Fidelity Wealth Builder Fund Nfo Presentation

Fidelity Wealth Builder Fund

FIDELITY INTERNATIONAL

January 2009

Where are we ? FIDELITY INTERNATIONAL

Last year has seen unprecedented volatility in equity market BSE Sensex has reached 2006 levels Economic growth is slowing Inflation is easing Central banks across the globe taking measures to provide growth stimulus Sharp rally in Government bonds Oil down approx 70%* from all time high in July 2008 2

* As on 31st December 2008

What’s going on in investor’s mind FIDELITY INTERNATIONAL

Stock market has gone back to 2006 levels

Economy is slowing down

Interest rates coming down

Where should I put my money ?

Should I move out of equities?

Do bonds make sense?

How can I avail of the best investment opportunity?

Current environment is likely to stir up many different thoughts and emotions in a random – perhaps chaotic – manner

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FIDELITY INTERNATIONAL

“You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets” – Peter Lynch Peter Lynch was the portfolio manager of the Fidelity Magellan Fund from May 1977 to May 1990. The Fund had $14 billion in assets when Peter Lynch retired in 1990. He is currently a Research Consultant with Fidelity Investments, USA.

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What should investors be doing? FIDELITY INTERNATIONAL

Markowitz and Modern Portfolio Theory

1952 Investors should look at risk as well as return

Investors can construct portfolios which optimise the level of risk for any expected level of return

Stick to basic principles of investing Harry

Markowitz 5

Portfolio structuring FIDELITY INTERNATIONAL

Why seek portfolio balance? Risk & Return The principle of diversification

The six facets of a diversified portfolio

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Asset allocation

Security specific risk

Market cap bias

Sector exposure

Geographic location

Investment style

FIDELITY INTERNATIONAL

The case for asset allocation

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Importance of asset allocation FIDELITY INTERNATIONAL

Impact on variability of return

91.5%

8.5% Asset allocation

Security selection

Source: Brinson, Hood, and Beebower ‘Determinants of Portfolio Performance II – an update’ Financial Analysts Journal, May/June 1991

Asset allocation is regarded as one of the important decisions an investor makes: 91.5% of investment return variability is driven by asset allocation decisions 8.5% of investment return variability is attributed to security selection and market timing

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Asset classes may not move in the same direction FIDELITY INTERNATIONAL

2001

2002

2003

2004

2005

2006

2007

2008

22.46%

15.68%

72.89%

13.08%

42.33%

46.70%

47.15%

20.78%

8.98%

8.55%

29.43%

4.86%

17.19%

17.87%

20.10%

7.73%

4.52%

6.45%

9.95%

4.64%

5.78%

6.14%

7.87%

-7.98%

-17.87%

3.52%

5.45%

-3.15%

3.47%

0.76%

5.29%

-52.45%

Equities

Debt

Cash

Composite

8 year CAGR Equity: 11.71%

Cash: 6.62%

Debt: 9.06%

Composite: 11.27%

Effective portfolio diversification can be achieved through combination of asset classes Performance of equities, debt and cash is based on BSE Sensex, NSE G-Sec Composite Index and NSE T-Bill Index respectively. Performance of composite is calculated as average of equities, debt and cash. CAGR for composite is based on assumption that composite is rebalanced at the end of every calendar year. 9

Source: ICRA MFIE

Asset allocation can reduce downside risk FIDELITY INTERNATIONAL

If equities go down by

Portfolio equity exposure

10%

20%

30%

15%

5.30%

3.80%

2.30%

30%

2.60%

-0.40%

-3.40%

50%

-1.00%

-6.00%

-11.00%

For illustrative purpose only For portfolios invested in debt and equity. Assuming 8% return on debt component 10

FIDELITY INTERNATIONAL

Asset allocation in current environment

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Asset allocation and economic cycle FIDELITY INTERNATIONAL

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Inflation rises

Recovery Growth moves above trend

We are in the bond friendly Reflation phase

The Investment Clock

Overheat

Reflation

Stagflation Inflation falls

Growth moves below trend

The Investment Clock is an asset allocation tool which can be used to identify which asset classes and equity sectors should perform well as the economy moves through the four phases of its cycles.

Moderating growth & lower inflation favour bonds FIDELITY INTERNATIONAL

GDP Growth (%)

12 10

8.5

8 6

9.4

9.6

9.0

7.5

6.8

5.8 4.4

5.5 3.8

4 2 0

10

01

02

03

04

05

06

07

08

09E

10E

IIP Vs. Inflation

8

12

6

10 8

4

6

2

4

0 -2 13

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IIP Growth (%)

WPI Growth (%) - RHS

Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Source: Bloomberg, Citibank, E= Citibank estimate

2 0

Attractive corporate bond spreads FIDELITY INTERNATIONAL

3 yr G-Sec Vs 3-yr AAA

14 12 10 8 6

3 yr G-sec

4

3-yr AAA

2 0

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

5 yr G-Sec Vs 5 yr AAA

14 12 10 8 6

5 yr G-sec

4

5-yr AAA

2 0

14

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Source: Bloomberg, as on 31 December 2008

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08 Dec-08

Equities… FIDELITY INTERNATIONAL

…have fallen sharply 25000

20873 20000

-54%

15000 BSE Sensex: 01 Jan 2001 to 31 Dec 2008

10000

9647

5000 0

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Dec-08

And have been volatile in the recent months 90 80 70 60 50 40 30 20 10 0

India VIX Index

Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08

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Source: Bloomberg, as on 31 December 2008

But equities also tend to bounce back after such crisis FIDELITY INTERNATIONAL

1992 stock market crash

2000 Tech Meltdown

5000

7000

Time to recover: 842 days 4000

6000

-54.41%

Time to recover: 1421 days

-56.18% 5000

3000 4000 2000

3000 2000

1000 1000 0 22-Apr-92

16

0 12-Aug-94

11-Feb-00

Source: ICRA MFIE. Past performance may or may not be sustained in the future

2-Jan-04

And its difficult to identify the trough FIDELITY INTERNATIONAL

2008 credit crisis 25000

20000

- 59.51%

15000

10000

Trough ?

5000

0 08-Jan-08

Dec-08

Opportunity cost of staying out of equities could be high Source: ICRA MFIE. Past performance may or may not be sustained in the future 17

To summarise… FIDELITY INTERNATIONAL

Moderating economic growth Lower inflation Wider corporate bond spreads

Bonds likely to outperform

softening interest rate scenario

Equities have fallen sharply Valuations looking attractive

Equities cannot be ignored

Risk of missing recovery in equities

Need to have the right asset mix between bonds and equities 18

FIDELITY INTERNATIONAL

Let’s have a look at performance of various asset allocation portfolios in similar market situation in the past

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Performance of various asset allocations – 2001 to 2008 FIDELITY INTERNATIONAL

5,600 5,100 4,600

Equity

Bonds

15% equity

30% equity

50% equity

4,100 3,600 3,100 2,600 2,100 1,600

Dec-08

Sep-08

Jun-08

Mar-08

Dec-07

Sep-07

Jun-07

Mar-07

Dec-06

Sep-06

Jun-06

Mar-06

Dec-05

Sep-05

Jun-05

Mar-05

Dec-04

Sep-04

Jun-04

Mar-04

Dec-03

Sep-03

Jun-03

Mar-03

Dec-02

Sep-02

Jun-02

Mar-02

Dec-01

Sep-01

Jun-01

Mar-01

600

Dec-00

1,100

Performance of equities and bonds is based on BSE Sensex and NSE G-Sec Composite Index respectively. Portfolios reset to original allocation at monthly intervals. 20

Source: ICRA MFIE. Past performance may or may not be sustained in the future. For illustrative purpose only.

Choosing the right portfolio mix FIDELITY INTERNATIONAL

Efficient Frontier - Two Asset Classes - 2001 to 2008 13% 12%

Most efficient allocation (Highest risk-adjusted return)

CAGR

11% 10%

100% equity, 0% debt 85% equity, 15% debt 70% equity, 30% debt 55% equity, 45% debt 40% equity, 60% debt 25% equity, 75% debt 10% equity, 90% debt

9% 8% 7% 6% 0%

4%

8%

12% 16% Annualised Std deviation

Equity

Bonds

Return (CAGR)

11.71%

9.06%

Risk

26.39%

Sharpe ratio

0.14

95% equity, 5% debt 80% equity, 20% debt 65% equity, 35% debt 50% equity, 50% debt 35% equity, 65% debt 20% equity, 80% debt 5% equity, 95% debt 20%

15%Equity

90% equity, 10% debt 75% equity, 25% debt 60% equity, 40% debt 45% equity, 55% debt 30% equity, 70% debt 15% equity, 85% debt 0% equity, 100% debt 24%

28%

30% Equity

50% Equity

9.95%

10.68%

11.38%

6.83%

7.42%

9.74%

14.03%

0.16

0.26

0.27

0.24

Performance of equities and bonds is based on BSE Sensex and NSE G-Sec Composite Index respectively. Portfolios reset to original allocation at monthly intervals. Risk free rate used: 8%. Risk is represented by annualised standard deviation of monthly returns of the portfolios. Source: ICRA MFIE. Past performance may or may not be sustained in the future. 21

For illustrative purpose only.

In short… FIDELITY INTERNATIONAL

Bonds outperformed equities from 2001 to Mid 2003

Equities outperformed bonds from mid 2003 onwards

However, HYBRID PORTFOLIOS with 15-50% exposure to equities HAVE

DELIVERED THE BEST RISK-ADJUSTED RETURN over the period analysed

Its difficult to make a timely shift from one asset class to another The best strategy is to opt for an asset allocation which delivers maximum return at desired risk level 22

FIDELITY INTERNATIONAL

Introducing

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Product structure FIDELITY INTERNATIONAL

An open ended fund-of-funds scheme Provides a choice of three plans: Plan A : around 15% of net assets in equity schemes, rest in debt schemes Plan B : around 30% of net assets in equity schemes, rest in debt schemes Plan C : around 50% of net assets in equity schemes, rest in debt schemes Will predominantly invest in Fidelity’s domestic funds

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Investment approach FIDELITY INTERNATIONAL

Traditional stock-picking fund

Bottom-up approach

Asset allocation funds

Top-down approach

Asset allocation funds invest in stock-picking products

The two approaches complement each other

Source: FIL.

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Investment Process FIDELITY INTERNATIONAL

Fund Manager

ASSET ALLOCATION z

Plans with pre-set asset allocation

z

Advice on plan selection: To be provided by Advisers

z

Market Beta: Taken care of by right mix of asset classes – Strategic & Tactical Allocation

Source: FIL. 26

FUND SELECTION z

z

Alpha generation: Stock-picking by portfolio managers of underlying funds to generate alpha Key inputs: Continuous PM interactions over a long period of time. A broad range of other inputs, including macroeconomic factors, market valuation, chart analysis, risk adjusted returns, fund flows and investor sentiment

Product Positioning FIDELITY INTERNATIONAL

Suitable for relatively risk-averse investors looking to participate in equities to benefit from potential recovery Can help in capitalising on the existing opportunities in equities and bonds Combines top-down and bottom-up approach – Combination of alpha and beta strategies Combines best of Fidelity’s funds in one fund Varying styles of underlying funds gives diversification benefit including style diversification Investors can easily shift from one plan to another without any load

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Why invest in Fidelity Wealth Builder Fund? FIDELITY INTERNATIONAL

Disciplined Asset Allocation Asset allocation key driver of variability of investment returns Portfolio diversification and downside protection

Low cost product No entry load Load free switches between plans Benefit of lower expense ratios in the underlying funds

Simple, easy to understand product Pre-set asset allocation Advisers can help choose the right plan based on investors’ risk profile and return expectations Equity exposure for an investor can be increased or decreased by load free switches between plans 28

Why invest in Fidelity Wealth Builder Fund? (contd.) FIDELITY INTERNATIONAL

Portfolios invested in debt and equity products with track record Economic cycle is in favour of bonds Advantage of investing in quality bond portfolios Positioned to benefit from a controlled exposure to equities as and when market recovers Investment in equity portfolios that have gained ground in difficult times

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Key Fund Facts FIDELITY INTERNATIONAL

Plan A: 85% Crisil Composite Bond Fund Index & 15% BSE 200

Benchmark

Plan B: 70% Crisil Composite Bond Fund Index & 30% BSE 200 Plan C: 50% Crisil Composite Bond Fund Index & 50% BSE 200

Entry load – NIL

Load structure Exit load 1% if redeemed within 12 months from the date of allotment

Minimum investment

Rs.5000

Dividend Frequency

Plan A and Plan B: Quarterly, Plan C: At the discretion of the Trustees Available now (Auto-debit facility at NFO)

Systematic Plan Minimum amount of each instalment Rs 500 Minimum aggregate amount Rs 5000 Minimum 6 instalments 30

Dates to remember FIDELITY INTERNATIONAL

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New Fund Offer opens on:

January 14, 2009

New Fund Offer closes on:

February 5, 2009

Scheme re-opens for continuous sale and re-purchase:

March 2, 2009

Performance track record – Equity funds FIDELITY INTERNATIONAL

Equity Funds – CAGR (%) as on 31-12-2008 FEF

Bm

FISSF

Bm

FIOF

Bm

FIGF

Bm

1 year

-50.24

-56.36

-52.02

-56.36

-45.80

-51.06

-49.94

-56.36

3 years

3.59

-0.84

NA

NA

NA

NA

NA

NA

Since inception*

13.95

8.34

-4.38

-3.91

-22.76

-21.46

-39.98

-42.81

As per SEBI standards for performance reporting, the since inception return is calculated on NAV of Rs. 10/- invested at inception. For this purpose, the inception date is deemed to be the date of allotment, i.e. 16-May-05 for FEF, 22May-06 for FISSF, 28-May-07 for FIOF and 23-Oct-07 for FIGF. Past performance may or may not be sustained in the future. Source: ICRA MFIE, Fidelity

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Performance track record – Fixed income funds FIDELITY INTERNATIONAL

3 months 8.83 9.24 9.37 10.13

6 months 8.54 8.96 9.04 9.43

1 year 8.20 8.63 8.70 8.41

Since inception 7.86 8.29 8.41 7.88

FLPF – Retail FLPF – IP FLPF – Super IP Benchmark (Retail & Super IP) Benchmark (IP)

2.23 2.34 2.37 2.59 2.59

4.38 4.59 4.65 4.75 4.75

8.41 NA 8.96 8.41 NA

8.23 7.70 8.77 8.04 7.61

FSTIF - Retail FSTIF – IP Benchmark

5.84 5.89 5.00

7.68 7.79 6.70

10.79 11.01 9.50

8.56 8.78 8.20

FFGF Benchmark

24.94 20.56

NA NA

NA NA

22.66 23.07

FCF - Retail FCF - IP FCF – Super IP Benchmark

As per SEBI standards for performance reporting, the since inception return is calculated on NAV of Rs. 10/- invested at inception. For this purpose, the inception date is deemed to be the date of allotment, i.e. 27-Nov-06 for FCF, 20-Sep07 for FLPF-Retail and FLPF – Super IP, 18-Feb-08 for FLPF – IP, 30-Aug-06 for FSTIF and 07-Aug-08 for FFGF. For FCF, return for periods less than 1 year are simple annualised and for periods greater than or equal to 1 year is CAGR. For other funds, return for periods less than 1 year are absolute and those for more than or equal to 1 year are CAGR. Past performance may or may not be sustained in the future. Source: ICRA MFIE, Fidelity. As on 31-12-2008. 33

FIDELITY INTERNATIONAL

Thank You

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Important Information FIDELITY INTERNATIONAL

Scheme Classification: An Open - ended fund of funds scheme comprising of three plans. Investment Objective: Plan A - To seek to generate reasonable returns by investing predominantly in the Debt Scheme(s) and around 15% of the net assets of the Plan in the Equity Scheme(s). Plan B - To seek to generate reasonable returns by investing predominantly in the Debt Scheme(s) and around 30% of the net assets of the Plan in the Equity Scheme(s). Plan C - To seek to generate reasonable returns by investing at least 50 % of the net assets of the Plan in the Debt Scheme(s) balanced with generation of long – term capital growth by investing around 50 % of the net assets of the Plan in the Equity Scheme(s). ▪ Normal Asset Allocation: Plan A - Debt Schemes – 70 to 100%; Equity Schemes – 0 to 30%; Money market instruments – 0 to 30%. Plan B - Debt Schemes – 55 to 85%; Equity Schemes – 15 to 45%; Money market instruments – 0 to 30%. Plan C - Debt Schemes – 30 to 70%; Equity Schemes – 30 to 70%; Money market instruments – 0 to 40%. Terms of issue: Units of Rs. 10 per unit for cash during the new fund offer and at applicable NAV thereafter. Minimum initial application amount: Rs. 5,000 per Plan per application. Minimum redemption amount/units: Rs. 1,000 or 100 Units in respect of each Plan. Scheme Information Document, Key Information Memorandum and Application Forms will be available at the ISCs/distributors’ offices. General Services: Investors can contact us at the toll-free number “1800-200-0600”. NAVs will be calculated on every business day and published in two daily newspapers on all business days. Redemption on all business days. ▪ Loads - Entry: Nil. Exit: For redemption within 12 months from the date of allotment or purchase applying First in First Out basis – 1.00%. A switch-out will also attract an Exit Load like any Redemption. No Entry / Exit Loads / CDSC will be chargeable in case of switches made between different options of the same Plan or between different Plans within the Scheme. Risk factors: ▪ 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. ▪ As with any investment in securities, the NAV of the units issued under the scheme can go up or down depending on various factors and forces affecting capital markets. ▪ Past performance of the Sponsor/the AMC/the Mutual Fund does not indicate the future performance of the scheme. ▪ Fidelity Wealth Builder Fund is the name of the scheme, and this does not in any manner indicate the quality of the scheme, its future prospects or returns. ▪ Investing in the Scheme involves certain risks and considerations associated generally with making investments in the Underlying Schemes and the AMC’s investment decisions to choose the Underlying Schemes may not be always profitable. There can be no assurance that the Underlying Schemes’ will achieve their objectives. The Scheme’s performance will be affected by the performance Underlying Schemes in which the investments are made. Investors will be bearing the expenses of a Plan in addition to the expenses of the relevant Underlying Scheme in which the Plan will make investments. ▪ Please read the Scheme Information Document of the scheme carefully before investing. Statutory: Fidelity Mutual Fund (‘the Fund’) has been established as a trust under the Indian Trusts Act, 1882, by FIL Investment Advisors (liability restricted to Rs. 1 Lakh). FIL Trustee Company Private Limited, a company incorporated under the Companies Act, 1956, with a limited liability is the Trustee to the Fund. FIL Fund Management Private Limited, a company incorporated under the Companies Act, 1956, with a limited liability is the Investment Manager to the Fund. Fidelity, Fidelity International and Pyramid Logo are trademarks of FIL Limited. CI01101

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