What is an Exchange Traded FundWhat is an Exchange Traded Fund(ETF)(ETF)

Exchange Traded Funds are essentially Open Ended Index funds that are listed and traded on exchanges like stocks.

ETF defined

Familiar Ground: Best of Both Worlds

Like an Index Fund…Constructed to track the Index/underlying assetOpen ended Mutual fundLow Expense ratioLow Turnover

Like a Stock…Trading flexibility intraday on the exchange Real time price close to NAVShort term traders are not subsidized by long term investors

ETF Advantage

MechanismMechanismSecondary market

Seller

Buyer

NSE

Gold BeES Cash

Cash

Primary market

Buy / sell

Market making / Arbitrage

Fund

AuthorisedParticipants

Redemptionin-kind (Gold)

Gold BeES

Source: Bloomberg, Morgan Stanley Research

Growth of International ETFs

-100200300400500600700

0100200300400500600700800900

AUM $ Billion No. Of ETF

AUM $ Billion 1 1 2 5 8 18 40 74 105 142 212 310 417 574 604

No. Of ETF 1 1 2 19 19 29 30 92 202 280 282 336 453 732 847

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Mar-07

ETFs on NSE

Nifty BeESBeESTMTM

Bank BeESBeESTMTM

Junior Nifty BeESBeESTM TM

Liquid BeESBeESTMTM

Gold Gold BeESBeESTMTM

UTI SunderUTI Sunder

UTI Gold ShareUTI Gold Share

KotakKotak Gold ETFGold ETF

Source: AMFI

Growth of ETFs in India

0

2000

4000

6000

8000

10000

Rs.

Cro

res

0123456789

AssetsNo of ETF

Assets 7 206 568 2935 7800 6000

No of ETF 1 5 6 6 6 8

Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 May-07

What is Gold Exchange Traded Fund (Gold BeES)?

Indian Scenario

India is the World's largest gold consumer, Approx 20% to 25 %(800 tonnes+) of World Production is consumed in IndiaSocial 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

There is need for an instrument which hasSmall denomination

Cost efficiency

Convenience for long term holding

Greater uniform availability

Transparency

Liquidity

Tax Efficiency

Gold ETF (GoldBeES) Can fulfill this Need

Introduction:

Gold Exchange Traded Funds (GETF):

Gold ETF's are intended to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold through the trading of a security on a stock exchange.

A Gold ETF is designed to provide returns that, before expenses, closely correspond to the returns provided by Gold.

Time Line of Gold ETF's

SEBI amended Custodian of Securities ActNov 06

Additional Listing of Street Tracks in SingaporeOct 06

Additional Listing of Street tracks in MexicoAug 06

Lyxor Gold Bullion Security listed on Euro nextNov 05

Gold ETF introduced in India by Benchmark AMCFeb 07

ZKB Gold ETF listed in SwitzerlandMar 06

I shares Comex Gold Trust on NYSEJan 05

New Gold Bullion Debentures listed in SANov 04

Street Tracks Gold ETF launched on NYSENov 04

Gold bullion Security launched on LSEDec 03

Gold Bullion Security launched in AustraliaMar 03

Benchmark AMC Files OD for the first ETF in the world with SEBI

May 02

World Scenario:

Gold ETFs was a Huge Success worldwide with 10 GETFs Trading on 11 Exchanges with Total Value of Gold holding more than $15 bn. (as on 24th July 2007)

1.3GOLDIST listed on Istanbul Stock Exchange

21.7ZKB Gold ETF listed on Switzerland

AUM (tonnes)Name of Gold ETF

GoldBeES (Benchmark AMC), Goldshare (UTI AMC) & Kotak Gold (Kotak M F) listed on National Stock Exchange India

I shares Comex Gold Trust listed on NYSE

New Gold Bullion Debentures listed on JSE, SA

Street Tracks Gold ETF listed on NYSE & Singapore

Lyxor Gold bullion Security listed on LSE, EuronextParis, Borsa Italiana & Frankfurter Wertpapierbörse(Deutsche Börse )

Gold Bullion Security Australia

3.36

45.91

13.92

497.15

93.10

12.48

Main Highlights of GoldBeES:

Open Ended Fund, 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

Unique Features of GoldBeES :

Quick and Convenient DealingNo Storage & Security IssuesTransparent PricingTaxation of Mutual FundAlso Ideal for Retail Investor

Other details

Unit denomination : approx one gram of gold

Annual total expense ratio : 1% per annum (maximum)

Price includes VAT

NSE accepts it as collateral with only 15% hair cut.

No STT on the exchange

Gold BeES Performance Details:

Listed on: March 19th 2007

Initial Corpus: Approx. 100 Crores

Latest Corpus: Approx. 125 Crores

(As on 17th August 2007)

Avg Daily Traded Quantity: 8.65 Kg.

Avg Daily Trades: 612

Indian Gold ETF Comparison:

Asset Under Management (AUM):(As on 31st July 2007)

GoldBeES- Rs. 123.98 Crores

Goldshare- Rs. 137.57 Crores

KotakGold- Rs. 41.15 Crores

Gold ETF first few months

Very high market expectation prior to launch

Moderate collection during NFOs

Substantial increase in no of investors post NFO

No of new launches may not result in popularity

Strong rupee a dampener

Requirement of a demat account probably restricts conversion.

Trading Volumes Comparison:

Trading Volume Comparison

0

10000

20000

30000

40000

50000

60000

70000

19-M

ar-0

7

27-M

ar-0

7

4-Ap

r-07

12-A

pr-0

7

20-A

pr-0

7

28-A

pr-0

7

6-M

ay-0

7

14-M

ay-0

7

22-M

ay-0

7

30-M

ay-0

7

7-Ju

n-07

15-J

un-0

7

23-J

un-0

7

1-Ju

l-07

9-Ju

l-07

17-J

ul-0

7

25-J

ul-0

7

2-Au

g-07

10-A

ug-0

7

18-A

ug-0

7

Period

Volu

me

in U

nits

Gold BeES Gold Share Kotak Gold

30 Day Moving Average-Volumes Comparison:

Volumes - 30 Days Moving Average

20004000

60008000

1000012000

1400016000

18-A

pr-0

7

25-A

pr-0

7

2-M

ay-0

7

9-M

ay-0

7

16-M

ay-0

7

23-M

ay-0

7

30-M

ay-0

7

6-Ju

n-07

13-J

un-0

7

20-J

un-0

7

27-J

un-0

7

4-Ju

l-07

11-J

ul-0

7

18-J

ul-0

7

25-J

ul-0

7

1-Au

g-07

8-Au

g-07

15-A

ug-0

7

Period

Uni

ts

Gold BeES Gold Share

Benchmark Mutual Fund

India’s first Asset Management Company to focus on indexing and quantitative asset management.Endeavor to bring newer products in IndiaRun and co promoted by professionals with long experience in Indian and International Financial Markets Introduced Idea of Gold ETF in the WorldCurrently:

The largest ETF (Exchange Traded Fund) manager in India*Largest Index Fund Manager in India*Total Assets under management of around Rs. 7459.21 crores*

(* as of 31st July 2007.)

Mutual Fund products introduced so far:Nifty BeES – First Exchange Traded Fund in IndiaLiquid BeES – First & Only Liquid ETF in the worldJunior BeES – First & Only Mid-cap index Fund and ETF in IndiaBank BeES – First and only sector Index Fund and ETF in IndiaGold BeES – First Gold ETF in IndiaBenchmark Derivative Fund – First equity arbitrage and market neutral fund in IndiaSplit Capital Fund – Unique product offering downside protection to the equity investors while ensuring unlimited upside depending on the equity participation.

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

Achievement:Best Provider of Structured Products

EUROMONEYPrivate Banking Poll

2006 & 2005

DisclaimerMutual 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 capital market. Past performance of the Sponsors and its affiliates does not indicate the future performance of the Schemes 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.

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