18th January 2012

WHAT ARE ELSS FUNDS?

ELSS funds are equity mutual funds and invest predominantly in equities or stocks of Indian companies. ELSS funds are similar to diversified equity funds except for their lock-in period of 3years.

HOW DO ELSS FUNDS HELP SAVE TAX?

The government has made certain savings 'tax-deductible' under section 80C and investors inELSS mutual fund schemes are eligible to avail of this benefit. As per section 80C, if you invest upto Rs 1 lakh in a tax saving instrument or a combination of them, you effectively reduce yourtaxable income by up to Rs 1 lakh, which could translate into savings for the future. This meansyou could save up to Rs 30,000# in taxes.

#Assuming the investor is in highest tax bracket. This does not include surcharge and the education cess.

ELSS FUNDS Vs OTHER SAVINGS OPTIONS UNDER SECTION 80C

ELSS funds invest predominantly in equities which sets them apart from most of the otherinvestment options under Section 80C. Equities are known to outperform most asset classes overlonger time horizon and hence ELSS funds have the potential to deliver better long-term returns,making it an attractive investment option for long term investors. However, the short term risksassociated with equities tend to be higher than other asset classes.

With the aim of helping investors understand the risk and return characteristics of ELSS funds andto compare their performance with some of the other savings options under Section 80C, we conducted a study based on the historical long-term performance of ELSS funds in the Indian mutual fund industry.

Here's what we did:

• As a first step, we identified all the open-ended ELSS funds which have been in existence for more than 10 years (in existence since October 2001)

• We then calculated CAGR of each of those funds for five year period at every monthend starting from October 2006 to October 2011. Thus we had a total of 61 data points,the first five year period was from 31-Oct-2001 to 31-Oct-2006 and the last five year period was from 31-Oct-2006 to 31-Oct-2011.

• Further, using the above performance numbers we calculated simple averageperformance of these funds for each of the time periods.

We then compared it against the rate of return that investors in PPF or NSC would have earned for each of those five year periods

KEY FINDINGS OF THE ANALYSIS ARE PRESENTED BELOW:

• ELSS funds' average returns have been better than PPF / NSC in 58 out of 61 periods

• Average 5 year annualised performance of ELSS funds was 26.43% as compared to average PPF rate of 8.32% and average NSC rate of 8.59% - outperformance of 18.11% and 17.94% respectively. In other words Rs. 100,000 invested in ELSS fundson an average would have grown to Rs. 323,036 in 5 year time whereas the same amount invested in PPF or NSC would have grown to just Rs.149,120 and Rs. 150,317 respectively.

• More than 3/5th of the times, ELSS funds outperformed PPF by over 10% on annualised basis.

UNDERSTANDING SHORT TERM RISKS IN ELSS FUNDS

The data above illustrate the return potential of ELSS funds. However, while evaluating any investment, it is equally important to understand the associated risks. The chart below shows therange of returns from ELSS fund over different time periods. As can be seen from this chart, the divergence of returns (and hence the risk) reduces with increase in investment horizon. For example, over a 3-year period, the average CAGR of ELSS funds have been in the range of -9.15% to 76.75% but if the investment horizon is increased to 5-years, the return range narrows down to 7.03% to 53.00%.

INVEST WITH FIDELITY TAX ADVANTAGE FUND - THE BEST TAX SAVING FUND*

To avail the dual benefit of tax saving and long-term wealth creation, turn to the Best Tax Saving Fund* -Fidelity Tax Advantage. The fund towered over all ELSS funds by winning the coveted ICRA Mutual Fund Awards three years in a row and the CNBC-TV 18 CRISIL awards two years in a row. And to add to this it has won the Morningstar Fund Awards (India) - ELSS category and has also been rated five-star by Value research.

Past performance is no guarantee of future results.

IN CONCLUSION

Like most equity funds, ELSS funds also tend to be volatile in the short term but have the potential to help investor generate wealth in the long run. Their wealth generation potential along with the compulsory minimum investment period of at least 3 years makes it a great investment option for investors looking to benefit from tax deductions under Section 80C. Fidelity Tax Advantage Fund,with its award winning performance could just be the right ELSS fund to invest in.

RANKING METHODOLOGY

This document is for investment professionals only and should not be relied upon by private investors. It must not be reproduced or circulated without prior permission. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. Past performance is not a reliable indicator of future results

Value Research Fund Ratings are a composite measure of historical risk-adjusted returns. For equity funds, this rating is based on the weighted average monthly returns for the last 3 years and 5 years. In the case of debt funds this rating is based on the weighted average weekly returns for the last 18 months and 3-year periods and in case of short-term debt funds - weekly returns for the last 18 months. These ratings do not take into consideration any entry or exit load. Each category must have a minimum of 10 funds for it to be rated. A fund with less than Rs. 5 crores of average AUM in the past six months will not be eligible for rating. Five-stars indicate that a fund is in the top 10% of its category and Four-stars indicate that a fund is in the next 22.5% of its category, in terms of historical risk-adjusted returns. The number of schemes in each category are Equity: Large & Mid Cap - 60 schemes (Fidelity Equity Fund and Fidelity India Growth Fund), Equity: Tax Planning - 28 schemes (Fidelity Tax Advantage Fund) and Debt: Ultra Short Term -133 schemes (Fidelity Ultra Short Term Debt Fund - Super Institutional Plan). The Fund Ratings are as on July 31, 2011. The Value Research Ratings are published in Monthly Mutual Fund Performance Reportand Mutual Fund Insight. Value Research does not guarantee the accuracy. The Ratings are subject to change every month. The Rating is based on primary data provided by respective funds. Value Research does not guarantee the accuracy. Source: www.valueresearchonline.com

*Best ELSS Fund - ICRA Award: Fidelity Tax Advantage Fund has been ranked as a Seven-Star/Best Fund and a Five-Star Fund in the 'Open-Ended Equity Linked Savings Scheme (ELSS)' category for its 3 year and 1 performance respectively till December 31, 2010. The ranks are an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size, companyconcentration, portfolio turnover and liquidity. The ranking methodology did not take into account entry and exit loads imposed by the Fund. There were 23 schemes and 34 schemes considered for the 3 year and1 year performance respectively in 'Open-Ended Equity Linked Savings Scheme (ELSS)' category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the futureperformance of Fidelity Tax Advantage Fund. Ranking Source & Publisher: ICRA Online Limited.

Morningstar Award: Fidelity Tax Advantage Fund - Dividend has been awarded the Morningstar Fund Award (India) in the 'India Open-Ended ELSS (Tax Savings)' category for its one and three-year performance ending December 31, 2010. The methodology eliminates schemes based on fund size, below-median calendar year returns, and allocates a score on the basis of returns in one-year and three-year periods and the risk rank for a three-year period. The methodology also includes various qualitative measures like the portfolio manager's tenure with the fund, the fund's deviation from its investment mandate,among others. There were 18 fund classes considered in 'India Open- Ended ELSS (Tax Savings)' category for the award exercise. Loads were not considered while calculating returns. The award should not be construed as an offer, the solicitation of an offer, to buy or sell securities, by Morningstar. It is neither a certificate of statutory compliance nor any guarantee on the future performance. Ranking Source:Morningstar India.

CNBC TV-18 CRISIL Award: Fidelity Tax Advantage Fund was the only scheme that won the CNBC TV-18 CRISIL Mutual Fund of the Year Award 2011 in the Equity Linked Savings Schemes Category. In total 25 schemes were eligible for the award universe. Schemes present in all four quarterly CRISIL CPRs were considered for the award. The award is based on consistency of the scheme's performance in the four quarterly CRISIL CPR rankings released during the calendar year 2010. The individual CRISIL CPR parameter scores averaged for the four quarters were further multiplied by the parameter weights as per the CRISIL CPR methodology to arrive at the final scores. For more information visit www.crisil.com Ranking Source: CRISIL FundServices, CRISIL Ltd.

DISCLAIMER

This document is for investment professionals only and should not be relied upon by private investors. The recipient should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. This information is purely for informational purposes and should not be construed as reflecting or indicating the views of Fidelity. Fidelity makes no representations and warranties in relation to, and accepts no responsibility or liability whatsoever for, the statements contained in, or completeness or accuracy of the contents of, the information used in the document or any actions/omissions of the recipient or any other person based on this information. Fidelity only provides information on its own products and services and does not give investment advice based on individual circumstances. The value of investments and income from them may go down as well as up and an investor may not get back the amount invested. Please consult your tax advisor before investing.

Fidelity Equity Fund ("FEF") is an open ended equity growth scheme with an objective to generate long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities. Fidelity Tax Advantage Fund ("FTAF") is an open ended equity linked savings scheme with an objective to generate long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities. Fidelity International Opportunities Fund ("FIOF") is an open ended equity growth scheme with an objective to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related securities including equity derivatives in the Indian and international markets. Fidelity India Growth Fund ("FIGF") is an open ended equity growth scheme with an objective to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related securities, including equity derivatives, in the Indian markets. Loads - FEF, FTAF, FIOF& FIGF - Exit: For Redemption within 1 year from the date of allotment or Purchase applying First in First Out basis: 1.00%. FTAF - Exit: Nil FTAF - Exit: Nil. The units allotted under FTAF have a lock-in period of 3 years from the allotment date. Risk factors:? Mutual funds, like securities investments, are subject to market risks and there is no guarantee against loss in the schemes/plan or that the schemes' objectives will be achieved. ?As with anyinvestment in securities, the NAV of the Units issued under the schemes can go up or down depending on various factors and forces affecting capital markets. ? Past performance of the Sponsor /the AMC/theMutual Fund does not indicate the future performance of the schemes. ? FEF, FTAF, FIGF and FIOF are the names of the schemes, and these do not in any manner indicate the quality of the schemes, its future prospects or returns. ? All the schemes/plan shall be subject to the risks associated with the instruments in which they invest. ? Please read the scheme information documents of respective schemes/plan and statement of additional information 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 Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. CI02263