fidelity liquid plus fund

8/8/2019 Fidelity Liquid Plus Fund

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This Offer Document contains information necessary for an investor to make an informed investment decision in the

Scheme described herein. Investors should read the Offer Document carefully prior to making an investment decision

and retain the Offer Document for future reference. Investors may note that this Offer Document remains effective

until a material change occurs. Material changes shall be filed with the Securities and Exchange Board of India (SEBI)

and circulated to all Unit Holders or may be publicly notified by advertisements in the newspapers subject to the

applicable Regulations. Investors may also like to obtain further changes after the date of this Offer Document from

the Mutual Fund/its Investor Service Centres or distributors.

The particulars of the Scheme under this Offer Document, have been prepared in accordance with the SecuritiesExchange 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 been approved or disapproved by SEBI nor has SEBI certified the

accuracy and adequacy of the Offer Document.

This Offer Document is dated September 12, 2007.

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Sponsor:Fidelity International Investment Advisors

Registered Office:Pembroke Hall, 42 Crow Lane,

Pembroke, Hamilton, HM19, Bermuda

Asset Management Company:Fidelity Fund Management Private Limited

Registered Office:56, 5th Floor, Maker Chambers VI,

220, Nariman Point, Mumbai 400 021

Trustee:Fidelity Trustee Company Private Limited

Registered Office:56, 5th Floor, Maker Chambers VI,

220, Nariman Point, Mumbai 400 021

Issue of Units at Rs. 10 per Unit for cash during theNew Fund Offer and at Applicable NAV thereafter

OFFER DOCUMENT

New Fund Offer Opens and Closes: September 19, 2007

Presented by Fidelity Mutual Fund

AN OPEN ENDED DEBT SCHEME


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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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Offer Document

Fidelity Liquid Plus Fund

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Table of Contents

PagePage

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

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

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

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

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

III. Risk Factors and Special Considerations ...... 9

A. Risk Factors Associated with Fixed

Income and Money Market Instruments ....... 9

B. Risk Factors Associated with Derivat ives..... 10

C. Risk Factors Associated with

Overseas Investment..................................... 10

D. Special Considerations.................................. 10

IV. Constitution of the Fund ................................... 13

A. The Fund ........................................................ 13

B. The Sponsor................................................... 13

C. The Trustee Company (The Trustee)............ 13

I. Directors ................................................. 13

II. Summary of the Substantive

Provisions of the Trust Deed ................. 14

III. Trustee - Fees and Expenses ............... 15

IV. Trustee - Supervisory Role .................... 15

D. The Asset Management Company................ 16

I. Constitution ............................................ 16

II. Directors ................................................. 16

III. Duties and Responsibilities of the

AMC and the material provisions of

the Investment Management

Agreement .............................................. 17

IV. Investment Management Fees .............. 17

V. Fund Manager ........................................ 19

VI. Compliance Officer ................................ 19

VII. Investors Relations Officer .................... 19E. The Registrar and Transfer Agent................. 19

F. The Custodian................................................ 19

G. The Fund Accountant .................................... 19

H. The Auditors ................................................... 19

I. The Collection Banks..................................... 19

V. Investment Objective, Investment Strategy,

Investment Pattern and Risk Profile and

Limitations of the Scheme ................................ 20

A. Fidelity Liquid Plus Fund ............................... 20

B. Investments in Derivatives ............................ 21

C. Fundamental Attributes ................................. 22

D. Borrowing Powers.......................................... 22

E. Investment in the Scheme by the AMC,

Sponsor or their Affiliates .............................. 22

F. Procedure and Recording of

Investment Decisions .................................... 22

G. Overview of Debt Markets ............................. 22

H. Investment Restrictions ................................. 23

I. Investment of Subscription Money................ 23

J. Computat ion of Net Asset Value ................... 23

K. Accrual of Expenses and Income ................. 25

L. Recording of Changes ................................... 25

M. Calculation of NAV ......................................... 25

N. Accounting Policies and Standards .............. 25

VI. Load and Fees and Expenses .......................... 27

A. Load Structure of the Scheme ...................... 27

B. Fees and Expenses of the Scheme .............. 27

C. Initial Issue Expenses of Existing /

Past Schemes ................................................ 28

VII. Units and the Offer ............................................. 30

A. Units on Offer during the

New Fund Offer (NFO) .................................. 30

B. Units on Offer - General Information ............ 30

C. Purchase of Units .......................................... 30

D. Important Note on Anti Money Laundering,

Know-Your-Customer and

Investor Protection......................................... 33

E. Investor's Personal Information .................... 34

F. Facilities Offered to Investors

under the Scheme ......................................... 34

G. Redemption of Units ...................................... 37

H. Suspension of the Purchase and

Redemption of Units ...................................... 38

I. Right to Limit Redemptions ........................... 38

VIII. Unit Holders' Rights and Services ................... 39

A. Unit Holders' Rights ....................................... 39

B. Voting Rights of the Unit Holders .................. 39

C. Account Statements and Unit Certi ficates .... 39

D. NAV Information............................................. 39

XI. Tax Benefits of investing in the Fund .............. 41

X. Other Matters ...................................................... 43

A. Transactions with the

Sponsor / Associates ..................................... 43

B. Policy on Offshore Investments

by the Scheme ............................................... 43

C. Dividends and Distributions .......................... 43D. Inter-Scheme Transfers................................. 43

E. Disclosure under Regulation 25(11) ............. 44

F. General Information ....................................... 45


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I. Highlights

Sponsor Fidelity International Investment Advisors

Name of the Scheme Fidelity Liquid Plus Fund

Structure Open ended Debt scheme. The Scheme is not a ''Liquid scheme" as defined as per SEBIcircular SEBI / IMD / CIR No. 11 / 78450 / 06 dated October 11, 2006.The Scheme does notassure or guarantee any returns.

Investment Objective To generate reasonable returns and liquidity primarily through investment in money marketand short term debt instruments.

Purchase Price for Rs.10 per Unit for cashNew Fund Offer (NFO)

Purchase/ Redemption When the Scheme goes open ended after the closure of the NFO, the price forPrice during Ongoing Offer Purchases and Redemptions will be based on Applicable NAVs of the Plans subject to applicable

Entry and Exit Loads/CDSC respectively.

Plans Retail, Institutional and Super Institutional Plans

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

Dividend Frequency Retail Plan:

Dividend Payout faciliity:

u Monthly

Dividend re-investment facility:

u Monthly

Institutional and Super Institutional Plans:

Dividend Payout faciliity:

u Monthly

Dividend re-investment facility:

u Daily

u Weekly

u Monthly

Minimum Initial Application Retail Plan: Rs. 5,000 per applicationAmount Institutional Plan: Rs. 1,00,00,000 per application

Super Institutional Plan:Rs.10,00,00,000 per application

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

Super Institutional Plan: Rs. 1,00,00,000 per application and thereafter in multiples ofRe. 1

Minimum Amount/No. of Retail Plan: Rs. 1000 or 100 UnitsUnits for Redemption Institutional Plan:Rs. 1,00,000 or 10,000 Units

Super Institutional Plan:Rs. 1,00,000 or 10,000 Units

Minimum Balance Amount/ Retail Plan: Rs. 1000 or 100 Units

No. of Units Institutional Plan:Rs. 1,00,000 or 10,000 UnitsSuper Institutional Plan:Rs. 1,00,000 or 10,000 Units

Load Structure During the NFO Period and Ongoing Offer Period

Entry Load: NIL

A switch-in or transfer under STP may also attract the applicable Entry Load like any Purchase.

Exit Load: For Redemption Load (% of Applicable NAV)

Within 5 calendar days from the date of 0.10%allotment or Purchase applyingFirst in First Out basis.

A switch-out or a withdrawal under SWP or transfer under STP may also attract an Exit Loadlike any Redemption.

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

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 a MTNL / BSNL landline) or 30309800 (at local call rate from your mobile phone prefixing the local citycode or non - MTNL / BSNL landline) or 0124 2542022 (at long distance rates) to know the latest position on Entry / ExitLoad or CDSC structure prior to investing.

Highlights


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Liquidity The Scheme will offer Units for Purchase and Redemption at Applicable NAV on every BusinessDay on an ongoing basis, commencing not later than 30 days from the closure of the NFOPeriod. The Mutual Fund will endeavour to despatch the Redemption proceeds within 3 BusinessDays from the acceptance of the Redemption request.

Transparency The AMC will calculate and disclose the first NAVs of the Scheme within a period of 30 daysfrom the closure of the NFO Period. Subsequently, 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 theAssociation of Mutual Funds in India - AMFI (www.amfiindia.com) every Business Day.

The AMC will disclose details of the portfolio of the Scheme every 6 months by either sendinga complete statement to all the Unit Holders or by publishing such statement, by way ofadvertisement, in two daily newspapers.

Benchmark forperformance comparison CRISIL Liquid Fund Index

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 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 Period

at the Designated Collection Centres of the Fund on a Business Day up to the Cut-off time of theScheme, 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 theScheme, 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.

Application Form / Key A form meant to be used by an investor to open a folio and Purchase Units in theInformation Memorandum Scheme. 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 Application Form will be deemed tobe 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 A day not being:

(1) A Saturday or Sunday;

(2) A day on which the banks in Mumbai including the Reserve Bank of India are closed forbusiness or clearing;

(3) A day on which Purchase and Redemption of Units is suspended or a book closure period isannounced by the Trustee / AMC; or

(4) A day on which normal business cannot be transacted due to storms, floods, bandhs, strikesor 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 theSales Charge / CDSC period of holding 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 NAVthat can be charged 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.

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

Collection Bank(s) The bank(s) with which the AMC has entered into an agreement, from time to time, to enablecustomers to deposit their applications for Units. The names and addresses are mentioned at theend of this Offer Document.

Designated Collection During the NFO: ISCs and branches of Collection Bank(s) designated by the AMCCentres where the applications shall be received.

During Ongoing Offer: ISCs designated by the AMC where the applications shall be received.

The names and addresses are mentioned at the end of this Offer Document.

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.

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 IndiaInvestors / FII (Foreign Institutional Investors) Regulations, 1995 as amended from time to time.

Fidelity International The Sponsor of Fidelity Mutual Fund.Investment Advisors /FIIA

DefinitionsandAbbreviations


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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

Agreement / IMA Fund and the AMC, 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 the Scheme or to aUnit Holder at the time of Redemption of Units from the Scheme.

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

New Fund Offer/NFO The offer for Purchase of Units at the inception of the Scheme, available to the investors duringthe NFO period.

New Fund Offer Period/ The period being one day i.e. September 19, 2007 subject to extension, if any.

NFO PeriodNon Resident Indian / NRI A person resident outside India who is a citizen of India or is a person of Indian origin as per the

meaning 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 Fidelity Liquid Plus Fund forsubscription. Any modifications to the Offer Document will be made by way of an addendumwhich will be attached to Offer Documents. On issuance of addendum, the Offer Document will bedeemed to be updated by the addendum.

Ongoing Offer Offer of Units under the Scheme when it becomes open ended after the closure of the New FundOffer Period.

Ongoing Offer Period The period during which the Ongoing Offer for subscription to the Units of the Scheme is made.

Person of Indian Origin A citizen of any country other than Bangladesh or Pakistan, if (a) he at any time held Indianpassport; 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) at which the Units can be purchased andcalculated in the manner provided in this Offer Document.

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

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

Redemption Price The price (being Applicable NAV minus Exit Load / CDSC) at which the Units can be redeemedand 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 Fidelity Liquid Plus Fund (including as the context permits, the plans/options thereunder).

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

Government of India.

Sponsor FIIA, being the Settlor of Fidelity Mutual Fund.

Systematic Investment A plan enabling investors to save and invest in the Scheme on a monthly/ quarterlyPlan / SIP basis by submitting post-dated cheques / payment instructions.

Systematic Transfer A plan enabling Unit Holders to transfer sums on a weekly/ fortnightly/monthly/

Plan / STP quarterly basis from the Scheme to other schemes launched by the Fund from time to time bygiving a single instruction.

Systematic Withdrawal A plan enabling Unit Holders to withdraw amounts from the Scheme on a monthlyPlan / SWP or quarterly basis by giving a single instruction.

Definitionsand

Abbreviations


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Transaction Slip A form meant to be used by Unit Holders seeking additional Purchase or Redemption of Units inthe Scheme, change in bank account details, switch-in or switch-out and such other facilitiesoffered by the AMC and mentioned in Transaction Slips.

Trustee / Fidelity Trustee Company Private Limited, a company set up under the Companies Act, 1956, toTrustee Company 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 the Scheme.

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

Valuation Day Business Day

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.

AMC : Asset Management Company

AMFI : Association of Mutual Funds in India

AOP : Association of Persons

BOI : Body of Individuals

CBLO : Collateral ised Borrowing and Lending Obligation

CDSC : Contingent Deferred Sales Charge

ECS : Electronic Clearing System

EFT : Electronic Funds Transfer

FII : Foreign Institutional Investor

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

FOF : Fund of Funds

HUF : Hindu Undivided Family.

ISC : Investor Service Centre

IMA : Investment Management Agreement

NAV : Net Asset Value

NFO : New Fund Offer

NRI : Non-Resident Indian

PAN : Permanent Account Number

PIO : Persons of Indian Origin

POA : 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

SIP : Systematic Investment PlanSI : Standing Instructions

STP : Systematic Transfer Plan

SWP : Systematic Withdrawal Plan



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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 the

Scheme or that the Scheme's objectives will be achieved.

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

u Past performance of the Sponsor or the AMC or the mutualfunds managed by the Sponsor or the AMC does not indicatethe future performance of the Scheme.

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

u Fidelity Liquid Plus Fund is the name of the Scheme, andthis does not in any manner indicate the quality of theScheme, its future prospects or returns.

B. Scheme Specific Risk Factorsu As per SEBI circular no. SEBI/IMD/CIR No. 10/22701/03

dated December 12, 2003, the Scheme (including the plansthere under) should have a minimum of 20 Unit Holdersand no single Unit Holder should account for more than25% of the corpus of the Scheme. In case of non-fulfilmentwith either of the aforesaid conditions in a three monthstime period or the end of succeeding calendar quarter,whichever is earlier, from the close of the NFO of theScheme, the Scheme shall be wound up by following theguidelines prescribed by SEBI. The aforesaid conditionsshould also be met in each subsequent calendar quarterthereafter on an average basis. In case of non-fulfilmentwith the first condition i.e. minimum of 20 investors in the

Scheme, on an ongoing basis for each calendar quarteras specified by SEBI, the Scheme shall be wound up byfollowing the guidelines prescribed by SEBI and Unit Holders'investment in the Scheme would be redeemed at theApplicable NAV. SEBI has further prescribed that if anyinvestor breaches the 25% limit over a quarter, a rebalancingperiod of one month will be allowed to the investor andthereafter the investor who is in breach of the limit shallbe given 15 days notice to redeem his exposure over the25% limit. In the event of failure on part of the said investorto redeem the excess exposure, the excess holding willbe automatically redeemed by the Fund following theguidelines prescribed by SEBI.

u In addition to the factors that affect the values of securities,

the NAV of Units of the Scheme will fluctuate with themovement in the broader fixed income, money market andderivatives market and may be influenced by factorsinfluencing such markets in general including but not limitedto economic conditions, changes in interest rates, priceand volume volatility in the bond and stock markets, changesin taxation, currency exchange rates, foreign investments,political, economic or other developments and closure ofthe stock exchanges.

u Investments in different types of securities are subject todifferent levels and kinds of risk. Accordingly, the Scheme'srisk may increase or decrease depending upon its investmentpattern. E.g. investments in corporate bonds carry a higherlevel of risk than investments in Government securities.

Further, even among corporate bonds, bonds which havea higher rating are comparatively less risky than bondswhich have a lower rating.

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 price

volatility 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 the Scheme's Units, to the extent that theScheme is invested in money market instruments, will be

affected by the changes in the level of interest rates. Wheninterest rates in the market rise, the value of a portfolio ofmoney market instruments can be expected to decline.

C. Risk Factors Associated with FixedIncome and Money Market Instruments

u The performance of the Scheme may be affected by changesin Government policies, general levels of interest rates andrisks associated with trading volumes, liquidity andsettlement systems.

u Interest rate risk: As with all debt securities, changes ininterest rates may affect the NAV of the Scheme since theprice of a fixed income instrument falls when the interest

rates move up and vice a versa. The effect is more prominentwhen the duration of the instrument is higher. Hence theNAV movement of the Scheme consisting of predominantlyfixed income securities is likely to have inverse correlationwith the movement in interest rates. In case of a floatingrate instrument, this risk is lower as a result of periodicreset 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 theScheme. Similar risk prevails for the investments in thefloating 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 Scheme by investing in these bonds will realize nocash till the cash payment date and if the issuer defaults,

the Scheme may obtain no return on its investment.

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 resultsin 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 Scheme

incurring losses till the security is finally sold.

u Reinvestment risk: This is associated with the fact thatthe 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.

RiskFactors


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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 Schemeare uninvested and no return is earned thereon. The inabilityof the Scheme to make intended securities purchases, due

to settlement problems, could cause the Scheme to misscertain investment opportunities. Similarly, the inability tosell securities held in the Schemes portfolio, due to theabsence of a well developed and liquid secondary marketfor debt securities, may result at times in potential lossesto the Scheme in the event of a subsequent decline in thevalue of securities held in the Scheme's portfolio.

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 If a court/regulatory authority concludes that the sales from

the originator to the securitisation trust was not a truesale, the Scheme may, in the event, that it has investedin instruments issued by such trust, experience losses ordelays in the payments due and the NAV of the Units maybe affected thereby. Care is generally taken while structuringthe transactions, so as to minimise the risk of the sale tothe trust not being construed as a true sale and legalopinion confirming that the sale constitutes a true sale isusually obtained.

D. Risk Factors Associated with Derivativesu The Scheme may invest in derivative products in accordance

with and to the extent permitted under the Regulationsand by RBI. Derivative products are specialized instrumentsthat require investment techniques and risk analysis differentfrom those associated with stocks and bonds. The use ofa derivative requires an understanding not only of theunderlying instrument but of the derivative itself. Tradingin derivatives carries a high degree of risk although theyare 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 Unitsof the Scheme.

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 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 The Scheme bears a risk that i t may not be able to correctlyforecast future market trends or the value of assets, indexesor other financial or economic factors in establishingderivative positions for the Scheme.

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 difficult

to 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 otherwise

comply with the terms of the agreement.

E. Risk Factors Associated withOverseas Investment

u Subject to necessary approvals and within the investmentobjectives of the Scheme, the Scheme 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 Scheme. Since theScheme would invest only partially in foreign securities,there may not be readily available and widely acceptedbenchmarks to measure performance of the Scheme. Tomanage risks associated with foreign currency and interestrate exposure, the Fund may use derivatives for efficientportfolio management including hedging and in accordancewith conditions as may be stipulated under the Regulationsor 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 investments

do 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 Scheme will be investedin securities denominated in foreign currencies, the IndianRupee 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.

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

from the operation of the Scheme beyond the initialcontribution 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 initial

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

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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 totheir 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 Scheme.Prospective investors are advised not to rely upon anyinformation 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 invest eitherdirectly or indirectly in the Scheme. The funds managedby these affiliates/associates may acquire a substantial

portion of the Scheme's Units and collectively constitute amajor investment in the Scheme. Accordingly, Redemptionof Units held by such funds may have an adverse impacton the value of the Units of the Scheme because of thetiming of any such Redemption and may affect the abilityof other Unit Holders to redeem their respective Units.

u As the liquidity of the Scheme's 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 of arestructuring of the Scheme's portfolio. In view of this, theTrustee has the right, in its sole discretion, to limitredemptions under certain circumstances - please refer

paragraph "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 KYCis vital for the prevention of money laundering.

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 mutualfunds, are required to formulate and implement a clientidentification programme, and to verify and maintain therecord of identity and address(es) of investors.

The AMC has entrusted the responsibility of collection ofdocuments relating to identity and address and recordkeeping to an independent agency (presently CDSL Ventures

Limited) that will act as central record keeping agency('Central Agency'). As a token of having verified the identityand address and for efficient retrieval of records, the CentralAgency will issue a KYC compliance letter to each investorwho submits an application and the prescribed documentsto the Central Agency.

KYC formalities under the PMLA and the related guidelines

issued by SEBI must be completed by all investors. Thisone-time verification is valid for transactions across all mutualfunds. The process to complete KYC formalities is as follows:

u A completed KYC application form along with thedocuments/information as mentioned below should besubmitted to any designated 'Points of Service' (POS)- Fidelity Investor Service Centres, CAMS InvestorService Centres or CVL Centres (CDSL Ventures Ltd.).The POS list is available at www.fidelity.co.in.

u A KYC application form can be obtained from anydesignated POS.

u The completed KYC application form along with PANcard copy and other necessary documents should be

submitted at a POS. (The list of all documents/information required and instructions to fill the formcan be found in the KYC application form).

u After verification of the KYC application form andaccompanying documents, investors will receive a lettercertifying their KYC compliance. There is no chargefor this verification.

When investing with the Fund, a copy of the KYC complianceletter should be attached to the scheme's application formto avoid rejection.

If you already have a Mutual Fund Identification Number("MIN") (not valid anymore) and have not provided a certified*copy of the PAN card at the time of obtaining MIN, you are

requested to complete the formalities as mentioned underthe paragraph PAN above to be KYC-compliant.

All investors must submit a copy of the KYC complianceletter for all transactions in units of the Scheme irrespectiveof the amount of transaction. Applications submitted withouta copy of the KYC compliance letter could be rejected.

u Permanent Account Number ("PAN"):

In accordance with SEBI circulars dated on April 27, 2007and June 25, 2007, with effect from July 02, 2007, PANissued by the Income Tax authorities is used as the soleidentification number for all investors transacting in thesecurities market including mutual funds, irrespective ofthe amount of transaction. Thus, all investors (including

resident and non-resident investors) have to provide PAN,along with a certified* copy of the PAN card for all transactionsin units of the schemes of the Fund irrespective of theamount of transaction. In case of investors who do notprovide a certified* copy of the PAN card, the applicationfor transaction in units of the schemes of the Fund couldbe rejected. However, till 31 December 2007:

u in case the transaction amount is less than Rs. 50,000,investors who are awaiting allotment of PAN shouldattach a copy of the evidence of having applied forPAN.

u in case the transaction amount is more than or equalto Rs. 50,000, investors should attach a copy of theevidence of having applied for PAN and a completed

Form 60/Form 61.

On and from January 01, 2008, submitting a copy of theevidence of having applied for PAN/Form 60/Form 61 willnot be valid and it will be mandatory for all investors toprovide a certified* copy of the PAN card for all transactionsin units of the schemes of the Fund.

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*Investors are requested to submit a copy along with theoriginal for verification at the investor service centres ofthe Fund/CAMS, which will be returned across the counter.Alternatively, a distributor empanelled with the Fund canattest a copy. A Bank Manager's attestation or a Notarisedcopy will also be accepted.

u Investor Protection: As the Scheme is a Debt scheme, it

is designed to offer investors liquidity and the Fundanticipates that investors will come in and out of the Schemefrequently. Such frequent purchases and redemptions byinvestors can reduce the returns to long term investors byincreasing expenses of the Scheme and can also disruptportfolio management strategies. Therefore, the Schemeis proposed to be managed with these risks in mind.

Though the Scheme has no limit on the number of purchasesand redemptions by any investor, the AMC reserves theright, under powers delegated by the Trustee, to rejectany application, prevent further transactions by a Unit Holder,or redeem the Units held by the Unit Holder at any timeprior to the expiry of 30 Business Days from the date ofsubmission of the application if, in the AMC's opinion, a

Unit Holder has been indulging in excessively frequenttrading or if his trading has been or may be disruptive forthe Scheme.

Investors are urged to study the terms of the Offercarefully before investing in the Scheme and to retainthis Offer Document for future reference.

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 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 proposed Scheme.

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 : MumbaiDate : July 26, 2007 Name : Hemang Bakshi

Designation : Director - Legal and Compliance

Note: The aforesaid Due Diligence Certificate dated July 26, 2007 was submitted to Securities and Exchange Board of India onJuly 26, 2007.

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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, MakerChambers 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, 2007 June 30, 2006 June 30, 2005

Total Revenue 123,982,528 133,444,959 98,231,913

Profit Before Tax 16,100,557 22,450,992 10,886,916

Profit After Tax 15,801,048 22,404,637 10,850,032

Free Reserves** 89,490,945 58,696,535 36,293,391

Net Worth 90,240,945 59,446,535 37,043,391

Earnings per Share 21.07 29.87 14.47

Book Value per Share 120.32 79.26 49.39

Dividend % 0% 0% 10,163%

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

** 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 Management

Service 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

D-302-303, Mantri Gardens, The Clearing Corporation of

Madhavan Park, India Limited

Jayanagar, 1st Block, Nilkamal Limited

Bangalore - 560 011. Subros LimitedAdvisor Amrit Corp. Limited

Ujjivan Financial Services

Private Limited

GMR Infrastructure Limited

GMR Power Corporation

Private LimitedGMR Ambala-Chandigarh

Express Private Limited

Gryffon Investment Advisors

Private Limited

ABC Paper Limited

Mr. Rajesh Kapadia Asianet Satellite

1001, Raheja Chambers, Communications Limited

213, Nariman Point, Bhoruka Power Corporation LimitedMumbai - 400 021. Exide Industries LimitedChartered Accountant Goldiam International Limited

H & R Johnson (India) Limited

Nilkamal Plastics 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' ChamberInnovasynth Technologies

(I) Limited

Diagold Design Limited

ING Vysya Life Insurance

Company Limited

RPG Guardian Private Limited

Foodworld Supermarkets

Private Limited

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

Mrs. Ann StockMrs. Stock is the Executive Director, Global Oversight -responsible for Compliance, Internal Audit, Risk and Investigations

and 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. SodhiJustice (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. In

1994, he was appointed as the Chief Justice of the High Courtof 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

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 banks inIndia 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 twodecades - 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 Kapadia

Mr. Kapadia, a Chartered Accountant is a Senior Partner of thefirm GM Kapadia & Company. Mr. Kapadia has more than 25years 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 constitutingthe 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 management

of the Mutual Fund and for providing information to theUnit 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 Unitsand 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 moneys 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 busi ness 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 Schemesfloated and managed by the Asset ManagementCompany, are operated in accordance with the TrustDeed, the Offer 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 of thekey personnel of the Asset Management Company.

(ii) The Trustee shall review the desirability or continuance ofthe Asset Management Company if substantial irregularitiesare observed in any of the Schemes and shall not allowthe Asset Management Company to float new schemes.

(iii) The Trustee shall ensure that the Trust Property is properlyprotected, held and administered by proper persons andby a proper number of such persons.

(iv) The Trustee shall ensure that all service providers holdappropriate registrations from SEBI or concerned regulatoryauthorities.

(v) The Trustee shall report to SEBI of any special developmentsin the Mutual Fund.

Special Due Diligence:

(i) The Trustee shall arrange for test checks of service contractsat such frequency and in such manner as it shall deemappropriate from time to time.

(ii) The Trustee shall obtain internal audit reports at regularintervals from independent auditors appointed by the TrusteeCompany;

(iii) The Trustee shall obtain compliance certificates at regularintervals from the Asset Management Company;

(iv) The Trustee shall hold meetings of the Board of Directorsof the Trustee Company regularly and frequently;

(v) The Trustee shall consider the reports of the independentauditor and compliance reports of Asset Management

Company at the meetings of the Board of Directors of theTrustee Company for appropriate action;

(vi) The Trustee shall maintain minutes of the meetings of theBoard of Directors of the Trustee Company;

(vii) The Trustee shall prescribe and adhere to a code of ethicsby the Trustee Company, Asset Management Company

and its personnel;(viii) The Trustee shall communicate in writing with the Asset

Management Company regarding any deficiencies andchecking on the rectification of deficiencies.

(ix) The Trustee shall ensure that the accounts maintained bythe Asset Management Company follow the accountingpolicies prescribed by SEBI or any other relevant authorityand shall be in the prescribed format and have the prescribedcontents.

(x) The Trustee shall procure that all necessary statements inrespect of the Mutual Fund and the Trust Property areprepared in the manner required by Regulations and makeor cause to be made all reports, publications, notices and

filings with respect to the Mutual Fund required by Indianlaw.

(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 the end ofeach accounting year.

(xii) The Trustee shall cause the affairs of the various Schemesof the Trust in respect of every accounting year to be auditedby one or more auditors qualified to act as auditors underthe law for the time being and obtain their report and submitthe same to SEBI or any other Government Authority, ifrequired by the law in force. The auditor shall be appointedby the Trustee Company and the Trustee Company mayin its discretion, determine out of what part or parts of the

Trust Property or the income thereof, the cost of such auditshall be defrayed and may make such apportionment ofsuch costs as it thinks desirable. Such auditor shall not bethe same as the auditor appointed for the Asset ManagementCompany.

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 ent itledto 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 for the Scheme will be 0.001% per annumof the average daily net assets of the Scheme or Rs. 1,500,000per annum, whichever is lower. The Trustee fees shall be accruedon a daily basis but the payment shall be made on a monthlybasis.

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 Global

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Oversight function to facilitate monitoring the activities of theAMC. 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 2006 -2007, 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 been

constituted pursuant to the SEBI circular MFD/CIR/010/024/2000 dated January 17, 2000 to, inter alia, review internal auditsystems 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 CompaniesAct, 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 dated February17, 2005. The AMC manages the Scheme / plans / options ofthe Fund in accordance with the provisions of the InvestmentManagement Agreement, the Trust Deed, the Regulations andthe objectives of each Scheme / plan / option. The AMC can beremoved by the Trustee, subject to the Regulations.

II. Directors

The directors of the AMC are:

Names and addresses Other directorships of the

of the Directors Directors

Mr. Simon Haslam COLT Telecom S.A.Flat 1, 130 Tonbridge Road, FID Funds (Mauritius) LimitedHildenborough, Tonbridge, Fidelity Administration LimitedKent TN11 9EW Fidelity Adviser World Funds

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

Advisors (UK) Limited

Fidelity International LimitedFidelity International Quiescent

Ventures LimitedFidelity International Services LimitedFidelity International Ventures LimitedFidelity Investment Management GmBHFidelity Investment Management LimitedFidelity Investments (Cayman Islands) SPCFidelity Investments (Singapore) LimitedFidelity Investments (South Africa) LimitedFidelity Investments DistributorsFidelity Investments Japan LimitedFidelity Investments Life Insurance LimitedFidelity Investments Securities

Investment Trust Co. Ltd.

Fidelity Japan Holdings KKFidelity MultiManager SICAVFidelity Structured Investments SPCFidelity Villa Mumm LimitedFIL Asia Ventures LimitedFIL Capital Management (Hong Kong)

Limited

FIL Capital Management LimitedFIL Greater China LimitedFIL Ventures LimitedFMR UK Property Limited

Millharbour Properties LimitedMutual Fund Technologies (UK) LimitedMutual Fund Technologies LimitedSWS International Properties LimitedUriel Limited

Mr. Ramesh Savoor E.I.D. Parry Limited201, Pine View, Foseco India Limited9, Edward Road, Divgi - Warner Pvt. Ltd.Bangalore - 560 052 Automotive Stampings and

Assemblies Limited

Mr. Arun Duggal Zuari Industries Limited106, Ashoka Estate, Patni Computer Systems Limited24, Barakhamba Road, Petronet LNG LimitedNew Delhi - 110 001. Blackstone Investment Co. Private Limited

Tanglewood Financial AdvisorsPrivate Limited

International Asset ReconstructionCo. Private Limited FourS Services

Transparency InternationalMatrix Laboratories LimitedManipal AcuNova Private LimitedThe Bellweather Microfinance FundCarzonrent (India) Private LimitedJubilant Energy Ltd., CanadaShriram Transport Finance Company LimitedChakra Interactive Private LimitedInfo Edge (India) Private LimitedShriram Properties Limited

Shriram City Union Finance LimitedMundra Port and Special Economic Zone

Mrs. Ashu Suyash 56, 5th Floor,Maker Chambers VI,220, Nariman Point,Mumbai - 400 021.

Mr. Simon Haslam and Mrs. Ashu Suyash are the directorsassociated with the Sponsor.

Mr. Simon Haslam

Mr. Haslam is the Chief Operating Officer at Fidelity InternationalLimited ("FIL"). He is a Director of several companies withinthe FIL Group, including FIL. Before joining FIL, Mr. Haslam

was an audit and consulting partner at what is now Deloitte,where he specialised in the fund management and securitiesindustry. His career in financial services, spanning more thantwenty years has concentrated on financial, compliance andbusiness matters affecting stockbroking, investment bankingand fund management businesses internationally.

Mr. Ramesh Savoor

Mr. Savoor retired from Castrol India Ltd., after a long career,including 12 years as Chief Executive & Managing Director. Inthe last two years of Mr. Savoor's tenure with Castrol, Mr. Savoorwas also the leader of the business unit comprising India, MiddleEast and Africa, managed from India, in addition to his role asthe Chief Executive & Managing Director of Castrol India. Inthis capacity as Business Unit Leader, he was also on the Board

of Castrol Worldwide.

Apart from being a director on the boards of directors of variouscompanies, Mr. Savoor is also a director on the Governing Boardof the Indian Institute of Management, Bangalore.

Mr. Arun Duggal

Mr. Duggal has had a long career with Bank of America and

Names and addresses Other directorships of theof the directors directors



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was the Chief Executive Officer and Managing Director beforehe chose to take early retirement. For about two years, Mr. Duggalwas also the Chief Financial Officer of HCL Technologies. Mr.Duggal was also instrumental in establishing the InternationalAsset Reconstruction Company and now is its non-executive -Vice Chairman. He is also an International Advisor to GeneralAtlantic Partners, a leading American Private Equity firm and

an advisor to a number of different institutions.

Mrs. Ashu Suyash

Mrs. Suyash is the Managing Director and Country Head. Shehas over 17 years of experience in the banking sector. Sheheld various positions during her stint with Citibank includingthat of Operations Head, CEO - brokerage business, Head ofinvestor sales, Head of Business Development, Head of Strategyand Business. The assets under management of the Fund havecrossed over two billion USD during her tenure over the lasttwo years.

III. Duties and Responsibilities of the AMC andthe material provisions of the InvestmentManagement Agreement

The duties and responsibilities of the AMC shall be consistentwith the Regulations and the Investment Management Agreement.The AMC shall discharge such duties and responsibilities asprovided for under the Regulations and the InvestmentManagement Agreement. The AMC shall, in the course ofmanaging the affairs of the Fund, inter alia:

(1) provide management, advisory and administrative servicesfor the Trust in accordance with the provisions of the IMAand any resolution of the Trustee Company Board fromtime to time;

(2) formulate and devise various Schemes and invest the TrustFund in accordance with the objects/provisions of the TrustDeed, the Regulations, or circulars issued by SEBI from

time to time;(3) manage the Schemes of the Fund in accordance with the

relevant rules and regulations applicable to them (includingthe provisions of the relevant Offer Document applicableto each Scheme) subject to directions from SEBI;

(4) be responsible for the day-to-day management of the TrustProperty and the various Schemes of the Fund;

(5) be responsible for floating and issuing Schemes for theFund after approval of the same by the Trustee CompanyBoard and SEBI, as well as investing and managing thefunds raised under the various Schemes, in accordancewith the provisions of the Trust Deed and the Regulations;

(6) ensure that no Offer Document of a Scheme, key information

memorandum, abridged half yearly results and annual resultsare issued or published without the prior approval of theTrustee Company Board or the Board of the AMC in writing,and also ensure that such documents do not contain anystatements or matter extraneous to the Trust Deed or

particulars stated in the Offer Document for the Schemeapproved by the Trustee Company Board and SEBI;

(7) disclose the Repurchase Price and NAV of the variousSchemes of the Fund to the investors, at such intervals asmay be specified by the Trustee Company Board and inaccordance with the Regulations issued from time to time;

(8) maintain books and records about the operation of variousSchemes of the Fund to ensure compliance with theRegulations, and submit a quarterly report on the functioningof each of the various Schemes of the Fund to the TrusteeCompany or at such intervals and in such manner as maybe required or called for by the Trustee Company or bySEBI;

(9) send periodical reports, as required under the Regulations,in addition to any other reports called for by the TrusteeCompany or SEBI from time to time;

(10) instruct the Auditors to examine the Trust's annual Statementof Accounts and to report on their correctness and authorisethe auditors to communicate directly with the TrusteeCompany at any time;

(11) publish by public advertisement in newspapers and, if sothought fit, in any other manner, the un-audited half-yearlyaccounts and audited annual accounts of the variousSchemes as required under the Regulations; and

(12) exercise all due diligence and vigilance in carrying out itsduties and in protecting the rights and interests of the UnitHolders.

IV. Investment Management Fees

The AMC is entitled to charge an investment management andadvisory fee at the rate of 1.25% per annum of the averagedaily net assets of the Scheme(s) outstanding in each financialyear for the net assets up to Rs. 100 Crores and at the rate of

1.00% per annum of the average daily net assets outstandingin each financial year for the net assets in excess of Rs.100Crores.

V. Shareholding Pattern of the AMC

The shareholding pattern of the AMC is as follows:

Name of the Shareholder Type of holdings Holdings

FIIA [via FID Investments Equity Shares 99.99%(Mauritius) Limited, its subsidiary]

Fidelity International Services Equity Shares 0.01%Limited

FIIA [via FID Investments Preference Shares 100%(Mauritius) Limited, its subsidiary]

For note on the activities of FIIA, please refer to the paragraphheaded "The Sponsor". Fidelity International Services Limitedis a wholly owned subsidiary of Fidelity International Limited, acompany established in Bermuda.

VI. Key Employees of the AMC and relevant experience

Employee Designation Age Qualifications Total no. Assignments held Periodof years of during last 10 years From - ToExperience

Ashu Suyash Managing 40 B.Com., A.C.A. 20 Citibank(Head of Strategy and Business) 2001 - 2003Director Development) Citibank (Head of Business Development -and Country Times of money.com) 2000 - 2001Head Citibank (Head of Investor Sales) 1998 - 2000

Citibank (CEO - Brokerage Business) 1996 - 1998Sandeep Kothari Fund Manager 36 B.Com., 13 Fidelity Investments Management Ltd.

(Equity) C.A. (Portfolio Manager) 2005 - 2006Fidelity Investments Management Ltd.(Investment Analyst) 2002 - 2005CLSA (Global Pharma Analyst and IndianEquity Strategist) 2001 - 2002Dresdner Kleinwort Wasserstein (Sr. Investment Analyst) 1999 - 2001Credit Lyonnais Securit ies (Sr. Investment Analyst) 1996 - 1999

Constitu

tionoftheFund


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Offer Document


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Suraj Kaeley Director- Sales 41 B.Sc, MMS 18 Met Life India Insurance Co. Pvt. Ltd.and Business (Chief Marketing Officer and Head Individual Business) 2003 - 2006Development Franklin Templeton Asset Management Private Limited

(Senior Vice President - Sales and Marketing) 1996 - 2003

Rajesh Singh Fund Manager 39 B.Tech., 16 Fidelity Investments, Hong Kong (Investment 2005-2006(Equity) (IIT - Kanpur) Analyst (Sector Team Leader))

M.B.A., Fidelity Mgmt & Research, Boston (Global 2003-2005(IIM - Investment Analyst)Ahmedabad) Fidelity Investments, Hong Kong (Investment Analyst) 2000-2002CFA CLSA, Mumbai & Singapore 1998-2000

(Assistant Investment Manager)CLSA, Mumbai (Investment Analyst) 1996-1997

Sameer Kulkarni Fund Manager 38 BE (Mech), 14 Franklin Templeton Asset Management (India) Pvt. Ltd - 2004-2006(Fixed Income) MMS, M Sc, (Senior Vice President and Head of Fixed

CFA (ICFAI) Income)FRM (Vice President and Portfolio Manager for Gilt Portfolio) 2002 -2004

IndusInd Bank(Vice President and Head of Domestic Treasury) 2000-2002(Dealer in fixed income products) 1997-2000

Srikar Baljekar Director - 47 B.Com, A.C.A., 20 Kotak Mahindra Asset Management Company LimitedOperations A.C.S. (Chief Operations Officer) 1998 - 2004

Kotak Mahindra Finance Limited (Vice President - IT) 1992 - 1998

Hemang Bakshi Director- Legal 42 B.Com., A.C.S., 20 Kotak Mahindra Asset Management Companyand Compliance C.P.A. (U.S.A.) Limited (Vice President - Compliance) 1996 - 2003

Kotak Mahindra Finance Limited(Manager - Secretarial) 1995 - 1996

Rajendra Khatu Associate 35 B.Com., A. C. A. 9 Franklin Templeton Asset Management India Private 2001 -2004Director - Limited (Senior Manager-Corporate AccountingFinance and Taxation)

Stockholding Corporation of India Limited 1997 - 2001(Assistant Manager - Finance)

Vikram Chopra Trader (Fixed 28 M.B.A., (IMT - 5 IDBI Bank Limited (Manager - Treasury) 2002-2006Income) Ghaziabad) UTI Bank Limited (Deputy Manager - Merchant Banking) 2001-2002

B.Com. (Hons)

Leng Ng Fund Manager 30 Bachelor of 5 Capital International (Portfolio Control Analyst) 2001-2005(Foreign Business Fidelity International, Singapore (Portfolio Management 2005-2006Securities) Administration Services Specialist)

C.F.A.

The AMC has four Fund Managers and eight Research/Credit Analysts. All the key personnel are based at the Corporate Office ofthe AMC in Mumbai.

Personnel of Investment Department

Employee Designation Age Qualifications Total no. of Assignments held during last 10 yearsyears of

experience

Varun Lohchab Research 28 B.E. (Electrical) 5 Tata Consultancy Services (Team Leader - IT Consultancy)Analyst PGDM (IIM) Ericsson India Limited (Systems Analyst)

ICICI Bank (Credit Analyst)

Ganesh Research 29 B.Com, A.C.A., 7 Hindustan Lever Limited. (Commercial Manager)Chidambaram Analyst MBA (INSEAD) GSK Consumer Healthcare Ltd. (Deputy Manager-Finance)

ITC Limited. (Industrial Trainee)Seshadri and Seetharam (Article Trainee)

Subramanian Research 28 C.A., PGP in 10 J. P. Morgan India Securities Private Limited (Analyst)Balakrishnan Associate Management HSBC Ltd. (Audit Senior)

From Indian Morgan Stanley Advantage Services (Audit Senior)School of Bharat S Raut (KPMG) (Audit Senior)Business BNP Paribas (Management Trainee)

ABN AMRO Bank NV ( Industrial Trainee)(Part of CA Articleship)S Madhavan and Co. (Article Trainee)

Gaurav Jalan Research 27 B.A., M.B.A. 3 Bain & Co (Senior Associate Consultant)Analyst Bid or Buy India.Com (Intern) Towers Perin (Intern)

Mahesh Credit Analyst 30 F.C.A., C.F.A. 9 Birla Sunlife Asset Management Company LimitedChhabria (I.C.F.A.I.), (Credit Analyst and Fund Manager)

Financial Risk RSM & Co. (Qualified Assistant)Manager from Khimji Kunverji & Co. (Audit Senior)GARP, U.S.A

Employee Designation Age Qualifications Total no. Assignments held Periodof years of during last 10 years From - ToExperience



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Amit Kumar Jain Research 28 C.A., PGDCM 3 ICICI Bank Limited (ManagerAssociate (IIM - Calcutta) Temasek Holdings (Associate)

Ashwinder Research 27 B. Com, MBA, 3 Fidelity Business Services India Private Limited

Bakhshi Associate- PG (Mass (Research Specialist Associate)Fixed Income Comm.), GNIIT CRISIL Rating Limited (Manager)

Smriti Shekhar Research 30 M.B.A., 8 The Chaterjee Group (Investment Professional -Analyst C.A., C.P.A. Private Equity)

Arthur Andersen/Ernst & Young - Consultant

Employee Designation Age Qualifications Total no. of Assignments held during last 10 yearsyears of

experience

VII. Fund Manager

Mr. Sameer Kulkarni is the Fund Manager who will managethe investments of the Scheme (for the experience andqualification of the Fund Manager please see the table of KeyEmployees above.)

VIII. Compliance Officer

The Compliance Officer for the Fund is Mr. Hemang Bakshi.

IX. Investors Relations Officer

The Investors Relations Officer for the Fund is Mr. VinodVenkateswaran and he may be contacted at the office of theAMC at 1st Floor, Ganesha Towers, Old No 90, New No 104,Dr Radhakrishnan Salai, Mylapore, Chennai - 600004.

E. The Registrar and Transfer AgentComputer Age Management Services Private Limited ("CAMS")has been appointed to act as registrar and transfer agent tothe Scheme in accordance with the Registrar and Transfer AgentAgreement dated September 10, 2004. The Registrar is registeredwith SEBI under the SEBI (Registrar and Transfer Agents)

Regulations, 1993 vide registration no. INR000002813. Asregistrar to the Scheme, the Registrar will handle the processingof all Unit Holders' Purchase / Redemption transactions,maintenance of their folio details, processing of dividends /commission payments, handling of investor servicing, etc. Theboards of the Trustee and the AMC have satisfied that theRegistrar can provide the services required and has adequatefacilities and systems capabilities. The Registra