMC) is a joint venture between ICICI Bank Limited (erstwhile ICICI Limited) and Prudential plc of the United Kingdom (UK).

The AMC is registered with SEBI as Portfolio Manager under Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993. The AMC obtained a license from SEBI for offering Portfolio Management Services in 2000. The AMC was the first Asset Management Company to have obtained the same. The Portfolio Management Services are being offered by “ICICI Prudential Portfolio Managers�, a division of the AMC. As on January 31, 2012, the AMC has been rendering portfolio management services to 6,039 clients with assets under management to the extent of Rs. 1,688.14 crore.

In addition, the AMC is appointed as the Investment Manager for ICICI Prudential Mutual Fund under the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. The AMC manages average assets of over Rs. 69,472.08 crore as on December 31, 2011 through 53 schemes. It is one of the leading asset management companies in the country.

As permitted by SEBI, the AMC is also rendering advisory services to offshore funds and investment managers to such funds.

(ii)

Promoters of the Portfolio Manager, directors and their background (a)

Promoters

ICICI Bank Limited ICICI Bank is India's second-largest bank with total assets of Rs. 4,062.34 billion (US$ 91 billion) at March 31, 2011 and profit after tax Rs. 51.51 billion (US$ 1,155 million) for the year ended March 31, 2011. The Bank has a network of 2,575 branches and 8,003 ATMs in India, and has a presence in 19 countries, including India.

ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management.

7

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Its UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

Prudential plc (formerly known as Prudential Corporation plc) Prudential plc is an international financial services group with significant operations in Asia, the US and the UK. They serve over 25 million customers and together manage ÂŁ340 billion of assets (as of 31 December 2010). Prudential is one of the best capitalised insurers in the world with an Insurance Groups Directive (IGD) capital surplus estimated at ÂŁ4.3 billion (as of 31 December 2010 before final dividend).

The Group is structured around four main business units: Prudential Corporation Asia Prudential is a leading life insurer in Asia with presence in 12 markets and a top three position in seven key locations: Hong Kong, India, Indonesia, Malaysia, Singapore, the Philippines and Vietnam. Prudential Corporation Asia provides a comprehensive range of savings, protection and investment products that are specifically designed to meet the needs of customers in each of the local markets. Prudential’s asset management business in Asia has retail operations in 10 markets and independently manages assets on behalf of a wide range of retail and institutional investors across the region.

Jackson National Life Insurance Company Jackson is one of the largest life insurance companies in the US, providing retirement savings and income solutions to more than 2.8 million customers. Jackson is also one of the top three providers of variable annuities in the US. Founded 50 years ago, Jackson has a long and successful record of providing advisers with the products, tools and support to design effective retirement solutions for their clients.

Prudential UK & Europe Prudential UK is a leading life and pensions provider to approximately 7 million customers in the United Kingdom. It has a number of major competitive advantages including significant longevity experience, risk management and multi-asset investment capabilities, a highly respected brand and financial strength. Prudential UK continues to pursue a valuedriven strategy built around its core strengths in with-profits and annuities.

8

M&G M&G is Prudential’s UK and European fund management business with total assets under management of £198 billion (as of 31 December 2010).

M&G has been investing money for individual and institutional clients for 80 years. Today it is one of Europe’s largest active investment managers, as well as being a powerhouse in fixed income.

Prudential plc of the United Kingdom is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America. (b)

Particulars of Directors

Sr. No. (I)

Name of Director(s) Address & Qualification (II)

1.

Ms. Chanda Kochhar ICICI Bank Limited, Bandra Kurla Complex, Bandra (East), Mumbai – 400051.

Bachelors Degree in Arts, MBA and Cost Accountant.

Experience (III)

Ms. Chanda Kochhar is the Managing Director and Chief Executive Officer of ICICI Bank Limited (the Bank). She began her career with ICICI as a Management Trainee in 1984 and has thereon successfully risen through the ranks by handling multidimensional assignments and heading all the major functions in the Bank at various points in time.

In 1993 when ICICI decided to enter commercial banking, she was deputed to ICICI Bank as a part of the core team to set up the bank.

When ICICI set up the Infrastructure Industry Group in 1996 to create dedicated industry expertise in the areas of Power, Telecom and Transportation sector,

Date of Appointment (DOA) & Previous Position held (IV) DOA: 01/09/2008

Previous Position held- as per column III.

Other Directorships in public limited companies (V) • ICICI Bank Ltd. • ICICI Bank Canada • ICICI Bank UK PLC • ICICI Lombard General Insurance Company Limited • ICICI Prudential Life Insurance Co. Ltd. • ICICI Bank Eurasia Limited • ICICI Securities Ltd.

9

Sr. No. (I)

Name of Director(s) Address & Qualification (II)

Experience (III)

Date of Appointment (DOA) & Previous Position held (IV)

Other Directorships in public limited companies (V)

DOA: 06/11/2006

• Prudential Public Limited UK • ICICI Prudential Life

she was handpicked and made incharge of the Infrastructure Industry Group.

2.

Mr. Barry Stowe Prudential Corporation Asia

In July 2000, she was chosen to head the Retail Finance division of ICICI and has been instrumental in scaling up the business. In April 2001, she was promoted as an Executive Director, heading the retail business in the Bank. In April 2006, she was appointed as the Deputy Managing Director with responsibility for both Corporate and Retail banking business of ICICI Bank and from October 2006 to October 2007 she handled the International and Corporate businesses of ICICI. In October 2007, she was appointed as the Joint Managing Director & CFO. She was heading the Corporate Centre, was the Chief Financial Officer (CFO) and was also the official spokesperson for ICICI Bank.

Mr. Stowe is Chief Executive of Prudential Corporation Asia.

He is responsible for an extensive network of over

Previous Position held- as per column III.

10

Sr. No. (I)

Name of Director(s) Address & Qualification (II)

Experience (III)

One International Finance Centre, 13 Floor, 1 Harbour View Street, Central, Hong Kong

50 life insurance and fund management operations spanning 13 diverse markets.

B.A. in Politics from David Lipscomb University, Nashville, Tennesse

Date of Appointment (DOA) & Previous Position held (IV)

He has considerable experience in Asia, having spent three years as the Regional Head for AIG Accident & Health in Southeast Asia before his appointment to the Hong Kong-based role of President, Accident & Health Worldwide.

Other Directorships in public limited companies (V) Insurance Co. Ltd. • Citic Prudential Life Insurance.

In addition to his eleven years with AIG, Barry’s career in the insurance industry includes his tenure as President & CEO of Nisus, a subsidiary of the Pan American Life Insurance Company, and several leadership positions at Willis Corroon, a global risk management and insurance brokerage based in the U.S. He is actively involved with a number of charities and community organisations, with a focus on the needs of children 3.

Mr. N. S. Kannan ICICI Bank

Mr. N.S. Kannan is the Executive Director and Chief Financial Officer of ICICI Bank.

His

DOA – May 01, 2009

•

ICICI Securities Primary Dealership

11

Sr. No. (I)

Name of Director(s) Address & Qualification (II)

Experience (III)

Limited Bandra Kurla Complex, Bandra (East), Mumbai – 400051

responsibilities include Finance, Treasury, Commercial Banking, Corporate Legal, Risk Management, Corporate Communications and Corporate Branding. He Postgraduate in also has the responsibility management for day to day from the Indian administration of the Institute of Compliance and Internal Management, Audit functions.

Bangalore and Chartered Prior to his current Financial assignment at ICICI Bank, Analyst from Mr. Kannan was the the Institute of Executive Director of Chartered ICICI Prudential Life Financial Insurance Company. He Analysts of was responsible for the India and an Corporate Centre Honours including the Finance & graduate in Accounts functions, Mechanical Investor/analyst relations, Engineering.

Investment Management,

Date of Appointment (DOA) & Previous Position held (IV) Previous Position held- as per column III.

Other Directorships in public limited companies (V) Limited • ICICI Bank Limited • ICICI Prudential Life Insurance Company Limited • ICICI Lombard General Insurance Company Limited • ICICI Bank UK Plc • ICICI Bank Eurasia LLC

Corporate Strategy, Corporate Communications and Human Resources. Prior to ICICI Prudential Life Insurance Company, Mr. Kannan was the Chief Financial Officer and Treasurer of ICICI Bank.

Mr. Kannan has been with the ICICI group for over 20 years. He joined the group as a project officer. During his tenure at the ICICI group he has also handled project

12

Sr. No. (I)

Name of Director(s) Address & Qualification (II)

Experience (III)

Date of Appointment (DOA) & Previous Position held (IV)

Other Directorships in public limited companies (V)

DOA: 22/01/2007

NIL

finance operations, infrastructure financing, structured finance and treasury operations.

4.

Mr. Vijay Thacker Horwath Consultants India 1105, Embassy Centre, Nariman Point, Mumbai – 400021 Chartered Accountant and Cost Accountant

5.

Mr. Dileep Choksi Mafatlal House 6th Floor, Backbay Reclamation, Mumbai – 400020 Chartered

Mr. Thacker a Fellow of the Institute of Chartered Accountants of India. He is a Chartered Accountant and Cost Accountant and has been in professional practice for over 22 years.

Previous Position held- as per column III.

Mr. Thacker’s professional skills and experience cover diverse facets including Audit and assurance, Business consulting, Corporate Law and taxation, Hotel and tourism consulting, Franchise consulting and Consulting for Family and Owner managed businesses.

He is also a speaker and paper writer at international and domestic conferences.

Mr. Dileep C. Choksi a Chartered Accountant by profession has over 36 years of experience.

His areas of specialization include tax planning and structuring for domestic and international clients, including expatriates, finalizing collaborations

DOA: 23/07/2008 Previous Position held- as per column III.

• ICICI Lombard General Insurance Co. Ltd. • NSE IT Ltd. • State Bank of India • ICICI Home Finance Company

13

Sr. No. (I)

Name of Director(s) Address & Qualification (II) Accountant.

Experience (III)

Date of Appointment (DOA) & Previous Position held (IV)

and joint ventures, corporate restructuring and analyzing tax impact of various instruments.

He has advised some of India’s largest business houses on mergers and acquisitions and multinational companies on cross border structuring and acquisition.

Mr. Choksi has contributed various papers on mergers and acquisitions, valuation of business enterprises, company law, corporate governance and taxation.

He has assisted in the preparation of the prominent book “Kanga and Palkhiwala – The Law and Practice of income Tax” Eight Edition by late Mr. N. A. Palkhiwala and Mr. B.A. Palkhivala.

Other Directorships in public limited companies (V) Limited • Ahmedabad Commodity Exchange Limited • Reliance Genemedix Plc. • 3i Infotech Limited • Datamatics Global Services Limited

He has been an exvisiting faculty member of the Jamnalal Bajaj Institute of Management Studies, Bankers Training College, and Reserve Bank of India. He was earlier on the Taxation Committee of the Indian Merchant Chambers.

6.

Mr. C. R. Muralidharan

DOA: Mr. C. R. Muralidharan May 20, 2010 was a Whole-Time Member of Insurance

• PTC Financial Services

14

Sr. No. (I)

Name of Director(s) Address & Qualification (II)

Experience (III)

29A, Kamala Street, Nehru Nagar, Chromepet, Chennai 600044

Regulatory and Development Authority, Hyderabad (IRDA) and was looking after the compliance by the insurers of the regulations on investments, analysis of financial statements of insurance companies, on and off-site supervision of insurance companies as well as other regulatory issues including the registration of new insurance companies.

B Sc. CAIIB

Date of Appointment (DOA) & Previous Position held (IV) Previous Position held- as per column III

Other Directorships in public limited companies (V) Limited • City Union Bank Limited

Prior to joining IRDA, he worked in RBI for more than three decades in various capacities. He was heading the Department of Banking Operations and Development (DBOD) of RBI, which is responsible for laying down a regulatory framework on a wide range of operations for Indian commercial banks to promote a sound and competitive banking system consistent with the emerging international best practices. He assisted IMF in two overseas assignments and was associated with several High Level Working Groups on Banking

15

Sr. No. (I)

Name of Director(s) Address & Qualification (II)

Experience (III)

Date of Appointment (DOA) & Previous Position held (IV)

Other Directorships in public limited companies (V)

DOA: April 21, 2011

• Federal Bank Ltd • Fedbank Financial Services Limited • ICICI International Limited • Emirates NBD Capital Limited (DIFC) • Emirates Financial Services Ltd (EFS) PSC

Regulation.

7.

Mr. Suresh Kumar B.Com, Post Graduate investment management programme conducted jointly by the Stanford University and the London School of Business.

He also completed an Advanced Management Programme at the Columbia Business School.

Besides, he was also actively involved in the role of promotion of rural credit as well as in the development of HR for the central bank.

Mr. Suresh Kumar is the Chief Executive Officer of Emirates NBD Capital Limited (DIFC).

Achievements/Eminent Positions held by Mr. Kumar: • Senior treasury and general management positions in a Government of Dubai project.

• Management positions in the banking sector in India, in the U. K. and in the (West Coast) U.S. • Member of the senior Management of Emirates Bank Group since 1989.

• Member on the Board of a number of offshore private equity firms.

• More recently, he has assumed the role of a Chief Mentor and Group Director in Emirates NBD; with responsibilities for a number of organic and inorganic initiatives.

Previous Position held- as per column III

16

Sr. No. (I)

8.

Name of Director(s) Address & Qualification (II)

Experience (III)

• Recipient of the Rotary International Scholarship (1977) tenable in California (U.S.A.) • Recipient of Lord Aldington Banking Fellowship (1978) • Fellow of the Indian Institute of Bankers • Member of the regional Chief Executive Forum of the Institute of International Finance (IIF), Washington D.C. Mr. Nimesh Mr. Shah joined ICICI Vipinbabu Shah Prudential AMC as its Managing Director in July ICICI Prudential 2007.

AMC Ltd Prior to joining ICICI 3rd Floor, Prudential AMC, Mr. Hallmark Shah was Senior General Business Plaza, Manager at ICICI Bank Sant and has over 14 years Dyaneshwar experience in banking Marg, and financial services. At Bandra (East), ICICI Group, he has Mumbai – handled many 400051 responsibilities including project finance, corporate Chartered banking and international Accountant and banking.

Cost Accountant He was associated with one of the first batches of senior managers selected to lead the foray of ICICI Bank into the international arena. He led ICICI Bank’s foray into the Middle-Eastern region and Africa.

Date of Appointment (DOA) & Previous Position held (IV)

Other Directorships in public limited companies (V)

DOA: 26/07/2007

Nil

Previous Position held- as per column III.

17

(iii) Top 10 Group companies/ firms of the Portfolio Manager on turnover basis as of March 31, 2011 Sr. No.

Name of the Company

1 2 3 4 5 6 7 8

ICICI Bank Limited ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Bank UK PLC ICICI Home Finance Company Limited ICICI Bank Canada ICICI Securities Limited ICICI Securities Primary Dealership Limited

Turnover (Rs. In million) 326,219.45 178,806.30 47,349.00 12,921.60 11,715.20 10,359.70 7,081.70 3,589.40

9

ICICI Venture Funds Management Company Limited

1,903.90

10

ICICI Bank Eurasia LLC

660.40

(iii) Details of the services being offered: Discretionary/Non discretionary/ Advisory: DISCRETIONARY SERVICES: The Portfolio Manager shall be acting in a fiduciary capacity with regard to the Client’s account consisting of investments, accruals, benefits, allotments, calls, refunds, returns, privileges, entitlements, substitutions and/or replacements or any other beneficial interest including dividend, interest, rights, bonus as well as residual cash balances, if any (represented both by quantity and in monetary value). The Portfolio Manager shall act in a fiduciary capacity and as a trustee and agent of the clients' account. The Portfolio Manager shall be acting as an agent as well as a trustee of the Client’s account.

The Portfolio Manager will provide Discretionary Portfolio Management Services which shall be in the nature of investment management, and may include the responsibility of managing, renewing and reshuffling the portfolio, buying and selling the securities, keeping safe custody of the securities and monitoring book closures, dividend, bonus, rights etc. so that all benefits accrue to the Client’s Portfolio, for an agreed fee structure entirely at the Client’s risk.

The Portfolio Manager shall have the sole and absolute discretion to invest in respect of the Client’s account in any type of security as per executed Agreement and make such changes in the investments and invest some or all of the Client’s account in such manner and in such markets as it deems fit would benefit the Client. The Portfolio Manager’s decision (taken in good faith) in

18

deployment of the Clients account is absolute and final and cannot be called in question or be open to review at any time during the currency of the agreement or any time thereafter except on the ground of malafide, conflict of interest or gross negligence. This right of the Portfolio Manager shall be exercised strictly in accordance with the relevant Acts, rules and regulations, guidelines and notifications in force from time to time.

NON- DISCRETIONARY SERVICES: The Portfolio Manager will provide Non-discretionary Portfolio Management Services as per express prior Instructions issued by the Client from time to time, in the nature of investment consultancy/management, and may include the responsibility of managing, renewing and reshuffling the portfolio, buying and selling the securities, keeping safe custody of the securities and monitoring book closures, dividend, bonus, rights etc. so as to ensure that all benefits accrue to the Client’s Portfolio, for an agreed fee structure entirely at the Client’s risk.

The Portfolio Manager’s decision (taken in good faith) in deployment of the Clients account is absolute and final and cannot be called in question or be open to review at any time during the currency of the agreement or any time thereafter except on the ground of malafide, conflict of interest or gross negligence. The rights and obligations of the Portfolio Manager shall be exercised strictly in accordance with the relevant Acts, rules and regulations, guidelines and notifications in force from time to time.

ADVISORY SERVICES: The Portfolio Manager will provide Advisory Portfolio Management Services, in terms of the SEBI (Portfolio Manager) Regulations 1993, which shall be in the nature of investment advisory and shall include the responsibility of advising on the portfolio strategy and investment and divestment of individual securities on the Client’s portfolio, for an agreed fee structure entirely at the Client’s risk.

The Portfolio Manager shall be solely acting as an advisor to the portfolio of the client and shall not be responsible for the investment / divestment of securities and/or administrative activities on the client’s portfolio. The Portfolio Manager shall, provide advisory services in accordance with such guidelines and/or directives issued by the regulatory authorities and /or the Client, from time to time, in this regard.

Minimum Investment Amount: The minimum amount to be invested under any portfolio is Rs. 25,00,000/(Rupees Twenty Five Lacs Only).

19

4)

Penalties, pending litigation or proceedings, findings of inspection or investigations for which action may have been taken or initiated by any regulatory authority. (i) All cases of penalties imposed by the : Nil Board or the directions issued by the Board under the Act or Rules or Regulations made thereunder. (ii) The nature of the penalty/direction. : Not applicable (iii) Penalties imposed for any economic offence and/ or for violation of any securities laws. (iv) Any pending material litigation/legal proceedings against the Portfolio Manager / key personnel with separate disclosure regarding pending criminal cases, if any. (v) Any deficiency in the systems and operations of the Portfolio Manager observed by the Board or any regulatory agency. (vi) Any enquiry/ adjudication proceedings initiated by the Board against the Portfolio Manager or its directors, principal officer or employee or any person directly or indirectly connected with the Portfolio Manager or its directors, principal officer or employee, under the Act or Rules or Regulations made thereunder.

: Nil : Nil

: Nil

: Nil

5. Services Offered I. The present investment objectives The Portfolio Manager provides various investment products/ services based on the mandate of the client and subject to the scope of investments as agreed upon between the Portfolio Manager and the Client in the Agreement. The investment objectives of the portfolios of the Clients depending on the Clients’ needs would be one or more of the following or any combination thereof: a) to generate capital appreciation / regular returns by investing in equity/ derivatives / debt/ money market instruments and equity related securities. b) to generate regular returns by primarily investing in debt and money market instruments. c) to generate capital appreciation/ regular returns by investing in exclusively gilt securities issued by the Central/State Government securities.

20

d) to generate capital appreciation by actively investing in equity, derivatives and equity related securities and for defensive considerations, the Portfolio Manager may invest in debt, money market instruments and derivatives. e) to endeavor to preserve certain percentage of investment amount by investing in a mix of fixed income and equity derivatives in such a manner so as to secure / preserve certain percentage of investment amount while attempting to enhance returns by the use of equity derivatives. f)

to endeavour to earn relatively high returns by buying/selling derivatives product/ instruments.

g) to earn returns through selling options while remaining covered by an equivalent position in the underlying securities. h) to generate capital appreciation / regular returns by investing in equity/ derivatives / debt/ money market instruments and equity related securities, units of mutual fund schemes and such other investment instruments/markets as the Portfolio Manager deems fit would benefit the client.

II. Types of services / products offered A)

The Portfolio Manager shall provide services to all eligible category of investors who can invest in Indian market including resident Indians, NRIs, FIIs, etc. Investment objectives may vary from client to client. Depending on the individual Client requirements, the portfolio can also be tailor-made based on the Client’s specifications. Currently the Portfolio Manager offers following categories of different portfolios. The features of the products are given below:

i)

Aggressive Portfolio The portfolio endeavours to generate long-term capital appreciation by investing into large cap stocks while retaining flexibility to invest a part of the portfolio in mid, small and micro cap stocks. The portfolio will endeavour to invest in stocks with attractive growth prospects that are available at reasonable valuations. The Portfolio Manager maintains a diversified portfolio by investing in stocks across select sectors.

The portfolio may be actively traded to take advantage of certain market trends with an endeavour to enhance returns.

ii)

Dividend Yield Portfolio This portfolio endeavours to generate superior risk-adjusted returns through a combination of dividend income and capital appreciation. This portfolio may be considered appropriate for investors with a relatively low risk appetite, who wish to potentially earn relatively higher returns, offered through the equity markets. It is also suitable for investors looking for tax-efficient investment options that offer the scope for relatively high-returns.

Investments are proposed to be made primarily in stocks that offer an attractive dividend yield. Portfolio Manager seeks to pay particular attention to the dividend track record, sustainability of free cash flows / dividends,

21

industry prospects, management quality, business fundamentals etc., with an attempt to include only high-quality companies in the portfolio. iii)

Deep Value Portfolio The Deep Value portfolio endeavours to generate capital appreciation over the long term, by investing in a diversified portfolio of significantly undervalued stocks relative to its intrinsic value.

Various parameters may be used to judge the degree of under valuation of the stocks including, but not limited to, price/earnings (p/e), price/book (p/book), dividend yield (DY), price/cash flow, replacement cost, valuations relative to history/sector/markets, etc. Due attention will be paid to qualitative parameters such as management quality, industry prospects, liquidity etc.

iv)

The Focused Portfolio The Focused Portfolio endeavours to generate capital appreciation in the long term by investing in stocks while striking an appropriate balance of concentration and diversification. The portfolio manager retains the flexibility to invest across market capitalisation and sectors. The portfolio manager may choose to have a greater degree of concentration across stocks and sectors in an attempt to enhance returns.

The performance of the portfolio may be closely linked to the concentrated positions in the portfolio, at various points in time.

v)

Non-Discretionary Portfolio In the case of non-discretionary portfolios, the investment objectives and the securities to be invested would be entirely decided by the Portfolio Manager based on the Agreement executed with the Client. The same could vary widely client to client.

vi)

Defined Tenure Series Portfolio Under this portfolio, the Portfolio Manager will seek to manage the funds of the client/invest in securities by combining investments in equity and equity linked securities, debt instruments having payout profiles linked to various asset classes and subscribing to units issued by SEBI registered mutual funds and venture capital funds which may have open ended/close ended or defined tenure structures which may be both long/short term in nature as may be agreed with the client.

vii)

Alpha Portfolio The Alpha Portfolio seeks to capture Alpha, which is out performance to index in the client’s portfolio. The entire portfolio will be hedged against overall market movements by using Index futures. The portfolio would remain fully hedged at all times. The hedged portfolio would reduce market risk (beta) by insulating the portfolio against market movements.

viii) Principal Protected Portfolio

22

The portfolio aims to achieve capital growth with relatively low capital risk.

The portfolio would have a defined tenure and a defined principal protection level. This objective is achieved by investing a part of the capital in an actively managed equity portfolio, while rest of the capital is invested in fixed income on a notional basis, which forms the floor for capital preservation. The portfolio may provide capital preservation with the help of a third party guarantee. In such a case, the third party guarantee would be invoked if the portfolio falls below a certain threshold level. ix)

Infrastructure Portfolio The infrastructure portfolio will invest in companies that are directly or indirectly linked to the infrastructure theme. This could include sectors such as construction, capital goods, power, cement, metals, banking, logistics and other related sectors/sub-sectors.

x)

Diversified Portfolio The portfolio may have a defined tenure. The Portfolio Manager has discretion to invest in a combination of different asset classes including but not limited to listed equities, equity related instruments, or other unlisted securities/instruments (private equity) including but not limited to units issued

by SEBI Registered Venture Capital Funds and money market instruments.

The terms of tenure of the product, subscription and redemption etc. will be as per the agreement executed with the Investor. The portfolio may offer third party guarantee on performance of one or more of the underlying funds/portfolios/securities /instruments.

xi)

The Absolute Return Portfolio The Portfolio Manager endeavours to deliver absolute performance irrespective of the direction of the markets. The portfolio would buy the ideas with the highest scope for outperforming/appreciation. The Portfolio Manager would sell stocks, which seem overvalued and may under perform. The portfolio would invest / trade in cash equities and futures and options. Futures and Options could be on both stocks and indices. Futures/options maybe both bought/sold. Buying of stocks could be through cash equities and/or futures/options. Selling of stocks could be done through the use of futures and/or options. Given the use of futures in the portfolio, the notional value of all the portfolio positions may exceed the amount invested. However, at all points of time sufficient cash will be maintained to enable payment of margins and it will be ensured that in line with the SEBI Portfolio Manager Regulations, at no point of time will the portfolio be borrowing for the purpose of taking its exposures.

xii) India Opportunities Portfolio The objective of this close-ended portfolio is to endeavour to generate superior risk-adjusted returns over the long term by investing in instruments including but not limited to equity, equity-linked products / securities, debt, units, hybrid products, convertibles, mortgage backed securities, commercial paper(s), notes and instruments offered by unlisted and listed companies

23

involved in, investing in, developing, constructing, owning, asset managing, project / facility managing and operating real estate assets and related infrastructure opportunities. The portfolio manager would seek to generate capital appreciation as well as regular returns / income (annual dividends / interest) through such investments. Until such time the portfolio manager finds appropriate investment opportunities, the Portfolio Manager may, at its discretion invest the funds in bank deposits, units of Mutual Funds, money market instruments and / or gilt securities issued by central / state governments.

The Portfolio Manager would be entitled to issue one or more series of varying tenures of issuances under this Portfolio with different underlying assets. xiii) Multi Manager Portfolio The Portfolio Manager under this portfolio will invest in units of SEBI Registered Mutual Funds as set out in the agreement between the Portfolio Manager and the client. The portfolio will typically be close ended in nature for a defined tenure with an option for liquidity at specified intervals with appropriate exit loads as agreed between the Client and the Portfolio Manager. The portfolio will offer the option of providing a pre-determined return pay off profile which may be linked to the performance of the underlying units of selected Mutual Funds. This is achieved through a contractual commitment by a reputed counter party with financial standing typically with a Banking/Investment Banking background. However such contractual commitment would be subject to the credit risk of the counter party. Moreover, there is no assurance of returns being offered by the Portfolio Manager under this portfolio.

An illustration of this portfolio is given below: Illustration 1# Tenure: 36 months No. of Mutual Fund Schemes: 3 Return Pay-off profile offered under this portfolio: 90% of the return of the best performing Mutual Fund scheme in each 12 month period. Returns from the best performing scheme is locked in each year and for the remaining period, such a scheme is not considered for the calculation of return payoff profile. The investors could get 90% of the return of the best performing Mutual Fund in each year. The returns would be available to the investor at the end of the period. The same can be seen from the table below: Year

Performance of Mutual Best Fund Schemes Performing Scheme Scheme Scheme Scheme A B C

Returns available to investors

Returns available to investors (%)

24

1

20%

35%

25%

Scheme B

90% of the performance of Scheme B 2 10% 15% Scheme C 90% of the performance of Scheme C 3 15% Scheme A 90% of the performance of Scheme A Returns to investor at the end of the period: period: Principal + 69.4% absolute based on compounded cumulative ((1+31.50%)*(1+13.50%)*(1+13.50%))((1+31.50%)*(1+13.50%)*(1+13.50%))-1

31.50%

13.50%

13.50%

return basis

Illustration 2# No of Mutual Fund Schemes: 3 Return Pay-off profile offered under this portfolio: 50% of the return of the best performing mutual fund scheme over the 36 month period 30% of the return of the next best performing Mutual Fund scheme over the 36 month period 20% of the return of the worst performing Mutual Fund scheme over the 36 month period The returns would be available to the investor at the end of the period. The same can be seen from the table below: Performance at the end of 3 years for the Mutual Fund Schemes Scheme A Scheme B Scheme C 90% 60% 75% Return Payoff profile available to investors: 50% of the best 20% of the worst 30% of the second performing fund performing fund best performing fund Return Payoff profile to the investor at the end of 3 years: 79.5% absolute return + principal The portfolio will be for a defined period and one or more series may be issued from time to time under this Portfolio. #Disclaimer: Please note that the above example is for illustration purpose only. Rate of return is assumed for the purpose of explaining the concept and cannot be construed as the final yield on the investment. Final yields will depend on market yields at the time of deployment of funds. Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or experts. The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Manager and any of its officers directors, personnel and employees, shall not be liable

25

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. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. xiv) Rising India Series The objective of the series is to seek to generate capital appreciation by investing into sectors that may be the enablers of economic growth and / or sectors that may be the significant beneficiaries of economic growth. The portfolio may invest into listed/unlisted, equity, equity linked products/securities and/or hybrid products, convertibles etc. The Portfolio Manager may offer one or more themes of varying tenures / nature (defined tenure or otherwise) including but not limited to: Build India Portfolio The portfolio aims to generate capital appreciation over the medium term by investing into sectors that are expected to drive economic growth. Given the on-going infrastructure thrust by the government, the portfolio could presently invest into infrastructure and related sectors including but not limited to the following sectors: Infrastructure Financial Services Utilities (Roads, Aviation, telecom etc) Energy Logistics etc.

However the portfolio manager may also invest in other sectors, which would meet the investment objective of the Build India Portfolio India Prosperity Portfolio The portfolio aims to generate capital appreciation over the medium term by investing into sectors that are expected to benefit from the rising prosperity levels in India. India has the youngest and the largest working population in the world. The productivity of this huge working population is expected to translate into economic growth and in turn, raise income levels of Indians in general. With rising incomes comes the ability to spend more. The portfolio will invest in sectors that would benefit from such changes in lifestyle. Some of the indicative sectors would be: Media & Entertainment Retailing Mobility (auto, telecom etc) Financial Services Housing & Real Estate Consumer Durables etc.

26

However, the portfolio manager may also invest in other sectors, which would meet the investment objective of the Build India Portfolio. xv) Pipe Portfolio Series The portfolio aims to generate capital appreciation by taking meaningful stake in companies. Typically, such companies tend to be smaller, out of favor or for some reason offer significant potential for returns. The portfolio seeks to identify such companies and take relatively higher exposure. Such companies may be listed or unlisted. And the holdings could be in the form of equity, fixed income instruments, hybrid products, convertibles, preference equity, or any other structure as allowed by the applicable regulations.

B) Asset Classes generally considered for deployment of Investment Amount The Portfolio Manager shall invest in respect of the Client’s Account in such capital and money market instruments or in fixed income securities or variable securities of any description, by whatever name called including: •

Equity and Equity related securities, Convertible Stock and Preference Shares of Indian Companies;

•

Debentures, Bonds having payout profiles linked to various asset classes and Secured Premium Notes, Swaps, Options Futures, Tax-exempt Bonds of Indian Companies and Corporations.

•

Government and Trustee Securities;

•

Units, Magnums and other instruments of Mutual Funds.

•

Bank Deposits/ Post Office Saving Schemes

•

Treasury Bills

•

Commercial Papers, Certificates of Deposit and other similar Money Market instruments;

•

Derivatives, both equity & fixed income as permitted under the Regulations.

•

Units of Venture Funds

•

Securitisation Instruments

•

Foreign securities (upto the permissible limit as mentioned above)

27

•

Other eligible modes of investment and/or forms of deployment within the meaning of the Regulation issued by SEBI as amended from time to time, (hereinafter collectively referred to as “Securities”)

•

Units or any other such instrument issued to the investors under any mutual fund schemes.

Until such time the Portfolio Manager finds appropriate investment opportunities, the Portfolio Manager may at its discretion, in all the Portfolios, invest the Clients funds in bank deposits, units of Mutual Funds, money market instruments and/or gilt securities issued by Central/State governments.

Asset Classes for deployment shall be always subject to the scope of investments as agreed upon between the Portfolio Manager and the Client in the Agreement.

III) Policies including the types of securities in which Portfolio Manager generally invests/ will generally invest The same shall be always subject to the scope of investments as agreed upon between the Portfolio Manager and the Client in the Agreement.

As mentioned above, the Portfolio Manager provides both discretionary and nondiscretionary services.

Investment Style The investment style would vary depending upon the specific requirements of the client and depending upon the type of the portfolio. The broad investment style for discretionary equity portfolios is outlined below: •

Stock picking The top-down approach is used to identify key macroeconomic and sectoral themes and subsequently helps identify stocks that will benefit from the same. The Portfolio Manager also adopts bottom-up approach, as there are always good companies to invest in irrespective of the market conditions. The Portfolio Manager looks to identify and invest in such companies.

•

Diversification The Portfolio Manager shall endeavour that the portfolios are invested in baskets of stocks with no undue concentration in any stock or sector, unless specifically mentioned in the investment mandate. The process of diversification may help control risk in the portfolio.

•

Investment style anchored in value The Portfolio Manager typically is looking to invest in stocks which offer growth and are available at reasonable valuations. The valuation measures typically used are PEx, PBx, PEG, etc. Notwithstanding the above, the Portfolio Manager is not averse to participating in momentum within reasonable limits.

28

•

Taking advantage of market opportunities Active management of the portfolio is essential in dynamic times. The Portfolio Manager attempts to take advantage of market opportunities in an attempt to maximise returns to investors.

•

Using tactical asset allocation The Portfolio Manager may move between asset classes i.e. equity and fixed income and cash depending upon market conditions. This is done mainly with an objective of protecting capital when markets are uncertain or have a downward bias.

Use of derivatives The use of derivatives will vary from portfolio to portfolio which shall be in accordance with applicable regulations. In the pure equity portfolios, derivatives will be used primarily for hedging and portfolio rebalancing purposes. Hedging will be used with an objective of attempting to preserve capital in uncertain times, while portfolio rebalancing would include investing in derivatives instead of a direct investment in the cash market if the Portfolio Manager feels a certain position can be more effectively created using derivatives. Covered Calls may also be written on certain stocks to enhance returns. The Absolute Returns product would invest/trade in cash equities and futures & options and given the use of futures in the portfolio, the notional value of all the portfolio positions under the product may exceed the amount invested.

(IV) The policies for investments in associates/ group companies of the Portfolio Manager and the maximum percentage of such investments therein subject to the applicable laws / regulations/guidelines •

The Portfolio Manager will, before investing in the securities of associate/ group companies, will evaluate such investments, the criteria for the evaluation being the same as is applied to other similar investments to be made under the Portfolio. The Portfolio Manager may also make investments under the schemes of ICICI Prudential Mutual Fund.

Investments under the Portfolio in the securities of the group companies will be subject to the limits prescribed in the Agreement (if any) executed with the respective Client and the same would be subject to the applicable laws/regulations/guidelines.

6. RISK FACTORS The risk factors given below are applicable to all the portfolios offered by the Portfolio Manager. Additional portfolio specific risk factors have been separately detailed in this document.

•

Securities investments are subject to market risks and there is no assurance or guarantee that the objective of investments will be achieved.

•

Past performance of the portfolio manager does not indicate its future performance.

29

•

Investors are not being offered any guaranteed or assured return/s i.e. either of Principal or appreciation on the portfolio.

•

Investors may note that Portfolio Manager’s investment decisions may not be always profitable, as actual market movements may be at variance with anticipated trends.

•

The liquidity of the Portfolio’s investments is inherently restricted by trading volumes in the securities in which it invests.

•

The valuation of the Portfolio’s investments, may be affected generally by factors affecting securities markets, such as price and volume volatility in the capital markets, interest rates, currency exchange rates, changes in policies of the Government, taxation laws or any other appropriate authority policies and other political and economic developments which may have an adverse bearing on individual securities, a specific sector or all sectors including equity and debt markets. There will be no prior intimation or prior indication given to the Clients when the composition/ asset allocation pattern changes.

•

Trading volumes, settlement periods and transfer procedures may restrict the liquidity of the investments made by the Portfolio. Different segments of the Indian financial markets have different settlement periods and such periods may be extended significantly by unforeseen circumstances. The inability of the Portfolio to make intended securities purchases due to settlement problems could cause the Portfolio to miss certain investment opportunities.

By the same rationale, the inability to sell securities held in the portfolio due to the absence of a well developed and liquid secondary market for debt securities would result, at times, in potential losses to the Portfolio, in case of a subsequent decline in the value of securities held in the Portfolio.

•

The Portfolio Manager may, considering the overall level of risk of the portfolio, invest in lower rated/ unrated securities offering higher yields. This may increase the risk of the portfolio. Such investments shall be subject to the scope of investments as laid down in the Agreement.

•

In case of Dividend Yield Portfolios, returns of the Portfolio could depend on the dividend earnings and capital appreciation, if any, from the underlying investments in various dividend yield companies. The dividend earnings of the portfolio may, vary from year to year based on the philosophy and other consideration of each of the high-dividend yield companies. Further, it should be noted that the actual distribution of dividends and frequency thereof by the high-dividend yield companies in future would depend on the quantum of profits available for distribution by each of such companies. Dividend declaration by such companies will be entirely at the discretion of the shareholders of such companies, based on the recommendations of its Board of Directors. Past track record of dividend distribution may not be treated as

30

indicative of future dividend declarations. Further the dividend yield stocks may be relatively less liquid as compared to growth stocks.

•

Securities, which are not quoted on the stock exchanges, are inherently illiquid in nature and carry a larger amount of liquidity risk, in comparison to securities that are listed on the exchanges or offer other exit options to the investor, including a put option. The Portfolio Manager may choose to invest in unlisted securities that offer attractive yields. This may however increase the risk of the portfolio. Such investments shall be subject to the scope of investments as laid down in the Agreement.

•

While securities that are listed on the stock exchange carry relatively lower liquidity risk, the ability to sell these investments is limited by the overall trading volume on the stock exchanges. Money market securities, while fairly liquid, lack a well-developed secondary market, which may restrict the selling ability of the Portfolio(s) and may lead to the investment(s) incurring losses till the security is finally sold.

•

The Portfolio Manager may, subject to authorisation by the Client in writing, participate in securities lending. The Portfolio Manager may not be able to sell / lend out securities, which can lead to temporary illiquidity. There are risks inherent in securities lending, including the risk of failure of the other party, in this case the approved intermediary to comply with the terms of the agreement. Such failure can result in a possible loss of rights to the collateral, the inability of the Approved Intermediary to return the securities deposited by the lender and the possible loss of corporate benefits accruing thereon.

•

To the extent that the portfolio will be invested in securities denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment

•

Interest Rate Risk: As with all debt securities, changes in interest rates may affect valuation of the Portfolios, as the prices of securities generally increase as interest rates decline and generally decrease as interest rates rise. Prices of long-term securities generally fluctuate more in response to interest rate changes than prices of short-term securities. Indian debt markets can be volatile leading to the possibility of price movements up or down in fixed income securities and thereby to possible movements in the valuations of Portfolios.

•

Liquidity or Marketability Risk: This refers to the ease with which a security can be sold at or near to its valuation yield-to-maturity (YTM). The primary measure of liquidity risk is the spread between the bid price and the offer price quoted by a dealer. Liquidity risk is today characteristic of the Indian fixed income market.

31

•

Credit Risk: Credit risk or default risk refers to the risk that an issuer of a fixed income security may default (i.e., will be unable to make timely principal and interest payments on the security). Because of this risk corporate debentures are sold at a higher yield above those offered on Government Securities which are sovereign obligations and free of credit risk. Normally, the value of a fixed income security will fluctuate depending upon the changes in the perceived level of credit risk as well as any actual event of default. The greater the credit risk, the greater the yield required for someone to be compensated for the increased risk.

•

Reinvestment Risk: This risk refers to the interest rate levels at which cash flows received from the securities under a particular Portfolio are reinvested.

The additional income from reinvestment is the “interest on interest” component. The risk is that the rate at which interim cash flows can be reinvested may be lower than that originally assumed.

•

Currency Risk: The Portfolio Manager may also invest in overseas Fixed Income or other Securities/ instruments as permitted by the concerned regulatory authorities in India. To the extent that the portfolio of the Scheme will be invested in securities/ instruments denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by changes/fluctuation in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital to India may also be hampered by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment.

•

Risk factors specific to Fixed Defined Tenure Series Portfolio The additional risk factors in this portfolio relate to lack of liquidity of instruments including units, frequency of disclosure of valuation of underlying units, valuation risks, risk of change in underlying due to changes or factors which may affect the issuer of units/ decisions of the unitholders and changes in regulation which may adversely affect the interest of the clients.

Given that the Portfolio Manager may be investing in units being nonexchange traded instruments, the risks of investment in such non-exchange instruments include counterparty default risks and liquidity risks.

Some underlying sectors based on which units are issued may tend to be illiquid and the illiquidity of the sector may translate into illiquidity of the holdings and hence this portfolio may be exposed to a higher level of liquidity risks than normal portfolio risks exposed only to equity/exchange listed instruments.

•

The Portfolio Manager may use various derivative products as permitted by the Regulations. Use of derivative requires an understanding of not only the underlying instrument but also of the derivative itself. Other risks include, the

32

risk of mispricing or improper valuation and the inability of derivatives to correlate perfectly with underlying assets, rates and indices.

•

The Portfolio Manager may use derivatives instruments like Stock Index Futures, Interest Rate Swaps, Forward Rate Agreements or other derivative instruments, as permitted under the Regulations and guidelines. Usage of derivatives will expose the Portfolio to certain risks inherent to such derivatives.

•

Specific Risk factors pertaining to Diversified Portfolio The Portfolio Manager may make substantial investment in unlisted securities/instruments (private equity). The investment in private equity may be made in the units issued by SEBI registered Venture Capital Fund or any other instrument available in the market. The major risk factors pertaining to investment in Venture Capital Fund are given herein below. Investors are advised to read carefully the product specific risk factors mentioned in detail, in the Agreement to be executed with Portfolio Manager, before making investment.

Nature of Investment The Portfolio Manager may invest in such Venture Fund (the Fund), which may invest in companies that are experiencing or have experienced severe financial difficulties. Many of such investments made by the Fund may be illiquid, and there can be no assurance that the Fund will be able to realize profits on its investments in a timely manner.

Since the Fund may make only a limited number of investments and these may involve a high degree of risk, poor performance by even a few of these investments could lead to adverse effects on the returns received by investors.

Restrictions on Withdrawal and Transfer Investors may not be able to voluntarily withdraw from the Fund. In addition, they may not be able to transfer any of the interests, rights, or obligations with regard to the Fund except as may be provided in the Fund Documents and the SEBI Venture Capital Funds Regulations.

Risks attached with the use of derivatives As and when the Portfolio Manager trade in the derivatives market there are risk factors and issues concerning the use of derivatives that investors should understand. Derivative products are specialized instruments that require investment techniques and risk analysis different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the “counter party”) to comply

33

with the terms of the derivatives contract. Other risks in using derivatives include the risk of mis pricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices.

Thus, derivatives are highly leveraged instruments. Even a small price movement in the underlying security could have a large impact on their value.

Also, the market for derivative instruments is nascent in India.

Trading in derivatives SEBI in terms of Securities and Exchange Board of India (Portfolio Managers) Amendment Regulations, 2002, has permitted all the Portfolio Managers to participate in the derivatives trading subject to observance of guidelines issued by SEBI in this behalf. Pursuant to this, the Portfolio Managers may use various derivative and hedging products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance the Clients’ interest.

Accordingly, the Portfolio Manager may use derivatives instruments like Stock Index Futures, Options on Stocks and Stock Indices, Interest Rate Swaps, Forward Rate Agreements or other such derivative instruments as may be introduced from time to time, as permitted by SEBI. The following information provides a basic idea as to the nature of the derivative instruments proposed to be used by the Portfolio Manager and the benefits attached there with.

Sr. No.

1

Type of Type of derivative positio n/ action Index Buy futures

2

Index futures

Sell

3

Index Options Call

Buy

4

Index Options Call

Sell

Purpose/Descript ion

Limit

Buy futures against cash to participate in a rising market

To the extent of cash / equivalents in the portfolio. Max. limit 100% of portfolio Up to 100% of equity portion of the portfolio

Hedging of portfolio against expected market downturn Buy index calls against cash (existing /expected) to participate in a rising market Covered Call Saleagainst existing portfolio

To the extent of cash / equivalents in the portfolio. Max. limit 100%of portfolio

Up to 100 %of equity portion of the portfolio

34

Sr. No.

5

6

Type of Type of derivative positio n/ action Index Buy Options Put Index Sell Options Put

Purpose/Descript ion

Limit

Buy index puts to hedge existing portfolio Covered Put SalePossible top sell index puts against existing/expected cash Buy against cash to participate in rising stock prices

Up to 100% of equity portion of the portfolio To the extent of cash / equivalents in the portfolio. Max. limit 100% of portfolio

7

Stock futures

Buy

8

Stock futures

Sell

9

Stock options Call

Buy

10

Stock options Call

Sell

Sell against existing stock/call position.

11

Stock options Put

Buy

12

Stock options Put

Sell

Purchase against existing stock.

Hedging against downside on existing stock in the face of expected volatility in the stock price Covered Put Sale against cash/put position

Sell against existing stock – Hedging against downside on existing stock in the face of expected volatility in the stock price Buy against cash to participate in rising stock prices

To the extent of cash / equivalents in the portfolio. Max. limit 100% of portfolio; per scrip limit 100%.

To the extent of the particular scrip holding in the portfolio; per scrip limit 100%

To the extent of cash / equivalents in the portfolio. Max. limit 100% of portfolio; per scrip limit 100% To the extent of the particular scrip holding in the portfolio; per scrip limit 100% To the extent of the particular scrip holding in the portfolio; per scrip limit 100%

To the extent of cash / equivalents in the portfolio. Max. limit 100%of portfolio; per scrip limit 100%

35

Sr. No.

13

14

Type of Type of derivative positio n/ action Synthetic Buy Call options – Index/Stoc k Synthetic Buy Put options – Index/Stoc k

Purpose/Descript ion

Limit

Buy Future and buy a put for hedging.

To the extent of cash / equivalents in the portfolio. Max. limit 100% of portfolio; per scrip limit 100% To the extent of cash / equivalents in the portfolio. Max. limit 100% of portfolio; per scrip limit 100%

Sell a future and buy a call for hedging.

The total exposure of the client’s portfolio will not exceed his funds placed with the portfolio manager and the maximum loss in the worst-case scenario will be limited to the client’s portfolio. In case of all the above-mentioned strategies the downside will be restricted to the client’s portfolio.

However, it may be noted that the Absolute Returns product would invest/trade in cash equities and futures & options. Given the use of futures in the portfolio, the notional value of all the portfolio positions under the product may exceed the amount invested. i) Index/Stock Futures a) Index Futures Benefits a) Investment in Stock Index Futures can give exposure to the index without directly buying the individual stocks. Appreciation in Index stocks can be effectively captured through investment in Stock Index Futures. b) The Portfolio Manager can sell futures to hedge against market movements effectively without actually selling the stocks it holds.

The Stock Index futures are instruments designed to give exposure to the equity market indices. The pricing of an index future is the function of the underlying index and interest rates.

Illustration#: Spot Index: 1070 1 month Nifty Future Price on day 1: 1075 Portfolio Manager buys 100 lots Each lot has a nominal value equivalent to 200 units of the underlying index

36

Let us say that on the date of settlement, the future price = Closing spot price = 1085 Profits for the Portfolio = (1085-1075)* 100 lots * 200 = Rs 200,000 # Disclaimer: Please note that the above example is for illustration purpose only.

Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or experts.

The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Mangaer and any of its officers directors, personnel and employees, shall not be 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. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material.

The net impact for the Portfolio will be in terms of the difference between the closing price of the index and cost price (ignoring margins for the sake of simplicity). Thus, it is clear from the example that the profit or loss for the Portfolio will be the difference of the closing price (which can be higher or lower than the purchase price) and the purchase price. The risks associated with index futures are similar to the one with equity investments. Additional risks could be on account of illiquidity and hence mispricing of the future at the time of purchase. b) Stock Futures Benefits a) Investment in Stock Futures can give exposure to the stock without directly buying the stocks. Appreciation in stocks can be effectively captured through investment in Stock Futures. b) The Portfolio Manager can sell stock futures to hedge against adverse movements effectively without actually selling the stocks it holds.

The risk and return payoff for the stock futures is similar to that of an Index future as mentioned above. ii) Buying Options a) Benefits of buying a call option: Buying a call option on a stock or index gives the owner the right, but not the obligation, to buy the underlying stock / index at the designated strike price.

Here the downside risks are limited to the premium paid to purchase the option.

37

Illustration#: For example, if the Portfolio Manager buys a one month call option on XYZ Limited at a strike of Rs. 150, the current market price being say Rs.151. The Portfolio Manager will have to pay a premium of say Rs. 15 to buy this call. If the stock price goes below Rs. 150 during the tenure of the call, the portfolio manager avoids the loss it would have incurred had it straightaway bought the stock instead of the call option. The Portfolio Manager gives up the premium of Rs. 15 that has to be paid in order to protect the Portfolio from this probable downside. If the stock goes above Rs. 150, it can exercise its right and own XYZ Limited at a price of Rs. 150, thereby participating in the upside of the stock. For such a transaction, the break-even price will be the sum of strike price and the premium paid; in this case it would be 150+15= Rs.165. # Disclaimer: Please note that the above example is for illustration purpose only. Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or experts. The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Manager and any of its officers directors, personnel and employees, shall not be 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. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. b) Benefits of buying a put option Buying a put option on a stock originally held by the buyer gives him/her the right, but not the obligation, to sell the underlying stock at the designated strike price. Here the downside risks are limited to the premium paid to purchase the option.

Illustration#: For example, if the portfolio owns XYZ Limited and also buys a three month put option on XYZ Limited at a strike of Rs. 150, the current market price being say Rs.151. The Portfolio Manager will have to pay a premium of say Rs. 12 to buy this put. If the stock price goes below Rs. 150 during the tenure of the put, the Portfolio Manager can still exercise the put and sell the stock at Rs. 150, avoiding therefore any downside on the stock below Rs. 150. The Portfolio Manager gives up the fixed premium of Rs. 12 that has to be paid in order to protect the Portfolio from this probable downside. If the stock goes above Rs. 150, say to Rs. 170, it will not exercise its option and the premium of Rs 12 would be lost. The Portfolio Manager will participate in the upside of the stock, since it can now sell the stock at the prevailing market price of Rs. 170.

38

# Disclaimer: Please note that the above example is for illustration purpose only. Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or experts. The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Manager and any of its officers directors, personnel and employees, shall not be 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. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. (iii) Writing Options a) Benefits of writing an option with underlying stock holding (Covered call writing) is a strategy where a writer (say the Portfolio Manager) will hold a particular stock, and sell in the market a call option on the stock. Here the buyer of the call option now has the right to buy this stock from the writer (the Portfolio Manager) at a particular price which is fixed by the contract (the strike price). The writer receives a premium for selling a call, but if the call option is exercised, he has to sell the underlying stock at the strike price. This is advantageous if the strike price is the level at which the writer wants to exit his holding / book profits. The writer effectively gains a fixed premium in exchange for the probable opportunity loss that comes from giving up any upside if the stock goes up beyond the strike price.

Illustration#: Let us take for example ABC Limited, where the Portfolio holds stock, the current market price being Rs. 3600. The Portfolio Manager holds the view that the stock should be sold when it reaches Rs. 3700. Currently the onemonth 3700 calls can be sold at say Rs.150. Selling this call gives the call owner the right to buy from the Portfolio Manager, Infosys at Rs. 3700.

Now the Portfolio Manager by buying / holding the stock and selling the call is effectively agreeing to sell Infosys at Rs. 3700 when it crosses this price. So the Portfolio Manager is giving up any possible upside beyond Rs. 3700.

However, the returns on the Portfolio are higher than what it would have got if it just held the stock and decided to sell it at Rs. 3700. This is because the Portfolio Manager by writing the covered call gets an additional Rs. 150 per share of Infosys. In case the price is below Rs. 3700 during the tenure of the call, then it will not be exercised and the Portfolio Manager will continue to hold the shares. Even in this case the returns are higher than if the Portfolio had just held the stock waiting to sell it at Rs. 3700. # Disclaimer: Please note that the above example is for illustration purpose only. Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or

39

experts. The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Manager and any of its officers directors, personnel and employees, shall not be 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. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. (b) Benefits of writing put options with adequate cash holding: Writing put options with adequate cash holdings is a strategy where the writer (say, the Portfolio Manager) will have an amount of cash and will sell put options on a stock. This will give the buyer of this put option the right to sell stock to the writer (the Portfolio Manager) at a pre-designated price (the strike price). This strategy gives the put writer a premium, but if the put is exercised, he has to buy the underlying stock at the designated strike price. In this case the writer will have to accept any downside if the stock goes below the exercise price. The writer effectively gains a fixed premium in exchange for giving up the opportunity to buy the stock at levels below the strike price. This is advantageous if the strike price is the level at which the writer wants to buy the stock.

Illustration#: Let us take, for example, that the Portfolio Manager wants to buy Infosys Technologies at Rs. 3500, the current price being Rs. 3600. Currently the three month 3500 puts can be sold at say Rs. 100. Writing this put gives the put owner the right to sell to the Portfolio Manager, Infosys at Rs. 3500. Now the Portfolio Manager by holding cash and selling the put is agreeing to buy Infosys at Rs. 3500 when it goes below this price. The Portfolio Manager will take on itself any downside if the price goes below Rs. 3500. But the returns on the Portfolio are higher than what it would have got if it just waited till the price reached this level and bought the stock at Rs. 3500, as per its original view. This is because the Portfolio Manager by writing the put gets an additional Rs. 100 per share of Infosys. In case the price stays above Rs. 3500 during the tenure of the put, then it will not be exercised and the Portfolio Manager will continue to hold cash. Even in this case the returns are higher than if the Portfolio had just held cash waiting to buy Infosys at Rs. 3500. # Disclaimer: Please note that the above example is for illustration purpose only. Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or experts. The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Manager and any of its officers directors, personnel and employees, shall not be liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also

40

any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. iv) Buying Synthetic Options Buying synthetic options is similar to that of buying of pure options with a difference of execution of transaction. To achieve a payoff exactly like that of a pure option, a future and an option are used together.

The highlight of this strategy would culminate in the transactions having limited loss/liability even in the worst-case scenario, which is exactly like that of a Call or a Put option. This is explained in detail hereunder: 1) Synthetic Call option: This transaction leads to a payoff similar to that of buying a call option and has limited liability under all circumstances. A synthetic call option is created by taking a buy position in future and additionally buying a put to protect the downside.

2) Synthetic Put option: This transaction leads to a payoff similar to that of a buying a put option and has limited liability under all circumstances. A synthetic put option is created by taking a sell position in future and additionally buying a call to protect the downside.

Thus under all possible circumstances, using synthetic call/put options, the losses will be limited to the clients initial capital. Therefore, the strategy operates fully within the PMS regulatory framework and fully complies will all the applicable regulations.

Please refer to the illustration below for further understanding: Profit and Loss Payoff on different closing prices of the underlying.

Positi Trade Transactio Pric Client' Maximum Maxi Worst on n Legs e s possible mum Case Capital number of loss Loss trades per trade 8=(6* 1 2 3 4 5 6 7 7) 1

Call Buy

Buy 100 6 Strike Call

100

16

-6

-96

0

80

90

100 100

110

-6

-6

-6

-6

4

120 1000

14

894 *Final Payoff

2 Synth etic Buy Call

Buy 100 Future Buy 100 6 Strike Put

-100 -20 100

16

-6

-10

0

10

20

900 -6

-96 Sum

94

14

4

-6

-6

-6

-6

-6

-6

-6

4

14

41

894 *Final

Payoff

*Please note that the final payoff for Call Option (Buy) and a Synthetic Call Option (Buy) is same.

3

Put

Buy

Buy 100 Strike Put

6

100

16

-6

-96

94

14

4

-6

-6

-6

-6

^Final Payoff

Sell 4 Synth 100 Future etic Buy 100 Buy 100 Put 6 Strike Call

16

-6

100

20

10

0

-10

-20

-900

-6

-6

-6

-6

4

14

894

94

14

4

-6

-6

-6

-6

-96 Sum

^Please note that the final payoff for Put Option (Buy) and a Synthetic Put Option (Buy) is same.

# Disclaimer: Please note that the above example is for illustration purpose only.

Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or experts.

The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Manager and any of its officers directors, personnel and employees, shall not be 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. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. v) Interest Rate Swaps and Forward Rate Agreements Benefits Bond markets in India are not very liquid. Investors run the risk of illiquidity in such markets. Investing for short-term periods for liquidity purposes has its own risks. Investors can benefit if the Portfolio remains in call market for the liquidity and at the same time take advantage of fixed rate by entering into a swap. It adds certainty to the returns without sacrificing liquidity.

Illustration The following are illustrations how derivatives work: Basic Structure of an Interest Rate Swap Floating Interest Rate Counter Party 1

Counter Party 2

Fixed Interest Rate

42

^Final Payoff Payoff

In the above illustration, Basic Details : Fixed to floating swap Notional Amount : Rs. 5 Crores Benchmark : NSE MIBOR Deal Tenure: 3 months (say 91 days) Documentation : International Securities Dealers Association (ISDA).

Let us assume the fixed rate decided was 10%.

At the end of three months, the following exchange will take place: Counter party 1 pays : compounded call rate for three months, say 9.90% Counter party 2 pays fixed rate : 10% In practice, however, the difference of the two amounts is settled. Counter party 2 will pay: Rs 5 Crores *0.10%* 91/365 = Rs. 12,465.75 Thus the trade off for the Portfolio Manager will be the difference in call rate and the fixed rate payment and this can vary with the call rates in the market. Please note that the above example is given for illustration purposes only and the actual returns may vary depending on the terms of swap and market conditions. # Disclaimer: Please note that the above example is for illustration purpose only.

Investors are advised to make their own conclusions based on their own independent assessment or through proper investment advisors and/or experts.

The assumptions on which the above illustration is based may or may not be valid in future. Past performance of the Portfolio Manager may not be indicative of the performance in the future. ICICI Prudential PMS, the Portfolio Manager and any of its officers directors, personnel and employees, shall not be 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. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. •

Risk Factors on India Opportunities Portfolio An Investment in the India Opportunities Portfolio (IOP) involves certain considerations and noteworthy risks. Whilst IOP will be investing into securities and instruments which may be listed/unlisted, the underlying assets to these securities/instruments would have prominent exposure to infrastructure/properties. Accordingly, before deciding to invest in the IOP, prospective Clients must carefully study the specific risks described below together with all the information contained in this Disclosure Document, and

43

seek independent investment and tax advice at their own expense. Additional risks and uncertainties not presently known to the Portfolio Manager, or that it currently deem immaterial may also have an unfavorable impact on the IOP and business. There can be no assurance that the IOP’s investment objective will be achieved.

•

RISKS SPECIFIC TO INVESTMENTS IN INDIA OPPORTUNITIES PORTFOLIO RELATING TO INVESTMENT IN SECURITIES/INSTRUMENTS WITH UNDERLYING ASSETS ASSOCIATED WITH INDIAN REAL ESTATE AND INFRASTRUCTURE Title This is a well known fact that the system of documentation of land records in India has still not been fully computerized. In the cities where the system is yet to be computerized, the maintenance and updation of land records is done manually which means that the records of all land related documents are physically updated. In some states, the process of computerization of records is underway which is a long drawn and time consuming process and because of the sheer number of records, the possibility of inaccurate records cannot be ruled out. The process and the report of title verification mainly depend on the availability of records with the respective revenue department and at sub-registrar’s office. Due to pending computerization of records, nonavailability of records and errors in the records, the possibility of an error in the title report of the underlying property cannot be ruled out.

Land Acquisition The right to own property in India is subject to restrictions that may be imposed by the Government. Particularly, the Government has a right to acquire any land or a part thereof if such acquisition is for a ‘public purpose’ and after paying the owner reasonable compensation. However, this compensation may not be at the fair market value i.e. the price that such property might have fetched if it were sold in the market.

Therefore, the real property or a part that the underlying assets represent, might be acquired by the Government, if the Government is of the view that such property has to be used for a ‘public purpose’. Further, the compensation paid for this purpose may not be adequate to compensate for the loss of such real property which may have an adverse impact on the IOP. Further, the government may specify certain lands to be either allotted for specific purpose and to be developed within a specified time or are leased from municipal corporation/ port trust, industrial development corporation, development authority or similar government or quasi-governmental authority for a long term. On completion of the specific purpose or expiry of lease, the land allotted / leased shall revert to the specified Government body.

Certain terms and conditions such as renewal of lease, termination of lease etc. are also attached to the allotment or lease of land and hence the letter of

44

allotment or the lease agreement and the related documents need to be scrutinized thoroughly.

Environmental Laws Indian Courts have implemented the “Polluter pays� principle in the field of Environment Law, whereby the person, company or industry responsible for the pollution, through the use or disposal of hazardous or toxic substance either on under or in a property, would be liable to restore the degradation of the property and the surrounding environment and compensate any victims thereby. The presence of contamination or hazardous or toxic substances, may adversely affect the investments made by IOP in any underlying assets which may be affected thereby and hence have an adverse impact on the returns. Preventive measures are to be taken by the developer for cleansing the soil with the use of latest technology.

With the changing times and increased awareness among the people, the Government has also become pro-active and over a period of time have introduced various legislations and regulations and accordingly require various approvals from the state pollution control boards (water and air) as well as approvals from Ministry of Environment and Forest (MoEF). Violation of such approvals or non-procurement of such approvals may drastically and adversely affect the progress of the project and may lead to stoppage of project.

Coastal Regulation Zones (CRZ) also prevent development on coastal areas as the same harms or contaminates such areas near to water bodies.

Rent Control In India various states have enacted rent control laws, which, inter alias, place restriction on the amount of rent that may be collected from tenants. If the IOP has invested in instruments where the underlying assets represent property that comes under the purview of rent control laws, this may adversely impact the returns that IOP may get from such property and thus consequently have an adverse effect on the performance of IOP. Litigation and stay / injunction on development Litigation in India is long drawn and time consuming and complicated process and there is generally a preponderance of litigation with respect to property. If any property in which the investments by IOP is subjected to any litigation (litigation may commence after IOP has invested in the underlying asset), this could have an adverse impact, financial or otherwise on the investments by IOP.

45

Tenancy Risk The bankruptcy or insolvency of or vacation by a significant tenant or a number of smaller tenants would have an adverse impact on the cash flows of the project. This risk is primarily faced by yield based investments.

Use of Agricultural Land and Zoning In India, certain lands are earmarked as agricultural lands, wherein only agricultural activities are permitted to be carried out. In order to carry out any non-agricultural activity, a prior approval/permission from appropriate authority is required to be obtained. This approval may be given by the authority, at its own discretion or with certain conditions. Generally, only an agriculturist (a person indulged in farming or agricultural activities) is permitted to buy agricultural property. Corporates are prohibited from acquiring agricultural properties. Hence, if the Portfolio Company in which the IOP is investing decides to acquire and utilize agricultural land, it is required to necessarily obtain a prior approval for using the land for non-agriclutural purposes. If such portfolio company fails to get the authority’s approval for usage for non-agricultural purposes before it has transferred in its name, then the Company would not be able to utilize such land for any non-agricultural purposes and this could affect the IOP. Properties are divided into various zones either generally or through some municipal master plan or development plan for a particular area. Such zones can be industrial zone, commercial zone, residential zone, no development zone, coastal zone etc. Development in such zones is restricted to that particular purpose, for e.g. an industrial zone will not have any residential development. If required, conversion of zone from one zone to another is required before commencement of a particular development/activity. This can be carried out only if permission for conversion is obtained in advance. For instance residential development is usually not permitted in an industrial zone unless and to the extent permitted as ancillary or incidental to the industrial development.

Investment Risks Most of the investments made by the IOP may be in unlisted companies whose securities should be considered illiquid. These investments may be difficult to value and to sell or otherwise liquidate, and the risk of investing in such companies is much greater than the risk of investing in publicly traded securities. Moreover, these unlisted companies are not regulated by the same disclosure and investor protection norms that apply to listed companies.

Nature of Investments Many of the investments made by the IOP will be illiquid, and there can be no assurance that the IOP will be able to realize profits on its investments in a timely manner.

46

IOP make only a limited number of investments and these may involve high degree of risk. Poor performance by even a few of these investments could lead to adverse effects on the returns received.

In addition, the IOP will compete with other Investors for investments in Portfolio Companies. This may result in fewer attractive investment opportunities. The Portfolio Manager may not be able to identify and successfully close a sufficient number of high-quality investments. In addition, such competition may have an adverse effect on the length of time required to fully invest the funds of the IOP which may have a substantial adverse impact on potential returns.

Investment Selection The Portfolio Companies may or may not have been identified at the time of commencement of the Portfolio. Accordingly, prospective clients may not have an opportunity to review the Portfolio Companies or the terms of the IOP’s investments in the Portfolio Companies prior to investing in the IOP. Performance Risks A portion of the Portfolio may be invested in companies in highly competitive markets or product segments dominated by firms with substantially greater financial and possibly better technical resources than the Portfolio Companies in which the IOP invests. They may operate in product segments that face technological changes and / or may be dominated by other firms or organizations. These and other inherent business risks could affect the performance of the Portfolio Companies, and affect the value of the equity investments, thereby affecting the Portfolio.

Restriction on Withdrawal and Transfer Clients may not be permitted to withdraw from the IOP except at the end of a defined tenure. In addition, except as may be provided in the Client Agreement they may not transfer any of the interest, rights, or obligations with regard to the IOP investments.

Dilution and valuation risk Subsequent to the investments in the underlying Portfolio Companies by the Investors of India Real Estate Securities Portfolio, the underlying Portfolio Companies may admit other new investors at a price, which may be at a discount to the prevailing asset value of the IOP’s investment. This may result in dilution of the value of the holdings by the existing Clients of India Real Estate Securities Portfolio. Further, the valuation of such investments is subjective and the value arrived at by the Portfolio Manager or an independent auditor may not reflect the true value of the investments.

47

Portfolio Risk There is a risk of concentration of investments especially in the asset classes relating to the Portfolio.

To mitigate this risk the IOP will seek to have a fair degree of diversification in its investments both by geographic region or asset type. The IOP will invest across residential, commercial and retail properties including but not limited to industrial, hotel, hospital, warehousing and other types of properties.

Further, to derisk from the down cycle of the market, the IOP proposes to invest in the projects having varying exit horizons.

Entitlement Risks and Development Risk The IOP generally invests in companies focused on developing some properties in which it is investing from a “Greenfield� start. Although the IOP intends to invest in companies and partners with developers (who could be shareholders in the respective portfolio companies) having good track record of handling such development projects, it will still have various development risk, delay in project risk, regulatory risk, statutory approval risk etc.

The entitlement risk associated with the purchase of land can be partly addressed by buying the land from a reliable source and partly by making the developer to bear this risk.

Development risk can be partly mitigated by providing an incentive structure to the developers for timely completion of the project and to have adequate penal clauses in order to deter him from defaulting on the completion timelines. The incentive structure envisaging disproportionate sharing of profit in the portfolio company and/or project, after a hurdle rate, will bring in more discipline from the developer towards the project. However, development risk on integrated township projects and Special Economic Zones would be high on account of political and regulatory risks, which could lead to significant time and cost overruns. Besides, projects where the portfolio company bids for the land may subsequently get delayed due to time lag in obtaining regulatory or statutory approvals. Non-availability of various building materials and shortage of labour may also lead to delay in the project as well as rise in the project cost. Wrong product-mix, competing project, development at far flung underdeveloped areas may also have an adverse impact on the investment.

Cost Overruns The Portfolio Manager will work with investee companies and endeavour to awarding a fixed term contract to reputed construction agencies with the possibility of including penal clauses if there is a material delay or cost overrun in the project. In addition, the investee companies will have a

48

separate Project Group located at the site to ensure timely implementation of the project and also to ensure that the construction quality is as per the contracted norms. Based on the same the risk in delay or cost overrun due to increased construction time expected to be is minimal. There can be opportunity loss due to delays, which may not be fully compensated by liquidated damages from the Engineering Procurement Construction (EPC) contractor. Besides, volatility or upward movement in commodity prices, especially of cement and steel, could result in cost overruns that may not be fully absorbed by the EPC contractors. Projects could also face time and cost overruns due to force majeure risks that may not be mitigated.

FSI / FAR and Height restrictions Floor Space Index (FSI) / Floor Area Ratio (FAR) sanctioned for utilization also affects the potential development of the project as the sanctioned FSI/FAR may vary from that of the one targeted. Height restrictions also prevail in various regions depending proximity from airport and defense base areas, which affect the development of a project in terms of height.

Market Cycles Timing to market cycle is very important in this sector. The investment looking favorable in the up market cycle may become a loss-making proposition in the down cycle. There will always be risk associated with the market cycle. This can be partly addressed by diversifying the portfolio across geographic region, asset type and exit time horizon.

Management and Operational Risks Reliance on the Portfolio Manager The Investment Committee advises the Portfolio Manager regarding the investments and divestments and the Clients will not be able to make investment or other decisions in the business of the IOP. The success of the IOP will depend to a large extent upon the ability of the Portfolio Manager, to source, select, complete and realize appropriate investments. The success of the IOP will also depend upon the judgment of the Investment Committee and the Portfolio Manager in reviewing investment proposals for the IOP. The Portfolio Manager will have considerable latitude in its choice of Portfolio Companies and the structuring of investments.

Accordingly, no person should invest in the IOP unless such person is willing to entrust all aspects of the Management to the Portfolio Manager.

Indemnification of Directors and Employees of the Portfolio Manager The Client Agreement provides for indemnification of the Portfolio Manager for any and all actions, suits, proceedings, claims, damages, settlement

49

payments, losses and liabilities arising in connection with the Client Agreement, unless they result from gross negligence or willful misconduct.

Indemnification of the Directors of the Portfolio Manager, as well as other parties, may impair the financial condition of the IOP and its ability to acquire assets or otherwise achieve its investment objective or meet its obligations.

Failure to Infuse Additional Funds Default by Clients of their obligations to infuse additional funds in the event of the Drawdown may cause the IOP to lack the capital necessary to make planned investments in Portfolio Companies. Such default may, consequently, cause the IOP to breach its agreement with a Portfolio Company which may result IOP to owe damages to such company. Loss of such opportunities, as well as the payment of damages, could result in a material adverse effect on the performance of the IOP. India-Related Risks Political, Economic and Social Risk Political and Socio-Economic factors, changes in Indian law or regulations and the status of India’s relations with other countries may adversely affect the value of the IOP. In addition, the Indian economy may differ favorably or unfavorably from other economies in several respects, including the rate of growth of gross domestic product, the rate of inflation, capital reinvestment, resource self-sufficiency, future actions of the Indian central government or the respective Indian state governments could have a significant effect on the Indian economy, which could adversely affect private sector companies, market conditions and prices and yields of the portfolio securities. The occurrence of selective unrest, or external tension, could adversely affect India’s political and economic stability and, consequently, adversely affect the IOP’s investment in Portfolio Companies.

India’s Political, Economic and Social stability is related to various factors such as the possibility of nationalization, expropriations or taxation amounting to confiscation, political changes, government regulation, social instability, diplomatic disputes or other similar developments which are beyond the control of the Portfolio Manager, could adversely affect the IOP’s investments.

Government Approvals Certain governmental approvals, local authority approvals, including approvals from the Securities and Exchange Board of India (SEBI) or the central government may be required before the IOP can make investments in Portfolio Companies. It is likely that all or some of these approvals are required to be obtained prior to the closing of the IOP. While the Portfolio Manager expects to obtain these governmental approvals within three months from the closing of offering of the IOP, the Portfolio Manager cannot

50

be certain that these approvals will be given by the appropriate authority. The Portfolio Manager shall not be liable in any manner if any approval from the Government is not forthcoming and/or is not obtained and / or cannot be obtained for any reason whatsoever.

The IOP operates under Indian laws and securities regulations. If policy announcements or regulations are made subsequent to this offering, which require retrospective changes in the structure or operations of the IOP, these may adversely impact the performance of the IOP. Tax Risks Clients invested in the IOP are subject to a number of risks related to tax matters. In particular, the tax laws relevant to the IOP are subject to change, and tax liabilities could be incurred by Clients as a result of such changes. The tax consequences of an investment in the IOP are complex, and the full tax impact of an investment in the IOP will depend on circumstances particular of each investor and the additional peculiarities associated with respect to activities of each Portfolio Company and securities issued by such Companies. Accordingly, prospective Clients are strongly urged to consult their tax advisors with specific reference to their own situations.

International / Financial Risk There may also be an impact on saleability, demand-supply of the developed / developable Property based on the prevailing international and financial scenario.

Risk of nonnon-deployment of funds The available funds may not be deployed due to non-availability of appropriate projects / promoter or due to regulatory aspects applicable to IOP. Others Risks Troubled Origination The Portfolio Manager may make substantial investments in non-performing or other troubled assets, which involve a degree of financial risk and which are experiencing or are expected to experience severe financial difficulties, which may never be overcome fully. As a result, the standards by which such investments were originated, the recourse to the selling institution or the standards by which such Investments are being serviced or operated may be adversely affected. Further, Investment in properties operating under the close supervision of a mortgage lender are, in certain circumstances, subject to certain additional potential liabilities which may exceed the value of the Portfolio ‘s original investment therein. For example: under certain circumstances, lenders who have inappropriately exercised control of the

51

management and policies of a debtor may have their claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions.

Bankruptcy Considerations Investment made in real estate assets operating in workout modes or under applicable bankruptcy laws could, if the Portfolio Manager or the Portfolio Company inappropriately exercises control over the management and policies of the debtors, be subordinated or disallowed and, in certain circumstances, the Portfolio Manager or the Portfolio Company could be liable to third parties. Furthermore, under certain circumstances, payments to the Portfolio in respect of such investments, and payment by the Portfolio Manager to its Clients, may be reclaimed if any such payment is later determined to have been a fraudulent conveyance or a preferential payment under concepts of applicable bankruptcy Co- Investment and Control Issues The Portfolio Company may (i) co – invest with third parties through partnerships, Joint ventures or other entities, thereby acquiring non – controlling interests in certain Investments, (ii) rely on independent third party management with respect to the operation of an Investment or (iii) only acquire a participation in an asset underlying an investment and, as a result, may not be able to exercise control over the management of such investments. Although, the Portfolio Company may not have complete control over these Investments and, therefore, may have a limited ability to protect its position therein, the Portfolio Manager expects that appropriate rights will be negotiated to protect the Portfolio’s interests. Nevertheless, such Investment may involve risks in connection with such third party involvement, including the possibility that a third party or investors may have financial difficulties, resulting in a negative impact on such investment, may have economic or business interests or goals which are inconsistent with those of the Portfolio or may be in a position to take action to contrary to the Portfolio’s investment objectives.

Development Activities The Portfolio Company may invest, directly or indirectly, in undeveloped land and certain development properties. Undeveloped land and development properties may involve more risk than properties on which the development has been completed. Undeveloped land and development properties do not generate operating revenue while costs are incurred to develop the properties and may also generate operating revenue while costs are incurred to develop the properties and may also incur certain other expenses, including property taxes and insurance. Development activities include the risks that development of the projects may be abandoned after expending recourses, construction costs of a project may exceed original estimates, occupancy and rental rates at a newly completed property may be less than anticipated and

52

construction and leasing of a property may not be completed on schedule.

Development activities are also subject to risks relating to the inability to obtain, or delays in obtaining, all necessary zoning, and land use, building, occupancy and other required government permits and authorizations.

Investment in securities Among the Investments the Portfolio will consider are debt or equity securities of a real estate – related companies which may be undergoing restructuring or require additional capital and active management. These securities are subject to various inherent risks, including that (i) equity and debt securities fluctuate in value, often based on factors unrelated to the issuers of the securities, and such fluctuations can be pronounced (ii) such investments are generally may be subject to risks with respect to issuer, (iii) the market for these securities may be less liquid than that for other higher rated or more widely followed securities, and (iv) securities of some issuers are less liquid and more volatile than securities of other comparable issuers.

Periods of economic and political uncertainty may result in further volatility that could be expected by investors in comparable and political uncertainty may result in further volatility in the value of the Investments. There may be greater volatility than value that could be expected by investors in comparable securities traded in securities markets. There can be no assurance that such investment will not be sold at prices below their acquisition costs.

CONFLICT OF INTEREST The IOP will be subject to certain conflicts of interest relating to the Clients the Portfolio Manager, directors of the Portfolio Manager or members of the Investment Committee (collectively, the “Interested Parties”) The Portfolio Manager has evolved strict corporate governance guidelines designed to achieve and maintain discipline and transparency in all business process and to avoid any potential or actual conflict of interests. These guidelines are applicable to any transaction entered into by the Portfolio Manager in respect of the IOP. A number of examples of potential conflicts of interest are outlined below.

However, the examples listed below are not intended to be exhaustive, and other types of conflicts of interest, arise during the term of the IOP. Allocation of Investment Where there are multiple Portfolios under IOP, there is a possibility of conflict of interest in allocation of investment opportunities amongst the IOP portfolios. The Portfolio Manager, will endeavour to resolve any such conflicts in a reasonable manner taking into account, amongst other things, the investment objectives and policies of each IOP, the remaining uninvited capital of each IOP, the level of diversification of each IOP, and the basis on

53

which prior conflicts in allocating investment opportunities have been resolved. However, there can be no assurance that the IOP will be allocated any particular investment opportunities that are identified by the Portfolio Manager, Furthermore, the Portfolio Manager, shall have the right, at its discretion, to allocate any investment opportunities to their other IOP’s or to its own portfolio.

Portfolio Company Boards As part of its investment methodology, the Portfolio Manager may require Portfolio Companies to grant to the Portfolio Manager a seat on the board of directors of such Portfolio company. The seat can be filled by a nominee of the Portfolio Manager, which may include, among others, a director of the Portfolio Manager, though it is not necessary that a Director be nominated or appointed on the Board of such Portfolio Company. As a consequence, such persons will have fiduciary and other duties to the Portfolio Company, which may conflict with the interest of the IOP. Representation The attorneys, accountants, and other professionals, who perform services for the IOP may, and in some cases do, also perform services for other Interested Parties and their affiliates, the Portfolio Manager shall wherever appropriate enter into confidentiality agreement prior to such services being rendered in the Portfolio Manager’s favour. The Portfolio Manager however, does not guarantee against any such conflict of interest.

RISKS SPECIFIC TO INVESTMENTS IN MULTI MANAGER PORTFOLIO RELATING TO INVESTMENT IN SECURITIES/MUTUAL FUND SCHEMES •

•

• •

Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Schemes will be achieved. The various factors which impact the value of the Scheme’s investments include, but are not limited to, fluctuations in markets, interest rates, prevailing political and economic environment, changes in government policy, tax laws in various countries, liquidity of the underlying instruments, settlement periods, trading volumes etc.

As with any securities investment, the Net Asset Value (NAV) of the Units issued under the Schemes can go up or down, depending on the factors and forces affecting the capital markets.

Past performance of the Sponsors, Asset Management Company (AMC)/Fund does not indicate the future performance of the Schemes of the Fund.

The Portfolio Manager shall not be responsible for liquidity of the Scheme’s investments which at times, be restricted by trading volumes and settlement periods. The time taken by the Scheme for redemption of units may be significant in the event of an inordinately large number of redemption requests or of a restructuring of the Scheme’s portfolio.

54

•

•

• •

•

• • 7.

The Portfolio Manager shall not responsible, if the AMC/ Fund does not comply with the provisions of SEBI (Mutual Funds) Regulations, 1996 or any other circular or acts as amended from time to time.

The Portfolio Manager shall not be liable for any changes in the offer document(s)/Scheme Information Document(s) of the scheme(s), which may vary substantially depending on the market risks, general economic and political conditions in India and other countries globally, the monitory and interest policies, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally.

The Portfolio Manager shall not be liable for any default, negligence, lapse error or fraud on the part of the AMC/the Fund.

While it would be the endeavour of the Portfolio Manager to invest in the schemes in a manner, which will seek to maximize returns, the performance of the underlying schemes may vary which may lead to the returns of this portfolio being adversely impacted.

The scheme specific risk factors of each of the underlying schemes become applicable where the Portfolio Manager invests in any underlying scheme.

Investors who intend to invest in this portfolio are required to and are deemed to have read and understood the risk factors of the underlying schemes.

The Portfolio Manager does not offer any guaranteed or assured returns to the investors.

Please read the Offer Documents/Scheme Information Document/Addendums of the Schemes carefully before investing.

Client Representation

(i) Client Representation The client categorization is provided as below: Category of clients

No. of clients

Funds managed (Rs. Cr)

6 1 1

7,435.12 496.91 507.47

As on March 31, 2011

7083

63,512.99#

As on March 31, 2010

7137

50,356.36#

As on March 31, 2009

5072

39,930.17#

Associates companies

Discretionary/ Non Discretionary

/group

As on March 31, 2011 As on March 31, 2010 As on March 31, 2009

Advisory Advisory Advisory

Others Discretionary and Advisory* Discretionary and Advisory* Discretionary and Advisory*

Total

55

Category of clients

No. of clients

As on March 31, 2011

7089

Funds managed (Rs. Cr) 70,948.11#

As on March 31, 2010

7138

50,853.27#

As on March 31, 2009

5073

40,437.64#

Discretionary/ Non Discretionary Discretionary and Advisory* Discretionary and Advisory* Discretionary and Advisory*

*This includes equity as well as fixed income portfolios. # Includes funds managed under Employee Provident Fund portfolio until March 31, 2011. (ii)

Complete disclosure in respect of transactions with related parties as per the standards specified by the Institute of Chartered Accountants of India.

(This disclosure is extracted from the information provided in the Audited Accounts of the AMC for the financial year ended March 31, 2011).

(Previous years figures are rounded the nearest Rupees in Thousands) Related party information 

Related parties where control exists ICICI Bank Limited – Holding Company.



Other related parties with whom transactions have taken place during the year Prudential Plc, England – Holds significant influence in the Company.

ICICI Prudential Trust Limited – Fellow subsidiary ICICI Lombard General Insurance Company Limited – Fellow subsidiary ICICI Prudential Life Insurance Company Limited – Fellow subsidiary ICICI International Limited – Fellow subsidiary ICICI Securities Limited – Fellow subsidiary ICICI Securities Holding Inc – Fellow subsidiary

Key management: Nimesh Shah – Managing Director − Nilesh Shah – Deputy Managing Director and Chief Investment Officer (till 15 February 2011) (All Rs. in Thousands) Nature of transactions Holding Fellow Party with Key Total company subsidiary significant management companies influence personnel −

Dividend declared

Previous Year

229,563 409,617

-

220,563 393,553

-

450,126 803,170

Common cost,

56

brokerage & marketing expenses

27,091

18,833

-

-

45,924

Previous Year

45,352

11,708

-

-

57,060

Insurance premium paid

-

33,618

-

-

33,618

Previous Year

-

9,934

-

-

9,934

Remuneration paid

-

-

-

87,291 34,802

87,291 34,802

Management fees earned

-

3,059

-

-

3,059

Previous Year

-

11,534

-

-

11,534

Other expenses incurred by Company

-

1,211

-

-

1,211

Previous Year

-

3,137

-

-

3,137

-

9,068 -

-

-

9,068 -

(6,795) (11,446)

(7,672) (408)

-

-

(14,467) (11,854)

Previous Year

Marketing Support Previous Year Balance outstanding: receivable/(payable)

Previous Year 

Provision for contribution to employee retirement or post retirement and other employee benefits which are based on actuarial valuation done on an overall Company basis are excluded from the disclosure above.

Bonus for the period up to March 31, 2011 and Long Term Incentive Plan (‘LTIP’) to the extent actually paid up to 31 March 2011 have been included in the above figures.



The remuneration paid to Key Management Personnel referred above includes 49% (Previous year 43%) paid to Deputy Managing Director and Chief Investment Officer and 51% (Previous Year 57%) paid to Managing Director.



An amount of Rs. 27,091 (Previous year Rs. 45,352) was paid to ICICI Bank Limited towards usage of their network/ facilities, brokerage and reimbursement of expenses. Rs. 6,795 (Previous year Rs. 11,446) is payable to ICICI Bank Limited towards the above.



The Company maintains a bank balance of Rs. 130,974 (Previous year Rs. 41,143) and Rs. 5,000 in fixed deposit (Previous year Rs. 5,000) with its holding company, ICICI Bank Limited as at 31 March 2011. Interest accrued but not due on fixed deposit Rs. 1391 (Previous year Rs. 818).



Banking transactions in the normal course of business with related parties have not been considered.

57



The Company has paid Rs. 31,811 (Previous year Rs. 5,135) to ICICI Lombard General Insurance Company Limited towards employee medical and asset insurance. An amount of Rs. 577 (Previous year Rs. 256) is receivable from ICICI Lombard General Insurance Company Limited.



An amount of Rs. 1,807 (Previous Year Rs. 4,799) was paid to ICICI Prudential Life Insurance Company Limited towards insurance premium.



The Company has earned advisory fees of Rs. 3,059 (Previous year Rs. 11,534) from ICICI International Limited. An amount of Rs. 1,375 (Previous year Rs. 2,140) is receivable from ICICI International Limited.



An amount of Rs. 18,833 (Previous year Rs. 11,708) has been paid to ICICI Securities Limited towards marketing & distribution support during the year and Rs. 9,624 (Previous year Rs. 2,804) is payable.



An amount of Rs. 1,211 (Previous year Rs. 3,137) has been incurred on behalf of ICICI Prudential Trust Limited.



An amount of Rs. 9,068 (Previous year Rs. ‘Nil’) has been paid to ICICI Securities Holding Inc towards marketing support expenses.

8.

THE FINANCIAL PERFORMANCE OF THE AMC (Based on audited financial statements) For Financial For Financial For Financial Year ended Year Year ended Year ended 31st March, 31st March, 31st March, 2011 2010 2009 (Rs. in Crore) (Rs. in Crore) (Rs. in Crore) Crore) Crore) Gross Income 382.13 467.39 321.89 Expenses 278.76 274.686 321.56 Profit / (Loss) before Tax 103.37 192.704 0.34 Provision for Taxation 31.54 64.678 -0.37 Profit / (Loss) after Tax 71.83 128.026 0.71 Equity Capital 17.65 17.652 17.65 Free Reserves 106.79 87.451 53.39 Net Worth 124.44 105.103 71.05

9.

Performance of the Portfolio Manager for the last three years (Using weighted average method)

Particulars Absolute Portfolio Aggressive Portfolio Ascending

Benchmark* Return S&P Nifty

Return Return (April 1, 2011 to January 31, 2012) Portfolio Benchmark NA NA

Return (April 1, 2010 to March 31, 2011) Portfolio Benchmark NA NA

BSE 100

-3.21%

-11.23%

11.63%

8.55%

India BSE 100

-3.15%

-11.23%

12.83%

8.55%

58

Return Return (April 1, 2011 to January 31, 2012) Portfolio - A series under the Aggressive portfolio Bluechip Portfolio A series under the Aggressive portfolio Build India Portfolio - A series under Rising India Portfolio Buy India Portfolio A series under Rising India Portfolio Deep Value Nucleus Portfolio-A series under Deep Value Portfolio Deep Value Portfolio Defined Tenure Series Equity Portion Dividend Yield Portfolio Focussed 10 stock portfolio- A series under Focussed portfolio Emerging Companies Portfolio - A series under the Focused Portfolio Focussed 20 stock portfolio- A series under Focussed Portfolio Focussed Bonus Potential PortfolioA series under the Focussed portfolio

BSE 200***

Return (April 1, 2010 to March 31, 2011)

-8.84%

-12.03%

9.46%

8.15%

-12.19%

-18.26%

6.39%

-10.11%

NA

NA

NA

NA

BSE MIDCAP***

-9.81%

-15.91%

6.34%

0.99%

BSE MIDCAP*** BSE 100

-8.37%

-15.91%

8.28%

0.99%

-3.31%

-11.23%

12.10%

8.55%

BSE 500

NA

NA

NA

NA

S&P Nifty

NA

NA

NA

NA

BSE MIDCAP

-7.22%

-15.91%

-0.84%

0.99%

BSE 100***

-9.14%

-11.23%

4.62%

8.55%

NA

NA

9.83%

11.14%

CNX INFRA***

BSE 500

S&P Nifty

59

India Recovery BSE 200*** Portfolio- A series under Focussed portfolio Infrastructure CNX Portfolio INFRA***

Return Return (April 1, 2011 to January 31, 2012) -9.02% -12.03%

Return (April 1, 2010 to March 31, 2011) 6.58% 8.15%

-11.87%

-18.26%

5.87%

-10.11%

6.81%

**

10.46%

**

-4.35%

-11.23%

13.92%

8.55%

-16.79%

-10.76%

NA

NA

-9.87%

-11.23%

NA

NA

India S&P Nifty

-12.20%

-10.76%

NA

NA

Value & Momentum S&P Nifty Strategy Portfolio

-21.10%

-10.76%

NA

NA

Principal Protected ** Portfolio Targeted^ Return BSE 100*** Portfolio -A Series under the Diversified Portfolio Fundamental S&P Nifty Strategy Index Portfolio Select India BSE 100*** Portfolio Star Alpha Portfolio

Particulars Absolute Return Portfolio Aggressive Portfolio Ascending India Portfolio - A series under the Aggressive portfolio Bluechip Portfolio A series under the Aggressive portfolio Build India Portfolio - A series under Rising India Portfolio

Benchmark* S&P Nifty

Return (Financial year 20092009-10) Portfolio Benchmark 82.12% 73.76%

Return (Financial year 20082008-09) Portfolio Benchmark -38.03% -36.19%

BSE 100

76.82%

88.17%

-44.57%

-39.97%

BSE 100

NA

NA

NA

NA

62.44%

92.87%

NA

NA

111.46%

44.46%

-49.49%

-44.40%

BSE 200***

CNX INFRA***

60

Buy India Portfolio A series under Rising India Portfolio Deep Value Nucleus Portfolio-A series under Deep Value Portfolio Deep Value Portfolio Defined Tenure Series - Equity Portion Dividend Yield Portfolio

BSE 500

Focussed 10 stock portfolio- A series under Focussed portfolio Emerging Companies Portfolio - A series under the Focused Portfolio Focussed 20 stock portfolio- A series under Focussed Portfolio Focussed Bonus Potential PortfolioA series under the Focussed portfolio India Recovery Portfolio- A series under Focussed portfolio Infrastructure Portfolio

S&P Nifty

Principal Protected Portfolio Targeted^ Return Portfolio -A Series under the Diversified Portfolio

Return (Financial year 20092009-10) 83.89% 96.38%

Return (Financial year 20082008-09) -37.51% -42.77%

BSE MIDCAP***

104.34%

130.23%

NA

NA

BSE MIDCAP*** BSE 100

96.07%

130.23%

-57.67%

-54.01%

88.36%

88.17%

-51.69%

-39.97%

-31.24%

-42.77%

BSE 500

NA

NA

79.18%

73.76%

-40.63%

-36.19%

BSE Midcap

NA

NA

NA

NA

BSE 100***

95.53%

88.17%

-45.50%

-39.97%

140.64%

73.76%

-37.68%

-36.19%

BSE 200***

66.21%

92.87%

NA

NA

CNX INFRA***

98.58%

44.46%

-47.65%

-44.40%

11.05%

**

35.14%

88.17%

S&P Nifty

** BSE 100***

-15.31% ** NA

NA

61

Fundamental S&P Nifty Strategy Index Portfolio Select India BSE 100*** Portfolio

Return (Financial year 20092009-10) NA NA

Return (Financial year 20082008-09) NA NA

NA

NA

NA

NA

India S&P Nifty

NA

NA

NA

NA

Value & Momentum S&P Nifty Strategy Portfolio

NA

NA

NA

NA

Star Alpha Portfolio

* Benchmark considered as applicable as of January 31, 2012 ** No Benchmark for period since entire portfolio is invested in fixed coupon bearing instruments. *** Benchmark has been changed. Benchmark returns for the previous years have also been changed accordingly. ^The Portfolio Manager does not assure targeted returns or guarantee capital under the portfolio.

N.A. means Not Applicable as portfolio was not in existence for the entire period or had no clients during the period.

Note for computation of returns: The percentage of returns is worked out on the basis of weighted average to give a fair picture of the returns to the PMS clients.

The broad procedure followed for computation of returns is described below:

10.

•

Only clients who have been active for the full period in each year have been considered for the above review. Further, the funds managed also includes impact of additional amounts invested as well as partial redemptions, if any, by the customer

•

Weighted average of returns with reference to the contribution of each of the customers to the total product AUM as of period ended is then calculated to work out returns for the above disclosure.

•

The total of the weighted average performance of each portfolio is then considered against its respective benchmark.

Nature of expenses (indicative): Investors may note that, the fees/ expenses that may be charged to Clients mentioned below are indicative only. The same will vary depending upon the exact nature of the services to be provided to investors.

62

Nature of Expenses (Indicative) (I)

Investment Management and Advisory fee** 1) Fixed Fee 2) Fixed Upfront fee 3) Performance Linked Fee as permitted under the Regulations.

4) Exit Loads 5) Combination of the above methods

Maximum Indicative Rate of Fee (%)

Up to 6% p.a.

Up to 10% Up to 50% of the Returns Up to 20%

(II)

Custodian Fee**

Up to 1% p.a.

(III)

Brokerage and transaction costs

Equity: Maximum of 0.4% on each transaction subject to a minimum of five paise per security Debt: Maximum of 5 paise on each transaction subject to a minimum of one paise per security

(IV) Fund Accounting Charges**

Up to 1% p.a.

**Basis of Charge – Indicative (any one or a combination of the below) 1 On Average Daily Assets Under Management 2 On Capital Invested 3 On Capital Committed 4 On Average Daily Equity portion of the Portfolio Note: 1)

Average daily portfolio value means the value of the portfolio of each client determined in accordance with the relevant provisions of the agreement executed with the client and includes both realized and unrealized gains / losses

2)

The Portfolio Manager may also be entitled to recover transaction fee, brokerage charges, straight through processing charges, demat fees, and/or disbursement made in respect of the investments (and/or disbursements) and/or any incidentals in the form of stamp duties, registration charges, professional fees, legal fees, consultancy charges, service charges etc. and such other expenses, duties, charges incurred on behalf of the Client on account of the Service provided to him/her/it

63

11.

TAX IMPLICATIONS INVESTORS

TO

THE

DIFFERENT

CATEGORIES

OF

1. SECURITIES TRANSACTION TAX Securities Transaction Tax (“STT”) is applicable on transactions of purchase or sale of equity shares in a company or a derivative or units of Equity Oriented Fund entered into on a recognized stock exchange and sale of units of Equity Oriented Fund to the Mutual Fund.

The STT rates as applicable are given in the following table: Taxable Securities Transaction Purchase of an equity share in a company or a unit of an equity oriented fund, where : - the transaction of such purchase is entered into in a recognised stock exchange; and - the contract for the purchase of such share is settled by the actual delivery or transfer of such share.

Sale of an equity share in a company, or a unit of an equity oriented fund, where : - the transaction of such sale is entered into in a recognised stock exchange; and - the contract for the sale of such share is settled by the actual delivery or transfer of such share.

Sale of an equity share in a company or a unit of equity oriented fund, where : - the transaction of such sale is entered into in a recognised stock exchange; and - the contract for the sale of such share is settled otherwise than by the actual delivery or transfer of such share.

Rate

Payable by

0.125% Purchaser

0.125% Seller

0.025% Seller

Sale of a derivative, where the transaction of such sale is entered into in a recognised stock exchange.

0.017% Seller

Sale of unit of an equity oriented fund to the Mutual Fund.

0.25% Seller

2. TAX IMPLICATIONS WHERE TRANSACTION IN SECURITIES IS IN THE NATURE OF TRADE OR BUSINESS: Income arising from purchase and sale of shares (for the sake of brevity, the term “shares” has been used below as an illustration but the same includes other types of securities) can give rise to business income or capital gains in the hands of the investor.

64

The issue of income characterization as above is essentially a question of fact and dependent on whether the shares are held as Business/Trading assets or on Capital Account. Based on judicial decisions, all of the following factors and principles need to be considered while determining the nature of assets as above: • • • • • • •

Motive for the purchase of shares.

Frequency of transactions and the length of period of holding of the shares.

Treatment of the shares and profit or loss on their sale in the accounts of the assessee.

Source of funds out of which the shares were acquired – borrowed or own.

Existence of an objects clause permitting trading in shares - relevant only in the case of corporate.

Acquisition of the shares – from primary market or secondary market.

Infrastructure employed for the share transactions by the client including the appointment of managers, etc.

Any single factor discussed above in isolation cannot be conclusive to determine the nature of the shares transactions. All factors and principles need to be construed harmoniously. Further, the background of the investor (Professional vs. a trader in shares) would also be a relevant factor in determining the nature of the shares.

Considering the above, the profits or gains arising from transaction in securities could be taxed either as “Profits or Gains of Business or Profession” under section 28 of the Act or as “Capital Gains” under section 45 of the Act. 2.1

PROFITS AND GAINS OF BUSINESS OR PROFESSION:

2.1.1 If the investment under the Portfolio Management Services is regarded as “Business/Trading Asset” then the gain/loss arising there from shall be taxed as business income.

2.1.2 Dividend from securities referred to in section 115-O of the Act, will be exempt under section 10(34) of the Act. Dividends other than that referred to in section 115-O and interest income will be taxable as Income from Other Sources.

Income on units of Mutual Funds specified under clause 10(23D) is exempt from tax under section 10(35) of the Act. Further, it has been clarified that income arising from transfer of units of Mutual Fund shall not be exempt under section 10(35).

2.1.3 Any sum paid on account of STT will be allowed as deduction in computing the income under the head “Profit and gains of business or profession” .

2.1.4

Proviso (d) to Section 43(5) of the Act provides that transactions in respect of trading in derivatives shall not be considered as a Speculative Transaction, if it is carried out electronically on screen based systems through a stock broker or sub-

65

broker or intermediary registered under SEBI or by banks or mutual funds on a recognized stock exchange and is supported by time stamped contract note.

2.1.5 As per the Finance Act 2011, the maximum tax rates applicable to different categories of assessees for the year 2011-12 are as follows: Resident individuals and HUF Partnership Firms Domestic Company Non Resident Indians Company other than a Domestic Company

30% plus education cess @ 3% 30% plus education cess @ 3% 30% plus surcharge* and education cess @ 3% 30% plus education cess @ 3%

40% plus surcharge ** and education cess @3%

In respect of Foreign Institutional Investors (FIIs) fulfilling conditions laid down under section 115AD of the Act, income (other than the dividend referred to in section 115-O of the Act) received in respect of securities other than units of mutual fund will be chargeable at the rate of 20% plus surcharge and cess, as may be applicable.

In case of individuals and HUF’s the maximum marginal rate of tax is applicable for the total income exceeding Rs. 8,00,000.

Domestic Companies having a total income exceeding Rs.1,00,00,000 a surcharge of 5% on the income tax is applicable.

A surcharge of 2% on the income tax would be applicable in the case of Foreign Company having a total income exceeding Rs.1,00,00,000.

2.2

LOSSES UNDER THE HEAD BUSINESS INCOME: In the case of loss under the head ‘Profits and Gains of Business or Profession’, it can be set off against the income from any other source under the same head or income under any other head (except Salary Income) in the same assessment year. Further, if such loss cannot be set off against any other head in the same assessment year, then it will be carried forward and shall be set off against the profits and gains of the business, within the period of eight subsequent assessment years.

According to section 94(7) of the Act, if any person buys or acquires units within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of nine months from such record date, then capital losses arising from such sale to the extent of income received or receivable on such units, which are exempt under the Act, will be ignored for the purpose of computing his income chargeable to tax.

66

Further, section 94(8) of the Act that, where additional units have been issued to any person without any payment, on the basis of existing units held by such person then the loss on sale of original units shall be ignored for the purpose of computing income chargeable to tax, if the original units were acquired within three months prior to the record date fixed for receipt of additional units and sold within nine months from such record date. However, the loss so ignored shall be considered as cost of acquisition of such additional units held on the date of sale by such person.

3.

TAX IMPLICATIONS WHERE TRANSACTION IN SECURITIES ARE IN THE NATURE OF INVESTMENTS: We have assumed that the assessee will have taxable income of higher than taxable limit prescribed under the Act. Where investment under the Portfolio Management Services is treated as investment, then the profit or loss from transfer of securities shall be taxed as Capital Gains under section 45 of the Act. Dividends referred to in section 115-O of the Act will be exempt under section 10(34) of the Act. Dividend other than that referred to in section 115-O and interest income from securities will be taxed under the head Income From Other Sources.

Income from units of Mutual Funds specified under clause 10(23D) of the Act is exempt from tax under section 10(35) of the Act. Further, it has been clarified that income arising from transfer of units of Mutual Fund shall not be exempt under section 10(35) of the Act. It may be noted that expenditure incurred in relation to income received / dividend is subject to disallowance under section 14A of the Act. LONG TERM CAPITAL GAINS Under Section 10(38) of the Act, Long Term Capital Gains on sale of Equity Shares in a company or units of Equity Oriented Fund are exempt from income tax provided such transactions are entered into a recognised stock exchange or such units are sold to the Mutual Fund and such transactions are chargeable to STT. However, such Long Term Capital Gains arising to a Company shall be taken into account in computing the book profit and income tax payable under section 115JB of the Act. In respect of capital gains not exempted under section 10(38) of the Act, the tax provisions of long-term capital gains for different categories of assessees are explained hereunder:-

3.1.1 For Individuals, Partnership Firms and HUFs Long Term Capital Gain in respect of securities ( not exempted under section 10(38) of the Act) will be chargeable under section 112 of the Act at the rate of

67

20% plus applicable cess. Capital gains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly and exclusively in connection with such transfer. In the case of capital assets being bonds or debentures, the benefit of indexation of cost is not available. In case, where taxable income as reduced by long term capital gains is below the exemption limit, the long term capital gains will be reduced to the extent of the shortfall and only the balance long term capital gains will be charged at the flat rate of 20% plus applicable cess.

It is further provided that an assessee will have an option to apply concessional rate of 10% plus applicable cess, provided the long term capital gains are computed without substituting indexed cost in place of cost of acquisition.

The gain arising on transfer of shares held in a Company, any listed security, units of Mutual Fund and Zero Coupon Bond will be treated as Long Term, if they were held for more than 12 months. The gain arising in case of any other securities will be treated as Long Term, if the assets were held for more than 36 months.

3.1.2 For Indian Companies/Foreign Companies Companies Long Term Capital Gains in respect of securities (not exempted under section 10(38) of the Act ) and held for a period of more than 12 months will be chargeable under section 112 of the Act at the rate of 20% plus surcharge, as may be applicable and cess. Capital gains would be computed after taking into account cost of acquisition as adjusted by Cost Inflation Index notified by the Central Government and expenditure incurred wholly and exclusively in connection with such transfer.

It is further provided that an assessee will have an option to apply concessional rate of 10% plus applicable surcharge and cess, provided the long term capital gains are computed without substituting indexed cost in place of cost of acquisition.

Long-term Capital Gains in respect of shares of an unlisted company held for a period of more than 12 months and any other non-listed security (other than units of Mutual Fund) held for a period of more than 36 months will be chargeable under section 112 of the Act at the rate of 20% plus surcharge, as applicable and cess.

In the case of long term capital assets being bonds or debentures, the benefit of indexation is not available.

3.1.3 For NonNon-resident Indians Under section 115E of the Act for non-resident Indians, income by way of longterm capital gains in respect of specified assets purchased in foreign currency (which includes shares, debentures, deposits in an Indian Company and

68

security issued by Central Government) is chargeable at the rate of 10% plus applicable cess. Such long-term capital gains would be calculated without indexation of cost of acquisition.

3.1.4 For Foreign Institutional Investors (FIIs) fulfilling conditions laid down under section 115AD Under section 115AD of the Act, income by way of long-term capital gains in respect of securities other than units in Mutual Fund will be chargeable at the rate of 10% plus surcharge, as may be applicable and cess. Such gains would be calculated without indexation of cost of acquisition.

3.2

SHORT TERM TERM CAPITAL GAINS Section 111A of the Act provides that short-term capital gains arising on sale of Equity Shares of a company or units of Equity Oriented Fund entered into a recognized stock exchange and on sale of units of Equity Oriented Fund to the Mutual Fund are chargeable to income tax at a concessional rate of 15% plus applicable surcharge and cess, provided such transactions are entered on a recognised stock exchange and are chargeable to STT. Further, under section 48 of the Act provides that no deduction shall be allowed in respect of STT paid for the purpose of computing Capital Gains.

In respect of capital gains not chargeable under section 111A of the Act, the provisions for taxation of short-term capital gains for different categories of assessees is explained hereunder :Short Term Capital Gains in respect of shares of a company, units of Mutual Fund, zero coupon bond and any other listed securities held for a period of not more than 12 months and unlisted securities (other than shares of a company and units of Mutual Fund) held for a period of not more than 36 months is added to the total income. Total income including short-term capital gains is chargeable to tax as per the relevant slab rates.

3.3

CAPITAL LOSS Losses under the head "Capital Gains" cannot be setoff against income under any other head. Further within the head "Capital Gains", losses arising from the transfer of long-term capital assets cannot be adjusted against gains arising from the transfer of a short-term capital asset. However, losses arising from the transfer of short-term capital assets can be adjusted against gains arising from the transfer of a long-term capital asset or a short-term capital asset.

Under Section 10(38) of the Act, Long Term Capital Gains on sale of equity shares in a company and units of Equity Oriented Fund are exempt from income tax provided such transactions are entered on a recognised stock exchange or such units are sold to the Mutual Fund and are chargeable to STT. Hence, losses arising from such transactions of sale of equity shares of a Company and units of Equity Oriented Fund entered into a recognised stock

69

exchange and sale of units of Equity Oriented Fund to the Mutual Fund would not be eligible for set-off against taxable capital gains.

Unabsorbed long-term capital loss (other than that relating to sale of equity shares and units of Equity Oriented Fund as stated in para above) can be carried forward and set off against the long-term capital gains arising in any of the subsequent eight assessment years.

Unabsorbed short-term capital loss can be carried forward and set off against the income under the head Capital Gains in any of the subsequent eight assessment years.

Provisions of section 94(7) and 94 (8) of the Act in respect of non-availability of losses to the extent of dividend/ bonus units received, within certain specified period shall be applicable.

12. Accounting policies followed by the Portfolio Manager accounting for the portfolio investments of the clients -

while

Accounting under the respective portfolios is being done in accordance with general accounting principles and more specifically in line with the SEBI (Mutual Fund) Regulations, as amended from time to time. (As SEBI (Portfolio Managers) Rules and Regulations do not explicitly lay down detailed accounting policies, such policies, which are laid down under SEBI (Mutual Fund) Regulations, are being followed.) The existing policies are: a) Dividend income earned by the Portfolio shall be recognized, not on the date the dividend is declared, but on the date the share is quoted on an exdividend basis. For investments, which are not quoted on the stock exchange, dividend income would be recognized on the date of declaration of dividend. In case of listed securities, the dividend receivable from such securities in which the portfolio has invested is directly credited to the client's mandated bank account and is not reinvested in the portfolio. The same is disclosed as an outflow entry in the portfolio on a periodic basis. b) In respect of all interest-bearing investments, income shall be accrued on a day-to-day basis as it is earned. Therefore, when such investments are purchased, interest paid for the period from the last interest due date up to the date of purchase should not be treated as a cost of purchase but shall be debited to Interest Recoverable Account. Similarly, interest received at the time of sale for the period from the last interest due date up to the date of sale must not be treated as an addition to sale value but shall be credited to Interest Recoverable Account. c) In determining the holding cost of investments and the gains or loss on sale of investments, the “First In First Out� method shall be followed for each security. d) Transactions for purchase or sale of investments shall be recognized as of the trade date and not as of the settlement date, so that the effect of all

70

investments traded during a financial year are recorded and reflected in the financial statements for that year. Where investment transactions take place outside the stock market, for example, acquisition through private placement or purchases or sales through private treaty, the transaction would be recorded, in the event of a purchase, as of the date on which the portfolio obtains an enforceable obligation to pay the price or, in the event of a sale, when the portfolio obtains an enforceable right to collect the proceeds of sale or an enforceable obligation to deliver the instruments sold. e) Bonus shares to which the portfolio becomes entitled shall be recognized only when the original shares on which the bonus entitlement accrues are traded on the Stock Exchange, Mumbai on an ex-bonus basis. Similarly, rights entitlements shall be recognized only when the original shares on which the right entitlement accrues are traded on the stock exchange on an ex-right basis. f) The cost of investments acquired or purchased shall include grossed-up brokerage, stamp charges and any charge customarily included in the broker’s contract note except for Securities Transaction Tax (STT). In respect of privately placed debt instruments any front-end discount offered may be reduced from the cost of the investment. g) Underwriting commission, if any, shall be recognized as revenue only when there is no devolvement on the Portfolio. Where there is devolvement on the Portfolio, the full underwriting commission received and not merely the portion applicable to the devolvement shall be reduced from the cost of the investment. h) Management Fees and Custody fees are accrued in accordance with the Portfolio Management Services Agreement. Securities Transaction Tax (STT) is recognized on the trade day when the securities are accounted for on which such Securities Transaction Tax is levied.

13. Investors services: (i) Name, address and telephone number of the Investor Relation Officer, who shall attend to the investor queries and complaints: Mr. Abdul Wasim– Investor Relations Officer Address:

3 rd floor, Hallmark Business Plaza, Sant Dyaneshwar Marg, Bandra (East), Mumbai – 400 051 Tel No. – 26428000

Additionally, the communication may also be addressed to: Ms. Supriya Sapre – Head Compliance and Legal Address: Address

2nd Floor, Block B-2, Nirlon Knowledge Park, Western Express Highway,

71

Goregaon, Mumbai – 63 Tel no.91-22- 26852000 (ii) Grievance redressal and dispute settlement mechanism: The Client shall send a written complaint/email addressed to the Investor Relation officer. The Client may also send the e-mail at feedback@icicipruamc.com. On receipt of the complaint, the Portfolio Manager, on a best effort basis, may resolve the complaint, within 30 days. In the event the complaint is not resolved within 30 days, the Client and the Portfolio Manager or any person designated by the Portfolio Manager shall endeavor to resolve the complaint by mutual dialogue.

The Investment Relation Officer(s) will be the interface between the Portfolio Manager and the Client. Alternatively in case the Client is not satisfied with the redressal by the Portfolio Manager or otherwise, the Client may lodge the complaint on SEBI’s web based complaints redress system (SCORES).

All disputes, differences, claims and questions whatsoever arising from (i) the Agreement between the Client and the Portfolio Manager and (ii) the services to be rendered by the Portfolio Manager and/or their respective representatives shall be attempted to be resolved by discussions between the Parties and amicable settlement. In case the disputes remain unsettled, the same shall be referred to a sole arbitrator and such arbitration shall be in accordance with and subject to the provisions of The Arbitration and Conciliation Act 1996, or any statutory modification or re-enactment thereof for the time being in force. Such Arbitration proceedings shall be held at Mumbai.

Date: February 28, 2012 Place: Mumbai

72

Name and Signature of the Directors of the Portfolio Manager signing the Disclosure Document Sr. No.

Name of Directors

Signature

1.

Mr. Nimesh Shah

Sd/-

2.

Mr. N. S. Kannan

Sd/-

73

FORM C SECURITIES AND EXCHANGE BOARD OF INDIA (PORTFOLIO MANAGERS) REGULATIONS, 1993 (Regulation 14) ICICI PRUDENTIAL ASSET MANAGEMENT COMPANY LIMITED Corporate OfficeOffice 3rd Floor, Hallmark Business Plaza, Sant Dyaneshwar Marg, next to Chetna College. Bandra (East), Mumbai – 400051 Tel no. 91-22-2 26428000 Website: www.iciciprupms.com It is confirmed that: i)

the Disclosure Document forwarded to the Board is in accordance with the SEBI (Portfolio Managers) Regulations, 1993 and the guidelines and directives issued by the Board from time to time;

ii) the disclosures made in the Disclosure Document are true, fair and adequate to enable the investors to make a well informed decision regarding entrusting the management of the portfolio to ICICI Prudential Asset Management Company Ltd. in its Portfolio Management Scheme; iii) the Disclosure Document has been duly certified by an independent chartered accountant viz. Mr. Jayesh M. Gandhi (Membership no. 37924), of M/s. N. M. Raiji & Company, Chartered Accountants, Universal Insurance Building, Sir Phiroze Shah Mehta Road, Mumbai 400 001 (Phone No.+91-2287 3463) on February 28, 2012.

Sd/Date : February 29, 2012 Name: Nimesh Shah Place : Mumbai Designation: Managing Director Address: 3rd Floor, Hallmark Business Plaza, Sant Dyaneshwar Marg Next to Chetna College, Bandra (East) Mumbai – 400051 Note: Note The Form C and a copy of the chartered accountants' certificate to that effect as stated above were submitted to SEBI on February 29, 2012.

ICICI Prudential Asset Management Company Limited Limited Corporate Office: Office 3rd Floor, Hallmark Business Plaza, Sant Dyaneshwar Marg, Bandra (East), Mumbai – 400 051.Tel No. 26428000 Fax No. 26554165 www.icicipruamc.com Central Service Office: 2nd Floor, Block B-2, Nirlon Knowledge Park, Western Express Highway,Goregaon (East), Mumbai – 400 063, Tel No.: 022 26852000, Fax No.: 022-2686 8313

Registered Office12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi – 110 001 Office

74