Principles of Indexing: Principles of Indexing


Means……: Means…… Replicating the performance of an underlying market Broad market index that matches as closely as possible the return of the overall stock market A quantitative measure of the returns that have been earned by some underlying group of securities Investing in a pool of stocks that form part of an Index in the same proportion as is there in the Index Set it forget it Strategy Returns will not stray away from that of the market


What is an Index???: What is an Index??? Gives information about some system / financial market Financial indexes are constructed to measure price movements of stocks, bonds, etc. They capture the behaviour of the underlying market It consists of a sample that is an effective representation of the behaviour of the entire market


Index categories……: Index categories…… Based on: Price weighted Equal weighted Market Capitalization weighting Free float Fundamental weighted Valuation Measure i.e. P/E, P/B, etc


Criteria’s of an Ideal Index……: Criteria’s of an Ideal Index…… Completeness Invest ability Clear rules & Governance Accurate Data Acceptance by investors Available liquidity and tradable products Low turnover & Transaction costs


Advantages of Indexing……: Advantages of Indexing…… Diversification Low Cost Low Expenses Tax Efficiency Control over allocation Avoid style drift


History of Indexing……: History of Indexing…… Stock indexes have been around since late nineteenth century In 1884 Charles Dow and Edward Jones created a benchmark of 11 large rail road companies, called Dow Jones Average. It was a price-weighted index In 1896, it was converted into a more broad-based index covering various industries, comprising of 12 stocks In 1960’s S&P 500 index based on market capitalization weighted was made available


Time line of Index based vehicles……: Time line of Index based vehicles…… 1970’s: The first institutional (1971 / 1973) and retail index fund (1976). First international Index Fund (1979) 1980’s: Stock index Futures & Options (US – 1982, UK – 1984, Japan – 1986). Expansion of Index Funds. Fist fixed-income index funds 1990’s: Massive growth of Index Fund assets and deeper penetration of indexing in Japan & Europe. Launch of ETF’s in Canada and US (1991 – 1993). Emerging market indexes and first EM index fund (1991 – 1994) 2000 – 2004: Global ETF explosion, Launch of commodity and currency ETF’s


Various Indexes……: Various Indexes…… DJIA NASDAQ 100 Russell 2000 BSE Sensex S&P 500 S&P CNX Nifty Wilshire 5000 Nikkei Hang sang, etc


Dow Jones Industrial Average……: Dow Jones Industrial Average…… It is the oldest continuing US market index It only takes US companies into consideration It comprises of 30 blue chip based on their size Measured using a price weighted method, calculated on a daily basis


S&P 500……: S&P 500…… Represents 70% of all publicly listed companies in US Comprises of 500 companies from diverse range of industries Leading companies in leading industries, is the guiding principle Measured using free-float market capitalization weighted method First Exchange Traded Fund i.e. Spiders, replicates this index


NASDAQ 100 Index……: NASDAQ 100 Index…… Began trading in 1999, under the symbol of QQQ Tracks the 100 largest stocks listed on NASDAQ Typically comprises of Tech stocks Measured using modified capitalization weighting method Bigger companies are heavily weighted with modifications so as to ensure that large companies do not devastate the smaller ones


Russell 2000……: Russell 2000…… Focuses on US small companies and is quite diversified Comprises of 2000 small companies from Russell 3000 index Average market capitalization of company form part of the index is $530 million It is measured using market capitalization weighting method


BSE Sensex……: BSE Sensex…… Constructed by one of the premier exchanges of India in 1875 Initially measured based on Full Market Capitalization methodology. Since 1993 it moved to Free-float market capitalization It is a broad based index Is a basket of stocks representing a sample of large, liquid and representative companies


Free Float Methodology……: Free Float Methodology…… Considers only the free float market capitalization of various companies Free Float represents the total number of shares readily available for trading in the market Promoter’s holding, government holding, strategic holding and locked-in shares are ignored while calculating it


S&P CNX Nifty Index……: S&P CNX Nifty Index…… One of India’s premier benchmarks, was developed in 1995 It is a broad-based index Companies with high degree of liquidity form a part Measured using the market capitalization weighted method Represents about 60% of the total market capitalization


S&P CNX Junior Index……: S&P CNX Junior Index…… Includes next rung of liquid securities after S&P CNX Nifty It is a broad-based index Measured using market capitalization weighted method Represents about 10% of the total market capitalization


Index based investment vehicles……: Index based investment vehicles…… Index futures Index Options Contract for differences Exchange Traded Funds Index based Mutual Fund schemes Index based Derivatives


Slide19: “The best way to own common stocks is through index funds... ” Warren Buffet, Berkshire Hathaway Inc. 1996 Shareholder Letter


Slide20: “All the time and effort people devote to picking the right fund, the hot hand, the great manager have, in most cases, led to no advantage." and "Most individual investors would be better off in an index mutual fund.” Peter Lynch


Slide21: “Properly measured, the average actively managed dollar must under perform the average passively managed dollar, net of costs. Empirical analyses that appear to refute this principle are guilty of improper measurement.” William F. Sharpe, Nobel Laureate in Economics, 1990


Slide22: Q. So investors shouldn’t delude themselves about beating the market ? A. “They’re just not going to do it. It’s just not going to happen. ” Daniel Kahneman, Nobel Laureate in Economics, 2002


Slide23: “If there’s 10,000 people looking at the stocks and trying to pick winners, one in 10,000 is going to score, by chance alone, a great coup, and that’s all that's going on. It’s a game, it’s a chance operation, and peoples think they are doing something purposeful... but they’re really not.” Miller, Merton Nobel Laureate and Prof. of Economics, Univ. of Chicago


Slide24: “The difference between luck and skill is seldom apparent at first glance.” Bernstein, Peter (Capital Ideas, The Improbable Origins of Modern Wall Street)


Slide25: “... skepticism about past returns is crucial. The truth is, much as you may wish you could know which funds will be hot, you can't -- and neither can the legions of advisers and publications that claim they can. That's why building a portfolio around index funds isn't really settling for average. It's just refusing to believe in magic. ” McLean,Bethany The Skeptic's Guide to Mutual Funds," Fortune Magazine,March 15, 1999.


Slide26: Source: Moneycontrol.com


Slide27: Source:Moneycontrol.com


Slide28: Source:Moneycontrol.com


Slide29: Exchange Traded Funds (ETFs) Introduction to


Slide30: What is an Exchange Traded Fund (ETF)


ETF basics: ETF basics Listed Open ended


ETFs defined (As per SEC US): ETFs defined (As per SEC US) An exchange-traded fund, or ETF, is a type of investment company whose investment objective is to achieve the same return as a particular market index. An ETF is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An ETF will invest in either all of the securities or a representative sample of the securities included in the index. For example, one type of ETF, known as Spiders or SPDRs, invests in all of the stocks contained in the S&P 500 Composite Stock Price Index.


Familiar ground…best of both worlds: Familiar ground…best of both worlds Like an Index Fund… Constructed to track the Index Open ended Mutual fund Low Expense ratio Low Turnover Like a Stock… Trading flexibility intraday on the exchange Real time price


What sets an ETF apart?: What sets an ETF apart? The creation/redemption process distinguishes ETFs from: Mutual funds and closed-end funds The creation/redemption process enables the unique benefits of ETFs


Origin: Origin First ETF - SPDR (S&P 500 depository receipts) Launched during January 1993 Designed to compete with futures Listed on American Stock Exchange Subsequent ETFs 1995 – Midcap Spiders 1996 - WEBs (World Equity Baskets) 1998 – Diamond and Select Sector Spiders 1999 - Cubes


Contemporary investment instrument: Contemporary investment instrument First close ended fund – Late 19th Century First Open ended fund - 1940s First Hedge Fund – 1950s First ETF – 1993


Growth of ETF’s……: Growth of ETF’s…… Source: Bloomberg, Morgan Stanley Research


Factors for ETF growth in US: Factors for ETF growth in US Many brokers were not comfortable with futures ETFs can be shorted without up tick rule Tax efficiency Proliferation of discount brokerage Lack of trust on research analyst Henry Blodget/Merry Meeker Underperformance of Mutual funds


Factors for ETF growth in US: Factors for ETF growth in US Penetrate through gatekeepers Transparent Structure (Late trading not possible) Instant diversification, Low cost, Fee based accounts, Some of the ETFs are exempt from MF Investment limit into other funds (upto 5%).


ETF applications -US: ETF applications -US Core portfolio Tactical beta exposure Hedging/Shorting Equalizing Cash Portfolio Rebalancing (Institutional) Portfolio clean up (retail)


Working / Mechanism of ETFs: Working / Mechanism of ETFs


Mechanism: Mechanism ETFs can be continually created / redeemed. ETFs can be created by APs in block size called “Creation Unit” Creation Unit – Portfolio Deposit – Resembles Index e.g. 50 shares representing Nifty. Cash Component – Cash Portion in NAV, this is not a charge or load. Portfolio Deposit is defined in terms of quantity of each security.


Creation Unit: Creation Unit


Buying / Selling on Exchange: Buying / Selling on Exchange


Mechanism: Mechanism Secondary market Seller Buyer NSE Nifty BeES Cash Cash Primary market Buy / sell Market making / Arbitrage Fund Authorised Participants / Financial Institutions Redemption in-kind Nifty BeES


Liquidity: Liquidity


Average Trade Value – Nifty BeES: Average Trade Value – Nifty BeES


Average Traded Quantity: Average Traded Quantity


Nifty BeES – NSE Prices v/s NAV: Nifty BeES – NSE Prices v/s NAV


ETFs Vs Index Funds: ETFs Vs Index Funds How ETFs and Index Funds vary significantly from each other


ETFs Vs Index Funds : ETFs Vs Index Funds Equitable Structure ETFs – All investors are treated at par Index Funds – structure biased in favour of large investors and traders. E.g. Equity Fund size : Rs 100 cr Your investment Amt : Rs 10,000 Total No of investors : 1,00,000


ETFs Vs Index Funds: ETFs Vs Index Funds Large investor ( 5 cr ) enters and exits the fund in a few days Approx cost involved Brokerage : 15.00 bps STT : 12.50 bps Impact Cost : 25.00 bps Total Cost : 62.50 bps Round Trip : 123 bps


ETFs Vs Index Funds: ETFs Vs Index Funds Round Trip cost Rs : 6,15,000 For 100 investors Rs : 6,15,00,000 Cost per investor Rs : 615 Cost per investor : 6.15 % Hence total cost for one year considering ER of 2.25 % = 8.40 %


ETFs Vs Index Funds: ETFs Vs Index Funds Tracking Error Definition :The standard deviation of the difference in daily returns between a tracker fund and the relevant benchmark index, measured over a certain period of time. Acid test of an index fund manager.


ETFs Vs Index Funds: ETFs Vs Index Funds Tracking Error influenced by factors like Fees, Cash Movements, Benchmark Index Changes etc. ETFs have an extremely low tracking error. Nifty BeES tracking error of 0.12 %- lowest among all index funds on 30th June 06. Highest - 7.86 % - LIC MF Index Nifty ( Source : Outlook Money, 15 August 06 )


Nifty Index Funds: Nifty Index Funds


Sensex Index Funds: Sensex Index Funds


ETfs Vs Index Funds: ETfs Vs Index Funds Expense Ratios. ETFs generally have lower expense ratios . Transaction costs negligible in ETFs. Much higher in Index Funds, no transparency on this.


ETFs Vs Index Funds : ETFs Vs Index Funds Minimum Amounts Lesser in ETFs Min. applications size for Junior BeES = Approx Rs 65 ( 1 unit ) Min application sizes for index funds generally = at least Rs 5,000 / -


ETFs Vs Index Funds: ETFs Vs Index Funds Ease of Use ETFs easier to use, telephone transactions possible. Index funds like other MFs involve movement of a no of documents. Situation expected to become more complicated with new KYC norms from 1st November 06.


ETFs Vs Index Funds: ETFs Vs Index Funds F & O Available in ETFs abroad. Not possible in index funds. Hence ETFs abroad have benefits of derivative instruments. End of first half of 2006, 33 new options on ETFs launched. Currently 184 options and 4 futures on ETFs listed on exchanges in US, Europe and Canada.


ETFs Vs Index Funds: ETFs Vs Index Funds In the US there are 173 options on ETFs, which means that 63% of US listed ETFs have options. The total volume traded in options on ETFs in the US has risen each quarter since Q1 2003 except for Q4 2003, Q3 2004 and Q3 2005. The Chicago Board Options Exchange (CBOE) plans to launch seven new ETF options.  


ETFs Vs Index Funds: ETFs Vs Index Funds Reach ETFs have significantly higher reach than Index Funds. UTI MF the MF with the largest number of contact points in India is present in 101 cities ( including franchisees ). NSE terminals are available in 296 cities through 2740 VSATs.


ETFs Vs Index Funds: ETFs Vs Index Funds Entry / Exit Loads None in ETFs – Transactions costs exist though. Exist in some index funds, generally much higher than ETF transaction costs.


ETFs Vs Index Funds: ETFs Vs Index Funds Real Time NAVs and Trxns. Available in ETFs. Not possible in Index Funds.


ETFs Vs Index Funds : ETFs Vs Index Funds Transaction Details ETFS – reflected in Demat statement. Convenient – one statement for multiple investments. Index Funds – multiple account statements.


Market Participants Offering ETFs: Market Participants Offering ETFs


Scheme Performances……: Scheme Performances…… Source: AMFI


ETFs in India: ETFs in India Nifty BeESTM Bank BeESTM Junior Nifty BeESTM Liquid BeESTM UTI Sunder SPice


Slide72: First ETF in India. Listed on NSE. Real-time NAV on Reuters (BEES 01) and website, www.benchmarkfunds.com. Tracks the S&P CNX Nifty Index. Priced at 1/10th of the Nifty Index. Minimum Lot-size for real-time cash creation/redemption with the Fund is 10000 units. Nifty BeES


Slide73: NSE Symbol : NIFTYBEES ISIN : INF732E01011 Reuters : NBES.NS Bloomberg : NBEES.IN Money line Telerate : IN;NBFN Total expense ratio : 0.80% Entry/ Exit Load : NIL Nifty BeES Details Back


Slide74: Tracks the CNX Nifty Junior Index (Currently no other index funds available on this index). Each unit is priced at 1/100th of the CNX Nifty Junior Index. Minimum Lot-size for real-time cash creation/redemption with the Fund is 16,000 units. Best performing Fund in FY 2003-04. Junior BeES


Slide75: NSE Symbol : JUNIORBEES ISIN : INF732E01029 Reuters : JBES.NS Bloomberg : JBEES.IN Total Expense Ratio : 1% Entry/ Exit load : NIL Junior BeES Back


Slide76: Tracks the CNX Bank Index (Currently no other index funds available on this index). CNX Bank Index consists of 12 key banking stocks. Each unit is priced at 1/10th of the CNX Bank Index. Combination of a share and a mutual fund unit. Minimum Lot-size for real-time cash creation/redemption with the Fund is 10,000 units. Bank BeES


Slide77: NSE Symbol : BANKBEES ISIN : INF732E01078 Reuters : BBES.NS Bloomberg : BBEES;IN Total expense ratio : 0.55% Entry/ exit load : NIL Bank BeES Back


Slide78: First Liquid Exchange Traded Fund (ETF) in the world. One Unit Face value is Rs.1000/-. Listed and Traded on the Capital Market Segment. Constant quotes for any size at 999.99 to 1000.01 No STT, as this product is classified as Debt Fund Can be used as Cash Equivalent margin for Derivatives segment with 10% hair cut. Minimum creation size of Rs. 25 lakh and in multiple of Rs. 25 lakhs. Custodian & transaction charges have been waived by NSDL & CDSL. Liquid BeES


Slide79: NSE Symbol : LIQUIDBEES ISIN : INF732E01037 Reuters : LBES.NS Bloomberg : LBEES IN Total Expense Ratio : 0.70% Entry/ Exit load : NIL Liquid BeES Back


Slide80: Date of Inception: 7th July 2003. Listed on NSE. Tracks the S&P CNX Nifty Index. Priced at 1/10th of the Nifty Index. Minimum Lot-size for real-time cash creation/redemption with the Fund is 10000 units plus in multiples of 2000 units. Expense Ratio: 0.50 % Entry/Exit Load: Nil. UTI-Sunder


Slide81: Date of Inception: 10th January 2003. Listed on BSE & DSE. Tracks the SENSEX. Priced at 1/100th of the Sensex Minimum Lot-size for real-time cash creation/redemption with the Fund is 25000 units. Expense Ratio: 0.80 % Entry/Exit Load: Nil. Pru ICICI-SPIcE


Slide82: ETFs Global Scenario


ETFs Global Scenario: ETFs Global Scenario ETFs are becoming instrument of choice for beta exposure. Growing institutional participation In US there were 448 Institutions using ETFs during 2000. This has gone up over 1500 during 2005. Spread across the globe. Over 900 listings. Average daily trading volume over 34 billion US$ (June 2006) 195 options and 4 futures on ETFs.


ETFs Global Scenario: ETFs Global Scenario ETFs are expected to cross 2 trillion US$ by 2011 (Forecast by Morgan Stanely) Currently 68 AMCs globally offer ETFs. ETFs are becoming instrument of choice for beta exposure. Growing institutional participation. In US there were 448 Institutions using ETFs during 2000. This has gone up over 1500 during 2005. Spread across the globe 36 Stock exchanges have ETFs listed on them.


Global ETFs: Global ETFs Types of ETFs available US Broad Market US market Size - Large/Mid/Small US Market Style - Value/Growth Sector - US/Europe/Japan Global Sectors International country Regional Emerging market


Global ETFs: Global ETFs Types of ETFs available Commodities Gold Oil Commodity indices Fixed Income Govt. Corporate Rule based indices Fundamental weighted Based on quant model Dividend Yield Leveraged/Short Currency


Slide87: A Smarter way to Invest in Gold Gold BeESTM (Gold Benchmark Exchange Traded Scheme)


Slide88: Why Invest in Gold ?


Alternative Assets Comparison:: Alternative Assets Comparison:


Slide90: Improving stability and predictability of returns Gold improves the stability and predictability of portfolio returns. It is not correlated with other assets because the gold price is not necessarily driven by the same factors that drive the performance of other assets Adding gold to a portfolio introduces an entirely different class of asset. Gold is unusual because it is both a commodity and a monetary asset Gold is one of the few financial assets that is not linked to a liability. It can provide 'insurance' against extreme movements on the value of traditional asset classes


Maintaining Long Term Value: Maintaining Long Term Value During periods of financial, economic and social turmoil, Gold has been a safe refuge when the value of other assets was greatly reduced E.g. The first quarter of 2002 saw a flight to Gold by Japanese investors as they awaited the withdrawal of government guarantees on bank deposits


Gold as a safe haven: Completely free of credit risk, although it carries market risk, Gold has always been a secure refuge in unsettled times. Its ‘safe haven’ attributes attract investors In 1999, Alan Greenspan, then Chairman of the Federal Reserve Board of the United States of America, said: “Gold still represents the ultimate form of payment in the world” This point can be better demonstrated by the following chart which shows Official Gold Holdings of selected Countries and its Percentage to the Total Reserves Gold as a safe haven


Official Gold Holdings of Selected Countries: Official Gold Holdings of Selected Countries


For Inflation Hedge: For Inflation Hedge The value of gold, in terms of real goods and services that it can buy, has remained remarkably stable. In contrast, the purchasing power of many currencies have varied over time Gold has consistently reverted to its historic purchasing power parity Gold is an inflation hedge as proved by a 400-year study of the purchasing power of gold in Britain between 1596 and 1997. One ounce of gold would consistently purchase the same amount of goods and services as it would have done 400 years ago


Purchasing Power Study of Gold (Britain): Purchasing Power Study of Gold (Britain)


Gold as Inflation Hedge: Indian Scenario: Gold as Inflation Hedge: Indian Scenario


For reduced Volatility: For reduced Volatility Gold has significantly low correlation to other assets like equity indices, fixed income and commodities. Therefore adding gold to a portfolio may help improve risk adjusted returns or reduce volatility for the expected return


Correlation Between Global Equity Indices and Gold: Correlation Between Global Equity Indices and Gold


Indian Scenario: Indian Scenario India is the World's largest gold consumer, Approx 20% to 25 %(800 tonnes+) of World Production is consumed in India Social compulsion of saving in gold for many Indians Gold is acquired and stored in the form of Jewelry, Bars, Coins, Gold Deposits, Gold Accumulation Plan and now Warehouse Receipts


Indian Scenario: Indian Scenario There is need for an instrument which has Small denomination Cost efficiency Convenience for long term holding Greater uniform availability Transparency Liquidity Tax Efficiency Gold BeES Can fulfill this Need


Slide101: Why Gold BeES ?


Slide102: Exchange Traded Funds (ETF): Exchange Traded Funds are essentially Open Ended Index funds that are listed and traded on exchanges like stocks. The ETF's trading value is based on the net asset value of the underlying stocks that it represents Gold Exchange Traded Funds (Gold BeES): Gold BeES are intended to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on a stock exchange Gold BeES is designed to provide returns that, before expenses, closely correspond to the returns provided by domestic price of Gold through physical gold.


Mechanism: Mechanism Secondary market Seller Buyer NSE Gold BeES Cash Cash Primary market Buy / sell Market making / Arbitrage Fund Authorised Participants Redemption in-kind (Gold) Gold BeES


Time Line of Gold ETF's: Time Line of Gold ETF's


World Scenario: World Scenario Gold ETFs are a huge Success worldwide, with 7 GETFs trading on 10 Exchanges with a total Value of Gold at more than $12.36 bn (as on 20th Jan 2007)


Main Highlights of Gold BeES: Main Highlights of Gold BeES Open Ended Fund, which will be listed on the Exchange in the form of an Exchange Traded Fund (ETF) tracking domestic prices of gold through investments in physical Gold Designed to provide returns that, before expenses, closely correspond to the returns provided by physical Gold in spot market Each unit issued under the scheme will be approx. equal to price of 1 (one) gram of Gold Units can be bought/sold like any other stock on the National Stock Exchange of India Ltd. (NSE) or on any other exchange where it is listed


Main Highlights of GoldBeES: Main Highlights of GoldBeES The Authorized Participants and Large Investors can directly buy/sell with the Fund in Creation Units Continuous arbitrage by Authorised Participants between spot gold and Gold BeES will keep prices in line Available only in dematerialized form


Unique Features of GoldBeES : Unique Features of GoldBeES Transparent Pricing There is no market or mechanism which tracks the Real Time Gold prices in India. Therefore the wide differences in prices of gold. Gold BeES will help provide this Taxation of Mutual Fund There will be no tax deduction at source on redemption (irrespective of amount involved) for unit holders resident in India Gold BeES units are not liable for Wealth Tax Ideal for Retail Investor The minimum amount of investment during NFO for Cash is Rs.10000 and in multiples of Rs.1000 thereafter The minimum number of units that can be bought or sold on secondary market is 1 (one) unit


Comparison of Investment in Gold by Source: Comparison of Investment in Gold by Source


Slide110: Why Benchmark Mutual fund?


Slide111: India’s first Asset Management Company to focus on indexing and quantitative asset management. Endeavor to bring newer products in India Run and co promoted by professionals with long experience in Indian and International Financial Markets Conceived the Idea of Gold ETF At Present: The largest ETF (Exchange Traded Fund) manager in India* Largest Index Fund Manager in India* Total Assets under management of approx Rs. 7938.48 crores* (* as of 29 December 2006.)


Slide112: Mutual Fund products introduced so far: Nifty BeES – First Exchange Traded Fund in India Liquid BeES – First & Only Liquid ETF in the world Junior BeES – First & Only Mid-cap index Fund and ETF in India Bank BeES – First and only sector Index Fund and ETF in India Benchmark Derivative Fund – First equity arbitrage and market neutral fund in India Split Capital Fund – Unique product offering downside protection to the equity investors while ensuring unlimited upside depending on the equity participation.


Slide113: PMS products introduced so far: Systematically Trading Portfolio (STraP) Capital Preservation Portfolio System (CaPPS) Equity Arbitrage Scheme (EAS) Equity Arbitrage Scheme-Pairs Trading


Disclaimer: Disclaimer Mutual funds and Securities investments are subject to market risks and there can be no assurance or guarantee that the objective of the Scheme will be achieved. As with any investment in securities, the Net Asset Value (NAV) of the units issued under the Scheme can go up or down depending on the factors and forces affecting the bullion market, capital market and money market. Past performance of the Sponsors and its affiliates does not indicate the future performance of the Scheme of the Mutual Fund. Gold Benchmark Exchange Traded Scheme (GoldBeES) is the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects and the returns. Investors are therefore urged to study the terms of offer carefully and consult their Investment Advisor before they invest in the Schemes. GoldBeES is the Exchange Traded Fund (ETF). Though ETF’s are popular abroad, it is still a new concept in India. The Sponsor i.e Niche Financial Services Pvt. Ltd., is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it of an amount of Rs. 1 Lac towards setting up of the Mutual Fund. Investors in the Schemes are not being offered any guaranteed or assured returns. The Schemes’ NAV will react to the Gold Bullion market movements. The Investor could lose money over short periods due to fluctuation in the Scheme’s NAV in response to factors such as economic and political developments, changes in interest rates and perceived trends in bullion prices market movements, and over longer periods during market downturns.


Slide115: INVESTMENT MANAGER Benchmark Asset Management Company Pvt. Ltd. 405, Raheja Chambers, Free Press Journal Marg, 213, Nariman Point, Mumbai - 400 021. Tel: +91 22 5651 2727 Fax: +91 22 2200 3412 SPONSORS Niche Financial Services Pvt. Ltd. Office No 4-5, 1st Floor, 11 / 13, Botawala Building, Horniman Circle, Fort, Mumbai - 400 001. Tel: +91 22 6777 6777 Fax +91 22 6777 6999 TRUSTEE Benchmark Trustee Company Pvt. Ltd. 405, Raheja Chambers, Free Press Journal Marg,213, Nariman Point, Mumbai - 400 021. Tel: +91 22 5651 2727 Fax: +91 22 2200 3412 CUSTODIANS FOR NIFTY BEES, JUNIOR BEES, LIQUID BEES, BANK BEES AND BENCHMARK SPLIT CAPITAL FUND – BALANCED Citibank N.A. 77,Ramnord HouseDr. Annie Besant RoadWorli, Mumbai – 400 018 Tel: +91 22 2497 5301 Fax: +91 22 2493 7620 FOR BENCHMARK DERIVATIVE FUND ICICI Bank Ltd. Empire Complex, F7/E7, 1st Floor 414, Senapati Bapat Marg,Lower Parel , Mumbai – 400 013 Tel: +91 22 5667 2069 Fax: +91 22 56672779


Risk Factors: Risk Factors Mutual funds and Securities investments are subject to market risks and there can be no assurance or guarantee that the objective of the Scheme will be achieved. As with any investment in securities, the Net Asset Value (NAV) of the units issued under the Scheme(s) can go up or down depending on the factors and forces affecting the capital market. Past performance of the Sponsors and its affiliates does not indicate the future performance of the Schemes of the Mutual Fund. Nifty Benchmark Exchange Traded Scheme (Nifty BeES), Nifty Junior Benchmark Exchange Traded Scheme (Junior BeES), Liquid Benchmark Exchange Traded Scheme (Liquid BeES), Banking Index Benchmark Exchange Traded Scheme (Bank BeES), Benchmark Derivative Fund and Benchmark Split Capital Fund - Balanced are the names of the Schemes and does not in any manner indicate either the quality of the Schemes or its future prospects and the returns. Investors are therefore urged to study the terms of offer carefully and consult their Investment Advisor before they invest in the Schemes. Nifty BeES, Junior BeES, Liquid BeES and Bank BeES are Exchange Traded Funds (ETF). Though ETFs are popular abroad, it is still a new concept in India. The Sponsor i.e Niche Financial Services Pvt. Ltd., is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it of an amount of Rs. 1 Lac towards setting up of the Mutual Fund. Investors in the Schemes are not being offered any guaranteed or assured returns. The Schemes’ NAV will react to the stock market movements and interest rate movements. The Investor could lose money over short periods due to fluctuation in the Scheme’s NAV in response to factors such as economic and political developments, changes in interest rates and perceived trends in stock prices market movements, and over longer periods during market downturns.


Slide117: Thank you