Deutsche Asset Management (India) Private Limited ... Combined Offer... · I. Risk Factors &...

SponsorsDeutsche Asset Management (Asia) Limited20 Raffles Place #27-01 Ocean Towers, Singapore 048620

Asset Management CompanyDeutsche Asset Management (India) Private LimitedDB House, Hazarimal Somani Marg, Fort, Mumbai 400 001

TrusteeDeutsche Trustee Services (India) Private LimitedDB House, Hazarimal Somani Marg, Fort, Mumbai 400 001

This Offer Document contains information necessary for an investor to make an informedinvestment decision in the Scheme described herein. Investors should carefully read the OfferDocument prior to making an investment decision and retain the Offer Document for futurereference. Investors may note that this Offer Document remains effective until a materialchange occurs. Material changes shall be filed with SEBI and circulated to all Unit Holders or asmay be publicly notified by advertisements in the newspapers subject to the applicableregulations.

The particulars of the schemes offered under this Offer Document, have been prepared inaccordance with the Securities Exchange Board of India (Mutual Funds) Regulations, 1996, asamended till date, and filed with the Securities and Exchange Board of India (SEBI), and theUnits being offered for public subscription have neither been approved or disapproved by SEBInor has SEBI certified the accuracy and adequacy of the Offer Document.

Deutsche Asset Management (India)Private Limited & Deutsche Mutual Fund

Combined Offer DocumentDeutsche Alpha Equity Fund

(an open ended equity scheme to generate long-term capital growth by investment ina diversified portfolio of equity and equity related securities)

Deutsche Investment Opportunity Fund(an open ended dynamic allocation scheme)

Deutsche Premier Bond Fund(an open ended income scheme with the objective to provide regular income by

investing in debt securities and money market instruments)

Deutsche MIP Fund(an open ended income scheme with the objective to generate regular income (noassured return) in order to make regular dividend payments and growth of capital)

Deutsche Dynamic Bond Fund(an open ended income scheme with the objective to actively manage a portfolio ofgood quality debt as well as money market instruments so as to provide reasonable

returns and liquidity to the Unitholders)

Deutsche Short Maturity Fund(an open ended income scheme with the objective to generate steady returns withlow volatility by investing in shot-medium term debt and money market securities)

Deutsche Insta Cash Plus Fund(an open ended liquid income scheme with the objective to generate steady returns

along with high liquidity by investing in a portfolio of short-term, high quality moneymarket and debt instruments)

Deutsche Floating Rate Fund(an open ended floating rate scheme with the objective to provide income consistent

with the prudent risk from a portfolio comprising substantially of floating rate debtinstruments, fixed rate debt instruments swapped for floating rate returns, and also

fixed rate instruments and money market instruments)

1

1Combined Offer Document

Important Notice

Service ProvidersSponsors

Deutsche Asset Management (Asia) Limited

Registered Office:

20 Raffles Place, #27-01 Ocean Towers,

Singapore 048620

Asset Management Company

Deutsche Asset Management (India) Private Limited

Registered & Corporate Office :

DB House, Hazarimal Somani Marg,

Fort, Mumbai 400 001

Trustee

Deutsche Trustee Services (India) Private Limited

Registered Office:

DB House, Hazarimal Somani Marg,

Fort, Mumbai 400 001

Custodian

JP Morgan Chase Bank

Mafatlal Centre, 9th Floor,

Nariman Point, Mumbai 400 021

Registrars & Transfer Agents

Karvy Computershare Private Ltd.

46, Road No 4, Street No 1,

Banjara Hills, Hyderabad 500 034

Auditors to the Fund & Tax Advisors

Price Waterhouse

1102/1107 Raheja Chambers,

Nariman Point, Mumbai 400 021

Advocates & Solicitors to the Fund

Little & Co.

Central Bank Building,

Mahatma Gandhi Road, Mumbai 400 023

Important NoticeInvesting in a mutual fund scheme involves certain risks andconsiderations associated generally with making investmentsin securities. The value of the Scheme�s investments may beaffected generally by factors affecting capital markets, suchas price and volume volatility in the capital markets, interestrates, currency exchange rates, changes in Governmentpolicies, taxation, political, economic or other developments,etc. Consequently, there can be no assurance that the Schemewill achieve its objectives. The NAV of the Units of the Schememay fluctuate and can go up or down. Past performance ofthe mutual funds managed by the Sponsors or their affiliatesis not indicative of the future performance of the Scheme norwill past performance of the Scheme, following itscommencement of operations, be necessarily indicative of itsfuture performance.

Prospective investors are advised to review this OfferDocument carefully and in its entirety and consult with theirlegal, tax and financial advisors to determine possible legal,tax and financial or other consequences of subscribing to,purchasing or holding Units under the Scheme, before makingan application for Units. Investors are requested to retain thisOffer Document for their reference.

The Deutsche Mutual Fund (�the Fund�), Deutsche AssetManagement (India) Private Limited (�the AMC�) and/orDeutsche Trustees Service (India) Private Ltd. (�Trustee�) havenot authorised any person to give any information or makeany representations, either oral or written, not stated in thisOffer Document in connection with the issue of Units underthe Scheme. Prospective investors are advised not to rely uponany information or representations not incorporated in thisOffer Document unless the same has been authorised by theFund or the AMC or the Sponsor. Any subscriptions, purchaseor sale made by any person on the basis of statements orrepresentations which are not contained or which areinconsistent with the information contained in this OfferDocument shall be solely at the risk of purchaser.

The current Regulations impose certain restrictions andconditions on the AMC for entering into transactions with theSponsors and their associates. These restrictions include:

a) prohibition of purchase or sale of securities through anybroker associated with a Sponsor that is an average of 5%or more of the aggregate purchases and sale of securitiesmade by the Fund in all its schemes. The limit of 5% shallapply for a block of any three months.

b) prohibition of utilisation of the services of the Sponsors orany of their associates, for the purpose of any securitiestransactions and distribution and sale of securities unlessa disclosure to this effect is made in the Offer Document.

Deutsche Bank, is an associate of the AMC and will be entitledto brokerage and trailer fee on the funds mobilised by them.The AMC may utilise the services of Sponsor, group companiesand any other subsidiary or associate company of the Sponsorestablished or to be established at a later date, in case such acompany (including their employees or relatives) is in a positionto provide the requisite services to the AMC. The AMC willconduct its business with the aforesaid companies (includingtheir employees or relatives) on commercial terms and onarms-length basis and at mutually agreed terms and conditionsto the extent permitted under the SEBI Regulations, afterevaluation of the competitiveness of the pricing offered bythe Sponsor, associate companies (including their employeesor relatives) and the services to be provided by them.

In this Combined Offer Document all references to �$� are toUnited States of America Dollars and �Rs.� are to IndianRupees.

This Combined Offer Document is dated January 12, 2005.Investors should ascertain about any further changes afterJanuary 12, 2005 from the AMC or any Investor Service Centreor Collection Centres or its distributors/brokers.

COMBINED OFFER DOCUMENT AS ON January 12, 2005

Combined Offer Document2

2 Combined Offer Document

Sr.No. Subject PageInd

ex

IndexSr.No. Subject Page

I. Risk Factors & Special Considerations .. 3

II. Definitions and Abbreviations .................... 6

III. Summary of the Scheme(s) ........................ 8

IV. Constitution of the Mutual Fund

A) The Fund ......................................................... 10

B) The Sponsors .................................................. 10

C) The Trustee Company .................................... 11

1) Directors ................................................. 11

2) Rights, Duties & Responsibilities ofthe Trustee and the materialprovisions of the Trust Deed .................. 11

3) Trusteeship Fees .................................... 12

D) The Asset Management Company (�AMC�) .

1) Constitution ............................................. 12

2) Directors ................................................. 13

3) Duties and Responsibilities of theAMC and the material provisions of theInvestment Management Agreement .... 14

4) Key Employees of AMC andrelevant experience ................................ 15

5) Fund Manager ......................................... 17

6) Compliance Officer ................................. 17

7) Investors Relations Officer ..................... 17

E) Auditors & Tax Advisors ................................. 17

F) The Registrar .................................................. 17

G) The Custodian ................................................. 17

V. Investment Objectives & Policies,Investment Pattern & Risk Profileand Limitations of the Scheme

A) Investment Objectives, InvestmentPattern & Risk Profile ..................................... 18

B) Procedure and recording ofInvestment Decisions ..................................... 26

C) Change in Investment Pattern ....................... 26

D) Change in Fundamental Attribute .................. 27

E) Portfolio Turnover ........................................... 27

F) Investment Limitations / Restrictions ............ 27

G) Investment of Subscription Money ................ 28

H) Depository ...................................................... 28

I) Investments by AssetManagement Company .................................. 28

J) Hedging Policies in connection withTrading in Derivatives ..................................... 28

VI. Fees & Expenses and Load

A) Load Structure of the Scheme ....................... 32

B) Fees and Expenses of the Scheme ............... 33

C) Fees and Expenses of theExisting Schemes ........................................... 33

D) Condensed Financial Information ................... 34

VII. Units & the Offer

A) Units on Offer - General Information ............. 38

B) Purchase of Units ........................................... 43

C) Redemption of Units ...................................... 46

D) Facilities offered to Investorsunder the Scheme .......................................... 48

VIII. Unit Holders� Rights and Services

A) Unit holders� Rights ........................................ 51

B) Voting Rights of the Unit Holders .................. 51

C) Account Statements and Unit Certificates ..... 51

D) NAV Information ............................................. 52

E) Disclosure of Information under theRegulations ..................................................... 52

F) Duration of the Scheme ................................. 52

G) Procedure and Manner of Winding Up .......... 52

H) Services to Unit Holders ................................. 53

IX. Taxation

A) To Unit Holders ............................................... 55

B) To the Mutual Fund ........................................ 56

X. Valuation of Assets and Net Asset Value

A) Computation of Net Asset Value .................... 57

B) Accounting Policies & Standards ................... 61

XI. Other Matters

A) Transactions with Sponsors / Associates ....... 62

B) Stock Lending by the Fund ............................ 62

C) Policy on offshore investments bythe Scheme .................................................... 63

D) Borrowing by Mutual Fund ............................. 63

E) Inter-Scheme Transfers .................................. 63

F) Underwriting by a Scheme ............................. 63

G) Disclosure under Regulation 25(11) ............... 63

H) General Information ........................................ 66

1) Power to make Rules ............................. 66

2) Power to remove Difficulties .................. 66

3) Penalties and Pending Litigation ............ 66

4) Scheme to be binding on theUnit Holders ............................................ 67

5) Register of Scheme�s Unit holders ........ 67

6) Website ................................................... 67

7) Omnibus Clause ..................................... 67

8) Jurisdiction .............................................. 67

9) Books and Records ................................. 67

10) Documents available for Inspection ....... 67

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I. Risk Factors &Special Considerations

Standard Risk FactorsInvestors in the Scheme are not being offered a guaranteed orassured rate of return

l Mutual funds, like securities investments, are subject tomarket and other risks and there can be no guarantee againstloss resulting from an investment in the Scheme nor canthere be any assurance that the Scheme�s objectives will beachieved. As with any investment in securities, the NAV ofthe Units issued under the Scheme can go up or downdepending on various factors that may affect the values ofthe Scheme�s investments. In addition to the factors thataffect the value of individual securities, the NAV of theScheme can be expected to fluctuate with movements inthe broader equity and bond markets and may be influencedby factors affecting capital markets in general, such as, butnot limited to, changes in interest rates, currency exchangerates, changes in governmental policies, taxation, political,economic or other developments and increased volatility inthe stock and bond markets.

l Neither the past performance of the mutual funds managedby the Sponsors and their affiliates/associates nor the pastperformance of the Sponsors/AMC or Fund is necessarilyindicative of future performance of the Scheme.

l The Sponsors are not responsible or liable for any lossresulting from the operation of the Scheme beyond the initialcontribution of an amount of Rs. 1 lakh collectively made bythem towards setting up the Fund or such other accretionsand additions to the initial corpus set up by the Sponsors.

l Deutsche Alpha Equity Fund (DAEF), Deutsche Premier BondFund (DPBF), Deutsche Insta Cash Plus Fund (DICPF),Deutsche Short Maturity Fund (DSMF), Deutsche FloatingRate Fund (DFRF), Deutsche Dynamic Bond Fund (DDBF),Deutsche MIP Fund (DMIP) and Deutsche InvestmentOpportunity Fund (DIOF) are the names of the Schemesand do not in any manner indicate the quality of the Scheme,its future prospects or returns.

As per SEBI circular dated December 12, 2003 ref SEBI/IMD/CIR No. 10/22701/03, each scheme and individualplan(s) under the schemes should have a minimum of 20investors and no single investor should account for morethan 25% of the corpus of such scheme/plan(s). In case ofnon-fulfillment with either of the above two conditions in athree months time period or the end of succeeding calendarquarter, whichever is earlier, from the close of the Initial PublicOffering (IPO) of open ended schemes or an ongoing basisfor each calendar quarter, the schemes /plans shall be woundup by following the guidelines prescribed by SEBI and theunits would be redeemed at applicable NAV.

Specific Risk Factorsl Subject to the stated investment objectives, the Scheme(s)

propose to invest in equity and equity related securities andin debt and debt related securities as the case may be.Trading volumes, settlement periods and transfer proceduresmay restrict the liquidity of these investments. Differentsegments of Indian financial markets have differentsettlement periods and such periods may be extendedsignificantly by unforeseen circumstances. The inability ofthe Scheme(s) to make intended securities� purchases dueto settlement problems could cause the Scheme(s) to misscertain investment opportunities. Different segments of theIndian financial markets have different settlement periodsand such periods may be extended significantly byunforeseen circumstances. Delays or other problems insettlement of transactions could result in temporary periodswhen the assets of the Scheme are uninvested and no return

is earned thereon. The inability of the Scheme to makeintended securities purchases, due to settlement problems,could cause the Scheme to miss certain investmentopportunities. By the same token, the inability to sellsecurities held in the Scheme�s portfolio, due to the absenceof a well developed and liquid secondary market for debtsecurities, would result at times, in potential losses to theScheme, should there be a subsequent decline in the valueof securities held in the Scheme�s portfolio.Corporate debtsecurities are subject to the risk of an issuer�s inability tomeet interest and principal payments on its debt obligations(credit risk). Debt securities may also be subject to pricevolatility due to factors such as changes in interest rates,general level of market liquidity and market perception ofthe creditworthiness of the issuer, among others (marketrisk). The Investment Manager will endeavour to managecredit risk through in-house credit analysis. The Scheme mayalso use various hedging products from time to time, as areavailable and permitted by SEBI, to attempt to reduce theimpact of undue market volatility on the Scheme�s portfolio.

l The Scheme(s) may also use various derivative and hedgingproducts from time to time, as would be available andpermitted by SEBI, in an attempt to protect the value of theportfolio and enhance Unitholders� interest. The Riskassociated with dealing in Derivatives trading are given belowunder �Risk factor associated with trading in derivatives�.

l The liquidity of investments made in the Scheme may berestricted by trading volumes, settlement periods andtransfer procedures. Different segments of the Indianfinancial markets have different settlement periods and suchperiods may be extended significantly by unforeseencircumstances. There have been times in the past, whensettlements have been unable to keep pace with the volumeof securities transactions, making it difficult to conduct furthertransactions. Delays or other problems in settlement oftransactions could result in temporary periods when theassets of the Scheme are not invested and no return isearned thereon. The inability of the Scheme to make intendedsecurities purchases, due to settlement problems, couldcause the Scheme to miss certain investment opportunities.

l The liquidity and valuation of the Scheme�s investments dueto its holdings of unlisted securities may be affected if theyhave to be sold prior to their target date of divestment.

Specific risks associated with investments in floatingrate debt instruments:(a) Interest rate movement (Basis Risk): As the fund will invest

in floating rate instruments, these instruments� coupon willbe reset periodically in line with the benchmark indexmovement. Normally, the interest rate risk of a floating rateinstrument compared to a fixed rate instrument is limited.The changes in the prevailing rates of interest will likely toaffect the value of the Scheme�s holdings until the next resetdate and thus the value of the Schemes� Units. Increasedrates of interest, which frequently accompany inflation and/or a growing economy, are likely to have a negative effecton the value of the Units. The value of securities held by theScheme generally will vary inversely with changes inprevailing interest rates. The fund could be exposed to theinterest rate risk (i) to the extent of time gap in resetting ofthe benchmark rates, and (ii) to the extent the benchmarkindex fails to capture the interest rate movement. In case ofdownward movement of interest rates, floating rate debtinstruments will give a lower return than fixed rate debtinstruments.

(b) Spread Movement (Spread Risk): Though the basis (i.e.benchmark) gets readjusted on a regular basis, the spread(i.e. mark up) over benchmark remains constant. This canresult in some volatility to the holding period return of floatingrate instruments.

(c) Settlement Risk (Counter party Risk): The floating rate assetsmay also be created by swapping a fixed return to a floating

Risk Factors



rate return. In such a swap, there may be an additional riskof counter party who will pay floating rate return and receivefixed rate return.

(d) Liquidity or Marketability Risk: This refers to the ease at whicha security can be sold at or near its true value. The primarymeasure of liquidity risk is the spread between the bid priceand the offer price quoted by a dealer. Liquidity risk ischaracteristic of the Indian fixed income market. Due to theevolving nature of the floating rate market, there may be anincreased degree of liquidity risk in the portfolio from timeto time.

l Credit Risk: Credit risk or default risk refers to the risk thatan issuer of a fixed income security may default (i.e., will beunable to make timely principal and interest payments onthe security). Because of this risk debentures are sold at ayield spread above those offered on Treasury securities whichare sovereign obligations and generally considered to be freeof credit risk. Normally, the value of a fixed income securitywill fluctuate depending upon the actual changes in theperceived level of credit risk as well as the actual event ofdefault.

l Reinvestment Risk: This risk refers to the interest rate levelsat which cash flows received from the securities in theScheme or from maturities in the Scheme are reinvested.The additional income from reinvestment is the �interest oninterest� component. The risk is that the rate at which interimcash flows can be reinvested will fall.

l The Scheme may also invest in overseas financial assets asand when permitted by the concerned regulatory authoritiesin India. To the extent that the assets of the Scheme will beinvested in securities denominated in foreign currencies, theIndian Rupee equivalent of the net assets, distributions andincome may be adversely affected by changes in the valueof certain foreign currencies relative to the Indian Rupee.The repatriation of capital to India may also be hampered bychanges in regulations concerning exchange controls orpolitical circumstances as well as the application to it of otherrestrictions on investment.

Risk factor associated with trading in derivatives:l The Fund may use derivative instruments like Stock Index

Futures, Interest Rate Swaps, Forward Rate Agreements orother derivative instruments for the purpose of hedging andportfolio balancing, as permitted under the Regulations andguidelines.

As and when the Scheme(s) trades in the derivatives marketthere are risk factors and issues concerning the use ofderivatives that investors should understand. Derivativeproducts are specialized instruments that require investmenttechniques and risk analyses different from those associatedwith stocks and bonds. The use of a derivative requires anunderstanding not only of the underlying instrument but alsoof the derivative itself. Derivatives require the maintenanceof adequate controls to monitor the transactions enteredinto, the ability to assess the risk that a derivative adds tothe portfolio and the ability to forecast price or interest ratemovements correctly. There is the possibility that a loss maybe sustained by the portfolio as a result of the failure ofanother party (usually referred to as the �counter party�) tocomply with the terms of the derivatives contract. Otherrisks in using derivatives include the risk of improper valuationof derivatives and the inability of derivatives to correlateperfectly with underlying assets, rates and indices. Thus,derivatives are highly leveraged instruments. Even a smallprice movement in the underlying security could have a largeimpact on their value. Also, the market for derivativeinstruments is nascent in India.

l Risks associated with Index futures are similar to thoseassociated with Equity Investments. Additional risks couldbe on account of illiquidity and hence mispricing of the futureat the time of purchase. As and when the scheme trades in

the derivative market, there are risks factors and issuesconcerning the use of derivatives.

Since derivatives would be used as risk management tool,up to 100% of the Scheme�s net assets of the portfolio maybe utilised for derivatives trading.

Risk factor associated with Overseas Investment:l Subject to necessary approvals and within the investment

objectives of the Scheme(s), the Scheme(s) may invest inoverseas markets which carry a risk on account offluctuations in the foreign exchange rates, nature of securitiesmarket of the country, repatriation of capital due to exchangecontrols and political circumstances

l 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. Suchinvestment opportunities may be pursued by the AMCprovided they are considered appropriate in terms of theoverall investment objectives of the Scheme(s). Since theScheme(s) would invest only partially in Foreign Securities,there may not be readily available and widely acceptedbenchmarks to measure performance of the Scheme(s). 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 by SEBI /RBI from timeto time.

l Offshore investments will be made subject to any / allapprovals, conditions thereof as may be stipulated by SEBI /RBI and provided such investments do not result in expensesto the Fund in excess of the ceiling on expenses prescribedby and consistent with costs and expenses attendant tointernational investing. The Fund may, where necessary,appoint other intermediaries of repute as advisors, custodian/sub-custodians etc. for managing and administering suchinvestments. The appointment of such intermediaries shallbe in accordance with the applicable requirements of SEBIand within the permissible ceilings of expenses. The feesand expenses would illustratively include, besides theinvestment management fees, custody fees and costs, feesof appointed advisors and sub-managers, transaction costsand overseas regulatory costs.

l To the extent that the assets of the Scheme(s) will beinvested in securities denominated in foreign currencies, theIndian Rupee equivalent of the net assets, distributions andincome may be adversely affected by changes in the valueof certain foreign currencies relative to the Indian Rupee.The repatriation of capital to India may also be hampered bychanges in regulations concerning exchange controls orpolitical circumstances as well as the application to it of otherrestrictions on investment.

Special Considerations:l Mutual funds being vehicles of securities investments are

subject to market and other risks and there can be noguarantee against loss resulting from investing in theScheme. The various factors which impact the value of theSchemes� investments include, but are not limited to,fluctuations in the equity and bond markets, fluctuations ininterest rates, prevailing political and economic environment,changes in government policy, factors specific to the issuerof the securities, tax laws, liquidity of the underlyinginstruments, settlement periods, trading volumes, etc.

l The past performance of the mutual funds managed by theSponsors and their affiliates / associates is not indicative ofthe future performance of the Scheme.

l Investment decisions made by the AMC may not always beprofitable.

l From time to time, mutual funds managed by the affiliates /

Risk F

actor

s

5


associates of the Sponsors may invest either directly orindirectly in the Scheme. The funds managed by theseaffiliates/associates may acquire a substantial portion of theScheme�s Units and collectively constitute a majority investorin the Scheme. Accordingly, redemption of Units held bysuch funds may have an adverse impact on the value of theUnits of the Scheme because of the timing of any suchredemptions and may impact the ability of other Unit Holdersto redeem their respective Units.

l Debt securities are subject to the risk of an issuer�s inabilityto meet principal and interest payments on the obligations(credit risk). Debt securities may also be subject to pricevolatility due to such factors as interest sensitivity, marketperception or the creditworthiness of the issuer and generalmarket liquidity (market risk). While it is the intent of theInvestment Manager to invest primarily in highly rated debtsecurities, the Schemes may from time to time invest inhigher yielding, lower rated securities. This would enhancethe degree of risk.

l Lower rated or unrated securities are more likely to react todevelopments affecting the market and the credit risk thanthe highly rated securities which react primarily tomovements in the general level of interest rates. Lower ratedsecurities also tend to be more sensitive to economicconditions than higher rated securities. The InvestmentManager will consider both credit risk and market risk inmaking investment decisions.

l Zero coupon or deep discount bonds are debt obligationsthat do not entitle the holder to any periodic payment ofinterest prior to maturity or a specified date when thesecurities begin paying current interest and therefore, aregenerally issued and traded at a discount to their face values.The discount depends on the time remaining until maturityor the date when securities begin paying current interest. Italso varies depending on the prevailing interest rates, liquidityof the security and the perceived credit risk of the Issuer.The market prices of zero coupon securities are generallymore volatile than the market prices of securities that payinterest periodically and are likely to respond to changes ininterest rates to a greater degree than other coupon bearingsecurities having similar maturities and� credit quality.

l The credit risk factors pertaining to lower rated securitiesalso apply to lower rated zero coupon or deferred interestbonds. Such bonds carry an additional risk in that, unlikebonds that pay interest throughout the period to maturity,the Schemes would not realise any cash until interestpayment on the bonds commence and if the issuer defaults,the Schemes may not obtain any return on its investment.

l The Schemes have the power to invest in securities whichare not quoted on a stock exchange (�unlisted securities�)which in general are subject to greater price fluctuations,less liquidity and greater risk than those which are traded inthe open market. Unlisted securities may lack a liquidsecondary market and there can be no assurance that theSchemes will realise its investments in unlisted securitiesat a fair value.

l As liquidity of the Schemes� investments could, at times, berestricted by trading volumes and settlement periods, thetime taken by the Mutual Fund for redemption of Units maybe significant in the event of an inordinately large number of

redemption requests or of a restructuring of the Schemes�portfolio. In view of this, the Trustee has the right, in its solediscretion to limit redemptions (including suspendingredemption) under certain circumstances, as described underthe section titled �Right to Limit Redemptions�.

l In case the Schemes undertakes stock lending under theSEBI Regulations, the Schemes may, at times, be exposedto counter party risk.

l In case the Schemes utilizes any derivatives, under the SEBIRegulations, the Schemes may, in certain situations, beexposed to price risks.

l It is compulsory for mutual funds to dematerialise theirholdings in certain notified securities / companies. Tradingin dematerialised securities is still at a nascent stage in Indiaand this may result in some illiquidity in these securities.

l Certain focus areas are already enjoying favourable taxtreatment by Government of India. Other focus areas theSchemes may also receive favourable tax treatment. If thesetax benefits are removed or amended, it is possible that thechanges may have a material adverse impact on thecompanies� revenue and earnings.

l The Schemes may be narrowly focused among sectors andtherefore, changes in a particular industry can havesubstantial impact on the Schemes� NAV.

l Investors in the Schemes are not being offered a guaranteedor assured rate of return. The Mutual Fund is not guaranteeingor assuring any dividend or that it will make any dividenddistributions at all. In any event, dividend distributions aresubject to the investment performance of the Schemes

l As the liquidity of the Scheme�s investments may sometimesbe restricted by trading volumes and settlement periods,the time taken by the Fund for redemption of Units may besignificant in the event of an inordinately large number ofredemption requests or of a restructuring of the Scheme�sportfolio. In view of this, the Trustee has the right, in its solediscretion, to limit redemptions under certain circumstancesPlease see Ch. VII C) 6) �Right to limit Redemptions�.

l Neither this Offer Document nor the units have beenregistered in any jurisdiction. The distribution of this OfferDocument in certain jurisdictions may be restricted or subjectto registration requirements and, accordingly, persons whocome into possession of this Offer Document in suchjurisdictions are required to inform themselves about, andto observe, any such restrictions. No person receiving a copyof this Offer Document or any accompanying application formin such jurisdiction may treat this Offer Document or suchapplication form as constituting an invitation to them tosubscribe for Units, nor should they in any event use anysuch application form, unless in the relevant jurisdiction suchan invitation could lawfully be made to them and suchapplication form could lawfully be used without compliancewith any registration or other legal requirements.

l Investment decisions made by the Investment Manager maynot always be profitable.

Investors are urged to study the terms of the offer carefullybefore investing in the Scheme, and to retain this OfferDocument for future reference.

Risk Factors



II. Definitions and Abbreviations

In this Offer Document, the following words and expressionsshall have the meaning specified herein, unless the contextotherwise requires:

AMC or Asset Deutsche Asset Management (India) PrivateManagement Limited, incorporated under the provisions ofCompany or the Companies Act, 1956, and approved byInvestment SEBI to act as Investment Manager for theManager or Scheme(s) of Deutsche Mutual FundDeAM India

Applicable NAV The Net Asset Value applicable for purchases / redemptions / switches, based on theBusiness Day and relevant cut-off times onwhich the application is accepted at anInvestor Service Centre

Business Day For DPBF, DMIP, DDBF, DSMF, DFRF,DICPF as under:-

A day other than (1) Saturday and Sunday or(2) a day on which The Stock Exchange,Mumbai or National Stock Exchange of IndiaLimited or Reserve Bank of India or banks inMumbai are closed or (3) the day on whichthe money markets are closed / not accessibleor (4) a day on which the sale and/orredemption and/or switches of Units issuspended by the Trustees / AMC or (5) a bookclosure period as may be announced by theTrustees / AMC or (6) a day on which normalbusiness cannot be transacted due to storms,floods, bandhs, strikes or such other eventsas the AMC may specify from time to time.

Provided that the days when the banks in anylocation where the AMC�s Investor ServiceCentres are located, are closed due to a localholiday, such days will be treated as nonBusiness Days at such centres for thepurposes of accepting fresh subscriptions.However, if the Investor Service Centre insuch locations are open on such local holidays,then redemption and switch requests will beaccepted at those Centres, provided it is aBusiness Day for the Scheme on an overallbasis. Notwithstanding the above, the AMCmay declare any day as a Business Day bygiving adequate notice to investors.

For DAEF & DIOF as under:-

A day other than (1) Saturday and Sunday or(2) a day on which The Stock Exchange,Mumbai or National Stock Exchange of IndiaLimited are closed or (3) a day on which thesale and/or redemption and/or switches ofUnits is suspended by the Trustees / AMC or(4) a book closure period as may beannounced by the Trustees / AMC or (5) a dayon which normal business cannot betransacted due to storms, floods, bandhs,strikes or such other events as the AMC mayspecify from time to time.

Provided that the days when the banks in anylocation where the AMC�s Investor ServiceCentres are located, are closed due to a localholiday, such days will be treated as nonBusiness Days at such centres for thepurposes of accepting fresh subscriptions.However, if the Investor Service Centre insuch locations are open on such local holidays,then redemption and switch requests will beaccepted at those Centres, provided it is a

Business Day for the Scheme on an overallbasis. Notwithstanding the above, the AMCmay declare any day as a Business Day bygiving adequate notice to investors.

CDSC Contingent Deferred Sales Charge permittedunder the Regulations to be borne by the UnitHolder upon exiting (whether by way ofredemption or Inter-scheme switching) basedon the amount of investment (if applicable)and period of holding of Units.

Custodian JP Morgan Chase Bank, Mumbai, registeredunder the SEBI (Custodian of Securities)Regulations, 1996, currently acting asCustodian to the Scheme(s), or any othercustodian approved by the Trustees.

DDs Demand Drafts

DeAM Asia or Deutsche Asset Management (Asia) LimitedSponsor orSettlor

Depository Depository as defined in the Depositories Act,1996.

Designated Such centres including collecting bankCentres branches as may be designated by the AMC

for subscriptions and / or redemptions and/orswitches in the Scheme(s) from time to time

Distributor Such persons / firms / companies / corporatesas may be appointed by the AMC to distribute/ sell / market the Scheme(s) of the Fund.

Dividend Income distributed by a Scheme on the Units,where applicable.

DTAA Double Taxation Avoidance Agreement.

FCNR Foreign Currency Non-Resident Accounts.

FII Foreign Institutional Investors, registered withSEBI under Securities and Exchange Boardof India (Foreign Institutional Investors)Regulations, 1995 as amended from time totime.

Fund or Deutsche Mutual Fund, a trust set up underMutual Fund the provisions of the Indian Trusts Act, 1882

and registered with SEBI under the Securitiesand Exchange Board of India (Mutual Funds)Regulations, 1996 vide Registration No. MF/047/02/10 dated 28th October 2002.

Initial Offer The dates on or the period during which thePeriod initial subscription to Units of the Scheme(s)

can be made subject to an extension, if any.

Initial Public Offer for purchase of Units of the Scheme(s).Offer or InitialIssue or IPO

Investment The Agreement dated May 29, 2002 enteredManagement into between the Trustees of DeutscheAgreement or Mutual Fund and Deutsche AssetIMA Management (India) Private Limited as

amended from time to time.

Investor of An investor of record for the purpose ofrecord dividend distributions is an investor who is a

Unitholder as of the date dividend is declared.In order to be a Unitholder an investor has tobe allocated Units against clear funds.

Investor Service Such offices as are designated as InvestorCentres or ISC Service Centres by the AMC from time to

time.

Defin

itions

7


Local Cheque A cheque handled locally and drawn on anybank which is a member of the Banker�sClearing House located at the place where theApplication Form is submitted.

NAV Net Asset Value of the Units of each Scheme,Plans (including Options if any, therein)calculated in the manner provided in this OfferDocument or as may be prescribed by theRegulations from time to time.

NRE Account Non-Resident External Accounts.

NRI Non-Resident Indian or a person of Indianorigin resident outside India.

NRSR Account Non-Resident Special Rupee Account.

Offer Document This document issued by Deutsche MutualFund, offering Units of Deutsche MIP Fundfor subscription.

RBI Reserve Bank of India, established under theReserve Bank of India Act, 1934, as amendedfrom time to time.

Redemption A charge paid by the investor when Units areLoad / Exit Load redeemed (sold back to the Mutual Fund). This

load may be used in whole or in part by theAsset Management Company in providingdistribution related services to the MutualFund relating to the sales, promotion andmarketing of Units of the Scheme, includingpayments for services in connection with thedistribution of Units.

Registrar Karvy Computershare Private Ltd. (KARVY),registered under the SEBI (Registrars to anIssue and Share Transfer Agents) Regulations,1993, currently acting as Registrar to theScheme(s) or any other registrar appointed bythe AMC from time to time.

Repo / Reverse Sale / purchase of Government Securities asRepo may be allowed by RBI from time to time with

simultaneous agreement to repurchase / resellthem at a later date.

Repurchase / Repurchase / redemption of Units of theRedemption relevant Scheme(s).

Sale / Sale / subscription of Units of the relevantSubscription Scheme(s).

Sales Load A one time charge that the investor pays atthe time of entry into the Scheme. This loadis used in whole or in part by the AssetManagement Company in providingdistribution related services to the MutualFund relating to the sales, promotion andmarketing of Units of the Scheme, includingpayments for services in connection with thedistribution of Units.

Scheme(s) Deutsche Alpha Equity Fund (DAEF),Deutsche Premier Bond Fund (DPBF),Deutsche Insta Cash Plus Fund (DICPF),Deutsche Short Maturity Fund (DSMF),Deutsche Floating Rate Fund (DFRF),

Deutsche Dynamic Bond Fund (DDBF),Deutsche MIP Fund (DMIP) and DeutscheInvestment Opportunity Fund (DIOF)(including, as the context permits, either thePlans / Options) collectively referred to as theScheme(s) and individually, as the contextpermits, as the Scheme.

SEBI Securities and Exchange Board of Indiaestablished under Securities and ExchangeBoard of India Act, 1992, as amended fromtime to time.

SEBI MF Securities and Exchange Board of IndiaRegulations1996 (Mutual Funds) Regulations, 1996 as amendedor Regulations from time to time, including by way of circulars

or notifications issued by SEBI, theGovernment of India or RBI.

SIP / SWP/ STP Systematic Investment Plan / SystematicWithdrawal Plan / Systematic Transfer Plan.

Switch Sale of a Unit in one Scheme / Plan / Optionagainst purchase of a Unit in another Scheme /Plan / Option.

Switchover Fee A charge incurred to switch from one schemeto another within the same mutual fund familyor to switch from one Investment Plan (i.e.Unit Class) to another within the sameScheme.

The Act The Income Tax Act, 1961.

Trust Deed The Trust Deed dated May 29, 2002 made byand between the Sponsor and the Trusteesestablishing Deutsche Mutual Fund, asamended from time to time.

Trust Fund Amounts settled / contributed by the Sponsortowards the corpus of the Deutsche MutualFund and additions / accretions thereto.

Trustees Deutsche Trustee Services (India) Pvt.Limited, the trustees of Deutsche MutualFund and approved by SEBI to act as theTrustees of the Scheme(s) of the Fund.

Unit The interest of an investor which consists ofone undivided share in the net assets of therelevant Scheme(s).

Unitholder or A holder of Units in any one or moreInvestor Scheme(s) of Deutsche Mutual Fund offered

under this Offer Document.

Interpretation

For all purposes of this Offer Document, except as otherwiseexpressly provided or unless the context otherwise requires:

l The terms defined in this Offer Document include the pluralas well as the singular.

l Pronouns having a masculine or feminine gender shall bedeemed to include the other.

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�.

Definitions



Summ

ary

III. Summary of the Scheme(s)Name oftheScheme

InvestmentObjective

Benchmark

Plans

Options

SubscriptionAmount

InitialIssueExpenses

MinimumRedemptionAmount

MinimumBalanceto bemaintained

Investmentby NRIs /Flls

Transparency

SwitchingOptions

DeutscheAlpha Equity Fund

The Investmentobjective of theScheme is togenerate long-termcapital growth frominvestment in adiversified portfolio ofequity and equityrelated securities.

NSE Nifty

Not Applicable

�Dividend� (payout /reinvestment) &�Growth�.

Minimum Rs. 5,000per application and inmultiples of Re. 1thereafter.

Initial Issue expensesover and above 1%will be borne by theAMC.

Minimum Rs. 1,000and in multiples ofRe. 1 thereafter.

Regular Plan :Rs. 3,000

DeutschePremier Bond Fund

The investmentobjective of theScheme is to provideregular income byinvesting in debtsecurities includingbonds and moneymarket instruments.

Crisil Composite BondFund Index

Institutional Plan (IP)and Regular Plan (RP).The Scheme willmaintain one portfoliofor both the Plans.

�Dividend� (Monthly,Quarterly & Yearly)(payout /reinvestment) &�Growth�.

Institutional Plan :MinimumRs. 100,000 (One Lac)per application and inmultiples of Re. 1thereafter.Regular Plan :Minimum Rs. 5,000per application and inmultiples of Re. 1thereafter.

To be borne by theAMC.

Institutional Plan :Minimum Rs. 100,000(One Lakh) and inmultiples of Re. 1thereafter.Regular Plan :Minimum Rs. 1,000and in multiples ofRe. 1 thereafter.

Institutional Plan :Rs. 100,000(One Lac Only)Regular Plan :Rs. 3,000

DeutscheShort Maturity Fund

The investmentobjective of theScheme is togenerate steadyreturns with lowvolatility by investingin short-medium termdebt and moneymarket securities.

Crisil Short Term BondIndex

Not Applicable.

�Dividend� (Weeklyreinvestment,Monthly payout /reinvestment) &�Growth�.

Minimum Rs. 25,000per application and inmultiples of Re. 1thereafter.


Minimum Rs. 1,000and in multiples ofRe. 1 thereafter.

Rs. 3,000

Deutsche InstaCash Plus Fund

The investmentobjective of theScheme is togenerate steadyreturns along withhigh liquidity byinvesting in a portfolioof short-term, highquality money marketand debt instruments.

Crisil Liquid FundIndex (LiquifEX)

Institutional Plan (IP)and Regular Plan (RP).The Scheme willmaintain one portfoliofor both the Plans.

�Dividend� (Daily /Weekly reinvestment,Regular Payout &Reinvestment) &�Growth�.

Institutional Plan :MinimumRs. 5,00,00,000 (FiveCrore) per applicationand in multiples ofRe. 1 thereafter.Regular Plan :Minimum Rs. 100,000per application and inmultiples of Re. 1thereafter.


Institutional Plan:Minimum Rs. 100,000(One Lakh) and inmultiples of Re. 1thereafter.Regular Plan:Minimum Rs. 1,000and in multiples ofRe. 1 thereafter.

Rs. 3,000

DeutscheDynamic Bond Fund

To actively manage aportfolio of goodquality debt as well asmoney marketinstruments so as toprovide reasonablereturns & liquidity tothe unitholders.

Crisil Composite BondFund Index

Regular Plan (RP)

�Dividend� (Monthly,Quarterly & Yearly)(payout /reinvestment) &�Growth�.

Regular Plan:Minimum Rs. 5,000per application and inmultiples of Re. 1thereafter.


Regular Plan:Minimum Rs. 1,000and in multiples ofRe. 1 thereafter.

Regular Plan :Rs. 3,000

Investment by NRIs / Flls are allowed on a full repatriation basis subject to RBI approvals, if any.

Investors may opt to switch units between schemes, Plans and Options of the Scheme at NAV based prices.

Daily Announcement of NAV on all Business Days and quarterly disclosure of complete portfolio through Fund�s Newsletters.

9


SummaryDeutsche Investment Opportunity Fund

The primary objective of the scheme is togenerate capital appreciation on theportfolio over a long term by activelyinvesting in different asset classes as permarket conditions. The investmentmanager will have the discretion to investupto 100% of the assets in the portfolio inequity market/equity related instrumentsat a given point of time. The equityexposure may fall to as low as 5% undercertain circumstances, in which case, thefund shall be invested in debt and moneymarket instruments at its discretion. TheAMC may choose to actively trade on theportfolio of the scheme in order to achievethe investment objective.

BSE 200 Index.

Not Applicable.

�Dividend� (Annual) (payout / reinvestment)& �Growth� Plans

Minimum Rs. 5,000 per application and inmultiples of Re. 1 thereafter. MinimumAdditional Amount Rs. 1,000 and inmultiples of Rs. 1 thereafter

Initial Issue expenses over and above 2%will be borne by AMC.

Rs. 1,000 and in multiples of Re. 1thereafter

Balance to be Rs. 3,000

Deutsche Floating Rate Fund

To provide income consistentwith the prudent risk from aportfolio comprisingsubstantially of floating ratedebt, fixed rate debtinstruments swapped forfloating rate returns and alsofixed rate and money marketinstruments.

Crisil Liquid Fund Index(LiqifEX)

Not Applicable.

�Dividend� (MonthlyReinvestments & WeeklyReinvestment) & �Growth�.

Minimum Rs. 25,000 perapplication and in multiples ofRe. 1 thereafter.

To be borne by the AMC.

Minimum of Rs. 1,000 and inmultiples of Re. 1 thereafter.

Rs. 3,000.

Deutsche MIP Fund

An open-ended income scheme with theprimary objective to generate regularincome1 in order to make regular dividendpayments to unit holders and thesecondary objective is growth of capital.The scheme seeks to generate regularincome by investing primarily in fixedincome securities/money marketinstruments so as to facilitate periodicdistributions to investors with thesecondary objective being generation oflong-term capital appreciation by investinga small portion in equity/ equity relatedinstruments. However, there can be noassurance that the investment objectiveof the scheme will be achieved.

Crisil MIP Blended Index

Plan A (invested up to 20% Equity); Plan B(invested up to 10% Equity). The Portfoliofor the two plans would be different

�Dividend� (Monthly, Quarterly, Annual)(payout / reinvestment) & �Growth� Plans

Minimum Rs. 25,000 per application forthe Dividend Option and Minimum Rs.5,000 per application for the Growthoption and in multiples of Re. 1 thereafter.Minimum Additional Amount Rs. 1,000and in multiples of Re. 1 thereafter forboth the Options

To be borne by the AMC.

Rs. 1,000 and in multiples of Re. 1thereafter.

Rs. 25,000 in case of Dividend Option andRs. 5,000 in case of the Growth Option.

Name oftheScheme

InvestmentObjective

Benchmark

Plans

Options

SubscriptionAmount

InitialIssueExpenses

MinimumRedemptionAmount

MinimumBalanceto bemaintained

Investmentby NRIs /Flls

Transparency

SwitchingOptions

1 No assured returns.

Investment by NRIs / Flls are allowed on a full repatriation basis subject to RBI approvals, if any.

Daily Announcement of NAV on all Business Days and quarterly disclosure of complete portfolio through Fund�sNewsletters.

Investors may opt to switch units between schemes, Plans and Options of the Scheme at NAV based prices.



Cons

tituti

on of

Mutu

al Fu

nd

IV.Constitution of theMutual Fund

A) The FundDeutsche Mutual Fund (�the Mutual Fund� or �the Fund�) hadbeen constituted as a Trust in accordance with the provisions ofthe Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed datedMay 29, 2002. The office of the Sub-Registrar of Assurances atMumbai has registered the Trust Deed establishing the Fund underthe Registration Act, 1908. The Fund was registered with SEBIvide registration number MF/047/02/10 dated 28th October, 2002.The office of the Mutual Fund is at DB House, Hazarimal SomaniMarg, Fort, Mumbai 400 001. The Trust has been formed for thepurpose of pooling of capital from the public for collectiveinvestment in securities / any other property for the purpose ofproviding facilities for participation by persons as beneficiaries insuch properties / investments and in the profits / income arisingtherefrom as may be permitted by the regulations.

B) The Sponsors

SponsorDeutsche Asset Management (Asia) Limited (�DeAM Asia�) isthe sponsor for the Deutsche Mutual Fund. Deutsche AssetManagement (Asia) Limited (�DeAM Asia�) was incorporated in1987 and is headquartered in Singapore. DeAM Asia is responsiblefor marketing and sourcing new assets in the region forinvestments into Asia and Global range of equity and fixed interestproducts. DeAM Asia has an Investment Adviser License issuedby the Monetary Authority of Singapore (�MAS�). It is one of thesix fund managers granted the Enhanced Fund Manager statusby MAS and is an Approved Fund Management Company underthe Central Provident Fund Scheme.

In addition to managing the funds of Asian clients, DeAM Asiaalso manages and advises the Asian assets of Deutsche AssetManagement�s UK and Australian pension funds, the Asian portionof the Group�s global emerging market portfolio�s and global smallcompany portfolios. Within the Asian region, DeAM Asia hassubsidiaries in Hong Kong, Korea, India and a marketing office inTaiwan.

Given below is a brief summary of DeAM Asia�s financials:

Year ended December 31 (US$ '000)

Description Sept. 2004 2003 2002 2001(Unaudited)

Total Income 14,347 20,675 16,508 12,662

Profit Before Tax 1,919 332 1,472 1,392

Profit After Tax 1,771 244 1,973 1,096

Free Reserves /(AccumulatedLosses) 7,244 5,624 5,276 3,097

Net Worth 16,540 14,815 12,992 10,332

Earnings perShare (US$) 0.11 0.02 0.15 0.08

Book Value perShare (US$) (NW /No. of Shares) 1.06 0.95 0.97 0.77

Dividend % 0 0 0 27.23%

Paid Up Capital(Equity) 9,296 9,191 7,716 7,235

(Preference) � � � �

Deutsche Asset ManagementDeutsche Asset Management is a 100% owned subsidiary ofDeutsche Bank AG.

Deutsche Asset Management (DeAM), the asset managementdivision of Deutsche Bank A.G., is one of the world�s foremostinvestment organisations. Their presence in the key majorinvestment markets allows them to leverage the expertise ofmore than 360 portfolio managers and analysts across the globe.DeAM�s investment teams benefit appreciably from the financialand research support of one of the world�s strongest financialinstitutions.

As a leading global asset manager, Deutsche Asset Managementoffers clients a combination of services - a truly global network, acomprehensive product range, a service orientation andcommitment to superior performance - together with the financialstrength and resources of the Deutsche Bank Group. DeAM isdedicated to providing clients with investment solutions at allpoints of the risk/return spectrum, with products specificallytailored to meet individual client requirements. Strategies offeredinclude active management in equities and fixed income bothdomestically and internationally. DeAM�s ultimate goal is toempower clients with innovative solutions that meet their complexinvestment needs.

Deutsche Asset Management manages funds on behalf of a widerange of clients world-wide, including pension funds, charitiesand foundations, corporates and insurance companies. As at the30th November 2004, Deutsche Asset Management had overUSD 729 billion of assets under management.

Deutsche Asset Management captures the talents and experienceof over 40 years of several key market players - most notably�Morgan Grenfell�, �Bankers Trust� and our European Retails Fundbusiness - �DWS Investments�. Since 1999 it has operated underone global name of �Deutsche Asset Management�. On 4thDecember, 2001 a definitive agreement to acquire the US,European (excluding Threadneedle) and Asian operations ofScudder from Zurich Financial Services was signed. The additionof Scudder expanded Deutsche Bank�s US presence significantly,enhancing the ability to deliver outstanding products and servicesto Deutsche Bank and Scudder investors worldwide. Thistransaction reflects and strengthens Deutsche Bank�scommitment to Asset Management as a key strategic focus.

Deutsche Bank GroupWith more than � 729 billion in assets and approximately 65,000employees, Deutsche Bank offers its 21 million clientsunparalleled financial services in around 74 countries throughoutthe world. The Bank aspires to be a leading global provider ofintegrated financial solutions for demanding clients and the pre-eminent bank in Germany, generating exceptional value for itsshareholders and people.

Deutsche Bank ranks among the global leaders in corporatebanking and securities, transaction banking, asset management,and private wealth management, and has a significant private &business banking franchise in Germany and other selectedcountries in Continental Europe.

Deutsche Bank in IndiaDeutsche Bank established its first branch in India in 1980. Today,Deutsche Bank operates in India through its five full-fledgedbranches. With a staff of over four hundred people in five cities,Deutsche Bank India has a presence in the key geographic Indianlocations. Armed with its in-depth knowledge of the Indianeconomy and the business environment, as well as by leveragingon its international network, Deutsche Bank is well positioned tooffer its clients state-of-the-art advisory services in India.

The bank has a strong presence in Corporate Banking, InternationalTrade Finance, Global Markets, Custody Services, Global CashManagement, Corporate Trust & Agency Services, and, PrivateWealth Management. The bank presently is recognized as India�sleading foreign exchange dealer, ranking among the top three in

11


Constitution of Mutual Fundderivatives sales and is one of the top three foreign banks in GOIsecurities trading. Deutsche Bank India has also been voted byFinance Asia as the� The Best Foreign Investment Bank in India-2004".

C) The Trustee Company (the Trustee)The Sponsor has appointed Deutsche Trustees Service (India)Private Limited as the Trustees for the Deutsche Mutual Fund.

1) The name, addresses and other details of the Board ofDirectors of Deutsche Trustees Service (India) Private Limitedare mentioned below:

Gunit Chadha ChairmanB.A , MBA IIM(A), Deutsche EquitiesAdvanced Management (India) Pvt. Ltd.Programme, Deutsche NetworkWharton School, USA Services Pvt. Ltd.Flat No.181, 18th Floor, Deutsche SecuritiesMaker Tower Apartment A & B, India Pvt. Ltd.Cuffe Parade, Mumbai 400 005. Trustee - SujayaCEO � Deutsche Bank , India Foundation

Member ofGoverning Board -Infinity BusinessSchool, New Delhi

M. H. Kania DirectorB. A. (Hons), LLB6-B, SAMTA, Gen. J. Bhosale Marg,Mumbai 400 021Former Chief Justice �Supreme Court of India.

Y.B.Desai DirectorB.A. (Hons), CAIIB Dishman901, Dheeraj Gaurav Heights, Pharmaceutical &Building No. 2, �A� Wing, Chemicals Ltd.At Link Road, Andheri (West), LIC HousingMumbai � 400053 FinanceFormer Managing Director � Company Ltd.Export Import Bank of India. Kabra Extrusion

Tecnik Ltd.

A.S. Mitra DirectorB.A., A.C.I.I. (London) Avery India Ltd.D5, Silver Valley No. 2, (Chairman-NonShivaji Maharaj Road, Vakola, Executive)Santacruz (E), Mumbai 400 055Former Chairman & ManagingDirector � New India AssuranceCompany.

Debabrata Bhadury DirectorB.A. (Economics Hons.), USV Ltd, Mumbai.Postgraduate Management Diploma9A Belvedere Court,Sane Guruji Marg, Mumbai 400 011Former Managing Director &Vice Chairman - Hoechst MarionRoussell Ltd.

Mr. Gunit Chadha is associated with the Sponsors.

Mr. M. H. Kania, Mr. Y. B. Desai, Mr. A. S. Mitra and Mr.Debabrata Bhadury, are independent trustees. Thus, 4 outof the 5 trustees are independent trustees.

2) Rights, Duties & Responsibilities of the Trustee andthe material provisions of the Trust Deed

l The Rights, Duties and Responsibilities of the Trustee shallbe consistent with the Regulations and the Trust Deed. TheTrustee shall discharge such duties and responsibilities asprovided in the Regulations and the Trust Deed. The dutiesand responsibilities of the Trustee and the material provisionsof the Trust Deed, inter alia, are as under:

l The Trustee has exclusive ownership of the Trust Fund andholds the same in trust and for the benefit of Unit Holders.

l The Trustee shall ensure that the Fund and the schemesfloated thereunder and managed by the AMC are inaccordance with the Trust Deed and the Regulations,directions and guidelines issued by SEBI, the StockExchanges and other regulatory agencies.

l The Trustee shall ensure that the transactions concerningthe Fund are in accordance with the Trust Deed and theRegulations.

l The Trustee shall ensure that the investment of the TrustFund and Unit Capital of each scheme is made only in thepermitted securities and within limits prescribed by the TrustDeed, the Regulations, and the offer document of theconcerned scheme.

l The Trustee shall hold in safe custody and preserve theproperties of the Fund and the various schemes of the Fund.

l The Trustee shall ensure that the income due to be paid tothe Scheme is collected and properly accounted for and shallclaim any repayment of tax and holding any income receivedin trust for the holders in accordance with the Trust Deedand the Regulations.

l The Trustee shall not acquire or allow the Asset ManagementCompany to acquire any asset out of Trust Fund, whichinvolves assumption of unlimited liability or results inencumbrance of Trust Fund.

l The Trustee shall be bound to make such disclosures to theUnit Holders as are essential in order to keep them informedabout any information, which may have an adverse bearingon their investments.

l The Trustee shall provide or cause to provide such informationto Unit Holders and SEBI, as may be specified by SEBI fromtime to time.

l The Trustee shall act in the best interest of Unit Holders.

l The Trustee, in carrying out its responsibilities under the TrustDeed and Regulations, shall maintain arm�s lengthrelationship with other companies, institutions or financialintermediaries or any body corporate with which it isassociated.

l A Director of the Trustee shall not participate in the meetingsof the Trustee or in any decision making process in respectof any investments for the Fund in which he may beinterested.

l The Trustee shall abide by the code of conduct specified inthe Regulations.

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

l The Trustee may, subject to the Regulations, prescribe suchterms and make such rules for the purpose of giving effectto the provisions of the Scheme with power to theInvestment Manager to add to, alter or amend all or any ofthe terms and rules that may be framed from time to time.However, the Trustee may alter / modify / change in theFundamental Attributes of the Scheme or the trust or feesand expenses payable or any other change which wouldmodify the Scheme or affect the interest of the Unit Holders,in accordance with the applicable Regulations from time totime.

l The Trustee will call for a meeting of the Unit Holders of theScheme, as required by the Regulations for the time beingin force, whenever it is required by SEBI to do so in theinterest of the Unit Holders, or if the Trustee determines tomodify the Scheme or prematurely redeem the Units or windup the Scheme.



Cons

tituti

on of

Mutu

al Fu

ndl If any difficulty arises in giving effect to the provisions of

this Scheme, the Trustee may do anything not inconsistentwith such provisions, subject to the Regulations, whichappear to be necessary, desirable or expedient, for thepurpose of removing such difficulty.

l In addition to the duties and responsibilities provided in theRegulations, the material provisions of SEBI (Mutual Funds)(Amendment) Regulations 1999 provide how the Trusteeshall exercise due diligence and are as under.

The Trustee shall exercise General Due Diligence in the followingmanner:

l The Trustee shall be discerning in the appointment of thedirectors on the Board of the AMC.

l The Trustee shall review the desirability of continuance ofthe AMC if substantial irregularities are observed in any ofthe schemes and shall not allow the AMC to float newschemes.

l The Trustee shall ensure that the trust property is properlyprotected, held and administered by proper persons and bya proper number of such persons.

l The Trustee shall ensure that all service providers are holdingappropriate registrations from the Board or concernedregulatory authority.

l The Trustee shall arrange for test checks of service contracts.

l The Trustee shall immediately report to the Board of anyspecial developments in the Fund.

The Trustee shall exercise Specific Due Diligence in the followingmanner:

l Obtain internal audit reports at regular intervals fromindependent auditors appointed by the Trustee

l Obtain compliance certificates at regular intervals from theAMC.

l Hold meeting of Trustee more frequently.

l Consider the reports of the independent auditor andcompliance reports of AMC at the meetings of trustees forappropriate action.

l Maintain records of the decisions of the Trustee at theirmeetings and of the minutes of the meetings.

l Prescribe and adhere to a code of ethics by the Trustee,AMC and its personnel.

l Communicate in writing to the AMC of the deficiencies andchecking on the rectification of deficiencies.

l Notwithstanding the aforesaid, the Trustee shall not be heldliable for acts done in good faith if they have exercisedadequate due diligence honestly.

l The Independent Directors of the Trustee or AMC shall payspecific attention to the following, as may be applicable,namely :

l The Investment Management Agreement and thecompensation paid under the agreement.

l Service contracts with affiliates - whether the AMC hascharged higher fees than outside contractors for the sameservices.

l Selection of the AMC�s independent directors.

l Securities transactions involving affiliates to the extent suchtransactions are permitted.

l Selecting and nominating individuals to fill independentdirectors vacancies.

l Code of ethics must be designed to prevent fraudulent,deceptive or manipulative practices by insiders in connectionwith personal securities transactions.

l The reasonableness of fees paid to Sponsors, AMC and anyothers for services provided.

l Principal underwriting contracts and their renewals.

l Any service contract with the associates of the AMC.

l Notwithstanding anything contained in sub-regulations (1)to (25) of regulation 18 of the Regulations, the Trustees shallnot be held liable for acts done in good faith if they haveexercised adequate due diligence honestly.

l The Regulations provide that the meetings of the Trusteesshall be held at least once in every 2 months and at least 6such meetings will be held every year. Further, as per theRegulations, for the purposes of constituting the quorumfor the meetings of the Trustees, at least one IndependentTrustee or Director should be present during such meetings.

The supervisory role of the Trustees will be discharged byreviewing the information and the operations of the Fund basedon the report submitted at the meetings of the Trustees, byreviewing the reports submitted by the Internal Auditor and thebi-monthly and half yearly compliance reports. The Trustees willalso conduct a detailed review of half-yearly and annual accountsof the Scheme of the Fund and discuss the matters arisingtherefrom with the Statutory Auditors of the Scheme of the Fund.

No amendment to the Trust Deed shall be carried out withoutprior approval of SEBI and Unitholders� approval / consent will beobtained where it affects the interests of Unitholders as per theprocedure / provisions laid down in the Regulations.

The Trustees may require or give verification of identity or otherdetails regarding any subscription or related information from / ofthe Unitholders as may be required under any law, which mayresult in delay in dealing with the applications, Units, benefits,distribution, etc.

3) Trusteeship FeesPursuant to the Trust Deed constituting the Fund, the Fundis authorised to pay Deutsche Trustee services (India) PrivateLimited a fee for their services in such capacity or such othersum as may be mutually agreed between the Sponsor andthe Board of Trustees from time to time, subject to the SEBIRegulations. . It has been decided to charge the Trusteeshipfees in proportion to the net assets of each of the schemesof the fund. Trustee fees will be charged at 0.01% of theassets of the scheme subject to a maximum of Rs. 500,000per annum.

4) Meeting held during the last financial yearThe board of directors of the trustee company met on 9occasions in the financial year 2003-2004.

D) The Asset Management Company(�AMC�)

1) Deutsche Asset Management (India) Pvt. Ltd. (DeAM India)has been appointed the Asset Management Company ofthe Mutual Fund by the Trustees. The Asset ManagementCompany is a private limited company incorporated underthe Companies Act, 1956 on March 21, 2002. DeutscheAsset Management (Asia) Ltd. holds 75% of the paid upequity capital of the company and the balance 25% is heldUnited Associates Holdings India Private Limited. UnitedAssociates Holdings India Private Limited is an Investmentand Financial Services company incorporated in India underthe Companies Act 1956. The head office and the registeredoffice of the DeAM India is DB House, Hazarimal SomaniMarg, Fort Mumbai 400 001, India. The Asset ManagementCompany was approved to act as the Asset ManagementCompany for the Mutual Fund by SEBI on October 29, 2002.

The Mutual Fund has entered into an InvestmentManagement Agreement with the Asset ManagementCompany dated May 29, 2002 pursuant to which the AssetManagement Company will act as investment manager ofthe Mutual Fund�s assets.

13


Constitution of Mutual FundBesides the offering and management of collectiveinvestment schemes, the Asset Management Company mayundertake activities in the nature of management andadvisory services to offshore funds, pension funds, providentfunds, venture capital funds, management of insurance fundsand financial consultancy and exchange of research on acommercial basis.

The AMC will manage the Scheme(s) of the Fund, includingthose mentioned in this Offer Document, in accordance withthe provisions of IMA, the Trust Deed, the SEBI Regulationsand the objectives of each of the Scheme(s).

In accordance with the SEBI Regulations, an asset

management company, subject to certain conditions, is alsopermitted to undertake activities in the nature of portfoliomanagement services, management and advisory servicesto offshore funds, pension funds, provident funds, venturecapital funds, management of insurance funds, financialconsultancy and exchange of research on commercial basisand such other activities as may be permitted, by SEBI, fromtime to time. Subject to these activities being assessed asdesirable and economically viable, the AMC may undertakeany or all of these activities after satisfying itself that thereis no potential conflict of interest.

2) Board of Directors of the AMCChoy Peng Wah ChairmanBBA (Business Administration), Deutsche Asset Management (Asia) Ltd.Lakehead University, Ontario Canada Deutsche Asset Management (Hongkong) Ltd.MBA (Marketing), McGill University, Montreal Canada The China Fund10 Cuscaden Walk, #03-04, Singapore 249693Chairman of the Board of DirectorsDirector & Chief Executive Officer, Asia �Deutsche Asset Management (Asia) Ltd.

Sandeep Dasgupta DirectorB. Tech (Electronics & Telecommunications),PGDM(IIM Ahmedabad)B-1, 12F, Harbour Heights, N. A. Sawant MargColaba, Mumbai 400 005Chief Executive Officer �Deutsche Asset Management (India) Pvt. Ltd.

Kersi M. Gherda DirectorB.Com., ACS, ACA, FCS (England & Wales) Aerospace Systems Pvt. Ltd.9 A, Sterling Apartments, 38, Pedder Road, Mumbai 400 026 Emerson Network Power India Pvt. Ltd.Chairman - Kotak Mahindra Bank Ltd. Kotak Mahindra Bank Ltd.Former Vice Chairman and Managing Director � KM Dastur Reinsurance Brokers Pvt. Ltd.Tata Electric Companies. Nelito Systems Ltd.

Pallonji Leasing Pvt. Ltd.Sanchez Capital Services Pvt. Ltd.Tata Ceramics Ltd.Universal Ferro & Allied Chemicals Ltd.WTI Advanced Technology Ltd.Yashmun Engineers Ltd.Zenta India Pvt Ltd.

Dileep C. Choksi DirectorB.Com. (Hons), LLB, (Grad) C.W.A., F.C.A. CCC Services Co. Pvt. Ltd.E-7, Sea Face Park, 50, Bhulabhai Desai Road, ICICI Lombard General Insurance Co Ltd.Mumbai 400 026. Aon Global Insurance Services Pvt. Ltd.Partner � Deloitte Haskins & Sells, Mumbai National Commodity & Derivatives Exchange Limited

NSEIT

Vijay P. Gokhale DirectorB.Sc., B.Sc.(Eng), London, DLC Hons (Mech.Engg) Carrier Aircon Ltd.12, Usha Kiran, M.L.Dahanukar Marg, Mumbai 400 026 Fosters India Ltd.Former Chairman and Managing Director � Franke India Pvt. Ltd.Union Carbide India Ltd. Krishvidur Services Pvt. Ltd.

Sunline Industries Ltd.TQM International Pvt. Ltd.T4T Consultants Pvt. Ltd.Vista Technical Services Pvt. Ltd.

Carl Saldanha DirectorB. Tech(Hons.), I.I.T., Mumbai United Associates Holdings India Pvt. Ltd.M.B.M., Asian Institute of Management, PhillipinesCool Shanagh, No. 602, N Gamadia Road, Mumbai - 400 026Executive Vice President � FinanceJet Airways India Pvt. Ltd.

l Mr. Choy Peng Wah and Mr. Sandeep Dasgupta are associated with the Sponsors.

l Mr. Kersi M. Gherda, Mr. Dileep C. Choksi and Mr. Vijay P. Gokhale are Independent Directors.

l Thus, 3 out of the 6 directors are independent directors.



Cons

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nd3) Powers, Duties and Responsibilities of the AMC

The powers, duties and responsibilities of the AMC shall begoverned by the Regulations and the InvestmentManagement Agreement. The AMC, in the course ofmanaging the affairs of the Mutual Fund, has the powers,inter alia for

Powers :l Floating Scheme(s) of the Mutual Fund after approval

of the same by the Trustees and investing and managingthe funds mobilised under various Scheme(s), inaccordance with the provisions of the Trust Deed andthe Regulations.

l Evaluating investment opportunities for furtherinvestments by the Mutual Fund.

l Evaluating and issuing orders and instructions withrespect to the acquisition and disposition of investmentsand risk positions/exposures.

l Issuing and ensuring due compliance of instructions tothe custodian and the Mutual Fund�s brokers, agentsincluding registrars and transfer agents.

l Issuing, selling, repurchasing and canceling the Unitsas per the terms of the respective Scheme(s) of theMutual Fund.

l Managing the Mutual Fund Scheme(s) independentlyof other activities and taking adequate steps to ensurethat the interests of Unitholders are not beingcompromised with those of any other Scheme(s) or anyof its other activities.

l Opening and operating bank accounts in the name andon behalf of each scheme in relation to the investmentsmade by the Mutual Fund.

l Fixing record dates or book closure periods for thepurpose of effecting transfer of Units and determiningeligibility for dividends, bonus, rights, privileges,preferences, reservations or other entitlements oraccretions.

l Providing information to SEBI and the Unitholders asrequired under the Regulations or as otherwise requiredby SEBI.

l Receiving, holding in trust, or as agent or nominee ofthe Trustees, improving, developing, using, selling,transferring, exchanging, assigning, dealing, trading inand managing all assets and all accretions thereto andendeavoring to earn adequate returns on them for andon behalf of the Trust.

l Fixing sales and re-purchase prices, and calculating NetAsset Value for Units, consistent with the Regulations.

l Setting up an effective establishment for servicing ofUnitholders under the various Scheme(s) and also toprotect the interest of the Unitholders.

l Generally doing all acts, deeds, matters and thingswhich are necessary for any object, purpose or in relationto the Mutual Fund in any manner or in relation to anyscheme of the Mutual Fund.

Duties and responsibilities :l The AMC shall take all reasonable steps and exercise

due diligence to ensure that the investment of fundspertaining to any scheme is not contrary to theprovisions of the SEBI Regulations, and the Trust Deed.

l The AMC shall exercise due diligence and care in all itsinvestment decisions as would be exercised by otherpersons engaged in the same business.

l The AMC shall be responsible for the acts ofcommissions or omissions by its employees or the

persons whose services have been procured by theAMC.

l The AMC shall submit to the Trustees quarterly reportsof each year on its activities and the compliance withthe SEBI Regulations.

l The Trustees at the request of the AMC may terminatethe assignment of the AMC at any time provided thatsuch termination shall become effective only after theTrustees have accepted the termination of assignmentand communicated their decision in writing to the AMC.

l Notwithstanding anything contained in any contract oragreement of termination, the AMC or its directors orother officers shall not be absolved of liability to theMutual Fund for their acts of commission or omissions,while holding such position or office.

l The AMC shall not through any broker associated withthe Sponsor, purchase or sell securities, which isaverage of 5% or more of the aggregate purchases andsales of securities made by a mutual fund in all itsScheme(s). Provided that for these purposes, aggregatepurchase and sale of securities shall exclude sale anddistribution of Units issued by the Mutual Fund. Providedfurther that the aforesaid limit of 5% shall apply for ablock of any 3 months.

l The AMC shall not purchase or sell securities throughany broker (other that a broker not associated with thesponsor) which is average of 5% or more of theaggregate purchases and sale of securities made bythe mutual fund in all its Scheme(s), unless the AMChas recorded in writing the justification for exceedingthe limit of 5% and reports of all such investments aresent to the Trustees of such mutual fund on a quarterlybasis. Provided that the aforesaid limit shall apply for ablock of 3 months.

l The AMC shall not utilize the services of the Sponsoror any of its associates, employees or their relatives,for the purpose of any securities� transactions anddistribution and sale of securities, provided that the AMCmay utilise such services if disclosure to that effect ismade to the Unitholders and the brokerage orcommission paid is also disclosed in the half yearlyannual accounts of the Mutual Fund.

l The AMC shall file with the Trustees the details oftransactions in securities by key personnel of the AMCin their own name or on behalf of the AMC and shallalso report to SEBI, as and when required by SEBI.

l In case the AMC enters into any securities� transactionwith any of its associates a report to that effect shall besent to the Trustees at their next meeting.

l In case any company has invested more than 5% ofthe net asset value of a scheme, the investment madeby that scheme or by any other scheme of the samemutual fund in that company or its subsidiaries shall bebrought to the notice of the Trustees by the AMC andbe disclosed in the half yearly / annual accounts of therespective Scheme(s) with justification for suchinvestment provided that the latter investment has beenmade within 1 year of the date of the former investmentcalculated on either side.

l The AMC shall file with the Trustees and SEBI

l Detailed bio-data of all its directors along with theirinterest in other companies within 15 days of theirappointment; and any change in the interest ofdirectors every 6 months.

l A quarterly report to the Trustees giving details andadequate justification about the purchase and saleof securities of the group companies of the Sponsoror the AMC as the case may be, by the MutualFund during the quarter.

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Constitution of Mutual Fundl Each director of the Asset Management Company shall

file the details of his transactions of dealing in securitieswith the trustees on a quarterly basis in accordancewith guidelines issued by SEBI from time to time.

l The AMC shall not appoint any person as key personnelwho has been found guilty of any economic offence orinvolved in violation of securities laws.

l The AMC shall appoint registrars and share transferagents who are registered with SEBI. Provided if thework relating to the transfer of Units is processed in-house, the charges at competitive market rates maybe debited to the Scheme and for rates higher than thecompetitive market rates, prior approval of the Trusteesshall be obtained and reasons for charging higher ratesshall be disclosed in the annual accounts.

l The AMC shall abide by the Code of Conduct asspecified in the Fifth Schedule of the SEBI Regulations.

l The AMC shall

l Not act as a trustee of any mutual fund

l Not undertake any other business activities exceptactivities in the nature of portfolio managementservices, management and advisory services tooffshore funds, pension funds, provident funds,venture capital funds, management of insurancefunds, financial consultancy and exchange ofresearch on commercial basis if any of suchactivities are not in conflict with the activities ofthe mutual fund without the prior approval of theTrustees and SEBI. Provided that the AMC mayitself or through its subsidiaries undertake suchactivities if it satisfies SEBI that the key personnelof the AMC, the systems, back office, bank andsecurities accounts are segregated activity wiseand there exists systems to prohibit access to

inside information of various activities. Providedfurther that the AMC shall meet capital adequacyrequirements, if any, separately for each suchactivity and obtain separate approval, if necessaryunder the relevant regulations;

l Not invest in any of its Scheme(s) unless fulldisclosure of its intention to invest has been madein the offer documents.

l Not be entitled to charge any fees on its investmentin that scheme.

l Not acquire any of the assets out of the TrustFunds, which involves the assumption of anyliability which is unlimited or which may result inencumbrance of the scheme property in any way.

l The independent directors of the AMC shall pay specificattention to the following as may be applicable, namely:

l The Investment Management Agreement and thecompensation paid under the agreement.

l Service contracts with affiliates - whether the AMC hascharged higher fees than outside contractors for thesame services.

l Securities transactions involving affiliates to the extentsuch transactions are permitted.

l Code of ethics must be designed to prevent fraudulent,deceptive or manipulative practices by insiders inconnection with personal securities transactions.

l The reasonableness of fees paid to sponsors, AssetManagement Company and any others for servicesprovided.

l Principal underwriting contracts and renewals.

l Any service contracts with the associates of the AMC.

4) Key Employees of the AMC and Relevant ExperienceName & Age Designation Qualification Experience

Sandeep Dasgupta Chief Executive l B. Tech. (Electronics & Over 17 years of work experience in Financial43 years Officer Telecommunications) Services Industry

l PGDM l Deutsche Asset Management (India) Private(IIM Ahmedabad) Limited - (Chief Executive Officer )

l Alliance Capital Asset Management (India) PrivateLimited (Country Sales & Marketing Head in chargeof National sales, distribution and marketing ofAlliance Capital Mutual Funds, January 1997-February 2001)

l ITC Financial Services Group(ITC-Peregrine Private Limited as General Manager-Corporate Finance and ITC Classic Finance Limitedas Asst. Vice President- Investment Banking &Retail Sales, October 1993- January 1996)

l Enam Financial Consultants Pvt. Limited (SeniorManager- Merchant Banking, July 1991-October1993)

l Hongkong Bank (Account Manager-InvestmentBanking, February 1990-July 1991)

l ICICI Limited (Senior Officer- Merchant Banking &Corporate Finance,March 1987- February 1990)

P. R. Shenoy Head -Legal, l B.Com Over 14 years experience in financial services33 years Compliance, & l LLB industry in operations, legal, secretarial and

Company l ACS complianceSecretary l Deutsche Asset Management (India) Private

Limited(Head - Legal Compliance & CompanySecretary from September 2001 to present )

l The Chase Manhattan Bank, Mumbai(Head LegalLiaison, Compliance and Audit October 98 toAugust 2001)



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l Morgan Stanley Trust Company(Associate �Operations July 1995 to September 1998 )

l SBI Mutual Fund(Accounts Executive � July 1993to July 1995)

l LIC of India (Accounts & OS � May 1990 to June1993)

Murali Head � Fund l B. Com. Over 10 years of experienceRamasubramanian Operations & l LLB l Deutsche Asset Management (India) Pvt. Limited -32 years Settlement Head - Fund Operations & Settlements(March

2003 to present)l Alliance Capital Asset Management (India) Pvt. Ltd

Asst. Vice President � Operations (Sept 1998 toMarch 2003)

l Birla Asset Management (India) Pvt. Ltd - Executive� Operations (November 1996 to August 1998)

l Datamatics Financial Services Pvt. Ltd. - Sr.Officer(September 1993 to September 1996)

B.P.Singh Head � Equity l B Tech ( Chemicals), Over 11 years experience in equity market37 years Funds UDCT, Bombay, l Deutsche Asset Management (India) Limited (Fund

l MBA, Manager, Equities from May 2002 onwards)University of Bombay l SSKI Securities Pvt. Ltd. (Head of Research, from

2000 to 2002.l UBS Warburg (Director, Research from 1996 to

2000 )l CRISIL (Rating Analyst from 1994 to 1996 )l Aventis Pharmaceuticals Ltd. (Executive, from

1991 to 1992)

Suresh Soni Head � l B. Sc. Over 11 years experience in debt market34 years Fixed Income l ACA l Deutsche Asset Management (India) Limited, Vice

l Grad CWA President & Head, Fixed Income (Oct 2002 topresent)

l Pioneer ITI AMC Limited, Fund Manager and VicePresident(April 2000 till Sept 2002)

l Sundaram Newton AMC Limited, FundManager,(Sept. 96 to March 2000)

l SBI Funds Management Limited, Scheme-in-Charge,( Feb 1993 till Sept. 1996)

l Godrej Soaps Limited, Industrial Trainee(1991-1992)

l Shah and Company, Article Trainee,(1989-1991)

Jignesh Barasara Asst. Fund Manager l MBA Over 7 years of experience31 years - Fixed Income l B.Sc. l Deutsche Asset Management (India) Private

Limited (Asst. FM-FI from Oct 02 to present)l HDFC Bank - Fixed Income Trader (Period �

October 1998 till Sept 2002)l Bank of America - Retail Assets (Period � 1994 �

1996)

Ajay Arora Head � Sales & l B.Com. Over 10 years of experience38 years Marketing l ACA l Deutsche Asset Management (India) Private

l ACS Limited Head � Sales & Marketing ( from June 04to present)

l ILFS Investmart India � Head- EquitySales(Dec.1998 to June2004)

l JM Morgan Stanley � AVP & Head Eastern Region(from July1997 to Nov.1998)

l Kotak Mahindra Finance (from June 1994 to June1997)

l S. R. Batliboi & Co. (from June 1993 to April 1994)

Name & Age Designation Qualification Experience

17


5) Fund Manager(s)Mr. Suresh Soni is the Head � Fixed Income (managingDeutsche Premier Bond Fund, Deutsche Short MaturityFund, Deutsche Dynamic Bond Fund, Deutsche MIP Fund)& Mr. B.P.Singh is Head � Equities (managing Deutsche AlphaEquity Fund, Deutsche Investment Opportunity Fund andDeutsche MIP Fund). Mr. Jignesh Barasara is the fundmanager for Deutsche Insta Cash Plus Fund and DeutscheFloating Rate Fund.

Brief Profile: Suresh Soni

Mr. Suresh Soni, who is a Chartered Accountant and CostAccountant has over 10 years of experience in the MutualFund Industry. He started his career with SBI Mutual Fundin 1993 where he was involved in research and fundManagement. He later managed Fixed Income funds foraround 4 years (Aug - 1996 - Mar-2000) with SundaramNewton AMC Ltd. Prior to joining Deutsche AssetManagement, he was Vice-President and Fund Manager-fixed Income at Pioneer ITI AMC Ltd. from April-2000 toSept-2002. He was responsible for managing 8 Fixed IncomeSchemes including liquid schemes with approximately Rs.2,500 crores of Assets under Management.

Funds Managed by Mr. Suresh Soni have won several awardsfor performance during the last 5 years.

Achievements:

l Templeton India Income Builder Account (formerlyknown as Pioneer ITI Income Builder Account) wasranked No 3 out of 37 Debt Funds ranked by theBusiness Standard Magazine for 2-year performance inSeptember 2002.

l Pioneer ITI Monthly Income Plan (Fortune) won the bestFortune award for the year in January 2002.

l Sundaram Bond Saver fund won the best debt fund ofthe year award for period April 99 to March 2000 byEconomic Times / Standard & Poor.

Brief Profile: B. P. Singh

B.P. Singh graduated from the University and Departmentof Chemical Technology, Bombay with a Bachelor of ChemicalTechnology and completed Masters in Management Studiesfrom S.P.Jain Institute of Management Research, Bombay.Upon graduation he worked with Aventis PharmaceuticalsLtd. for 2 years before moving to CRISIL as Credit Analyst.He later worked for 4 years (1996-2001) with UBS WarburgSecurities Pvt. Ltd as Senior Analyst. Prior to joining DeutscheAsset Management (India) Pvt. Ltd, he worked for two yearsas Head of Equity Research with SSKI Securities Ltd., aleading brokerage house in India.

Achievements :

Rated 2nd Best Analyst by Asia-Money in 2000.

Rated 3rd Best Analyst by Asia-Money in 1998

Brief Profile: Jignesh Barasara

Mr. Jignesh Barasara who is an MBA has over 6 years ofexperience in the Fixed Income Industry. He started hiscareer with HDFC Bank in 1998 where he was in the Treasuryof the Bank. He started his career on the money marketdesk and then shifted to Fixed Income trading subsequentlyin HDFC Bank. Before joining Deutsche Asset Managementin October 2002 he used to trade actively in the Fixed Incomemarket in Government Securities, Corporate Bonds and otherinstruments during his experience with HDFC Bank.

6) Compliance OfficerP.R. ShenoyHead � Legal & Compliance and Company SecretaryDeutsche Asset Management (India) Private LimitedDB House, Hazarimal Somani Marg,Fort, Mumbai 400 001

7) Investors Relations OfficerMurali RamasubramanianHead � Fund OperationsDeutsche Asset Management (India) Private LimitedDB House, Hazarimal Somani Marg,Fort, Mumbai 400 001

E) Auditors & Tax AdvisorsPrice Waterhouse, Chartered Accountants, 1102/1107 RahejaChambers, Nariman Point, Mumbai 400 021 have been appointedas Auditors for the Scheme offered under this Offer Document.The Trustees also have appointed them as Tax Advisors. TheTrustees have the right to change the Auditors.

F) Registrar & Transfer AgentsKarvy Computershare Private Ltd. (KARVY) 46, Road No 4, StreetNo 1, Banjara Hills, Hyderabad 500 034 have been appointed asRegistrars and Transfer Agents for the Scheme. The Registrar isregistered with SEBI under the SEBI (Registrars to an Issue andShare Transfer Agents) Regulations, 1993 vide registration numberINR000000221. As Registrars to the Scheme, KARVY will handlecommunications with investors, perform data entry services anddespatch account statements. The AMC and the Trustees havesatisfied themselves that the Registrars have adequate capacityto discharge responsibilities with regard to processing ofapplications and despatching account statements to Unitholderswithin the time limit prescribed in the Regulations and alsosufficient capacity to handle investor complaints.

G) CustodianJP Morgan Chase Bank, Mafatlal Centre, 9th Floor, Nariman Point,Mumbai 400 021, India has been appointed as Custodian of theScheme mentioned in the Offer Document. The Custodian hasbeen registered with SEBI under the SEBI (Custodians ofSecurities) Regulations, 1996, and has been awarded registrationnumber IN/CUS/014 dated November 10,1998. The Mutual Fundhas entered into a Custodian Service Agreement dated November01, 2002, with the Custodian and the salient features of the saidAgreement are to:

l Provide post-trading and custodial services to the MutualFund

l Ensure benefits due on the holdings are received

l Provide detailed management information and other reportsas required by the AMC

l Maintain confidentiality of the transactions

l Be responsible for the loss or damage to the assets belongingto the Scheme(s) due to negligence on its part or on the partof its approved agents

l Segregate assets of each Scheme

The Custodian shall not assign, transfer, hypothecate, pledge,lend, use or otherwise dispose any assets or property, exceptpursuant to instruction from the Trustees/AMC or under theexpress provisions of the Custodian Service Agreement.

The Custodian will be entitled to remuneration for its services inaccordance with the terms of the Custodian Service Agreement.The Trustees have the right to change the Custodian, if necessary.

Constitution of Mutual Fund



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V. Investment Objectives &Policies, Investment Pattern& Risk Profile andLimitations of the Scheme

A) Investment Objectives, Investment Focus,Investment Pattern & Risk Profile

l Deutsche Alpha Equity Fund

Investment ObjectivesThe Investment objective of the Scheme is to generate long-term capital growth from a diversified portfolio of equity andequity related securities of companies registered in, and / orlisted on a regulated market of India. The Scheme will investin companies across a range of market capitalisations with apreference for medium and large companies. The investmentobjective is to generate long-term capital growth from anactively managed portfolio of equity and equity relatedsecurities. However there can be no assurance that theScheme objective can be realized.

Investment PatternThe corpus of the Scheme will be invested primarily in equityand equity related securities. The Scheme may invest itscorpus in debt and money market instruments, to manageits liquidity requirements.

Subject to the Regulations and other prevailing laws asapplicable, the corpus of the Scheme can be invested in any(but not exclusively) of the following securities:

l Equity and equity related securities including convertiblebonds and debentures and warrants carrying the rightto obtain equity shares.

l ADRs / GDRs issued by the Indian companies, subjectto the guidelines issued by the Reserve Bank of Indiaand Securities and Exchange Board of India.

l Stock index futures and such other derivativeinstruments permitted by SEBI/RBI.

l Unlisted Equity shares not exceeding 5% of the TotalAssets of the Scheme.

The Scheme may participate in securities lending aspermitted under the Regulations.

Under normal circumstances, it is anticipated that the assetallocation shall be as follows :

Type of Security Normal Risk ProfileAllocation(% of Corpus)

Equities & Equity 80-100% Medium torelated securities High

Debt securities & 0-20% Low toMoney Market MediumInstruments (includingcash & money at call)

If the Scheme decides to invest in securitised debt, it is theintention of the Investment Manager that such investmentswill not, normally exceed 10% of the corpus of the plan andif the Scheme decides to invest in foreign debt securities, itis the intention of the Investment Manager that suchinvestments will not, normally exceed 10% of the assets ofthe Scheme.

The Scheme may review the above pattern of investmentsbased on views on the equity markets and asset liability

management needs. However, at all times the portfolio willadhere to the overall investment objective of the Scheme.

Investors may note that securities that provide higher returnstypically display higher volatility. Accordingly, the investmentportfolio of the Scheme would reflect moderate to highvolatility in its equity and equity related investments and lowto moderate volatility in its debt and money marketinvestments.

Investment StrategyThe aim of the Deutsche Alpha Equity Fund is to deliverabove benchmark returns with due regard to capitalconservation by providing long-term capital growth from anactively managed portfolio, mainly comprising companiesregistered in and/or listed on a regulated market of India.Income is not a primary consideration in the investmentpolicies of the Deutsche Alpha Equity Fund. The Schemewill invest across a range of market capitalisations with apreference for medium and large companies.

A top down and bottom up approach will be used to investin equity and equity related instruments. Investments willbe pursued in select sectors based on the Investment team�sanalysis of business cycles, regulatory reforms, competitiveadvantage etc. Selective stock picking will be done fromthese sectors. The fund manager in selecting scrips will focuson the fundamentals of the business, the industry structure,the quality of management, sensitivity to economic factors,the financial strength of the company and the key earningsdrivers.

Since investing requires disciplined risk management, theAMC would incorporate adequate safeguards for controllingrisks in the portfolio construction process. Stock specific riskwill be minimized by investing only in those companies thathave been analyzed by the Investment team at the AMC.

Risk will also be reduced through adequate diversification ofthe portfolio. Diversification will be achieved by spreadingthe investments over a range of industries / sectors.

The Scheme may however, invest in unlisted and / or privatelyplaced securities subject to the limits indicated under�Investment Restrictions for the Scheme(s)� in clause F ofthis section, from issuers of repute and sound financialstanding. If investment is made in unlisted securities, theapproval of the Investment Review Committee (constitutedby the Board of the AMC) shall be obtained, as per theRegulations and within the broad parameters approved bythe Board of the AMC.

As per the asset allocation pattern indicated above, forinvestment in debt securities and money market instruments,the Fund may invest a part of the portfolio in various debtsecurities issued by corporates and / or state and Centralgovernment. Such government securities may includesecurities which are supported by the ability to borrow fromthe treasury or supported only by the sovereign guaranteeor of the state government or supported by GOI / stategovernment in some other way.

The Scheme may invest in other Scheme(s) managed bythe AMC or in the Scheme(s) of any other mutual fund,provided it is in conformity with the investment objectivesof the Scheme and in terms of the prevailing Regulations.As per the Regulations, no investment management feeswill be charged for such investments.

l Deutsche Premier Bond Fund

Investment ObjectivesThe investment objective of the Scheme is to provide regularincome by investing in debt securities including bonds andmoney market instruments.

19


Investment ObjectivesInvestment PatternThe Scheme will invest the entire corpus in high quality debtand money market securities. There will be no investmentin equity and equity related products. The asset allocation ofthe Scheme will be as under:-

Instrument Normal Risk ProfileAllocation(% of Corpus)

Debt* Instruments 60 - 100% Mediumincluding GovernmentSecurities andCorporate Debt

Money Market 0 - 40% LowInstruments

* Debt securities may include securitised debts up to 50%of the net assets

The above is only indicative and the Board of Trusteesreserves the right to change the above pattern in the interestof the investors depending on the market conditions for ashort term period on defensive considerations to safeguardinvestors interest.

The securities, the Scheme is permitted to invest could belisted, unlisted, privately placed, secured, unsecured, ratedor unrated and of any maturity. The securities may beacquired through Initial Public Offerings (IPOs), secondarymarket operations, private placement, rights offers ornegotiated deals. The Scheme may invest the funds of theScheme in short-term deposits of scheduled commercialbanks.

The Scheme may also enter into repurchase and reverserepurchase obligations in all securities held by it as per theguidelines and regulations applicable to such transactions.The Scheme may also use various derivatives and hedgingproducts from time to time, as would be available andpermitted by SEBI, in an attempt to protect the value of theportfolio and enhance Unitholders� interest. The Scheme mayinvest in other debt Schemes managed by the AMC or inthe debt Schemes of any other Mutual Funds, provided it isin conformity to the investment objectives of the Schemeand in terms of the prevailing Regulations.

As per the Regulations, no investment management feeswill be charged for such investments and the aggregate interScheme investment made by all Schemes of DeutscheMutual Fund or in the Schemes under the management ofother asset management companies shall not exceed 5%of the net asset value of the Deutsche Mutual Fund.


For the present, the Scheme does not intend to enter intounderwriting obligations. However, if the Scheme does enterinto an underwriting agreement, it would do so aftercomplying with the Regulations and with the requisiteapproval of the Board of the AMC / Trustee.

Investment StrategyThe fund management team will endeavor to meet theinvestment objective while maintaining a balance betweensafety, liquidity and the profitability aspect of variousinvestments. The Scheme will be actively managed and theFund Management team will take an active view of theinterest rate movement by keeping a close watch on variousparameters of the Indian economy, as well as developmentsin global markets. The Scheme will try to leverage its

international resource base to understand the globaleconomic and interest rate environment.

Investment views / decisions inter-alia will be taken on thebasis of the following parameters:

1. Prevailing interest rate scenario

2. Returns offered relative to alternative investmentopportunities.

3. Quality of the security / instrument (including thefinancial health of the issuer)

4. Maturity profile of the instrument

5. Liquidity of the security

6. Any other factors considered relevant in the opinion ofthe Fund Management team.

The Scheme can also use derivatives to reduce the volatilityof the portfolio and/or to enhance the portfolio returns. TheScheme will try to identify securities that yield relative valueover others for similar risk and liquidity level. Various analyticaltools like yield curve analysis, spreads between asset classes,horizon returns, forward implied interest rates, will bedeployed to evaluate various investment options.

Investments in debt instruments carry various risks likeinterest rate risk, liquidity risk, default risk, reinvestment risketc. While they cannot be done away with, they can beminimized by diversification and effective use of hedgingtechniques.

l Deutsche Dynamic Bond Fund

Investment ObjectivesThe investment objective will be to actively manage aportfolio of good quality debt as well as Money MarketInstruments so as to provide reasonable returns and liquidityto the Unitholders.

Investment PatternThe Scheme will invest the entire corpus in high quality debtand money market securities. There will be no investmentin equity and equity related products. The asset allocation ofthe Scheme will be as under:-


Debt* Instruments 0 - 100% Mediumincluding GovernmentSecurities andCorporate Debt

Money Market 0 � 100% LowInstruments

* Debt securities may include securitised debts up to 70% ofthe net assets

Whenever in the opinion of the Investment Manager themarket valuation appears stretched and/or the risks outweighthe opportunities, taking a dynamic view of the marketscenario, the Fund could significantly shift to Cash or nearcash securities (Money Market instruments). However, onavailability of fresh opportunity fresh investments may beconsidered.

The above is only indicative and the Board of Trusteesreserves the right to change the above pattern in the interestof the investors depending on the market conditions for ashort term period on defensive considerations to safeguardinvestors interest. No prior intimation/indication would begiven to investors when the composition/ asset allocationspattern under the scheme change.



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sThe securities, the Scheme is permitted to invest could belisted, unlisted, privately placed, secured, unsecured, ratedor unrated and of any maturity. The securities may beacquired through Initial Public Offerings (IPOs), secondarymarket operations, private placement, rights offers ornegotiated deals.

The Scheme may invest the funds of the Scheme in short-term deposits of scheduled commercial banks. The Schememay also enter into repurchase and reverse repurchaseobligations in all securities held by it as per the guidelinesand regulations applicable to such transactions. The Schememay also use various derivatives and hedging products fromtime to time, as would be available and permitted by SEBI,in an attempt to protect the value of the portfolio and enhanceUnitholders� interest. The Scheme may invest in other debtSchemes managed by the AMC or in the debt Schemes ofany other Mutual Funds, provided it is in conformity to theinvestment objectives of the Scheme and in terms of theprevailing Regulations.

As per the Regulations, no investment management feeswill be charged for such investments and the aggregate interScheme investment made by all Schemes of DeutscheMutual Fund or in the Schemes under the management ofother asset management companies shall not exceed 5%of the net asset value of the Deutsche Mutual Fund.


For the present, the Scheme does not intend to enter intounderwriting obligations. However, if the Scheme does enterinto an underwriting agreement, it would do so aftercomplying with the Regulations and with the requisiteapproval. of the Board of the AMC / Trustee.

Investment StrategyThe fund management team will endeavor to meet theinvestment objective while maintaining a balance betweensafety, liquidity and the profitability aspect of variousinvestments. The Scheme will be actively managed and theFund Management team will take an active view of theinterest rate movement by keeping a close watch on variousparameters of the Indian economy, as well as developmentsin global markets. The Scheme will try to leverage itsinternational resource base to understand the globaleconomic and interest rate environment.










l Deutsche Short Maturity Fund

Investment ObjectivesThe investment objective of the Scheme is to generatesteady returns with low to medium market risk for investorsby investing in a portfolio of short -medium term debt andmoney market securities.

Investment PatternThe scheme will invest in high quality debt and money marketinstruments. The asset allocation of the Scheme will be asunder:-


Debt* and Money 65 - 100% Low toMarket Instruments Mediumwith average maturityupto eighteen months**

Debt and Money Up to 35% MediumMarket Instrumentswith average maturitygreater than eighteenmonths

* Debt securities may include securitised debts up to 50%of the net assets

** including floating rate instruments which may have amaturity of more than one year but where the couponreset happens atleast once a year (including fixed ratesecurities swapped for floating rate in the above manner)


The securities, the scheme is permitted to invest could belisted, unlisted, privately placed, secured, unsecured, ratedor unrated and of any maturity. The securities may beacquired through Initial Public Offerings (IPOs), secondarymarket operations, private placement, rights offers ornegotiated deals. The Scheme may invest the funds of theScheme in short-term deposits of scheduled commercialbanks. The Scheme may also enter into repurchase andreverse repurchase obligations in all securities held by it asper the guidelines and regulations applicable to suchtransactions.

The Scheme may invest in other debt Schemes managedby the AMC or in the debt Schemes of any other MutualFunds, provided it is in conformity to the investmentobjectives of the Scheme and in terms of the prevailingRegulations. As per the Regulations, no investmentmanagement fees will be charged for such investments andthe aggregate inter Scheme investment made by all Schemesof Deutsche Mutual Fund or in the Schemes under themanagement of other asset management companies shallnot exceed 5% of the net asset value of the Deutsche MutualFund.


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Investment ObjectivesFor the present, the Scheme does not intend to enter intounderwriting obligations. However, if the Scheme does enterinto an underwriting agreement, it would do so aftercomplying with the Regulations and with the requisiteapproval. of the Board of the AMC / Trustee.

Investment StrategyThe fund management team will endeavor to meet theinvestment objective while maintaining a balance betweensafety, liquidity and return on investments. Since theinvestment horizon for the scheme is short, the scheme willfocus on short-medium term securities. The overall portfoliomaturity of the fund shall not exceed three years, and noindividual instrument (other than floating rate instrument)will have a maturity exceeding five years.

The Scheme will be actively managed and the FundManagement team will endeavor to generate superiorreturns while moderating credit and interest rate risk. TheFund Manager will take a close view of the interest ratemovement based on various parameters of the Indianeconomy, as well as developments in global markets. Thefund will try to leverage its international resource base tounderstand the global economic and interest rateenvironment.

Investment views / decisions inter alia will be taken on thebasis of the following parameters:









l Deutsche Insta Cash Plus Fund

Investment ObjectivesThe investment objective of the Scheme is to generatesteady returns with high liquidity by investing in a portfolioof short-term, high quality money market and debtinstruments.

Investment PatternThe entire corpus of the Scheme will be invested in high

quality money market and debt securities. The assetallocation of the Scheme will be as under:-


Debt* and Money 80 - 100% LowMarket Instrumentswith average maturityup to one year**

Debt and Money 0 - 20% Low toMarket Instruments Mediumwith average maturitygreater than one year

* Debt securities may include securitised debts up to 50%of the net assets.

** including floating rate instruments which may have amaturity of more than one year but where the couponreset happens atleast once a year (including fixed ratesecurities swapped for floating rate in the abovemanner).


The securities, the Scheme is permitted to invest could belisted, unlisted, privately placed, secured, unsecured, ratedor unrated and of any maturity. The securities may beacquired through Initial Public Offerings (IPOs), secondarymarket operations, private placement, rights offers ornegotiated deals. The Scheme may invest the funds of theScheme in short-term deposits of scheduled commercialbanks. The Scheme may also enter into repurchase andreverse repurchase obligations in all securities held by it asper the guidelines and regulations applicable to suchtransactions.

The Scheme may invest in other debt Schemes managedby the AMC or in the debt Schemes of any other MutualFunds, provided it is in conformity to the investmentobjectives of the Scheme and in terms of the prevailingRegulations. As per the Regulations, no investmentmanagement fees will be charged for such investments andthe aggregate inter Scheme investment made by all Schemesof Deutsche Mutual Fund or in the Schemes under themanagement of other asset management companies shallnot exceed 5% of the net asset value of the Deutsche MutualFund.





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sl Investment Focus of DICPF

A. Mark-to-Market component of the fund on a weeklyaverage basis will be less than 10%.

(Mark to Market would mean the valuation of an asset(e.g. marketable securities, derivatives and otherfinancial contracts) using a traded price or a derived pricefrom the corresponding yield curve). Money Marketinstruments shall be excluded while calculating Markto Market

and

B. Maximum repricing tenor of 1 year reckoned as under:

i. For a fixed rate asset, the remaining tenor will be1 year or less.

ii. For a floating rate asset, the interest resetfrequency will be 1 year or less.

iii. For a fixed rate/floating rate asset where theprincipal is paid in a staggered and/or on amortizingbasis (e.g. securitised papers), the average maturityof such an asset will be 1 year or less.

iv. For a portfolio using Interest Rate Swaps,

a) the composite floating rate asset (underlyingfixed rate asset and Interest Rate Swap,paying fixed and receiving floating) will havean interest reset frequency up to 1 year.

b) for Interest Rate Swaps (receiving fixed andpaying floating), used to convert a floating rateasset into a fixed rate asset, the fixed leg ofthe Interest Rate Swap will have remainingtenor up to 1 year.

v. For a portfolio using Forward Rate Agreements,the summation of the beginning and end dates ofthe period covered will be 1 year or less.

C. If there are positions in Interest Rate Futures and BondFutures, the repricing risk will be 1 year or less. Further,the repricing tenor of each of the securities included inthe portfolio of DICPF will be 1 year or less.

The above Investment Focus is achievable within the existingInvestment Pattern of DICPF as mentioned in the OfferDocument and hence there is no change in the fundamentalattributes of DICPF.

Investment StrategyThe fund management team will endeavor to meet theinvestment objective while maintaining a balance betweensafety, liquidity and return on investments.

As the primary objective of the scheme is to provide highliquidity along with low volatility the fund manager will investa significant portion of assets in short-term / floating ratesecurities, which carry low market risk. Then Scheme canalso use derivatives to reduce the volatility of the portfolioand / or to enhance the portfolio returns. The fund will try toidentify securities that yield relative value over others forsimilar risk and liquidity level. Various analytical tools likespread, horizon returns, forward implied interest rates willbe deployed to evaluate various investment options.


The Fund Management team will take an active view of theinterest rate movement by keeping a close watch on variousparameters of the Indian economy, as well as developmentsin global markets.

Investment views / decisions will be taken on the basis ofthe following parameters:







l Deutsche Floating Rate Fund

Investment ObjectivesThe primary objective of the scheme is to generate stablereturns with low risk strategy by creating a portfolio that issubstantially invested in good quality floating rate debt ormoney market instruments, fixed rate debt or money marketinstruments swapped for floating rate returns and fixed ratedebt and money market instruments.

Investment PatternThe scheme will invest in high quality debt and money marketinstruments. The asset allocation of the Scheme will be asunder:-

Instrument Normal Normal RiskAllocation Deviation Profile(% ofCorpus)

Fixed Rate Debt 0% - 35% 30% Low toSecurities (including Mediumsecuritised debt,Money MarketInstrument & FloatingRate Debt Instrumentswapped for fixedrate return

Floating Rate Debt 65 % - 30% Low toSecurities (including 100% Mediumsecuritised debt,Money MarketInstrument & FixedRate Debt Instrumentswapped for Floatingrate return

The Fund manager would decide on the appropriate assetallocation for the scheme depending on market conditions.In bullish conditions the exposure to Fixed Rate DebtSecurities (including securitised debt & Money Marketinstruments) would be increased and in bearish conditionsthe exposure to Floating Rate debt instruments (includingsecuritised debt & Money Market instruments) would beincreased thus providing an effective hedge against adversemovements. The Asset allocation pattern may be modifiedin the interest of investors; however, the same will bereviewed by the trustee on a quarterly basis and will berebalanced to its normal position in a time frame as permittedby the trustee. However, the AMC will endeavour to achievenormal asset allocation pattern in a maximum period of 6months. Under normal circumstances, the total portfolio willbe invested in floating rate debt instruments and fixed ratedebt instruments as indicated above. This may be by way ofdirect investment in floating rate assets or fixed rate assetsswapped for floating rate returns by using derivatives asdescribed later in this section.

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Investment ObjectivesIt is the intention of the Fund that the investments insecuritised debts will not, normally, exceed 60% of the NetAssets of the scheme. The portfolio of the Fund will normallybe skewed towards short-term maturities. In addition to thesecurities stated in the table above, the scheme may enterinto repos/reverse repos with respect to the securities thatit will invest in or as may be permitted by the RBI from timeto time. Pending deployment as per investment objective,the monies under the scheme may be invested in short termdeposit of Scheduled commercial Banks.

Investment StrategyThe scheme proposes to invest substantially in floatinginterest rate securities, fixed interest rate securities swappedfor floating rate returns and fixed rate securities. The aim ofthe investment strategy is to generate stable returns both inthe short term and long term with a low risk, particularlyminimal interest rate risk strategy.

The net asset of the Scheme will be invested in a portfoliocomprising substantially of floating rate debt / money marketinstruments, fixed rate debt instruments swapped for floatingrate returns, and fixed rate debt instruments and moneymarket instruments.

The securities, the Scheme is permitted to invest could belisted, unlisted, privately placed, secured, unsecured, ratedor unrated and of any maturity. The securities may beacquired through Initial Public Offerings (IPOs), secondarymarket operations, private placement, rights offers ornegotiated deals. The Scheme may invest the funds of theScheme in short-term deposits of scheduled commercialbanks. The Scheme may also enter into repurchase andreverse repurchase obligations in all securities held by it asper the guidelines and regulations applicable to suchtransactions.

l Deutsche Investment Opportunity Fund

Investment ObjectiveAn open-ended scheme seeking to generate capitalappreciation on the portfolio over a long term by activelyinvesting in different asset classes as per market conditions.For defensive considerations, the scheme may invest in debt,money market instruments and derivatives. The investmentmanager will have the discretion to invest upto 100% of theassets in the portfolio in equity market/equity relatedinstruments at a given point of time. The equity exposuremay fall to as low as 5% under certain circumstances, inwhich case, the fund shall be invested in debt and moneymarket instruments at its discretion. The AMC may chooseto actively trade on the portfolio of the scheme in order toachieve the investment objective.

However, there can be no assurance that the investmentobjective of the Scheme will be realised, as actual marketmovements may be at variance with anticipated trends.

Investment PatternThe corpus of the Scheme will be invested in mix of equity& equity-related securities and Debt and Money marketrelated instruments.

Subject to the Regulations and other prevailing laws asapplicable, the corpus of the Scheme can be invested in any(but not exclusively) of the following securities:


l Equity of foreign companies, ADRs/GDRs issued by theIndian companies, subject to the guidelines issued bythe Reserve Bank of India and Securities and ExchangeBoard of India.


l Unlisted Equity shares not exceeding 5% of the totalassets of the scheme.

l Debt* Instruments including Government Securities andCorporate Debt and Money Market instruments


Under normal circumstances, the investments will bepredominantly in Equity and Equity related instruments.However, the maximum and minimum allocation to Equityand Debt instruments shall be as follows:

Asset Class % Min % Max RiskProfile**

Equity and Equity 5% 100% Mediumrelated instruments to High

Debt* Instruments 0% 95% Low toincluding Government MediumSecurities and CorporateDebt and Money Marketinstruments


** Risk profile refers to the price risk of the respectiveasset class. Please refer risk factors for more details.

Whenever in the opinion of the Investment Manager, theequity market valuation appears more attractive and theInvestment Manager anticipates higher return compared tothe debt market returns, the investment in equities wouldbe highest. However if in the opinion of the InvestmentManager, the market valuation appears stretched and/or therisks outweigh the opportunities, the Fund could shiftsignificantly in favour of Debt instruments.

The above is only indicative and the Board of Trusteesreserves the right to change the above pattern in the interestof the investors depending on the market conditions for ashort term period on defensive considerations to safeguardinvestors interest. No prior intimation/indication would begiven to investors when the composition/ asset allocationspattern under the scheme change. The Scheme may reviewthe above pattern of investments based on views on theequity markets and asset liability management needs.However, at all times the portfolio will adhere to the overallinvestment objective of the Scheme.

Investors may note that securities that provide higher returnstypically display higher volatility. Accordingly, the investmentportfolio of the scheme would reflect moderate to highvolatility in its equity and equity related investments and lowto moderate volatility in its debt and money marketinvestments. The securities mentioned above and such othersecurities, the Scheme is permitted to invest could be listed,unlisted, privately placed, secured, unsecured, rated orunrated and of any maturity. The securities may be acquiredthrough Initial Public Offerings (IPOs), secondary marketoperations, private placement, rights offers or negotiateddeals.

The Scheme may invest the funds of the Scheme in short-term deposits of scheduled commercial banks. The Schememay also enter into repurchase and reverse repurchaseobligations in all securities held by it as per the guidelinesand regulations applicable to such transactions. The Schememay also use various derivatives and hedging products fromtime to time, as would be available and permitted by SEBI,in an attempt to protect the value of the portfolio and enhanceUnitholders� interest. The Scheme may invest in other debtSchemes managed by the AMC or in the debt Schemes ofany other Mutual Funds, provided it is in conformity to theinvestment objectives of the Scheme and in terms of theprevailing Regulations.

As per the Regulations, no investment management fees



will be charged for such investments and the aggregate interScheme investment made by all Schemes of DeutscheMutual Fund or in the Schemes under the management ofother asset management companies shall not exceed 5%of the net asset value of the Deutsche Mutual Fund.


Investment StrategyAs mentioned in �Investment Pattern�, the Schemeproposes to invest primarily in equities and for defensiveconsideration in a mix of equity and/or fixed income securitiesincluding money market instruments with the aim ofgenerating capital appreciation over a long term. With thisaim the Investment Manager will allocate the assets of theScheme between equity and/or fixed income securities. Theactual percentage of investment in equities and fixed incomesecurities will be decided after considering the prevailingmarket conditions, the macro economic environment(including interest rates and inflation), the performance ofthe corporate sector, the equity markets and general liquidityand other considerations in the economy and markets. TheAMC may choose to continuously churn the portfolio of theScheme in order to achieve the investment objective. ThisScheme will trade actively in the capital market. The AMCwill have the discretion to take aggressive asset calls i.e. byinvesting upto 95% invested in equity market/equity relatedinstruments at a given point of time and 5% at another, inwhich case, the fund may be invested in debt relatedinstruments at its discretion. Given the nature of the Scheme,the portfolio turnover ratio could be very high and AMC maychange the full portfolio from say all Equity to all Cash and/or to all Long /short term Bonds, commensurate with theinvestment objectives of the Scheme.

l Deutsche MIP Fund

Investment ObjectiveThe scheme seeks to generate regular income by investingprimarily in fixed income securities/money marketinstruments so as to facilitate periodic distributions toinvestors with the secondary objective being generation oflong-term capital appreciation by investing a small portion inequity/ equity related instruments. However, there can beno assurance that the investment objective of the schemewill be achieved.

Investment PatternThe Fund will primarily invest in fixed income securities withan option to invest up to 20% in Equity in the Plan A andupto 10% in Equity in the Plan B. While the fixed Incomesecurities generally provides steady and consistent return,the equity component would enhance the return of the totalportfolio to offer a potentially higher return to the investorsover a long term.

Under normal circumstances, the asset allocation of theScheme for the Plan A will be as under: -



Equity and Equity 0% 20% Mediumrelated instruments to High



Under normal circumstances, the asset allocation of theScheme for the Plan B will be as under: -



Equity and Equity related 0% 10% Mediuminstruments to High



The above is only indicative and the Board of Trusteesreserves the right to change the above pattern in the interestof the investors depending on the market conditions for ashort term period on defensive considerations to safeguardinvestors interest. No prior intimation/indication would begiven to investors when the composition/ asset allocationspattern under the scheme change.

Subject to the Regulations and other prevailing laws asapplicable, the corpus of the Scheme allocate to the equitycategory can be invested in any (but not exclusively) of thefollowing securities:


l Equity of foreign companies, ADRs/GDRs issued by theIndian companies, subject to the guidelines issued bythe Reserve Bank of India and Securities and ExchangeBoard of India.


l Unlisted Equity shares not exceeding 5% of the TotalAssets of the scheme.


Investment StrategyThe fund management team will endeavor to meet theinvestment objective while maintaining a balance betweensafety, liquidity and the profitability aspect of variousinvestments. The Scheme will be actively managed and theFund Management team will take an active view of theinterest rate movement by keeping a close watch on variousparameters of the Indian economy, as well as developmentsin global markets. The scheme will be predominantly investedin debt and money market securities; however dependingon the views on the equity markets, the Fund Managersmay at their discretion decide to invest in equity instrumentsto enhance the overall return of the portfolio. The InvestmentManager will allocate the assets of the Scheme betweenequity and/or fixed income securities. The actual percentageof investment in equities and fixed income securities will bedecided after considering the prevailing market conditions,the macro economic environment (including interestrates and inflation), the performance of the corporate sector,the equity markets and general liquidity and otherconsiderations in the economy and markets. The Schemewill try to leverage its international resource base tounderstand the global economic, interest rate environmentand the equity markets.

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3. Expected return on Equity investments







Money market and debt instruments will include but will notbe restricted to: -

1. Securities created and issued by the Central and StateGovernments and / or repos / reverse repos in suchGovernment Securities as may be permitted by RBI(including but not limited to coupon bearing bonds, zerocoupon bonds and treasury bills)

2. Securities guaranteed by the Central and StateGovernments (including but not limited to couponbearing bonds, zero coupon bonds and treasury bills)

3. Debt obligations of domestic Government agencies andstatutory bodies, which may or may not carry a Central/ State Government guarantee

4. Corporate debt and securities (of both public and privatesector undertakings) including Bonds, Debentures,Notes, Strips, etc.

5. Obligations of banks (both public and private sector)and development financial institutions

6. Securitised Debt obligations.

7. The non-convertible part of convertible securities.

8. Money market instruments as permitted by SEBI/RBI,call money market or in alternative investments for thecall money market as may be provided by RBI to meetthe liquidity requirements.

9. Certificate of Deposits (CDs)

10. Commercial Paper (CPs) , Usance Bills

11. Pass through, Pay through or other ParticipationCertificates representing interest in a pool of assetsincluding receivables

12. Any other domestic fixed income securities includingStructured Obligations

13. Any international fixed income securities Subject tomaximum amount permitted from time to time.

14. Derivative instruments like Exchange Traded InterestRate Futures, Interest Rate Swaps, Forward RateAgreements and such other derivative instruments aspermitted by SEBI/RBI.

15. Any other like instruments as may be permitted by RBI/ SEBI / such other Regulatory Authority from time totime.

The securities mentioned above and such other securities,the Scheme is permitted to invest could be listed, unlisted,privately placed, secured, unsecured, rated or unrated andof any maturity. The securities may be acquired through InitialPublic Offerings (IPOs), secondary market operations, privateplacement, rights offers or negotiated deals.

The Scheme may invest the funds of the Scheme in short-term deposits of scheduled commercial banks.

The Scheme may also enter into repurchase and reverserepurchase obligations in all securities held by it as per theguidelines and regulations applicable to such transactions.

Risk ControlSince investing requires disciplined risk management, theAMC would incorporate adequate safeguards for controllingrisks in the portfolio construction process. The risk controlprocess involves reducing risks through portfoliodiversification, taking care however not to dilute returns inthe process. The AMC believes that this diversification wouldhelp achieve the desired level of consistency in returns. Stockspecific risk will be minimized by investing only in thosecompanies that have been analyzed by the Investment Teamat the AMC.

For investments in debt securities, the AMC aims to identifysecurities, which offer superior levels of yield at lower levelsof risks. With the aim of controlling risks, rigorous and in-depth credit evaluation of the securities proposed to beinvested in, will be carried out by the investment team ofthe AMC. Rated Debt instruments in which the Schemeinvests will be of investment grade as rated by a credit ratingagency. The AMC will be guided but not limited by the ratingsof Rating Agencies such as CRISIL, CARE, ICRA and Duffand Phelps Credit Rating India Limited or any other ratingagencies that may be registered with SEBI from time to time.In case a debt instrument is not rated, necessary clearanceof the Investment Review Committee / Board as perrequirements of Regulations / Guidelines / Circulars will beobtained for such an investment.

For its investments into Equity instruments, the Schemewill invest across a range of market capitalisations with apreference for medium and large companies.

A top down and bottom up approach will be used to investin equity and equity related instruments. Investments willbe pursued in select sectors based on the Investment Team�sanalysis of business cycles, regulatory reforms, competitiveadvantage etc. Selective stock picking will be done fromthese sectors. The fund manager in selecting scrips will focuson the fundamentals of the business, the industry structure,the quality of management, sensitivity to economic factors,the financial strength of the company and the key earningsdrivers.

The Scheme may also use various derivatives and hedgingproducts from time to time, as would be available andpermitted by SEBI, in an attempt to protect the value of theportfolio and enhance Unitholders�interest.

The Scheme may invest in other debt Schemes managedby the AMC or in the debt Schemes of any other MutualFunds, provided it is in conformity to the investmentobjectives of the Scheme and in terms of the prevailingRegulations. As per the Regulations, no investmentmanagement fees will be charged for such investments andthe aggregate inter Scheme investment made by all Schemesof Deutsche Mutual Fund or in the Schemes under themanagement of other asset management companies shallnot exceed 5% of the net asset value of the Deutsche MutualFund. For the present, the Scheme does not intend to enterinto underwriting obligations. However, if the Scheme does

Investment Objectives



enter into an underwriting agreement, it would do so aftercomplying with the Regulations and with the requisiteapproval of the Board of the AMC/Trustee.

Debt Market in IndiaThe Indian debt market, one of the largest in Asia, is developingrapidly buoyed by a multitude of factors including newinstruments, increased liquidity, deregulation of interest rates andimproved settlement systems. The major players in the Indiandebt markets today are banks, financial institutions, insurancecompanies and mutual funds. The instruments in the market canbe broadly categorized as those issued by corporates, banks,financial institutions and those issued by state/centralgovernments. The risks associated with any investments are -credit risk, interest rate risk and liquidity risk. While corporatepapers carry credit risk due to changing business conditions,government securities are perceived to have zero credit risk.Interest rate risk is present in all debt securities and depends ona variety of macroeconomic factors. The largest segment of theIndian Debt market consists of the Government of India securitieswhere the daily trading volume is in excess of Rs.3000 crores,with instrument tenors ranging from short dated Treasury Bills tolong dated securities extending beyond 20 years. The Corporatebond market, though relatively less liquid, is also fast developingwith an increased participation from the banks, FinancialInstitutions, mutual funds, insurance companies and cash richcorporates. Also there are a large number of instruments availablelike MIBOR linked bonds, commercial papers and medium to longdated fixed and floating rate bonds. The yield curve tends to bepositive sloping i.e. yield of shorter dated securities being lowerthan that of longer dated ones.

The money markets in India essentially consist of call moneymarket (i.e. market for overnight and term money between banksand institutions), repo transactions (temporary sale with anagreement to buy back the securities at a future date at specifiedprice), commercial papers (CPs, short term unsecured promissorynote, generally issued by corporates), certificate of deposits (CDs,issued by banks) and Treasury Bills (issued by RBI). Apredominantly institutional market, the key money market playersare banks, financial institutions, insurance companies, mutualfunds, primary dealers and corporates.

The various instruments currently available for investments are:

Instruments Current Yields Liquidity(as of December2004)

Central / StateGovernment securities 4.75%-7.15% Very High

PSU Bonds / Corporatedebentures 5.0%-7.50% Medium � High

Securitised debt 5.45%-8.25% Low � Medium

Commercial Papers /Certificate of deposits 4.90%-6% High

Call/Notice Money 4.75-6% Very High

Repo 4.75-6% Very High

The actual yields will, however, vary in line with general levels ofinterest rates and debt / money market conditions prevailing fromtime to time.

The Scheme may also invest in other fixed income instrumentsthat may be available from time to time. The securities above,subject to applicable SEBI regulations, could be listed, unlisted,privately placed, secured, unsecured and of any maturity. Thesecurities may be acquired through initial public offerings,secondary market operations, private placement etc.

Derivatives market is rapidly developing. Instruments range formovernight interest rate swaps to complex transaction combiningforeign exchange as well as interest rate exposure. Daily volumesin the derivatives are in the range of Rs. 3000 crores.

B) Procedure and Recording of InvestmentDecisions

l The Fund Manager for the Scheme is responsible for makingbuy / sell decisions in respect of the securities in therespective Scheme(s)� portfolios. The investment decisionsare made on a daily basis keeping in view the marketconditions and all relevant aspects.

l The Board of the AMC has constituted an Investment ReviewCommittee that will meet at periodic intervals. TheInvestment Review Committee, at its meetings, will reviewall investments made by the scheme. The Investment reviewcommittee will consist of Business Head, Head Legal &Compliance, Head Fixed Income and Head Equity Funds.The board of the AMC may add more members to thecommittee as and when required.

l Investment Review Committee will approve all investmentsin unrated securities. The approval of unrated debtinstruments will be based on parameters laid down by theBoard of the AMC and the Trustees. The details of suchinvestments will be communicated by the AMC to theTrustees in their periodical reports along with a disclosureregarding how the parameters have been complied with.Such reporting shall be in the manner prescribed by SEBIfrom time to time. The Committee will also review theperformance of the Scheme(s) and general market outlookand assess the investment pattern of the scheme with regardto parameters and directions laid down in the investmentpolicy.

l It is the responsibility of the AMC to ensure that theinvestments are made as per the internal / Regulatoryguidelines, Scheme investment objectives and in the bestinterest of the Unitholders of the respective Scheme(s).

l The Fund Manager will make presentations to the Board ofthe AMC and the Trustees periodically, indicating theperformance of the Scheme(s). The Fund will adopt theBenchmark for the Scheme(s) as specified in Section III -Summary of the Scheme(s) as the benchmark for theScheme. Among other things, the Board of AMC and Trusteewill review the performance of the Scheme in comparisonto the benchmark. The Trustees reserve the right to changethe benchmark for evaluation of performance of the schemefrom time to time in conformity with the Investmentobjectives and appropriateness of the benchmark subject toSEBI Regulations, and other prevailing guidelines, if any.

l The Fund Manager will bring to the notice of the AMC Board,specific factors if any, which are impacting the performanceof any individual Scheme. The Board on consideration of allrelevant factors may, if necessary, give appropriate directionsto the AMC. Similarly, the performance of the Scheme(s)will be submitted to the Trustees. The Fund Manager willexplain to the Trustees, the details on the Schemes�performance vis-à-vis the benchmark returns. The Trusteesand the AMC board may also review the performance of theschemes in the light of performance of the mutual fundsindustry as published from time to time by independentresearch agencies and financial newspapers and journals andmay take corrective action in case of unsatisfactoryperformance.

l All investment decisions shall be recorded in terms of SEBICircular no MFD/CIR/6/73/2000 dated July 27, 2000 or asmay be revised by SEBI from time to time.

C) Change in Investment PatternSubject to the Regulations, the asset allocation patternindicated above for the Scheme(s) may change from time totime, keeping in view market conditions, marketopportunities, applicable regulations and political andeconomic factors. It must be clearly understood that thepercentages stated above are only indicative and not absoluteand that they can vary substantially depending upon theperception of the Investment Manager, the intention beingat all times to seek to protect the interests of the Unitholders,

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and meet the objective of the relevant Scheme/Plan. Suchchanges in the investment pattern will be for short term anddefensive considerations.

Provided further and subject to the above, any change in theasset allocation affecting the investment profile of theScheme(s) shall be effected only in accordance with theprovisions of sub regulation (15A) of Regulation 18 of theRegulations, as detailed below.

D) Change in Fundamental AttributesIn accordance with Regulation 18(15A) of the SEBIRegulations, the Trustees shall ensure that no change in thefundamental attributes of the Scheme(s) and the Plan /Options thereunder or the trust or fee and expenses payableor any other change which would modify the Scheme(s) andthe Plan / Options thereunder and affect the interests ofUnitholders is carried out unless:

l A written communication about the proposed changeis sent to each Unitholder and an advertisement is givenin one English daily newspaper having nationwidecirculation as well as in a newspaper published in thelanguage of the region where the Head Office of themutual fund is situated; and

l The Unitholders are given an option to exit at theprevailing Net Asset Value without any exit load.

Explanation: In terms of the Regulations and circular datedFebruary 4, 1998, �Fundamental Attributes� referred aboveshall mean:

i) Type of Scheme

l Open ended / Close ended / Interval Scheme

l Sectoral Fund / Equity Fund / Balanced Fund /Income Fund / Index Fund / Any other type of Fund.

ii) Investment Objectives

l Main Objectives - Growth / Income / Both

l Investment pattern - The tentative equity / debt /money market breakup with minimum andmaximum asset allocation, while retaining theoption to alter the asset allocation for a short termperiod on defensive considerations.

iii) Terms of Issue

l Liquidity provisions such as listing, repurchase,redemption

l Aggregate fees and expenses charged to theScheme

l Any safety net or guarantee provided

E) Portfolio TurnoverPortfolio turnover is defined as the aggregate of purchasesand sales as a percentage of the corpus of the Scheme duringa specified period of time. Portfolio turnover in the Schemeswill be a function of market opportunities. The economicenvironment changes on a continuous basis and exposesdebt portfolio to systematic as well as non-systematic risk.The Scheme being open-ended Schemes, it is expected thatthere would be a number of subscriptions and redemptionson a daily basis. Consequently, it is difficult to estimate withany reasonable measure of accuracy, the likely turnover inthe portfolio. The Investment Manager will endeavour tooptimise portfolio turnover to optimise risk adjusted returnkeeping in mind the cost associated with it. A high portfolioturnover rate is not necessarily a drag on portfolioperformance and may be representative of arbitrageopportunities that exist for scrips / securities held in theportfolio rather than an indication of a change in AMC�s viewon a scrip, etc.

F) Investment Limitations / RestrictionsAs per the Trust Deed read with the Regulations, thefollowing investment restrictions apply in respect of theScheme at the time of making investments. However, allinvestments by the Scheme will be made in accordance withthe Investment Objective, Investment Focus, InvestmentPattern described above as well as the Regulations, includingSchedule VII thereof.

1) The Scheme shall not invest more than 15% of its NAVin debt instruments issued by a single issuer rated notbelow investment grade by a credit rating agencyauthorised to carry out such activity under the Securitiesand Exchange Board of India Act, 1992 and this limitmay be extended to 20% of the NAV of the Schemesubject to prior approval of the Board of the AMC andthe Trustee. Investments within such limits can be madein mortgage backed securitised debts which are ratednot below investment grade by a credit rating agencyregistered with SEBI.

The aforementioned limits shall not be applicable forinvestment in government securities & money marketinstruments.

The Scheme shall not invest more than 10% of its NAVin unrated debt instruments issued by a single issuerand such total investments shall not exceed 25% ofthe NAV of the Scheme. All such investments shall besubject to the prior approval of the Board of the AMCand the Trustee.

2) Transfers of investments from one scheme to anotherscheme in the same mutual fund shall be allowed onlyif:

a) such transfers are done at the prevailing marketprice for quoted instruments on spot basis (spotbasis shall have the same meaning as specified bya Stock Exchange for the spot transaction); andtransfers of unquoted securities will be made asper the policy laid down by the Trustee from timeto time; and

b) the securities so transferred shall be in conformitywith the investment objective of the scheme towhich such transfer has been made.

3) The Scheme may invest in another scheme under thesame AMC or any other mutual fund without chargingany fees, provided that aggregate inter-schemeinvestment made by all schemes under the samemanagement or in schemes under the management ofany other asset management company shall not exceed5% of the net asset value of the Fund.

4) The initial issue expenses in respect of any schememay not exceed 6% of the Funds raised under thatscheme.

5) The Trustee/ Scheme shall take delivery of scripspurchased and give delivery in case of scrips sold andin no case shall engage in short selling or carry forwardtransactions or badla finance provided that the Fundshall enter into derivatives transactions in a recognisedstock exchange for the purpose of hedging and portfoliobalancing in accordance with the guidelines issued bythe SEBI.

6) The Fund shall get the securities purchased/transferredin the name of the Fund on account of the concernedscheme, wherever the instruments are intended to beof long term nature.

7) Pending deployment of funds of the Scheme insecurities in terms of investment objectives of theScheme, the AMC can invest the funds of the Schemein short term deposits of scheduled commercial banksor in call deposits.




8) No Scheme of the Fund shall make any investment in

a) any unlisted security of any associate or groupcompany of the sponsor; or

b) any security issued by way of private placementby an associate or group company of the sponsor;or

c) the listed securities of group companies of thesponsor which is in excess of 25% of the netassets.

9) No term loans for any purpose may be advanced by theFund and the Fund shall not borrow except to meettemporary liquidity needs of the Scheme for the purposeof repurchase, redemption of Units or payment ofinterest or dividends to Unit Holders, provided that theFund shall not borrow more than 20% of the net assetsof the Scheme and the duration of such a borrowingshall not exceed a period of six months.

10) The Fund may lend securities in accordance with�Guidelines for Participation by Mutual Funds in StockLending� issued by SEBI or any amendments thereto.

11) The Scheme may also use various derivative andhedging products from time to time, as are availableand permitted by SEBI, in an attempt to protect andenhance the interests of the Unit Holders at all times.

12) If any company invests more than 5 percent of the NAVof the Scheme then investment made by any otherscheme of the Fund in that company or its subsidiarieswill be disclosed in accordance with the Regulations.

13) Debentures, irrespective of any residual maturity period(above or below 1 year), shall attract the investmentrestrictions as applicable for debt instruments asspecified under Clause 1 and 1A of the SeventhSchedule to the Regulations or as may be specified bySEBI from time to time.

14) The Scheme will comply with any other Regulationsapplicable to the investments of Mutual Funds fromtime to time.

These investment limitations / parameters as expressed /linked to the net asset / net asset value / capital shall in theordinary course apply as at the date of the most recenttransaction or commitment to invest, and changes do nothave to be effected merely because, owing to appreciationor depreciation in value or by reason of the receipt of anyrights, bonuses or benefits in the nature of capital or of anyscheme of arrangement or for amalgamation, reconstructionor exchange, or at any repayment or redemption or otherreason outside the control of the Fund, any such limits wouldthereby be breached. If these limits are exceeded for reasonsbeyond its control, AMC shall adopt as a priority objectivethe remedying of that situation, taking due account of theinterests of the Unit Holders.

The Trustee Company / AMC may alter these above statedlimitations from time to time, and also to the extent theRegulations change, so as to permit the Scheme to makeits investments in the full spectrum of permitted investmentsin order to achieve its investment objective.

G) Investment of Subscription MoneyThe Scheme may invest subscription money received fromthe investing public in money market instruments in additionto any other permissible form of investment, beforefinalisation of the allotment of Units. The AMC, on beingsatisfied of the receipt of the minimum subscription amount,can commence investment out of the funds received inaccordance with the investment objective of the Schemeand as per existing Regulations. The income earned out ofsuch investments would be merged with the income of theScheme, on completion of the allotment of the Units.

H) DepositorySecurities of the Scheme will be held either in physical ordematerialised form. In case the securities are held indematerialised (electronic) mode, the rules of the SEBI(Depositories and Participants) Regulations, 1996 wouldapply. The services charges payable to the depositoryparticipant will form a part of the annual recurring expenses.

I) Investment by Asset Management CompanyAMC, its Sponsor and investment companies managed bythem, their affiliates, their associates companies andsubsidiaries may invest either directly or indirectly in theScheme. The funds managed by these affiliates, associates,the sponsor, Subsidiaries of the Sponsor and/or the AMCmay acquire a substantial portion of the Scheme�s units andcollectively constitute a major investment in the Scheme.Accordingly, Repurchase of Units held by such funds,affiliates/associates and sponsor may have an adverse impacton the Units of the Scheme, because the timing of suchrepurchase may impact the ability of other Unitholders torepurchase their units. Such investments and movementthereof shall be disclosed to the unitholders on a half yearlybasis. The AMC shall not charge any fees on suchInvestments by the AMC in the units of its Schemes, inaccordance with sub clause (3) of regulation 24 of theRegulations and shall charge fees on such amounts in futureonly if the SEBI Regulations so permit. However, AMC shallcharge fees on investment by sponsor, and investmentcompanies managed by them, their affiliates, their associatecompanies and subsidiaries.

J) Hedging Policies in connection with Trading inDerivativesSEBI vide its circularMFD/CIR/011/061/2000 dated01 February, 2000, permitted Mutual Funds to participate inderivative trading subject to the observance of guidelinesissued by SEBI. The fund may use various derivatives andhedging products/ techniques to insulate the portfolio fromexcessive risks, for the purpose of hedging and balancingthe portfolio; as permitted under the regulation and theguidelines. The trustees will take reasonable steps to ensurethat the AMC possess adequate expertise and infrastructurefor derivative trading.

Derivative instruments may take form of stock Index futures,options on Indices, Interest rate swaps, Forward rate agreementsand such other derivative instruments as may be available fromtime to time and appropriate for the portfolio.

The risks and returns ensuring from such investments areexplained herein below:

Basic Structure of an Equity Derivative Instrument

A Stock Index FutureThe Stock Index Future is an instrument designed to give exposureto equity market indices. The Stock Exchange, Mumbai and TheNational Stock Exchange have recently started trading in indexfutures of 1, 2 and 3-month maturities. Pricing of an index futureis a function of the underlying index and short-term interest rates.

Assumptions:1 month BSE 30 FutureSpot Index: 3800Future Price on day 1: 3820Fund buys 10,000 futuresFuture price = Closing spot price = 3850Profits for the Scheme = (3850 - 3820) X 10000 = Rs. 300,000

The net impact for the Scheme will be in terms of the differencebetween the closing price of the index and cost price (ignoringmargins for the sake of simplicity). Thus, profit or loss for theScheme will be the difference between the closing price (whichcan be higher or lower than the purchase price) and the purchaseprice.

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Advantages of Equity Derivatives:Volatility in the Indian equity markets has increased over the lastfew months. Derivatives provide much needed flexibility to hedgeagainst this volatility. Some of the advantages of specific derivativeproducts are given below:

Stock Index Futures can give exposure to the index. Appreciationin Index stocks can be effectively captured through investmentin Stock Index Futures without buying individual stocks that makeup the index.

The Scheme can sell futures to hedge against market movementswithout actually selling the underlying stocks it holds.

By buying call options on the index one can participate in the risein the market, without actually buying individual stocks.

By buying put options on the index the Scheme can insulate theportfolio (assuming a perfect co-relation between portfolio andindex - which may not be the case) from the downside risk at asmall cost.

Buying Options

Benefits of buying a call optionBuying a call option on a stock or index gives the owner the right,but not the obligation, to buy the underlying stock / index at thedesignated strike price. Here the downside risks are limited tothe premium paid to purchase the option.

IllustrationIf the Fund buys a 1 month call option on Hindustan Lever at astrike of Rs. 190, the current market price being say Rs.191. TheFund will have to pay a premium of say Rs. 15 to buy this call. Ifthe stock price goes below Rs. 190 during the tenure of the call,the Fund avoids the loss it would have incurred had it straightawaybought the stock instead of the call option. The Fund gives upthe premium of Rs. 15 that has to be paid in order to protect theFund from this probable downside. If the stock goes above Rs.190, it can exercise its right and own Hindustan Lever at a costprice of Rs. 190, thereby participating in the upside of the stock.

Benefits of buying a put optionBuying a put option on a stock originally held by the buyer giveshim/her the right, but not the obligation, to sell the underlyingstock at the designated strike price. Here the downside risks arelimited to the premium paid to purchase the option.

IllustrationIf the Fund owns Hindustan Lever and also buys a three-monthput option on Hindustan Lever at a strike of Rs. 190, the currentmarket price being say Rs.191. The Fund will have to pay apremium of say Rs. 12 to buy this put.

If the stock price goes below Rs. 190 during the tenure of theput, the Fund can still exercise the put and sell the stock at Rs.190, avoiding therefore any downside on the stock below Rs.190. The Fund gives up the fixed premium of Rs. 12 that has tobe paid in order to protect the Fund from this probable downside.If the stock goes above Rs. 190, say to Rs. 220, it will not exerciseits option. The Fund will participate in the upside of the stock,since it can now sell the stock at the prevailing market price ofRs. 220.

Writing OptionsBenefits of writing an option with underlying stock holding(Covered call writing)

Covered call writing is a strategy where a writer (say the Fund)will hold a particular stock, and sell in the market a call option onthe stock. Here the buyer of the call option now has the right tobuy this stock from the writer (the Fund) at a particular price whichis fixed by the contract (the strike price). The writer receives apremium for selling a call, but if the call option is exercised, hehas to sell the underlying stock at the strike price. This isadvantageous if the strike price is the level at which the writer

wants to exit his holding / book profits. The writer effectivelygains a fixed premium in exchange for the probable opportunityloss that comes from giving up any upside if the stock goes upbeyond the strike price.

IllustrationLet us take for example Infosys Technologies, where the Fundholds stock, and the current market price being Rs. 3600. TheFund Manager holds the view that the stock should be sold whenit reaches Rs. 3700. Currently the 1 month 3700 calls can be soldat say Rs.150. Selling this call gives the call owner the right tobuy from the Fund, Infosys at Rs. 3700.

Now the Fund by buying / holding the stock and selling the call iseffectively agreeing to sell Infosys at Rs. 3700 when it crossesthis price. So the Fund is giving up any possible upside beyondRs. 3700. However, the returns for the Fund are higher than whatit would have got if it just held the stock and decided to sell it atRs. 3700. This is because the Fund by writing the covered callgets an additional Rs. 150 per share of Infosys. In case the priceis below Rs. 3700 during the tenure of the call, then it will not beexercised and the Fund will continue to hold the shares. Even inthis case the returns are higher than if the Fund had just held thestock waiting to sell it at Rs. 3700.

Benefits of writing put options with adequate cashholdingWriting put options with adequate cash holdings is a strategywhere the writer (say, the Fund) will have an amount of cashand will sell put options on a stock. This will give the buyer ofthis put option the right to sell stock to the writer (the Fund)at a pre-designated price (the strike price). This strategy givesthe put writer a premium, but if the put is exercised, he has tobuy the underlying stock at the designated strike price. In thiscase the writer will have to accept any downside if the stockgoes below the exercise price. The writer effectively gains afixed premium in exchange for giving up the opportunity to buythe stock at levels below the strike price. This is advantageous ifthe strike price is the level at which the writer wants to buy thestock.

IllustrationLet us take for example, that the Fund wants to buy InfosysTechnologies at Rs. 3500, the current price being Rs. 3600.Currently the three-month puts can be sold at say Rs. 100. Writingthis put gives the put owner the right to sell to the Fund, Infosysat Rs. 3500.

Now the Fund by holding cash and selling the put is agreeing tobuy Infosys at Rs. 3500 when it goes below this price. The Fundwill take on itself any downside if the price goes below Rs. 3500.But the returns for the Fund are higher than what it would havegot if it just waited till the price reached this level and bought thestock at Rs. 3500, as per its original view. This is because theFund by writing the put gets an additional Rs. 100 per share ofInfosys. In case the price stays above Rs. 3500 during the tenureof the put, then it will not be exercised and the fund will continueto hold cash. Even in this case the returns are higher than if theFund had just held cash waiting to buy Infosys at Rs. 3500.

Interest Rate SwapsAn interest rate swap is an agreement whereby two parties agreeto exchange periodic interest payments. The amount of interestpayments exchanged is based on some predetermined principal,called notional principal amount. The amount each counter partypays to the other is the agreed upon periodic interest ratemultiplied by the notional principal amount. The only amount thatis exchanged between the parties are the interest payment, notthe notional principal amount.

A FRA, on the other hand, is an agreement between two counterparties to pay or to receive the difference between an agreedfixed rate (the FRA rate) and the interest rate prevailing on astipulated future date based on a notional amount, for an agreedperiod.




In the most common type of swap one party agrees to pay theother party fixed interest payments at designated dates for thelife of contract. The other party agrees to make interest ratepayments that float with some index.

The interest rate benchmarks that are commonly used for floatingrate in an interest rate swap are those on various money marketinstruments. In Indian markets the benchmark most commonlyused is MIBOR.

Swaps can be unwound by either reversing the original swapentered into or doing by a reverse swap with cash flows matchingthe original swap.

Example: Interest Rate Swap (IRS)l Suppose the Scheme has a portion of its portfolio in cash.

The Fund Manager has a view that the interest rate scenariois soft and call rates are unlikely to spurt over the next threemonths. The fund manager would therefore prefer to receivea higher rate of return on his cash, which he is lending in theovernight call market. In other words he would like to moveto a 91 Day fixed interest rate from overnight floating rate

l In the above example

Say Notional Amount: Rs.5 crores

Benchmark: NSE MIBOR

Tenor : 91 days

Fixed Rate: 6.25% At the end of 91 days

The Scheme Pays: compounded call rates for 91 days, whichaverages to say 5.90%

The Scheme receives fixed rate at 6.25% for 91 days.

At the end of 91 days the transaction will be settled as under:-

Deutsche MIP Scheme receiveFixed rate @ 6.25% for 91 days Rs. 7,79,110

Deutsche MIP Scheme paysFloating rate @ 5.90% for 91 daysamounting to Rs. 7,35,479

Net Receivable / Settlement Value Rs. 43,631

Please note that the above example is hypothetical in nature andthe figures are assumed.

The fixed Income derivative market has made considerableprogress in last two years. Interest rate swaps have become anintegral part of Risk Management practice for most banks.Corporate Treasury have issued Innovative instruments likefloating rate debt and constant maturity swaps.

This innovation on issuance, trading, settlement and riskmanagement side will considerably enhance the depth and thewidth of the Indian debt markets and bring it at par with developedmarkets.

The Scheme may use derivative instruments primarily to protectthe value of portfolio against potential risks such as interest raterisk, credit risks, reinvestment risk and liquidity risks. Thisprotection is also known as hedge. At the same time, however, aproperly correlated hedge will result in a gain in the portfolioposition being offset by a loss in the hedge position. As a result,the use of derivatives could limit any potential gain from anincrease in value of the position hedged. In addition, an exposureto derivatives in excess of the hedging requirement can lead tolosses. IRS and FRAs do also have inherent credit and settlementrisks. However, these risks are substantially reduced as they arelimited to the interest streams and not the notional principalamounts.

Derivative instruments offer unique advantages like securityexposures without the attendant execution and settlement risk.Derivative instruments carry a high risk return ratio. It is like ainsurance policy where one has to pay the premium up-front and

the benefit is contingent upon an event. Derivative instrument ifused on a leveraged basis could distort the risk return ratioconsiderably even with a small price movement (the scheme willnot take a leveraged exposure). It requires a high level ofknowledge, understanding and surveillance to control risk.

The Indian market for derivative instruments is still evolving.

The Scheme, however, will use the derivative instruments veryjudiciously and keep in mind the overall objective the scheme.

Reporting requirements:The AMC shall cover the following aspects in their reports to theTrustees periodically, as provided for in the Regulations:

Transactions in derivatives, both in volume and value terms.

Market value of cash or cash equivalents / securities held to coverthe exposure.

Any breach of the exposure limit laid down in the scheme offerdocument.

Shortfall, if any, in the areas covering investment in derivativeproducts and the manner of bridging it.

The Trustees shall offer their comments on the above aspects inthe report filed with SEBI under sub regulation (23) (a) of regulation18 of Securities and Exchange Board of India (Mutual Funds)Regulations, 1996.

Valuation of Derivative Productsl The traded derivatives shall be valued at market price in

conformity with the stipulations of sub clauses (i) to (v) ofclause 1 of the Eighth Schedule to the Securities andExchange Board of India (Mutual Funds) Regulations, 1996,as amended from time to time.

l The valuation of untraded derivatives shall be done inaccordance with the valuation method for untradedinvestments prescribed in sub clauses (i) and (ii) of clause 2of the Eighth Schedule to the Securities and Exchange Boardof India (Mutual Funds) Regulations, 1996 as amended fromtime to time.

Risks associated with Derivatives Trading1. Credit Risk: The credit risk is the risk that the counter party

will default obligations and is generally negligible, as there isno exchange of principal amounts in a derivative transaction.

2. Market risk: Derivatives carry the risk of adverse changes inthe market price.

3. Illiquidity risk: The risk that a derivative cannot be sold orpurchased quickly enough at a fair price, due to lack of liquidityin the market.

4. The fund pays the daily compounded rate. In practicehowever there can be a difference in the actual rate at whichmoney is lent in the call market and the benchmark, whichappears and is used.

5. The risk is to the extent that returns are limited for theinvestor in case of extreme movement in call rates.

6. Risks associated with index futures are similar to thoseassociated with equity investments. Additional risks couldbe on account of illiquidity and hence mispricing of the futureat the time of purchase. As and when the Scheme trades inthe derivatives market, there are risks factors and issuesconcerning the use of derivatives. Derivative products arespecialized instruments that require investment techniquesand risk analyses different from those associated with stocks.The use of a derivative requires an understanding of theunderlying instrument as well as that of the derivative itself.Derivatives require the maintenance of adequate controlsto monitor the transactions entered into, the ability to assessrisk that a derivative adds to the portfolio and the ability toforecast price or interest rate movements correctly. There is

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the possibility that a loss may be sustained by the portfolioas a result of failure of another party (usually referred to asthe �counter party�) to comply with the terms of thederivatives contract. Other risks associated with trading inderivatives include the risks of mis-pricing or impropervaluation of derivatives and the inability of derivatives tocorrelate perfectly with underlying assets, rates and indices.

7. Since derivatives would be used as a risk management tool,up to 100% of the Scheme�s net assets may be utilised forderivatives trading.

It may be mentioned here that the guidelines issued byReserve Bank of India from time to time for forward rateagreements and interest rate swaps and other derivativeproducts would be adhered to.

Investment in ADR and GDRs of Indian CompaniesAmerican Depository Receipts (ADRs) and Global DepositoryReceipts (GDRs) are securities representing ownership ofunderlying stock in a certain ratio. These securities aredenominated in a foreign currency (e.g. US Dollars etc.) and arelisted on a foreign stock exchange (NASDAQ, NYSE, London,Luxembourg etc.). These securities are issued in order to tapinvestors in foreign capital markets who wish to invest in Indiancompanies but want to avoid the currency, settlement andregulatory issues involved with investing in the Indian StockMarkets.

SEBI has currently allowed mutual funds registered with it, toinvest in ADR/ GDRs of Indian companies and foreign securities.This is subject to a limit on the net assets of the Schemes as of adesignated date with an overall cap of USD 50 million per fund.The Scheme would invest in ADR / GDRs in accordance with itsinvestment objectives and in compliance with regulatoryapprovals. The Scheme will take a maximum exposure of up to10% of its net assets to ADRs / GDRs.

Subject to the Reserve Bank of India (RBI) and SEBI approvals,the Scheme would invest in ADR/GDR issues of Indian Companiesin the overseas market by way of remittance from India. Theregulatory authorities would subject to terms and conditionsspecify all investments made.

The advantages of investing in ADR / GDRs of Indian companiesare:

There is a significant trend of companies accessing the ADR/GDR markets rather than the local Indian market e.g. SatyamInfoway, Rediff.com etc. This is because the valuations at whichthey can issue stock in these markets are higher due to theexistence of deeper markets. It is felt that at many times these

companies may offer attractive investment opportunities.However as these companies are not listed on the Indian StockExchanges the Fund would not be able to profit by investing inthese companies unless the Fund is allowed to invest in ADR /GDRs.

In many cases, newly offered ADR/GDRs are priced attractivelyand it might be more attractive to hold the ADR / GDRs of acompany rather than shares of the same company in India.

Investing in ADR and GDRs allow diversification across currenciesby allowing the fund to gain exposure to currencies other thanIndian Rupees.

Risks in investing in ADR/GDRs are to the extent that the Schemeinvests in securities denominated in other currencies, the Indianrupee value of the investments; distributions and income may beaffected by changes in the value of the relevant foreign currencyrelative to the Indian Rupee.

Offshore investments in ADR/GDRs will be made subject to any /all approvals, conditions as may be stipulated by RBI and SEBI.The Fund will ensure that such investments do not result inexpenses to the Fund, in excess of the ceilings prescribed underSEBI Regulations and will be consistent with the costs andexpenses attendant to investing in such instruments. The Fundwill, wherever necessary, appoint other intermediaries of reputeas custodian / sub-custodians for managing and administeringsuch investments. The appointment of intermediaries shall be inaccordance with the applicable requirements of SEBI and withinthe permissible ceilings of expenses.

The Scheme will commence investment in ADR / GDRs only uponreceipt of regulatory approvals and after the Trustee is satisfiedthat investments would be made in conformity with the Scheme�sinvestment objectives, proper systems and procedures areadopted and overseas service providers having sufficientexperience, competence and a satisfactory regulatory track recordare appointed by the Fund.

Notwithstanding the foregoing investment policies, for temporarydefensive purposes (e.g.during periods in which the AssetManagement Company believes changes in the securitiesmarkets or economic or other conditions warrant), the Schememay invest substantially in Indian Government Treasury Bills andhold cash or cash equivalents and other money marketinstruments. The Trustees of the Mutual Fund may from time totime alter these limitations in conformity with the SEBI (MF)Regulations, 1996 and any other guidelines or notifications thatmay be issued by SEBI.

There is no Money Market Mutual Fund scheme.




VI. Fees, Expenses & LoadThe information provided under this section is to assist theunitholder to understand the expense structure of the currentScheme and types of fees and their percentage the unitholder islikely to incur on subscribing the units of the Scheme.

A) Load Structure of the SchemeThe units will be sold and repurchased on an ongoing basis atapplicable NAV-based prices.

Under normal circumstances based on the Scheme�s potentialperformance in the market environment existing as of the dateof the Offer Document, the Fund intends to charge the load underthe scheme(s) unless mentioned otherwise or changedsubsequently. Investors may note that the Trustee has a right tomodify the existing Load Structure in any manner or introduce anEntry Load or Exit Load or CDSC or a combination of Entry Loadand / or Exit Load and / or CDSC and / or any other Load subjectto a maximum as prescribed under the Regulations withprospective effect. Should the Trustee on any date, change theLoad structure in any manner, the investments made by the UnitHolders prior to such date will be subject to only the Load structurewhich was prevailing/ applicable prior to such change.

All Loads including CDSC are intended to enable the AMC torecover expenses incurred for promotion or distribution and salesof the Scheme. All Loads including CDSC for the Scheme will beretained in the Scheme in a separate account and will be utilisedto meet the selling and distribution expenses or such otherexpenses as permitted by SEBI. Any surplus in this account maybe credited to the Scheme within one year from the end of thefinancial year in which the Loads / CDSC has been charged

Any imposition or enhancement of Load in future shall beapplicable on prospective investments only. At the time ofchanging the Load Structure:

(i) The addendum detailing the changes will be attached to OfferDocument and Abridged Offer Document. The addendumwill be circulated to all the distributors / brokers so that thesame can be attached to all Offer Documents and AbridgedOffer Documents already in stock. The addendum will besent alongwith the newsletter sent to the Unit holdersimmediately after the changes.

(ii) Arrangements will be made to display the changes /modifications in the Offer Document in the form of a noticein all the Investor Service Centres and Designated Centres.

(iii) The introduction of the Exit Load alongwith the details willbe stamped in the acknowledgement slip issued to theinvestors on submission of the application form and will alsobe disclosed in the Account Statement or in the coveringletter issued to the Unit holders after the introduction ofsuch Load.

Investors are advised to contact the Investor Service Centres ordesignated centres or AMC offices to know the latest positionon Entry Load / Exit Load / CSDC prior to Investing in the Scheme.

The Fund will ensure that the Redemption Price is not lower than93% of the NAV and the Purchase Price is not higher than 107%of the NAV, provided that the difference between the RedemptionPrice and Purchase Price of the Units shall not exceed thepermissible limit of 7% of the Purchase Price, as provided forunder the Regulations.

Contingent Deferred Sales Charge (CDSC)Under the regulations, when a Scheme is operating on a no loadbasis, the AMC retains the right to charge CDSC to unit holderexiting from the Scheme within 4 years of entry. The CDSC isintended to enable the AMC to recover expenses for promotionof the Scheme which otherwise the Unitholders may have hadto bear. Under the Scheme, the AMC reserves the right to chargethe CDSC structure if it deems fit in the interest of the smoothand efficient functioning of the Fund. Should the AMC on anydate decide to change the CDSC structure (including a zero CDSCstructure), investments made prior to that date would attract theCDSC structure applicable prior to that change.

Summary of Current Load Structure & CDSCMaximum Sales (Entry) load Present Maximumimposed on purchase of units Charge Charge

At initial Offer

DAEF 1% 6%

DIOF 2% 6%

DAEF,DIOF,DSMF,DICPF,DPBF,DDBF,DFRF,DMIP 0% 6%

Sales load on issue of unitsin lieu of dividend

DAEF,DIOF,DSMF,DICPF,DPBF,DDBF,DFRF,DMIP NA NA

Contingent DeferredSales Charge (�CDSC�)

DAEF,DIOF,DSMF,DICPF,DPBF, Year 1 - 0% Year 1 - 4%DDBF,DFRF,DMIP Year 2 - 0% Year 2 - 3%

Year 3 - 0% Year 3 - 2%Year 4 - 0% Year 4 - 1%

Redemption Load(refer the chart below)

DAEF,DIOF 0% 2%

Switchover / Exchange FeeInterscheme switches DAEF,DIOF,DSMF,DICPF,DPBF,DDBF,DFRF,DMIP 0% 0.05%

Intrascheme switches DAEF,DIOF,DSMF,DICPF,DPBF,DDBF,DFRF,DMIP 0% 0.05%

The maximum redemption load which can be levied is 2% under all the schemes. The load applicable on an ongoing basis is as follows:

Name of the DAEF & DIOF DPBF DDBF DMIP FUND - PLAN A & PLAN B*Scheme (Regular) (Regular)

Entry Load 2.25% - for less than Rs.200,00,000/-, Nil Nil NilNil - Rs.200,00,000/- and above -

Exit Load Nil 0.5% - for 0.5% - for 0.5% - for < Rs.10 Lacs if exit in< Rs.10 Lacs < Rs.10 Lacs 12 months, 0.25% - for Rs.10 Lacs toif exit in 3 if exit in 3 less than Rs.25 Lacs if exit beforemonths, months, 6 months , Nil - Rs.25 Lacs and aboveNil in other Nil in othercases cases

There is no entry / exit load for DICPF, DPBF � Institutional, DSMF & DFRF. * The portfolio for both the plans will be different.

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No entry /exit load would be levied for investments/withdrawals/transfers made through Systematic Investment Plan (SIP), SystematicWithdrawal Plan (SWP) and Systematic Transfer Plan (STP). However, the Trustees / AMC reserve the right to reintroduce the loadsthrough issue of a notice at its investor service centre / distributor office or charge the waived load in case the terms and conditions, asmay be notified by the Trustees / AMC from time to time, for SIP / SWP/ STP are not complied with. No entry load will be charged oninter scheme transfer from DAEF to DIOF and vice versa. Investment by a Fund of Funds Scheme in DAEF shall not entail any entry orexit load.

Investment by a fund of fund scheme in DAEF, DIOF, DPBF, DMIP, DDBF shall not entail any entry or exit load.

B) Fees and Expenses of the Scheme

1) Ongoing ExpensesThe fees and expenses of operating the Scheme on an annual basis, expressed as a percentage of the amount of the Scheme�saverage daily net assets, are estimated as follows:

Description DAEF DPBF - DPBF - DSMF DICPF - DICPF - DDBF- DFRF DMIP DIOFInstitutional Regular Regular Institutional Regular*

InvestmentManagement &Advisory fees 1.25% 0.50% 0.90% 0.35% 0.35% 0.32% 1.20% 0.45% 1.25% 1.25%

Trustee fees 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%

Custodian fees 0.10% 0.09% 0.07% 0.08% 0.08% 0.06% 0.08% 0.05% 0.05% 0.08%

Distribution &Selling Expenses 0.80% 0.27% 0.75% 0.25% 0.25% 0.10% 0.50% 0.25% 0.60% 0.60%

Registrar & TransferAgent fees 0.18% 0.11% 0.13% 0.10% 0.10% 0.08% 0.10% 0.10% 0.10% 0.10%

Other expenses 0.11% 0.06% 0.09% 0.04% 0.04% 0.01% 0.08% 0.07% 0.16% 0.16%

Investor Servicing &Bank Charges 0.05% 0.06% 0.05% 0.07% 0.07% 0.02% 0.03% 0.07% 0.08% 0.05%

Total AnnualRecurring Expenses 2.50% 1.10% 2.00% 0.90% 0.90% 0.60% 2.00% 1.00% 2.25% 2.25%

*DDBF- Institutional Plan was wound up wef 16.12.04

The purpose of the above table is to assist the investor inunderstanding the various costs and expenses that an investor inthe Scheme(s) will bear directly or indirectly. The above expensesare subject to change and may increase / decrease as per actualand / or any change in the Regulations. However, as per theRegulations, the total recurring expenses that can be charged toany of the Scheme(s) in this Offer Document shall be subject tothe applicable guidelines. Expenses over and above the permittedlimits will be borne by the AMC.

As per the SEBI (MF) Regulations, 1996, ongoing expenses onthe first Rs.100 crores of the Scheme�s average weekly net assetswill not exceed 2.25% per annum. On the next Rs. 300 crores ofthe Scheme�s average weekly net assets ongoing expenses willnot exceed 2.00% per annum. On the next Rs. 300 crores of theScheme�s average weekly net assets ongoing expenses will notexceed 1.75% and on the balance of the Scheme�s averageweekly net assets ongoing expenses will not exceed 1.50%. Inaccordance with SEBI (MF) Regulations, 1996 the investmentmanagement and advisory fee is included within the ongoingexpenses stated herein and charged to the Scheme and is subjectto the following limits: On the first Rs.100 crores of the averageweekly net assets 1.25% and 1% of the excess amount overRs.100 crores, where net assets so calculated exceed Rs.100crores. The ongoing fees and expenses of the Scheme will bepayable monthly in arrears.

The recurring expenses of the Scheme(s), and the additionalmanagement fee shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shallnot exceed the limits prescribed thereunder.

The initial issue expenses for all the schemes was borne by theAMC except DAEF and DIOF over and above 1%, 2% respectivelyof the amount collected. All initial issue expenses incurred forDeutsche Premier Bond Fund, Deutsche Short Maturity Fund,Deutsche Insta Cash Plus Fund, Deutsche Fixed Maturity Plans,Deutsche Floating Rate Fund, Deutsche Dynamic Bond Fund wasborne by the AMC.

C) Fees and Expenses of the ExistingSchemes

Deutsche Mutual Fund - Most Recent Scheme Launched

Deutsche Mutual Fund launched two schemes betweenNovember 2003 and December 2004. The initial issue expensesfor all the schemes was borne by the AMC except DAEF andDIOF over and above 1%, 2% respectively of the amountcollected. All initial issue expenses incurred for Deutsche PremierBond Fund, Deutsche Short Maturity Fund, Deutsche Insta CashPlus Fund, Deutsche Fixed Maturity Plans, Deutsche Floating RateFund, Deutsche Dynamic Bond Fund was borne by the AMC.

Fees, Expenses & Load



D) Condensed Financial Information

Historical Per Unit StatisticsParticulars DFRF DDBF DMIP A DMIP B

Oct. 24, Apr. 1, Oct. 24, Apr. 1, Feb. 5, Apr. 1, Feb. 5, Apr. 1,2003 2004 2003 2004 2004 2004 2004 2004

to to to to to to to toMar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Sept. 30,

2004 2004 2004 2004 2004 2004 2004 2004

Institutional Regular Institutional Regular

Audited Unaudited Audited Unaudited Audited Unaudited Audited Unaudited

NAV at the beginningof the year (Rs.)# 10.0000 10.2014 10.0000 10.0000 10.1193 10.0734 10.0000 10.0603 10.0000 10.0732

Net Income per unit (Rs.) 0.2190 0.1111 0.1290 (0.6286) (0.5964) 0.0324 0.1488 0.0540 0.2412

Dividends(Rs. per unit)^^

Daily Dividend N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Weekly Dividend 0.0443 0.1504 N.A. N.A. N.A. N.A. - - - -

Monthly Dividend 0.0178 0.1803 - - - - - 0.0620 - 0.1664

QuarterlyDividend Plan N.A. N.A. - - - - - - - -

Annual Dividend /Dividend Plan N.A. N.A. - - - - - - - -

Transfer to reserves(if any) (Rs. In Crores) 0.39 - 0.92 0.03 - - 0.29 - 0.17 -

NAV at the end ofthe period (Rs.) 10.2014 10.4375 10.1193 10.0734 9.9840 9.8976 10.0603 10.2875 10.0732 10.3447

Date of Allotment 24-Oct-03 24-Oct-03 5-Feb-04 5-Feb-04

Absolute Return ofthe Scheme (sinceInception till end ofrespective period) (%) 2.01% 4.38% 1.19% 0.73% -0.16% -1.02% 0.60% 2.88% 0.73% 3.45%

Benchmark Performance(since Inception till end ofrespective period) (%) 1.78% 3.72% 1.09% -0.74% 0.98% -0.58% 0.98% -0.58%

Compounded AnnualisedReturn of the scheme(since Inception ofrespective schemes tillMarch 31, 2004) (%) N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Compounded AnnualisedReturn of the BenchmarkIndex (since Inception ofrespective scheme tillMarch 31, 2004) (%) N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Net Assets at end ofthe year (Rs. Crs.) 23.16 694.34 60.30 4.17 5.93 4.61 46.91 32.80 22.51 25.72

Ratio of RecurringExpenses to netassets (%) 0.65%@ 0.65%@ 1.15%@ 1.99%@ 1.15%@ 2.00%@ 2.25%@ 2.25%@ 2.25%@ 2.25%@

NAV as onSep. 30, 2004 N.A. 10.4375 N.A. N.A. 9.9840 9.8976 N.A. 10.2875 N.A. 10.3447

Compounded AnnualisedReturn Since Inceptionto September 30, 2004 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Benchmark Performance N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

NAV as on Dec. 31, 2004 10.5695 10.1308 10.6420 10.5402

Compounded AnnualisedReturn Since Inceptionto Dec. 31, 2004 * 4.73% 0.0018% 6.42% 5.40%

Benchmark Performance* 4.03% -0.0200% 2.35% 2.35%

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Particulars DAEF DIOF DSMF

Jan. 30, Apr. 1, Apr. 1, Feb. 5, Apr. 1, Jan. 27, Apr. 1, Apr. 1,2003 2003 2004 2004 2004 2003 2003 2004

to to to to to to to toMar. 31, Mar. 31, Sept. 30, Mar. 31, Sept. 30, Mar. 31, Mar. 31, Sept. 30,

2003 2004 2004 2004 2004 2003 2004 2004

Audited Audited Unaudited Audited Unaudited Audited Audited Unaudited

NAV at the beginning of the year (Rs.)# 10.00 9.25 21.03 10.00 9.95 10.0000 10.0647 10.7782

Net Income per unit (Rs.) (0.38) 2.75 (0.03) (0.08) (0.38) 0.0930 0.7730 0.6059

Dividends (Rs. per unit) ^^

Daily Dividend N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Weekly Dividend N.A. N.A. N.A. N.A. N.A. - 0.4360 0.2607

Monthly Dividend N.A. N.A. N.A. N.A. N.A. - 0.4400 0.2706

Quarterly Dividend Plan N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Annual Dividend / Dividend Plan - 4.00 1.50 N.A. N.A. N.A. N.A. N.A.

Transfer to reserves (if any) (Rs. In Crores) (1.36) 29.86 - (0.31) - 0.74 0.55 -

NAV at the end of the period (Rs.) 9.25 21.03 21.96 9.95 10.44 10.0647 10.7782 10.9944

Date of Allotment 30-Jan-03 5-Feb-04 27-Jan-03

Absolute Return of the Scheme (since Inceptiontill end of respective period) (%) -7.50% 110.30% 119.60% -0.50% 4.40% 0.65% 7.78% 9.94%

Benchmark Performance (since Inceptiontill end of respective period) (%) -9.25% 64.38% 61.94% -2.05% -2.10% 0.90% 6.32% 7.17%

Compounded Annualised Return of the scheme(since Inception of respective schemes tillMarch 31, 2004) (%) N.A. 86.91% N.A. N.A. N.A. N.A. 6.51% N.A.

Compounded Annualised Return of theBenchmark Index (since Inception of respectivescheme till March 31, 2004) (%) N.A. 51.92% N.A. N.A. N.A. N.A. 5.29% N.A.

Net Assets at end of the year (Rs. Crs.) 16.61 120.75 116.59 46.86 32.50 71.96 370.10 162.70

Ratio of Recurring Expenses to net assets (%) 2.50% @ 2.48% 2.46% @ 2.23% @ 2.25% @ 0.90% @ 0.90% 0.90% @

NAV as on Sep. 30, 2004 N.A. N.A. 21.96 N.A. 10.44 N.A. N.A. 10.9944

Compounded Annualised ReturnSince Inception to September 30, 2004 N.A. N.A. 59.14% N.A. N.A. N.A. N.A. 5.76%

Benchmark Performance N.A. N.A. 32.94% N.A. N.A. N.A. N.A. 4.17%

NAV as on Dec. 31, 2004 26.17 12.34 11.1072

Compounded Annualised ReturnSince Inception to Dec. 31, 2004 * 63.98% 23.40% 5.55%

Benchmark Performance * 40.22% 18.38% 4.08%




Particulars DICPF DPBF

Jan. 27, Apr. 1, Apr. 1, Jun. 26, Jan. 30, Apr. 1, Apr. 1,2003 2003 2004 2004 2003 2003 2004

to to to to to to toMar. 31, Mar. 31, Sept. 30, Sept. 30, Mar. 31, Mar. 31, Sept. 30,

2003 2004 2004 2004 2003 2004 2004

Regular Institutional Institutional Regular Institutional Regular Institutional Regular

Audited Audited Unaudited Audited Audited Unaudited

NAV at the beginning ofthe year (Rs.)# 10.0000 10.1095 10.6227 10.0000 10.0000 10.0000 9.8872 9.8749 11.2005 11.1020

Net Income per unit (Rs.) 0.1002 0.2939 0.5570 0.1066 -0.1532 1.1795 0.44 (0.07)

Dividends(Rs. per unit)^^

Daily Dividend N.A. 0.2871 0.2199 0.0974 N.A. N.A. N.A. N.A. N.A. N.A.

Weekly Dividend N.A. 0.4492 0.1959 0.1019 N.A. N.A. N.A. N.A. N.A. N.A.

Monthly Dividend - 0.3905 0.2400 0.0800 - - 0.5400 0.5320 0.3036 0.2400

QuarterlyDividend Plan N.A. N.A. N.A. N.A. - - 0.4521 0.4386 0.3400 0.3299

Annual Dividend /Dividend Plan N.A. N.A. N.A. N.A. - - 0.70 0.65 - -

Transfer to reserves(if any) (Rs. In Crores) 0.74 31.56 - - (1.29) (0.31) 30.30 7.36 - -

NAV at the end of theperiod (Rs.) 10.1095 10.6227 10.8595 10.1209 9.8872 9.8749 11.2005 11.1020 11.1984 11.0495

Date of Allotment 27-Jan-03 26-Jun-04 30-Jan-03

Absolute Return of theScheme (since Inceptiontill end of respectiveperiod) (%) 1.10% 6.23% 8.60% 1.21% -1.13% -1.25% 12.01% 11.02% 11.98% 10.50%

Benchmark Performance(since Inception till endof respective period) (%) 0.90% 5.29% 7.30% 0.97% -0.63% 8.14% 6.17%

Compounded AnnualisedReturn of the scheme(since Inception ofrespective schemes tillMarch 31, 2004) (%) N.A. 5.21% N.A. N.A. N.A. N.A. 10.01% 9.19% N.A. N.A.

Compounded AnnualisedReturn of the BenchmarkIndex (since Inception ofrespective scheme tillMarch 31, 2004) (%) N.A. 4.43% N.A. N.A. N.A. N.A. 6.18% N.A. N.A.

Net Assets at end ofthe year (Rs. Crs.) 68.15 920.86 316.36 1,124.46 113.50 24.44 336.78 104.76 44.18 27.36

Ratio of RecurringExpenses to netassets (%) 0.55%@ 0.65% 0.65%@ 0.50%@ 1.00%@ 1.75%@ 1.01% 1.78% 1.11%@ 2.01%@

NAV as on Sep. 30, 2004 N.A. N.A. 10.8595 10.1209 N.A. N.A. N.A. N.A. 11.1984 11.0495

Compounded AnnualisedReturn Since Inception toSeptember 30, 2004 N.A. N.A. 4.99% 1.21% N.A. N.A. N.A. N.A. 6.91% 6.07%

Benchmark Performance N.A. N.A. 4.25% 0.97% N.A. N.A. N.A. N.A. 3.60%

NAV as on Dec. 31, 2004 10.9920 10.2485 11.2648 11.0896

Compounded AnnualisedReturn Since Inception toDec. 31, 2004 * 4.98% 2.49% 6.31% 5.46%

Benchmark Performance* 4.26% 2.06% 3.44%

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· All NAV stated are of growth plans and the same has been considered for return calculations.

· Past Performance may or may not be sustained in future.

· NAV of the dividend plan reduces to the extent of dividend payout.

# All the per unit NAV�s are of Growth Option

^^ Per unit Dividend rate is a Gross of Dividend Distribution Tax & Education Cess for the period April 1, 2004 to Sept. 30, 2004

@ The ratio of expenses and gross income to average daily net assets by percentage has been annualised for the respective period.Institutional Plan of DDBF has been wound up wef Dec. 16, 2004

* For schemes which have not completed one year the returns mentioned are absolute and for other CAGR




VII. Units & the OfferA) General Information

1) Minimum Subscription Amount / Redemption Amount / Balance to be maintained

Name of DAEF DPBF DSMF* DICPF DDBF DFRF*the Scheme

Subscription Minimum Institutional Plan: Minimum Institutional Plan: Regular Plan: MinimumAmount Rs. 5,000 per Minimum Rs. 25,000 per Minimum Minimum Rs. 25,000 per

application and Rs. 100,000 application and Rs. 5,00,00,000 Rs. 5,000 per application and inin multiples of (One Lac) per in multiples of (Five Crore) per application and multiples of Re. 1Re. 1 thereafter. application and Re. 1 thereafter. application and in multiples of thereafter.

in multiples of in multiples of Re. 1Re. 1 thereafter. Re. 1 thereafter. thereafter.

Regular Plan: Regular Plan:Minimum MinimumRs. 5,000 per Rs. 100,000 perapplication and application andin multiples of in multiples ofRe. 1 thereafter. Re. 1 thereafter.

Minimum Minimum Institutional Plan: Minimum Institutional Plan: Regular Plan: Minimum ofRedemption Rs. 1,000 and Minimum Rs. 1,000 and Minimum Minimum Rs. 1,000 and inAmount in multiples of Rs. 100,000 in multiples of Rs. 100,000 Rs. 1,000 and in multiples of Re. 1

Re. 1 thereafter. (One Lakh) and Re. 1 thereafter. (One Lakh) and multiples of thereafter.in multiples of in multiples of Re. 1 thereafter.Re. 1 thereafter. Re. 1 thereafter.

Regular Plan: Regular Plan:Minimum MinimumRs. 1,000 and in Rs. 1,000 andmultiples of in multiples ofRe. 1 thereafter. Re. 1 thereafter.

Minimum Regular Plan: Institutional Plan: Rs. 3,000 Rs. 3,000 Regular Plan: Rs. 3,000.Balance to be Rs. 3,000 Rs. 100,000 Rs. 3,000maintained (One Lac Only)

Regular Plan:Rs. 3,000

Name of the DIOF DMIPScheme

Subscription Minimum Rs. 5,000 per application and Minimum Rs. 25,000 per application for the DividendAmount in multiples of Re. 1 thereafter. Option and Minimum Rs. 5,000 per application for the

Growth option and in multiples of Re. 1 thereafter.

Minimum Additional Amount Rs. 1,000 and Minimum Additional Amount Rs. 1,000 and in multiplesin multiples of Rs. 1 thereafter of Re. 1 thereafter for both the Options

Minimum Rs. 1,000 and in multiples of Re. 1 thereafter Rs. 1,000 and in multiples of Re. 1 thereafter.RedemptionAmount

Minimum Balance to be Rs. 3,000 Rs. 25,000 in case of Dividend Option and Rs. 5,000Balance to be in case of the Growth Option.maintained

* There is a cooling off period of 5 days from the date of receipt of the subscription, during which no redemption request(s) would be processed by the AMC inrespect of the same investment. However, the AMC reserves the right to process the redemption during the cooling off period on a specific request from theinvestor and in such exceptional cases the redemption request would be processed on a T+2 day** basis. Days for this purposes would mean Business Days.**T+2 day shall mean two business days from the date of valid acceptance of the request. The above change is also applicable to switch transactions.

Units

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2) Options available under the SchemeInvestors in the Scheme have a choice of Growth Option forcapital appreciation and Dividend Option for regular income.The choice of the option should be indicated by ticking theappropriate box on the Application Form. The Net Asset Valuewould be the same for the two options till the time the firstdividend is declared by the Scheme. Subsequently, therewould be two separate NAVs, one for Growth Option andthe other for Dividend Option in the Scheme.

a) Growth OptionThe Fund does not propose to declare any dividends

under this Option. The income earned by the Schemewill remain invested in the Scheme and will be reflectedin the NAV. This Option is suitable for investors whoare not looking for current income (but who haveinvested with the intention of capital appreciation).Moreover, if Units under this Option are held as a capitalasset for a period of at least one year, from the date ofacquisition, Unit Holders should get the benefit of longterm capital gains tax. (Please see Ch. IX on �Taxation�).

b) Dividend OptionThis Option is suited for investors seeking income

39


through Dividend declared by the Scheme. Only UnitHolders opting for the Dividend Option will receivedividends. An investor on record for the purpose ofdividend distributions is an investor who is a Unitholderas of the Record Date. In order to be a Unitholder, aninvestor has to be allocated Units representing receiptof clear funds by the Scheme.

The Trustee intends to declare dividends at monthly,quarterly and annual intervals comprising substantiallyof net realized income and net realized capital gains.The Trustee, in its sole discretion, may also declareinterim dividends. It should be noted that actualdistribution of Dividends and the frequency ofdistribution indicated above, are provisional and will beentirely at the discretion of the Trustee and depend,inter alia on the availability of distributable surplus. Tothe extent the entire net income and realised gains arenot distributed, the same will remain invested in theScheme and be reflected in the NAV.

This option in turn offers two sub-options i.e. �PayoutDividend� or �Reinvest Dividend�

i) Payout DividendAs per the Regulations, the Fund shall despatch tothe Unit Holders, the dividend proceeds within 30days of declaration of the Dividend. Dividends willbe payable to those Unit Holders whose namesappear in the Register of Unit Holders on the date(Record Date). Dividends will be paid by cheque,net of taxes as may be applicable. Unit Holderswill also have the option of direct payment ofdividend to the bank account. The cheques will bedrawn in the name of the sole / first holder andwill be posted to the Registered address of thesole / first holder as indicated in the originalapplication form. The Fund will endeavour todespatch the dividend cheques within 30 days ofthe Record date. To safeguard the interest of UnitHolders from loss or theft of dividend cheques,investor should provide the name of their bank,branch and account number in the ApplicationForm. Dividend cheques will be sent to the UnitHolder after incorporating such information.

ii) Reinvest DividendUnder this sub-option, Unit Holders may chose toreinvest all of their dividends by way of additionalunits of the Scheme instead of receiving dividendsin cash. Such additional Units by way ofreinvestment of dividends will be at the ApplicableNAV on the next day (excluding Saturday) after theRecord Date. The dividend so reinvested shall beconstructive payment of dividend to unitholdersand constructive receipt of the same amount fromeach unitholder for reinvestment in Units.Any suchinvestment will be made without the payment ofan Entry Load, if any. Such choice may be madeby indicating in the investor�s original applicationor by providing the Fund with written notice signedby all the registered holder(s) of the Units and sentto the Registrar at its Hyderabad office. Revocationof any such decision also must be made in writingand signed by all the registered holder(s) of theUnits and also sent to the Registrar.

The additional units issued under the sub-option�Reinvest Dividend� and held as capital assetwould get the benefit of long-term capital gainstax if sold after being held for one year. For thispurpose one year will be computed from the datewhen such additional units are issued.

Effect of Dividend: The NAV of the Unit Holdersin Dividend Option, will stand reduced by the

amount of dividend declared. The NAV of theGrowth Option will remain unaffected.

The options available in the schemes arementioned at Section III - Summary of Scheme(s).

Shut�out Period (Applicable for Investorsunder Dividend Option only of Deutsche MIP Fund)After the closure of the Initial Offer Period, on an ongoingbasis, investors should note that the AMC reserves a rightto declare shut out period not exceeding 5 days at the endof each month/quarter, as the case may be, for the investorsopting for payment of dividend under the respective DividendOptions. The declaration of the shut out period is envisagedto facilitate the AMC to determine the Units of the Unitholders eligible for receipt of dividend under the variousDividend Options. Further, the shut-out period will also helpin expeditious processing and despatch of dividend warrants.The AMC shall arrange to display at all Investor ServiceCentres atleast 10 days before the introduction. The shut-out period will be applicable for making investments in theScheme. During the shut-out period investors may makepurchases into the Scheme but the Sale Price for subscriptionof Units will be calculated at the applicable NAV as at theclose of the first Business Day in the following month/quarteras the case may be, depending on the Dividend Optionchosen by the investor. Therefore, if investments are madeduring the shut-out period, Units to the credit of the Unitholders� account will be allotted only on the first BusinessDay of the following month/quarter, as the case may be,depending on the dividend option chosen by the investor.The Shut-out period applies to new investors in the Schemeas well as to Unit Holders making additional purchases ofUnits into an existing folio. The shut-out period does notapply to purchases of Units under the Growth Option. TheAMC reserves the right to change the duration of the Shut-out period and prescribe new shut-out period from time totime.

IMPORTANT: Investors should indicate the Plan and / orOption, wherever applicable, for which the subscription ismade by indicating the choice in the appropriate box providedfor this purpose in the application form. In case of validapplications received, without indicating the Plan and/orOption the following defaults will be flagged off.

Indication not made Default

Deutsche MIP Fund Plan B(Plan A / Plan B)

Dividend / Growth Options Growth Option

Dividend Payment / Dividend ReinvestmentReinvestment

Dividend Payment Monthly DividendFrequency

Bonus Units: Guided by the philosophy of value-orientedreturns, the Trustees may decide to periodically capitalisethe net earnings of the Scheme (including dividend / interestincome and realised gains on the securities) by way ofallotment / credit of bonus units to the unitholder�s accounts,the intent being to protect the Net Asset value of the Schemeand unitholders� interests.

The Fund, however, does not assure any targeted annualreturn / income nor any capitalisation ratio. Accumulation ofearnings and / or capitalisation of bonus units and theconsequent determination of NAV, may be suspendedtemporarily or indefinitely under any of the circumstancesas stated under the para on �Suspension of Purchases and /or Redemption of units�.

7) Applicable NAVThe Scheme(s) will offer Units for sale, repurchase and

Units & the Offer



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rswitch on every Business Day. The application to purchase, redeem or switch Units can be made on forms that should besubmitted at any of the Investor Service Centres / Designated Centres or at the offices of the AMC.

An application will be considered accepted on that day, subject to it being complete in all respects and received prior to thefollowing times on that Business Day at each Investor Service Centre:

Name of the Scheme(s): Deutsche Alpha Equity Fund (DAEF), Deutsche Investment Opportunity Fund (DIOF), Deutsche PremierBond Fund (DPBF), Deutsche MIP Fund � Plan A (DMIPA), Deutsche MIP Fund � Plan B (DMIPB), Deutsche Dynamic Bond Fund(DDBF), Deutsche Short Maturity Fund (DSMF), Deutsche Floating Rate Fund (DFRF) and Deutsche Insta Cash Plus Fund (DICPF).

Schemes Cut Off timing Applicable NAV for

Purchase / Redemption /Switch In Switch Out

DAEF*, DIOF*, DPBF*, All valid applications received by Upto 3 p.m. Closing NAV of the Closing NAV of theDMIPA*, DMIPB*, the Fund alongwith a local cheque day on which the day on which theDDBF*, DSMF* or a demand draft payable at par application is application is

at the place where the application received. received.is received

All valid applications received After 3 p.m. Closing NAV of the Closing NAV of theby the Fund next business day next business day

on which the on which theapplication is application isreceived. received.

*However, in respect of valid applications with outstation cheque(s) / demand draft not payable at par at the place of receipt ofapplication, closing NAV of the day on which the cheque(s)/ demand draft is credited to the account of the Fund shall be applicable.

DICPF# All valid applications received Upto 1 p.m. Closing NAV of theby the Fund day immediately

previous to the dayon which funds areavailable forutilisation by thefund

All valid applications received After 1 p.m. Closing NAV for theby the Fund day, if the funds are

available forutilisation by theFund on thesame day

DICPF All valid applications received Upto 10 a.m. ��- Closing NAV of theby the Fund for redemption / immediatelyswitch out previous day

All valid applications received After 10 a.m. Closing NAV forby the Fund for redemption / the dayswitch out

# In case of Switch Transaction(s) into DICPF, the closing NAV of DICPF of the day immediately previous to the day on whichfunds are available for utilisation by the Fund shall be applicable. In case of Switch Transaction(s) into DICPF on a business daywhich is followed by a holiday, the closing NAV of DICPF of the day immediately previous to the next business day shall beapplicable since the funds will be available for utilisation by the Fund on that day.

DFRF* All valid applications received by Upto 3 p.m. Closing NAV of the Closing NAV of thethe Fund along with a local cheque day on which the day on which theor a demand draft payable at par application is application isat the place where the application received. received.is received followed by abusiness day.

All valid applications of Rs. 25 lakh Upto 3 p.m. Closing NAV of the Closing NAV of theor more received by the Fund next business day day on which thealong with a local cheque or a on which the application isdemand draft payable at par at the application is received.place where the application is received.received on a day followed by anon business day for the fund.

All valid applications received by Upto 3 p.m. Closing NAV of the Closing NAV of thethe Fund along with an account day on which the day on which thetransfer/cheque where the funds application is application isare available for utilization on the received. received.sdame business day when theapplication is received on a dayfollowed by a non businessday for the fund.

41


Units & the Offer*However, in respect of valid applications with outstationcheque(s) / demand draft not payable at par at the place ofreceipt of application, closing NAV of the day on which thecheque(s)/ demand draft is credited to the account of theFund shall be applicable.

Subject to the availability of funds for utilization by the Fund,the Fund /AMC reserves the right to determine the applicableNAV for valid applications. Further, in case of multipleapplication(s) of less than Rs. 25 lakh received from the sameapplicant, the Fund/AMC reserves the right to determinethe applicable NAV.

l Modified definition of Business Dayis as under:

A. In the offer document of DPBF, DMIPA, DMIPB,DDBF, DSMF, DFRF, DICPF as under:-

A day other than (1) Saturday and Sunday or (2) a day onwhich The Stock Exchange, Mumbai or National StockExchange of India Limited or Reserve Bank of India or banksin Mumbai are closed or (3) the day on which the moneymarkets are closed / not accessible or (4) a day on which thesale and/or redemption and/or switches of Units issuspended by the Trustees / AMC or (5) a book closure periodas may be announced by the Trustees / AMC or (6) a day onwhich normal business cannot be transacted due to storms,floods, bandhs, strikes or such other events as the AMCmay specify from time to time.

Provided that the days when the banks in any location wherethe AMC�s Investor Service Centres are located, are closeddue to a local holiday, such days will be treated as nonBusiness Days at such centres for the purposes of acceptingfresh subscriptions. However, if the Investor Service Centrein such locations are open on such local holidays, thenredemption and switch requests will be accepted at thoseCentres, provided it is a Business Day for the Scheme on anoverall basis. Notwithstanding the above, the AMC maydeclare any day as a Business Day by giving adequate noticeto investors.

B. In the offer document of DAEF$, DIOF$ as under:-A day other than (1) Saturday and Sunday or (2) a day onwhich The Stock Exchange, Mumbai or National StockExchange of India Limited are closed or (3) a day on whichthe sale and/or redemption and/or switches of Units issuspended by the Trustees / AMC or (4) a book closure periodas may be announced by the Trustees / AMC or (5) a day onwhich normal business cannot be transacted due to storms,floods, bandhs, strikes or such other events as the AMCmay specify from time to time.

Provided that the days when the banks in any location wherethe AMC�s Investor Service Centres are located, are closeddue to a local holiday, such days will be treated as nonBusiness Days at such centres for the purposes of acceptingfresh subscriptions. However, if the Investor Service Centrein such locations are open on such local holidays, thenredemption and switch requests will be accepted at thoseCentres, provided it is a Business Day for the Scheme on anoverall basis. Notwithstanding the above, the AMC maydeclare any day as a Business Day by giving adequate noticeto investors.

$ No Switch requests will be processed when the NAVfor both schemes are not available.

The Applicable NAV is the net asset value per unit at theclose of the Business Day on which the application isreceived.

Where an application is received after the cut-off time asmentioned above, the request will be deemed to have beenreceived on the next Business Day.

8) Sale of UnitsThe Fund offers Units for sale on every Business Day. TheUnits will be available at the sale price, which is based onthe Applicable NAV, subject to sales load and subject to theminimum application amount specifications. Subscriptionson an ongoing basis will be made only by specifying theamount to be invested and not the number of Units to besubscribed. The total number of Units allotted will bedetermined with reference to the applicable sale price andfractional Units may be created. Fractional Units will becomputed and accounted for up to three decimal places forthe Scheme. Fractional Units will in no way affect theinvestor�s ability to redeem Units. The AMC reserves theright to change the basis for subscription from amount basisto any other basis, subject to the SEBI Regulations.

9) Repurchase of UnitsThe Units can be repurchased on every Business Day at therepurchase price. The repurchase request can be made on apre - printed form that should be submitted at any of theInvestor Service Centres / Designated Centres or at theoffices of the AMC.

The repurchase would be permitted to the extent of creditbalance in the Unitholder�s account. The repurchase requestcan be made by specifying the rupee amount or the numberof Units to be repurchased. Where a request for a repurchaseis for both amount and number of Units, the amountrequested for repurchase will be considered as the definitiverequest.

If the balance in the Unit holder�s account does not coverthe amount of repurchase request, then the Mutual Fund isauthorised to close the account of the Unit holder and sendthe entire such (lesser) balance to the Unit holder.

In case an investor has purchased Units on more than 1Business Day (either under the Initial Offer Period or throughsubsequent purchases), the Units purchased prior in time(i.e. those Units which have been held for the longest periodof time) will be deemed to have been redeemed first i.e. ona First-in-First-Out basis.

Unit holders may also request for redemption of their entireholding and close the account by indicating the same at theappropriate place in the Redemption Request Form.

Where however, the Unit holder wishes to redeem Units fora specified amount, then the amount to be paid onredemption will be divided by the redemption price, and theresultant number of Units will be redeemed.

In case the Units are standing in the names of more thanone Unit holder, where mode of holding is specified as�Jointly�, redemption requests will have to be signed by ALLjoint holders. However, in cases of holding specified as�Anyone or Survivor�, any one of the Unit holders will havethe power to make redemption requests, without it beingnecessary for all the Unit holders to sign. However, in allcases, the proceeds of the redemption will be paid to thefirst-named holder only.

10) Minimum BalanceThe Unitholder has to maintain a minimum balance asspecified at �Section III � Summary of Scheme� . The Fundmay close an investor�s account if the balance falls belowthe minimum prescribed due to redemption and a period of30 days has elapsed after the issue of notice to the investorby the Fund requesting him/her to bring the amount in theaccount to the level of minimum prescribed and if he/shefails to do so.

11) Systematic Investment Plan (SIP)/ SystematicTransfer Plan (STP)/ Systematic Withdrawal Plan(SWP) Systematic Investment Plan (SIP)

Mutual Fund Investors can benefit by investing specified rupee



amounts periodically for a continuous period. This conceptis called Rupee Cost Averaging.

This savings program allows investors to save a fixed amountof rupees every month by purchasing additional units of theFund. Therefore, the average unit cost will always be lessthan the average sale price per unit irrespective of the marketbeing rising, falling or fluctuating.

By investing a fixed amount of Rupees at regular intervals,investors can take advantage of the benefits of Rupee CostAveraging, at the same time, saving a fixed amount eachmonth. The investment under SIP has to be for a minimumprescribed amount. A minimum of 6 cheques in case ofmonthly and minimum of 4 cheques in case of quarterly SIPneeds to be provided.

Here is an illustration using hypothetical figures to show howa Systematic Investment Plan can benefit an investor. Letus assume that Mr. ABC would like to invest Rs.1,000 as aquarterly investment for a period of four quarters, i.e. a totalof Rs. 4,000.

Quarter Amount Public Offering No. of UnitsInvested Price (POP) purchased

(Rs.) (Rs.)

1 1000 12 83.333

2 1000 15 66.667

3 1000 9 111.111

4 1000 12 83.333

TOTAL 4000 48 344.444

Average price (per unit) per quarter (quarters) = Rs.12.00(i.e. Rs. 48/4)

Average cost per unit = Rs.11.61 (i.e. Rs. 4000/344.444 units)

As can be seen from the example above, the average costper unit is always lower than the average market price perunit, irrespective of a rise, fall or fluctuations in the market.

A greater number of units were purchased when the per-unit cost was low; fewer units were purchased when theper-unit cost was high. Thus, Mr. ABC automatically gainswithout having to monitor prices (NAV) on a day-to-day basis.

However, an investor should note that the market value ofthe Scheme�s units is subject to fluctuations. Beforeundertaking any plan for Systematic Investment, the investorshould keep in mind that such a program does not assure aprofit or protect against a loss.

Systematic Transfer Plan (STP)A Unitholder may establish a systematic transfer plan andchoose to transfer on a monthly or quarterly basis from theScheme to another Deutsche Mutual Fund scheme. Thetransfer will be effected by way of redemption of units (withappropriate exit load, if any) and a reinvestment (withappropriate entry load, if any) of the redemption proceeds inanother Scheme(s).

Unitholders may change the amount (but not below thespecified minimum) by giving written notice to the registrars.

Currently, STP from the Scheme is available for transfer intoDeutsche Alpha Equity Scheme and Deutsche Dynamic BondScheme.

The Unitholder may avail of this plan by completing theenclosed Application Form or by filling up the relevant portionof the transaction statements. A systematic transfer planmay be terminated on appropriate written notice by theunitholder of the fund, and it will terminate automatically ifall the units are liquidated or withdrawn from the account,or upon the Fund�s receipt of notification of death orincapacity of the unitholder. The Investment Manager maychange rules relating to the plan from time to time.

Here is an illustration using hypothetical figures to explainthe concept of a Systematic Transfer Plan. Let us assumethat Mr. ABC would like to transfer Rs. 1000 every monthfrom Deutsche Alpha Equity Fund to Deutsche MIP Fundfor a period of four months, i.e. a total of Rs. 4000.

Units

& th

e Offe

r

Deutsche Alpha Equity Fund

Month Opening Balance Applicable NAV Amount Redeemed No. of Units Closing Balanceof Units (Rs.) (Rs.) Redeemed of Units

(a) (b) (c) (d) (e)[c-b] [a-d]

1 5,000.000 11.00 1,000.00 90.909 4,909.091

2 4,909.091 11.08 1,000.00 90.253 4,818.838

3 4,818.838 11.15 1,000.00 89.686 4,729.152

4 4,729.152 11.20 1,000.00 89.286 4,639.866

Deutsche MIP Fund

Month Amount Invested Applicable NAV No. of Units Closing Balance(Rs.) (Rs.) Allotted of Units(f) (g) (h) (i)

[f-g]

1 1000.00 11.000 90.909 90.909

2 1000.00 11.092 90.155 181.064

3 1000.00 11.129 89.855 270.919

4 1000.00 11.222 89.111 360.030

Note:

The Fund may close an investor�s account if the balance falls below the minimum prescribed balance (based on applicable NAV) inthe Schemes from which Transfer is proposed to be done due to redemptions or SWP and the investor fails to invest sufficientfunds to bring the value of the account to the prescribed minimum (based on applicable NAV) after a written intimation in thisregard is sent to the first named Unitholder.

43


Systematic Withdrawal Plan (SWP)A Unitholder may establish a Systematic Withdrawal Plan inany Scheme and receive regular/ quarterly payments fromthe account. The Unitholder can opt to withdraw a fixedamount subject to a prescribed minimum amount per monthor per quarter. The investor can alternatively withdraw capitalappreciation. In case of withdrawal of capital appreciation,SWP is available in Growth Option only.

The Unitholder may avail of SWP by filling up the relevantportion of the transaction statement or by completing anApplication Form and sending it to any of the ISCs mentionedat the reverse of this Offer Document.

The amount thus withdrawn by redemption shall beconverted into Units at the applicable NAV (which is generally

the first business day of the month in which the payment isscheduled), and such Units will be subtracted from the unitbalance of that Unit holder.

Unitholders may change the amount by giving appropriatewritten notice to the Registrars. A Systematic WithdrawalPlan may be terminated on written notice by the unitholderof the Fund, and it will terminate automatically if all Units areliquidated or withdrawn from the account, or upon the Fund�sreceipt of notification of death or incapacity of the Unitholder.

Here is an illustration using hypothetical figures to explainthe concept of a Systematic Withdrawal Plan. Let us assumethat Mr. ABC has invested Rs. 10,000 and been allotted 1000units during the initial offer. Subsequently he would like toreceive Rs. 1000 for a period of four months, commencingfrom the beginning of the next month.

Units & the Offer

Month Opening Balance Amount Withdrawn Applicable NAV No. of Units Closing Balanceof Units (Rs.) (Rs.) redeemed of Units

1 1000.000 1000 12 83.333 916.667

2 916.667 1000 15 66.667 850.000

3 850.000 1000 9 111.111 738.889

4 738.889 1000 12 83.333 655.556

Total 4000 344.444

Note: The Fund may close an investor�s account if the balance falls below the prescribed minimum balance (based on applicableNAV) due to redemptions or SWP, and the investor fails to invest sufficient funds to bring the value of the account to the prescribedminimum (based on applicable NAV) after a written intimation in this regard is sent to the first named Unitholder. The investor hasto make an initial investment of the prescribed minimum application amount and maintain the minimum prescribed balance to availof the facilities under the SIP/STP/SWP.

Salient Features (for details please read theinstructions for SIP/SWP/STP):l No initial application amount would be required to be invested

for starting a Systematic Investment Plan (SIP) ie. theMinimum Amount for SIP shall be Minimum of 6 Chequesof Rs. 1000/- each or 12 Cheques of Rs. 500/- each forMonthly SIP; Minimum of 4 Cheques of Rs. 1500/- forQuarterly SIP.

l Investors can choose to transfer/withdraw Fixed Amount /Capital Appreciation (available only for Growth option)/Dividend Transfer (for STP only). The frequency for transfer/ withdrawal can be monthly or quarterly on the 7th / 15th /21st of the month and on the next business day if it happensto be a holiday. The minimum amount of STP/SWP (exceptDividend transfer) shall be Rs. 1,000/- for monthly and Rs.3,000/- for quarterly. Dividend from DFRF and DICPF, subjectto a minimum of Rs. 1000/-, can be transferred into DAEF,DIOF, DMIP, DSMF and Regular plan of DPBF & DDBF butnot vice versa. Dividend amongst DPBF, DMIP, DDBF, DSMF,DAEF and DIOF, subject to a minimum of Rs. 1,000/-, iseligible for STP.

l An investor cannot simultaneously participate in SIP andSWP/STP or SWP and STP in the same scheme.

l No entry load would be levied for transfers made throughSIP/ STP. However for units allotted on account of suchtransfer an exit load equivalent to the entry load will beapplicable if the same are redeemed within 1 year from thedate of allotment.

l No exit load would be levied for withdrawals made throughSWP.

l The Trustees/AMC reserves the right to reintroduce the loadsor charge waived load in case the terms and conditions asmay be notified by the Trustees/AMC are not complied with.

l The Trustees / AMC reserve the right to discontinue the SIPin case a cheque is returned and debit the charges for thecheque return to the investors� account.

l The Trustees/AMC reserves the right to modify the termsand conditions at any time in future. Also the Trustees/AMCreserve the right to close an investor�s account if the balancefalls below the minimum prescribed limit.

l No SIP facility is available in DSMF, DICPF, DFRF, InstitutionalPlan of DPBF. Systematic Transfers can only be made intoDAEF, DIOF, DMIP Fund, DSMF and Regular plans of DPBF& DDBF.

l The Trustees / AMC reserve the right to discontinue / modifythe conditions for the facilities ie. SIP, STP & SWP at anytime in future.

B) Purchase of Units

1) Who can Invest?The following persons (subject to, wherever relevant,purchase of units of mutual funds being permitted underrespective constitutions, and relevant statutory regulations)are eligible and may apply for subscription to the Units ofthe Scheme.

l Resident Adult Individuals either singly or jointly (notexceeding three)

l Minors through parent / legal guardian

l Companies, Bodies Corporate, Public SectorUndertakings, association of persons or bodies ofindividuals whether incorporated or not and societiesregistered under the Societies Registration Act, 1860(so long as the purchase of Units is permitted underthe respective constitutions)

l Religious, Charitable and Private Trusts, under theprovisions of 11(5) of Income Tax Act, 1961 read withRule 17C of Income Tax Rules, 1962 (subject to receiptof necessary approvals as �Public Securities�, whereverrequired)



l Wakfs and Trustee of private trusts authorised to investin mutual fund scheme under the Trust Deed

l Partnership Firms

l Karta of Hindu Undivided Family (HUF)

l Banks (including Co-operative Banks and Regional RuralBanks) and Financial Institutions

l Non Resident Indians (NRIs) / Persons of Indian originresiding abroad on full repatriation basis (subject to RBIapproval, if any) or on non-repatriation basis

l Foreign Institutional Investors (FIIs) registered with SEBIon full repatriation basis (subject to RBI approval, if any)

l Army, Air Force, Navy and other para-military funds andeligible institutions

l Scientific and Industrial Research Organisations

l International Multilateral Agencies approved by theGovernment of India

l Non-Government Provident / Pension / Gratuity fundsas and when permitted to invest

l Others who are permitted to invest in the Scheme asper their respective constitutions

l Trustees, AMC or Sponsor or their associates (if eligibleand permitted under prevailing laws), may subscribe tothe Units under the Scheme(s)

l Other Scheme(s) of Deutsche Mutual Fund subject tothe conditions and limits prescribed in SEBI regulations

The Fund reserves the right to include / exclude new / existingcategories of investors to invest in the Scheme(s) from timeto time, subject to SEBI Regulations, and other prevailingstatutory regulations, if any.

2) Purchase PriceThe purchase price of the Units on an ongoing basis, will bethe Applicable NAV. Currently the Fund does not intend tocharge any Entry Load. Please see VI �Fees & Expensesand Load�.

However, if an Entry Load is introduced, the Purchase Pricewill be calculated as follows:

Purchase Price = Applicable NAV x (1 + Entry Load)

For Example - if the applicable NAV is Rs 10.00; and theentry load is 2 per cent then the purchase price will be Rs10.20 per unit.

Investors may note that the Trustee has a right to modifythe existing Load Structure in any manner or introduce anEntry Load or Exit Load or CDSC or a combination of EntryLoad and / or Exit Load and / or CDSC and / or any otherLoad subject to a maximum as prescribed under theRegulations with prospective effect. Should the Trustee onany date, change the Load structure in any manner, theinvestments made by the Unit Holders prior to such datewill be subject to the Load structure applicable prior to suchchange.

The Fund shall ensure that the Redemption Price is not lowerthan 93% of the NAV and the Purchase Price is not higherthan 107% of the NAV, provided that the difference betweenthe Redemption Price and Purchase Price of the Unit shallnot exceed the permissible limit of 7% of the Purchase Price,as provided for under the Regulations.

3) How to Purchase?The application forms or transaction slips for the purchaseof Units of the Scheme, will be available at the office of the

AMC, the Designated Centres and the Investor ServiceCentres. New Unit Holders can purchase Units by completingan Application Form. Existing Unit Holders may use the formattached to the bottom of their Account Statement or fill outa deposit slip.

Applications can be made either by way of a �RegularApplication� i.e. along with a cheque / DD or under DirectDeposit Application Facility i.e. alongwith account to accounttransfer instruction. The Fund may introduce other newermethods of application which will be notified as and whenintroduced.

Investors should complete the Application Form and deliverthe same along with cheque / draft (i.e. in case of �RegularApplication�) or account to account transfer instructions (incase availing of �Direct Deposit Application Facility�) at anyof the

l Investor Service Centres, or

l Designated Centres, or

l AMC Offices

l By post to the Registrar,Karvy Computershare Private Ltd.46, Road No. 4, Street No. 1, Banjara Hills,Hyderabad 500 034.

The addresses of the ISCs and Designated Centresrespectively are given on the back cover of this OfferDocument.

The Trustee shall, have absolute discretion to reject anyapplication for purchase of Units, if in its opinion, increasingthe size of the Unit Capital is not in the general interest ofthe Unit Holders, or if for any other reason it does not believeit would be in the best interest of the Scheme or its UnitHolders to accept such an application.

Incomplete Applications or those not specifying the Scheme/ option and / or accompanied by cheque / demand drafts /account to account transfer instructions favouring scheme /option other than that specified in the application are liableto be rejected.

As per the directives issued by SEBI, it is mandatory forapplicants to mention their bank account no., PAN No. (incase the application is for Rs. 50,000/- or more), UniqueIdentification Number (for those mandated by SEBI to obtainthe same) in their applications for purchase of units. In casesuch details are not mentioned, the application forms maybe rejected. Also whenever the application is overRs. 50,000/- a copy of the PAN card is required to besubmitted for the purpose of verification as per a directivefrom Ministry of Finance. As directed by SEBI allapplications / redemptions / switches are time stamped atthe point of acceptance.

4) Mode of PaymentCash will not be accepted as a mode of payment. Paymentby stockinvest , out-station cheques and post-dated chequeswill not be accepted.

i) Resident InvestorsInvestors may make payments for subscription to theUnits of the Scheme by bank draft / local MICR chequepayable at par, in the city in which the application formis submitted drawn on a bank, which is a member ofBankers clearing house. Bank charges for out-stationdemand drafts will not be borne by the AMC. The Fundwill not entertain any requests for refund of demanddraft charges.

All cheques and drafts should be crossed �Account

Units

& th

e Offe

r

45


Payee Only� and made out in favour of �Deutsche MIPFund�.

ii) NRIs, , PIOs and FIIs

(a) Repatriation Basis - NRIs, , PIOsIn terms of Schedule 5 of notification No. FEMA20/2000 dated May 3, 2000 issued under theForeign Exchange Management Act, the RBI hasgranted a general permission to mutual funds, asreferred to in Clause (23D) of Section 10 of theAct to issue and repurchase units of their schemeswhich are approved by SEBI to NRIs / / PIOs subjectto conditions set out in the aforesaid notification.Further, general permission is also granted to sendsuch units to NRIs / / PIOs to their place ofresidence or location as the case may be.

NRI applications on a repatriation basis will be madeby submitting payment by demand draftspurchased from / cheques drawn on FCNR / NREbank accounts payable at a city enlisted in the lastpage of this document where Karvy ISC is located.Such applicants would have to subsequentlyarrange to provide a debit certificate from theirbankers confirming that the amount has been paidby debiting a NRE / FCNR account.

(b) Non-Repatriation Basis - NRIs, PIOsIn case of NRIs / PIOs seeking to apply for Unitson a non-repatriation basis, payments may be madeby cheque / draft drawn out of NRO / NRSRaccounts.

(c) FIIsFIIs may pay their subscription amounts by directremittance from abroad or out of their special Non-Resident Rupee Accounts maintained with adesignated bank in India. The RBI has grantedmutual funds as referred to in Clause (23D) ofSection 10 of the Act general permission to issueunits of SEBI approved schemes, to send suchunits out of India to their global custodians and torepurchase units from FIIs and make paymenttherefore in terms of Schedule 5 of notification No.FEMA 20 / 2000 dated May 3, 2000 issued underthe Foreign Exchange Management Act.

The Application Form must provide the FIIs SpecialNon-Resident Rupee Account details maintainedwith any one of the RBI designated banks. Allapplications made under a Power of Attorney byany of the above mentioned categories require thatthe Power of Attorney or a duly certified copythereof be lodged at the Registrar�s office.

The NRIs, PIOs and FIIs shall also be required to furnishsuch other documents as may be necessary and asdesired by the Fund in connection with the investmentin the Scheme and as prescribed by regulations fromtime to time.

iii) Application under Power of Attorney / BodyCorporate / Registered Society / Trust /Partnership etc.In case of an application under a Power of Attorney orby a limited company or a body corporate or a registeredsociety, or a trust, or a partnership or an association ofpersons or body of individuals, the relevant Power ofAttorney or the relevant resolution or the authority tomake the application specifying the mode of operationor the partnership deed and letter / authority given byall partners specifying mode of operation as the casemay be, or duly certified copy thereof, along with acertified copy of the Memorandum and Articles of

Association, incorporation / constitution documents and/ or bye-laws / certificate of registration must be lodgedat the Registrar�s office within seven days of thesubscription. Sole proprietary firms would require tosubmit a completed nomination form to enabletransmission of units in the event of death of the soleproprietor. In case of HUF, a list of all coparcenerstogether with their dates of birth and specimensignatures must be lodged at the Registrar�s officewithin seven days of the subscription.

5) Mode of HoldingApplicants have to specify the �mode of holding� in theapplication form. The mode of holding may be �Single�,�Joint� or �Anyone or Survivor�.

Where Units are jointly held, the person first-named in theApplication Form will receive all notices and correspondenceswith respect to the Folio, as well as any distributions throughdividends, redemptions or otherwise. Such person shall holdthe voting right, if any, associated with the Units. However,all documentation / purchase applications / redemptionrequests / enrolment forms shall necessarily be signed byall the holders. The liability of the Mutual Fund in this regardshall be only to the first-named holder.

When Units are held as anyone or survivor, the person first-named in the Application Form will receive all notices andcorrespondences with respect to the Account, as well asany distributions through dividends, redemptions orotherwise. The first named holder shall exercise the votingright, if any, associated with the Units. All documentation /purchase applications / redemption requests / enrolmentforms may be signed by any one of the joint holders and theMutual Fund will act on the instructions of any one of theaccount holders. If two or more persons apply for unitswithout specifying the mode of holding, they shall be deemedto have elected to hold the units jointly. Any change in themode of holding will require the signature of all the holders.By following the above procedure, the Mutual Fund and theAMC shall be discharged of all liability towards the joint /remaining unitholders.

Investors are requested to carefully study the provisionspertaining to TRANSMISSION as well as NOMINATION givenbelow under �D) Facilities offered to Investors under theScheme� before ticking the relevant box pertaining to theMode of Holding in the application form.

Note : The Trustee, at their discretion at a later date, maychoose to alter or add other modes of payment during theContinuous Offer.

6) Allotment / Account Statement / Refunds

a) Folio Number & Issuance of UnitsEvery investor will be identified by a Folio Number. Pleasequote your folio number in all communications with theMutual Fund or the KARVY ISCs. The Trustee is entitled, inits sole and absolute discretion, to reject any application forUnits. Upon issue, a non-transferable Account Statement(or, if requested, a non-transferable Unit Certificate) will besent to each Unitholder. The Account Statement or Unitcertificate will be confirmation of the Units purchased.

b) AllotmentAll applicants will receive full and firm allotment of Units,provided the applications are complete in all respects andare found to be in order. The Trustees retain the sole andabsolute discretion to reject any application. The process ofallotment of Units and mailing of account statementsreflecting the allotments will be completed within 30 daysfrom the date of closure of the Initial Offer Period.

Allotment to NRIs / / FIIs will be subject to RBI approval, ifany, required.

Units & the Offer



c) Account StatementUnits will be issued in registered, uncertificated form only.Unitholders may request a Unit certificate in lieu of anAccount Statement. After acceptance of an Investor�srequest and within three Business Days the Mutual Fundwill endeavor to mail to investors by post / courier AccountStatements confirming their Units held in the Scheme.Provided that the Fund reserves the right to reverse thetransaction of crediting units in the Unitholder�s account, inthe event of non-realization of any cheque or other instrumentremitted by the investor.

All Units will rank pari passu, among Units within the sameOption, i.e. either the dividend option or the growth option,as to assets, earnings and the receipt of dividenddistributions, if any, as may be declared by the Trustees.Allotment of Units and despatch of Account Statements toNRIs / / FIIs will be subject to RBI�s general permission datedMarch 30, 1999 to mutual funds, in terms of NotificationNo. FERA195/99-RB or such other notifications, guidelinesissued by RBI from time to time.

Each Unitholder will receive an Account Statement /transaction slip (or, if requested, a Unit certificate) each timepurchases during an initial offering period or redemption ofUnits are made. In addition, each Unitholder will also receivean annual Account Statement as soon as practicable after31st March each year. Such annual Account Statement willdetail the investor�s opening balance of Units held as of 1stApril of the prior year, all transactions that occurred duringthe preceding twelve months with respect to the Account,such as additional purchases and redemptions, and a closingbalance of Units held and the Net Asset Value of the Unitsas of 31st March of such year or the last NAV calculatedduring the relevant financial year.

Unitholders may verify the contents of Account Statementsand revert to their nearest KARVY ISC immediately in caseof any discrepancy. In the event the unitholder fails to informthe KARVY ISC within 15 days from the date of the AccountStatement, it shall be deemed to be correct.

Receiving Account Statement /Correspondence by E-mailThe Mutual Fund will encourage the investor to provide theiremail addresses for all correspondence. The Mutual Fund�sproposed website would facilitate request for AccountStatement by Unitholders. The Mutual Fund wouldendeavour to send Account statement and any othercorrespondence using e-mail as the mode for communicationas may be decided from time to time.

The Unit holder will be required to download and print theAccount Statement after receiving the e-mail from the Mutualfund. Should the Unitholder experience any difficulty inaccessing the electronically delivered Account Statement,the Unitholder shall promptly advice the Mutual Fund toenable the Mutual Fund to make the delivery throughalternate means. Failure to advice the Mutual Fund of suchdifficulty within 24 Hours after receiving the e-mail wouldserve as an affirmation regarding the acceptance by theUnitholder of the Account Statement.

It is Deemed that the Unitholder is aware of all security risksincluding possible third party interception of the accountStatements and content of the Account statements beingknown to third parties.

Under no circumstances, including negligence, shall theMutual Fund or anyone involved in creating, producing,delivering or managing the Accounts Statement of theUnitholders, be liable for any direct, indirect, incidental,special or consequential damages that may result from theuse of or inability to use the service or out of breach of anywarranty. The use and storage of any information including,without limitation, the password, account information,transaction activity, account balances and any other

information available on the Unitholder�s personal computeris at the and sole responsibility of the Unitholders.

C) Redemption of UnitsThe redemption request can be made for the minimum amountas stated in Section III-Summary of Scheme. A Unit Holder mayrequest redemption of a specified amount or a specified numberof Units. If the redemption request is made for a specified amountand the number of Units are also specified by the Unit Holder,the number of Units specified will be considered for deciding theredemption amount. If only the Unit Holder specifies theredemption amount, the Fund will divide the redemption amountso specified by the Redemption Price to arrive at the number ofUnits to be redeemed.

In case an investor has purchased Units on more than oneBusiness Day (either under the Initial Offer Period or throughsubsequent purchases) the Units purchased first (i.e. those Unitswhich have been held for the longest period of time), will bedeemed to have been redeemed first i.e. on a First-in-First-Outbasis.

Please note that persons mandated by SEBI to obtain UniqueIdentification Number should state the same while givingredemption. In case such detail is not mentioned, the requestwill not be processed.

The Trustees may mandatorily redeem Units of any Unitholder inthe event it is found that the Unitholder has submitted informationeither in the application or otherwise that is false, misleading orincomplete or if the minimum balance is not maintained.

If a Unitholder makes a redemption request immediately afterpurchase of Units, the Fund shall have a right to withhold theredemption request till sufficient time has elapsed to ensure thatthe amount remitted by him (for purchase of Units) is realizedand the proceeds have been credited to the concerned Scheme�sAccount. However, this is only applicable if the value of redemptionis such that some or all of the freshly purchased Units may haveto be redeemed to effect the full redemption.

Unit Holders may also request for redemption of their entireholding and close the account by indicating the same at anappropriate place in the Redemption Request Form.

As directed by SEBI all requests for redemption / switch out aretime stamped at the point of acceptance.

1) Redemption PriceThe Redemption Price of the Units will be calculated on thebasis of the Applicable NAV subject to prevailing CDSC andthe Exit Load as mentioned in Chapter VI (A).

With the applicable Exit Load / CDSC, Redemption Price willbe calculated as under:

Redemption Price = Applicable NAV x (1-CDSC) or

Redemption Price = Applicable NAV x (1-Exit Load)

For Example - if the applicable NAV is Rs 10.00 and the exitload is 2 percent then the redemption price will be Rs 9.80.

Please refer to Ch. VI (A) �Load Structure of the Scheme�.

Please see VII (A)(7) �Applicable NAV�

2) How to Redeem?The redemption requests can be made on the pre-printedforms or by using the form at the bottom of the AccountStatement. The redemption request can be presented at anyof the Investor Service Centres as listed in this OfferDocument or at the Collection Centres or can be sent to theRegistrar, Karvy Computershare Private Ltd., 46, Road No 4,Street No. 1, Banjara Hills, Hyderabad 500 034.

In case the Units are standing in the names of more thanone Unit Holder, where mode of holding is specified as�Jointly�, redemption requests will have to be signed by all

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joint holders. However, in cases of holding specified as�Anyone or Survivor�, any one of the Unit Holders will havethe power to make redemption requests, without it beingnecessary for all the Unit Holders to sign. However, in allcases, the proceeds of the redemption will be paid to thefirst-named holder only.

The Unit Holder may either request for mailing theredemption proceeds to his / her address or avail of the DirectDeposit Application Facility. For details pertaining toapplications by way of Direct Deposit Application Facilityplease see �VII D) 6) Direct Deposit Application Facility forPurchase and Redemption of Units.�

3) Payment of ProceedsAs per the Regulations, the Fund shall despatch theredemption proceeds within 10 Business Days from the dateof acceptance of redemption request. In the event ofdelay / failure to despatch the redemption/repurchaseproceeds within the aforesaid 10 Business Days, the AMCwill be liable to pay interest to the Unitholders @ 15% p.a.for the period of delay. However, under normalcircumstances, the Fund will endeavour to despatch theredemption proceeds within 3 Business Days from the dateof the Applicable NAV.

The redemption cheque will be issued in favour of the sole /first Unit Holder�s registered name and bank account number,if provided and will be sent to the Registered address of thesole / first holder as indicated in the original Application Form.The redemption cheque will be payable at par at all the placeswhere the Investor Service Centres or at the DesignatedCentres are located. The bank charges for collection ofcheques at all other places will be borne by the Unit Holder.For redemptions of amounts above Rs. 5,000 the chequeswill be sent by courier (where such facilities are available).With a view to safeguarding their interest, it is desirable thatthe Unit Holders indicate their Bank Account No., name ofthe Bank and Branch in the application for purchasing Unitsof the Scheme.

A fresh account statement will also be sent to the redeeminginvestors, indicating the new balance to the credit in theAccount, along with the redemption cheque.

Provided that the Fund may close an investor�s account ifthe balance falls below the minimum balance required to bemaintained as specified in Section III - Summary of theScheme(s) and a period of 30 days has elapsed after theissue of notice to the investor by the Fund requesting himto bring the amount in the account.

If a Unit Holder makes a redemption request immediatelyafter purchase of Units, the Fund shall have a right to withholdthe redemption request until such time as the Fund has toensure that the amount remitted by him (for purchase ofUnits) is realised and the proceeds have been credited tothe Scheme�s Account. However, this is only applicable ifthe value of redemption is such that some or all of the freshlypurchased Units may have to be redeemed to effect the fullredemption.

Redemption by NRIs / FIIsCredit balances in the account of an NRI /FIIs investor, maybe redeemed by such investors in accordance with theprocedure described above and subject to any procedureslaid down by the RBI, if any. Such redemption proceeds willbe paid by means of a Rupee cheque payable to the NRIs/ /FIIs or by a foreign currency draft drawn at the then currentrates of exchange less bank charges thereof subject to RBIprocedures and approvals.

In terms of the Schedule 5 of Notification No. FEMA 20/2000 dated May 3, 2000 issued under the Foreign ExchangeManagement Act, 1999 (FEMA) the RBI has granted generalpermission to NRIs/ and FIIs who have purchased units

issued by mutual funds in accordance with the aforesaidnotification to tender units to the mutual funds for repurchaseor for the payment of maturity proceeds.

For the purpose of this section, the term �mutual funds� isas referred to in Clause (23D) of Section 10 of Income-TaxAct 1961.

4) Effect of RedemptionsThe Unit capital and Reserves will stand reduced by anamount equivalent to the product of the number of Unitsredeemed and the Applicable NAV. Units once redeemedwill be extinguished and will not be re-issued.

5) Fractional UnitsSince a request for redemption or purchase is generally madein rupee amounts and not in terms of number of Units of theScheme(s), an investor may be left with fractional Units.Fractional Units will be computed and accounted for up tothree decimal places for all Scheme(s). However, fractionalUnits will in no way affect the investor�s ability to redeemthe Units, either in part or in full, standing to the Unitholder�scredit.

6) Right to Limit RedemptionsThe Trustee may, in the general interest of the Unitholdersof all or any of the Scheme(s) offered under this OfferDocument, and keeping in view the unforeseencircumstances / unusual market conditions, limit the totalnumber of Units which may be redeemed on any BusinessDay to 5% of the total number of Units then in issue, undereach Scheme and Plan(s) thereof, or such other percentageas the Trustees may determine. Any Units, which by virtueof these limitations are not redeemed on a particular BusinessDay, will be carried forward for redemption to the nextBusiness Day, in order of receipt. Redemptions so carriedforward will be priced on the basis of the Applicable NAV(subject to the prevailing load) of the Business Day on whichredemption is made. Under such circumstances, to theextent multiple redemption requests are received at thesame time on a single Business Day, redemptions will bemade on pro-rata basis, based on the size of each redemptionrequest, the balance amount being carried forward forredemption to the next Business Day(s). In addition, theTrustees reserve the right in their sole discretion, to limitredemptions with respect to any single account to an amountof Rs. 100 lakhs (Rupees One hundred lakhs only) in a singleday.

7) Suspension of Sale and Redemption of UnitsThe Mutual Fund at its sole discretion reserves the right towithdraw sale and / or repurchase and / or switch of theUnits in the Scheme(s) (including any one of the Plan of anyof the Scheme(s)) temporarily or indefinitely, if in the opinionof the AMC, the general market conditions are not favourableand/or suitable investment opportunities are not availablefor deployment of funds. However, the suspension of sale /repurchase / switch either temporarily or indefinitely will bewith the approval of the Trustees.

The sale / repurchase / switch of the Units may be suspendedunder the following conditions:

l When one or more stock exchanges or markets, whichprovide basis for valuation for a substantial portion ofthe assets of the Scheme(s) is closed otherwise thanfor ordinary holidays.

l When, as a result of political, economic or monetaryevents or any circumstances outside the control of theTrustees and the AMC, the disposal of the assets ofthe Scheme(s) is not reasonable, or would notreasonably be practicable without being detrimental tothe interests of the Unitholders.

Units & the Offer



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rl In the event of breakdown in the means of

communication used for the valuation of investmentsof the Scheme(s), without which the value of thesecurities of the Scheme(s) cannot be accuratelycalculated.

l During periods of extreme volatility of markets, whichin the opinion of the AMC are prejudicial to the interestsof the Unitholders of the Scheme(s).

l In case of natural calamities, strikes, riots and bandhs.

l In the event of any force majeure or disaster that affectsthe normal functioning of the AMC, ISC or the Registrar.

l If so directed by SEBI.

In the above eventualities, the time limits indicated above,for processing of requests for purchase and redemption ofUnits will not be applicable. Further, an order to purchaseUnits is not binding on and may be rejected by the Trustees,the AMC or their respective agents, until it has beenconfirmed in writing by the AMC or its agents and paymenthas been received.

Suspension or restriction of repurchase / redemption facilityunder any Scheme / Plan of the Mutual Fund shall be madeapplicable only after the approval from the Board of Directorsof the AMC and the Trustees. The approval from the AMCBoard and the Trustees giving details of circumstances andjustification for the proposed action shall also be informedto SEBI in advance.

8) Unclaimed Redemption and Dividend AmountAs per circular No MFD/CIR/9/120/2000, dated November24, 2000 issued by SEBI, the unclaimed redemption anddividend amounts shall be deployed by the Fund in call moneymarket or money market instruments only. The investmentmanagement fee charged by the AMC for managing suchunclaimed amounts shall not exceed 50 basis points. Thecircular also specifies that investors who claim these amountsduring a period of three years from the due date shall bepaid at the prevailing NAV. Thus, after a period of three years,this amount can be transferred to a pool account and theinvestors can claim the said amounts at the NAV prevailingat the end of the third year.

In terms of the circular, the onus is on the AMC to make acontinuous effort to remind investors through letters to taketheir unclaimed amounts.

D) Facilities offered to Investors underthe Scheme

1) SwitchingOn an ongoing basis, the Unitholders have the option toswitch all or part of their investment from one Scheme toany of the other Scheme(s) offered by the Fund, which isavailable for investment at that time, subject to prevailingload structure.

A switch by NRIs / FIIs Unitholders will be subject to thecompliance of procedures and / or final approval of theReserve Bank of India or and any other agency, as may berequired.

The AMC reserves the right to charge different (includingzero) loads on Applicable NAV on switchover as comparedto the sale / repurchase as the case may be.

A switch has the effect of a redemption from one Scheme /Option and a purchase in the other Scheme / Option to whichthe switching has been done and the terms and conditionspertaining to same are specified below.

To effect a switch, a Unit Holder must provide clearinstructions. Such instructions may be provided in writing orby completing the transaction slip / form attached to the

account statement or telephonically by providing PIN number.Requests for switching can be sent to the Fund through theInvestor Service Centres / Designated Centres / Office ofthe Registrar at Hyderabad. All switching requests receivedprior to the cut off timing for the scheme on any BusinessDay will be considered accepted on that Business Day,subject to the request being complete in all respects andprovided the Business Day is a Business Day for both, theScheme from which one is switching out and the Schemeinto which one is switching in. When a switching request isreceived after the cut off time, then the request will deemedto have been received on the next Business Day. An accountstatement reflecting the new holding will be despatched tothe Unit holder within 3 Business Days of the completion ofthe switch transaction.

The switch will be effected by redeeming Units from theScheme in which the Units are held and investing the netproceeds in the other Scheme(s) / Plans / Options, subjectto the minimum balance, minimum application amount andsubscription / redemption criteria applicable for the respectiveScheme(s).

Applicable NAV for the switches would be the Net AssetValue per Unit at the close of the Business Day for both, theScheme switched out of and the Scheme switched into,after considering any prevalent exit and entry loads or acombination thereof for switches.

i) Inter-Scheme SwitchingThe Unit Holders have the option to switch all or part oftheir investment in the Scheme, to any other scheme(s)established by the Fund, available for investment at thattime. The switch will be effected by way of redemptionof Units from a Scheme and re-investment of theredemption proceeds in the other scheme(s) selectedby the Unit Holder at the prevailing terms of the schemeto which the switch is taking place.

The price at which the Units will be switched out of theScheme will be based on the Redemption Price on theBusiness Day of acceptance of switching request andthe net proceeds will be invested in the other scheme(s)at the prevailing Purchase Price for units in thatscheme(s) Please see Ch. VII(C)(1) �Redemption Price�.However, the applicable Entry Load, in this Scheme, ifany, will be reduced by any Entry and / or Exit Load (butexcluding CDSC) already paid by the investor in thescheme he or she is switching out from.

The Mutual Fund reserves the right to charge aswitchover or exchange fee on interscheme transfers,which if charged will not exceed 0.05% of the net assetvalue of the amount being transferred. In the event thata Unitholder is liable to pay the redemption load andthe switchover or exchange fee due to a switch, theredemption load shall be applicable and the switchoveror exchange fee shall be waived.

Please note that switch out from Deutsche MIP Fundin to either Deutsche Short Maturity Fund, DeutscheInsta Cash Plus Fund, Deutsche Floating Rate Fund willbe subject to a lock-in period of 3 days in to those funds.

ii) Intra-Scheme SwitchingUnitholders have the option to switch all or part of theirinvestments from one Option of the scheme to the otherOption of the same scheme. The switch will be effectedby way of a redemption of Units of the relevant Optionand reinvestment of the redemption proceeds in theother Option selected by the Unitholder on the prevailingterms of that scheme. The price at which the Units willbe switched out will be at the Applicable NAV on theBusiness Day of acceptance of switching request andthe net proceeds will be invested in the other Option atthe Applicable NAV of that Option.

49


Units & the Offer2) Pledge of Units

The Units may be pledged in favour of approved scheduledcommercial banks and other institutions / companies by theUnitholder as security for raising loans. Units are pledged bycompleting a form that is available on request. The formmay be requested from the KARVY Investor Service Centersor from the head office of the Mutual Fund. The Mutual Fundwill record a pledge / charge / lien against Units pledged. Ifrequired, the Mutual Fund will also issue a Unit certificate tothe Unitholder for the Units pledged. The Unit certificate isnon-transferable as per section 4, Transfer / TransmissionFacility. The Unit certificate may be lodged by the Unitholderwith the scheduled bank / institution to which the Units arepledged as proof of a pledge / lien / charge being recordedby the Mutual Fund. Units that are pledged may not beredeemed by the pledgor until the entity to which they arepledged provides written authorisation to the Mutual Fundthat the pledge / charge / lien may be removed. As long asthe Units are pledged, the pledgee scheduled bank /institution will have complete authority to redeem such Units.The Asset Management Company reserves the right tochange the procedure for pledges from time to time.

3) ListingThe Scheme being open ended, the Units are not proposedto be listed on any stock exchange. However, the Fund mayat its sole discretion list the Units on one or more StockExchanges at a later date, and thereupon the Fund will makesuitable public announcement to that effect.

The Fund will offer and redeem the Units on a continuousbasis during the Continuous Offer Period.

4) Transfer / TransmissionAccount Statements and Unit certificates are nottransferable. In an open-end Scheme, on any Business Day,the Mutual Fund repurchases and issues Units on an ongoingbasis, as such a transfer facility is not required. If a transfereebecomes a holder of the Units by operation of law, or uponenforcement of a pledge, or due to the death, insolvency orwinding up of the affairs of a sole holder or the survivors ofa joint holder, then subject to the production of evidencewhich in the opinion of the Mutual Fund is sufficient, theMutual Fund will effect the transfer if the intended transfereeis otherwise eligible to hold the Units. Units shall betransmitted in favour of the surviving jointholder(s) upon theexecution of suitable indemnities in favour of the mutualfund and the Asset Management Company by the survivingjointholder(s). Transmission of units / payment of sumsstanding to the credit of the deceased unitholder in favourof the surviving unitholders shall discharge the mutual fundand the Asset Management Company of all liability towardsthe estate of the deceased unitholder and his / her successorsand legal heirs. Further, if either the mutual fund or the AssetManagement Company incur any loss whatsoever arisingout of any litigation or harm that it may suffer in relation tothe transmission, they will be entitled to be indemnifiedabsolutely from the deceased unitholder�s estate.

5) Nomination FacilityIndividual unit holders can at the time of Application or bysubsequently writing to a KARVY investor Service Centre,request a Nomination form in the format prescribed by SEBI.The mutual fund permits nomination for units in terms ofSEBI regulations, which are as follows. Only individualsholding units singly or jointly can nominate. Non- individualsincluding society, trust, body corporate, partnership firm, kartaof Hindu Undivided Family and holder of power of Attorneycannot nominate. Where the mode of holding is �Joint� or�Anyone / Survivor� all Unitholders must sign the nominationforms.

Only one person per folio can be nominated. A minor can benominated in which case, name and address of the

nominee�s guardian will also have to be provided and theform will have to be signed by the guardian. A trust, society,body corporate, partnership firm, karta of Hindu UndividedFamily and holder of power of Attorney cannot be a nominee.A NRI can be nominated subject to the fulfillment of theprevailing Exchange Control requirements and will begoverned by the rules formulated by the Reserve Bank ofIndia from time to time. Units will be transmitted in favor ofthe nominee only after the death of all existing holders.

Nomination shall stand rescinded upon redemption / transferof the units. A nomination may be cancelled only by thoseindividuals holding units singly, �Jointly� or as �Anyone /Survivor�, who had made the original nomination. Uponcancellation, a nomination shall stand rescinded and the AMCwill not transmit the units in favor of the nominee.Transmission of the units in the name of the nominee shalldischarge the AMC from any liability towards the heir(s) ofthe deceased unitholder(s). However, the AMC may requestthe nominee to execute suitable indemnities in favour ofthe mutual fund and the AMC, and to submit necessarydocumentation to the satisfaction of the Mutual Fund beforetransmitting units to his / her favour. Nominations receivedin the form prescribed by the Mutual Fund alone shall bevalid.

6) Direct Deposit Application Facility for Purchaseand Redemption of UnitsInvestors can avail of the Direct Deposit Application Facilityfor the purchase and redemption of Units of the Scheme asand when it is offered in addition to a �Regular Application�and is available only to those investors who comply with therequirements at the time of application. The direct depositis made through an account to account transfer. The abilityto make account to account transfers without the need forcheques or demand drafts reduces the time taken inobtaining use of funds thereby reducing the opportunity costattributable to lost interest on funds in transit. The DirectDeposit Application Facility is therefore an enhanced investorservice feature that the Fund is offering to investors whowish to avail of it. The Direct Deposit Application Facility willinitially be available only in Mumbai and later may be madeavailable in other cities. Investors are advised to contact anyof the Investor Service Centres or the AMC to know latestlist of banks through which Investors can avail of the DirectDeposit Application Facility.

The direct deposit process would work as follows - The Fundat its discretion will open purchase and redemption accountswith various bank(s) (Designated Accounts) from time totime. An investor who is interested in availing of the DirectDeposit Application Facility would have to open an accountin the same branch of the said bank unless the said bankhas the necessary online facility. If the investor has a pre-existing account at that branch bank then the pre-existingaccount may suffice pending approval of the concerned bank.The investor would then be able to instruct the bank to makedirect deposits into the Fund�s account when purchasingUnits of the Scheme. The Fund in turn will be able to makedirect deposits into the investor�s account with the bankwhen paying redemption proceeds. Please note that a DirectDeposit Subscription / Redemption application cannot beprocessed without the investor�s bank details.

Investors are required to fill the same Application Formirrespective of whether they are making a regular applicationor a direct deposit application.

7) Personal Identification Number (PIN)The PIN facility is proposed to be provided to only thoseUnit Holders who indicate their desire to avail of this facilityand who also indicate their Bank Account No., name of theBank and Branch in the application for purchasing Units. Asand when this facility if offered the Registrar will, within 30days of allotment of Units, mail to such Unit Holders, the



Units

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r�Disclaimer Form� together with detailed terms and conditionssubject to which its usage is permitted. On receipt of the�Disclaimer Form� duly signed, the PIN will be mailed to eachUnit Holder. Unit Holders may use the PIN to request apurchase, a redemption, a switch or an address change, bycalling the Investor Service Centre in Mumbai, Delhi, Bangalore,Calcutta and Chennai only. The Unit Holder will be asked forthe PIN before the request is accepted. In the interest of theUnit Holder, the Investor Service Centre officials reserve theright to ask for a fax confirmation of the request and any otheradditional information about the account of the Unit Holder.

This PIN should never be disclosed to any person or writtendown where any other person may discover it. Any suchdisclosures or inadequate protection of the confidentiality ofthe PIN is entirely at the Unit Holder�s risk. All transactionsconducted with use of this PIN will be responsibility of theUnit Holder and the Unit Holder will abide by the record of the

transactions generated. The Fund and the Registrar shallnot accept any responsibility for the unauthorised use ofthe PIN.

8) Multiple Folio Holdings under Single AddressNormally, newsletters and annual report of the funds aresent to each Unit holder, which results in certainhouseholds with one or more members as the Unit holdersof the Scheme getting multiple copies. It is the intent ofthe AMC to review and consolidate the database and sendeach such �household� a single newsletter and annualreport. The AMC feels that this will not inconvenience theUnit holders. In case it does, unitholder should write tothe AMC, for additional copies of newsletters or annualreport as required. The AMC will write to the unitholdersperiodically to consolidate the multiple folio�s foroperational efficiency.

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VIII. Unit Holders� Rights andServices

A) Unit Holders� Rightsl Unitholders of the Scheme(s) have a proportionate right in

the beneficial ownership of the assets of the respectiveScheme(s) and in case of Dividend Option, whereverapplicable, to the dividend declared, if any, by the Fund underthe Scheme(s).

l When the Fund declares a dividend under the Scheme(s),the Fund shall despatch the dividend warrants to theUnitholders within 30 days from the date of declaration ofdividend.

l The Fund shall despatch the redemption proceeds to theUnitholders within 10 Business Days from the date ofacceptance of the request for the same.

l The Trustees are bound to make such disclosures to theUnitholders as are essential in order to keep them informedabout any information known to Trustees which may havean adverse bearing on their investments.

l The appointment of the AMC for the Fund can be terminatedby a majority of the Trustees or by 75% of the Unitholdersof any one or more of the Schemes of the Fund and anychange in the appointment of the AMC shall be subject tothe prior approval of SEBI and the Unitholders of therespective Scheme(s).

l The Trustees are obliged to convene a meeting on arequisition of 75% of the Unitholders of a Scheme.

l 75% of the Unitholders of a Scheme can pass a resolutionto wind up the Scheme.

l Unitholders have the right to inspect all the documents listedunder �Documents Available for Inspection� on page 43 ofthis Offer Document.

l The Trustees shall obtain the consent of the Unitholders:

l Whenever required to do so by SEBI, in the interest ofthe Unitholders

l Whenever required to do so on a requisition made bythree-fourths of the Unitholders of the Scheme

l When the Trustees decide to wind-up or prematurelyredeem the Units.

l The Trustees shall ensure that no change in the fundamentalattributes of any Scheme or the Trust or fees and expensespayable or any other change which would modify the Schemeand affect the interests of Unitholders is carried out unless:

l A written communication about the proposed changeis sent to each Unitholder and

l An advertisement is given in one English dailynewspaper having nationwide circulation as well as ina newspaper published in the language of the regionwhere the Head Office of the Mutual Fund is situatedand

l Unitholders are given an option to exit at the prevailingNet Asset Value without any exit load.

Subject to the Regulations and the guidelines issued by SEBI,the consent of the Unitholders of the Scheme(s) will be obtainedthrough voting, by mail. Detailed modalities of the same, includingthe principles for entitlement of votes for each Unitholder will befinalized in consultation with and after obtaining the approval ofSEBI and the Trustees.

The annual report containing accounts of the AMC would bedisplayed on the website of the AMC. Unitholders, if they sodesire, may request for the annual report of the AMC.

B) Voting Rights of the Unit HoldersSubject to the provisions of the Regulations as amended fromtime to time, the consent of the Unit Holders shall be obtained, ifnecessary through postal ballot/mail or any other mode, inconsultation with SEBI. Each Unit Holder shall be entitled to onevote for each unit held by him in respect of each resolution to bepassed.

Procedure for Conducting a Unitholder VoteAll issues to be voted upon will be intimated to Unitholders bymail / courier. Unitholders of record as of the most recent monthend prior to the month in which a request for a vote is sent, willbe eligible to vote. Unitholders are entitled to one vote per Unitheld on all matters to be voted upon by Unitholders. Issues to beput to vote will be sent out to Unitholders of record along with anexplanation from the Trustee as to why the vote is beingrequested. A ballot paper will also be sent to Unitholders. In caseof joint holders or �anyone or survivor� the ballot paper shall besent to the first named holder. Unitholders will be requested torespond by mailing back their ballot paper by a specified cut-offdate. Duly completed and signed ballots received on or beforethe close of working hours on the cut-off date would beconsidered a valid ballot. Valid ballots will be counted and if morethan 50% of the valid ballots received vote for the proposal thenthe proposal will stand carried and will be made binding on allUnitholders in the Scheme. Unitholders who oppose the proposalwill be allowed to redeem their holdings in the Scheme in themanner specified by SEBI Regulations. As each ballot may containmore than one proposal, Unitholders who cast a negative voteon any one of the proposals will be allowed to redeem theirholdings in the Scheme as aforesaid. Unitholders will be informedof the results of the voting either by mail or through anadvertisement or by such other means as may be decided by theTrustee. All proposals that have been accepted by Unitholders,will come into effect on the next Business Day following thedate on which the valid ballots were counted or any other date asspecified in advance to Unitholders. In all matters to be votedupon the Unitholders will be requested to return their ballots tothe offices of the Scheme�s Transfer Agent and the Transfer Agentwill conduct the counting of the ballots in the presence of anindependent third party. Unitholders can inspect the votes cast,if so required by them, at the office of the Share Transfer Agentin Hyderabad. The votes will be preserved for a period of onemonth after the cut-off date. The scheme shall follow any othervoting policy specified by SEBI for seeking Unitholders� consent.

C) Account Statements and Unit CertificatesEach Unit Holder will be sent an Account Statement within 3Business Days from the date of Applicable NAV or from the dateof acceptance whichever is later in case of additional purchasesor redemptions are made. However, when additional Units areissued on account of the dividend which is to be reinvested underthe �Dividend Reinvest Option�, an Account Statement will bedespatched to all such Unit Holders within 7 Business Days ofdeclaration of dividend. In addition, the Unit Holders will also besent an Account Statement, within 30 days after March 31 fortransactions in his/her account from April 1 of the preceding year.The Account Statement will show all transactions done duringthe twelve-month period from April 1 of the preceding year andwill also indicate the closing balance of Units held and their NAVas on March 31.

The Account Statements shall be non-transferable. This AccountStatement shall not be constructed as a proof of title and is onlya computer printed statement indicating the details of transactionsunder the Scheme during the current financial year and givingthe closing balance of Units for the information of the Unit Holder.

Further, the Trustee also reserves the right to issue tradeConfirmation Slips on an ongoing basis in lieu of AccountStatements, indicating the price, and the Units debited or creditedto the Account of the Investor, along with the closing balance ofhis Account. Under this system a periodical statement of holdingsof the investors in the Scheme and all other schemes of DeutscheMutual Fund will be given.

Unit Holders' Rights



Non-transferable Unit Certificates will be sent, if an applicant sodesires, within six weeks of the receipt of a request of thecertificate. Unit Certificates will not be issued for any fractionalunits entitlement.

Units held, either in the form of Account Statement or UnitCertificates, are non-transferable. The Trustee reserves the rightto make the Units transferable at a later date subject to theRegulations issued from time to time.

All Units will rank pari passu, among Units within the same Optioneither Growth Option or Dividend Option, as to assets, earningsand the receipt of dividend distributions, if any, as may be declaredby the Trustee.

The Mutual Fund will encourage the investors to provide their e-mail addresses for all correspondence. The Mutual Fund�sproposed website would facilitate request for Account Statementby Unitholders. The Mutual Fund will endeavour to send AccountStatements and any other correspondence using e-mail as themode for communication.

The Unitholder will be required to download and print the AccountStatement after receiving the e-mail from the Mutual Fund. Shouldthe Unitholder experience any difficulty in accessing theelectronically delivered Account Statement, the Unitholder shallpromptly advise the Mutual Fund to enable the Mutual Fund tomake the delivery through alternate means. Failure to advise theMutual Fund of such difficulty within 24 hours after receiving thee-mail will serve as an affirmation regarding the acceptance bythe Unitholder of the Account Statement.

It is deemed that the Unitholder is aware of all security risksincluding possible third party interception of the AccountStatements and content of the Account Statements becomingknown to third parties.

Under no circumstances, including negligence, shall the MutualFund or anyone involved in creating, producing, delivering ormanaging the Account Statements of the Unitholders, be liablefor any direct, indirect, incidental, special or consequentialdamages that may result from the use of or inability to use theservice or out of the breach of any warranty. The use and storageof any information including, without limitation, the password,account information, transaction activity, account balances andany other information available on the Unitholder�s personalcomputer is at the risk and sole responsibility of the Unitholder.

D) NAV InformationThe NAV of the Scheme(s) will be calculated daily and announcedby the Fund on each Business Day. The Unit holders may obtainthe information on NAV on any day, by calling the office of theAMC or any of the Investor Service Centres or on the proposedweb site of the AMC. . The Fund will publish NAVs daily, in atleast two daily newspapers. Further, the AMC shall publish thepurchase and redemption prices of Units daily in a newspaperwith all India circulation.

The AMC shall update the NAVs on the web site of Associationof Mutual Funds in India - AMFI (www.amfiindia.com) by 8.00 p.m.everyday. In case of any delay, the reasons for such delay wouldbe explained to AMFI and SEBI by the next day. If the NAVs arenot available before commencement of business hours on thefollowing day due to any reason, the Fund shall issue a pressrelease providing reasons and explaining when the Fund wouldbe able to publish the NAVs.

E) Disclosure of Information underthe Regulations

The annual report of the Scheme will be prepared and the AnnualReport or an abridged summary of the Annual Report will bemailed to all Unit Holders not later than six months from the dateof the closure of the relevant financial year.

Whenever the report is mailed in a summary form, the full AnnualReport will be available for inspection at the Registered Office of

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the Trustee and a copy made available on request to the UnitHolders on payment of a nominal fee.

The Fund shall before the expiry of one month from the close ofeach half year, that is as on March 31 and September 30, publishits unaudited financial results in one national English dailynewspaper circulating in the whole of India and in a newspaperpublished in the language of the region where the Head office ofthe Fund is situated. These shall also be displayed on the websiteof the Mutual Fund and that of AMFI.

Full portfolio in the prescribed format shall also be disclosed eitherby publishing it in the newspapers or by sending to the unitholderswithin one month from the end of each half-year and it shall alsobe displayed on the website of the Fund.

F) Duration of the SchemeThe duration of the Scheme is perpetual. However, the Schememay be wound up in the following circumstances:

a) On happening of any event, which in the opinion of theTrustee, requires the Scheme to be wound up, OR

b) If 75% of the Unit Holders of the Scheme pass a resolutionthat the Scheme be wound up, OR

c) If SEBI so directs in the interests of Unit Holders.

Where the Scheme is so wound up, the Trustee shall give noticeof the circumstances leading to the winding up of the Schemeto :

a) SEBI and

b) in two daily newspapers having a circulation all over India, avernacular newspaper with circulation in Mumbai.

On and from the date of the publication of notice of winding up,the Trustee or the Investment Manager, as the case may be,shall

a) cease to carry on any business activities in respect of theScheme so wound up;

b) cease to create or cancel Units in the Scheme;

c) cease to issue or redeem Units in the Scheme.

G) Procedure and Manner of Winding UpThe Trustee shall call a meeting of the Unit Holders to approve bysimple majority of the Unit Holders present and voting at themeeting for authorising the Trustee or any other person to takesteps for winding up of the Scheme.

The Trustee or the person authorised as above, shall dispose ofthe assets of the Scheme concerned in the best interest of UnitHolders of the Scheme.

The proceeds of sale realised in pursuance of the above shall befirst utilised towards discharge of such liabilities as are due andpayable under the Scheme, and after meeting the expensesconnected with such winding up, the balance shall be paid to theUnit Holders in proportion to their respective interest in the assetsof the Scheme, as on the date when decision for winding up wastaken. The Unitholder may opt to switch-over to other eligibleSchemes then in operation at the prevailing terms of the Schemeto which the Unitholder is switching to.

On completion of the winding up, the Trustee shall forward toSEBI and Unit Holders a report on the winding up, detailing, thecircumstances leading to the winding up, the steps taken fordisposal of the assets of the Scheme before winding up, netassets available for distribution to the Unit Holders and a Certificatefrom the auditors of the Fund.

Notwithstanding anything contained herein above, the provisionsof the Regulations in respect of disclosures of half-yearly reportsand annual reports shall continue to be applicable until windingup is completed or the Scheme ceases to exist.

After the receipt of the report referred to above, under �Procedure

53


and Manner of Winding Up�, if SEBI is satisfied that all measuresfor winding up of the Scheme have been complied with, theScheme shall cease to exist.

H) Services to Unit Holders

Investor ServicesDeutsche Mutual Fund is committed to providing high qualityservice to its unitholders. This would encompass facilitatinginteractions with the unitholders with the Fund, timelydissemination of information about the fund, schemes and theportfolios, ability to access account related information in a speedymanner. The Fund will strive to upgrade the quality of servicethrough implementation of appropriate technology, throughensuring quality consciousness amongst its service personneland agencies associated with it. The Fund will provide high degreeof convenience for the unitholders� dealing with it. Following arethe salient features of Investor service facilities that the fund hasproposed to implement / proposed to implemented for theconvenience of the investors.

Facilitating Enquiries and Transactions

a) Investor Service by means of TechnologyIt will be the endeavor of the Fund to extensively usetechnological tools in rendering unitholder service. The Fundwill send the Account Statements on account of certainFinancial and / or non-financial transactions, besides periodicinformation etc. by way of e-mail, which is speedier andeconomical. Other financial transactions (subscription ofunits) can also be conveyed to the unitholders by way of e-mail, wherever requested, subject to such safeguards theFund may deem necessary. The fund has designed andoperationalised a website that is being updated daily for allrelevant information in the fund. The unitholder is proposedto be empowered (by assigning a pin) to view Account relatedinformation. All the unitholders will have access toNewsletters, portfolio, and Fund factsheets. ApplicationForms, Offer Documents and several other friendly featuresthat are available and are being developed on the website.

b) Investor Service Centres in select citiesUnitholders� enquiries and transactions during business hourswill be entertained at the Investor Service Centres / AMC�soffices listed at the end of this Offer Document.Unitholders / investors can also write/e-mail/contact themat the AMC�s Corporate office at Mumbai. In additionunitholders may also contact the AMC at its corporate officefor any additional service. The AMC will, in course of time,seek to add more designated centres at other major locationsto handle unitholder enquiries and transactions besidesproviding a high degree of convenience to the unitholders.

c) Investor Service through personal meetingsAn Investor Relations personnel of the AMC will be availableevery business day during normal official hours of the AMCfor personal meeting with any unitholder. The purpose ofthis facility is to attend to any query related to investmentneeds of a unitholder, resolve any unitholder service relatedqueries and to provide such other services that the unitholderdesires. Adequate sitting space has been provided for the

unitholders to meet with the Investor Relations Managerand discuss service related matters in the AMC office.

d) Investor Service through TelecommunicationsThe Fund intends to implement activation of rendering fundinformation through the telephone at select centres.Reasonable procedures need to be followed to assure thatinstructions from unitholders are genuine. The unitholderwould be liable for the loss resulting from a fraudulenttelephone instruction that the Fund reasonably believed asgenuine. The procedures include: Telephone identificationnumber; recording all telephone instructions, requestingpersonnel identification information (name, phone number,I.T. permanent account number; birth date etc.) and sendingwritten confirmation to the unitholders address of record.The Fund reserves the right to refuse telephone instructionsto certain unitholders.

e) Investor Relations ManagerMr. Murali Ramasubramanian is the current InvestorRelations Manager and can be contacted at the office of theAMC, the present address being as follows:

Deutsche Asset Management (India) Private LimitedDB House, Hazarimal Somani Marg,Fort, Mumbai 400 001

f) Investor Service StandardsThe Fund shall endeavor to adhere to the following timeschedules from date of receipt on an ongoing basis providedthe unitholder furnishes the Mutual Fund with all the requiredcorrect and complete supporting legal / other documents.

Service Standard Maximum

Redemption Within 3 Within 10Cheque Mailing Business days Business days

Updated Account Within 5 Within 30Statement Business days Business days

Purchase Within 3 Within 30intimations Business days Business days

Address Change Within 10 Within 10Business days Business days

Ownership Within 30 Within 30Transmission Business days Business days

The above mentioned time Schedule does not include postaltransit time.

g) Investment Grievances Redressal MechanismThe Fund will follow-up with Investor Service Centres andthe Registrar on complaints and inquiries received frominvestors with an endeavor to resolve them promptly. Thefund will also keep a track of complaints received andresolved periodically.

The above is not an exhaustive details of services that theFund endeavors to provide. As stated earlier the Fund shallconstantly strive to add more services & upgrade them forthe convenience of the unitholders.

Unit Holders' Rights



Details of Queries and Complaints received and resolved during January 2003 to December 2004.

Description No. of Resolved PendingQueriesReceived

T T+1 T+2 >T+2

Change of Address 634 0 539 95 0 0

Change of Bank Details 628 0 549 79 0 0

SEBI Referal 0 0 0 0 0 0

Client Referal 0 0 0 0 0 0

Stock Exchange Referal 0 0 0 0 0 0

Agent Queries 0 0 0 0 0 0

Non Receipt of Dividend 24 3 0 3 18 0

Revalidation of Dividend 10 0 0 0 10 0

Non Receipt of A/c statement 22 3 14 4 1 0

Non Receipt of Redemption warrant 12 2 0 7 3 0

Revalidation of Redemption Warrant 0 0 0 0 0 0

Non encashment of Redemption warrant 0 0 0 0 0 0

Miscellaneous 1903 0 1550 306 47 0

Total 3233 8 2652 494 79 0

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Note: Miscellaneous includes:

1. Request for Nominations

2. Request for procedures of Redemption/switch etc

3. Addition and deletion of Joint holders/Nominees

4. Change of Name due to marriage/divorce etc / Transmission

5. Change of Option

6. Pledge / Lien

7. Consolidation of accounts

8. E-mail, Date of Birth, PAN, Circle, Bank Details and ContactPerson - Mailer

Compliance OfficerMr. P.R. Shenoy, is the Compliance Officer of the AMC. He canbe contacted at the Corporate office of the AMC, presently at:

Deutsche Asset Management (India) Pvt. Limited,DB House, Hazarimal Somani Marg, Fort, Mumbai - 400 001.(Phone: +91 22 5658 4600, Fax: +91 22 2207 4411)

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Taxation

IX. Taxation

THE INFORMATION SET FORTH BELOW IS BASED ON THEMUTUAL FUND�S UNDERSTANDING OF THE TAX LAWSPREVAILING AS OF DATE OF THIS OFFER DOCUMENT.CONSIDERING THE INDIVIDUAL NATURE OF TAXCONSEQUENCES, EACH INVESTOR IS ADVISED TO CONSULTHIS OR HER OWN TAX ADVISOR WITH RESPECT TO THESPECIFIC TAX CONSEQUENCES TO HIM OR HER.

A. To Unitholders

1. Income from Mutual Fund received by Unitholders wouldbe tax free in the hands of the Unitholders as per theprovisions of section 10(35) of the Income-tax Act, 1961 (theAct).

2. Under Section 2(29A) of the Act, read with section 2(42A) ofthe Act, a unit of a Mutual Fund is treated as a long termcapital asset if the same is held for more than 12 months.

Under Section 112 of the Act, capital gains arising on thetransfer of long term capital assets are subject to tax at therate of 20%. The capital gains will be computed by deductingexpenditure incurred in connection with such transfer andindexed cost of acquisition of the unit from the saleconsideration. However, the maximum tax payable on longterm capital gains on units is restricted to 10% of capitalgains calculated without indexation of the cost of acquisition.

In case of an individual or HUF, being a resident, where thetotal income as reduced by the long term capital gains isbelow the maximum amount not chargeable to tax(Rs. 50,000), the long term capital gains shall be reduced tothe extent of the shortfall and only the balance long termcapital gains will be subject to the flat rate of taxation.

In addition to the aforesaid tax, in the case of an individual,HUF or Association of Persons (AOP), where the incomeexceeds Rs. 850,000, a surcharge of 10%, in the case ofcompanies a surcharge of 2.5% and in case of an artificialjuridical person a surcharge of 10% of such tax liability isalso payable. A 2% education cess on total income taxpayable (including surcharge) is payable by all categories oftaxpayers with effect from April 1, 2004.

However, as per section 10(38) of the Act, long term capitalgain arising from the sale of a unit of an equity oriented fund(an equity oriented fund is a fund where the investible fundsare invested in equity shares of domestic companies to theextent of more than 50% of the total proceeds of such fund)is exempt from tax. However, at the time of sell of units(redemption) the unitholder will have to pay a STT of 0.15%on the value of the sale.

3. The capital loss resulting from sale of units would be availablefor setting off against other capital gains made by the investor

and would reduce the tax liability of the investor to thatextent. However, losses on transfer of long term capitalassets would be allowed to be set-off only against gainsfrom transfer of long-term capital assets and the balancelong-term capital loss shall be carried forward separately fora period of eight assessment years to be set off only againstlong-term capital gains. However, as the long term capitalgains on sale of units are exempt from tax the losses fromsuch units may not be allowed to be set off against othergains.

4. Where a person buys any units within a period of threemonths before the record date and sells such units withinnine months after such date, the dividend income on suchunits being exempt from tax, then the capital loss, if any, onsuch sale to the extent of dividend income cannot be set offagainst other gains.

5. Where a person buys units (original units) within a period ofthree months before the record date, receives bonus unitson such original units, and then sells the original units withina period of nine months from the record date and continuesto hold the bonus units, then the loss incurred on the originalunits shall not be allowed to be set off against other profitsbut shall be deemed to be the cost of the bonus units.

6. The long term capital gains on transfer of units would beexempt from tax under Section 54EC and Section 54EDsubject to conditions prescribed in these sections. Thesesections require investments in specified bonds or specifiedcapital issue. Where exemption under Section 54EC orSection 54ED of the Act is availed by investing in such bonds,then rebate of income tax under Section 88 of the Act withreference to the cost of such investment in the bonds willnot be allowed.

7. Short term capital gains arising to a unitholder will be taxedat the normal rate applicable to that unitholder as per theprovisions of the Act.

In the case of equity oriented mutual funds, as per section111A of the Act, short term capital gains arising from thesale of a unit, are taxable at the rate of 10%. The seller ofthe units will also have to pay a STT of 0.15% on the valueof the sale.

The provisions related to minimum amount not chargeableto tax, surcharge and education cess described at clause 2above would also apply to such short term capital gains.

8. Where the units are treated as �stock in trade� and the profitsarising from the sale of units are taxed under the head�Profits & Gains of business or profession�, an amount equalto the STT paid by the unitholder can be claimed as a rebatefrom the tax payable on the income from such sale of unitsby virtue of the provisions of section 88E of the Act. Nodeduction would be allowed for STT while calculating capitalgains.



9. No deduction of tax at source shall be made from incomecredited or paid by a mutual fund to a Unitholder.

10. Under Section 195 of the Act, in case of schemes otherthan equity oriented scheme, the Mutual Fund required todeduct tax at source at the rate of 20% on any long termcapital gains chargeable to tax if the payee Unitholder is anon resident. In respect to short-term capital gains, tax isrequired to be deducted at source at the rate of 30% if thepayee Unitholder is a non-resident non-corporate and at therate of 40% if the payee Unitholder is a foreign company.Further, the surcharge and education cess as described atclause 2 above would apply.

In case the Unitholder is entitled to the benefit of a lowerrate available under a Double Taxation Avoidance Agreement,the Unitholder will be required to provide the Mutual Fundwith a certificate obtained from his Assessing Officer statinghis eligibility for the lower rate.

11. Mutual Fund units are exempt from wealth tax.

The above is not exhaustive. Investors are requested to refer tothe Finance Bill 2004 / consult tax advisors for further details.

Pursuant to the amendment to the tax on distribution of dividends,

as proposed by the Finance Bill 2004-2005, on declaration ofdividend the NAV of the respective dividend option will furtherstand reduced by the applicable dividend distribution tax/surcharge/cess/any other statutory levy. Notwithstanding varyingrates of statutory levies, the ex-dividend NAV will remain the samefor all categories of investors in a particular option, though theamount of dividend received by the Unit Holders may varydepending on the category of each Unit Holder. The proportionateright to receipt of dividend declared will be subject to (i)categorisation of investors for applicability of statutory levies and(ii) distribution tax/surcharge/cess/any other levy payable by thescheme in respect of separate category of investors.

B. To the Mutual Fund

1. Deutsche Mutual Fund is a Mutual Fund registered with SEBIand as such is eligible for benefits under Section 10(23D) ofthe Act. Accordingly, its entire income is exempt from tax.

2. Mutual Funds are required to pay distribution tax on incomedistributed by it at the rate of 13.06875% in the case ofdistributions to individuals and HUFs. An increased rate of20.91% is applicable for distributions made to persons otherthan an individual or a HUF. However, no distribution tax ispayable by an open ended equity oriented fund.

Taxa

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X. Net Asset Value andValuation of Assets

A. Computation of Net Asset ValueThe NAV of the Units of the Scheme(s) will be computed bydividing the net assets of the Scheme(s) by the number of Unitsoutstanding on the valuation date. The Fund shall value itsinvestments according to the valuation norms, as specified inthe Eighth Schedule of the Regulations, or such norms as maybe prescribed by SEBI from time to time. The broad valuationnorms are detailed below:

Traded Securitiesl Traded equity securities shall be valued at the last quoted

closing price on the Stock Exchange.

l When the securities are traded on more than one recognizedstock exchange, the securities shall be valued at the officialclosing price on the stock exchange where the security isprincipally traded. It would be left to the AMC to select theappropriate stock exchange, and the AMC shall record thereasons for the selection in writing. There should, however,be no objection for all scrips being valued at the prices quotedon the stock exchange where a majority of the investmentsare principally traded.

l When on a particular valuation day, a security has not beentraded on the principal stock exchange; the value at which itis traded on another stock exchange will be used.

l When a security (other than debt securities) is not traded onany stock exchange on a particular valuation day, the valueat which it was traded on the selected stock exchange, asthe case may be, on the earliest previous day may be usedprovided such date is not more than 30 days prior to valuationdate.

l When a debt security (other than Government Securities) isnot traded on any stock exchange on a particular valuationday, the value at which it was traded on the principal stockexchange or any other stock exchange, as the case may be,on the earliest previous day may be used, provided suchdate is not more than 15 days prior to the valuation date.

l When a debt security (other than Government Securities) ispurchased by way of private placement, the value at whichit was bought may be used for a period of 15 days beginningfrom the date of purchase.

Thinly Traded Securities

Thinly Traded Equity/Equity Related SecuritiesThinly traded securities as defined in the Regulations shall bevalued in the manner as specified in the guidelines issued bySEBI, as follows:

When trading in an equity / equity related security (such asconvertible debentures, equity warrants, etc.) in a month is bothless than Rs. 5 lacs (Rupees Five Lakhs Only) and the total volumeis less than 50,000 (Fifty Thousand Only) shares, it shall beconsidered as a thinly traded security and valued accordingly.

For example, if the volume of trade is 1,00,000 and value is Rs.4,00,000, the share does not qualify as thinly traded. Also if thevolume traded is 40,000, but the value of trades is Rs. 6,00,000,the share does not qualify as thinly traded. In order to determinewhether a security is thinly traded or not, the volumes traded inall recognised stock exchanges in India may be taken into account.

Where a stock exchange identifies the �thinly traded� securitiesby applying the above parameters for the preceding calendarmonth and publishes / provides the required information alongwith the daily quotations, the same can be used by the MutualFund.

If the share is not listed on the stock exchanges which providesuch information, then it will be obligatory on the part of the mutualfund to make its own analysis in line with the above criteria tocheck whether such securities are thinly traded which would thenbe valued accordingly.

In case trading in an equity security is suspended upto 30 days,then the last traded price would be considered for valuation ofthat security. If an equity security is suspended for more than 30days, then the Asset Management Company/Trustees will decidethe valuation norms to be followed and such norms would bedocumented and recorded.

Thinly Traded Debt SecuritiesThinly traded securities as defined in the Regulations shall bevalued in the manner as specified in the guidelines issued bySEBI, as follows:

A debt security (other than Government Securities) shall beconsidered as a thinly traded security if on the valuation date,there are no individual trades in that security in marketable lots(currently Rs 5 crore) on the principal stock exchange or any otherstock exchange.

A thinly traded debt security as defined above would be valuedas per the norms set for non-traded debt security.

Non-Traded Securitiesl When a security (other than Government Securities) is not

traded on any stock exchange for a period of 15 days prior tothe valuation date, the scrip must be treated as a �non traded�security.

Valuation of Non-Traded / Thinly Traded SecuritiesNon-traded/ thinly traded securities shall be valued �in good faith�by the Asset Management Company on the basis of the valuationprinciples laid down below:

Non-traded / thinly traded equity securitiesl Based on the latest available Balance Sheet, net worth shall

be calculated as follows:

Net Worth per share = [share capital reserves (excludingrevaluation reserves) � miscellaneous expenditure and debitbalance in P&L A/c] divided by number of paid up shares.

l Average capitalisation rate (P/E ratio) for the industry basedupon either BSE or NSE data (which should be followedconsistently and changes, if any noted with properjustification thereof) shall be taken and discounted by 75%i.e. only 25% of the industry average P/E shall be taken ascapitalisation rate (P/E ratio). Earnings per share of the latestaudited annual accounts will be considered for this purpose.

l The value as per the net worth value per share and the capitalearning value calculated as above shall be averaged andfurther discounted by 10% for ill-liquidity so as to arrive atthe fair value per share.

l In case the EPS is negative, EPS value for that year shall betaken as zero for arriving at capitalised earning.

l In case where the latest balance sheet of the company isnot available within 9 months from the close of the year,unless the accounting year is changed, the shares of suchcompanies shall be valued at zero.

l In case an individual security accounts for more than 5% ofthe total assets of the scheme, an independent valuer shallbe appointed for the valuation of the said security.

To determine if a security accounts for more than 5% of thetotal assets of the scheme, it should be valued by theprocedure above and the proportion which it bears to thetotal net assets of the scheme to which it belongs would becompared on the date of valuation.

Net Asset Value



Non-Traded /Thinly Traded Debt Securities of upto 182Days to MaturityAs the money market securities are valued on the basis ofamortization, (cost plus accrued interest till the beginning of theday plus the difference between the redemption value and thecost spread uniformly over the remaining maturity period of theinstruments) a similar process should be adopted for non-tradeddebt securities with residual maturity of upto 182 days, in theabsence of any other standard benchmarks in the market. Debtsecurities purchased with residual maturity of upto 182 days areto be valued at cost (including accrued interest till the beginningof the day) plus the difference between the redemption value(inclusive of interest) and cost spread uniformly over the remainingmaturity period of the instrument. In case of a debt security withmaturity greater than 182 days at the time of purchase, the lastvaluation price plus accrued interest should be used instead ofpurchase cost. All other non-traded Non Government debtinstruments shall be valued using the method suggested below.

Non-Traded/ Thinly Traded Debt Securities of Over 182Days to MaturityFor the purpose of valuation, all non traded debt securities wouldbe classified into �Investment grade� and �Non Investmentgrade� securities based on their credit ratings. The non-investmentgrade securities would further be classified as �Performing� and�Non Performing� assets.

l All non-government investment grade debt securities,classified as not traded, shall be valued on yield to maturitybasis as described below.

l All non-government non-investment grade performing debtsecurities would be valued at a discount of 25% to the facevalue.

l All non-government non-investment grade non-performingdebt securities would be valued based on the provisioningnorms.

The approach in valuation of non traded debt securities is basedon the concept of using spreads over the benchmark rate to arriveat the yields for pricing the non traded security.

The yields for pricing the non traded debt security would be arrivedat using the process as defined below.

l Step A: A risk free benchmark yield is built using thegovernment securities (GOI Sec) as the base. GOI Securitiesare used as the benchmarks as they are traded regularly,free of credit risk and traded across different maturityspectrums every week.

l Step B: A matrix of spreads (based on the credit risk) arebuilt for marking up the benchmark yields. The matrix is builtbased on traded corporate paper on the wholesale debtsegment of an appropriate stock exchange and the primarymarket issuances. The matrix is restricted only to investmentgrade corporate paper.

l Step C: The yields as calculated above are marked-up/marked-down for ill-liquidity risk.

l Step D: The yields so arrived are used to price the portfolio.

Methodology

Construction of Risk Free BenchmarkUsing Government of India dated securities, the benchmark shallbe constructed as below:

l Government of India dated securities will be grouped intothe following duration buckets viz., 0.5-1 years, 1-2 years, 2-3 years, 3-4 years, 4-5 years, 5-6 years and 6 years and thevolume weighted yield would be computed for each bucket.These duration buckets may be changed to reflect the marketvalue more closely by any agency suggested by AMFI givingbenchmark yield / matrix of spreads over benchmark yield.Accordingly, there will be a benchmark YTM for each durationbucket.

l The benchmark as calculated above will be set at leastweekly, and in the event of any significant movement ofprices of Government securities on account of any eventimpacting interest rates on any day such as change in theRBI policies, the benchmark will be reset to reflect anychange in the market conditions.

Note: The concept of duration over tenor has been chosen inorder to capture the reinvestment risk. It is intended to graduallymove towards a methodology that incorporates the continuouscurve approach for valuation of such securities. However, in viewof the current lack of liquidity in the corporate bond markets, acontinuous curve approach to valuation would be necessarilybased on limited data points, and this would result in out of linevaluations. As an interim methodology therefore it is proposedthat the Duration Bucket approach be adopted and continuouslytracked in order to fine-tune the duration buckets on a periodicbasis. Over the next few years it is expected that with thedeepening of the secondary market trading, it would be possibleto make a gradual move from the Duration Bucket approachtowards a continuous curve approach.

Building a Matrix of Spreads for Marking-up theBenchmark YieldMark up for credit risk over the risk free benchmark YTM ascalculated in step A, will be determined using the trades ofcorporate debentures/bonds of different ratings. All trades onappropriate stock exchange during the fortnight prior to thebenchmark date will be used in building the corporate YTM andspread matrices. Initially these matrices will be built only forcorporate securities of investment grade. The matrices aredynamic and the spreads will be computed every week. The matrixwill be built for all duration buckets for which the benchmark GOImatrix is built to effectively link the corporate matrix with theGOI securities matrix. Accordingly:

l All traded paper (with minimum traded value of Rs. 1 crore)(Rupees One Crore Only) will be classified by their ratingsand grouped into 7 duration buckets; for rated securities,the most conservative publicly available rating will be used;

l For each rating category, average volume weighted yield willbe obtained both from trades on the appropriate stockexchange and from the primary market issuance�s

l Where there are no secondary trades on the appropriatestock exchange in a particular rating category and no primarymarket issuance during the fortnight under consideration,then trades on appropriate stock exchange during the 30days period prior to the benchmark date will be consideredfor computing the average YTM for such rating category;

l If the matrix cannot be populated using any or all of the abovesteps, then credit spreads from trades on appropriate stockexchange of the relevant rating category over the AAA tradeswill be used to populate the matrix;

l In each rating category, all outliers will be removed forsmoothening the YTM matrix;

l Spreads will be obtained by deducting the YTM in eachduration category from the respective YTM of the GOIsecurities;

l In the event of lack of trades in the secondary market andthe primary market the gaps in the matrix would be filled byextrapolation. If the spreads cannot be extrapolated for thereason of practicality, carrying the spreads from the lastmatrix will fill the gaps in the matrix.

Mark-up/Mark-down YieldThe Yields calculated would be marked-up/marked-down toaccount for the ill-liquidity risk, promoter background, financecompany risk and the issuer class risk. As the level of ill-liquidityrisk would be higher for non rated securities the marking processfor rated and non rated securities would be differentiated asfollows:

Net A

sset

Value

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Adjustments for Securities rated by External RatingAgenciesThe Yields so derived out of the above methodology could beadjusted to account for risk mentioned above by an appropriatediscount or premium as may be required. The range of themarkups for both discount as well as premium is given below:

PremiumA Discretionary premium of up to -50 Basis Points for securitieshaving a duration of up to 2 years and up to 25 Basis Points forsecurities having duration higher than 2 years will be permittedto be provided for the above mentioned types of risks. Therationale for the above discount structure is to take cognizanceof the differential interest rate risk of the securities. This structurewill be reviewed periodically.

DiscountSEBI vide circular dated 20 February, 2002, has revised thediscretionary discount limits as below:

Category Discretionary discount overbenchmark yield in basis points

Rated Instruments with Discretionary Discount ofduration up to 2 years up to +100

Rated Instruments with Discretionary Discount ofduration over 2 years up to +75

Adjustments for Internally Rated SecuritiesTo value an unrated security, the fund manager has to assign aninternal credit rating, which will be used for valuation. Sinceunrated instruments tend to be more illiquid than rated securities,the yields would be mandatorily marked up by adding +50 basispoint for securities having a duration of up to two years and +25basis point for securities having duration of higher than two yearsto account for the illiquidity risk.

The yields derived from the above methodology could be adjustedto account for risk mentioned above. SEBI vide circular dated 20February, 2002, has revised the discretionary discount limits asbelow :

Category Discretionary discount overbenchmark yield in basis points

Unrated Instruments with Discretionary Discount ofduration up to 2 years up to +50 over and above the

mandatory Discount of +50

Unrated Instruments with Discretionary Discount ofduration over 2 years up to +50 over and above the

mandatory Discount of +25

The benchmark yield/matrix of spreads over benchmark yieldobtained from any agency suggested by AMFI as a provider ofbenchmark yield/matrix of spreads over benchmark yield to mutualfunds, must be applied for valuation of securities on the day onwhich the bench mark yield/matrix of spreads over benchmarkyield is released by the aforesaid agency.

Valuation of securities with Put/Call optionsThe option embedded securities would be valued as follows:

Securities with Call optionThe securities with call option shall be valued at the lower of thevalue as obtained by valuing the security to final maturity andvaluing the security to call option.

In case there are multiple call options, the lowest value obtainedby valuing to the various call dates and valuing to the maturitydate is to be taken as the value of the instrument.

Securities with Put optionThe securities with put option shall be valued at the higher of the

value as obtained by valuing the security to final maturity andvaluing the security to put option.

In case there are multiple put options, the highest value obtainedby valuing to the various put dates and valuing to the maturitydate is to be taken as the value of the instruments.

Securities with both Put and Call optionon the same dayThe securities with both Put and Call option on the same daywould be deemed to mature on the Put/Call day and would bevalued accordingly.

Government securitiesGovernment securities will be valued as per the prices forGovernment Securities released by an agency suggested by AMFIfor the sake of uniformity in calculation of NAVs.

Illiquid Securitiesl Aggregate value of �illiquid securities� of scheme, which

are defined as non-traded, thinly traded and unlisted equityshares, shall not exceed 15% of the total assets of thescheme and any illiquid securities held above 15% of thetotal assets shall be assigned zero value or such value asmay be specified by SEBI from time to time.

l All funds shall disclose as on March 31 and September 30the scheme-wise total illiquid securities in value andpercentage of the net assets while making disclosures ofhalf yearly portfolios to the Unitholders. In the list ofinvestments, an asterisk mark shall also be given against allsuch investments, which are recognised as illiquid securities.

l The Mutual Fund is not allowed to transfer illiquid securitiesamong its Scheme(s).

Fixed Income and Money Market Securitiesl Debt instruments shall generally be valued on a yield to

maturity basis on the basis of the capitalization factor forcomparable traded securities and with an appropriatediscount for a lower liquidity.

l While investments in call money, bills purchased underrediscounting scheme and short term deposits with banksshall be valued at cost plus accrual; other money marketinstruments shall be valued at the yield at which they arecurrently traded. For this purpose, instruments not tradedfor a period of 7 days will be valued at cost plus interestaccrued till the beginning of the day plus the differencebetween the redemption value and the cost spread uniformlyover the remaining maturity period of the instruments.

Value of �Rights� entitlementl Until they are traded, the value of the �rights� entitlement

would be calculated as:

Vr = n/m x (Pex � Pof) where

Vr = Value of rights

N = no. of rights Offered

M = no. of original shares held

Pex = Ex-Rights price

Pof = Rights Offer price

l Where the rights are not traded pari-passu with the existingshares, suitable adjustments would be made to the value ofrights. Where it is decided not to subscribe for the rights butto renounce them and renunciations are being traded, therights would be valued at the renunciation value.

Valuation of �Repo�Where instruments have been bought on �repo� basis, theinstrument must be valued at the resale price after deduction of

Net Asset Value



Net A

sset

Value

applicable interest up to date of resale. Where an instrument hasbeen sold on a �repo� basis, adjustment must be made for thedifference between the repurchase price (after deduction ofapplicable interest up to date of repurchase) and the value of theinstrument. If the repurchase price exceeds the value, thedepreciation must be provided for and if the repurchase price islower than the value, credit must be taken for the appreciation.

Valuation of unlisted equity sharesUnlisted equity shares of a company shall be valued �in goodfaith� on the basis of the valuation principles laid down below:

l Based on the latest available audited balance sheet, net worthshall be calculated as lower of the following:

l Net worth per share = [share capital plus free reserves(excluding revaluation reserves) minus Miscellaneousexpenditure not written off or deferred revenue expenditure,intangible assets and accumulated losses] divided by Numberof Paid up Shares.

l After taking into account the outstanding warrants andoptions, Net worth per share shall again be calculated andshall be = [share capital plus consideration on exercise ofOption/Warrants received/receivable by the Company plusfree reserves(excluding revaluation reserves) minusMiscellaneous expenditure not written off or deferredrevenue expenditure, intangible assets and accumulatedlosses] divided by {Number of Paid up Shares plus Numberof Shares that would be obtained on conversion/exercise ofOutstanding Warrants and Options}

The lower of the above shall be used for calculation of net worthper share and for further calculation to arrive at the fair value pershare as stated below.

l Average capitalisation rate (P/E ratio) for the industry basedupon either BSE or NSE data (which shall be followedconsistently and changes, if any, noted with properjustification thereof) shall be taken and discounted by 75%i.e. only 25% of the Industry average P/E shall be taken ascapitalisation rate (P/E ratio). Earnings per share of the latestaudited annual accounts will be considered for this purpose.

l The value as per the net worth value per share and the capitalearning value calculated as above shall be averaged andfurther discounted by 15% for illiquidity so as to arrive at thefair value per share.

The above methodology for valuation shall be subject to thefollowing conditions:

l All calculations as aforesaid shall be based on auditedaccounts.

l In case where the latest balance sheet of the company isnot available within 9 months from the close of the year,unless the accounting year is changed, the shares of suchcompanies shall be valued at zero.

l If the net worth of the company is negative, the share wouldbe marked down to zero.

l In case the EPS is negative, EPS value for that year shall betaken as zero for arriving at capitalised earning.

l In case an individual security accounts for more than 5% ofthe total assets of the scheme, an independent valuer shallbe appointed for the valuation of the said security. Todetermine if a security accounts for more than 5% of thetotal assets of the scheme, it should be valued in accordancewith the procedure as mentioned above on the date ofvaluation.

At the discretion of the AMC and with the approval of the trustees,an unlisted equity share may be valued at a price lower than thevalue derived using the aforesaid methodology.

Valuation of convertible debentures and bondsIn respect of convertible debentures and bonds, the non-convertible and convertible components shall be valuedseparately. The non-convertible component shall be valued onthe same basis as would be applicable to a debt instrument. Theconvertible component shall be valued on the same basis as wouldbe applicable to an equity instrument. If, after conversion theresultant equity instrument would be traded pari passu with anexisting instrument which is traded, the value of the latterinstrument can be adopted after an appropriate discount for thenon-tradability of the instrument during the period preceding theconversion. While valuing such instruments, the fact whetherthe conversion is optional will also be factored in.

Valuation of warrantsIn respect of warrants to subscribe for shares attached toinstruments, the warrants shall be valued at the value of the sharewhich would be obtained on exercise of the warrant as reducedby the amount which would be payable on exercise of the warrant.A discount similar to the discount to be determined in respect ofconvertible debentures (as referred in valuation of convertibledebentures and bonds above) shall be deducted to account forthe period which must elapse before the warrant can be exercised;

Valuation of Derivative Productsl The traded derivatives shall be valued at market price in

conformity with the stipulations of sub clauses (i) to (v) ofclause 1 of the Eighth Schedule to the Regulations.

l The valuation of untraded derivatives shall be done inaccordance with the valuation method for untradedinvestments prescribed in sub clauses (i) and (ii) of clause 2of the Eighth Schedule to the Regulations.

Expenses and Incomes AccruedAll expenses and incomes accrued up to the valuation date shallbe considered for computation of NAV. For this purpose, majorexpenses like management fees and other periodic expenseswould be accrued on a day to day basis. The minor expenses andincome will be accrued on a periodic basis, provided the non-daily accrual does not affect the NAV calculations by more than1%.

Changes in securities and in number of UnitsAny changes in securities and in the number of Units will berecorded in the books not later than the first valuation datefollowing the date of transaction. If this is not possible, given thefrequency of NAV disclosure, the recording may be delayed up toa period of 7 days following the date of the transaction, providedas a result of such non recording, the NAV calculation shall not beaffected by more than 1%.

In case the Net Asset Value of a scheme differs by more than1%, due to non - recording of the transactions, the investors orscheme/s as the case may be, shall be paid the difference inamount as follows: -

(i) If the investors are allotted units at a price higher than NetAsset Value or are given a price lower than Net Asset Valueat the time of sale of their units, they shall be paid thedifference in amount by the scheme.

(ii) If the investors are charged lower Net Asset Value at thetime of purchase of their units or are given higher Net AssetValue at the time of sale of their units, asset managementcompany shall pay the difference in amount to the scheme.The asset management company may recover the differencefrom the investors.�

The valuation guidelines as outlined above are as per prevailingRegulations and are subject to change from time to time inconformity with changes made by SEBI.

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NAV of Units under the Scheme(s) shall be calculatedas shown below

Market or Fair Value of Scheme�s investments (+)Current Assets (�) Current Liabilities and Provisions

NAV (Rs.) =No. of Units outstanding under Scheme

The first NAV will be calculated and announced not later than 30days from the close of the IPO. Subsequently, the NAV of theScheme(s) will be calculated as of the close of every BusinessDay. Deutsche Alpha Equity Fund up to 2 decimal places. Thevaluation of the Scheme(s)� assets and calculation of theScheme(s)� NAV shall be subject to audit on an annual basis andsuch regulations as may be prescribed by SEBI from time to time.

B) Accounting Policies & StandardsIn accordance with the Regulations, the AMC will follow theaccounting policies and standards, as detailed below:

l The AMC, for each Scheme, shall keep and maintain properbooks of accounts, records and documents, for the Schemeso as to explain its transactions and to disclose at any pointof time the financial position of the Scheme and in particulargive a true and fair view of the state of affairs of the Fund.

l For the purposes of the financial statements, the Fund shallmark all investments to market and carry investments in thebalance sheet at market value. However, since the unrealisedgain arising out of appreciation on investments cannot bedistributed, provisions shall be made for exclusion of thisitem when arriving at distributable income.

l Dividend income earned by the Scheme and its Plans shallbe recognized, not on the date the dividend is declared, buton the date the share is quoted on an ex-dividend basis. Forinvestments, which are not quoted on the stock exchange,dividend income would be recognized on the date ofdeclaration of dividend.

l In respect of all interest-bearing investments, income shallbe accrued on a day to day basis as it is earned. Thereforewhen such investments are purchased, interest paid for theperiod from the last interest due date up to the date ofpurchase should not be treated as a cost of purchase butshall be debited to interest Recoverable Account. Similarly,interest received at the time of sale for the period from thelast interest due date up to the date of sale must not betreated as an addition to sale value but shall be credited toInterest Recoverable Account.

l In determining the holding cost of investment and the gainsor loss on sale of investments, the �average cost� methodshall be followed.

l Transaction for purchase or sale of investments shall berecognised as of the trade date and not as of the settlementdate, so that the effect of all investments traded during afinancial year are recorded and reflected in the financialstatements for that year. Where investment transactions takeplace outside the stock market, for example, acquisitionthrough private placement or purchases or sales throughprivate treaty, the transaction would be recorded in the event

of a purchase, as of the date on which the scheme obtainsan enforceable obligation to pay the price or, in the event ofa sale, when the Scheme obtains an enforceable right tocollect the proceeds of sale or an enforceable obligation todeliver the instruments sold.

l Where income receivable on investments has accrued buthas not been received for the period as specified in the SEBIguidelines for identification and provisioning for NPAs(referred to in clause 8 above), provision shall be made bydebiting to the revenue account the income so accrued inthe manner specified in the SEBI guidelines for identificationand provisioning for NPAs ( referred to in clause 8 above).Insofar as provision for the principal amount is concerned,the same shall be provided as specified in the aforesaidguidelines.

l Bonus shares to which the Scheme and the Plans thereunderbecomes entitled shall be recognized only when the originalshares on which the bonus entitlement accrues are tradedon the stock exchange on an ex-bonus basis. Similarly, rightsentitlements shall be recognized only when the originalshares on which the right entitlement accrues are traded onthe stock exchange on an ex-right basis.

l When Units are sold, the difference between the sale priceand the face value of the Unit, if positive, shall be credited toreserves and if negative, shall be debited to reserves, theface value being credited to the Capital Account. Similarly,when Units are repurchased, the difference between thePurchase Price and face value of the Unit, if positive, shallbe debited to reserves and, if negative, shall be credited toreserves, the face value being debited to the Capital Account.

l When Units are sold an appropriate part of the sale proceedsshall be credited to an Equalisation Account and when Unitsare repurchased an appropriate amount shall be debited toEqualisation Account. The net balance on this account shallbe credited or debited to the Revenue Account. The balanceon the Equalisation Account debited or credited to theRevenue Account shall not decrease or increase the netincome of the Fund but is only an adjustment to thedistributable surplus. It shall therefore be reflected in theRevenue Account only after the net income of the Fund isdetermined.

l The cost of investments acquired or purchased shall includeall such costs incurred for effecting such acquisition/purchase. In respect of privately placed debt instrumentsany front-end discount offered shall be reduced from thecost of the investment.

· Underwriting commission shall be recognised as revenueonly when there is no devolvement on the Scheme. Wherethere is devolvement on the Scheme, the full underwritingcommission received and not merely the portion applicableto the devolvement shall be reduced from the cost of theinvestment.

The accounting policies and standards as outlined above are asper the existing Regulations and are subject to changes madefrom time to time by AMC and/or Trustees. However suchchanges would be in conformity with the Regulations.

Net Asset Value



XI.Other MattersA) Transactions with the Sponsors /

Associates

Investment in Group CompaniesThe AMC has invested in following securities of AssociatesCompanies/Group Companies since inception till September 30,2004.

Name of the Associate/ Name of the SchemeGroup Company (Rs. In Crores)

DPBF DSMF DICPF DFRF

Kotak Mahindra Bank(Associate Co.)

Fixed Deposit � 5 117 21Corporate Debt � 5.2 � �

Deutsche Securities(India) Private Limited(Group Company) �

Commercial Paper 6.32 21.36 24.6 �(Including Interscheme)

Underwriting Obligations with respect to issues ofAssociate CompaniesThe AMC has till date, not entered into any underwriting contractsin respect of any public issue made by any of its associatecompanies.

Subscription in issues lead managed by the Sponsor orany of its AssociatesThe Mutual Fund has not subscribed for allotments in any issueslead managed by the Sponsor or any of its associates.

Dealing with Associate CompaniesThe AMC may from time to time, for the purpose of conductingits normal business, use the services (including brokerage services

and securities transactions) of the Sponsor, its subsidiaries,associates of the Sponsor and employees or relatives. Theassociates of the Sponsor on the date of this Offer Documentare:

Deutsche Bank

Deutsche Trustee Services (India) Private Ltd.

Deutsche Network Services Private. Ltd.

Deutsche Securities (India) Private Ltd.

Deutsche Equity (India) Private Ltd.

Comfund Consulting Ltd.

DSL Software Ltd.

The AMC may utilise the services of Sponsor, Group Companiesand any other subsidiary or associate company of the Sponsorestablished or to be established at a later date, in case such acompany (including employees or relatives) is in a position toprovide the requisite services to the AMC. The AMC will conductits business with the aforesaid companies (including employeesor relatives) on commercial terms and on arms� length basis andat mutually agreed terms and conditions to the extent permittedunder the SEBI Regulations, after evaluation of thecompetitiveness of the pricing offered by the Sponsor, associatecompanies (including employees or relatives) and the services tobe provided by them.

Associates & Group Co. as DistributorsThe AMC has utilised the services of one of the associates namely,Deutsche Bank as one of the Collecting Banker and Distributorsfor procuring Unit subscriptions for units of Deutsche Alpha EquityFund, Deutsche Premier Bond Fund, Deutsche Short MaturityFund and Deutsche Insta Cash Plus Fund The Collecting Banker�sfees and commissions payable are at the same rates offered toother Collecting Banker�s and distributors by the scheme(s).Further, the AMC has also dealt with Deutsche Equity (India)Private Limited as Secondary Market Broker in the EquitySegment. The brokerage paid to the associate is at the same rateoffered to other brokers in the segment.

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Amount Paid / payable to Associates (Amt. in Lac)Particulars DPBF DSMF DICPF DDBF DFRF DIOF DMIPA DMIPB DAEF

Deutsche Bank

Commission onDistribution of Units 31.11 41.63 21.81 1.66 0.45 24.51 1.02 1.04 47.44

Kotak MahindraBank Limited 1.20 2.31 2.75 0.00 0.00 0.09 0.23 0.08 2.04

Deutsche Equity(India) Pvt. Ltd. � � � � � 3.73 0.98 0.37 12.88

Associate transactions, if carried out, will be as per the SEBIRegulations and the limits prescribed thereunder. The Scheme(s)shall not make any investment in:

l Any unlisted security of an associate or group company ofthe Sponsor

l Any security issued by way of private placement by anassociate or group company of the Sponsor

l The listed securities of group companies of the Sponsorwhich is in excess of 25% of the net assets.

Deutsche branches to act as Investor Service CentresThe AMC may avail the services of the Sponsor and / or itsassociates for usage of designated branches as Investor ServiceCentres and/or to act as collection and distribution agents. TheSponsor / associates shall be paid a fee based on the quality of

services rendered. These fees shall be debited to the Scheme(s),subject to SEBI Regulations.

B) Stock Lending by the FundThe risks in lending portfolio securities, as with other extensionsof credit, consist of the failure of another party, in this case theapproved intermediary, to comply with the terms of agreemententered into between the lender of securities i.e. the Scheme(s)and the approved intermediary.

Such failure to comply can result in the possible loss of rights inthe collateral put up by the borrower of the securities, the inabilityof the approved intermediary to return the securities depositedby the lender and the possible loss of any corporate benefitsaccruing to the lender from the securities deposited with theapproved intermediary. The Mutual Fund may not be able to sellsuch lent securities and this can lead to temporary illiquidity.

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C) Policy on Offshore Investmentsby the Scheme

Offshore investments will be made subject to any / all approvals,conditions thereof as may be stipulated by SEBI / RBI and providedsuch investments do not result in expenses to the Fund in excessof the ceiling on expenses prescribed by and consistent withcosts and expenses attendant to international investing. The Fundmay, where necessary, appoint other intermediaries of repute asadvisors, custodian / sub-custodians etc. for managing andadministering such investments. The appointment of suchintermediaries shall be in accordance with the applicablerequirements of SEBI and within the permissible ceilings ofexpenses. The fees and expenses would illustratively include,besides the investment management fees, custody fees andcosts, fees of appointed advisors and sub-managers, transactioncosts and overseas regulatory costs.

To the extent that the assets of the Scheme(s) will be invested insecurities denominated in foreign currencies, the Indian Rupeeequivalent of the net assets, distributions and income may beadversely affected by changes in the value of certain foreigncurrencies relative to the Indian Rupee. The repatriation of capitalto India may also be hampered by changes in regulationsconcerning exchange controls or political circumstances as wellas the application to it of other restrictions on investment.

D) Borrowing by Mutual FundUnder the Regulations, the Fund is allowed to borrow to meet itstemporary liquidity needs of the Scheme for the purpose ofrepurchase, redemption of units or payment of interest or dividendto the Unit Holders. Further, as per Regulations, the Fund shallnot borrow more than 20% of the Net Assets of the Scheme andthe duration of such borrowing shall not exceed a period of sixmonths.

Unitholders should however note that in the normal course ofthe Fund�s operations there might be occasional instances ofoverdraft in the collection account due to dishonor of chequedeposited by an Investor. Since this unusual instance cannot beapprehended in advance the AMC will endeavor to normalize theaccount within 1 business day and AMC will also bear the costincurred on such inadvertent overdraft without affecting theInvestors of the Fund.

E) Inter-scheme TransfersTransfers of investments from one scheme to another scheme

in the same mutual fund shall be allowed only if:

(a) such transfers are done at the prevailing market price forquoted instrument on spot basis; and transfers of unquotedsecurities will be made as per the policy laid down by theTrustee from time to time; and

(b) the securities so transferred shall be in conformity with theinvestment objective of the scheme to which such transferhas been made.

The Fund does not ordinarily envisage making inter-schemetransfers under the Scheme. However, if such inter-schemetransfers are done they will be effected based on the prescribedvaluation norms, which may be amended by the AMC and / orTrustees from time to time.

F) Underwriting by a SchemeIn order to generate additional income, the Scheme may enterinto underwriting commitments for primary issues. In terms ofthe guidelines issued by SEBI, the Mutual Fund may make, buthas not yet made, an application to SEBI for registration underSEBI (Underwriters) Rules and Regulations, 1993.

In this connection, once granted permission by SEBI, a Schemewill be subject to the following underwriting restrictions :

For the purposes of Regulation 7, of the SEBI (Underwriters)Regulations, the capital adequacy of the Mutual Fund shall bethe net assets of the Scheme as applicable.

The total underwriting obligations of the Mutual Fund at any timeshall not exceed the total net asset value of the Scheme.

Any Underwriting commitment by the Mutual Fund will be madeas if the Mutual Fund is actually investing the amount under theScheme. Accordingly, all investment restrictions and prudentialguidelines related to investments individually and in aggregatepursuant to the SEBI (MF) Regulations, 1996, insofar as they maybe applicable, shall apply to underwriting obligations which maybe undertaken by the Scheme.

No underwriting commitment may be undertaken in respect ofany Scheme during the period of six months prior to theredemption of the Scheme.

Underwriting commitments, if any, undertaken by the Schememust be in accordance with the investment objectives of theScheme.

Other Matters

G) Disclosure under Regulation 25(11)Deutsche Mutual Fund (DeMF) has made the following investments in companies, which held units in excess of 5% of the net assetvalue of any scheme of Deutsche Mutual Fund during the period ended September 30, 2004:

Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 asamended. Investments made by the schemes of Deutsche Mutual Fund in Companies or their subsidiaries that had investedmore than 5% of the net assets of any scheme of Deutsche Mutual Fund as on September 30, 2004.

Company Name Scheme invested Invetsments made Aggregated for Outstanding as atin by the Company by schemes of the period under September 30, 2004

Deutsche Mutual Fund Regulation 25 (11) at Market/Fair Valuein the company/ At cost

subsidiary. (Rupees in lakhs) (Rupees in lakhs)

Bank of Baroda DICPF DAEF 206.01 �

Bharti Televentures Limited DICPF DICPF 947.56 � DFRF DAEF 398.29 146.10

DIOF 123.06 � DMIP-A 11.85 � DMIP-B 5.92 �

Export Import Bank of India DSMF DSMF 6,956.79 � DICPF 3,843.90 � DPBF 17,704.13 � DMIP-A 299.56 � DMIP-B 199.71 �



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Finolex Cables Limited DSMF DSMF 2,552.65 � DICPF 1,200.00 � DPBF 519.16 �

Grasim Industries Limited DICPF DSMF 1,088.04 � DSMF DICPF 509.27 �

DPBF 1,081.70 � DAEF 1,000.60 673.97 DIOF 265.60 146.57 DMIP-A 41.79 28.69 DMIP-B 16.89 11.48 DAEF^ 130.76 � DIOF^ 44.12 � DMIP-A^ 14.41 � DMIP-B^ 9.25 �

HCL Technologies Limited DSMF DAEF 1,132.33 505.45 DIOF 239.63 115.95 DMIP-A 28.51 �

Hindalco Industries Limited DSMF DAEF 676.65 269.56DFRF DIOF 93.52 � DMIP-A 14.03 � DMIP-B 9.35 �

Hindustan Lever Limited DICPF DSMF 4,554.69 119.88DSMF DICF 1,242.87 � DAEF 221.96 � DFRF 531.42 45.29

Hindustan Zinc Ltd. DFRF DAEF 35.78 �

Housing Development DICPF DSMF 14,887.35 �Finance Corporation DICPF 21,492.53 7,557.96

DPBF 14,457.31 � DAEF 275.45 45.74 DFRF 2,392.59 1,918.85 DDBF 1,446.57 � DMIP-A 1,239.83 � DMIP-B 200.00 �

Industrial Development DICF DSMF 24,095.45 676.02Bank of India DSMF DICPF 28,195.18 9,699.44 DFRF DPBF 19,157.88 784.47

DAEF 422.96 360.80 DFRF 3,420.93 3,374.05 DDBF 754.17 65.80 DIOF 101.19 104.93 DMIP-A 1,124.91 324.08 DMIP-B 393.82 377.04 DSMF^^ 1,500.10 995.70 DICPF^^ 3,000.00 � DFRF^^ 2,000.00 �

Infrastructure Development DICPF DICPF 7,356.99 2,452.91Finance Co. Ltd. DSMF

DPBFDDBF

ITC Limited DSMF DEF 1,484.06 34.14 DICPF DIOF 178.68 �

Larsen & Toubro Ltd. DICPF DSMF 617.77 � DPBF DICPF 1,884.49 � DAEF DAEF 2,109.68 314.18 DIOF DIOF 641.54 �

DMIP-A 205.12 21.15 DMIP-B 73.72 � DSMF^^^ 1,700.00 1,506.09 DICPF^^^ 1,800.00 � DFRF^^^ 100.00 �




65


Other Matters

LIC Housing Finance Limited DICPF DICPF 4,555.99 � DFRF DPBF 4,229.55 � DFRF 766.63 500.00

Mahindra & Mahindra Ltd. DDBF DICPF 500.00 � DAEF 883.33 � DIOF 477.02 � DMIP-A 73.23 � DMIP-B 22.31 �

Nestle India Limited DICPF DAEF 43.01 �

Raymond Limited DSMF DICPF 1,500.00 1,000.00 DICPF DPBF 487.48 �

DFRF DFRF 3,300.00 � DDBF DICPF^^^^ 494.31 �

Tata Chemicals Limited DDBF DAEF 16.34 � DSMF

Tata Motors Ltd. DICPF DAEF 1,413.23 282.35 DIOF 429.56 80.67 DMIP-A 135.95 � DMIP-B 36.39 �

The Associated DICPF DSMF 2,006.87 �Cement Cos. Ltd. DICPF 2,482.34 �

DAEF 832.87 453.73 DIOF 221.63 149.99 DMIP-A 53.67 53.38 DMIP-B 16.18 13.35

The Tata Iron and Steel Co. Ltd. DICPF DAEF 1,672.82 462.32 DIOF 549.28 115.58 DMIP-A 164.65 57.79 DMIP-B 76.13 18.78 DSMF^^^^^ 200.00 � DICPF^^^^^ 100.00 � DPBF^^^^^ 200.00 �

UTI Bank Ltd. DSMF DSMF 190.29 190.55 DICPF DICPF 2,137.06 2,140.03 DFRF DFRF 112.22 112.38

^ DAEF, DIOF, DMIP-A, DMIP-B have invested in Ultratech Cemco which is a subsidiary of Grasim Industries Limited.

^^ DSMF, DICPF, DFRF have invested in IDBI Capital Markets which is a subsidiary of IDBI.

^^^ DSMF, DICPF, DFRF have invested in L&T Finance Ltd which is a subsidiary of Larsen & Toubro Ltd.

^^^^ DICPF have invested in Raymond Apparels which is a subsidiary of Raymond Ltd.

^^^^^ DSMF, DICPF, DFRF have invested in Tata SSL Ltd which is a subsidiary of The Tata Iron And Steel Co Ltd.

The above investments comprise equity shares, debentrures / bonds, commercial paper, fixed deposits and other debt instruments.These investments have been made on account of their high credit quality and competitive yield for the investment in fixed income/money market insturments and in case of equity shares because of attractive valuations of these companies.






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H) General Information

1) Power to make RulesSubject to the Regulations, the Trustee may, from time totime, prescribe such terms and make such rules for thepurpose of giving effect to a Scheme with power to theAMC to add to, alter or amend all or any of the terms andrules that may be framed from time to time.

2) Power to remove DifficultiesIf any difficulties arise in giving effect to the provisions of aScheme, the Trustee may, subject to the Regulations, doanything not inconsistent with such provisions, whichappears to it to be necessary, desirable or expedient, for thepurpose of removing such difficulty.

3) Penalties and Pending LitigationAll cases of penalties awarded by SEBI under the SEBI Actor any of its regulations against the Sponsor of the MutualFund or any company associated with the Sponsor in anycapacity including the Asset Management Company, TrusteeCompany/Board of Trustees, or any of the directors or keypersonnel (specifically the fund managers) of the AssetManagement Company and Trustee Company.

l NONE

For Sponsor and its associates, other than the penalties asmentioned above, the penalties awarded by any financialregulatory body, including stock exchanges, for defaults inrespect of shareholders, debentureholders and depositorsincluding penalties awarded for any economic offence andviolation of any securities laws.

Details of all cases of suspensions and cancellation ofcertificate of registration (for irregularities / violations infinancial services sector or for defaults in respect of shareholders, debentureholders and depositors) of the AMC,Trustee Company and sponsor or any associate of thesponsor shall be disclosed for the last 10 years. (Mutual fundshaving associate companies abroad shall make the abovedisclosures for foreign and Indian entities separately)

Indian:l NONE

ForeignFollowing an inspection from the Financial Service AgencyJapan (FSA) Deutsche Trust Bank Limited (DTB), which islargely responsible for the management of public sectorJapanese client assets has been inter alia issued anadministrative improvement order concerning DTB�s internaladministration and compliance controls. The FSA has alsosuspended DTB from taking on new clients for a period of 3months, effective from May 27th, 2004 until August 27th,2004.

Top 10 monetary penalties in case of foreign entities and allmonetary penalties in case of Indian entities, imposed againstthe AMC / Trustee Company / Sponsor or any associate ofthe sponsor (for irregularities / violations in the financialservices sector or for defaults in respect of share holders /debentureholders and depositors, in jurisdiction country asdetermined in the above clause, by any financial regulatorybody or government authority or settlement arrived with anyfinancial regulatory body during the last five years and detailsthereof :

l The Office of Special Director of Enforcement,Government of India, vide its order dated March 23,2004 levied a penalty of Rs. 25,00,000 under Section50 of Foreign Exchange Regulation Act, 1973 in thematter relating to salaries paid abroad in the earlier years.The Bank paid the penalty amount on May 5, 2004. TheBank�s management has filed an appeal against the

order of the Enforcement Directorate with the AppelatteTribunal Foreign Exchange, New Delhi � 10th May, 2004.

l Deutsche Bank, India had defaulted in maintenance ofCash Reserve Ratio (CRR) for all fortnights of the quarterended June 1996 and the first fortnight (ended 5 July1996) of the quarter ended September 1996. In July1999, RBI withdrew CRR interest and imposed a penaltyof 5,25,000 for default in maintenance of CRR.

l In December 1999, RBI imposed a penalty of 2,17,000for default in the maintenance of prescribed StatutoryLiquidity Ratio (SLR) on 8th and 22nd October, 1999.

l Deutsche Bank has paid 1,00,000 to the CustomsAuthorities towards fine for Audi Car, in the Assessmentyear 1999-2000.

Foreign Entities

GermanyA fine of DM 4,000,000 pronounced by the Federal BankingSupervisory Office (BAK) on December 29, 1998 againstDeutsche Bank for insufficient reporting procedures in itsanti-money laundering units.

Another case concerned administrative fines (not sentencedby banking regulators) for errors in reporting statisticalinformation as requested by foreign commerce rules. Suchfines were pronounced at seven occasions during the pastfive years and did not exceed the amount of Euro 50,000 inthe aggregate.

A fine of DM 50,000 pronounced by the former FederalSecurities Trade Supervisory Agency (BAWe) on August 16,2001 against Deutsche Bank for insufficient organisation ofinternal reporting procedures with regard to substantialshareholding disclosure obligations. The decision related toincidents that occurred between 1998 and 2000.

A fine of DM 110,000 pronounced by the former FederalBanking Supervisory Office (�BAK�, now �BAFin�) againstthe former Bankers Trust Company Frankfurt branch for latefiling of the statutory annual accounts for the financial year1999.

Due to system deficiencies Deutsche Bank AG and DeutscheBank 24 AG failed to be in a position to distinguish theindividual acting person in online banking transactions in caseof joint accounts. The banking supervisory body of Germany(BAFin) imposed a fine of EUR 1,000,000 against bothcompanies (Date: June 13, 2002).

Any pending material litigation proceedings incidental to thebusiness of the Mutual Fund to which the Sponsor of theMutual Fund or any company associated with the Sponsorin any capacity including the AMC, Board of Trustees / TrusteeCompany or any of the directors or key personnel is a party.

l NONE

Any pending criminal cases against the Sponsor or anycompany associated with the Sponsor in any capacityincluding the AMC, Board of Trustees/Trustee Company orany of the directors or key personnel.

l NONE

Any deficiency in the systems and operations of the Sponsorof the Mutual Fund or any company associated with thesponsor in any capacity including the AMC or the TrusteeCompany which SEBI has specifically advised to be disclosedin the offer document, or which has been notified by anyother regulatory agency.

l NONE

Any enquiry/adjudication proceedings under the SEBI Actand the Regulations made thereunder, that are in progressagainst the Sponsor of the Mutual Fund or any company

67


associated with the Sponsor in any capacity such as the AMC,Board of Trustees/Trustee Company or any of the Directorsor key personnel of the Asset Management Company.

A notice dated 30 June 2004 issued by SEBI to DeutscheInternational Trust Corporation (C.I.) Limited (DITC) andDBMGOF (Mauritius) Limited (DBMG) is pending. DITC andDBMGOF have filed their reply to the notice. DITC andDBMGOF are associates of the Sponsor but are not directlyassociated with Deutsche Mutual Fund.

The above information has been disclosed in good faith asper the information available to the AMC.

4) Scheme to be binding on the Unit HoldersSubject to the Regulations, the Trustee may, from time totime, add or otherwise vary or alter all or any of the featuresof investment options/Facilities and terms of a Scheme afterobtaining the prior permission of SEBI and Unit Holders ifrequired, and the same shall be binding on all the Unit Holdersof such Scheme and any person or persons claiming throughor under them as if each Unit Holder or such person expresslyhad agreed that such features, plans and terms shall be sobinding.

5) Register of the Scheme�s Unit HoldersRegisters of Unit Holders under the scheme containingnecessary particulars will be maintained at the office of theRegistrar at Hyderabad and at such other places as theTrustee may decide.

6) WebsiteThe AMC has hosted a website (www.deutschemutual.com)for the benefit of the unitholders and distributors. Thewebsite of the Fund/AMC is intended solely for the use ofResident Indians, Non Resident Indians, persons of IndianOrigin and Foreign Institutional Investors registered withSecurities and Exchange Board of India. The informationprovided on this Site is not intended for distribution to, oruse by, any person or entity in any jurisdiction or countrywhere such distribution or use would be contrary to law orregulation or which would subject DeAM India or its affiliatesto any registration requirement within such jurisdiction orcountry. This service does not constitute an offer to sell or asolicitation of an offer to buy any mutual fund units, shares,securities or other instruments to any person in anyjurisdiction where it is unlawful to make such an offer orsolicitation. It shall be the sole responsibility of foreignresidents including NRIs in foreign jurisdictions to verifywhether the facility can be accessed and utilised in theirrespective jurisdictions. The AMC cannot be responsible forany information contained in any website linked from thiswebsite.

7) Omnibus ClauseBesides the AMC, the Trustee / Sponsor may also absorbexpenditures in addition to the limits laid down underRegulation 52.

Further, any amendment / clarification and guidelinesincluding in the form of notes or circulars issued from timeto time by SEBI for the operation and management of mutualfund shall be applicable.

8) JurisdictionThe jurisdiction for any matters arising out of this Schemeshall reside with the courts in India.

9) Books and RecordsThe books and records of the Mutual Fund will be maintainedat its Head Office. The fiscal year of the Mutual Fund endson 31st March in each year.

10) Documents available for InspectionCopies of the following documents will be available forinspection by the Unit Holders during the Initial Offer Period

on all Business Days between 10 a.m. and 3 p.m. at theRegistered Office of the AMC at DB House, HazarimalSomani Marg, Fort, Mumbai 400 001.

l Copy of Memorandum and Articles of Association ofthe Trustee Company and the AMC.

l Copy of the Custodian Agreement between the Trusteeand JP MORGAN CHASE.

l Copy of the Investment Management Agreement.

l Copy of the Trust Deed.

l Copy of Mutual Fund Registration Certificate No. MF/047/02/10, 2002 dated October 28, 2002 from SEBI.

l Consent of the Auditors to act in the said capacity.

l Copy of Securities and Exchange Board of India (MutualFunds) Regulations, 1996.

l Copy of Indian Trust Act, 1882.

As provided in Regulation 24(2) of the SEBI (Mutual Funds)Regulations, 1996, the AMC is undertaking non discretionaryadvisory services which has been approved by SEBI. The AMChereby confirms that there is no conflict of interest in providingthe services.

The AMC hereby confirms that the contents set out in the�Instructions for filing Offer Document with SEBI� as mentionedin SEBI Circular No. MFD/CIR/06/275/2001 dated July 9, 2001duly revised on December 26, 2003 has been included in thisoffer document.

NOTWITHSTANDING ANYTHING CONTAINED IN THE OFFERDOCUMENT, THE PROVISIONS OF THE SEBI (MUTUALFUNDS) REGULATIONS, 1996 AND THE GUIDELINESTHEREUNDER SHALL BE APPLICABLE.

FOR DEUTSCHE ASSET MANAGEMENT (INDIA) PVT. LTD.

Investment Managers to Deutsche Mutual Fund

Sandeep Dasgupta P.R. ShenoyChief Executive Officer Head - Legal & Compliance

Place : MumbaiDate : January 12, 2005

Due Diligence CertificateIt is confirmed that:

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

ii. All legal requirements connected with the launching of theScheme(s) as also the guidelines, instructions, etc. issuedby the Government of India and any other competentauthority in this behalf, have been duly complied with.

iii. The disclosures made in the Offer Documents are true, fairand adequate to enable the investors to make a well-informeddecision regarding investment in the proposed Scheme(s).

iv. The intermediaries named in the Offer Document areregistered with SEBI and till date such registration is valid.

For Deutsche Asset Management (India) Private Limited(Investment Manager to Deutsche Mutual Fund)

P. R. ShenoyCompliance Officer & Company Secretary

Place: MumbaiDate: January 12, 2005

Note :

l The offer document was approved by the Trustees onJanuary 12, 2005.

l The Due Diligence Certificate as stated above was submittedto SEBI on January 14, 2005.

Other Matters



Notes

cover (iii)

KarvyInvestor Service CentresAHMEDABAD201-203, Shail Building, Opp. Madhusudan House,Near Navrangpura Tel. Exchange,Off C. G. Road, Ahmedabad 380 006.Tel. : 079-26420422 / 26402967

BANGALORE1st Floor, Surya Building, Rathna Avenue,51 / 25, Richmond Road, Bangalore 560 025.Tel. : 080-25320085 / 86

BARODA31-34, Payal Complex, Beside Vadodara StockExchange,Sayajiguj, Baroda 390 005.Tel. : 0265-2225210 / 2225168 / 69

CHENNAIFlat 2 - B, First Floor, Wellington Estate No. 24, EthirajSalai, Commander-in-Chief Road, Chennai 600 105.Tel. : 044-52028858 (D) / 52028512

COCHING 39, Panampally Nagar, Cochin 682 036.Tel. : 0484-310884 / 322152

HYDERABAD21, Road No. 4, Street No.1, Banjara Hills, Hyderabad 500 034.Tel. : 040-23312454 Extn. 488 / 119

KOLKATA49, Jatindas Road, Kolkata 700 029.Tel. : 033-24659267 (D) / 24659263

LUCKNOW94, Mahatma Gandhi Marg, (Opp. Governor House)Hazratganj, Lucknow 226 001.Tel. : 0522-2236828 /19

MUMBAI16-22 , Bake House, Ground Floor,Maharashtra Chamber of Commerce Lane,Opp. MSC Bank, Fort, Mumbai 400 023.Tel. : 022-56346513 (D) / 56381746 to 50

NEW DELHI105-108, Arunachal Building, 19, Barakhamba Road,Connuaght Place, New Delhi 110 001.Tel. : 011-51511627 (D)

PUNE202, Mahadkar Chambers, Opp. Karishma Heights,Karve Road, Pune 411 029.Tel. : 020-25456890 / 870 / 4028431

Deutsche Asset Management(India) Private LimitedMUMBAIDB House, Hazarimal Somani Marg,Fort, Mumbai - 400 001.Tel: +91 (22) 5658 4600

NEW DELHITolstoy House, 15-17, Tolstoy Road,New Delhi - 110 001.Tel :+91 (11) 2372 1155

BANGALORERaheja Tower, 26-27, M.G. Road,Bangalore - 560 001.Tel :+91 (80) 2559 4488

KOLKATABrooke House, 9 Shakespeare Sarani,Kolkata - 700 071.Tel :+91 (33) 2282 4040

CHENNAIKothari Building, 114, M.G. Road,Chennai - 600 034.Tel: +91 (44) 2833 4846 (D)

Official Points for Accepting Transactions

Deutsche Asset Management (India)

Private Limited

Registered & Corporate Office :

DB House, Hazarimal Somani Marg

Fort, Mumbai - 400 001

Tel: +91 (22) 5658 4600

Fax: +91 (22) 2207 4411

E-mail: [email protected]

Website: www.deutschemutual.com

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