Zurich India Leadership Fund

Zurich India Mutual Fund

Harchandrai House, 4th Floor, 81, Maharshi Karve Road, Marine Lines, Mumbai 400 002, India

Sponsor

Zurich Insurance Company

Trustee

Zurich Trustee Company (India) Private Limited

Investment Manager

Zurich Asset Management Company ( India ) Private Limited

The Scheme particulars of the Zurich India Leadership Fund has been prepared in accordance with Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended till date and filed with Securities and Exchange Board of India (SEBI), and the Units being offered for the public subscription have not been approved or disapproved by SEBI, nor has SEBI certified the accuracy or adequacy of the Prospectus.

This Prospectus sets forth concisely necessary information for a prospective investor to make an informed investment decision in the Scheme described herein. Investors should carefully read the Prospectus prior to making an investment decision and retain the Prospectus for future reference.

Zurich India Leadership Fund is an open-end equity scheme. This Prospectus is dated 27 February 2002. The Prospectus will remain effective till a 'material change' (other than a change in the Fundamental Attributes and within the purview of the Prospectus) occurs,material changes shall be filed with SEBI and circulated to the Unitholders or may be publicly notified by advertisements in the newspapers subject to the applicable regulations.

The Zurich Group

As on June 30, 2001 the Group had USD 416 billion of assets under management of which

USD 241 billion represent funds managed for third-party institutional and retail customers

Zurich India Leadership Fund

• Please refer Taxation section of this Prospectus carefully.
  • TABLE OF CONTENTS

Persons interested in acquiring Units in the Fund should inform themselves or seek professional advice as to:

1. Legal requirements or restrictions relating to the acquisition, holding, disposal, or repurchase of Units within their jurisdiction of nationality, residence, ordinary residence and domicile or under the laws of any jurisdiction to which they are subject; and

2. The treatment of income, capital gains, and other tax consequences relevant to their acquisition, holding or disposal, whether by way of sale or repurchase of Units.

Unitholders/ Investors should study this Prospectus carefully in its entirety and should not construe the contents hereof as advice relating to legal, taxation, investment or any other matters. They may, if they wish, consult with their legal, tax, investment and other advisors to determine possible legal, tax, financial or other considerations of subscribing for, purchasing or disposing Units before making a decision for investing in Units. Potential/Existing Investors should appreciate that all financial investments carry inherent risks and no assurance or guarantee can be given that the objective of the Fund will be fully met. The NAV of the Units issued under this Scheme and the income from them (income from what?) can go up or down depending on the factors and forces affecting the Capital Markets.

Neither this Prospectus nor the Units has been registered in any jurisdiction. The distribution of this Prospectus in certain jurisdictions may be restricted or subject to registration requirements and accordingly, persons who come into possession of this Prospectus are required to inform themselves about, and to observe any such restrictions. This Prospectus does not constitute an offer or solicitation outside India or to anyone in any jurisdiction outside India.

Zurich India Mutual Fund

Harchandrai House, 4th Floor, 81 Maharshi Karve Road, Marine Lines, Mumbai 400 002

Phone + 91 22 231 1000 Fax + 91 22 200 40163

Sponsor : Zurich Insurance Company acting together and through its Subsidiary

Trustee : Zurich Trustee Company (India) Private Limited

Investment Manager : Zurich Asset Management Company (India) Private Limited

Legal Advisor : Dave & Girish & Co.

Registrar & Transfer Agent : Computer Age Management Services Limited

Auditors : Price Waterhouse

Custodian for the Schemes : Citibank N.A.

Zurich India Leadership Fund

The Sole Sponsor of the Fund is Zurich Insurance Company, part of Zurich Financial Services Group, which is a global leader in the financial services industry, providing its customers with

solutions in the area of financial protection and asset accumulation with over US $ 416 billion in assets under management as on June 30, 2001. The Group has offices in more than 60 countries reaching over 35 million customers.

Target allocation of a minimum 90% in equities and related instruments and maximum of 10% in debt and money market instruments

Zurich India Leadership Fund is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme, its future prospects or returns.

Investment in overseas markets, ADRs/GDRs, as permitted by the Reserve Bank of India and the Securities and Exchange Board of India are subject to risk of exchange rate in the value of currency. To the extent the assets of the scheme are invested in overseas financial assets, there may be risks associated with currency movements, restrictions on repatriation and transaction procedures in overseas market

The scheme may undertake stock lending which is subject to to legal risk on enforceability of contracts in case of default by borrowers and credit risk in terms of counterparty and collaterals.

As and when the Scheme trades in the derivatives market there are risk factors and issues concerning the use of derivatives that investors should understand. Derivative products are specialised instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions. 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 correctly. There is a possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the "counterparty") to comply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices.

The Scheme proposes to primarily invest in equities and equity related instruments, it will be subjected to the risks of equity markets. Liquidity of these investments may be affected by trading volumes, settlement periods and transfer procedures. These factors may also affect the Scheme’s ability to make intended purchases/sales and cause potential losses to Scheme as well as cause the Scheme to miss certain investment opportunities.

1. Investments made in market leaders in a particular industry at the time of investment may no longer be market leaders or the industry to which the company belongs may no longer have high growth potential.

2. Increase in direct/indirect tax rates/structure:

   Any increase in excise duties/structure would impact selling price, demand and/or company margins, India being a price sensitive market. Any increase in personal taxes could reduce disposable income resulting in lower consumption. Increase in direct corporate taxes could adversely affect business performance. Certain industries may be eligible for tax concessions which may be withdrawn adversely affecting the businesses.

3. Political uncertainty
4. Competition from spurious/smuggled goods
5. Loss of Key Professionals
6. Failure to adapt business to the rapid technological changes
7. Exchange rates(Imports)
8. Poor monsoon (rural consumer demand)

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

The Trustee have the right, in their sole discretion, to limit repurchases under certain circumstances. Please refer to para on Right to Limit Repurchases.

It is confirmed that:

1. the draft Prospectus forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time.
2. all legal requirements connected with the launching of the Scheme as also the guidelines, instructions, etc., issued by the Government and any other competent authority in this behalf, have been duly complied with.
3. the disclosures made in the Prospectus are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the proposed Scheme.
4. according to the information given to us M/s Citibank NA, the Custodian to the Schemes, is registered with SEBI and till date such registration is valid.
5. according to the information given to us M/s Computer Age Management Services Ltd., the Registrar and Transfer Agents to the Schemes, is registered with SEBI and till date such registration is valid.

Place : Mumbai Name : Ms Mala Iyer

Date : 27 February 2002 Designation : Compliance Officer

Zurich India Mutual Fund, has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882)(SEBI Regn No. MF/006/93/9). The Fund was registered with SEBI on 12th November 1993. The Fund was established under a Trust Deed dated 30th October 1993. A Revised Trust Deed was registered on 18th February 1999 and Zurich Insurance Company became the sole Sponsor and Settlor of the Fund and the name of the Fund changed to Zurich India Mutual Fund. SEBI has noted the change in the name of the Fund, vide its letter MF/AU/096/99 dated 24th February 1999 and has re-endorsed the certificate of registration of the Fund to reflect the change in the name.

On account of a restructuring of ITC Threadneedle Mutual Fund (ITC MF), the Schemes of ITC MF have migrated to Zurich India Mutual Fund (ZIMF), the two schemes managed by ITC Threadneedle AMC Ltd., i.e. Top 200 and High Interest Fund, have become an integral part of ZIMF and have been renamed as Zurich India Top 200 Fund and Zurich India High Interest Fund respectively.

Zurich Insurance Company through its subsidiary has contributed an amount of Rs 10 lacs towards the corpus of the Trust which is presently invested in Zurich India Prudence Fund (Growth Plan).

The main objective of the Fund is to mobilise savings from investors by way of pooling of capital in the Schemes of the Fund, and investing the funds so collected primarily in the capital markets and money markets, and to provide facility to Investors of participation in the returns arising from such investments.

Zurich Insurance Company is not new to India. Prior to nationalisation of the insurance business, it was present in non-life insurance business in India till 1972.

The last 3 years' financial highlights of the Zurich Financial Services is as follows:

in USD million except per unit statistics

The figures for Dividends per share, Pro-forma earnings per share and Book Value per share for the year 2000 are after the merger of Allied Zurich p.l.c. and Zurich Allied AG into Zurich Financial Services. The foreign exchange selling rate of Indian Rupees per unit of US$ on 29 December 2000 was Rs 46.62

In terms of the provisions of the Trust Deed, Zurich Trustee Company (India) Private Limited (The Trustee), within the meaning of the Companies Act, 1956, became the sole Trustee of the Fund. The Board of Directors of the Trustee presently consists of the following eminent persons from the fields of Insurance, Finance, Investments and Law.

Zurich Insurance Company

Mythenquai 2, P O Box 8022

Zurich, Switzerland

408, 'A' Wing, Dalamal Towers

Free Press Journal Marg

Nariman Point, Mumbai 400 021

East & West Building,

49/55 Bombay Samachar Marg

Fort, Mumbai 400 023

1st Floor, Sethna Building

55, Maharshi Karve Road

Marine Lines 400 002

Zurich Risk Management Services (India) Private Limited

Harchandrai House

Maharshi Karve Road

Marine Lines

Mumbai 400 002

Mr Robert Sulzer, Chairman, of the Board, is associated with the Sponsor in his capacity as Executive Director, China, India and Sri Lanka with Zurich Financial Services, Zurich, Switzerland. Mr Robert Sulzer is also a Director in the following companies:

Zurich Asia Holdings Limited, Bermuda

New China Life Insurance Company Limited, China

Zurich Risk Management Services (India) Private Ltd., India

Zurich Risk Management Ltd., India

Zurich Finance (Mauritius) Ltd., Mauritius

Malayan Insurance Company, Inc., Philippines

Malayan Zurich Insurance Company, Inc., Philippines

Eagle Insurance Company Ltd., Sri Lanka

Eagle NDB Fund Management Company Ltd., Sri Lanka

Zurich NDB Finance Lanka (Pvt) Ltd.

Zurich Insurance (Taiwan) Ltd.

Zurich Securities Investment Trust Company Ltd., Taiwan

Zurich Securities Investment Consulting Company Ltd., Taiwan

Mr A P Kurian is an independent Director on the Board. He is the former Executive Trustee of Unit Trust of India and currently holds the following directorship in other companies:

Advantage E-Accounting Services Pvt. Ltd.

Advantage Moti (I) Pvt. Ltd.

Association of Mutual Funds of India - Chairman

Aptech Limited

.

Century Textiles and Industries Ltd. - Nominee Director (UTI)

Geojit Securities Ltd. - Chairman

Muthoot Capital Services Ltd.

Mr. Ajay Ambalal Thakkar, is an independent Director on the Board. He is a Partner with Ambalal Thakkar & Company, a renowned firm of Chartered Accountants and is a Director on the Board of Inter-Connected Stock Exchange of India, SIDBI Venture Capital Limited and Member of Local Advisory Board, OCBC Ltd..

Mr Girish M Dave is an independent Director on the Board. He is a Senior Partner with Dave & Girish & Co., a renowned firm of Advocates and currently holds the following directorship in

other companies:

Birla AT&T Communications Ltd.

Birla Global Finance Ltd.

Chicago Pneumatic India Ltd.

Dharani Cements Ltd.

Grindlays Investment Services Pvt. Ltd.

India Venture Capital (Holdings) Pvt. Ltd.

Kesar Petroproducts Ltd.

PCS Industries Ltd.

Vani Vilas Cements Pvt Ltd

Vinati Organics Ltd

GIC Asset Management Company Limited

Mr. Praveen Vashishta has been appointed as the Alternate Director for Mr. Robert Sulzer subject to approval of SEBI. He is the Managing Director of Zurich Risk Management Services (India) Private Limited (ZRMS), a company offering fee based risk management services since October 1998. Prior to joining ZRMS, he was Divisional Manager, Engineering and Projects Division with Oriental Insurance Company Limited. He currently holds the following directorship in other companies:

1. Zurich Risk Management Services (India) Private Limited

2. Zurich Risk Management Limited

The supervisory role of the Trustee is discharged by the Board of Directors of the Trustee company by having continuous feedback from the Asset Management Company on matters of importance and a review of the Mutual Funds operations at periodical Board meetings. The AMC on a regular basis submits various reports to the Trustee including bimonthly/quarterly/half-yearly reports on the activities of Mutual Fund. The performance of all the schemes of the Mutual Fund are reviewed at the Board meetings of the Trustee Company wherein generally a presentation is made to the Board by the Chief Investment Officer/Vice President Marketing on all the schemes. During the period 1 April 2000 to 31 December 2001 the Board of Directors of the Trustee Company met seven times.

1. The Trustee and the Asset Management Company have entered into an Investment Management Agreement with the prior approval of SEBI

2. The Investment Management Agreement contains such clauses as are mentioned in the Fourth Schedule and such other clauses as are necessary for the purpose of making investments.

3. The Trustee shall have a right to obtain from the Asset Management Company such information as is considered necessary by the Trustee.

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

a) proper systems in place for its back-office, dealing and accounting;

b) appointed all key personnel including Fund Manager(s) for the Scheme(s) and submitted their bio-data which shall contain the educational qualifications, past experience in the securities market to the Trustee, within 15 days of their appointment;

c) appointed Auditors to audit the accounts of the Scheme(s);

d) appointed a Compliance Officer to comply with regulatory requirements and to redress Investor grievances;

e) appointed Registrars and laid down parameters for their supervision;

f ) prepared compliance manual and designed internal control mechanisms including internal audit systems;

g) specified norms for empanelling of brokers and marketing agents.

5. The Trustee shall ensure that the Asset Management Company has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker.

6. The Trustee shall ensure that the Asset Management Company has not given any undue or unfair advantage to any of its associate companies or dealt with any of the associates of the Asset Management Company in any manner detrimental to interest of the Unitholders.

7. The Trustee shall ensure that the transactions entered into by the Asset Management Company are in accordance with the SEBI Regulations and the objectives of the Scheme(s) .

8. The Trustee shall ensure that the Asset Management Company has been managing the Scheme(s) independently of other activities and has taken adequate steps to ensure that the interest of Investors of one Scheme are not being compromised with those of any other Scheme or of other activities of the Asset Management Company.

9. The Trustee shall ensure that all the activities of the Asset Management Company are in accordance with the provisions of the SEBI Regulations.

10. Where the Trustee have reason to believe that the conduct of business of the Fund is not in accordance with the SEBI Regulations and the Scheme's objectives they shall forthwith take such remedial steps as are necessary and shall immediately inform SEBI of the violation and the action

taken by them.

11. Each Director of Trustee shall file the details of his transactions (which exceed the value of Rs 1 lac) of dealing in Securities with the Mutual Fund on a quarterly basis.

12. The Trustee shall be accountable for, and be the custodian of, the funds and property of the respective Schemes and shall hold the same in trust for the benefit of the Unitholders in accordance with the SEBI Regulations and the provisions of the Trust Deed.

13. The Trustee shall take steps to ensure that the transactions of the Fund are in accordance with the provisions of the Trust Deed.

14. The Trustee shall be responsible for the calculation of any income due to be paid to the Fund and also of any income received in the Fund for the holders of the Units of any Scheme in accordance with these Regulations and the Trust Deed.

15. The Trustee shall obtain the consent of the Unitholders: a) whenever required to do so by SEBI in the interest of the Unitholders; or b) whenever required to do so on the requisition made by three-fourths of the Unitholders of any scheme; or c) when the majority of the Trustee decide to wind up or prematurely redeem the Units;

15 A The Trustee shall ensure that no change in the fundamental attributes of any Scheme or trust or fees or expense payable or any other change which would modify the Scheme or affect the interest of the Unitholders shall be carried out unless:

(i) a written communication about the proposed change is sent to each Unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; and

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

16. The Trustee shall call for the details of transactions in securities by the key personnel of the Asset Management Company in his own name or on behalf of the Asset Management Company and shall report to SEBI, as and when required.

17. The Trustee shall quarterly review all transactions carried out between the Fund, Asset Management Company and its associates.

18. The Trustee shall quarterly review the Net Worth of the Asset Management Company and in case of any shortfall, ensure that the Asset Management Company makes up for the shortfall, as per Clause (f ) of Sub-regulation (1) of Regulation 21.

"Explanation: For the purposes of this clause, "net worth" means the aggregate of the paid up capital and free reserves of the Asset Management Company after deducting therefrom miscellaneous expenditure to the extent not written off or adjusted or deferred revenue expenditure, intangible assets and accumulated losses."

19. The Trustee shall periodically review all service contracts such as custody arrangements, transfer agency of the securities and satisfy itself that such contracts are executed in the interest of the Unitholders.

20. The Trustee shall ensure that there is no conflict of interest between the manner of deployment of its Net Worth by the Asset Management Company and the interest of the Unitholders.

21. The Trustee shall periodically review the Investor complaints received and the redressal of the same by the Asset Management Company.

22. The Trustee shall abide by the Code of Conduct as specified in the Fifth Schedule of SEBI Regulations.

23. The Trustee shall furnish to SEBI on a half yearly basis: a) a report on the activities of the Fund;

b) a certificate stating that the Trustee have satisfied themselves that there have been no instances of self dealing or front running by any of the Trustee, Directors and key personnel of the Asset Management Company; c) a certificate to the effect that: the Asset Management Company has been managing the schemes independently of any other activities and in case any activities of the nature referred to in sub-regulation (2) of regulation 24 have been undertaken by the Asset Management Company it has taken adequate steps to ensure that the interest of the Unitholders are protected.

24. The independent Director(s) of the Trustee referred to in sub-regulation (5) of regulation 16 shall give their comments on the report received from the Asset Management Company regarding the investments by the Fund in the securities of group companies of the Sponsor.

25. The Trustee shall exercise due diligence as under: (A) General Due Diligence (i) be discerning in the appointment of the directors on the Board of the Asset Management Company (ii) review the desirability of continuance of the Asset Management Company if substantial irregularities are observed in any of the schemes and shall not allow the Asset Management Company to float new schemes. (iii) ensure that the trust property is properly protected, held and administered by proper persons and by a proper number of such persons (iv) ensure that all service providers are holding appropriate registrations from SEBI or concerned regulatory authority (v) arrange for test checks of service contracts (vi) immediately report to SEBI of any special developments in the Fund

(B) Specific Due Diligence:

The Trustee shall (i) obtain internal audit reports at regular intervals from independent auditors appointed by the Trustee (ii) obtain compliance certificates at regular intervals from the Asset Management Company (iii) hold meeting of Trustee more frequently (iv) consider the reports of the independent auditor and compliance reports of the Asset Management Company at the meetings of Trustee for appropriate action (v) maintain records of the decisions of the Trustee at their meetings and of the minutes of the meetings (vi) prescribe and adhere to a code of ethics by the Trustee, Asset Management Company and its personnel. (vii) communicate in writing to the Asset Management

Company of the deficiencies and checking on the rectification of deficiencies.

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

27. The independent directors of the Trustee or Asset Management Company shall pay specific attention to the following, as may be applicable, namely; (i) the Investment Management Agreement and the compensation paid under the agreement (ii) service contracts with affiliates - whether the Asset Management Company has charged higher fees than outside contractors for the same services (iii) selection of the Asset Management Company's independent directors (iv) securities transactions involving affiliates to the extent such transactions are permitted (v) selecting and nominating individuals to fill independent directors vacancies (vi) code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions. (vii) the reasonableness of fees paid to Sponsors, Asset Management Company and any others for services provided (viii)principal underwriting contracts and their renewals (ix) any service contract with the associate of the Asset Management Company.

28. No amendments to the Trust Deed shall be carried out without the prior approval of SEBI and Unitholders approval would be obtained where it affects the interests of the Unitholder.

29. Subject to the provisions of SEBI Regulations where the said Regulations require seeking approval of Unitholders for any purpose, the Trustee shall adopt either of the following two alternative procedures as the Trustee consider appropriate in the circumstances as specified by SEBI Regulations or approved by SEBI:

i. Seeking approval of the Unitholders through postal ballot. This would entail seeking positive consent of the Unitholders on the specific proposal(s) by sending to the Unitholders the necessary mailers and seeking their such consent through return post/courier/fax as may be decided by the Trustee. The Trustee shall lay down detailed guidelines for the actual conduct and accomplishment of the postal ballot and announcement of its results.

ii. Seeking approval of the Unitholders present and voting at a meeting to be specifically summoned by the Trustees at the appointed day, date, time, and venue. A notice convening such meeting shall be sent to the Unitholders at least 21 days prior to the appointed date setting out the proposal(s) which would be voted on the scheduled meeting. The Trustee shall lay down detailed guidelines for the actual conduct and accomplishment of the voting at a meeting and announcement of its results.

Pursuant to the Trust Deed constituting the Fund, the Fund is authorised to pay the Trustee a fee for its services in such capacity. Presently, this fee being charged to the Scheme is computed at the rate of 0.05% of the weekly average net assets of the Scheme or such other percentage or amount as may be agreed by the Trustee from time to time.

 THE ASSET MANAGEMENT COMPANY

In terms of the Investment Management Agreement dated 5^th November, 1993 the Trustee have appointed Zurich Asset Management Company (India) Private Limited (AMC) to manage the Fund. The paid up equity capital of Asset Management Company is Rs. 24.32 crores of which 75% is held by Zurich Insurance Company together and through its subsidiary company. Raymond Apparel Limited and J K Chemicals Limited together hold 24.99 % of the equity capital, while the remaining 0.01% is held by resident individual. Raymond Apparel Limited is a wholly owned subsidiary of Raymond Limited, manufacturing and selling readymade garments under the brand names ‘Park Avenue’, ‘Parx’ and ‘Manzoni’. J K Chemicals Limited is a Non Banking Finance Company engaged in the business of investing and lending.

As per the terms of the Investment Management Agreement dated 5th November 1993, the Asset Management Company will conduct the operations of the Fund and manage the assets of the schemes, including this Scheme, launched by the Fund from time to time. The Asset Management Company was incorporated under the Companies Act, 1956 on 19th July, 1993 and was approved to act as an Asset Management Company for the Fund by SEBI on 12th November, 1993. Consequent to the Zurich Financial Services Group, Switzerland acquiring management control of the Asset Management Company, the name of Asset Management Company was changed. The Asset Management Company applied and secured approval from the Registrar of Companies, Maharashtra, for the change of name to Zurich Asset Management Company (India) Limited, vide certificate No. 11- 72948 dated 12 April, 1999. Subsequently the Company was converted into a private limited company and the same was approved by the Registrar of Companies, Maharashtra vide their certificate dated 22 November 1999. ZAMC has been granted approval by SEBI to function as an Asset Management Company of the Fund, and shall be responsible, inter alia, for the following:

1. Launching and operating the various schemes of the Fund.

2. Performing Investment Management functions for various schemes of the Fund.

3. Ensuring that the investment of the funds pertaining to any scheme is made in accordance with the investment objective of the respective Scheme(s), provisions of the SEBI Regulations and the Trust Deed.

4. Ensuring that adequate disclosures are made to the Investors, Trustee and to SEBI regarding the performance of the Fund, in accordance with SEBI Regulations .

The AMC has obtained registration from SEBI to act as Portfolio Manager vide Registration no. INP000000548 dated April 11, 2001 under SEBI (Portfolio Managers) Regulations, 1993. The registration is valid for 3 years from 16 April 2001 to 15 April 2004. However, the AMC is yet to commence providing Portfolio Management services. There is no conflict of interest between the Portfolio Management activity and the present activity of the AMC. Further the Mutual Funds Division of SEBI vide its letter no.MF/BC/248/01 dated 25 September 2001 conveyed its no objection for the AMC undertaking Portfolio Management activities subject to the AMC complying with the requirements as envisaged in the regulation 24(2) of the Regulations

The Board of Directors of the Asset Management Company presently consists of eminent persons from the fields of finance, investments, insurance, law and economics.

The Board of Directors of the Asset Management Company presently consists of eminent persons from the fields of finance, investments, insurance, law and economics.

In terms of the Investment Management Agreement, the Asset Management Company shall perform inter-alia, the following functions:

1. Frame and launch schemes from time to time after seeking approval from the trustees and SEBI

2. Manage the schemes with a view to achieving the investment objective of the scheme(s) without breaching the SEBI Regulations

3. Acquire, hold, manage, trade and dispose of securities of any kind and to deal with, engage in and carry out all

d) Issue, sell and purchase / repurchas Units under any Scheme of the Trust.

e) Get the Units under any Scheme listed on any one or more stock exchanges in India or abroad.

f) Open and operate Bank accounts in the name of and on behalf of each Fund in relation to the investment.

7. Calculate the fees payable in respect of the services of the Asset Management Company and the Custodian and

   to receive payment thereof and other payments due to them

   h) Provide or cause to provide information to SEBI and the Unitholders as may be specified by SEBI.

8. To furnish to the Trustees all information concerning the operations of various schemes at periodic intervals to ensure compliance with the provisions of the Trust Deed and the regulations.
9. Generally do all acts, deeds, matters and things, which are necessary for any object, purpose or in relation to the
10. Fund or in relation to any Scheme of the Fund.

1. The Asset Management Company shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any Scheme is not contrary to the provisions of the SEBI Regulations and the Trust Deed.

2. The Asset Management Company shall exercise due diligence and care in all its investment decisions as would be exercised by other persons engaged in the same business.

3. The Asset Management Company shall be responsible for the acts of commissions or omissions by its employees or the persons whose services have been procured by the Asset Management Company.

4. The Asset Management Company shall submit to the Trustee quarterly reports each year on its activities and the compliance with SEBI Regulations.

5. The Trustee at the request of the Asset Management Company may terminate the assignment of the Asset Management Company at any time : Provided that such termination shall become effective only after the Trustee have accepted the termination of assignment and communicated their decision in writing to the Asset Management Company.

6. Notwithstanding anything contained in any contract or agreement or termination, the Asset Management Company or its Directors or other officers shall not be absolved of liability to the Fund for their acts of commission or omission, while holding such position or office.

7. (a) The Asset Management Company shall not through any broker associated with the Sponsor, purchase or sell Securities, which is average of 5% or more of the aggregate purchases and sale of Securities made by the Fund in all its schemes. Provided that for the purpose of this sub-regulation, aggregate purchase and sale shall exclude sale and distribution of Units issued by the Fund.

Provided further that the aforesaid limit of 5% shall apply for a block of any three months. (b) The Asset Management Company shall not purchase. or sell Securities through any broker (other than a broker referred to in clause (a) of sub-regulation (7)) which is average of 5% or more of the aggregate purchase and sale of Securities made by the Fund in all its Schemes, unless the Asset Management Company has recorded in writing the justification for exceeding the limit of 5% and reports of all such Investments are sent to the Trustee on a quarterly basis. Provided that the aforesaid limit of 5% shall apply for a block of 3 months.

8. The Asset Management Company shall not utilize the services of the Sponsor or any of its associates, employees or their relatives, for the purpose of any Securities transaction and distribution and sale of Securities: Provided that an Asset Management Company may utilise such services if disclosure to that effect is made to the Unitholders and the brokerage or commission paid is also disclosed in the half yearly annual accounts of the Fund.

Provided further that the Asset Management Company shall disclose at the time of declaring half yearly and yearly results: (i) any underwriting obligations undertaken by the schemes of the mutual funds with respect to issue of securities of associate companies (ii) devolvement, if any (iii) subscription by the schemes in the issue lead managed by associate companies (iv) subscription to any issue of equity or debt on private placement basis where the Sponsor or its associate companies have acted as arranger or manager.

9. The Asset Management Company shall file with the Trustee the details of transactions in Securities by the key personnel of the Asset Management Company in their own name or on behalf of the Asset Management Company and shall also report to SEBI, as and when required by SEBI .

10. In case the Asset Management Company enters into any Securities transactions with any of its associates a report to that effect shall be sent to the Trustee at its next meeting.

11. In case any company has invested more than 5 percent of the NAV of a Scheme, the investment made by that Scheme or by any other Scheme of the Fund in that company or its subsidiaries shall be brought to the notice of the Trustee by the Asset Management Company and be disclosed in the half yearly and annual accounts of the respective Schemes with justification for such Investment Provided the latter investment has been made within one year of the date of the former investment calculated on either side.

12. The Asset Management Company shall file with the Trustee and SEBI:

a) detailed bio-data of all its directors along with their interest in other companies within fifteen days of their appointment; and

b) any change in the interest of Directors every six months.

c) a quarterly report to the Trustee giving details and adequate justification about the purchase and sale of the Securities of the group companies of the Sponsor or the Asset Management Company as the case may be, by the Fund during the said quarter.

13. Each Director of the Asset Management Company shall file the details of his transactions of dealing in securities with the Trustee on a quarterly basis in accordance with guidelines issued by the Board.

14. The Asset Management Company shall not appoint any person as key personnel who has been found guilty of any economic offence or involved in violation of securities laws.

15. The Asset Management Company shall appoint Registrars and Share Transfer Agent who are registered with SEBI:

Provided if the work relating to the transfer of Units is processed in-house, the charges at competitive market rates may be debited to the Scheme and for rate higher than the competitive market rates, prior approval of the Trustee shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts.

16. The Asset Management Company shall abide by the Code of Conduct as specified in the Fifth Schedule of SEBI Regulations.

Mr. Prashant Jain, Chief Investment Officer would be the Fund Manager for Zurich India Leadership Fund*. The Fund Managers are assisted by Research Department comprising four research analysts having vast and varied experience in research in equity/debt. Presently, all the key personnel are based in the registered/corporate office of the AMC

Citibank N.A. Ramnord House, 77 Annie Besant Road, Worli Mumbai 400 018, a Custodian registered with SEBI having registration number IN/CUS/004 has been appointed as the Custodian of the Scheme, and shall perform, inter alia, the following functions:

1. Post trading and custodial services including

• safe keeping of securities
• making payment / taking delivery of securities
• delivering securities against receipt of funds
• co-ordinating with clearing corporations / RBI

2 Ensuring that all benefits accruing to the assets of the Scheme are received.

3. Segregate assets of each scheme

Provide detailed management information and other reports pertaining to various transactions undertaken in the scheme to AMC as required.

4. Responsibility for the loss of or damage to the securities due to gross negligence or wilful misconduct on its part or on the part of its employees /agents for whose acts the custodian is responsible.

5. The Custodian shall not assign, transfer or lend securities held by it on behalf of the Fund except with the prior permission of the AMC.

6. The Custodian shall not have any lien, right for set-off, counter-claim, charges, security, interest, encumbrance, retention or power of sale or any other claim of its own over any securities of the Fund save and except, compensation claims for custodial services on other monies due to the custodian.

The Custodian will be entitled to remuneration for its services in accordance with the terms of the Custodial Agreement.

The Asset Management Company reserves the right to change the Custodian, if required.

Computer Age Management Services (P) Limited (CAMS), A & B Lakshmi Bhavan, 609 Anna Salai, Chennai - 600006, has been appointed to act as the Registrars and Transfer agents to the

Scheme(s). The Registrar is registered with SEBI under the registration no. INR000002813.

The Trustee and the Asset Management Company have satisfied themselves and have ensured that the Registrar can provide the services required with regard to processing of applications and despatching account statements to unitholders within the time limit prescribed under the regulations and also has sufficient capacity to handle investor complaints and has adequate facilities including systemscapabilities and back up, to do so. As Registrar to the Scheme, it will accept and process Investors' applications for Subscription and Repurchase on an on-going basis. It will also handle

communications with Investors, perform data entry services, despatch Account Statements and process dividend payments.

The Registrar is responsible for carrying out diligently the functions of Registrar and Transfer Agent set out in the agreement entered into with it and as per any modification made thereof from time to time.

The Registrar will be entitled to remuneration for its services in accordance with the terms of the agreement with them.

 The Asset Management Company reserves the right to change the Registrar. The Unitholders will then be informed accordingly.

M/s Price Waterhouse, Chartered Accountants, 1102/1107, Raheja Chambers, Nariman Point, Mumbai would be the Statutory Auditors for the scheme.

The Trustee reserves the right to appointany other firm of Chartered Accountants who are qualified to act as auditors of the scheme.

This fund aims to generate capital appreciation in the long term by investing in equities and equity linked instruments of No 1/ No 2 companies (market leaders)or No3 / No 4 / No5 companies (that have the potential to become market leaders) in the respective businesses. Leadership or ranking in the businesses is defined by market share.

The fund will concentrate on equity investments of No 1/ No 2 companies (market leaders)or No3 / No 4 / No5 companies (that have the potential to become market leaders) in the respective businesses Leadership or ranking in the businesses is defined by market share. In case of multi product companies, a substantial portion of the total income must be derived from segments in which the company enjoys 1 to 5 rankings.

This fund aims to invest predominantly in companies which are No1/ No2 in the respective businesses and the balance in No3/ No4/ No5 companies. The fund will maintain a reasonably diversified portfolio.

Companies in this fund’s portfolio are expected to have higher than sector average growth rates

in sales, earnings and return on equity.

The main idea behind focussing on market leaders is that in the opinion of the fund managers market leaders will over a period of time deliver better returns than smaller companies. LEADERSHIP is both difficult to attain and once attained it is difficult to be dislodged from. Leadership has its advantages. It gives companies which are market leaders economies of scale, better bargaining power with suppliers, distributors and clients, ability to attract and retain skilled manpower, more credibility, higher profitability, enhanced ability to take risks, sustaining power in adverse market conditions, easier and cheaper access to funds etc. All this is expected to result in better than industry average growth and profitability.

This is expected to result in better share price performance of companies which are market leaders in the respective industries. This is expected to enable the fund to generate returns which are superior to market returns over long periods of time.

At present this fund will be benchmarked against the BSE Sensex. However, the BSE Sensex is not completely representative of the fund as the fund’s investment universe is much larger and diverse compared to the BSE Sensex. In an event when some other benchmark is perceived to be more representative of this fund, the same shall be changed after placing an advertisement in an English National daily.

 Investment Plans

The Scheme has a Dividend Plan and a Growth Plan. The returns would be periodically paid out as dividends to investors under Dividend Plan. In the Growth Plan, all profits earned by the Scheme would be reinvested. This would be reflected in the NAV and realised at the time of Repurchase of the Units by Investors. Any capital appreciation that is attained by the Units of the Fund would be realised by the Investors at the time of repurchase of their Units in proportion to the number of Units that they would be repurchasing. Since the profits under the Growth Plan are reinvested on an ongoing basis, it is expected that the capital appreciation under this Plan would be higher than that obtained by the investors under Dividend Plan. However, neither the Fund, nor the Sponsor are in a position to give an assurance to this effect.