SCHEME INFORMATION DOCUMENT EXCHANGE TRADED FUNDS A. OPEN ENDED INDEX SCHEMES (1) NIFTY BENCHMARK EXCHANGE TRADED SCHEME (Nifty BeES) (2) NIFTY JUNIOR BENCHMARK EXCHANGE TRADED SCHEME (Junior BeES) (3) BANKING INDEX BENCHMARK EXCHANGE TRADED SCHEME (Bank BeES) (4) PSU BANK BENCHMARK EXCHANGE TRADED SCHEME (PSU Bank BeES) (5) SHARIAH BENCHMARK EXCHANGE TRADED SCHEME (Shariah BeES) (6) HANG SENG BENCHMARK EXCHANGE TRADED SCHEME (Hang Seng BeES) (7) INFRASTRUCTURE BENCHMARK EXCHANGE TRADED SCHEME (Infra BeES) B. OPEN ENDED LIQUID SCHEME (1) LIQUID BENCHMARK EXCHANGE TRADED SCHEME (Liquid BeES) C. OPEN ENDED GOLD SCHEME (1) GOLD BENCHMARK EXCHANGE TRADED SCHEME (Gold BeES) CONTINUOUS OFFER of units at NAV based prices Mutual Fund: Asset Management Company: Trustee Company: Registered Office: Tel No.: Fax No.: Toll Free No.: Website:

BENCHMARK MUTUAL FUND Benchmark Asset Management Company Pvt. Ltd. Benchmark Trustee Company Pvt. Ltd. 405, Raheja Chambers, Free Press Marg, 213, Nariman Point Mumbai - 400 021 022 66512727 022 22003412 1800-22-5079 www.benchmarkfunds.com

The particulars of the Schemes have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations 1996, (herein after referred to as SEBI (MF) Regulations) as amended till date, and filed with SEBI, along with a Due Diligence Certificate from the AMC. The units being offered for public subscription have not been approved or recommended by SEBI nor has SEBI certified the accuracy or adequacy of the Scheme Information Document (SID). The SID sets forth concisely the information about the Schemes that a prospective investor ought to know before investing. Before investing, investors should also ascertain about any further changes to this SID after the date of this Document from the Mutual Fund / Investor Service Centres / Website / Distributors or Brokers. The investors are advised to refer to the Statement of Additional Information (SAI) for details of Benchmark Mutual Fund, Tax and Legal issues and general information on www.benchmarkfunds.com. SAI is incorporated by reference (is legally a part of the SID). For a free copy of the current SAI, please contact your nearest Investor Service Centre or log on to our website www.benchmarkfunds.com. The SID should be read in conjunction with the SAI and not in isolation. This SID is dated March 25, 2011.

TABLE OF CONTENTS

3

Highlights / Summary of the Schemes I.

Introduction

II.

A. Risk Factors

6

B. Requirement of Minimum Investors in the Schemes

10

C. Special Considerations

11

D. Definitions

15

E. Due Diligence by the Asset Management Company

18

Information about the Schemes A. Type of the Scheme

19

B. Investment Objective

19

C. Asset Allocation

20

D. Investment by the Schemes

22

E. Investment Strategy

29

F. Fundamental Attributes

32

G. Benchmark Index

33

H. Fund Manager

33

I. Investment Restrictions

34

J. Schemes Performance

36

K. About the Index

44

L. Introduction to Index Funds & Exchange Traded Funds

48

M. Debt Markets in India

52

III.

IV.

Units and Offer A. New Fund Offer (NFO)

53

B. Ongoing Offer Details

53

C. Periodic Disclosures

72

D. Computation of NAV

73

Fees and Expenses A. New Fund Offer (NFO) Expenses

75

B. Annual Scheme Recurring Expenses

75

C. Load Structure

78

V.

Rights of Unit holders

80

VI.

Penalties and Pending Litigation

80

2

HIGHLIGHTS/SUMMARY OF THE SCHEMES Investment (1) Nifty BeES The investment objective of the Scheme is to provide investment returns that, before Objective expenses, closely correspond to the total returns of the securities as represented by the S&P CNX Nifty Index. (2) Junior BeES The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the returns of securities as represented by CNX Nifty Junior Index. (3) Bank BeES The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the CNX Bank Index. (4) PSU Bank BeES The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the CNX PSU Bank Index. (5) Shariah BeES The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the S&P CNX Nifty Shariah Index by investing in securities which are constituents of S&P CNX Nifty Shariah Index in the same proportion as in the Index. (6) Infra BeES The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the CNX Infrastructure Index by investing in the securities in the same proportion as in the Index. (7) Liquid BeES The investment objective of the Scheme is to enhance returns and minimize price risk by investing in basket of call money, short-term government securities and money market instruments of short and medium maturities while maintaining the safety and liquidity. (8) Gold BeES The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the returns provided by domestic price of gold through physical Gold. (9) Hang Seng BeES The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of securities as represented by Hang Seng Index of Hang Seng Data Services Limited, by investing in the securities in the same proportion as in the Index. There can be no assurance or guarantee that the investment objective of the Schemes will be achieved. Benchmark Index

1. 2. 3. 4. 5. 6. 7. 8. 9.

Nifty BeES - S&P CNX Nifty Index Junior BeES - CNX Nifty Junior Index Bank BeES - CNX Bank Index PSU Bank BeES - CNX PSU Bank Index Shariah BeES - S&P CNX Shariah Nifty Index Infra BeES - CNX Infrastructure Index Liquid BeES – CRISIL Liquid Fund Index Hang Seng BeES - Hang Seng Index Gold BeES – Price of physical Gold

3

Face Value

1. Nifty BeES - Rs. 10/- per unit 2. Junior BeES - Rs. 1.25/- per unit 3. Bank BeES - Rs. 10/- per unit 4. PSU Bank BeES - Rs. 10/- per unit 5. Shariah BeES - Rs. 10/- per unit 6. Infra BeES - Rs. 10/- per unit 6. Liquid BeES - Rs. 1,000/- per unit 7. Gold BeES - Rs. 100/- per unit 8. Hang Seng BeES - Rs. 10/- per unit

Type of Scheme

(1) Nifty BeES, (2) Junior BeES, (3) Bank BeES, (4) PSU Bank BeES, (5) Shariah BeES and (6) Infra BeES are open ended index schemes, listed on the Exchange in the form of an Exchange Traded Fund (ETF) tracking (1) S&P CNX Nifty Index, (2) CNX Nifty Junior Index, (3) CNX Bank Index, (4) CNX PSU Bank Index (5) S&P CNX Nifty Shariah Index and (6) CNX Infrastructure Index, respectively. Liquid BeES is an open ended liquid scheme, listed on the Exchange in the form of an Exchange Traded Fund (ETF) with daily dividend and compulsory reinvestment of dividend Gold BeES is an open ended scheme, listed on the Exchange in the form of an Exchange Traded Fund (ETF) investing in physical Gold. Hang Seng BeES is an open ended Index Scheme, investing in overseas securities, listed on the Exchange in the form of an Exchange Traded Fund (ETF) tracking Hang Seng Index.

Liquidity facility

The units of the Schemes can be bought / sold like any other stock on the National Stock Exchange of India Ltd. (NSE) or the Authorised Participants and Large Investors can directly buy/sell units with the Fund in Creation Unit Size. Liquid BeES Additional facility in Liquid BeES: In addition to creation / redemption of units of Liquid BeES in exchange of Portfolio Deposit and Cash Component in creation unit size, investors can also subscribe / redeem units of Liquid BeES through the facility provided by National Stock Exchange of India Ltd. (NSE) and the Bombay Stock Exchange Ltd. (BSE).

Transparency/ NAV disclosure

NAV shall be declared and announced on all working days. The details of the portfolio shall be disclosed on a half yearly basis as prescribed by SEBI (Mutual Funds) Regulations, 1996.

Load Structure

Entry Load - Nil Exit Load - Nil

Minimum Application

1. All Schemes i. Directly with Fund - The investors can create/redeem in exchange of Portfolio Deposit and Cash Component in creation unit size for each Scheme. ii. On the Exchange - 1 unit. 2. Liquid BeES Additional facility in Liquid BeES: In addition to creation/redemption of units of Liquid BeES in exchange of Portfolio Deposit and Cash Component in creation unit size, investors can also subscribe/redeem units of Liquid BeES through the facility provided by National Stock Exchange of India Ltd. (NSE) and the Bombay Stock Exchange Ltd. (BSE). Investors can through this facility subscribe units of Liquid BeES with a minimum amount of Re. 1 and in multiples thereof. Investors can through this facility redeem units of Liquid BeES with a minimum of 0.001 units and in multiples thereof.

4

Units Offered

As the units of the Schemes can be bought/sold directly from the Fund, this mechanism provides efficient arbitrage between the traded prices and the NAV, thereby reducing the incidence of the units of the Schemes being traded at premium/discounts to NAV.

Dematerialisation

The units of the Schemes are available in Dematerialized form. This helps in consolidating with other portfolio holdings.

5

I. INTRODUCTION A. RISK FACTORS Standard Risk Factors:  Investment in Mutual Fund Units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal.  As the price/value/interest rates of the securities in which the Schemes invests fluctuates, the value of your investment in the Schemes may go up or down depending on the factors and forces affecting the capital market.  Past performance of the Sponsors/AMC/Mutual Fund does not guarantee the future performance of the Schemes.  The name of the Schemes 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.  The Sponsor 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.  The present Schemes are not a guaranteed or assured return Schemes. Scheme Specific Risk Factors The Schemes are subject to the principal risks described below. Some or all of these risks may adversely affect Schemes’ NAV, yield, return and/or its ability to meet its objectives. 

Market Risk The NAV of the Schemes will react to the stock market movements. The investor could lose money over short periods due to fluctuation in the Schemes NAV in response to factors such as economic and political developments, changes in interest rates and perceived trends in stock market movements and over longer periods during market downturns.

 1.

Market Trading Risks Absence of Prior Active Market: Although the Schemes are listed on NSE, there can be no assurance that an active secondary market will develop or be maintained. Lack of Market Liquidity: Trading in the units of the Schemes on NSE may be halted because of market conditions or for reasons that in view of NSE or SEBI, trading in the units of the Schemes are not advisable. In addition, trading of the units of the Schemes are subject to trading halts caused by extraordinary market volatility and pursuant to NSE and SEBI ‘circuit filter’ rules. There can be no assurance that the requirements of NSE necessary to maintain the listing of the units of the Schemes will continue to be met or will remain unchanged. Units of the Schemes May Trade at Prices Other than NAV: The units of the Schemes may trade above or below their NAV. The NAV of the Schemes will fluctuate with changes in the market value of the holdings of the Schemes. The trading prices of the units of the Schemes will fluctuate in accordance with changes in their NAV as well as market supply and demand for the units of the Schemes. However, given that units of the Schemes can be created and redeemed in Creation Units directly with the Fund, it is expected that large discounts or premiums to the NAV of units of the Schemes will not sustain due to arbitrage opportunity available. Regulatory Risk: Any changes in trading regulations by NSE or SEBI may affect the ability of market maker to arbitrage resulting into wider premium/discount to NAV. Right to Limit Redemptions: The Trustee, in the general interest of the Unit holders of the Schemes offered under this SID and keeping in view of the unforeseen circumstances/unusual market conditions, may limit the total number of Units which can be redeemed on any Business Day depending on the total “Saleable Underlying Stock” available with the Fund.

2.

3.

4. 5.



Volatility Risk The equity markets and derivative markets are volatile and the value of securities, derivative contracts and other instruments correlated with the equity markets may fluctuate dramatically from day to day. This volatility may cause the value of investment in the Schemes to decrease.

6



Redemption Risk Investors may note that even though the Schemes are open-ended Schemes, the Schemes would ordinarily repurchase units in creation unit size. Thus in case of (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES and (vi) Infra BeES, unit holdings less than the creation unit size can only be sold through the secondary market on the exchange unless no quotes are available on the NSE for 5 trading days consecutively. However, in (i) Gold BeES and (ii) Hang Seng BeES, unit holdings in less than creation unit size cannot be redeemed directly with the Fund in any circumstances.



Asset Class Risk The returns from the types of securities in which the Schemes invest may under perform returns of general securities markets or different asset classes. Different types of securities tend to go through cycles of out-performance and under-performance in comparison of securities markets.



Passive Investments The Schemes, excluding Liquid BeES are not actively managed. The Schemes which are linked to indices may be affected by a general decline in the Indian markets relating to its Underlying Index and in case of Gold BeES the Scheme would be affected by a general decline in the price of physical gold. The Scheme as per its investment objective invests in physical gold in Gold BeES and for other Schemes in securities which are constituents of its Underlying Index regardless of their investment merit. The AMC does not attempt to individually select stocks or to take defensive positions in declining markets.



Tracking Error Risk for Schemes tracking indices The Fund Manager would not be able to invest the entire corpus exactly in the same proportion as in the Underlying Index due to certain factors such as the fees and expenses of the respective Scheme, Corporate Actions, Cash balance, changes to the Underlying Index and regulatory policies which may affect AMC’s ability to achieve close correlation with the Underlying Index of the Scheme. The Schemes’ returns may therefore deviate from those of its Underlying Index. "Tracking Error" is defined as the standard deviation of the difference between daily returns of the Underlying Index and the NAV of the respective Scheme. Tracking Error may arise due to the following reasons: 1. Expenditure incurred by the Fund. 2. The Fund may not be invested at all times as it may keep a portion of the funds in cash to meet redemptions or for corporate actions. 3. Securities trading may halt temporarily due to circuit filters. 4. Corporate actions such as debenture or warrant conversion, rights, merger, change in constituents etc. 5. Rounding off of quantity of shares in Underlying Index 6. Dividend payout. 7. Index providers undertake a periodical review of the scrips that comprise the Underlying Index and may either drop or include new scrips. In such an event, the Fund will try to reallocate its portfolio but the available investment/reinvestment opportunity may not permit absolute mirroring immediately.



Investments in Derivative Instruments The Schemes may use various derivative products in an attempt to protect the value of portfolio and enhance the Unit holder interest. As and when the Schemes trades in derivative market, there are risk factors and issues concerning the use of derivatives that the investors should understand. Derivative products are specialized instrument that require investment technique and risk analysis different from those associated with stocks. The use of derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivative requires the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price. There is a possibility that loss may be sustained by the portfolio as a result of the failure of another party (usually referred as the “Counter party”) to

7

comply with the terms of the derivative contract. Other risks in using derivative include the risk of mispricing or improper valuation of derivative and the inability of derivative to correlate perfectly with underlying assets, rates and indices. Thus, derivatives are highly leveraged instruments. The risk of loss associated with futures contracts is potentially unlimited due to the low margin deposits required and the extremely high degree of leverage involved in futures pricing. As a result, a relatively small price movement in a futures contract may result in an immediate and substantial loss or gain. There may be a cost attached to selling or buying futures or other derivative instrument. Further there could be an element of settlement risk, which could be different from the risk in settling underlying securities. The possible lack of a liquid secondary market for a futures contract or listed option may result in inability to close futures or listed option positions prior to their maturity date. Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the Fund Manager to identify such opportunities. Identification and execution of the strategies to be pursued by the Fund Manager involve uncertainty and decision of the Fund Manager may not always be profitable. No assurance can be given that the Fund Manager will be able to identify or execute such strategies. The risk associated with the use of derivatives are different from or possibility greater than the risks associated with investing directly in securities and other traditional investments. 

Investments in Overseas Financial Assets The Schemes may also invest in overseas financial assets as permitted under the applicable regulations. To the extent that the assets of the Schemes are invested in overseas financial assets, there may be risks associated with currency movements, the nature of the securities market of the relevant country and restrictions on repatriation and transaction procedures in overseas market. Further, the repatriation of capital to India may also be hampered by changes in the regulations concerning exchange controls, political circumstances, bi-lateral conflicts or prevalent tax laws. Investment in securities denominated in foreign currencies carry exchange rate risks related to depreciation in the value of foreign currency relative to the Indian Rupee.



Securities Lending Securities lending is lending of securities through an approved intermediary to a borrower under an agreement for a specified period with the condition that the borrower will return equivalent securities of the same type or class at the end of the specified period along with the corporate benefits accruing on the securities borrowed. There are risks inherent in securities lending, including the risk of failure of the other party, in this case the approved intermediary, to comply with the terms of the agreement entered into between the lender of the securities i.e. the Scheme and the approved intermediary. Such failure can result in the possible loss of rights to the collateral put up by the borrower of the securities, inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefits accruing to the lender in respect of the securities lent. The Fund may not be able to sell such lent securities and this can lead to temporary illiquidity.



Applicable to Bank BeES, PSU Bank BeES and Infra BeES Sector Risk The Schemes restricts its investments only in the securities of the Underlying Index which is based to a particular sector. The banking sector, public sector banks and infrastructure sector, respectively, could under perform returns from securities included in the Index or other asset classes. As the Schemes are linked to a particular Index which pertains to a particular sector, the Investment Manager would have to invest in the companies comprising such Index whereby there is no diversification.



Applicable to Shariah BeES Index Risk The Scheme restricts its investments only in the securities of the Underlying Index which is based on certain principles. As the Scheme is linked to a particular Index which pertains to certain principles, the

8

Investment Manager would have to invest in the companies comprising the Index whereby there is no diversification. 

Applicable to Hang Seng BeES Currency risk The foreign securities are issued and traded in foreign currencies. To the extent that the assets of the Scheme are invested in securities denominated in foreign currencies, the Indian rupee equivalent of the net assets, distribution and income may be adversely affected by changes in the exchange rates of respective foreign currencies relative to the Indian Rupee. Restrictions on currency trading that may be imposed by developing market countries will have an adverse effect on the value of the securities of companies that trade or operate in such countries. The repatriation of capital to India may also be hampered by changes in the regulations concerning exchange controls or political circumstances as well as the application to it of other restriction on investment. Limits of Investment in Foreign Securities As per the SEBI Regulations, the Fund is permitted to invest US $ 300 million in foreign securities. However, the overall limit for the Mutual Fund Industry is US $ 7 billion. The Scheme therefore may or may not be able to utilise the limit of US $ 300 million due to the US $ 7 billion limit being exhausted by other Mutual Funds. Further, the overall ceiling for investment in overseas Exchange Traded Funds (ETFs) that invests in securities is US $ 1 billion subject to a maximum of US $ 50 million per mutual fund. As and when the investment limits are breached, the subscriptions would be stopped till such time that the assets under management in the Scheme would decrease from the threshold limit as mentioned in the Regulation. Restrictions on Foreign Investment Some countries prohibit or impose substantial restrictions on investments by foreign entities. Certain countries may restrict investment opportunities in issuers or industries or securities deemed important to national interests. The manner, in which foreign investors may invest in companies/securities in certain countries, as well as limitations on such investments, may have an adverse impact on the operations of the Scheme. Certain risk arises from the inability of a country to meet its financial obligations. The risk encompassing economic, social and political conditions in a foreign country which might adversely affect the interests of the Scheme. Overseas Stock Exchange The Scheme shall invest in securities listed on the overseas stock exchange. Hence all the risk factors pertaining to overseas stock exchange like market trading risk, liquidity risk and volatility risk, as mentioned earlier, are also applicable to the Scheme. Settlement Risks The Scheme will be exposed to settlement risk, as different countries have different settlement periods. Investments in Overseas Mutual Fund Schemes The Scheme intends to invest in the units of overseas mutual fund schemes including exchange traded funds. Hence scheme specific risk factors of such underlying schemes will be applicable. All risks associated with such schemes, including performance of their underlying stocks, derivative instruments, stock-lending, off-shore investments, liquidity, etc., will therefore be applicable in this Scheme. Investors who intend to invest in the Scheme are required to and deemed to have understood the risk factors of the underlying schemes. Redemption by exchange of Portfolio Deposit In case a unit holder wishes to redeem in creation unit size, the units of the Scheme by exchange of portfolio deposit, then such unit holder is required to have a securities account, etc. in their respective jurisdiction which permits them to hold such securities and which will enable the AMC to transfer the constituents of the Underlying Index.

9



Applicable to Gold BeES Indirect taxation For valuation of units of the Scheme, indirect taxes like customs duty, VAT, etc. would also be considered. Hence, any change in the rates of indirect taxation would affect the valuation of the units of the Scheme.



Applicable to Liquid BeES Interest Rate Risk Changes in interest rates will affect the Scheme’s Net Asset Value. The prices of securities usually increase as interest rates decline and usually decrease as interest rates rise. The extent of fall or rise in the prices is guided by duration, which is a function of the existing coupon, days to maturity and increase or decrease in the level of interest rate. The new level of interest rate is determined by the rate at which the government raises new money and/or the price levels at which the market is already dealing in existing securities. Prices of long-term securities generally fluctuate more in response to interest rate changes than short-term securities. The price risk is low in the case of the floating rate or inflation-linked bonds. The price risk does not exist if the investment is made under a repo agreement. Debt markets, especially in developing markets like India, can be volatile leading to the possibility of price moving up or down in fixed income securities and thereby to possible movements in the NAV. Credit Risk Credit Risk means that the issuer of a security may default on interest payments or even paying back the principal amount on maturity. (i.e. the issuer may be unable to make timely principal and interest payments on the security). Even where no default occurs, the prices of security may go down because the credit rating of an issuer goes down. However, it must be noted that where the Scheme has invested in Government securities, there is no risk to that extent. Liquidity or Marketability Risk This refers to the ease at which a security can be sold at or near its true value. The primary measure of liquidity risk is the spread between the bid price and the offer price quoted by a dealer. Liquidity risk is characteristic of the Indian fixed income market. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of the investments made by the Scheme. Different segments of the Indian financial markets have different settlement periods and such period may be extended significantly by unforeseen circumstances leading to delays in receipt of proceeds from sale of securities. As liquidity of the investments made by the Scheme could, at times, be restricted by trading volumes and settlement periods, the time taken by the Fund for redemption of units may be significant in the event of an inordinately large number of redemption requests or restructuring of the Scheme. Securitised Debt The Scheme may invest in domestic securitised debt such as asset backed securities (ABS) or mortgage backed securities (MBS). ABS are securitised debts where the underlying assets are receivable arising from various loans including automobile loans, personal loans, loans against consumer durables, etc. MBS are securitized debts where the underlying assets are receivables arising from loans backed by mortgage of residential /commercial properties. ABS/MBS instruments reflect the undivided interest in the underlying pool of assets and do not represent the obligation of the issuer of ABS/MBS or the originator of the underlying receivables. The ABS/MBS holders have a limited recourse to the extent of credit enhancement provided. If the delinquencies and credit losses in the underlying pool exceed the credit enhancement provided, ABS/MBS holders will suffer credit losses. ABS/MBS are normally exposed to a higher level of reinvestment risk as compared to normal corporate or so sovereign debt.

B.

REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME As the Schemes are Exchange Traded Schemes, the provisions of minimum number of investors and maximum holding of the investors are not applicable as per SEBI Regulations and Circulars.

10

C. 

SPECIAL CONSIDERATIONS Prospective investors should review/study SAI along with SID carefully and in its entirety and shall not construe the contents hereof or regard the summaries contained herein as advice relating to legal, taxation, or financial/investment matters and are advised to consult their own professional advisor(s) as to the legal or any other requirements or restrictions relating to the subscriptions, gifting, acquisition, holding, disposal (sale, transfer, switch or redemption or conversion into money) of units and to the treatment of income (if any), capitalization, capital gains, any distribution, and other tax consequences relevant to their subscription, acquisition, holding, capitalization, disposal (sale, transfer, switch or redemption or conversion into money) of units within their jurisdiction/nationality, residence, domicile etc. or under the laws of any jurisdiction to which they or any managed funds to be used to purchase/gift units are subject, and also to determine possible legal, tax, financial or other consequences of subscribing/gifting to, purchasing or holding units before making an application for units.



Neither this SID and SAI, nor the units have been registered in any jurisdiction. The distribution of this SID in certain jurisdictions may be restricted or subject to registration and accordingly, any person who gets possession of this SID is required to inform themselves about, and to observe, any such restrictions. It is the responsibility of any persons in possession of this SID and any persons wishing to apply for units pursuant to this SID to inform themselves of and to observe, all applicable laws and Regulations of such relevant jurisdiction. Any changes in SEBI/NSE/RBI regulations and other applicable laws/regulations could have an effect on such investments and valuation thereof.



Benchmark Mutual Fund/AMC has not authorised any person to give any information or make any representations, either oral or written, not stated in this SID in connection with issue of units under the Schemes. Prospective investors are advised not to rely upon any information or representations not incorporated in the SAI and SID as the same have not been authorised by the Fund or the AMC. Any purchase or redemption made by any person on the basis of statements or representations which are not contained in this SID or which are not consistent with the information contained herein shall be solely at the risk of the investor. Investors are requested to check the credentials of the individual, firm or other entity they are entrusting their application form and payment to, for any transaction with the Fund. The Fund shall not be responsible for any acts done by the intermediaries representing or purportedly representing such investor.



If the units are held by any person in breach of the Regulations, law or requirements of any governmental, statutory authority including, without limitation, Exchange Control Regulations, the Fund may mandatorily redeem all the units of any Unit holder where the units are held by a Unit holder in breach of the same. The Trustee may further mandatorily redeem units of any Unit holder in the event it is found that the Unit holder has submitted information either in the application or otherwise that is false, misleading or incomplete. If a Unit holder makes a redemption request immediately after purchase of units, the Fund shall have a right to withhold the redemption request till sufficient time has elapsed to ensure that the amount remitted by the Unit holder (for purchase of units) is realized and the proceeds have been credited to the Scheme’s Account. However, this is only applicable if the value of redemption is such that some or all of the freshly purchased units may have to be redeemed to effect the full redemption.



In terms of the Prevention of Money Laundering Act, 2002 ("PMLA") the rules issued there under and the guidelines/circulars issued by SEBI regarding the Anti Money Laundering (AML) Laws, Benchmark Mutual Fund and Benchmark Asset Management Company Pvt. Ltd, the Investment Manager, have formulated and implemented a client identification programme and to verify and maintain the record of identity and address(es) of investors. If after due diligence, the AMC believes that any transaction is suspicious in nature as regards money laundering, the AMC shall report any such suspicious transactions to competent authorities under PMLA and rules/guidelines issued thereunder by SEBI and/or RBI, furnish any such information in connection therewith to such authorities and take any other actions as may be required for the purposes of fulfilling its obligations under PMLA and rules/guidelines issued thereunder by SEBI and/or RBI without obtaining the prior approval of the investor/Unit holder/any other person.

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

Disclaimer by Index Providers: Performance of the Underlying Indices will have a direct bearing on the performance of the respective Schemes. In the event any of the Indices are dissolved or are withdrawn by the Index providers, the Trustee reserves a right to modify such respective Schemes so as to track a different and suitable index and the procedure stipulated in the Regulations shall be complied with. 1.

a.

b.

c.

d.

e.

India Index Services & Products Ltd.: The owner and provider of indices i.e. (i) S&P CNX Nifty, (ii) CNX Nifty Junior, (iii) CNX Bank Index, (iv) CNX PSU Bank Index (v) S&P CNX Nifty Shariah Index and (vi) CNX Infrastructure Index.

“The Products i.e. Nifty BeES and Shariah BeES are not sponsored, endorsed, sold or promoted by India Index Services & Products Limited (IISL) or Standard & Poor’s, a division of The McGraw-Hill Companies Inc.(S&P). Neither IISL nor S&P makes any representation or warranty, express or implied to the Unit holders of any Product or any member of the public regarding the advisability of investing in securities generally or in any Product particularly or the ability of the Indices i.e. S&P CNX Nifty Index and S&P CNX Nifty Shariah Index to track general stock market performance in India. The relationship of S&P and IISL to Benchmark Asset Management Company Pvt. Ltd. is only in respect of the licensing of certain trademarks and trade-names of their Indices, which is determined, composed and calculated by IISL without regard to the Benchmark Asset Management Company Pvt. Ltd. or any Product. Neither IISL nor S&P has any obligation to take the needs of the Benchmark Asset Management Company Pvt. Ltd. or the Unit holders of the Products into consideration in determining, composing or calculating the Indices. Neither IISL nor S&P is responsible for or has participated in the determination of the timing of, prices at, or quantities of the Products to be issued or in the determination or calculation of the equation by which the Products are to be converted into cash. Neither S&P nor IISL has any obligation or liability in connection with the administration or marketing or trading of the Products.” “S&P and IISL do not guarantee the accuracy and/or the completeness of the Indices or any data included therein and they shall have no liability for any errors, omissions, or interruptions therein. Neither IISL nor S&P makes any warranty, express or implied, as to the results to be obtained by the Benchmark Asset Management Company Pvt. Ltd., Unit holders of the Products or any other persons or entities from the use of the Indices or any data included therein. IISL and S&P make no express or implied warranties and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indices or any data included therein. Without limiting any of the foregoing, in no event shall IISL or S&P have any liability for any special, punitive, indirect or consequential damages (including lost profits), even if notified of the possibility of such damages.” “Standard & Poor’s ®” and “S&P®” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by India Index Services & Products Limited. The S&P CNX Nifty is not compiled, calculated or distributed by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in products that utilise any such Index as a component, or such similar language as may be approved in advance by S&P, it being understood that such notice need only refer to the specific S&P Marks referred to in the Informational Material.” “Standard & Poor’s®” and “S&P®” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by IISL, which has sublicensed such marks to Benchmark Asset Management Company Pvt. Ltd. The S&P CNX Nifty is not compiled, calculated or distributed by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in products that utilise any such Index as a component.” Standard & Poor’s (“S&P”) is a division of The McGraw-Hill Companies, Inc., a New York corporation. Among other things, S&P is engaged in the business of developing, constructing, compiling, computing and maintaining various equity indices that are recognized worldwide as benchmarks for U.S. stock market performance. “Standard & Poor's®” and “S&P®” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by India Index Services & Products Limited (IISL) in connection with S&P CNX Nifty Shariah Index. IISL may further license the S&P trademarks to third parties, and has sublicensed such marks to Benchmark Asset Management Company Pvt. Ltd. in connection with S&P CNX Nifty Shariah Index and Shariah BeES. The S&P CNX Nifty Shariah Index is not compiled, calculated or distributed by Standard & Poor's and Standard & Poor's

12

f.

g.

and makes no representation regarding the advisability of investing in products that utilize Index as a component thereof, including the Shariah BeES. The Products i.e. Junior BeES, Bank BeES, PSU Bank BeES and Infra BeES are not sponsored, endorsed, sold or promoted by India Index Services & Products Limited (IISL). IISL makes no representation or warranty, express or implied to the owners of the Products or any member of the public regarding the advisability of investing in securities generally or in the Products particularly or the ability of the Indices i.e. CNX Nifty Junior Index, CNX Bank Index, CNX PSU Bank Index and CNX Infrastructure Index to track general stock market performance in India. The relationship of IISL to the Benchmark Asset Management Company Pvt. Ltd. is in respect of the licensing of certain trademarks and trade names of their Indices which is determined, composed and calculated by IISL without regard to the Benchmark Asset Management Company Pvt. Ltd. or the Products. IISL has no obligation to take the needs of Benchmark Asset Management Company Pvt. Ltd. or the owners of the Products into consideration in determining, composing or calculating the Indices. IISL is not responsible nor has participated in the determination of the timing of prices at, or quantities of the Products to be issued or in the determination or calculation of the equation by which the Products are to be converted into cash. IISL has no obligation or liability in connection with the administration, marketing or trading of the Products. IISL does not guarantee the accuracy and/or the completeness of the Indices or any data included therein and they shall have no liability for any errors, omissions, or interruptions therein. IISL makes no warranty, express or implied, as to the results to be obtained by the Benchmark Asset Management Company Pvt. Ltd., owners of the Products, or any other persons or entities from the use of the Indices or any data included therein. IISL makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the Indices or any data included therein. Without limiting any of the foregoing, in no event shall IISL have any liability for any special, punitive, indirect or consequential damages (including lost profits), even if notified of the possibility of such damages. 2. Hang Seng Data Services Pvt. Ltd. : The owner of Hang Seng Index THE HANG SENG INDEX (THE “INDEX”) IS PUBLISHED AND COMPILED BY HANG SENG INDEXES COMPANY LIMITED PURSUANT TO A LICENCE FROM HANG SENG DATA SERVICES LIMITED. THE MARK AND NAME HANG SENG INDEX ARE PROPRIETARY TO HANG SENG DATA SERVICES LIMITED. HANG SENG INDEXES COMPANY LIMITED AND HANG SENG DATA SERVICES LIMITED HAVE AGREED TO THE USE OF, AND REFERENCE TO, THE INDEX BY BENCHMARK ASSET MANAGEMENT COMPANY PVT. LTD. IN CONNECTION WITH HANG SENG BENCHMARK EXCHANGE TRADED SCHEME (HANG SENG BeES) (THE “PRODUCT”), BUT NEITHER HANG SENG INDEXES COMPANY LIMITED NOR HANG SENG DATA SERVICES LIMITED WARRANTS OR REPRESENTS OR GUARANTEES TO ANY BROKER OR HOLDER OF THE PRODUCT OR ANY OTHER PERSON (I) THE ACCURACY OR COMPLETENESS OF THE INDEX AND ITS COMPUTATION OR ANY INFORMATION RELATED THERETO; OR (II) THE FITNESS OR SUITABILITY FOR ANY PURPOSE OF THE INDEX OR ANY COMPONENT OR DATA COMPRISED IN IT; OR (III) THE RESULTS WHICH MAY BE OBTAINED BY ANY PERSON FROM THE USE OF THE INDEX OR ANY COMPONENT OR DATA COMPRISED IN IT FOR ANY PURPOSE, AND NO WARRANTY OR REPRESENTATION OR GUARANTEE OF ANY KIND WHATSOEVER RELATING TO THE INDEX IS GIVEN OR MAY BE IMPLIED. THE PROCESS AND BASIS OF COMPUTATION AND COMPILATION OF THE INDEX AND ANY OF THE RELATED FORMULA OR FORMULAE, CONSTITUENT STOCKS AND FACTORS MAY AT ANY TIME BE CHANGED OR ALTERED BY HANG SENG INDEXES COMPANY LIMITED WITHOUT NOTICE. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO RESPONSIBILITY OR LIABILITY IS ACCEPTED BY HANG SENG INDEXES COMPANY LIMITED OR HANG SENG DATA SERVICES LIMITED (I) IN RESPECT OF THE USE OF AND/OR REFERENCE TO THE INDEX BY BENCHMARK ASSET MANAGEMENT COMPANY PVT. LTD. IN CONNECTION WITH THE PRODUCT; OR (II) FOR ANY INACCURACIES, OMISSIONS, MISTAKES OR ERRORS OF HANG SENG INDEXES COMPANY LIMITED IN THE COMPUTATION OF THE INDEX; OR (III) FOR ANY INACCURACIES, OMISSIONS, MISTAKES, ERRORS OR INCOMPLETENESS OF ANY INFORMATION USED IN CONNECTION WITH THE

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COMPUTATION OF THE INDEX WHICH IS SUPPLIED BY ANY OTHER PERSON; OR (IV) FOR ANY ECONOMIC OR OTHER LOSS WHICH MAY BE DIRECTLY OR INDIRECTLY SUSTAINED BY ANY BROKER OR HOLDER OF THE PRODUCT OR ANY OTHER PERSON DEALING WITH THE PRODUCT AS A RESULT OF ANY OF THE AFORESAID, AND NO CLAIMS, ACTIONS OR LEGAL PROCEEDINGS MAY BE BROUGHT AGAINST HANG SENG INDEXES COMPANY LIMITED AND/OR HANG SENG DATA SERVICES LIMITED IN CONNECTION WITH THE PRODUCT IN ANY MANNER WHATSOEVER BY ANY BROKER, HOLDER OR OTHER PERSON DEALING WITH THE PRODUCT. ANY BROKER, HOLDER OR OTHER PERSON DEALING WITH THE PRODUCT DOES SO THEREFORE IN FULL KNOWLEDGE OF THIS DISCLAIMER AND CAN PLACE NO RELIANCE WHATSOEVER ON HANG SENG INDEXES COMPANY LIMITED AND HANG SENG DATA SERVICES LIMITED. FOR THE AVOIDANCE OF DOUBT, THIS DISCLAIMER DOES NOT CREATE ANY CONTRACTUAL OR QUASI-CONTRACTUAL RELATIONSHIP BETWEEN ANY BROKER, HOLDER OR OTHER PERSON AND HANG SENG INDEXES COMPANY LIMITED AND/OR HANG SENG DATA SERVICES LIMITED AND MUST NOT BE CONSTRUED TO HAVE CREATED SUCH RELATIONSHIP. 

Disclaimers by NSE As required a copy of this SID has been submitted to National Stock Exchange of India Limited (hereinafter referred to as NSE). NSE has given permission to the Mutual Fund to use the Exchange’s name in this SID as one of the stock exchange on which the Mutual Fund’s units are proposed to be listed subject to, the Mutual Fund fulfilling the various criteria for listing. The Exchange has scrutinized this SID for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Mutual Fund. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that the SID has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this SID; nor does it warrant that the Mutual Fund’s units will be listed or will continue to be listed on the Exchange; nor does it take any responsibility for the financial or other soundness of the Mutual Fund, its promoters, its management or any scheme or project of the Mutual Fund. Every person who desires to apply for or otherwise acquire any units of the Mutual Fund may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

Investors are urged to study the terms of the offer carefully before investing in the Schemes and retain this SID and the SAI for future reference.

14

D. 1. 2. 3. 4. 5. 6.

7. 8. 9. 10. 11.

12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.

DEFINITIONS In this SID, unless the context otherwise requires: ‘Asset Management Company’/‘AMC’/‘Investment Manager’ means Benchmark Asset Management Company Pvt. Ltd., a Company incorporated under the Companies Act, 1956 and approved by SEBI to act as an Asset Management Company for the Schemes of Benchmark Mutual Fund. ‘Applicable NAV’ means Net Asset Value per unit of the Scheme as declared by the Fund and applicable for purchase/redemption of units of the Scheme, based on the business day and cut off times at which the application is received and accepted. ‘Authorised Participant’ means the Member of the National Stock Exchange of India Ltd. who is appointed by the AMC/Fund to act as Authorized Participant for respective Scheme. ‘Authorised participant for Gold BeES’ means the Member of the National Stock Exchange of India Ltd. and their nominated entities/persons who are appointed by the AMC/Fund to act as Authorized Participant. ‘Bank BeES’ means Banking Index Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund listed on NSE. ‘Creation Unit’, is a fixed number of units of the Schemes, which is exchanged for a basket of shares underlying the respective Index for index linked Schemes and physical Gold in case of Gold BeES, called the “Portfolio Deposit” and a “Cash Component”. For redemption of units it is vice versa, i.e. a fixed number of units of the Schemes and cash component are exchanged for Portfolio Deposit. ‘CNX Infrastructure Index’ means an index owned and operated by India Index Services & Products Ltd. (IISL). ‘CNX Nifty Junior Index’ means an index owned and operated by India Index Services & Products Ltd. (IISL). ‘CNX Bank Index’ means an index owned and operated by India Index Services & Products Ltd. (IISL). ‘CNX PSU Bank Index’ means an index owned and operated by India Index Services & Products Ltd. (IISL). ‘Custodian’ means Citibank N.A. for all the Schemes and additionally The Bank of Nova Scotia for Gold BeES, who have been granted a certificate of registration by SEBI under the SEBI (Custodian of Securities) Regulations, 1996 and for the time being appointed by the Fund for rendering custodial services for the Schemes in accordance with the Regulations. ‘Depository’ means a body corporate as defined in the Depositories Act, 1996 and includes National Securities Depository Ltd. (NSDL) and Central Depository Systems Ltd (CDSL). ‘Depository Participant’ means a person registered as such under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992. ‘Dividend’ means the income distributed by the Fund on units. ‘Domestic price of Gold’ for Gold BeES means price calculated using the valuation methodology described in the section ‘Determination of NAV’. ‘Entry Load’ means load on purchase/subscription of units. ‘Exit Load’ means load on repurchase/redemption of units. ‘Exchange/Market’ means Recognized Stock Exchange(s) where the units of the Schemes are listed. ‘Exchange Traded Fund’/‘ETF’ means a fund whose units are listed on an exchange and can be bought/ sold at prices, which may be close to the NAV of the Schemes. ‘FII’ means Foreign Institutional Investors registered with SEBI under SEBI (Foreign Institutional Investors) Regulations, 1995 as amended from time to time. ‘Fund’ means Benchmark Mutual Fund, a Trust set up under the provisions of Indian Trust Act, 1882 and registered with SEBI vide Registration No. MF/045/01/6 dated June 12, 2001. ‘Gilts or Government Securities’ means securities created and issued by the Central Government and/or State Government (including treasury bill) or Government Securities as defined in the Public Debt Act, 1944 as amended from time to time. ‘Gold BeES’ means Gold Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund, at present listed on NSE. ‘Hang Seng BeES’ means Hang Seng Benchmark Exchange Traded Scheme in the form on an Exchange Traded Fund listed on NSE. ‘Hang Seng Index’ means an Index owned and operated by Hang Seng Data Services Limited. ‘IISL’ means India Index Services & Products Ltd., a joint venture between CRISIL Ltd. and National Stock Exchange of India Ltd. (NSE). 'Index Fund' means a mutual fund scheme, which invests in securities in the same proportion that constitute the Underlying Index. ‘Infra BeES’ means Infrastructure Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund listed on National Stock Exchange of India Ltd. (NSE).

15

29.

30. 31. 32.

33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45.

46.

47. 48. 49. 50. 51. 52.

‘Investor’ means any resident or non-resident person whether individual or a non-individual who is eligible to subscribe for units under the laws of his/her/their state/country of incorporation, establishment citizenship, residence or domicile and under the Income Tax Act, 1961 including amendments made from time to time and who has made an application for subscribing units under the respective Schemes. Under normal circumstances, a Unit holder would be deemed to be an investor. ‘IMA’ means Investment Management Agreement dated February 14, 2001, as amended from time to time, entered into between Benchmark Trustee Company Pvt. Ltd. and Benchmark Asset Management Company Pvt. Ltd. ‘Junior BeES’ means Nifty Junior Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund listed on NSE. ‘Large Investor’ means an investor who is eligible to invest in the respective Schemes and who would be creating units of the Schemes in creation unit size by depositing Portfolio Deposit and Cash Component. Further large investor would also mean those investors who would be redeeming units of the Schemes in creation unit size. ‘Liquid BeES’ means Liquid Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund presently listed on the Capital Market Segment of the National Stock Exchange of India Ltd. ‘Load’ means a charge that may be levied as a percentage of NAV at the time of entry into the Schemes or at the time of exit from the Schemes. ‘NAV’ means Net Asset Value per unit of the Schemes calculated in the manner described in this SID or as may be prescribed by the SEBI Regulations from time to time. ‘NFO’ means New Fund Offer. ‘Nifty BeES’ means Nifty Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund listed on NSE. ‘NSE’ means the National Stock Exchange of India Ltd., a Stock Exchange recognized by the Securities and Exchange Board of India. ‘PSU Bank BeES’ means PSU Bank Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund listed on NSE. ‘RBI’ means the Reserve Bank of India established under The Reserve Bank of India Act, 1934. ‘Repo’ means sale of Government Securities with simultaneous agreement to repurchase them at a later date. ‘Reverse Repo’ means purchase of Government Securities with simultaneous agreement to resell them at a later date. ‘S&P CNX Nifty Index’ means an index owned and operated by India Index Services & Products Ltd. (IISL). ‘S&P CNX Nifty Shariah Index’ means an index owned and operated by India Index Services & Products Ltd. (IISL). ‘Saleable Underlying Stock’ means the securities of the Underlying Index and physical Gold in case of Gold BeES, which form part of the holdings of the Schemes, as certified by the Custodian and can be readily sold. ‘Schemes’ means (i) Nifty Benchmark Exchange Traded Scheme (Nifty BeES), (ii) Nifty Junior Benchmark Exchange Traded Scheme (Junior BeES), (iii) Liquid Benchmark Exchange Traded Scheme (Liquid BeES), (iv) Banking Index Benchmark Exchange Traded Scheme (Bank BeES), (v) Gold Benchmark Exchange Traded Scheme (Gold BeES), (vi) PSU Bank Benchmark Exchange Traded Scheme (PSU Bank BeES) and (vii) Shariah Benchmark Exchange Traded Scheme (Shariah BeES) (viii) Hang Seng Benchmark Exchange Traded Scheme (Hang Seng BeES) and (ix) Infrastructure Benchmark Exchange Traded Scheme (Infra BeES) offered through this SID. ‘SEBI’ means the Securities and Exchange Board of India, established under Securities and Exchange Board of India Act, 1992 as amended from time to time. ‘SEBI Regulations’ means SEBI (Mutual Funds) Regulations, 1996 as amended from time to time including any circulars, directions or clarifications issued by SEBI or any Government authority and as applicable to the Schemes and the Fund. ‘Shariah BeES’ means Shariah Benchmark Exchange Traded Scheme in the form of an Exchange Traded Fund listed on NSE. ‘Sponsor’ means Niche Financial Services Pvt. Ltd., a Company incorporated under the Companies Act, 1956 and includes its successors and permitted assigns. ‘Tracking Error’ is defined as the standard deviation of the difference between daily returns of the Index and the NAV of the respective Schemes. ‘Trustee’ means the Trustee Company which holds the property of Benchmark Mutual Fund in trust and includes the directors of the Trustee Company and the successors and assigns of the Trustee Company.

16

53. 54. 55. 56. 57.

‘Trustee Company’ means Benchmark Trustee Company Pvt. Ltd., a Company incorporated under the Companies Act, 1956 and approved by SEBI to act as Trustee of the Schemes of Benchmark Mutual Fund. ‘Trust Deed’ means the Deed of Trust of the Mutual Fund dated February 14, 2001, entered into between Niche Financial Services Pvt. Ltd. (Sponsor) and Benchmark Trustee Company Pvt. Ltd. (Trustee Company). ‘Unit’ means the interest of investor in the respective Schemes, which consists of each unit representing one undivided share in the assets of the respective Schemes. ‘Unit holder’ means a person holding unit(s) in the Schemes offered under this SID. ‘Working Day/Business Day’ means any day other than: (a) Saturday and Sunday (b) a day on which capital/debt markets in Mumbai are closed or are unable to trade for any reason (c) a day on which the registers of Unit holders are closed (d) a day on which the Banks in Mumbai are closed or RBI is closed for business/clearing (e) a day on which NSE is closed (f) a day which is public/Bank holiday at a collection centre where the application is received (g) a day on which sale and repurchase of units is suspended by the Trustee (h) a day on which normal business could not be transacted due to storms, floods, bandhs, strikes etc. However the AMC reserves the right to declare any day a Working Day or otherwise at any or all collection centres.

Words and expressions used in this SID and not defined will have same meaning as assigned to them in Trust Deed. Interpretation For all purposes of this SID, except as otherwise expressly provided or unless the context otherwise required: 1. the terms defined in this SID include the singular as well as the plural. 2. pronouns having a masculine or feminine gender shall be deemed to include the other.

17

E.

DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY

It is confirmed that: 1.

the Scheme Information Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time.

2.

All legal requirements connected with the launching of the Schemes as also the guidelines, instructions, etc., issued by the Government and any other competent authority in this behalf, have been duly complied with.

3.

The disclosures made in the Scheme Information Document are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the Schemes.

4.

The intermediaries named in the Scheme Information Document and Statement of Additional Information are registered with SEBI and their registration is valid, as on date.

For Benchmark Asset Management Company Pvt. Ltd. (Asset Management Company for Benchmark Mutual Fund) Sd/Gautam H. Rathor (Compliance Officer) Place: Mumbai Date: March 25, 2011

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II. INFORMATION ABOUT THE SCHEME A. TYPE OF SCHEME (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES (v) Shariah BeES and (vi) Infra BeES

Open ended index schemes, listed on the Exchange in the form of an Exchange Traded Fund (ETF)

Liquid BeES

An open ended liquid scheme, listed on the Exchange in the form of an ETF, with daily dividend and compulsory reinvestment of dividend

Gold BeES

An open ended scheme, listed on the Exchange in the form of an ETF investing in physical Gold

Hang Seng BeES

Open ended index scheme, listed on the Exchange in the form of an ETF investing in overseas securities

B. INVESTMENT OBJECTIVE The investment objective of Nifty BeES is to provide investment returns that, before Nifty BeES expenses, closely correspond to the total returns of the securities as represented by the S&P CNX Nifty Index. Junior BeES

The investment objective of Junior BeES is to provide returns that, before expenses, closely correspond to the returns of securities as represented by CNX Nifty Junior Index.

Bank BeES

The investment objective of Bank BeES is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the CNX Bank Index.

PSU Bank BeES

The investment objective of PSU Bank BeES is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the CNX PSU Bank Index.

Shariah BeES

The investment objective of Shariah BeES is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the S&P CNX Nifty Shariah Index by investing in securities which are constituents of S&P CNX Nifty Shariah Index in the same proportion as in the Index.

Infra BeES

The investment objective of Infra BeES is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the CNX Infrastructure Index by investing in the securities in the same proportion as in the Index.

Liquid BeES

The investment objective of the Scheme is to enhance returns and minimize price risk by investing in basket of call money, short-term government securities and money market instruments of short and medium maturities while maintaining the safety and liquidity.

Gold BeES

The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the returns provided by domestic price of gold through physical Gold.

Hang Seng BeES

The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of securities as represented by Hang Seng Index of Hang Seng Data Services Limited., by investing in the securities in the same proportion as in the Index.

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There can be no assurance or guarantee that the investment objective of the respective Schemes will be achieved. However, the performance of the (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES (vi) Infra BeES and (vi) Hang Seng BeES, may differ from that of the respective Underlying Index due to tracking error. Similarly the performance of Gold BeES may differ from that of the underlying physical Gold due to tracking error. C. ASSET ALLOCATION The investment policies of the Schemes shall be as per SEBI (Mutual Funds) Regulations, 1996, and within the following guidelines. Under normal market circumstances, the investment range would be as follows: 1. Nifty BeES Instruments Risk Profile Securities covered by S&P CNX Nifty Index Medium to High Low Money Market instruments, convertible bonds & other securities including cash at call but excluding subscription & redemption Cash Flow The above stated percentages are indicative and not absolute.

% Upto 100% Upto 10%

The exposure of Nifty BeES in derivative instruments shall be restricted to 50% of the Net Assets of Nifty BeES. 2. Junior BeES Instruments Risk Profile % Securities covered by CNX Nifty Junior Index Medium to High 90% - 100% Money Market instruments, convertible bonds & other securities including Low to Medium 0% - 10% cash at call but excluding subscription & redemption Cash Flow Subscription Cash Flow is the subscription money in transit before deployment and Redemption Cash Flow is the money kept aside for meeting redemptions. The above stated percentages are indicative and not absolute. 3. Bank BeES Instruments Securities covered by the CNX Bank Index Money Market Instruments, G-Secs, Bonds, Debentures, Preference Shares and cash at call The above stated percentages are indicative and not absolute.

Risk Profile Medium to High Low

% 90% - 100% 0% - 10%

Risk Profile Medium to High Low

% 90% - 100% 0% - 10%

4. PSU Bank BeES Instruments Securities covered by the CNX PSU Bank Index Money Market Instruments, G-Secs, Bonds, Debentures and cash at call The above stated percentages are indicative and not absolute.

Cash at call includes cash component of the portfolio deposit received for subscription and payable on redemptions, dividend received by the Scheme which is pending deployment, etc. For the time duration of change in the Index, the Scheme may have to invest in derivatives to maintain the respective weightages for the companies, constituting the Index. These investments would be for a short period of time. The notional exposure of Scheme in derivative instruments shall be restricted to 10% of the net assets of the Scheme. The margin paid for the derivative instruments will form part of the “Money Market Instruments, G-Secs, Bonds, Debentures and cash at call” as mentioned in the asset allocation pattern.

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5. Shariah BeES Instruments Securities covered by the S&P CNX Nifty Shariah Index Cash The above stated percentages are indicative and not absolute.

Risk Profile Medium to High Low

% 90% - 100% 0% - 10%

Risk Profile Medium to High Low

% 95% - 100% 0% - 5%

6. Infra BeES Instruments Securities covered by the CNX Infrastructure Index Money Market Instruments, G-Secs, Bonds, Debentures and cash at call

As the CNX Infrastructure Index is an Equity Index, the constituents of the Index do not include debt securities. Cash at call includes cash component of the portfolio deposit received for subscription and payable on redemptions, dividend received by the Scheme which is pending deployment, etc. For the time duration of change in the index constituents, the Scheme may have to invest in derivatives to maintain the respective weightages for the companies, constituting the index. These investments would be for a short period of time. The notional exposure of the Scheme in derivative instruments shall be restricted to 10% of the net assets of the Scheme. The combined exposure of equity shares, debt securities and gross notional exposure of derivatives instruments shall not exceed 100% of the net assets of the Scheme. 7. Liquid BeES Instruments Call Money, Short Term Government Securities, T- Bills, Repos, Debt Securities* Commercial Papers, CDs, Short Term Debentures and Floating Rate Notes * Debt securities may include securitised debts upto 50% of the net assets.

Risk Profile Low

% Upto 100%

Medium to High

Upto 100%

Risk Profile Medium Low to Medium

% 90% to 100% 0% to 10%

8. Gold BeES Instruments

Physical Gold Money Market instruments, Securitised Debts*, Bonds, including cash at call * Investments in securitised debts can be made by the Scheme upto 5% of the net assets. The above stated percentages are indicative and not absolute.

Note: Investment in warehouse receipts and other permitted instruments linked to Gold prices and units of international gold linked ETFs would be made as and when permitted by regulatory authorities. 9. Hang Seng BeES Instruments Securities constituting Hang Seng Index Money Market Instruments, G-Secs, Bonds, Debt instruments and cash at call, mutual fund schemes/overseas exchange traded funds based on Hang Seng Index The above stated percentages are indicative and not absolute.

Risk Profile Medium to High Low

% 90% - 100% 0% - 10%

Hang Seng BeES shall invest in derivatives traded on overseas exchanges only for hedging and portfolio balancing. The exposure to the derivatives would be undertaken, when no equity shares of the constituents of the Index are available or equity shares are insufficient to take exposure in the constituents of the Index and would

21

be restricted to 10% of the net assets of the Scheme. The margin paid for the derivative instruments will form part of the “Money Market Instruments, G-Secs, Bonds, Debentures, Debt instruments and cash at call” as mentioned in the asset allocation pattern. D. INVESTMENT BY THE SCHEME I.

Investment in equity and equity related instruments by (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES and (vi) Infra BeES

The respective Schemes will invest in securities which are constituents of its Underlying Index. The investment restrictions and limits are specified in Schedule VII of SEBI (Mutual Funds) Regulations, 1996 which are mentioned under the heading ‘Investment Restrictions’. Investments in Debt Instruments The Schemes except Shariah BeES, will invest in Money Market Instruments, Debt Instruments, Government Securities, etc. The investment restrictions applicable to debt instruments, as specified in Schedule VII of SEBI (Mutual Funds) Regulations, 1996 are mentioned under ‘Investment Restrictions’. Shariah BeES shall not invest in any debt instruments. II. Investment by Liquid BeES Investment in money market and debt instruments The Scheme, in general, will invest in money market and debt instruments. The investment restriction and limits are mentioned under the heading ‘Investment Restrictions’. Money market and debt instruments will include but will not be restricted to:  Money Market instruments as permitted by SEBI/RBI, call money or an alternative investments for the call money market as may be provided by RBI to meet the liquidity requirements.  Certificate of Deposit (CDs).  Commercial Paper (CPs).  Securities created and issued by the Central and State Government and/or repos/reverse repos in such Government Securities as may be permitted by RBI (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills).  Securities guaranteed by the Central and State Government (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills).  Debt obligations of domestic Government agencies and statutory bodies, which may or may not carry a Central/State Government guarantee.  Corporate debt and securities (for both public and private sector undertakings) including Bonds, Debentures, Notes, Strips, etc.  Obligations of banks (both public and private sectors) and development financial institutions.  Securitised Debt Obligations. Investments in such securities will not exceed 50% of the net assets of the Scheme or such other limits as may be prescribed from time to time.  The non-convertible part of convertible securities.  Pass through, Pay through or other Participation Certificates representing interest in pool of assets including receivables.  Any other domestic fixed income securities including Structured Obligations.  Any international fixed income securities as permitted by SEBI and RBI from time to time.  Derivative instruments like Interest Rate Swaps, Forward Rate Agreement and such other derivative instruments as permitted by SEBI/RBI.  Any other like instrument as may be permitted by RBI/SEBI/such other Regulatory Authority from to time. The securities mentioned above and such other securities the Scheme is permitted to invest could be listed, unlisted, privately placed, secured or unsecured. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations, private placements, right offers or negotiated deals.

22

If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not, normally exceed 50% of the corpus of the Scheme. Note: The Scheme will make investment in/purchase debt and money market securities with maturity of upto 91 days only. Explanation: a. In case of securities where the principal is to be repaid in a single payout the maturity of the securities shall mean residual maturity. In case the principal is to be repaid in more than one payout then the maturity of the securities shall be calculated on the basis of weighted average maturity of security. b. In case the maturity of the security falls on a non-business day then settlement of securities will take place on the next business day. The Scheme will retain the flexibility to invest in the entire range of securities as per investment objectives of the Scheme and as per the SEBI Regulations. III. Investment by Gold BeES Investment in physical Gold The Scheme, in general, will buy physical Gold. The investment restrictions and limits are mentioned under the heading ‘Investment Restrictions’. Investment in debt instruments The Scheme would invest in money market instruments, securitized debt, bonds including cash at call, etc. in order to meet the liquidity requirements of the Scheme. The investment restrictions and limits are specified in Schedule VII of SEBI (MF) Regulations, 1996. IV. Investment by Hang Seng BeES Investment in equity instruments The Scheme will invest in securities which are constituents of Hang Seng Index. The constituents of Hang Seng Index are traded on the Stock Exchange of Hong Kong. As per SEBI Circular SEBI/IMD/CIR No.7/104753/07 dated September 26, 2007, the limits for overseas investment is subject to a maximum of US $ 300 million per mutual fund. As and when this limit is revised or modified, the Fund shall adopt such new limits. As and when this limit is revised or modified, the Fund shall adopt such new limits. The detailed investment restrictions and limits as per SEBI (MF) Regulations, 1996 are mentioned under the heading ‘Investment Restrictions’. Investments in Debt Instruments The Scheme will invest in Money Market Instruments, G-Secs, Bonds, Debentures, etc. The investment restrictions applicable to debt instruments, as specified in Schedule VII of SEBI (Mutual Funds) Regulations, 1996 are mentioned under ‘Investment restrictions’. Investment in units of overseas mutual fund schemes The Scheme may also invest in units of mutual fund schemes including Exchange Traded Funds which are based on Hang Seng Index. As per SEBI Circular no. SEBI/IMD/CIR No.7/104753/07 dated September 26, 2007, the limits for overseas investment is subject to a maximum of US $ 300 million per mutual fund and the limits for investments in overseas Exchange Traded Funds that invest in securities is subject to a maximum of US $ 50 million per mutual fund. As and when this limit is revised or modified, the Fund shall adopt such new limits. The detailed investment restrictions and limits as per SEBI (MF) Regulations, 1996 are mentioned under the heading ‘Investment Restrictions’. As mentioned under SEBI Regulations, the restriction on the investments in mutual fund units upto 5% of net assets and prohibiting charging of fees on the same, shall not be applicable to investments in mutual funds units in foreign countries. However, the management fees and other expenses charged by the mutual fund in foreign countries along with the management fee and recurring expenses charged to the domestic mutual fund scheme

23

shall not exceed the total limits on expenses as prescribed under Regulation 52(6). Where the scheme is investing only a part of the net assets in the foreign mutual funds, the same principle shall be applicable for that part of investment. Investments in Derivative Instruments As part of the Fund Management process, the Schemes except Shariah BeES, may use derivative instruments such as index futures and options, stock futures and options contracts, warrants, convertible securities, swap agreements or any other derivative instruments that are permissible or may be permissible in future under applicable regulations and such investments shall be in accordance with the investment objectives of the respective Schemes. Shariah BeES shall not invest in any derivative instruments. Index futures/options are meant to be an efficient way of buying/selling an index compared to buying/selling a portfolio of physical shares representing an index for ease of execution and settlement. Index futures/options can be an efficient way of achieving the Schemes’ investment objective. Notwithstanding the pricing, they can help in reducing the Tracking Error in the Schemes. Index futures/options may avoid the need for trading in individual components of the index, which may not be possible at times, keeping in mind the circuit filter system and the liquidity in some of the individual stocks. Index futures/options can also be helpful in reducing the transaction costs and the processing costs on account of ease of execution of one trade compared to several trades of shares comprising the Underlying Index and will be easy to settle compared to physical portfolio of shares representing the Underlying Index. In case of investments in index futures/options, the risk/reward would be the same as investments in portfolio of shares representing an index. However, there may be a cost attached to buying an index future/option. Further there could be an element of settlement risk, which could be different from the risk in settling the securities. This settlement risk is likely to be minimized if the exchange acts as the clearing corporation and the counter party, as is the practice in the developed markets. The Schemes will not maintain any leveraged or trading positions. Additional provision for investments in derivative instruments by (i) Hang Seng BeES and (ii) Infra BeES (i) Hang Seng BeES The Scheme will take exposure to the derivatives, when no equity shares of the constituents of the Index are available or equity shares are insufficient to take exposure in the constituents of the Index. The total exposure to derivatives would be restricted to 10% of the net assets of the Scheme. The Scheme shall invest in derivatives traded on overseas exchanges only for hedging and portfolio balancing. The Scheme will use derivative instruments such as Stock Futures and Options, or other derivative instruments that are permissible or may be permissible in future under SEBI/RBI Regulations and such investments shall be in accordance with the investment objective of the Scheme. (ii) Infra BeES For the time duration of change in the index constituents, the Scheme may have to invest in derivatives to maintain the respective weightages for the companies, constituting the index. These investments would be for a short period of time. The notional exposure of the Scheme in derivative instruments shall be restricted to 10% of the net assets of the Scheme. The combined exposure of equity shares, debt securities and gross notional exposure of derivatives instruments shall not exceed 100% of the net assets of the Scheme. Purpose of investment in derivatives a. The Schemes shall fully cover its positions in the derivatives market by holding underlying securities/cash or cash equivalents/option and/or obligation for acquiring underlying assets to honour the obligations contracted in the derivatives market. b. Separate records shall be maintained for holding the cash and cash equivalents/securities for this purpose. c. The securities held would be marked to market by the AMC to ensure full coverage of investments made in derivative products at all time. Limit for investment in derivatives instruments In accordance with SEBI circulars nos. DNPD/Cir-29/2005 dated September 14, 2005, DNPD/Cir-30/2006 dated January 20, 2006 and SEBI/DNPD/Cir-31/2006 dated September 22, 2006, the following conditions shall apply to the Scheme’s participation in the derivatives market. The investment restrictions applicable to the Scheme’s

24

participation in the derivatives market will be as prescribed or varied by SEBI or by the Trustees (subject to SEBI requirements) from time to time. i. a.

b.

ii. a.

b.

iii. 1. 2.

iv.

1.

2.

v. 1.

2.

Position limit for the Mutual Fund in index options contracts The Mutual Fund’s position limit in all index options contracts on a particular underlying index shall be Rs. 500 crore or 15% of the total open interest of the market in index options, whichever is higher, per Stock Exchange. This limit would be applicable on open positions in all options contracts on a particular underlying index. Position limit for the Mutual Fund in index futures contracts The Mutual Fund’s position limit in all index futures contracts on a particular underlying index sh all be Rs. 500 crore or 15% of the total open interest of the market in index futures, whichever is higher, per Stock Exchange. This limit would be applicable on open positions in all futures contracts on a particular underlying index. Additional position limit for hedging for the Mutual Fund: In addition to the position limits at point (i) and (ii) above, the Mutual Fund may take exposure in equity index derivatives subject to the following limits: Short positions in index derivatives (short futures, short calls and long puts) shall not exceed (in notional value) the Mutual Fund’s holding of stocks. Long positions in index derivatives (long futures, long calls and short puts) shall not exceed (in notional value) the Mutual Fund’s holding of cash, government securities, T-Bills and similar instruments. Position limit for the Mutual Fund for stock based derivative contracts: The position limit for the Fund in a derivative contract on a particular underlying stock, i.e. stock option contracts and stock futures contracts shall be as follows: For stocks having applicable market-wise position limit (MWPL) of Rs. 500 crores or more, the combined futures and options position limit shall be 20% of applicable MWPL or Rs. 300 crores, whichever is lower and within which stock futures position cannot exceed 10% of applicable MWPL or Rs. 150 crores, whichever is lower. For stocks having applicable market-wise position limit (MWPL) less than Rs. 500 crores, the combined futures and options position limit would be 20% of applicable MWPL and futures position cannot exceed 20% of applicable MWPL or Rs. 50 crore which ever is lower. Position limit for the Scheme: For stock option and stock futures contracts, the gross open position across all derivative contracts on a particular underlying stock of the Scheme shall not exceed the higher of : 1% of the free float market capitalisation (in terms of number of shares) or 5% of the open interest in the derivative contracts on a particular underlying stock (in terms of number of contracts). This position limits shall be applicable on the combined position in all derivative contracts on an underlying stock at a stock exchange.

Exposure Limits for all Schemes The cumulative gross exposure through equity, debt and derivative positions shall not exceed 100% of the net assets of the respective Scheme. Cash or cash equivalents with residual maturity of less than 91 days may be treated as not creating any exposure. Exposure due to hedging positions may not be included in the above mentioned limits subject to the following a. Hedging positions are the derivative positions that reduce possible losses on an existing position in securities and till the existing position remains. b. Hedging positions cannot be taken for existing derivative positions. Exposure due to such positions shall have to be added and treated under limits mentioned above. c. Any derivative instrument used to hedge has the same underlying security as the existing position being hedged.

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d.

The quantity of underlying associated with the derivative position taken for hedging purposes does not exceed the quantity of the existing position against which hedge has been taken.

However, exposure due to derivative positions taken for hedging purposes in excess of the underlying position against which the hedging position has been taken, shall be treated under the limits mentioned above. Investment in derivatives by Liquid BeES The Scheme may write (sell) and purchase call and put options in government securities in which it invests and on indices based on government securities in which the Scheme invests. Through the purchase and sale of futures contracts and related options on those contracts, the Fund would seek to hedge against a decline in government securities owned by the Fund or an increase in the prices of government securities, which the Fund plans to purchase. The Fund would sell futures contracts on government securities indices in anticipation of a fall in government securities prices, to offset a decline in the value of its government securities portfolio. When this type of hedging is successful, the futures contract increase in value while the Fund’s investment portfolio declines in value and thereby keep the Fund’s net asset value from declining as much as it otherwise would. Similarly, when the Fund is not fully invested, and an increase in the price of government securities is expected, the Fund would purchase futures contracts to gain rapid market exposure that may partially or entirely offset increase in the cost of the government securities it intends to purchase. An interest rate swap agreement (as per guidelines issued by RBI) from fixed rate to floating rate will be an effective hedge for portfolio in a rising interest rate environment. Presently futures and options in Government Securities are not permitted and such products would be taken up only as and when introduced by RBI and as permitted for Mutual Funds. Under the normal circumstances, the Scheme will not have exposure of more than 50% of its net assets in derivative instruments. However, the AMC, with a view to protect the interest of the investors, may increase exposure in derivative instruments as deem fit from time to time. Interest Rate Swaps (IRS) An IRS is an agreement between two parties to exchange stated interest obligations for an agreed period in respect of a notional principal amount. The most common form is a fixed to floating rate swap where one party receives a fixed (pre-determined) rate of interest while other receives a floating (variable) rate of interest. IRS is a widely used derivative product in the financial markets to manage interest rate risk. A typical transaction is a contract to exchange streams of interest rate obligation/income on a notional principal amount with a counter party, usually a bank. The two interest streams are fixed (pre-determined) rate on one side and floating (variable) rate on the other. Forward Rate Agreement (FRA) A FRA is basically a forward starting IRS. It is an agreement between two parties to pay or receive the difference between an agreed fixed rate (the FRA rate) and the interest rate (reference rate) prevailing on a stipulated future date, based on a notional principal amount for an agreed period. The only cash flow is the difference between the FRA rate and the reference rate. As is the case with IRS, the notional amounts are not exchanged in FRAs. Example: An example of a derivatives transaction (an interest rate swap) is given below. Basic Structure of a Swap X has a 6 month Rs. 5 crore liability which is currently being deployed in overnight "call" money markets. Y has a Rs. 5 crore 6 month asset which is being funded through call. Both X and Y are running an interest rate risk. To hedge this interest rate risk, they can enter into a 6 month MIBOR (Mumbai Inter Bank Offered Rate) swap. Through this swap X will receive a fixed pre-agreed rate (say 12%) and pay NSE MIBOR ("the benchmark rate"). His paying at "call" on the benchmark rate will neutralize the interest rate risk of lending in call. Y will pay 12% and receive interest at the benchmark rate. His receiving of interest on the benchmark rate will neutralize his interest rate risk arising from his call borrowing.

26

The mechanism is as follows: Assume the swap is for Rs. 5 crore July 1, 2009 to January 1, 2010. X is a fixed rate receiver at 12% and Y is a floating rate receiver at the overnight compounded rate. On July 1, 2009, X and Y will exchange only an agreement of having entered this swap. This documentation would be as per International Securities Dealers Association (ISDA). On a daily basis, the benchmark rate fixed by NSE will be tracked by them. On January 1, 2010, they will calculate the following: X is entitled to receive interest on Rs. 5 crore at 12% i.e. Rs. 30.25 lakh, (this amount is known at the time the swap was concluded) and will pay the compounded benchmark rate. Y is entitled to receive daily compounded call rate for 184 days and pay 12% fixed. On January 1, 2010, if the total interest on the daily overnight compounded benchmark rate is higher than Rs. 30.25 lakhs, X will pay Y the difference. If the daily compounded benchmark rate is lower, then Y will pay the difference. Please note that the above example is hypothetical in nature and the interest rates are assumed. The actual return may vary based on actuals and depends on the interest rate prevailing at the time the swap agreement is entered into. In Liquid BeES, the Fund may enter into plain vanilla interest rate swaps for hedging purposes. The counter party in such transactions has to be an entity recognized as a market maker by RBI. Further, the value of the notional principal in such cases must not exceed the value of respective existing assets being hedged by the scheme. Exposure to a single counterparty in such transactions should not exceed 10% of the net assets of the scheme. Definition of Exposure in case of Derivative Positions Each position taken in derivatives shall have an associated exposure as defined under. Exposure is the maximum possible loss that may occur on a position. However, certain derivative positions may theoretically have unlimited possible loss. Exposure in derivative positions shall be computed as follows: Position Long Future Short Future Option bought

Exposure Futures Price * Lot Size * Number of Contracts Futures Price * Lot Size * Number of Contracts Option Premium Paid * Lot Size * Number of Contracts

Investment in Overseas Financial Assets In case of Schemes linked to indices except Hang Seng BeES, then such Schemes will not invest in overseas financial assets, as the investment philosophy is to track its Underlying Index. In the event, the index service provider incorporates an overseas security in the Index, the Schemes will invest in the overseas security to that extent. As per the SEBI circular and applicable guidelines, the aggregate ceiling for overseas investment is US $7 billion. Within the overall limit of US $ 7 billion, Fund can make overseas investments subject to a maximum of US $300 million per mutual fund. The types of overseas securities in which the Schemes can invest as per the following: i. ADRs / GDRs issued by Indian or foreign companies ii. Equity of overseas companies listed on recognized stock exchanges overseas iii. Initial and follow on public offerings for listing at recognized stock exchanges overseas iv. Foreign debt securities in the countries with fully convertible currencies, short term as well as long term debt instruments with rating not below investment grade by accredited/registered credit rating agencies v. Money market instruments rated not below investment grade vi. Repos in the form of investment, where the counterparty is rated not below investment grade; repos should not however, involve any borrowing of funds by mutual funds

27

vii. viii. ix. x.

Government securities where the countries are rated not below investment grade Derivatives traded on recognized stock exchanges overseas only for hedging and portfolio balancing with underlying as securities Short term deposits with banks overseas where the issuer is rated not below investment grade Units/securities issued by overseas mutual funds or unit trusts registered with overseas regulators and investing in (a) aforesaid securities, (b) Real Estate Investment Trusts (REITs) listed in recognized stock exchanges overseas or (c) unlisted overseas securities (not exceeding 10% of their net assets).

Investment in units of Overseas securities by Hang Seng BeES Hang Seng BeES will invest in securities which are constituents of Hang Seng Index. The constituents of Hang Seng Index are traded on the Stock Exchange of Hong Kong. As per SEBI Circular SEBI/IMD/CIR No.7/104753/07 dated September 26, 2007, the limits for overseas investment is subject to a maximum of US $ 300 million per mutual fund. As and when this limit is revised or modified, the Fund shall adopt such new limits. The detailed investment restrictions and limits as per SEBI (MF) Regulations, 1996 are mentioned under the heading ‘Investment Restrictions’. Investment in units of Overseas mutual fund schemes by Hang Seng BeES The Scheme may also invest in units of mutual fund schemes including Exchange Traded Funds which are based on Hang Seng Index. As per SEBI Circular no. SEBI/IMD/CIR No.7/104753/07 dated September 26, 2007, the limits for investments in overseas Exchange Traded Funds that invest in securities is subject to a maximum of US $ 50 million per mutual fund. As and when this limit is revised or modified, the Fund shall adopt such new limits. To manage risks associated with Foreign currency and interest rate exposure, the Fund may use derivatives for efficient portfolio management including hedging and in accordance with conditions as may be stipulated by the Regulations/RBI. The Fund may also utilize services of a global custodian and/or consultant to manage such investment, the costs of which would be within the expense limits laid down under SEBI Regulations. To the extent that the assets of the Schemes will be invested in securities denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distribution and income may be adversely affected by changes in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital to India may also be hampered by changes in Regulations or political circumstances as well as the application to it of other restrictions on Investment. If and when the current guidelines are modified, then the AMC would adopt the new guidelines. Lending of Securities The Schemes may lend securities from its portfolio in accordance with the Regulations and the applicable SEBI guidelines. Securities’ lending shall enable the Schemes to earn income that may partially offset its expenses and thereby reduce the effect these expenses have on the Schemes’ ability to provide investment returns that correspond generally to the price and yield performance of its Index. The Schemes will pay reasonable administrative and custodial fees in connection with the lending of securities. The Schemes will be exposed to the risk of loss should a borrower default on its obligation to return the borrowed securities. The Schemes share of income from the lending collateral will be included in the Schemes’ gross income. The Fund will comply with the conditions for securities lending specified by SEBI Regulations and circulars. The maximum exposure of each Scheme except Infra BeES to a single intermediary in the stock lending programme at any point of time would be limited to 50% of the market value of its equity portfolio or upto such limits as may be specified by SEBI. Each Scheme will not lend more than 75% of its corpus. Infra BeES will lend securities as per SEBI Circular having reference no. SEBI/IMD/CIR No. 9/108562/07 dated November 16, 2007, which has made enabling provisions for mutual funds to engage in securities lending which shall be applicable as and when notified by SEBI. The Fund will comply with the conditions for securities lending specified by SEBI Regulations and circulars.

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E. INVESTMENT STRATEGY (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES, (vi) Gold BeES and (vii) Hang Seng BeES The AMC uses a “passive” or indexing approach to try and achieve Schemes’ investment objective. Unlike other Funds, the Schemes do not try to “beat” the markets they track and do not seek temporary defensive positions when markets decline or appear over valued. The AMC does not make any judgments about the investment merit of a particular stock or a particular industry segment or the underlying nor will it attempt to apply any economic, financial or market analysis. Indexing eliminates active management risks with r egard to over/ underperformance vis-à-vis a benchmark. The Schemes shall invest all of its funds as per its investment objective and asset allocation pattern, except to meet its liquidity requirements. Passive approach eliminates active management risks pertaining to over/underperformance vis-à-vis a benchmark. (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES, and (vi) Hang Seng BeES will invest at least 90% of its total assets in the stocks of its Underlying Index. Due to corporate action in companies comprising the Index, the Schemes may be allocated/allotted securities which are not part of its Underlying Index. Hence, the Schemes may hold upto 10% of their total assets in stocks not included in the corresponding Underlying Index. For example, the AMC may invest in stocks not included in the relevant Underlying Index in order to reflect various corporate actions (such as mergers) and other changes in the relevant Underlying Index (such as reconstitutions, additions, deletions and these holdings will be in anticipation and in the direction of impending changes in the Underlying Index). Infra BeES will invest 95% of its total assets in the stocks of its Underlying Index. Due to corporate action in companies comprising the Index, the Scheme may be allocated/allotted securities which are not part of the Index. Hence, the Scheme may hold upto 5% of their total assets in stocks not included in the corresponding Underlying Index. For example, the AMC may invest in stocks not included in the relevant Underlying Index in order to reflect various corporate actions (such as mergers) and other changes in the relevant Underlying Index (such as reconstitutions, additions, deletions and these holdings will be in anticipation and in the direction of impending changes in the Underlying Index). The Fund shall endeavor to rebalance the portfolio to track the Underlying Index. Hang Seng BeES shall also, as per its investment allocation pattern invest upto 10% in money market instruments, convertible bonds, mutual fund schemes / overseas exchange traded funds based on Hang Seng Index & other securities including cash at call to meet cash flows, recurring expenses and redemption requirements. The Schemes, excepting Hang Seng Index, Shariah BeES and Infra BeES, shall also invest upto 10% in money market instruments, G-Secs, bonds, debentures and cash at call, as per its investment allocation pattern. Infra BeES shall also invest upto 5% in money market instruments, G-Secs, bonds, debentures and cash at call, as per its investment allocation pattern. Gold BeES will invest upto 100% but at least 90% of its total assets in the physical Gold. The Scheme may hold upto 10% of its total assets in other securities/instruments. As long as the Scheme invests at least 90% of its total assets in physical Gold, it may also invest its other assets in cash and cash equivalents and short-term high quality debt that would include, obligations of the Indian Government and its agencies, Commercial Papers (rated by recognized Rating agencies), Bank Certificates of Deposit, repurchase agreements (Repo’s), units of money market funds and other money market instruments permissible under the investment norms. II. Liquid BeES The Scheme will retain the flexibility to invest in the entire range of securities as per investment objective of the Scheme and as per the SEBI Regulations. Investment strategy of the Scheme is to invest in very high quality short-term debt paper with objective of avoiding loss of capital even on a daily basis. Fund will invest in Government Securities, Treasury bills, corporate bonds of such maturity as permitted by SEBI Regulations. The Scheme investments will be in accordance with investment objective of the Scheme and provisions of SEBI Regulations.

29

The AMC will endeavour to meet the investment objective of the Scheme while maintaining a balance between safety, liquidity and return on investments. As the primary objective of the Scheme is to provide high liquidity with low volatility, the AMC will invest a significant portion of assets in short term/floating rate securities, which carry low market risk. The Scheme may also use derivatives to reduce the volatility of the portfolio and/or to enhance the portfolio returns. The Fund will try to identify securities that yield relative value over others for similar risk and liquidity level. Various analytical tools like spread, horizon returns, forward implied interest rates will be deployed to evaluate various investment options. Investment in debt instruments carry various risks like Interest Rate Risk, Liquidity Risk, Credit Risk, etc. While they cannot be eliminated, they can be reduced by diversification and effective use of hedging techniques. Investment views/decisions will be taken on the basis of following parameters: 1. Liquidity of the security. 2. Maturity profile of the instruments. 3. Quality of the security/instrument (including the financial health of the issuer). 4. Returns offered relative to alternative investment opportunities. 5. Prevailing interest rate scenario. 6. Any other factors considered relevant in the opinion of the AMC. RISK CONTROL Investments made by the Schemes would be in accordance with the investment objective of the respective Schemes and provisions of SEBI Regulations. Since the investing requires disciplined risk management, the AMC has adequate safeguards for controlling risk in the portfolio construction process. The risk control process involves reducing risk through portfolio diversification wherever possible, taking care however not to dilute the returns in the process. It is the belief of the AMC that the diversification would help to achieve desired level of consistency in returns. Additionally for Liquid BeES, the AMC aims to identify securities, which offer superior level of yields at lower level of risks. The AMC will be guided by the ratings of Ratings Agencies such as CRISIL, CARE, ICRA and Duff and Phelps Credit Rating India Ltd. or of any other rating agencies that may be registered with SEBI from time to time. The Scheme may also use various derivatives and hedging products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance the unit holders’ interest. While these measures are expected to mitigate the above risks to a large extent, there can be no assurance that these risks would be completely eliminated. CHANGE IN INVESTMENT PATTERN I. (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES, (vi) Hang Seng BeES and (vii) Infra BeES As the Schemes are Index schemes, the policy is passive management. However the investment pattern is indicative and may change for short duration. In the event the Underlying Index, as the case may be, is dissolved or is withdrawn or is not published due to any reason whatsoever, the Trustees reserve the right to modify such Schemes so as to track different and suitable Index or to suspend tracking the benchmark Index and appropriate intimation will be send to the Unit holders of such Schemes. In such a case, investment pattern will be modified suitably to match the composition of the securities that are included in the new Index to be tracked and such Schemes will be subject to tracking errors during the intervening period. It must be clearly understood that the percentage stated in the asset allocation table are only indicative and not absolute. In the case of Hang Seng BeES in case of a change in the investment pattern, the Fund will try and rebalance the Scheme to track the underlying Index within two months. Rebalance for the above Schemes shall also be carried out whenever there is a change in the Underlying Index or any change due to corporate action with respect to the constituents of the Underlying Index

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II. Liquid BeES: Subject to SEBI Regulations, the asset allocation pattern indicated above may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors. It must be clearly understood that the percentage stated above are only indicative and not absolute. These proportions may vary substantially depending upon the perception of the AMC, the intention being all the times to seek to protect the interest of the unit holders. Such changes in the investment pattern will be for short term only. The AMC retains the flexibility to invest across all the securities/instruments in Debt and money market. The flexibility is being retained to adjust the portfolio in response to a change in the risk-return equation for asset classes under investment, with view to maintain risk within manageable limits. III. Gold BeES Subject to SEBI Regulations, the asset allocation pattern indicated above may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors. It must be clearly understood that the percentage stated in the asset allocation table are only indicative and not absolute. These proportions may vary substantially depending upon the perception of the AMC, the intention being all the times to seek to protect the interest of the unit holders. Such changes in the investment pattern will be for short term and keeping in view the passive nature of the Scheme. IMPLEMENTATION OF POLICIES I. (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES, (vi) Hang Seng BeES and (vii) Infra BeES The Schemes, in general, will hold all the securities that comprise the Underlying Index in the same proportion as the respective Index. The income received by way of dividend shall be used for recurring expenses and redemption requirements or shall be accumulated and invested as per the investment objective of the Schemes. There is a risk of higher tracking error due to the income received by way of dividend till it is reinvested. Expectation is that, over a period of time, the tracking error of the Schemes relative to the performance of the Underlying Index will be relatively low. The Fund would endeavour to keep the tracking error of Infra BeES within 2%. The Investment Manager would monitor the tracking error of the Schemes on an ongoing basis and would seek to minimize tracking error to the maximum extent possible. There can be no assurance or guarantee that the Schemes will achieve any particular level of tracking error relative to performance of the Underlying Index. The investment decisions will be determined as per the benchmark Index. II. Gold BeES The Scheme, in general, will buy physical Gold. Expectation is that, over time, the tracking error of the Scheme relative to the performance of the domestic prices of gold will be relatively low. INVESTMENT PROCESS I. (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES, (vi) Hang Seng BeES and (vii) Infra BeES The Schemes will endeavor to track the respective Underlying Index by investing in the constituents of the respective Underlying Index. II. Gold BeES The Scheme will endeavor to track the domestic prices of gold by investing in physical Gold. Normally, the Fund will receive physical Gold from the authorised participants/large investors against the exchange of units of the Scheme in Creation Unit size as defined by the Fund. The AMC will analyse from time to time different ways of taking exposure in gold from the perspective of risk and return and decide the same in the best interest of investors.

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RECORDING OF INVESTMENT DECISIONS The investment decisions will be taken by the Schemes keeping in view the investment objective of the respective Schemes and all the relevant aspects. The AMC will review all the investments made by the Schemes. The investment decisions of the Schemes will be carried out by the designated Fund Manager under the supervision of Chief Investment Officer. All investment decisions of the Scheme will be recorded in accordance with SEBI Regulations. PORTFOLIO TURNOVER Portfolio Turnover is the term used by the Fund for measuring the amount of trading that occurs in a Scheme’s portfolio during a specified period of time. The Schemes are open ended Schemes. It is therefore expected that there would be a number of subscriptions and redemptions on a daily basis. There may be frequent transaction to buy and sell the securities resulting in increase in transaction cost. At the same time frequent transactions may increase the profits and which can offset the increase in cost. Consequently, it is difficult to estimate with any reasonable measure of accuracy, the likely turnover in the portfolio. However, the Fund Manager will endeavour to optimize the portfolio turnover to minimize risk and maximize gains while keeping in mind the cost associate with such transaction. I. (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES, (vi) Gold BeES, (vii) Hang Seng BeES and (viii) Infra BeES Portfolio Turnover is defined as the lower of sales or purchases divided by the average corpus during a specified period of time. Generally, turnover will be confined to rebalancing of portfolio on account of change in the composition and corporate actions of the underlying Index. II. Liquid BeES Portfolio Turnover is the average maturity period of the securities held by the Scheme. F. FUNDAMENTAL ATTRIBUTES Following are the fundamental attributes of the Scheme, in terms of Regulation 18(15A) of the SEBI Regulations: (i) Type of Schemes : Please refer section of ‘Type of Scheme” (ii) Investment Objective:  Investment objective - Please refer section of ‘Investment Objective’.  Investment pattern - Please refer section of ‘Asset Allocation’. (iii) Terms of Issue: Provisions with respect to listing, repurchase, redemption of units and fees and expenses as indicated in this SID. In accordance with Regulation 18(15A) of the Regulations, the Trustee shall ensure that no change in the fundamental attributes of the Schemes and Plan(s)/Option(s) thereunder or the trust or fees and expenses payable or any other change which would modify the Scheme and the Plan(s)/Option(s) thereunder and affect the interest of the Unit holders, will be carried out unless: (i)

(ii)

A written communication about the proposed change is sent to each Unit holder of the respective Scheme and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a Marathi daily newspaper with wide circulation published in Mumbai (as the head office of the Fund is situated there); and The Unit holders of the respective Scheme will be given an option to exit for a period of 30 days to exit at the prevailing Net Asset Value without any Exit Load.

Fundamental attributes will not cover such actions of the Trustee of the Mutual Fund or the Board of Directors of the AMC, made in order to conduct the business of the Trust, the Scheme or the AMC, where such business is in the nature of discharging the duties and responsibilities with which they have been charged. Nor will it include 32

changes to the Schemes made in order to comply with changes in Regulation with which the Schemes have been required to comply. G. BENCHMARK INDEX The Trustees have adopted the following benchmark Index : Sr. No. 1 2 3 4 5 6 7 8 9

Name of the Scheme Nifty BeES Junior BeES Bank BeES PSU Bank BeES Shariah BeES Infra BeES Liquid BeES Gold BeES Hang Seng BeES

Benchmark Index S&P CNX Nifty Index CNX Nifty Junior Index CNX Bank Index CNX PSU Bank Index S&P CNX Nifty Shariah Index CNX Infrastructure Index CRISIL Liquid Fund Index Physical price of Gold Hang Seng Index

For Schemes tracking indices, as per its investment objective the investment would primarily be in securities which are constituents of the benchmark Index. Thus, the composition of the aforesaid benchmark index is such that it is most suited for comparing performance of the respective Schemes. For Gold BeES the investments would be in physical gold as per its investment objective. Thus, the aforesaid benchmark is such that it is most suited for comparing performance of the Scheme. For Liquid BeES the investments would be made in debt securities as per its investment objective. Thus, the aforesaid benchmark is such that it is most suited for comparing performance of the Scheme. A detailed review of the Schemes and the performance of the Schemes vis-à-vis the benchmark will be placed before the Board of Directors of AMC and Trustee on a quarterly basis. The Trustee reserves the right to change the benchmark or select an additional Index for evaluation of performance of any of the Schemes from time to time in conformity with investment objective of the Schemes and appropriateness of the benchmark subject to SEBI Regulations and other prevailing guidelines, if any. H. FUND MANAGER OF THE SCHEMES Name of the Schemes (i) Nifty BeES, (ii) Bank BeES, (iii) Shariah BeES, (iv) Gold BeES and (v) Infra BeES

Fund Manager Mr. Vishal Jain

(i) Junior BeES, (ii) Liquid BeES and (iii) PSU Bank BeES Hang Seng BeES

Ms. Payal Kaipunjal 1. 2.

Mr. Vishal Jain for managing investments in foreign securities. Ms. Payal Kaipunjal for managing investments in debt securities

Vishal Jain, aged 38 years, is B. Sc. and MBA with over 10 years experience. He was previously with the CRISIL Ltd., India’s premier rating agency, where he was part of the Index group, which was involved in the calculation, maintenance and dissemination of CRISIL Equity Indices. He was then deputed to India Index Services & Products Ltd. (IISL), a joint venture of CRISIL and NSE, which has a licensing and consulting agreement with Standard & Poor’s, the world largest index service provider. He is working with Benchmark Asset Management Company Pvt. Ltd. since October 2000. Presently he is designated as Chief Investment Officer and is responsible for the Fund Management of all the Schemes of Benchmark Mutual Fund. He has also

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been designated as Fund Manager of the following Schemes i.e. (i) Benchmark Equity & Derivatives Opportunities Fund and (ii) Benchmark S&P CNX 500 Fund. Payal Kaipunjal, aged 31 years, is a B. Com., M.B.A in Finance, PGDIM and Financial Risk Management (GARP). At the AMC, she was handling fund management in Portfolio Management Services Department from June 2004 upto January 2006. From February 2006 she has been working in the mutual fund division and is a part of the fund management team. At present she has been designated as Asst. Vice President. I. INVESTMENT RESTRICTIONS Pursuant to the SEBI Regulations, the following are the investment and other limitations as presently applicable to the Schemes at the time of making investments. However, all the investments by the Schemes will be made within the investment objective, asset allocation, described earlier as well as within the investment restrictions as specified in SEBI (Mutual Funds) Regulations, 1996, as amended from time to time, including Schedule VII thereof. 1. No term loans for any purpose will be advanced by the Schemes. 2. Each Scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer, which are rated not below the investment grade by a credit rating agency authorized to carry out such activity under the Act. Such investment limit may be extended to 20% of the NAV of the Scheme with the prior approval of Board of Directors of Trustees Company and AMC, till the time the Regulations require such approvals. Provided further that investment within such limit can be made in mortgaged backed securitized debt which are rated not below investment grade by a rating agency registered with the Board. However such limit shall not be applicable to investments in government securities and money market instruments. Provided further that Debentures, irrespective of any residual maturity period (above or below one year), shall attract the investment restrictions as applicable for debt instruments as specified under Clause 1 and 1 A of Seventh Schedule to the SEBI (Mutual Funds) Regulations, 1996. 3. Each Scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investments in such instruments shall not exceed 25% of the NAV of the Scheme. All such investments shall be made with the prior approval of the Board of Directors of Trustees Company and AMC, till the time the Regulations require such approvals. 4. Each Scheme shall not invest more than 30% of its net assets in money market instruments of an issuer. Provided that such limit shall not be applicable for investments in Government securities, treasury bills and collateralized borrowing and lending obligations. 5. Transfer of investments from one Scheme to another Scheme in the Mutual Fund shall be allowed only if: a. Such transfers are done at the prevailing market price for quoted instruments on spot basis. Explanation: “Spot basis” shall have same meaning as specified by Stock Exchange for spot transaction. b. The securities so transferred shall be in conformity with the investment objective of the respective Scheme to which such transfer has been made. 6. The Schemes may invest in another Scheme under the same AMC or any other Mutual Fund without charging any fees, provided that aggregate inter-Scheme investment made by all the Schemes under the same management or in Schemes under the management of any other Asset Management Company shall not exceed 5% of the net asset value of the Mutual Fund. 7. Till the Regulations so require, the Fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relative securities and in all cases of sale, deliver the securities and shall in no case put itself in a position whereby it has to make short sale or carry forward transaction or engage in badla finance. 8. Till the Regulations so require, the Fund shall get the securities purchased transferred in the name of the Fund on account of the respective Scheme, wherever investments are intended to be of a long-term nature. 9. Pending deployment of funds of Schemes in securities in terms of investment objectives of the Schemes, a Fund can invest the funds of the Schemes in short-term deposits of scheduled commercial banks within the limits prescribed under SEBI circular and applicable guidelines. Shariah BeES will not invest in any deposits. 10. The Fund may borrow to meet liquidity needs, for the purpose of repurchase, redemption of units or payment of interest or dividend to the Unit holders and such borrowings shall not exceed 20% of the net asset of the respective Scheme and duration of the borrowing shall not exceed 6 months. The Fund may

34

11.

12. 13. 14. 15.

borrow from permissible entities at prevailing market rates and may offer the assets of the Fund as collateral for such borrowing. Shariah BeES will not borrow funds. Till the Regulations so require, the Schemes shall not make any investment in: i Any unlisted security of an associate or group company of the sponsor; or ii Any security issued by way of private placement by an associate or group company of the Sponsor; or iii The listed securities of group companies of the Sponsor, which is in excess of 25% of the net assets. The Schemes shall not invest more than 5 percent of its NAV in the unlisted equity shares or equity related securities. The Schemes shall not make any investment in any fund of funds scheme. (i) Nifty BeES, (ii) Junior BeES, (iii) Bank BeES, (iv) PSU Bank BeES, (v) Shariah BeES (vi) Hang Seng BeES and (vii) Infra BeES, being Index Schemes, will not invest in securitized debt. The funds of the Gold BeES shall be invested only in gold or gold related instruments in accordance with the investment objective, except to the extent necessary to meet the liquidity requirements for honouring repurchases or redemptions, as disclosed in this SID. Presently as per SEBI Regulations, investments by the Scheme can be made only in physical gold. Investment in warehouse receipts and other permitted instruments linked to prices of Gold and units of international gold linked ETFs would be made as and when permitted by regulatory authorities.

16. The Schemes will comply with any other Regulations applicable to the investments of Mutual Funds from time to time. All investment restrictions shall be applicable at the time of making investments. The AMC may alter these limitations/objectives from time to time to the extent the SEBI Regulations change so as to permit the Schemes to make its investments in the full spectrum of permitted investments to achieve its investment objective. The Trustees may from time to time alter these restrictions in conformity with the SEBI Regulations. All investments of the Schemes will be made in accordance with the SEBI Regulations, including Schedule VII thereof. INVESTMENT BY AMC The AMC may invest in the Schemes. The percentage of such investment to the total net asset value may vary from time to time. The AMC shall not charge any fees on investment by the AMC in the units of the Schemes in accordance with sub-regulation 3 of Regulation 24 of the Regulations and shall charge fees on such amounts in future only if the SEBI Regulations so permit.

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J. SCHEMES PERFORMANCE 1. Nifty BeES (a) Absolute Returns

(b) Compounded Annualised Returns as on February 28, 2011 Period Nifty BeES S&P CNX Nifty Index S&P CNX Nifty Total Return Index Returns for last 1 Year 9.10% 8.30% 9.46% Returns for the last 3 years 1.26% 0.70% 1.75% Returns for the last 5 years 12.63% 11.64% 12.96% Returns since Inception 20.98% 19.58% 21.48% Returns since inception are calculated from the date of allotment i.e. December 28, 2001. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Dividends are assumed to be reinvested at the prevailing NAV. Bonus declared has been adjusted.

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2. Junior BeES (a) Absolute Returns

(b) Compounded Annualised Returns as on February 28, 2011 Period Junior BeES CNX Nifty Junior Index

CNX Nifty Junior Total Return Index Returns for last 1 Year 3.54% 3.44% 4.47% Returns for the last 3 years 2.64% 2.74% 3.83% Returns for the last 5 years 11.82% 11.85% 13.09% Returns since Inception 28.52% 28.47% 30.35% Returns since inception are calculated from the date of allotment i.e. February 21, 2003. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Dividends are assumed to be reinvested at the prevailing NAV. Bonus declared has been adjusted.

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3. Bank BeES (a) Absolute Returns

(b) Compounded Annualised Returns as on February 28, 2011 Period Bank BeES CNX Bank Index CNX Bank Total Return Index Returns for last 1 Year 20.11% 19.52% 20.61% Returns for the last 3 years 7.09% 6.30% 7.82% Returns for the last 5 years 18.86% 17.90% 19.63% Returns since Inception 24.61% 23.32% 25.35% Returns since inception are calculated from the date of allotment i.e. May 27, 2004. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Dividends are assumed to be reinvested at the prevailing NAV.

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4. PSU Bank BeES (a) Absolute Returns

(b) Compounded Annualised Returns as on February 28, 2011 Period PSU Bank BeES CNX PSU Bank Index CNX PSU Bank Total Return Index Returns for last 1 Year 33.64% 32.91% 34.67% Returns for the last 3 years 13.28% 12.12% 14.49% Returns since Inception 15.21% 14.41% 16.57% Returns since inception are calculated from the date of allotment i.e. October 25, 2007. As the Scheme has not completed 5 years, the returns of the Scheme for 5 years are not provided. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Dividends are assumed to be reinvested at the prevailing NAV.

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5. Shariah BeES (a) Absolute Returns

(b) Compounded Annualised Return as on February 28, 2011 Period Shariah BeES S&P CNX Nifty Shariah Index Returns for last 1 Year

3.25%

2.73%

Returns Since Inception

S&P CNX Nifty Shariah Total Return Index 4.01%

35.05% 35.31% 36.84% Returns since inception are calculated from the date of allotment i.e. March 18, 2009. As the Scheme has not completed 3 years, the returns of the Scheme for 3 and 5 years are not provided. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.

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6. Liquid BeES (a) Absolute Returns

(b) Compounded Annualised Returns as on February 28, 2011 Period Liquid BeES CRISIL Liquid Fund Index Returns for last 1 Year

5.75%

5.84%

Returns for last 3 Years

5.33%

6.22%

Returns for last 5 Years

5.49%

6.46%

Returns Since Inception

4.87% 5.73% Returns since inception are calculated from the date of allotment i.e. July 8, 2003. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Dividends are assumed to be reinvested at the prevailing NAV.

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7.

Gold BeES

(a) Absolute Returns

(b) Compounded Annualised Returns as on February 28, 2011 Period Gold BeES Domestic Price of Gold Returns for last 1 Year

22.72%

23.98%

Returns for last 3 Years

17.29%

18.35%

Returns Since Inception

21.02% 22.11% Returns since inception are calculated from the date of allotment i.e. March 8, 2007. As the Scheme has not completed 5 years, the returns of the Scheme for 5 years are not provided. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.

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8. Hang Seng BeES (a) Absolute Returns

(b) Returns as on February 28, 2011 Period Hang Seng Hang Seng Index Hang Seng Index BeES Total Return Index Returns Since Inception 11.43% 10.05% 11.97% Returns are absolute as the Scheme has not completed 1 year. Returns since inception are calculated from the date of allotment i.e. March 9, 2010. As the Scheme has not completed 1 year, the returns of the Scheme for 1, 3 and 5 years are not provided. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.

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9. Infra BeES (a) Absolute Returns

(b) Returns as on February 28, 2011 Period Infra BeES

CNX Infrastructure Index

CNX Infrastructure Total Return Index Returns Since Inception -24.80% -24.41% -24.26% Returns are absolute as the Scheme has not completed 1 year. Returns since inception are calculated from the date of allotment i.e. September 29, 2010. As the Scheme has not completed 1 year, the returns of the Scheme for 1, 3 and 5 years are not provided. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.

K. ABOUT THE INDEX Index Service Provider India Index Services & Products Ltd. (IISL), a joint venture between National Stock Exchange of India Ltd. (NSE) and the CRISIL Ltd is an index service provider. IISL has been formed with the objective of providing a variety of indices and index related services and products for the capital market. All the indices i.e. S&P CNX Nifty Index, CNX Nifty Junior Index, CNX Bank Index, CNX PSU Bank Index and S&P CNX Nifty Shariah Index have been licensed from IISL. IISL has a Consulting and License Agreement with Standard and Poor’s, a division of The McGraw Hill Companies Inc., (S&P), the world’s leading provider of investable equity indices, for co-branding certain equity indices of IISL.

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The Indices are reviewed quarterly by the Index Maintenance Sub-committee of IISL and any changes to the constituents are announced in advance. The index values are calculated by IISL on daily basis and put on the web site of the National Stock Exchange of India Ltd. (www.nseindia.com). The details about the Index are as follows : 1. S&P CNX Nifty S&P CNX Nifty Index comprises of 50 stocks and is computed based on free float methodology. Stocks are selected based on their float adjusted market capitalization and liquidity. An important aspect of S&P CNX Nifty Index is that the impact cost (cost of executing the entire set of S&P CNX Nifty securities) is low. S&P CNX Nifty Index is a broad based diversified index. S&P CNX Nifty has a base period of November 3, 1995 with a base index value of 1000. 2. CNX Nifty Junior CNX Nifty Junior Index comprises of 50 stocks and is computed based on free float methodology. Stocks are selected based on their float adjusted market capitalization and liquidity. An important aspect of CNX Nifty Junior is that the impact cost (cost of executing the entire set of CNX Nifty Junior securities) is low. CNX Nifty Junior has a base date of November 3, 1996 with a base index value of 1000. 3. CNX Bank Index CNX Bank Index which is a free float market capitalization weighted index, comprises of 12 most liquid and large capitalised Indian Banking stocks. CNX Bank Index has a base date of January 01, 2000 with a base index value of 1000. Selection Criteria Selection of security to be included in the CNX Bank Index is based on the following criteria: 1. Company's market capitalisation rank in the universe should be less than 500 2. Company's turnover rank in the universe should be less than 500 3. Company's trading frequency should be at least 90% in the last six months 4. Company should have a positive net worth. 5. A company which comes out with an IPO will be eligible for inclusion in the index, if it fulfills the normal eligiblity criteria for the index for a 3 month period instead of a 6 month period. 4. PSU Bank Index CNX PSU Bank Index comprises of 12 stocks of Public Sector Banks. CNX PSU Bank Index has a base date of January 01, 2004 with a base index value of 1000. The Index is a Free Float methodology based weighted index. Methodology 1. Definitions of free float: By definition, free float means shares of a company that are freely available to the investing public and which is available for trading in the normal course. The free float factor for each company in the index will be determined based on the public shareholding of the companies as disclosed in the shareholding pattern submitted to the stock exchanges by these companies. Further, the following categories would also be excluded from the free float factor where identifiable separately: 1. Government holding in the capacity of strategic investor 2. Shares held by promoters through ADR/GDRs. 3. Strategic stakes by corporate bodies 4. Investments under FDI category 5. Equity held by associate/group companies (cross-holdings) Free-float Methodology refers to an index construction methodology that takes into consideration only the free-float market capitalization of a company for the purpose of index calculation and calculating the weightage of the constituents of that index. Further, Free float factor for each company in the index will be updated based on the shareholding pattern submitted on a quarterly basis by companies to the stock exchanges.

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2.

Benefits of free float: 1. Takes into consideration only the shares freely available for the investing public to trade. 2. Excludes cross holding among group companies. 3. Excludes companies, which have an undue influence on index, because of large market capitalization and at the same time has a less free float. 4. The index which is calculated on a free float methodology can have large representation in form of many constituents whereby reducing the concentration of a few companies and leading to diversification.

3.

Issues in implementing free float: For calculating free float, the total shares issued are not considered only the shares which are freely available for trading is considered. Technically all shares which are issued can be traded.

Selection Criteria Selection of the index set is based on the following criteria: 1. Constituent should be a Public sector bank 2. Constituent’s market capitalization rank in the universe should be among the top 500. 3. Constituent’s turnover rank in the universe should be in the top 500. 4. Constituent should have a positive Net worth. 5. The constituents should be available for trading in the derivatives segment (Stock Futures & Options market) on NSE. 5. S&P CNX Nifty Shariah Index Shariah Screening Standard & Poor’s has contracted with Ratings Intelligence Partners (RI) to provide the Shariah screens and filter the stocks based on these screens. Ratings Intelligence Partners is a London/Kuwait based consulting company specializing in solutions for the global Islamic investment market. Its team consists of qualified Islamic researchers who work directly with a Shariah Supervisory Board. It is continually working with regional banks to create Shariah-compliant equity products and expand investment offerings. RI works with a Shariah Supervisory Board, which is a board of Islamic scholars serving to interpret business issues and recommend actions related to business decisions for the indices. The members are : • Dr. Muhammad Ali Elgari - PhD in Economics from the University of California, U.S.A. • Dr. Abdul Sattar Abu Ghuddah - PhD in Islamic Law from Al Azhar University, Cairo, Egypt. • Dr. Nazih Hammad - PhD in Islamic Law from the University of Cairo, Egypt. • Dr. Mohammad Amin Ali-Qattan - PhD in Islamic Banking, University of Birmingham, United Kingdom. S&P CNX Nifty Shariah Index Based on the premier market bellwether for India, the S&P CNX Nifty, the current constituents of the Index are screened for Shariah compliance. Those that are compliant form the S&P CNX Nifty Shariah. The resulting Index performance closely tracks the performance of the parent Index. The S&P CNX Nifty includes the largest and most liquid companies listed on the NSE. Representation All underlying stocks are representative of the Indian equity market, while remaining highly liquid and investable. The Index typically covers over 60% of the market capitalization of the parent Index, though this can vary depending on the number of companies found to be compliant. Historical performance analysis, however, indicates that there is a high level of correlation between the S&P CNX Nifty Index and S&P CNX Nifty Shariah Index. Sector-Based Screens Business activities related to the following are excluded: 1. Pork 2. Alcohol 3. Gambling 4. Financials

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5. Advertising and Media (newspapers are allowed, sub-industries are analyzed individually) 6. Pornography 7. Tobacco 8. Trading of gold and silver as cash on deferred basis During the selection process, each company’s audited annual report is reviewed to ensure that the company is not involved in any non-Shariah compliant activities. Those that are found to be non-compliant are screened out. The above industries are not considered Islamic and would not be appropriate for investment for observant Muslims. Accounting-Based Screens After removing companies with non-compliant business activities, the rest of the companies are examined for compliance in financial ratios, as certain ratios may violate compliance measurements. Three areas of focus are leverage, cash and the share of revenues derived from non-compliant activities. All of these are subject to evaluation on an ongoing basis. Leverage Compliance This compliance is measured as: Debt / Market Value of Equity (12 Month average) < 33 %; Cash Compliance There are compliances with reference to cash holdings. These are: Accounts Receivables / Market value of Equity (12 Month average) < 49 %; (Cash + Interest Bearing Securities) / Market value of Equity (12 Month average)