Motilal Oswal Mutual Fund presents

m50
REMIXED

Opens: 30 June 2010

’s
India t
NFO Closes: 19 July 2010
Firs
Motilal Oswal MOSt Shares M50 Exchange Traded Fund
An Open Ended Exchange Traded Fund
India’s first fundamentally weighted ETF based on Nifty

MOSt
Mutual Fund Shares
Acts like a fund, Trades like a share
MOSl Shares M50

India’s 1st Fundamentally Weighted ETF based on the S&P CNX Nifty
Index (Nifty).

Seeks investment return that generally corresponds to the performance

of the MOSt 50 basket*.

MOSt 50 basket is essentially Nifty Remixed and consists of all 50

stocks of Nifty but not in same proportion as Nifty.

Weights of stocks in MOSt 50 basket determined by using Motilal

Oswal AMC’s proprietary pre-defined methodology that assigns
weights based on stock’s fundamentals (ROE, net worth, retained
earnings & price) against market cap based weights used in Nifty.

Weightage allocation methodology based on a set of fundamental/

financial parameters and valuations.

Companies with good financial performance and reasonable valuation

get higher weightage.

* Before fees & expenses; Subject to tracking error

For further details on scheme features, please refer to the Scheme Information
Document ( SID ) of the scheme.

2
MOSl Shares M50
Pre-defined set of rules to determine the allocations.

Day to day management of the basket components / weights being done

by India Index Services & Products Ltd. (IISL – A Joint Venture between
Crisil Ltd. & National Stock Exchange of India Ltd.) based on pre-defined
set of rules.

Periodic rebalancing of the basket ensures an element of active capital

allocation.

Rebalancing linked to change in Nifty constituents or 12 months from

last rebalance, whichever is earlier.

No discretion on weightages with Fund Manager / AMC, ensuring passive

replication of the MOSt 50 Basket.

MOSt Shares ETF platform to provide for an Efficient, Transparent &

Flexible platform.

For further details on scheme features, please refer to the Scheme Information
Document ( SID ) of the scheme.

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Active Funds Scorecard

70% of Large Cap funds have underperformed S&P CNX Nifty Index
over a 5-year period.

Equal Weighted Asset Weighted

Returns v/s Benchmark Returns v/s Benchmark
Large Cap Large Cap
Equity 1 Year 3 Year 5 Year Equity 1 Year 3 Year 5 Year

Equal Asset
Weighted 76.59% 9.42% 20.71% Weighted 77.86% 10.33% 21.36%
returns returns

S&P CNX S&P CNX

Nifty 77.59% 10.71% 21.70% Nifty 77.59% 10.71% 21.70%

Source: S&P Crisil SPIVA Report, Indices v/s Active Funds Scorecard, India,
December 2009

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Fundamental Weighing

Fundamentally Weighing combines the positive features of both

active fundamentals based investing and passive execution

Active Investing features

Higher capital allocation to companies which have

Strong consistent financial performance

Cheap valuation or reasonable valuation

Passive / Index Investing features

Quantitative rule based investing based on pre-defined investment rules

No discretion to fund managers in selecting or rejecting individual stocks

Low costs

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Investment Features - Market Cap Based
Index & MOSl 50
Market Cap Index
Weightage to Based on stock's Market Capitalization.
stocks
Higher allocation to stocks with bigger
market capitalization irrespective of
their underlying fundamentals.
Implication Weight of stock is not reduced even
if it becomes expensive or have poor
financial performance.
MOSt 50 Basket
Based on stock's fundamentals (ROE,
Net Worth, Retained Earnings & Price).
Higher allocation to stocks with better financial
performance and reasonable valuations.
Periodic rebalancing of Most 50 basket linked
to change in Nifty constituents ensures higher
capital remains allocated to stocks with good
financial performance and reasonable valuations.

Investment Allocation in a Market Cap based index gives primary credence

to size of company.
Expansion in valuations lead to increasing weightage of a stock in an Index
thereby increasing investors exposure to an already expensive stock, when in
fact it should be the reverse.
Conversely, companies with depressed valuations tend to be underweight,
especially at times of extreme pessimism, when in fact it should be the
reverse.
MOSt Shares M50 aims at combining the best of active investing principles
with passive execution, thereby eliminating the bias of size & expensiveness
in an investment portfolio.

Source: Internal Analysis

6
Illustrative Capital Allocation
MOSl 50

High Under Weight Moderate Weight

Valuations

Low Moderate Weight Over Weight

Low High

Fundamental / Financial Performance

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Illustrative Capital Allocation
MOSl 50

Under weight Moderate weight

Capital
Real Equipment
High Estate Oil
Technology
FMCG
Valuations

Moderate weight Over weight

Cement Pharma
Low Banking &
Financial
Power
Telecom
Metal Auto

Low High

Fundamental / Financial Performance

Note : Representative basket as on last two Nifty change dates

Source: Internal Analysis

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Illustrative Capital Allocation:
Nifty & MOSl 50
Sectoral allocation of Nifty Sectors 22-Oct-09 8-Apr-10
and MOSt 50 on Oct 22, Nifty MOSt 50 Nifty MOSt 50
2009 and April 8, 2010 Automotives 4.60% 11.60% 5.20% 12.80%
when change in Nifty took Capital Equipment 11.10% 3.00% 10.60% 9.40%
place Cement 2.20% 4.90% 1.30% 1.20%
Once MOSt Shares M50 is Financial Services 24.40% 31.00% 24.00% 28.30%
listed, the constituent FMCG 6.60% 1.20% 6.00% 4.30%
holdings will be declared Infrastructure 1.20% 0.60% 1.20% 0.60%
on a daily basis Metals 8.00% 10.30% 9.10% 12.40%
Oils 15.00% 5.50% 15.80% 2.40%
MOSt 50 Basket Inception
Power 5.10% 12.40% 4.40% 10.30%
date : 3rd April 2007
Pharma 2.10% 6.10% 2.40% 6.10%
3rd Apr 2007 Real Estate 3.30% 1.80% 2.60% 1.80%
MOSt 50 Basket 3691 Technology 11.50% 9.70% 12.80% 8.50%
Value
Nifty Value 3691 Telecom 4.80% 1.80% 4.00% 1.85%

MOSt Shares M50 is a new scheme and does not have a performance track record. Past
Performance may or may not be achieved in future. The above illustration is meant to help the
investors have an understanding of the MOSt 50 Basket. Investors may note that comparison shown
above is not meant to indicate performance of MOSt 50 Basket in any manner whatsoever. In
particular the Scheme does not offer capital protection or assured returns. MOSt 50 Basket
methodology is as mentioned in the Scheme Information Document. The results presented here are
based on indicative MOSt 50 Basket values and the final values since inception will be provided by
IISL before the Scheme is listed and will be available on the AMC’s website.

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 MOSl 50 Basket

Nifty MOSt 50
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-

10/3/2009

12/3/2009
10/3/2008

12/3/2008
10/3/2007

12/3/2007

2/3/2009

4/3/2009

6/3/2009

8/3/2009
2/3/2008

4/3/2008

6/3/2008

8/3/2008

2/3/2010

4/3/2010
4/3/2007

6/3/2007

8/3/2007

MOSt 50 Nifty
Basket*
Value on 3rd April 2007 3691 3691
Value on 31st May 2010 7218 5086
Annualized Returns 23.7% 10.7%
Annualized Standard Deviation 33.28% 34.24%
Beta with Market 0.94 1.00
Sharpe Ratio 0.53 0.14
Jensen Alfa 13.2%
* Indicative Value
MOSt Shares M50 is a new scheme and does not have a performance track record. Past Performance, as
indicated above, may or may not be achieved in future. The above illustration is meant to help the investors have
an understanding of the MOSt 50 Basket. Investors may note that comparison shown above is not meant to
indicate performance of MOSt 50 Basket in any manner whatsoever. In particular the Scheme does not offer
capital protection or assured returns. MOSt 50 Basket methodology is as mentioned in the Scheme Information
Document. The results presented here are based on indicative MOSt 50 Basket values and the final values since
inception will be provided by IISL before the Scheme is listed and will be available on the AMC’s website.

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Benefits of MOSl Shares M50

A mutual fund scheme with the convenience of share trading at real

time liquidity and prices.

Owning a diversified portfolio of bluechipTop 50 Nifty stocks.

Higher allocation to stocks with superior fundamentals and

reasonable valuations.

Lower allocation to stocks with inferior fundamentals & valuations.

Combines the benefit of active allocation & passive execution.

Lower cost structure (approx 1% against >2%) as compared to a

traditional investment product.

No Entry or Exit loads.

Tax efficient exposure to the “market”.

Complete transparency with daily portfolio disclosure.

Available at low denominations of less than Rs.100/-

For further details on scheme features, please refer to the Scheme

Information Document ( SID ) of the scheme.

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Uses of MOSl Shares M50

All types of investors i.e. Retail or Institutional, long term

or short term can use MOSt Shares M50 for following
strategies.

Investing

Trading

Hedging

Arbitrage

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Fund Manager

Mr. Rajnish Rastogi

14 Years Experience in Fund Management and Equity Research

Qualifications – CFA, M. Tech (Mgmt & Systems) and B.Tech from

Indian Institute of Technology (I.I.T.)

Prior Experience

Investment Manager at Alliance Bernstein LLP, New York, USA

Director Investment at HSBC Private Equity Advisors (India) Pvt. Ltd.

Associate Director at IL&FS Investment Managers Ltd.

Head Equity Research, CRISIL Ltd.

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Important Product Details
NFO Period Post NFO Period

During NFO, Investors can apply
online on BSE Star Platform or on MFSS
platform of NSE through their share
broker/sub-brokers or through any
Mutual Fund distributor. They can also
apply directly to Motilal Oswal AMC
through physical applications.
Post NFO, MOSt Shares M50 will be
listed on NSE and will be available for
buy and sell like any other share
through equity brokers.
Minimum investment would be in
round lot of one unit on NSE.

Minimum investment amount during AP/Large investor can buy/sell in

NFO: Rs. 10,000 & in multiple of Rs. 1 creation unit size directly with the fund.
thereafter.

During NFO period MOSt Shares M50

(units) will be allotted at 1/100th of
M50 basket Value e.g. if M50 basket on
allotment date is 7500 than issue price
for MOSt shares M50 will be
approximately Rs. 75 The units will be
alloted in whole numbers.

Any remaining fractional amount after For further details on scheme features,
please refer to the Scheme Information
allotment will be refunded to the Document ( SID ) of the scheme.
investor.

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ETF – An Introduction

Exchange Traded Funds (ETFs) are open ended mutual fund schemes,
which are traded on stock exchanges like a share and seek investment
returns that correspond to the performance of a particular index like
Nifty or Basket of Securities like MOSt50.

Post NFO, ETF is listed on stock exchanges and can be bought and sold
like any other company share.

ETF and Open ended Mutual Fund ( An Illustrative chart )

Feature ETFs Mutual Fund

NAV / Price Real Time End of the day
Portfolio Transparency High - Daily Low - Monthly / Quarterly
Fund Management Charges Low Comparatively High
Operating expenses Low Relatively high
Intraday Trading Possible Not possible
Margin Funding Possible Not possible
Purchase / Redemption Exchange /
Fund House
Fund House

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Global ETF Growth
Global ETF Asset Growth

56% CAGR

Source: ETF Landscape Global Handbook Blackrock; Q1 2010

Global ETF assets are at an all time high of US$ 1.03 Trillion as on March 2010,
clocking a CAGR of approx 56% since it was first launched in 1993.
During 2006-09, worldwide MF assets have grown by 2.5%, where as ETF
assets have grown by 82.46%
On US Exchanges, 11 out of top 25 Volume leaders / stocks are ETFs
These 11 ETFs account for 78% of total volume out of top 25 traded stocks on
US exchanges. 10 years back it was less than 25%
In US, ETF corpus increased by 180 billion$ last year while normal Mutual Fund
lost similar amount of money.
In India ETFs are amongst top 150 traded stocks on NSE.
In India ETF AUM has grown from just 7 crores in 2001 to 2410 crores as on Dec
09 i.e. astounding 344 times growth in assets.
Source : Bloomberg

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 DISCLAIMER:
This presentation has been prepared and issued on the basis of internal data, publicly available information and
other sources believed to be reliable. The information contained in this document is for general purposes only and
not a complete disclosure of every material fact and terms and conditions and features of Motilal Oswal MOSt
Shares M50 ETF (MOSt Shares M50). The information / data herein alone is not sufficient and shouldn’t be used for
the development or implementation of an investment strategy. It should not be construed as investment advice to
any party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and are
subject to change without notice. While utmost care has been exercised while preparing this document, Motilal
Oswal Asset Management Company Limited does not warrant the completeness or accuracy of the information
and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained
herein may include statements of future expectations and other forward-looking statements that are based on our
current views and assumptions and involve known and unknown risks and uncertainties that could cause actual
results, performance or events to differ materially from those expressed or implied in such statements. Readers
shall be fully responsible / liable for any decision taken on the basis of this presentation. No part of this document
may be duplicated in whole or in part in any form and/or redistributed without prior written consent of the Motilal
Oswal Mutual Fund/ Motilal Oswal Asset Management Company Limited. Readers should before investing in the
Scheme make their own investigation and seek appropriate professional advice.

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Statutory Details: Constitution: Motilal Oswal Mutual Fund has been set up as a trust under the Indian Trust Act, 1882. Trustee:
Motilal Oswal Trustee Company Limited. Investment Manager: Motilal Oswal Asset Management Company Ltd. Sponsor:
Motilal Oswal Securities Ltd. Scheme Classification & Investment Objective: Motilal Oswal MOSt Shares M50 ETF
(MOSt Shares M50), an open ended Exchange Traded Fund that seeks investment return that corresponds (before fees and
expenses) generally to the performance of the MOSt 50 Basket (Underlying Basket), subject to tracking error. Asset Allocation:
Securities constituting MOSt 50 Basket: 95%-100%; Debt and Money market instruments and cash at call: 0-5%. The total
exposure to Derivatives would be restricted to 10% of the net assets of the Scheme. Load: Entry Load: Nil Exit Load: Nil Terms of
Issue: Minimum Application Amount: During NFO, Rs. 10,000/- and in multiples of Re. 1/- each. Ongoing Basis, On the
Exchange: The units of the Scheme are proposed to be listed on the Capital Market Segment on National Stock Exchange of India
Ltd. (NSE). On NSE, the units of the Scheme can be purchased/sold in round lot of 1 unit and in multiples thereafter. Directly with
the Fund: The minimum number of units of the Scheme that investors can create/redeem in exchange of portfolio deposit and cash
component is 50,000 units and in multiples thereof. Face Value & Issue Price: Offer of units of Rs. 10/- per unit for cash at a
premium approximately equal to difference between the face value of Rs. 10/- and 1/100th of the value of MOSt 50 Basket during
the New Fund Offer and at NAV based prices on ongoing basis. Investor Benefits and General Services: During NFO, Investors can
also subscribe to the units through the mutual fund trading platforms viz. BSE StAR MF of Bombay Stock Exchange Limited (BSE)
and Mutual Fund Service System (MFSS) of NSE. The AMC will calculate and publish the first NAV of the Scheme not later than 30
days from the closure of the NFO. Subsequently, the NAVs will be calculated and disclosed at the close of every Business Day. Risk
Factors: (1) All the Mutual Funds and securities investments are subject to market risks and there can be no assurance
that the Scheme's objectives will be achieved (2) As the price / value / interest rates of the securities in which the
Scheme invests fluctuates, the Net Asset Value (NAV) of units issued under the Scheme may go up or down depending
upon the factors and forces affecting the securities market (3) Past performance of the Sponsor/AMC/Mutual Fund
and its affiliates does not indicate the future performance of the Scheme and may not provide a basis of comparison
with other investments (4) Motilal Oswal MOSt Shares M50 ETF (MOSt Shares M50) is the name of the Scheme and
does not in any manner indicate either the quality of the Scheme, its future prospects and returns. Investors are
therefore urged to study the terms of offer carefully and consult their Investment Advisor before they invest in the
Scheme (5) The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Mutual
Fund beyond the initial contribution made by it of an amount of Rs. 1 Lac towards setting up of the Mutual Fund (6)
Motilal Oswal Asset Management Company Limited (MOAMC) has no previous experience in managing a Mutual
Fund. The present Scheme is the first Scheme being launched under its management (7) The present Scheme is not a
guaranteed or assured return Scheme. Scheme Specific Risk Factors: Investment in the scheme shall be subject to
various other risk factors including but not limited to risk associated with investment in Equities such as trading
volumes, settlement risk, liquidity risk, default risk, tracking error risk, calculating agent risk, Underlying Basket risk,
risk associated with investment in derivatives, risk of fundamentally weighted Basket, risk of total return, etc. IISL

18
Disclaimer: The MOSt 50 Basket is not sponsored, endorsed, sold or promoted by India Index Services & Products Limited (IISL).
MOSt 50 Basket has been developed by MOAMC and IISL has calculated and maintained as per the specifications and requirements
of MOAMC. IISL does not make any representation or warranty, express or implied regarding the advisability of investing in the
products linked to MOSt 50 Basket and availing the services generally or particularly or the ability of MOSt 50 Basket to track
general stock market performance in India. Please read the full Disclaimers in relation to the MOSt 50 Basket in the Scheme
Information Document. S&P Disclaimer: “S&P®” and “Standard and Poor's®” are trademarks of S&P, and have been licensed for
use by India Index Services & Products Limited in connection with the S&P CNX Nifty Index. MOSt Shares M50 is not sponsored,
endorsed, sold or promoted by India Index Services & Products Limited ("IISL") or Standard & Poor's ("S&P"), a Delaware limited
liability company. Neither IISL nor S&P makes any representation or warranty, express or implied, to the owners of MOSt Shares
M50 or any member of the public regarding the advisability of investing in securities generally or in MOSt Shares M50. Please read
the full Disclaimers in relation to the S&P CNX Nifty Index in the Scheme Information Document. NSE Disclaimer: It is to be
distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Scheme Information
Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the
Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the full text of the
'Disclaimer Clause of NSE'. For further Scheme Specific Risk Factors & other details, Please read the Scheme Information
Document (SID) & Statement of Additional Information (SAI) carefully before investing. A copy of SID, SAI and KIM
alongwith the application form are available at the office of the AMC, R&T, Distributors, or can be downloaded from
www.motilaloswal.com/assetmanagement and www.mostshares.com Investors can also contact us on our toll free number 1800-
200-6626 or send email at mfservice@motilaloswal.com

19
Call: 1800-200-6626 l SMS: M50 to 575753
E-mail: mfservice@motilaloswal.com
Website: www.mostshares.com
www.motilaloswal.com/assetmanagement