combined offer document

8/3/2019 Combined Offer Document

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Fidelity Equity Fund

Issue of units at applicable NAVplus applicable Entry Load, if any.

COMBINED OFFER DOCUMENT

An open ended equity growt schemehContinuous offer opened on May 18, 2005

Fidelity Tax Advantage FundAn open ended equity linked savings schemeContinuous offer opened on March 1, 2006

Fidelity India Special Situations FundAn open ended equity growt schemeh

Continuous offer opened on May 24, 2006

Fidelity Short Term Income FundAn open ended income schemeContinuous offer opened on August 31, 2006

Fidelity Cash FundAn open ended liquid schemeContinuous offer opened on November 29, 2006

This Offer Document contains information necessary for an investor to makean informed investment decision in the Schemes forming part of this OfferDocument. Investors should read the Offer Document carefully prior tomaking an investment decision and retain the Offer Document for futurereference. Investors may note that this Offer Document consisting of variousSchemes of Fidelity Mutual Fund remains effective until a material changeoccurs. Material changes shall be filed with the Securities and ExchangeBoard of India (SEBI) and circulated to all Unit Holders or may be publicly

notified by advertisements in the newspapers subject to the applicableRegulations. Investors may also like to obtain further changes after the dateof this Offer Document from the MutualFund / itsInvestorService Centers ordistributors.

The particulars of the Schemes under this Offer Document, have beenprepared in accordance with the Securities and Exchange Board of India(Mutual Funds) Regulations, 1996, as amended till date, and filed with SEBI,and the Units being offered for public subscription have neither beenapproved or disapproved by SEBI nor has SEBI certified the accuracy andadequacy of this OfferDocument.

This Offer Document supersedes all the earlier Offer Documents of theSchemes of Fidelity MutualFund forming part of this Offer Document.

This Offer Document is dated as at March 09,2007.

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Fidelity, Fidelity International and Pyramid Logo are trademarks of Fidelity International Limited.


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1

SPONSOR

Fidelity International Investment Advisors

Registered Office:Pembroke Hall, 42 Crow Lane,Pembroke, Hamilton,HM19, Bermuda.

TRUSTEE

Fidelity Trustee Company Private Limited

Registered Office:56, 5th Floor, Maker Chambers VI,220, Nariman Point, Mumbai - 400 021.

ASSET MANAGEMENT COMPANY

Fidelity Fund Management Private Limited

Registered Office:56, 5th Floor, Maker Chambers VI,220, Nariman Point, Mumbai - 400 021.

REGISTRAR AND TRANSFER AGENT

Computer Age Management Services Private Limited

Registered Office:A&B, Lakshmi Bhawan,609, Anna Salai, Chennai - 600 006.

CUSTODIAN

J P Morgan Chase Bank

Registered Office :Mafatlal Centre, 9th Floor,

Nariman Point, Mumbai - 400 021.

AUDITORS TO THE FUND

Price Waterhouse

Office:252, Veer Savarkar Marg,Shivaji Park, Dadar (West),Mumbai - 400 028.

LEGAL ADVISORS

Amarchand & Mangaldas & Suresh A. Shroff & Co.

Office:5th Floor, Peninsula Chambers,Peninsula Corporate Park,Ganpatrao Kadam Marg,Lower Parel, Mumbai - 400 013.


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Combined Offer Document

Fidelity Mutual Fund

2

I. Highlights ......................................................... 3

II. Definitions and Abbreviations ................... 5

A. Definitions ...................................................... 5

B. Abbreviations ................................................. 7

C. Interpretation .................................................. 8

III. Risk Factors and SpecialConsiderations ............................................... 9

A. Standard Risk Factors ................................... 9

B. Risk Factors pertaining toEquity Schemes ............................................. 9

C. Risk Factors pertaining toDebt Schemes ............................................... 9

D. Risk Factors associated withtrading in Derivatives ..................................... 10

E. Risk Factors associated with

Scrip Lending ................................................. 10F. Risk Factors associated with

Overseas Investment ..................................... 11

G. Additional Scheme SpecificRisk Factors ................................................... 11

H. Special Considerations.................................. 11

IV. Constitution of the Fund ............................. 14

A. The Fund ........................................................ 14

B. The Sponsor................................................... 14

C. The Trustee Company (The Trustee)............ 14

I. Directors ................................................. 14

II. Summary of the SubstantiveProvisions of the Trust Deed ................. 15

III. Trustee - Fees and Expenses ............... 16

IV. Trustee - Supervisory Role .................... 17

D. The Asset Management Company................ 17

I. Constitution ............................................ 17

II. Directors ................................................. 17

III. Duties and Responsibilities ofthe AMC and the materialprovisions of the InvestmentManagement Agreement ....................... 18

IV. Key Employees of the AMC andrelevant experience................................ 18

V. Fund Managers ...................................... 20

VI. Compliance Officer ................................ 20

VII. Investors Relations Officer .................... 20

VIII. The Registrar and Transfer Agent ......... 20

IX. The Custodian ........................................ 20

X. The Fund Accountant............................. 20

XI. The Auditors ........................................... 20

V. Investment Objective, InvestmentStrategy, Investment Pattern andRisk Profile and Limitations ofthe Schemes .................................................... 21

A. Schemes on Offer .......................................... 21

I. Fidel ity Equity Fund ............................... 21

II. Fidel ity Tax Advantage Fund ................. 21

III. Fidel ity India Special Situations Fund ... 22

IV. Fidel ity Short Term Income Fund .......... 23

V. Fidelity Cash Fund ................................. 24

B. Underwriting ................................................... 25

C. Scrip Lending by the Fund ............................ 25

D. Investment in Derivatives .............................. 25

Table of Contents

Page

E. Fundamental Attributes ................................. 28

F. Borrowing Powers.......................................... 28

G. Investment in the Schemes by the AMC,

Sponsor or their Affiliates .............................. 28H. Procedure and Recording of

Investment Decisions .................................... 28

I. Portfol io Turnover - Equity Schemes ............ 28

J. Overview of Debt Markets ............................. 28

K. Investment Restrictions ................................. 29

L. Computat ion of Net Asset Value ................... 31

M. Accrual of Expenses and Income ................. 34

N. Recording of Changes ................................... 34

O. Calculation of NAV ......................................... 34

P. Accounting Policies and Standards .............. 34

VI. Load, Fees and Expenses ........................... 36

A. Load Structure of the Schemes..................... 36

B. Fees and Expenses of the Schemes ............ 36

C. Initial Issue Expenses of the existingschemes of the Fund ..................................... 38

D. Condensed Financial Information ................. 38

VII. Units and the Offer ........................................ 40

A. Units on Offer - General Information ............ 40

B. Purchase of Units .......................................... 41

C. Important Note on Anti MoneyLaundering, Know-Your-Customerand Investor Protection ................................. 43

D. Investor's Personal Information .................... 44

E. Facilities Offered to Investors underthe Schemes .................................................. 44

F. Redemption of Units ...................................... 47

G. Suspension of the Purchaseand Redemption of Units ............................... 48

H. Right to Limit Redemptions ........................... 48

VIII.Unit Holders' Rights and Services ........... 49

A. Unit Holders' Rights ....................................... 49

B. Voting Rights of the Unit Holders .................. 49

C. Annual Accounts and Unit Cert ificates ......... 49

D. NAV Information............................................. 49

E. Disclosure of Information underthe Regulations .............................................. 49

F. Duration of the Schemes ............................... 49

G. Procedure and Manner of Winding Up ......... 49

H. Services to Unit Holders ................................ 50

IX. Consolidated Tax Benefits of Investing Inthe Schemes of the Fund ............................ 51

A. For Unit Holders............................................. 51

B. For The Fund ................................................. 52

X. Other Matters ................................................... 53

A. Transactions with the Sponsor /Associates ...................................................... 53

B. Policy on Offshore Investments bythe Schemes .................................................. 53

C. Dividends and Distributions .......................... 53

D. Inter-Scheme Transfers................................. 54

E. Disclosure under Regulation 25(11) ............. 54

F. General Information ....................................... 54

Page


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I. HighlightsName of the Scheme Fidelity Equity Fund Fidelity India Special Fidelity Tax Advantage Fund

("FEF") Situations Fund ("FISSF") ("FTAF") *

Structure An open ended equity An open ended equity An open ended equity linkedgrowth scheme. growth scheme. savings scheme.

The Scheme does not assure or guarantee any returns.

Investment Objective To generate long-term capital To generate long-term capital growth To generate long-term capital growthgrowth from a diversified from a diversified portfolio of from a diversified portfolio ofportfolio of predominantly predominantly equity and predominantly equity and equity-equity and equity-related equity-related securit ies including related securi ties.securities. equity derivatives.

Options The Scheme offers Growth option and Dividend option. The Dividend option offers Dividend Payout andDividend Reinvestment facilities.

Minimum Initial Rs. 5,000 per application Rs. 5,000 per application Rs. 500 per application andApplication Amount in multiples of Rs. 500 thereafter

Minimum Additional Rs.1,000 per application Rs.1,000 per application Rs. 500 per application andApplication Amount in multiples of Rs. 500 thereafter

Minimum Amount / Rs. 1,000 or 100 Units Rs. 1,000 or 100 Units Rs. 500 or 50 UnitsNo. of Units forRedemption

Load Structure For each Purchase Load (% of

i. Entry Load Applicable NAV)

(i) Of less than Rs. 5 Crores 2.25%

(ii) Of Rs. 5 Crores or more NIL

(iii) By an FOF (irrespective of the amount of Purchase) NIL

(iv) As a result of Dividend Re-investment NIL

(v) Through switch-in (including through STP) into any of the Equi ty Schemes of the NILFund from Fidelity MultiManager Cash Fund ("FMCF") or FSTIF or FCF;provided units are first switched out / systematically transferred out from theEquity Schemes of the Fund to FMCF or FSTIF or FCF and, within a period of90 days from such transaction, the units allotted against such switch proceedsare again switched out / systematically transferred out from FMCF or FSTIF orFCF (on a FIFO basis) into any of the Equity Schemes of the Fund.

(vi)Through switch-in from other Equity Schemes of the Fund NIL

In case of SIP / STP the above criteria for Entry Load will be applicable for each instalment.

A switch-in may also attract an Entry Load like any Purchase except in cases mentioned above.

ii. Exit Load For Redemption Load (% ofApplicable NAV)

Within 6 months from the date of allotment or Purchase applying 1.00%First in First Out basis for investments made other than throughSIP / STP or if the Purchase was made through SIP / STP andthe Entry Load applicable at the time of SIP / STP Purchasewas NIL / 2.25%. NIL

Within 2 years from the date of al lotment or Purchase applying 1.00%First in First Out basis, if the Purchase was made throughSIP / STP and the Entry Load applicable at the time ofthe SIP / STP Purchase was 1.25%.

A switch-out or a withdrawal under SWP may also attract an Exit Load like anyRedemption.

No Entry / Exit Loads / CDSC will be chargeable in case of switches made between different plans / options of theScheme.

Liquidity The Scheme will offer Units for Purchase The Scheme will offer Units for Purchase and Redemptionand Redemption at NAV related prices on at NAV related prices on every Business Day. Redemptionevery Business Day. The Mutual Fund will of Units can be made only after a period of 3 years of lock-inendeavour to dispatch the Redemption period from the date of allotment of the Units proposed to beproceeds within 3 Business Days from the redeemed. The Mutual Fund will endeavour to dispatch theacceptance of the Redemption request. Redemption proceeds within 3 Business Days from the

acceptance of the Redemption request.

Transparency The NAVs will be calculated and disclosed on every Business Day.

The AMC shall update the NAVs on the website of the Fund (www.fidelity.co.in) and of the AMFI -(www.amfiindia.com) every Business Day.

The AMC will disclose details of the portfolio of the Schemes every 6 months by either sending a complete

statement to all the Unit Holders or by publishing such statement, by way of advertisement, in two dailynewspapers.

Benchmark for BSE-200 indexperformancecomparison

* The Scheme has been prepared pursuant to the notifications dated November 3, 2005 and December 13, 2005 issued by the Department ofEconomic Affairs, Ministry of Finance, Government of India or such other scheme as the Central Government may, by notification in the OfficialGazette, specify under section 80C of the Income Tax Act, 1961. Investors in the Scheme are entitled to deductions of the amount invested inUnits of the Scheme, subject to a maximum of Rs. 1,00,000, under and in terms of Section 80C (2) (xiii) of the Income Tax Act, 1961.

Highlights


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4

Name of the Scheme Fidelity Short Term Income Fund ("FSTIF") Fidelity Cash Fund ("FCF")

Structure An open ended income scheme An open ended liquid scheme

The Scheme does not assure or guarantee any returns.

Investment Objective To generate reasonable returns through a diversified To deliver reasonable returns with lower volatility andportfolio of fixed income securities. higher liquidity through a portfolio of debt and money

market instruments.

Plans Retail and Institutional Plans Retail, Institutional and Super Institutional Plans

Options Each of the Plans under the Scheme offers the Growth option and the Dividend option. The Dividend option offersDividend Payout and Dividend Reinvestment facilities.

Dividend Frequency Monthly Dividend payout facility:(All Plans) u Monthly

Dividend re-investment facility:u Dailyu Weeklyu Monthly

Minimum Initial Retail Plan: Rs. 5,000 per application Retail Plan: Rs. 5,000 per applicationApplication Amount Institutional Plan: Rs. 5,00,00,000 per application Institutional Plan: Rs. 1,00,00,000 per application

Super Institutional Plan: Rs. 10,00,00,000 perapplication

Minimum Additional Retail Plan: Rs. 1,000 per application Retail Plan: Rs. 1,000 per application and thereafterApplication Amount Institutional Plan: Rs. 1,00,000 per application in multiples of Re. 1

Institutional Plan: Rs. 1,00,000 per application andthereafter in multiples of Re. 1Super Institutional Plan: Rs. 1,00,00,000 perapplication and thereafter in multiples of Re. 1

Minimum Amount / Retail Plan: Rs.1,000 or 100 Units Retail Plan: Rs.1,000 or 100 UnitsNo. of Units for Institutional Plan: Rs.1,00,000 or 10,000 Units Institutional Plan: Rs.1,00,000 or 10,000 UnitsRedemption Super Institutional Plan: Rs.1,00,000 or 10,000 Units

Load Structure

i. Entry Load NIL

If the AMC introduces an Entry Load, a switch-in or transfer under STP may also attract the applicable Entry Loadlike any Purchase.

ii. Exit Load NIL

If the AMC introduces an Exit Load, a switch-out or a withdrawal under SWP or transfer under STP may alsoattract the applicable Exit Load like any Redemption.

No Entry / Exit Loads / CDSC will be chargeable in case of switches made between different plans / options of theScheme.

Liquidity The Scheme will offer Units for Purchase and Redemption at Applicable NAV on every Business Day. The MutualFund will endeavour to dispatch the Redemption proceeds within 3 Business Days from the acceptance of theRedemption request.

Transperancy The NAVs will be calculated and disclosed on The NAVs for every calendar day will be calculated.every Business Day.

The AMC shall update the NAVs on the website of the Fund (www.fidelity.co.in) and of the AMFI -(www.amfiindia.com) every Business Day.

The AMC will disclose details of the portfolio of the Scheme every 6 months by either sending a completestatement to all the Unit Holders or by publishing such statement, by way of advertisement, in two dailynewspapers.

Benchmark for CRISIL Short Term Bond Fund Index CRISIL Liquid Fund Indexperformancecomparison

Investors are advised to contact any of the ISCs or the AMC by calling the investor line of the AMC at "1800 180 8000" (toll-free from aMTNL / BSNL landline) or 30309800 (at local call rate from your mobile phone prefixing the local city code or non - MTNL / BSNLlandline) or 0124 2542022 (at long distance rates) to know the latest position on Entry / Exit Load or CDSC structure prior to investing.

Highlights


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II. Definitions and Abbreviations

A. DefinitionsIn this Offer Document the following terms will have the meanings indicated there against, unless the context suggests otherwise.

Applicable NAV FEF, FISSF, FTAF, FSTIF :For applications for Purchases (along with a local cheque or demand draft payable at par at the

place where the application is received) / Redemptions, accepted during the Ongoing Offer Periodat the Designated Collection Centres of the Fund on a Business Day up to the Cut-off time of theSchemes, the NAV of that day; and

For applications for Purchases (along with a local cheque or demand draft payable at par at theplace where the application is received) / Redemptions accepted during the Ongoing Offer Periodat the Designated Collection Centres of the Fund on a Business Day after the Cut-off time of theSchemes, the NAV of the next Business Day; and

For applications for Purchases along with demand drafts not payable at par at the place wherethe application is received, NAV of the day on which the demand draft is credited.

FCF :For Purchase :1. In respect of valid Purchase applications accepted at a Designated Collection Centre upto

12.00 noon on a Business Day and if the funds are available for utilization by the Scheme onthe same day, the closing NAV of the day immediately preceding the day of acceptance ofapplication will be applicable.

2. In respect of valid Purchase applications accepted at a Designated Collection Centre after12.00 noon on a Business Day and if the funds are available for utilization by the Scheme onthe same day, the closing NAV of the day immediately preceding the next Business day willbe applicable.

3. In respect of valid Purchase applications accepted at a Designated Collection Centre on aBusiness Day, irrespective of the time of acceptance of applications, where the funds are notavailable for utilization on the day of the application, the closing NAV of the day immediatelypreceding the day on which the funds are available for utilization by the Scheme will beapplicable.

For Redemption :1. In respect of valid Redemption applications accepted at a Designated Collection Centre upto

3.00 p.m. on a Business Day, the closing NAV of the day immediately preceding the nextBusiness Day will be applicable.

2. In respect of valid Redemption applications accepted at a Designated Collection Centre after

3.00 p.m. on a Business Day, the closing NAV of the next Business Day will be applicable.Application Form / Key A form meant to be used by an investor to open a folio and Purchase Units under any SchemeInformation Memorandum offered under this Offer Document. Any modifications to the Application Form will be made by way

of an addendum, which will be attached thereto. On issuance of such addendum, the ApplicationForm will be deemed to be updated by the addendum.

Asset Management Fidelity Fund Management Private Limited, the asset management company, setCompany / AMC/ up under the Companies Act, 1956, having its registered office at 56, 5th Floor,Investment Manager Maker Chambers VI, 220, Nariman Point, Mumbai - 400 021 and authorised by SEBI to act as

Asset Management Company / Investment Manager to the schemes of Fidelity Mutual Fund.

Business Day FEF, FTAF, FISSF :A day not being: (1) A Saturday or Sunday; (2) A day on which both the Stock Exchanges, the BSEand the NSE are closed; (3) A day on which Purchase and Redemption of Units is suspended ora book closure period is announced by the Trustee / AMC; or (4) A day on which normal businesscannot be transacted due to storms, floods, bandhs, strikes or such other events as the AMC may

specify from time to time.FSTIF :A day not being: (1) A Saturday or Sunday; (2) A day on which the banks in Mumbai including theReserve Bank of India are closed for business or clearing; (3) A day on which Purchase andRedemption of Units is suspended or a book closure period is announced by the Trustee / AMC;or (4) A day on which normal business cannot be transacted due to storms, floods, bandhs,strikes or such other events as the AMC may specify from time to time.

FCF :A day not being: (1) A Saturday or Sunday; (2) A day when the money markets are closed / notaccessible; (3) A day on which the banks in Mumbai or the Reserve Bank of India are closed forbusiness or clearing; (4) A day on which Purchase and Redemption of Units is suspended by theTrustee / AMC; or (5) A day on which normal business cannot be transacted due to storms, floods,bandhs, strikes or such other events as the AMC may specify from time to time.

The AMC reserves the right to change the definition of Business Day. The AMC reserves the rightto declare any day as a Business Day or otherwise at any or all ISCs.

Contingent Deferred A charge to the Unit Holder upon exiting (by way of Redemption) based on the period of holdingSales Charge / CDSC of Units. The Regulations provide that a CDSC may be charged only for a no-Load scheme and

only for the first four years after the Purchase and caps the percentage of NAV that can becharged in each year.

Custodian J P Morgan Chase Bank, Mumbai branch registered under the SEBI (Custodian of Securities)Regulations, 1996, or any other custodian who is approved by the Trustee.

DefinitionsandAbbreviations


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Cut-off time FEF, FTAF, FISSF, FSTIF:A time prescribed in this Offer Document up to which an investor can submit a Purchase / Redemptionrequest along with a local cheque or a demand draft payable at par at the place where the applicationis received, to be entitled to the Applicable NAV for that Business Day.

Debt Schemes All Schemes (including the plans thereunder) referred to in this Offer Document which invests indebt and money market instruments viz., Fidelity Short Term Income Fund and Fidelity CashFund.

Designated Collection ISCs designated by the AMC where the applications shall be received. The names and addressesCentres are mentioned at the end of this Offer Document.

ELSS Equity Linked Savings Scheme, 2005 as notified by Ministry of Finance (Department of EconomicAffairs) vide notification dated November 03, 2005 and amended vide notification dated December 13,2005.

Entry Load A Load charged to an investor on Purchase of Units based on the amount of investment perapplication or any other criteria decided by the AMC.

Equity Schemes All Schemes referred to in this Offer Document which invest in equity and equity related instrumentsviz., Fidelity Equity Fund, Fidelity Tax Advantage Fund and Fidelity India Special Situations Fund.

Exit Load A Load (other than CDSC) charged to the Unit Holder on exiting (by way of Redemption) basedon period of holding, amount of investment, or any other criteria decided by the AMC.

Foreign Institutional An entity registered with SEBI under Securities and Exchange Board of India (Foreign Institutional

Investors / FII Investors) Regulations, 1995 as amended from time to time.Fidelity International The Sponsor of Fidelity Mutual Fund.Investment Advisors / FIIA

Fund of Funds / FOF A mutual fund scheme that invests primarily in other schemes of the same mutual fund or othermutual funds.

Fund / Mutual Fund Fidelity Mutual Fund, a Trust registered with SEBI under the Regulations, vide Registration No.MF / 050 / 05 / 01 dated February 17, 2005.

Investment Management The agreement dated August 9, 2004, entered into between Fidelity Mutual Fund and the AMC,Agreement / IMA as amended from time to time.

Investor Service Official points of acceptance of transaction / service requests from investors. These will beCentre / ISC designated by the AMC from time to time.

Load A charge that may be levied to an investor at the time of Purchase of Units of a Scheme(s) or toa Unit Holder at the time of Redemption of Units from a Scheme(s).

Net Asset Value / NAV Net Asset Value of the Units of a Scheme (including plans / options thereunder) calculated in themanner provided in this Offer Document or as may be prescribed by the Regulations from time totime.

Non Resident Indian / NRI A person resident outside India who is a citizen of India or is a person of Indian origin as per themeaning assigned to the term under Foreign Exchange Management (Investment in firm or proprietaryconcern in India) Regulations, 2000.

Offer Document / This document issued by Fidelity Mutual Fund, offering Units of various schemes (including plansCombined Offer Document and options thereunder) viz. Fidelity Equity Fund, Fidelity Tax Advantage Fund, Fidelity India

Special Situations Fund, Fidelity Short Term Income Fund and Fidelity Cash Fund for subscription.Any modifications to the Offer Document will be made by way of an addendum which will beattached to this Offer Document. On issuance of addendum, the Offer Document will be deemedto be updated by the addendum.

Person of Indian Origin A citizen of any country other than Bangladesh or Pakistan, if (a) he at any time held Indian

passport; or (b) he or either of his parents or any of his grand parents was a citizen of India byvirtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or (c) the person is aspouse of an Indian citizen or a person referred to in sub-clause (a) or (b).

Purchase / Subscription Subscription to / Purchase of Units by an investor from the Fund.

Purchase Price The price (being Applicable NAV plus Entry Load, if any) at which the Units under a Scheme canbe purchased and calculated in the manner provided in this Offer Document.

Registrar Computer Age Management Services Private Limited ("CAMS"), appointed as the registrar andtransfer agent for the Schemes, or any other registrar that may be appointed by the AMC.

Redemption Repurchase of Units under a Scheme by the Fund from a Unit Holder.

Redemption Price The price (being Applicable NAV minus Exit Load / CDSC) at which the Units under a Scheme canbe redeemed and calculated in the manner provided in this Offer Document.

Repo / Reverse Repo Sale / Purchase of securities with a simultaneous agreement to repurchase / sell them at a laterdate.

Scheme / Schemes FEF, FTAF, FISSF, FSTIF and FCF collectively referred to as "Schemes" and individually referredto as "a Scheme" as the context permits (including the plans and options thereunder).

SEBI Regulations/ Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended fromRegulations time to time, including by way of circulars or notifications issued by SEBI and the Government of

India.

Definitionsand

Abbreviations


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Special Situations Situations that are considered out-of-the-ordinary and therefore, present interesting stock pickingopportunities.

The types of companies that may fall within the scope of such special situations could include butare not limited to:

- companies with recovery potential.

- companies whose growth potential may not be fully recognised by the market.

- companies with hidden / undervalued assets whose value is not fully recognised by the market.

- companies with interesting product pipelines which could offer good earnings potential.

- companies undertaking corporate restructuring.

- companies which could be potential candidates for mergers and acquisitions related activities.

Sponsor FIIA, being the Settlor of Fidelity Mutual Fund.

Systematic Investment A plan enabling investors to save and invest under a Scheme on a monthly / quarterly basis byPlan / SIP submitting post-dated cheques / payment instructions.

Systematic Transfer A plan enabling Unit Holders to transfer sums on a weekly / fortnightly / monthly / quarterly basisPlan / STP from a Scheme to other schemes launched by the Fund from time to time by giving a single

instruction.

Systematic Withdrawal A plan enabling Unit Holders to withdraw amounts from a Scheme on a monthly / quarterly basisPlan / SWP by giving a single instruction.

Transaction Slip A form meant to be used by Unit Holders seeking additional Purchase or Redemption of Unitsunder a Scheme of the Fund, change in bank account details, switch-in or switch-out and suchother facilities offered by the AMC and mentioned in the Transaction Slip.

Trustee / Trustee Fidelity Trustee Company Private Limited, a company set up under the Companies Act, 1956, toCompany act as the Trustee to Fidelity Mutual Fund.

Trust Deed The Trust Deed dated August 9, 2004 made by and between the Sponsor and the Trustee, establishingFidelity Mutual Fund, as amended from time to time.

Trust Fund Amounts settled / contributed by the Sponsor towards the corpus of Fidelity Mutual Fund andadditions / accretions thereto.

Unit The interest of an investor, which consists of one undivided share in the net assets of a Scheme.

Unit Holder A person holding Units of a Scheme of the Fund offered under this Offer Document.

Valuation Day FEF, FTAF, FISSF, FSTIF : Business Day

FCF : A day on which NAVs are calculated.Words and Expressions Same meaning as in the Trust Deed.used in this OfferDocument andnot defined

B. AbbreviationsIn this Offer Document the following abbreviations have been used.

ADR : American Depositary Receipt

AMC : Asset Management Company

AMFI : Association of Mutual Funds in India

AOP : Association of Persons

BOI : Body of Individuals

BSE : Bombay Stock Exchange Limited

CBLO : Collateral ised Borrowing and Lending Obligation

CDSC : Contingent Deferred Sales Charge

ECS : Electronic Clearing System

EFT : Electronic Funds Transfer

ELSS : Equity Linked Savings Scheme

FCF : Fidelity Cash Fund

FEF : Fidelity Equity Fund

FII : Foreign Institutional Investor

FIIA : Fidelity International Investment Advisors, the Sponsor of Fidelity Mutual Fund

FISSF : Fidelity India Special Situations Fund

FOF : Fund of Funds

FSTIF : Fidelity Short Term Income Fund

FTAF : Fidelity Tax Advantage Fund

GDR : Global Depositary Receipt

HUF : Hindu Undivided Family



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IMA : Investment Management Agreement

ISC : Investor Service Centre

NAV : Net Asset Value

NRI : Non-Resident Indian

NSE : National Stock Exchange of India Limited

PIO : Persons of Indian OriginPOA : Power of Attorney

RBI : Reserve Bank of India

RTGS : Real Time Gross Settlement

SEBI : Securities and Exchange Board of India established under the SEBI Act, 1992

SEBI Act : Securities and Exchange Board of India Act, 1992

SEFT : Special Electronic Funds Transfer

SI : Standing Instructions

SIP : Systematic Investment Plan

STP : Systematic Transfer Plan

SWP : Systematic Withdrawal Plan

C. InterpretationFor all purposes of this Offer Document, except as otherwise expressly provided or unless the context otherwise requires:

u The terms defined in this Offer Document include the plural as well as the singular.

u Pronouns having a masculine or feminine gender shall be deemed to include the other.

u All references to "US$" refer to United States Dollars and "Rs." refer to Indian Rupees. A "Crore" means "ten million" and a"Lakh" means a "hundred thousand".

u References to times of day (i.e. a.m. or p.m.) are to Mumbai (India) times and references to a day are to a calendar dayincluding non Business Day.



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III. Risk Factors and SpecialConsiderations

A. Standard Risk Factorsu Mutual funds, like securities investments, are subject to

market risks and there is no guarantee against loss in any

Scheme or that the Schemes' objectives will be achieved.

u As with any investment in securities, the NAV of the Unitsissued under the Schemes can go up or down dependingon various factors and forces affecting capital and moneymarkets.

u Past performance of the Sponsor or the AMC or the mutualfunds managed by the Sponsor does not indicate the futureperformance of the Schemes.

u Investors in the Schemes are not being offered a guaranteedor assured rate of return.

u Fidelity Equity Fund, Fidelity Tax Advantage Fund, FidelityIndia Special Situations Fund, Fidelity Short Term Income

Fund and Fidelity Cash Fund are the names of the Schemes,and do not in any manner indicate the quality of the Schemes,their future prospects or returns.

u As per SEBI circular no. SEBI / IMD / CIR No. 10 / 22701 / 03 dated December 12, 2003, each scheme (includingthe plans thereunder) should have a minimum of 20 UnitHolders and no single Unit Holder should account for morethan 25% of the corpus of such scheme. The aforesaidconditions should be met in each calendar quarter on anaverage basis. In case of non-fulfilment with the first conditioni.e. minimum of 20 investors in the Scheme, for each calendarquarter as specified by SEBI, the Scheme shall be woundup by following the guidelines prescribed by SEBI and UnitHolders' investment in such Scheme would be redeemedat the Applicable NAV. SEBI has further prescribed that ifany investor breaches the 25% limit over a quarter, arebalancing period of one month will be allowed to theinvestor and thereafter the investor who is in breach ofthe limit shall be given 15 days notice to redeem his exposureover the 25% limit. In the event of failure on part of thesaid investor to redeem the excess exposure, the excessholding will be automatically redeemed by the Fund followingthe guidelines prescribed by SEBI.

B. Risk Factors pertaining toEquity Schemes

u Equity and equity related securities are volatile and proneto price fluctuations on a daily basis. The liquidity of

investments made in the Equity Schemes may be restrictedby trading volumes and settlement periods. Settlementperiods may be extended significantly by unforeseencircumstances. The inability of the Equity Schemes to makeintended securities purchases, due to settlement problems,could cause the Equity Schemes to miss certain investmentopportunities. Similarly, the inability to sell securities heldin the Equity Schemes' portfolios would result at times, inpotential losses to the respective Equity Schemes, shouldthere be a subsequent decline in the value of securitiesheld in such Equity Schemes' portfolios.

u Investments in equity and equity related securities involvea degree of risks and investors should not invest in EquitySchemes unless they can afford to take the risk of losingtheir investment.

u The liquidity and valuation of the Schemes' investmentsdue to its holdings of unlisted securities may be affected ifthey have to be sold prior to the target date of disinvestment.

u Investments in money market instruments would involvea moderate credit risk i.e. risk of an issuer's liability to meetthe principal payments.

u Money market instruments may also be subject to pricevolatility due to factors such as changes in interest rates,general level of market liquidity and market perception ofcredit worthiness of the issuer of such instruments. TheAMC endeavours to manage such risk by the use of in-house credit analysis.

u The NAV of Equity Schemes' Units, to the extent that such

Schemes are invested in money market instruments, willbe affected by the changes in the level of interest rates.When interest rates in the market rise, the value of a portfolioof money market instruments can be expected to decline.

C. Risk Factors pertaining to Debt Schemesu The performance of Debt Schemes may be affected by

changes in Government policies, general levels of interestrates and risks associated with trading volumes, liquidityand settlement systems.

u Interest rate risk: As with all debt securities, changes ininterest rates may affect the NAV of the Debt Schemessince the price of a fixed income instrument falls when theinterest rates move up and vice a versa. The effect is more

prominent when the duration of the instrument is higher.Hence the NAV movement of the Debt Schemes consistingof predominantly fixed income securities is likely to haveinverse correlation with the movement in interest rates. Incase of a floating rate instrument, this risk is lower as aresult of periodic reset of the coupon.

u Spread risk: Though the sovereign yield curve might remainconstant, investments in corporate bonds are exposed tothe risk of spread widening between corporate bonds andgilts. Typically, if this spread widens, the prices of thecorporate bonds tend to fall and so could the NAV of theDebt Schemes. Similar risk prevails for the investments inthe floating rate bonds, where the benchmark might remainunchanged, but the spread over the benchmark might vary.

In such an event, if the spread widens, the price and theNAV could fall.

u Credit risk or default risk: This refers to inability of theissuer of the debt security to make timely payments ofprincipal and / or interest due. It is reflected in the creditrating of the issuer. Hence if the credit rating of the issueris downgraded, the price of the security will suffer a lossand the NAV will fall. Credit risk factors pertaining to lowerrated securities also apply to lower rated zero coupon anddeferred interest kind bonds. Lower rated zero coupon anddeferred interest kind bonds carry an additional risk in that,unlike bonds that pay interest through the period of maturity,the Debt Schemes by investing in these bonds will realizeno cash till the cash payment date and if the issuer defaults,

the Scheme may obtain no return on its investment.Separately, underlying assets in securitised debt mayassume different forms and the general types of receivablesinclude auto finance, credit cards, home loans or any suchreceipts. Credit risks relating to such receivables dependupon various factors, including macro-economic factorsof these industries and economies. Specific factors likenature and adequacy of property mortgaged against theseborrowings, nature of loan agreement / mortgage deed incase of home loans, adequacy of documentation in caseof auto finance and home loans, capacity of a borrower tomeet his obligations on borrowings in case of credit cardsand intentions of the borrower influence the risks relatingto asset borrowings underlying securitised debt.

u

Liquidity risk: This represents the possibility that therealised price from selling the security might be lesser thanthe valuation price as a result of illiquid market. If a largeoutflow from the Scheme is funded by selling some of theilliquid securities, the NAV could fall even if there is nochange in interest rates. Illiquid securities are typically quotedat a higher yield than the liquid securities and have higherbid offer spreads. Investment in illiquid securities results

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in higher current yield for the portfolio. Liquidity risk is acharacteristic of the Indian fixed income market today. Inaddition, money market securities, while fairly liquid, lacka well-developed secondary market, which may restrictthe selling ability of the Scheme and may lead to the Schemeincurring losses till the security is finally sold.

u Reinvestment risk: This is associated with the fact that

the intermediate cash flows (coupons, prepayment ofprincipal in case of securitised transactions or principalpayment in case a security gets called or repurchased)may not be reinvested at the same yield as assumed inthe original calculations. In case of securitised debt, changesin market interest rates and pre-payments may not changethe absolute amount of receivables for the investors butmay have an impact on the re-investment of the periodiccash flows that an investor receives on securitised papers.

u Settlement risk: Different segments of Indian financialmarkets have different settlement periods and such periodsmay be extended significantly by unforeseen circumstances.Delays or other problems in settlement of transactions couldresult in temporary periods when the assets of the Scheme

are uninvested and no return is earned thereon. The inabilityof the Debt Schemes to make intended securities purchases,due to settlement problems, could cause the Debt Schemesto miss certain investment opportunities. Similarly, theinability to sell securities held in the Debt Schemes' portfolio,due to the absence of a well developed and liquid secondarymarket for debt securities, may result at times in potentiallosses to such Schemes in the event of a subsequent declinein the value of securities held in the Debt Schemes' portfolios.

u Market risk: Lower rated or unrated securities are morelikely to react to developments affecting the market andthe credit risk than the highly rated securities which reactprimarily to movements in the general level of interest rates.Lower rated or unrated securities also tend to be moresensitive to economic conditions than higher rated securities.

u Pre-payment risk:Asset securitization is a process wherebycommercial or consumer credits are packaged and sold inthe form of financial instruments. In the event of pre-paymentof the underlying debt, investors may be exposed to changesin tenor and yield.

u In addition to the factors that affect the values of securities,the NAV of Units of Debt Schemes will fluctuate with themovement in the broader fixed income market, moneymarket and derivatives market and may be influenced byfactors influencing such markets in general including butnot limited to economic conditions, changes in interest rates,price and volume volatility in the bond and stock markets,changes in taxation, currency exchange rates, foreign

investments, political, economic or other developments andclosure of the stock exchanges.

u Investments in different types of securities are subject todifferent levels and kinds of risk. Accordingly, the DebtSchemes' risk may increase or decrease depending uponits investment pattern. E.g. investments in corporate bondscarry a higher level of risk than investments in Governmentsecurities. Further, even among corporate bonds, bondswhich have a higher rating are comparatively less riskythan bonds which have a lower rating.

D. Risk Factors associated with trading inDerivatives

u Derivative products are specialized instruments that require

investment techniques and risk analysis different from thoseassociated with stocks and bonds. The use of a derivativerequires an understanding not only of the underlyinginstrument but of the derivative itself.

u The derivatives market in India is nascent and does nothave the volumes that may be seen in other developedmarkets, which may result in volatility to the values.

u Trading in derivatives carry a high degree of risk althoughthey are traded at a relatively small amount of margin whichprovides the possibility of great profit or loss in comparisonwith the principal investment amount. Thus, derivativesare highly leveraged instruments. Even a small pricemovement in the underlying security could have an impacton their value and consequently, on the NAV of the Units

of the Schemes.u The Schemes may find it difficult or impossible to execute

derivative transactions in certain circumstances. Forexample, when there are insufficient bids or suspensionof trading due to price limit or circuit breakers, the Schemesmay face a liquidity issue.

u The options buyer's risk is limited to the premium paid,while the risk of an options writer is unlimited. Howeverthe gains of an options writer are limited to the premiumsearned. Since in case of the Schemes all option positionswill have underlying assets, all losses due to price-movementbeyond the strike price will actually be an opportunity loss.

u The Exchange may impose restrictions on exercise of

options and may also restrict the exercise of options atcertain times in specified circumstances.

u The writer of a put option bears the risk of loss if the valueof the underlying asset declines below the exercise price.The writer of a call option bears a risk of loss if the valueof the underlying asset increases above the exercise price.

u Investments in index futures face the same risk as theinvestments in a portfolio of shares representing an index.The extent of loss is the same as in the underlying stocks.

u The Schemes bear a risk that it may not be able to correctlyforecast future market trends or the value of assets, indicesor other financial or economic factors in establishingderivative positions for the Schemes.

u The risk of loss in trading futures contracts can be substantial,because of the low margin deposits required, the extremelyhigh degree of leverage involved in futures pricing andthe potential high volatility of the futures markets.

u There is the possibility that a loss may be sustained bythe portfolio as a result of the failure of another party (usuallyreferred to as the "counter party") to comply with the termsof the derivatives contract. Other risks in using derivativesinclude the risk of mispricing or improper valuation ofderivatives and the inability of derivatives to correlateperfectly with underlying assets, rates and indices.

u Interest Rate Swaps (IRS) are highly specialized instrumentsthat require investment technique and risk analysis different

from those associated with equity shares and other traditionalsecurities. The use of a IRS requires not only anunderstanding of the referenced asset, reference rate orindex but also of the swap itself, without the benefit ofobserving the performance of the swap under all possiblemarket conditions. Swap agreements are also subject toliquidity risk, which exists when a particular swap is difficultto purchase or sell. Swap agreements may be subject topricing risk, which exists when a particular swap becomesextraordinarily expensive (or cheap) relative to historicalprices or the prices of corresponding cash marketinstruments. IRS agreements are also subject to counterpartyrisk on account of insolvency or bankruptcy or failure ofthe counterparty to make required payments or otherwisecomply with the terms of the agreement.

E. Risk Factors associated withScrip Lending

The risks in lending portfolio securities, as with other extensionsof credit, consist of the failure of another party, in this case theapproved intermediary, to comply with the terms of agreemententered into between the lender of securities i.e. any scheme

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and the approved intermediary. Such failure to comply can resultin the possible loss of rights in the collateral put up by the borrowerof the securities, the inability of the approved intermediary toreturn the securities deposited by the lender and the possibleloss of any corporate benefits accruing to the lender from thesecurities deposited with the approved intermediary. The MutualFund may not be able to sell such lent securities and this can

lead to temporary illiquidity.

F. Risk Factors associated withOverseas Investment

u Subject to necessary approvals and within the investmentobjectives of the Schemes, the Schemes may invest inoverseas markets which carry risks related to fluctuationsin the foreign exchange rates, the nature of the securitiesmarket of the country, repatriation of capital due to exchangecontrols and political circumstances.

u It is the AMC's belief that investment in foreign securitiesoffers new investment and portfolio diversificationopportunities into multi-market and multi-currency products.However, such investments also entail additional risks. Such

investment opportunities may be pursued by the AMCprovided they are considered appropriate in terms of theoverall investment objectives of the Schemes. Since theSchemes would invest only partially in foreign securities,there may not be readily available and widely acceptedbenchmarks to measure performance of such Schemes.To manage risks associated with foreign currency andinterest rate exposure, the Fund may use derivatives forefficient portfolio management including hedging and inaccordance with conditions as may be stipulated underthe Regulations or by RBI from time to time.

u Overseas investments will be made subject to any / allapprovals, conditions thereof as may be stipulated underthe Regulations or by RBI and provided such investmentsdo not result in expenses to the Fund in excess of theceiling on expenses prescribed by and consistent with costsand expenses attendant to international investing. The Fundmay, where necessary, appoint other intermediaries of reputeas advisors, custodian / sub-custodians etc. for managingand administering such investments. The appointment ofsuch intermediaries shall be in accordance with theapplicable requirements of SEBI and within the permissibleceilings of expenses. The fees and expenses wouldillustratively include, besides the investment managementfees, custody fees and costs, fees of appointed advisorsand sub-managers, transaction costs and overseasregulatory costs.

u To the extent that the assets of the Schemes will be investedin securities denominated in foreign currencies, the Indian

Rupee equivalent of the net assets, distributions and incomemay be adversely affected by changes in the value of certainforeign currencies relative to the Indian Rupee. Therepatriation of capital to India may also be hampered bychanges in regulations concerning exchange controls orpolitical circumstances as well as the application to it ofother restrictions on investment.

G. Additional Scheme Specific Risk Factorsu FTAF: By virtue of requirements under ELSS, Units issued

under FTAF will not be redeemed until the expiry of threeyears from the date of their allotment. The ability of aninvestor to realise returns on investments in FTAF isconsequently restricted for the first three years. Redemptionwill be made prior to the expiry of the aforesaid three yearperiod only in the event of the death of a Unit Holder, subjectto the Units having been held for a period of one year fromthe date of their allotment.

H. Special Considerationsu The Sponsor is not responsible or liable for any loss resulting

from the operation of the Schemes beyond the initial

contribution of an amount of Rs.1,00,000 (Rupees OneLakh) collectively made by them towards setting up theFund or such other accretions and additions to the initialcorpus set up by the Sponsor.

u Neither this Offer Document nor the Units have beenregistered in any other jurisdiction. The distribution of thisOffer Document in certain jurisdictions may be restricted

or totally prohibited and accordingly, persons who comeinto possession of this Offer Document are required to informthemselves about, and to observe, any such restrictions.

u Prospective investors should review / study this OfferDocument carefully and in its entirety and shall not construethe contents hereof or regard the summaries containedherein as advice relating to legal, taxation or financial /investment matters and are advised to consult their ownprofessional advisor(s) as to the legal, tax, financial or anyother requirements or restrictions relating to the subscription,gifting, acquisition, holding, disposal (by way of sale, switchor Redemption or conversion into money) of Units and tothe treatment of income (if any), capitalisation, capital gains,any distribution and other tax consequences relevant to

their subscription, acquisition, holding, capitalisation,disposal (by way of sale, transfer, switch or conversioninto money) of Units within their jurisdiction of nationality,residence, incorporation, domicile etc. or under the lawsof any jurisdiction to which they or any managed funds tobe used to Purchase / gift Units are subject, and also todetermine possible legal, tax, financial or otherconsequences of subscribing / gifting, purchasing or holdingUnits before making an application for Units.

u Fidelity Mutual Fund / the AMC have not authorised anyperson to give any information or make any representations,either oral or written, not stated in this Offer Document inconnection with issue of Units under the Schemes.Prospective investors are advised not to rely upon any

information or representations not incorporated in this OfferDocument as the same have not been authorised by theFund or the AMC. Any subscription, Purchase or sale madeby any person on the basis of statements or representationswhich are not contained in this Offer Document or whichare inconsistent with the information contained herein shallbe solely at the risk of the investor.

u Subject to the Regulations, from time to time, funds managedby the affiliates / associates of the Sponsor may investeither directly or indirectly in the Schemes. The fundsmanaged by these affiliates / associates may acquire asubstantial portion of any Scheme's Units and collectivelyconstitute a major investment in such Scheme. Accordingly,Redemption of Units held by such funds may have anadverse impact on the value of the Units of that Schemebecause of the timing of any such Redemption and mayaffect the ability of other Unit Holders to redeem theirrespective Units.

u As the liquidity of the Schemes' investments may sometimesbe restricted by trading volumes settlement periods andtransfer procedures, the time taken by the Fund forRedemption of Units may be significant in the event of aninordinately large number of Redemption requests or ofrestructuring of the Schemes' portfolios. In view of this,the Trustee has the right, in its sole discretion, to limitredemptions under certain circumstances - please referparagraph "Right to Limit Redemptions" in Chapter VII.

u Anti Money Laundering and Know Your Customer (KYC):

Fidelity is committed to complying with all applicable antimoney laundering and KYC laws and regulations in all ofits operations. Fidelity recognises the value and importanceof creating a business environment that strongly discouragesmoney launderers from using Fidelity. To that end, certainpolicies have been adopted by the AMC. The need to "KnowYour Customer" (KYC) is vital for the prevention of moneylaundering.


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In terms of the Prevention of Money Laundering Act, 2002("PMLA") the rules issued there under and the guidelines /circulars issued by SEBI regarding the Anti Money Laundering(AML) Laws, all intermediaries, including Mutual Funds, arerequired to formulate and implement a client identificationprogramme, and to verify and maintain the record of identityand address(es) of investors.

The Mutual Fund Industry has collectively entrusted theresponsibility of collection of documents relating to identity andaddress and record keeping to an independent agency (presentlyCDSL Ventures Limited) that will act as central record keepingagency ('Central Agency'). As a token of having verified theidentity and address and for efficient retrieval of records, theCentral Agency will issue an acknowledgement to each investorwho submits an application and the prescribed documents tothe Central Agency.

Investors who have obtained an acknowledgement can investin the schemes of the mutual fund by referring to / submittingthe acknowledgement in lieu of submitting information anddocuments required under AML Laws.

Investors who wish to obtain an acknowledgement have to submita completed Application Form (the Form') along with all theprescribed documents listed in the Form, at any of the Point ofService ('POS'). The Form is available at our website(www.fidelity.co.in) and AMFI website (www.amfiindia.com). POSare the designated centres appointed by the Central Agencyfor receiving the Forms, processing data and providing theacknowledgement. List of and location of POS are available atour website (www.fidelity.co.in) and www.amfiindia.com. Onsubmission of application, documents and information to thesatisfaction of the POS, the investor will be given anacknowledgement across the counter. Subsequently, the CentralAgency will scrutinize the information and documents submittedby the investor. In case of any deficiency in the document /information, the form will be rejected.

Presently, it is mandatory for all applications for Subscriptionof value of Rs.50,000 and above to quote the PAN of all theapplicants (guardian in case of minor) in the application forSubscription. The PAN will be validated with the records of theCentral Agency before allotting units. Applications forsubscriptions of value of Rs.50,000 and above without a validPAN will be rejected.

In the event of any Form being subsequently rejected for lackof information / deficiency / insufficiency of mandatorydocumentation, the investment transaction will be cancelledand the amount may be redeemed at Applicable NAV, subjectto payment of Exit Load, wherever applicable. Such redemptionproceeds will be dispatched within a maximum period of 21days from date of acceptance of the application.

All investors (both individual and non-individual) can submitthe Form for the purpose of KYC. However, applicants shouldnote that minors cannot make an application and any investmentin the name of minors should be along with a guardian, whoshould obtain an acknowledgement for the purpose of investingwith a Mutual Fund. Also, applicants / Unit Holders intending toapply for units / currently holding units and operating their MutualFund folios through a Power of Attorney (PoA) must ensurethat the issuer of the PoA and the holder of the PoA must obtainthe acknowledgement at the time of investment of value of Rs.50, 000 and above. PoA holders are not permitted to make anapplication on behalf of the issuer of the PoA. Separateprocedures are prescribed for change in name, address andother related details, should the applicant desire to change such

information. POS will extend the services of effecting suchchanges.

Suspicious Transaction Reporting: If after due diligence, theAMC believes that the transaction is suspicious in nature as

regards money laundering, the AMC shall report any suspicioustransactions to competent authorities under the PMLA and rules / guidelines issued thereunder by SEBI and RBI, furnish anysuch information in connection therewith to such authoritiesand take any other actions as may be required for the purposesof fulfilling its obligations under the PMLA without obtaining theprior approval of the investor / Unit Holder / a person making

the payment on behalf of the investor.u Investor Protection :

(a) FEF, FISSF: The Schemes are designed to supportlonger-term investment and active trading isdiscouraged. Short term or excessive trading into andout of FEF or FISSF may affect its performance bydisrupting portfolio management strategies and byincreasing expenses. The Fund and the distributorsmay refuse to accept applications for Purchase,especially where transactions are deemed disruptive,particularly from market timers or investors who, intheir opinion, have a pattern of short term or excessivetrading or whose trading has been or may be disruptivefor FEF or FISSF. If in the opinion of the AMC, a UnitHolder is indulging in short term or excessive tradingas above, it shall, under powers delegated by theTrustee, have absolute discretion to reject anyapplication, prevent further transaction by the UnitHolder or redeem the Units held by the Unit Holder atany time prior to the expiry of 30 Business Days fromthe date of the application.

(b) FSTIF: As the Scheme is a short term income scheme,it is designed to offer investors liquidity and the Fundanticipates that investors will come in and out of theScheme frequently. Such frequent purchases andredemptions by investors can reduce the returns tolong term investors by increasing expenses of theScheme and can also disrupt portfolio managementstrategies. Therefore, the Scheme is proposed to be

managed with these risks in mind. Though the Schemehas no limit on the number of purchases andredemptions by any investor, the AMC reserves theright, under powers delegated by the Trustee, to rejectany application, prevent further transactions by a UnitHolder, or redeem the Units held by the Unit Holderat any time prior to the expiry of 30 Business Daysfrom the date of submission of the application if, inthe AMC's opinion, a Unit Holder has been indulgingin excessively frequent trading or if his trading hasbeen or may be disruptive for the Scheme.

(c) FCF: As the Scheme is a cash / liquid scheme, it isdesigned to offer investors liquidity and the Fundanticipates that investors will come in and out of the

Scheme frequently. Such frequent purchases andredemptions by investors can reduce the returns tolong term investors by increasing expenses of theScheme and can also disrupt portfolio managementstrategies. Therefore, the Scheme is proposed to bemanaged with these risks in mind. Though the Schemehas no limit on the number of purchases andredemptions by any investor, the AMC reserves theright, under powers delegated by the Trustee, to rejectany application, prevent further transactions by a UnitHolder, or redeem the Units held by the Unit Holderat any time prior to the expiry of 30 Business Daysfrom the date of submission of the application if, inthe AMC's opinion, a Unit Holder has been indulgingin excessively frequent trading or if his trading has

been or may be disruptive for the Scheme.

Investors are urged to study the terms of the Offer carefullybefore investing in the Schemes and to retain this OfferDocument for future reference.

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DUE DILIGENCE CERTIFICATEIt is confirmed that:

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

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

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

4. All the intermediaries named in the Offer Document are registered with SEBI and till date such registration is valid.

For Fidelity Fund Management Private Limited

Place : Mumbai Name : Hemang BakshiDate : March 09, 2007 Designation : Director - Legal and Compliance

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IV. Constitution of the Fund

A. The FundThe Fund was established by FIIA, as a Trust under the IndianTrusts Act, 1882, in terms of the Trust Deed dated August 9,2004 and is registered under Indian Registration Act, 1908.

The Fund has been registered with SEBI vide Registration No.MF / 050 / 05 / 01. The office of the Fund is at 56, 5th Floor,Maker Chambers VI, 220, Nariman Point, Mumbai - 400 021.

The objective of the Fund is to raise monies through the sale ofunits to the public or a section of the public under one or moreschemes for investing in securities.

B. The SponsorThe Sponsor of Fidelity Mutual Fund is Fidelity InternationalInvestment Advisors, a company incorporated in Bermuda in1983 under registered number EC 10326. FIIA is registeredwith the following financial services regulators: the SecuritiesExchange Commission in the US, the HK Securities and FuturesCommission in Hong Kong and the Financial Services Agency

in Japan. FIIA is a wholly owned subsidiary of Fidelity InternationalLimited, a company established in Bermuda.

Given below is a brief summary of the Sponsor's financials(amounts in US $):

Description Year ended Year ended Year ended

June 30, 2006 June 30, 2005 June 30, 2004

Total Revenue 133,444,959 98,231,913 74,656,435

Profit Before Tax 22,450,992 10,886,916 50,589,072

Profit After Tax 22,404,637 10,850,032 50,561,184

Free Reserves** 58,696,535 36,293,391 78,665,532

Net Worth 59,446,535 37,043,391 79,307,532

Earnings per Share 29.87 14.47 78.76

Book Value per Share 79.26 49.39 123.53

Dividend % 0% 10,163% 0%

Paid Up Capital (Equity) 750,000 750,000 642,000

** Note: Including contributed surplus.

C. The Trustee Company (The Trustee)Fidelity Trustee Company Private Limited (the Trustee), acompany incorporated under the Companies Act, 1956, is theTrustee for the Fund vide Trust Deed dated August 9, 2004.

I. DirectorsThe directors of the Trustee are:

Names, addresses and Other directorships of the

occupations of the Directors Directors

Mrs. Ann Stock Fidelity Securities KK

Flat 2, 130 Tonbridge Road, Fidelity Investment Services Limited

Tonbridge, Kent TN11 9EW Fidelity Investments International

United Kingdom Fidelity Pensions ManagementService Financial Administration Services

Limited

Fidelity International Investment

Advisors (U.K.) Limited

Fidelity Investments Asset

Management (Korea) Limited

Justice (retired) S. S. Sodhi Fortis Health Care Limited

51, Sector 9,

Chandigarh - 160 009

Retired

Mr. K. R. Ramamoorthy ING Vysya Bank Limited

42, 18th Main Road, The Clearing Corporation of

J. P. Nagar, Phase II, India Limited

Bangalore -560 078 Nilkamal Limited

Advisor Subros LimitedAmrit Banaspati Company Limited

Ujjivan Financial Services

Private Limited

GMR Infrastructure Limited

GMR Power Corporation Private

Limited

GMR Ambala-Chandigarh Express

Private Limited

Gryffon Investment Advisors Private

Limited

Mr. Rajesh Kapadia Asianet Satellite

9-C Woodlands, Communications Limited

67, Dr. G. Deshmukh Marg, Bhoruka Power Corporation Limited

Mumbai - 400 026 Exide Industries LimitedChartered Accountant Goldiam International Limited

H & R Johnson (India) Limited

Nilkamal Limited

Prism Cement Limited

Surin Investments Private Limited

Associated Battery Manufacturers

(Ceylon) Limited

Chloride Batteries SE Asia Private

Limited

Chloride Eastern Industries Private

Limited

Chloride Eastern Limited

The Indian Merchants' Chamber

Innovasynth Technologies (I)Limited

Diagold Design Limited

ING Vysya Life Insurance Company

Limited

RPG Guardian Private Limited

Foodworld Supermarkets Limited

Mrs. Ann Stock is a director associated with the Sponsor.

Mrs. Ann Stock

Mrs. Stock is the Executive Director, Global Oversight -responsible for Compliance, Internal Audit, Risk and Investigationsand Intelligence across the FIL Group.

Mrs. Stock is a Chartered Accountant (ICAEW) with an MBAand a Degree in Economics from Kingston University, England.She has over 20 years of professional experience in financialservices and related fields of practice, having previously workedfor KPMG and Legal and General plc.

Justice (retired) S. S. Sodhi

Justice (retired) Sodhi, a lawyer, started practicing law in 1958in the High Court of Punjab and Haryana and served as a Judgein this High Court during the period 1982 to 1994. During theperiod from 1968 to 1982, he also served in various positionslike the Legal Remembrancer to the Punjab Government;Registrar of High Court of Punjab; Lok Pal (Ombudsman), Punjaband Haryana; and District and Sessions Judge in Punjab. In1994, he was appointed as the Chief Justice of the High Court

of Allahabad.

In 1997 he was appointed as the Chairperson of TelecomRegulatory Authority of India. He is currently a Trustee of theTribune group of newspapers, Chandigarh; Honorary Rectorof the Army Law Institute, Mohali; Member Board of Governorsof Yadavindra Public School, Patiala and Mohali; Director Fortis

ConstitutionoftheFund

Names, addresses and Other directorships of the

occupations of the Directors Directors


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Hospital, Mohali and President, Chandigarh Lawn TennisAssociation.

Mr. K. R. Ramamoorthy

K. R. Ramamoorthy is a senior banker, with over 40 years ofcommercial and banking experience in India. He was theChairman and CEO of two of the leading commercial banks in

India, one a state-owned commercial bank - Corporation Bank- and the other - Vysya Bank Limited - in the private sector. Hehas also served as an Advisor to CRISIL for three years, providingexpert advice and guidance on advisory assignments relatingto commercial banks in the area of Credit Risk Rating framework.

After his rewarding career in leadership positions,Mr. Ramamoorthy has been consulting for commercial banksin India and other developing countries. His services are availedof by The World Bank, International Monetary Fund, InternationalFinance Corporation, commercial banks and internationalinvestors in many areas including bank restructuring,strengthening and financial risk assessment.

Prior to joining the Indian banking industry, Mr. Ramamoorthygained rich career exposure in the private sector for nearly two

decades - in pharmaceutical, entertainment and engineeringand consumer product marketing organisations, including Liptons,where he served for 15 years.

Mr. Ramamoorthy holds degrees in Economics and Law(University Rank holder) and is a senior Fellow Member of theInstitute of Company Secretaries of India.

Currently he serves on the Boards of ING Vysya Bank Limited,Fidelity Trustee Company Private Limited, Clearing Corporationof India, Subros Limited, Nilkamal Limited and Amrit BanasaptiLimited as an Independent Director. He is also on the Auditand Risk Management Committees of some of these companiesand has also served on the various Committees constituted bythe Reserve Bank of India and the Indian Banks' Association.

Mr. Rajesh KapadiaMr. Kapadia, a Chartered Accountant is a Senior Partner of thefirm GM Kapadia & Company. Mr. Kapadia has more than 23years of experience in the field of audit, taxation, investigations,due diligence, company law and exchange control.

Mr. Kapadia was on the Board of the Trustee Company of DSPMerrill Lynch Mutual Fund from 1998 till 2002. Apart from beinga Trustee for many charitable trusts, Mr. Kapadia is also a directoron the boards of various companies.

II. Summary of the Substantive Provisions of theTrust Deed

Pursuant to the Trust Deed dated August 9, 2004 constituting

the Mutual Fund and in terms of the SEBI Regulations, therights and obligations of the Trustee, inter alia, are as under:

1. The Trustee Company has exclusive ownership of the assetsof the Schemes of the Fund ("Trust Property") and holdsthe same in trust and for the benefit of the Unit Holders.

2. The Trustee Company has the authority to appoint one ormore bodies corporate to act as an asset managementcompany and to enter into an investment managementagreement with them.

3. The Trustee Company shall hold the Trust Property in trustfor the benefit of the Unit Holders.

4. The Trustee Company is responsible for the managementof the Mutual Fund and for providing information to the

Unit Holders, the Sponsor, SEBI and any other regulatorybody and to ensure compliance by the Mutual Fund / AMCof all statutory formalities.

5. The Trustee Company, through the AMC is, inter alia,empowered and entitled to:

(i) frame one or more schemes for the issue of Units

and frame such rules and regulations for the issue asit may in its absolute discretion deem fit;

(ii) acquire, hold, manage, trade, lend and dispose ofstocks and securities of all kinds, subject to RBIapproval;

(iii) acquire or enter into or deal in any derivative, option,

hedging, swap or other contract of a similar nature,repurchase agreement transactions and to enter intosecurities lending and borrowing transactions,underwriting and sub underwriting contracts andplacings;

(iv) calculate the offer, repurchase and Redemption pricesof Units including inter alia the allowance to be madein computing these prices for contingent liabilities;

(v) keep the capital and monies of the Mutual Fund incall or repurchase options or deposit with banks orother financial institutions or companies or any otherfinancial instruments as may be permitted under theRegulations;

(vi) enter into agency arrangements with banks;

(vii) enter into agreements or arrangements includingagreements / arrangements by way of tie-ups,collaborations, joint ventures with mutual funds, assetmanagement companies, financial institutions,investment companies, banks and other institutions;

(viii) do any other kind of business connected withmobilisation of savings and investments;

(ix) accept contributions, grants and donations;

(x) collect, get in and receive the profit, interest, dividendand income of the Trust Property from time to time asand when the same becomes due and receivable;

(xi) pay all costs, charges, expenses and outgoings ofand incidental to the administration and execution ofthe Trust and the management and maintenance ofthe Trust Property and incurred for the same inaccordance with and subject to the limits under theRegulations as may be stipulated from time to time;

(xii) appoint brokers, sub-brokers, agents, custodial agents,registrars, share transfer agents for the purpose ofpurchase and sale of securities, investment under thescheme and to pay their charges;

(xiii) appoint and engage advocates, solicitors, valuers,chartered accountants, credit rating agencies and othersuch advisers and experts for the purpose of the

scheme and to pay their remuneration and charges;

(xiv) do all such acts, deeds and things and exercise suchpowers and sign and execute all such documents,Unit Certificates, transfer forms, declarations, affidavits,indemnities as it may in its absolute discretion deemfit;

(xv) open one or more bank accounts, securities account(s)with RBI and other banks (if permitted) and operatethe same;

(xvi) deal with all matters arising from the Mutual Fund /Asset Management Company, on the one hand andUnit Holders on the other, and to settle disputes, ifany, with Unit Holders;

(xvii) generally to exercise all such powers as it may berequired to be exercised under the Regulations forthe time being in force and do all such matters andthings as may promote the Mutual Fund or as may beincidental to or consequential upon the discharge ofits functions and the exercise and enforcement of allor any of the powers and rights under the Trust Deed;

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(xviii) pay out of the income of the Trust Property afterdeducting all expenses the interest and dividend inaccordance with the Scheme and the Offer Documentapplicable to each scheme;

(xix) subject to the provisions of the Regulations and theTrust Deed, exercise all powers and rights of a trusteeunder the Indian Trusts Act, 1882, to achieve the objects

of this Trust and protect the interests of the Unit Holders.

6. The Trustee Company is responsible for supervising thecollection of all income due to be paid to the scheme andfor claiming any repayment of tax and holding any incomereceived in trust for the Unit Holders in accordance withthe Trusts Deed and the Regulations.

7. The Trustee Company shall inter alia:

(i) at no time acquire any asset out of the Trust Property,which involves the assumption of any liability whichis unlimited or results in the encumbrance of the TrustProperty in any way, except to the extent permittedby the Regulations;

(ii) take reasonable care to ensure that the schemes floatedand managed by the Asset Management Company,are operated in accordance with the Trust Deed, theOffer Document and the Regulations;

(iii) cause the Asset Management Company to ensure thatthe manner of calculating the offer, repurchase andRedemption prices of Units, including inter alia theallowance to be made in computing these prices forcontingent liabilities, would be in accordance with theRegulations and any guidelines issued by SEBI fromtime to time;

(iv) be bound to discharge all obligations, duties andresponsibilit ies entrusted to them under theRegulations.

The Trustee shall exercise due diligence as under:

General Due Diligence:

(i) The Trustee shall be discerning in the appointment ofthe key personnel of the Asset Management Company.

(ii) The Trustee shall review the desirability or continuanceof the Asset Management Company if substantialirregularities are observed in the schemes and shallnot allow the Asset Management Company to floatnew schemes.

(iii) The Trustee shall ensure that the Trust Property isproperly protected, held and administered by properpersons and by a proper number of such persons.

(iv) The Trustee shall ensure that all service providershold appropriate registrations from SEBI or concernedregulatory authorities.

(v) The Trustee shall report to SEBI of any specialdevelopments in the Mutual Fund.

Special Due Diligence:

(i) The Trustee shall arrange for test checks of servicecontracts at such frequency and in such manner as itshall deem appropriate from time to time.

(ii) The Trustee shall obtain internal audit reports at regularintervals from independent auditors appointed by theTrustee Company.

(iii) The Trustee shall obtain compliance certificates atregular intervals from the Asset Management Company.

(iv) The Trustee shall hold meetings of the Board ofDirectors of the Trustee Company regularly andfrequently.

(v) The Trustee shall consider the reports of theindependent auditor and compliance reports of AssetManagement Company at the meetings of the Boardof Directors of the Trustee Company for appropriateaction.

(vi) The Trustee shall maintain minutes of the meetingsof the Board of Directors of the Trustee Company.

(vii) The Trustee shall prescribe and adhere to a code ofethics by the Trustee Company, Asset ManagementCompany and its personnel.

(viii ) The Trustee shall communicate in writing with the AssetManagement Company regarding any deficiencies andchecking on the rectification of deficiencies.

(ix) The Trustee shall ensure that the accounts maintainedby the Asset Management Company follow theaccounting policies prescribed by SEBI or any otherrelevant authority and shall be in the prescribed formatand have the prescribed contents.

(x) The Trustee shall procure that all necessary statements

in respect of the Mutual Fund and the Trust Propertyare prepared in the manner required by Regulationsand make or cause to be made all reports, publications,notices and filings with respect to the Mutual Fundrequired by Indian law.

(xi) The Trustee shall cause the balance sheet and accountsof the Trust to be prepared and submitted to the Sponsorfor the accounting year as soon as may be after theend of each accounting year.

(xii) The Trustee shall cause the affairs of the variousschemes of the Trust in respect of every accountingyear to be audited by one or more auditors qualifiedto act as auditors under the law for the time beingand obtain their report and submit the same to SEBIor any other Government Authority, if required by thelaw in force. The auditor shall be appointed by theTrustee Company and the Trustee Company may inits discretion, determine out of what part or parts ofthe Trust Property or the income thereof, the cost ofsuch audit shall be defrayed and may make suchapportionment of such costs as it thinks desirable.Such auditor shall not be the same as the auditorappointed for the Asset Management Company.

8. The Trustee may amend the Trust Deed with the priorapproval of SEBI and the Unit Holders where it affects theinterest of Unit Holders.

9. The Trustee Company may, subject to the Regulations,

acquire, hold, develop, deal with and dispose of any movableor immovable property either on ownership, rental or otherbasis whatsoever, with power to let or sublet the samewith or without charging any compensation fee or rent asthe Trustee may in its absolute discretion deem fit. However,no investment shall be made in immovable property fromthe resources mobilised for the scheme.

III. Trustee - Fees and Expenses

Pursuant to the Trust Deed, the Trustee, in addition to thereimbursement of all costs, charges and expenses incurred inor about the administration and execution of the Fund, is entitledto receive a fee from and out of the Trust Property. As per theTrust Deed, the Trustee's fee can be determined for each Schemeseparately. The fee charged for each Equity Scheme will be0.025% per annum of the average daily net assets of therespective Scheme and the fee charged for each Debt Schemewill be 0.001% per annum of the average daily net assets ofthe respective Scheme or Rs. 1,500,000 per annum per Scheme,whichever is lower. The Trustee fees shall be accrued on adaily basis but the payment shall be made on a monthly basis.

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IV. Trustee - Supervisory Role

The Compliance Officer reports directly to the Board of Directorsof the Trustee to carry out the supervisory role on behalf of theTrustee. In addition, the Trustee may seek any information fromtime to time from the AMC. The internal audit of the Fund willbe carried out by the internal audit team of the FIL GlobalOversight function to facilitate monitoring the activities of the

AMC. On a quarterly basis, an activity report is prepared bythe AMC and the same is discussed at the board meetings ofthe Trustee. During the financial year 2005-2006, 6 meetingsof the Board of Directors of Trustee were held. The AuditCommittee, comprising of all the directors on the board of theTrustee with an independent director as its chairman, has beenconstituted pursuant to the SEBI circular MFD / CIR / 010 / 024 / 2000 dated January 17, 2000 to, inter alia, review internalaudit systems and reports from internal and statutory auditors.

D. The Asset Management Company

I. Constitution

In conformity with the Regulations, Fidelity Fund ManagementPrivate Limited, a company registered under the Companies

Act, 1956, and having its registered office at 56, 5th floor, MakerChambers VI, 220, Nariman Point, Mumbai 400 021, has beenset up to act as the Asset Management Company (AMC) to theFund.

In terms of the Investment Management Agreement ("IMA") datedAugust 9, 2004 entered into between the Trustee and the AMC,the AMC has been appointed as the Investment Manager tothe Fund.

The Investment Manager was approved by SEBI to act as theAMC for the Fund vide letter no. IMD / SB / 33960 / 05 datedFebruary 17, 2005. The AMC manages the Schemes / plans /options of the Fund in accordance with the provisions of theInvestment Management Agreement, the Trust Deed, theRegulations and the objectives of each Scheme / plan / option.

The AMC can be removed by the Trustee, subject to theRegulations.

II. Directors

The directors of the AMC are:

Names and addresses Other directorships of theof the Directors Directors

Mr. Simon Haslam COLT Telecom Group S.A.Flat 1, 130 Tonbridge Road, Euroclear plcHildenborough, Tonbridge, Euroclear SA / NVKent TN11 9EW FID Funds (Mauritius) LimitedUnited Kingdom FIL Trust Co. Limited

Fidelity Adviser World Funds (Bermuda)Limited

Fidelity Distributors International LimitedFidelity Fund Management LimitedFidelity Funds II SICAVFidelity Funds Korea (L) Ltd.Fidelity Funds SICAVFidelity International Investment AdvisorsFidelity International LimitedFidelity International Quiescent Ventures

LimitedFidelity International Services LimitedFidelity International Ventures LimitedFidelity Investment Management GmBHFidelity Investment Management LimitedFidelity Investments (Cayman Islands) SPCFidelity Investments (CI) Limited

Fidelity Investments (Singapore) LimitedFidelity Investments (South Africa) LimitedFidelity Investments DistributorsFidelity Investments International GmbHFidelity Investments Life Insurance LimitedFidelity Investments Securities Investment

Trust Co. Ltd.

Fidelity MultiManager SICAVFidelity Nominees (CI) LimitedFidelity Structured Investments SPCFidelity Villa Mumm LimitedFIL Asia Ventures Limited

FIL Capital Management (Hong Kong)Limited

FIL C