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Gold BeESGold Exchange Traded Fund

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Exchange Traded Fund (ETF)

ETF is an open ended fund which is traded

on exchangeFirst ETF was introduced in US during 1993

Since than it has been growing at more 60%per annum.

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ETF Advantages

Real Time trading v/s end of the day prices

Easy availability through stock exchanges

Long term share holders do not subsidize

transaction cost of short term tradersLow cost

Available in lower denomination

Convenient for long term holding

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Growth of ETFs

Growth of International ETFs

-

200

400

600

0

100

200

300

400

500

600700

AUM $ Billion No. Of ETF

AUM $ Bil li on 1 1 2 5 8 18 40 74 105 142 212 310 417 487

No. Of ETF 3 3 4 21 21 31 33 92 202 280 282 336 453 596

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Jun-

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Growth of ETFs in India

Growth of ETFs in India

0

1000

2000

R

s.

C

ro

res

0

2

4

6

8

Assets

No of ETF

Assets7 206 333 611 868 1200

No of ETF 1 5 6 6 6 6

Dec-02 Dec-03 Mar-04 Mar-05 Mar-06 Jul-06

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Time line for Gold ETFs

May 02 Benchmark Files OD for the first ETF in the world with

SEBI

Mar 03 Gold Bullion Security launched in Australia

Dec 03 Gold bullion Security launched on LSE

Nov 04 Street Tracks Gold ETF launched on NYSE

Nov 04 New Gold Bullion Debentures listed in SA

Jan 05 I shares Comex Gold Trust on NYSE

Nov 05 Lyxor Gold Bullion Security listed on Euro next

Aug 06 Additional Listing of Street tracks in MexicoMar 06 ZKB Gold ETF listed in Switzerland

Awaited ETF introduced in India

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Current Size of Gold ETFs

Name of Gold ETF AUM in

tonnes

Gold Bullion Security Australia 9.78

Lyxor Gold bullion Security launched on LSE

Street Tracks Gold ETF launched on NYSE

New Gold Bullion Debentures listed in SA

I shares Comex Gold Trust on NYSE

ZKB Gold ETF listed in Switzerland

78.19

390.52

9.89

43.13

1.53

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Why Gold BeES

India is the World's largest gold consumer

Higher investment consumption of gold in

IndiaSocial compulsion of saving in gold for many

Indians

Potential hedge against rupee devaluation

C S i

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Current Scenario

Gold is acquired and stored in the form of

Jewelry, Bars, Coins, Gold Deposits, Gold

Accumulation Plan and now WarehouseReceipts

GAP, GDS and WRs can be classified as nonphysical

Out of this GAP is in unorganized sector, GDS

in current for is very restrictive and WR is

having higher denomination

C S i

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Current Scenario

There is need for an instrument which has

Small denomination

Cost efficiency

Convenience for long term holding

Greater uniform availability

Liquidity

Gold BeES Can fulfill this

T M k

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Target Market

Gold BeES will be targeted

savers and it is intended work more like very

flexible Gold Accumulation plan

investors who would like to use gold as

portfolio diversification and long term storeof value

G ld B ES St t

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Gold BeES Structure

Gold BeES will invest in physical gold

One unit will represent one gram of gold(approx Rs. 950)

G ld B ES St t

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Gold BeES Structure

The units will be listed on NSE and closely

track actual spot gold prices

Continuous arbitrage by Authorised Participantsbetween spot gold and Gold BeES will keep

prices in line

G ld B ES O ti

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Gold BeES Operations

Secondary market

Seller

Buyer

NSE

Cash

Primary market

Gold BeESCash

Buy / sell

Market making /

Arbitrage

Fund

Authorised

Participant

Redemption

in-kind

(Physical Gold)

Creation

in-kind

(Physical Gold)

Gold BeES

Ad t

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Advantages

Small unit size for accumulation

Will remain in demat form hence no risk of theft

No worries about purity of gold

Established procedures for putting Gold BeES

(demat security) as collateral for borrowing

Ad antages

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Advantages

Listing of one of the most popular

commodity linked fund on NSE

It will introduce many new investors to

NSE / NSDL/CDSL who have never

traded on NSE before or opened DPaccounts

World wide already gold ETFs aresuccessful

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Thank You