The current portfolio, which is heavily invested in equity, would be liquidated, and only the stocks of multinational companies will be retained. The current corpus of the scheme is Rs 110 crore. With 80 per cent invested in equity, the scheme has equity worth Rs 88 crore and the balance Rs 22 crore is in debt and current assets.

"We plan to be invested in the equity of only multinational companies and high-quality debt in the rolled over scheme," said the head of equity investments, Prudential ICICI, Shahzad Madon.

At present, ICICI Premier is a close-ended scheme which is coming up for redemption in February, 1999. The scheme is slated to roll over into a balanced scheme for five years up toFebruary, 2004.

The portfolio of Premier has seen a lot of restructuring since the beginning of March, 1998, when the erstwhile ICICI Mutual Fund got into a joint venture with Prudential of UK. The Premier scheme has posted better returns post restructuring.

A comparative look at the returns generated by the scheme shows that prior to restructuring, the scheme gave a negative return of 32.3 per cent, while post-restructuring (February 1998), the scheme has given a return of 12.8 per cent as against a drop of 11.9 per cent in its benchmark index, BSE 200.

The structural advantage of investment in the rolled over scheme would be that investments in MNC stocks have always yielded higher returns even when the markets are going down. "A study of the performance of the MNC universe has shown a 15 per cent annualised return in the last five years. The market, during the same period, gave a negative return of 0.80 per cent. Thus, the MNC Index outperformed the market by 16 per cent," informedMadon.

Commenting on the reliability of the proposed portfolio, Madon said that the new structure will have adequate debt holding, which means that even if the equity holdings of the portfolio (40 per cent) become zero after five years, all that is required is a 10.78 per cent annualised return on the debt securities for preservation of capital.

A number of changes have been made in the holdings of Premier. The scheme has reduced its holdings in ITC from 120,154 shares to 35,493 shares, in MTNL from 324,500 to 289,200 shares, in Cochin Refineries from 305,000 to 213,200 shares, in Satyam Computers from 19,950 to nil, in NIIT from 55,350 to 30,250, in Pond's from 36,300 to 19,050, in ABB from 76,066 to nil, in Sterlite from 125,600 to 72,800 and in Ranbaxy from 47,748 to 27,500 shares.

The net asset value of the scheme is currently at Rs 7.15, which has moved up from Rs 6.48 in February. "We are trying to at least bring the NAV of the scheme at its par value and our endeavour would be to give at least Rs10 to our investors. Thus, the rolled over option is available only to the investors of Premier," he added.