OFFER DOCUMENT

30
Prudential ICICI Mutual Fund
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The Sponsors are not responsible or liable for any loss resulting from the operation of the Scheme beyond the
contribution of an amount of Rs 22.2 lacs collectively made by them towards setting up the Fund and such other
accretions and additions to the corpus set up by the Sponsors.
Prudential ICICI Balanced Fund is the name of the Scheme and does not in any manner indicate either the quality of
the Scheme or its future prospects and returns.
The NAVs of Prudential ICICI Balanced Fund may be affected by changes in the general market conditions, factors
and forces affecting capital markets in particular, level of interest rates, various market related factors and trading
volumes, settlement periods and transfer procedures.
In the event of receipt of inordinately large number of redemption requests or of a restructuring of the Scheme’s
portfolios, there may be delays in the redemption of Units. Please see Page 80 for “Right to Limit Redemptions” in
this Offer Document.
Investors in the Scheme are not being offered any guaranteed returns.
l The Scheme, under normal circumstances, proposes to invest about 60% of its corpus in equity and equity related
securities and about 40% in debt and money market securities. Trading volumes, settlement periods and transfer
procedures may restrict the liquidity of these investments. Different segments of the Indian financial markets have
different settlement periods and such periods may be extended significantly by unforeseen circumstances. The inability
of the Scheme to make intended securities purchases due to settlement problems could cause the Scheme to miss
certain investment opportunities. By the same rationale, the inability to sell securities held in the Scheme’s portfolio
due to the absence of a well developed and liquid secondary market for debt securities would result, at times, in
potential losses to the Scheme, in case of a subsequent decline in the value of securities held in the Scheme’s portfolio.
l As per the prevailing tax laws, in respect of ‘Open Ended Equity Oriented Scheme’, where more than 50% of the
corpus of the Scheme is invested in equity shares, per provisions of Section 115R of the Act, no additional income
tax is payable on the income distributed by the Schemes for the period upto March 31, 2004. In the event that
investible funds of more than 50% of the total proceeds of the scheme are not invested in equity shares of domestic
companies, the Fund will be liable to pay tax on such distributed income by the Scheme as per the provisions of the
Finance Act, 2003.
l From time to time and subject to the regulations, the sponsors, the mutual funds and investment Companies managed
by them, their affiliates, their associate companies, subsidiaries of the sponsors and the AMC may invest in either
directly or indirectly in the scheme. The funds managed by these affiliates, associates and/ or the AMC may acquire a
substantial portion of the Scheme. Accordingly, redemption of units held by such funds, affiliates/associates and
sponsors may have an adverse impact on the units of the Scheme because the timing of such redemption may
impact the ability of other unitholders to redeem their units
The Scheme may invest in other schemes managed by the AMC or in the schemes of any other Mutual Funds,
provided it is in conformity to the investment objectives of the Scheme and in terms of the prevailing Regulations.
As per the Regulations, no investment management fees will be charged for such investments.
l The Scheme may also invest in ADRs / GDRs as permitted by Reserve Bank of India and Securities and Exchange
Board of India. To the extent that some part of the assets of the Plans may be invested in securities denominated in
foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected
by the changes in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital also
may be hampered by changes in regulations concerning exchange controls or political circumstances as well as the
application to it of other restrictions on investment.
l The Scheme may also use various derivatives and hedging products from time to time, as would be available and
permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders’ interest. In case the
Scheme utilizes any derivatives under the Regulations, the Scheme may, in certain situations, be exposed to price
risks.
l The Fund may use derivatives instruments like Stock Index Futures, Interest Rate Swaps, Forward Rate Agreements or
other derivative instruments for the purpose of hedging and portfolio balancing, as permitted under the Regulations
and guidelines. Usage of derivatives will expose the Scheme to certain risks inherent to such derivatives.
Trading in Derivatives
SEBI vide its circular no. MFD/CIR/011/061/2000 dated February 1, 2000 has permitted all the mutual funds to participate
in the derivatives trading subject to observance of guidelines issued by SEBI in this behalf. In terms of SEBI guidelines,
trading in derivatives by the mutual funds should be restricted to hedging and portfolio balancing and the Fund has to
comply with the prescribed disclosure requirements.
The Board of Directors of Prudential ICICI Trust Limited (The Trustee) at its meeting held on May 30, 2000 approved the
proposal for the AMC using the various portfolio hedging techniques and adopting the risk control mechanism under
the portfolios of the schemes of the Fund.
Accordingly, the Fund may use derivatives instruments like Stock Index Futures, Interest Rate Swaps, Forward
Rate Agreements or such other derivative instruments as may be introduced from time to time for the purpose
of hedging and portfolio balancing, as permitted under the Regulations and guidelines.