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ITE Shariah Indices

Primary Index Methodology December 2010

Islami Tijara

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© All rights reserved. Pragmatic Wealth Management Pvt. Ltd. 1

Table of Contents Introduction ............................................................................................. 2

Index Types ................................................................................................ 2

Shariah Monitoring....................................................................................... 3

Keynotes ..................................................................................................... 3

Stocks Eligibility Criteria .......................................................................... 4

Shariah Compliance Screening ...................................................................... 4

Index Eligibility Criteria ................................................................................ 5

ITE Indices Computation ......................................................................... 6

Stock Selection ............................................................................................ 6

ITE Shariah Index Family ............................................................................. 9

Index Construction .................................................................................... 10

Index Inclusion & Exclusion Policy .............................................................. 12

Index Governance .................................................................................. 14

The Index Research Group ......................................................................... 14

Shariah Research Group ............................................................................. 14

Base Currency ........................................................................................... 14

Base Date ................................................................................................. 14

Index Data Disclosure ........................................................................... 15

Index Notices ............................................................................................ 15

Holiday Schedule ....................................................................................... 15

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Introduction

In 2009, Pragmatic Wealth Management (PWM) launched the “Islami Tijara Equity” or the ITE Shariah Indices comprising of Shariah Compliant stocks. “Shariah” meaning Islamic canonical law

is adhered to, by observant Muslims in their daily lives and has certain strictures regarding finance and commercial activities. Over the last few years, demand for Shariah compliant

financial products has increased worldwide, while in India, the products are still at a nascent

stage and provide a wide and indigenous scope for penetration.

The ITE Shariah Indices are derived from the ITE Shariah Compliant Universe list of stocks. The universe of listed companies on the BSE (Bombay Stock Exchange) and NSE (National Stock

Exchange) are screened for Shariah Compliance and the ITE Shariah Compliant Universe is

derived. Although norms have been made stricter (discussed below), it’s an eye opener to notice almost 70% of the Sensex 30 and 65% of the Nifty 50 stocks are Shariah Compliant. PWM, with

the ITE-35 Index at the front line, aims to promote Shariah Compliant investments focusing on equity involvement of the market participants, rather than a fixed interest based involvement.

With almost 66% of Large Cap, 63% mid cap and 28% of small Cap stocks on the Indian Stock Market being “Shariah compliant”, the potential and opportunity for growth in “Islamic

Investment”, seems limitless.

ITE Shariah Indices are owned by Pragmatic Wealth Management Pvt. Ltd (PWM), and are

created and maintained by PWM’s Index Research Group (IRG) under the supervision of its Chief mentor Mr. Imtiaz Merchant.

Pragmatic Wealth Management (PWM) aims to facilitate Shariah Compliant investors tap opportunities in the Indian Equity markets. The methodology used to construct and maintain the

index aims to produce a vibrant and investable index, consisting of the most liquid and well traded stocks amongst its peer group.

Index Types

Currently all Islami Tijara Equity indices are Float-adjusted Market Capitalisation Weighted, where each stock’s weight in the index is proportional to its float-adjusted market value.

Pragmatic Wealth Management proposes to introduce various portfolio indices based on:

Limit (Capped) Weighted-Where maximum weight of a stock in each of the index is

capped to a certain percentage number

Equal Weighted-Where each stock in the index is given equal weight Historical Stock Returns Analysis Weighted-Where stocks selected based on the ranking.

Ranks are given to each stock based on their historical performance on price, return

ratios and valuation ratios.

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Shariah Monitoring

Islamic Investment and Finance Board (IIFB)

PWM has initiated and contracted the Islamic Investment and Finance Board (IIFB), which is an India based Shariah Finance and Investment Advisory Board which certify the financial products.

The IIFB comprises eminent Muftis, Aalims, and Islamic Finance Scholars from across various

Islamic schools of thought.

The members are:

Maulana Mohammed Wali Rahmani -- Aalim (Jamia Rahmani ), Fazil (Darul Uloom),

Research Scholar (Darul Uloom), Graduation and Post Graduation in History (Bhagalpur

University) and Secretary, All India Muslim Personal Law Board. He is currently the

Chairman of IIFB

Maulana Khalid Saifullah Rahmani – Shariah Scholar, Founder Member and Member

Executive Council, All India Muslim Personal Law Board

Mufti Fuzailur Rahman Hilal Usmani -- Shariah Scholar

Maulana Mohammad Shoibullah Khan – Shariah Scholar, and editorial member of

“Islamic Vision” (English Monthly Magazine, Bangalore)

Maulana Fazlur Raheem Mujaddi -- Shariah Scholar

Mufti Riyadh Ahmad Qasmi Rahmani – Shariah Scholar and Arabic lecturer of NCPUL

at Jamia Rahmani Munger

Mufti Ahmad Nadir Qasmi – Shariah Scholar and Mufti in Islamic Fiqh Academy India

Mufti Aijaz Arshad Qasmi – Shariah Scholar and General Secretary: Islamic Peace

Foundation of India, New Delhi.

The Shariah Board is responsible for structuring and supervising of the various financial products

developed by PWM. The IIFB on a quarterly basis Reviews, Audits and Certifies the ITE Shariah Compliant Stock Universe, Indices and other Investment & Financial products.

Keynotes All listed companies are screened for Shariah compliance at the end of every

quarter (Mar, June, Sept, and Dec) and from these compliant stocks, the ITE Indices are arrived at.

Index stocks checked for liquidity (volumes) for investments

All Compliant Companies are classified under ITE Sectors, and subsequently into

ITE Industries. The Sector and Industries are classified as per ITE - Shariah Industry

Classification (ITE-SIC).

Shariah Compliance is as per strict compliance norms observed in India, and

monitored by the IIFB

A team of researchers at PWM works directly with the Shariah Board, to create products adhering

to Islamic Investment norms. Upon accomplishment of all the criteria set for Shariah Compliance, the Shariah Board Certifies the products as “Halal” (Meaning-Permissible under the Islamic

Shariah Law).

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Stocks Eligibility Criteria

Shariah Compliance Screening

a) Primary Filter (Industry/ Business activity) Islam has forbidden certain trades that conflict the basic tenets of Islam. Any such trades

are treated as unethical and immoral from Shariah stand point and hence should not be

traded. These industries are filtered and screened out. Following category of industries are not permitted for investments:

Completely Prohibited (Haram) Industries

1 Banks / NBFCs / Securities / Commodities Trading /Casinos

2 Breweries/ Distilleries

3 Chemicals – Alcohol based

4 Tobacco-Cigarettes / Pan masala / Chewing Tobacco

5 Advertising and Media (Excluding Print, Television Media and Newspapers)

6 Casinos, Gaming Zones and Parlours

Non-Compliant Industries

b) Secondary Filter (Financial Ratios)

Stocks that pass the primary filter are subject to a secondary filter, that of “Financial Ratios”. These Financial Ratios are mandated by select Shariah scholar’s of IIFB and are

an interpretation from the Shariah Law. The stocks of Companies are screened for Debt,

Cash plus Interest bearing securities, and Receivable levels, as against their Trailing Twelve Months (TTM) Market cap. Explained below:

1 Total Debt to Average TTM Market cap less than 33 percent

2 Cash +Interest based Investment to Averg TTM Market cap less than 33 percent

3 Sundry Debtors to Average TTM Market cap less than 33 percent

4 Interest Income to Total Income less than 5 percent

Financial Ratios *

*Notes:

A. Average TTM Market Cap= Trailing Twelve month average market capitalization (Market Cap= Current Market price * Shares Outstanding)

B. Cash + Interest bearing investments exclude Investments in equity C. Sundry Debtors = Receivables D. Total Debt=Long-term debt + Short-term debt E. Total Income = Sales Turnover + Other Income

Post screening for Shariah Compliance, the stocks are further subject to the ITE Shariah Index Eligibility Criteria enumerated below.

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Dividend Purification Ratio:

In certain cases revenue share from non-compliant businesses is permissible if they comply with

the norms for threshold:

Income from Non-permissible Business activities / Revenue < 5%

This ratio is provided to investors for purification of income from dividends and is calculated as:

Dividends * (Non Permissible Revenue / Total Revenue)

(The Islamic scholar suggest that the impure income received by investors should be given to the

poor’s as charity)

Index Eligibility Criteria

The constituents and the criteria set for selection judge the effectiveness of the index. ITE Shariah Indices are unique in this respect and compliant securities that fulfil the below mentioned

criteria are eligible for index inclusions:

1. Market Cap: Average Trailing Twelve Month Market Capitalization threshold set for each of

the ITE indices is defined in the respective Index methodologies.

2. Liquidity: The Company should have traded for at least 90 percent of the trading days in the previous six month to the review date. The Turnover Multiple or the ratio of annual

turnover in rupee traded on the exchanges to the Float Adjusted Market Capitalization and

the Volume Multiple (the ratio of total annual volume of shares traded to the free float number of shares) should be at least 0.25 each. All indices are sufficiently liquid and

investable. For Index specific liquidity criteria please refer to respective index methodologies.

3. Corporate Governance: Companies that have not been consistently submitting annual

results for last two financial years (from the date of index review) will not be considered for index inclusions. In the opinion of the ITE Index research group, the company should have

top of the line corporate governance and disclosure policies.

4. Free-Float: ITE Shariah Indices are based on Free-Float methodology, and companies eligible for inclusion in the ITE Index, should have a floating stock of at least 10%.

5. Financial Viability: Companies that have not been consistently reporting positive EBITDA for last four quarters will not be considered for index inclusions. EBITDA earnings are

Earnings before depreciation & amortization, interest and tax. The company should also have a positive net worth.

6. Initial Public Offering (IPO): IPOs will be available for inclusion in the index only after four months of seasoned performance from the listing date. Post four months, the companies

will be eligible for index inclusions, if they fulfil the above first three eligibility criteria i.e. Liquidity, Corporate Governance, and Floating stock.

7. Sector Classification: Contribution to sector balance maintenance, as measured by a

comparison of each ITE-SIC Economy Sector weight in an index with its weight in the ITE

Shariah Compliant Universe, in the relevant market capitalization range.

8. Exclusivity: One stock cannot be included in two of the ITE Shariah Indices and is thus exclusive to the respective index.

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9. Domicile: The Company must be domiciled in India and trade on the Indian Stock

Exchanges.

10. Eligible Securities: Eligible securities include all Indian stocks listed on the BSE and the NSE capital markets.

11. Index Review: The ITE Shariah Indices are reviewed every quarter and the list of additions and deletions is made available on the website (www.islamitijara.com) 2 week in advance.

ITE Indices Computation ITE Shariah Compliant Universe: Each of the companies listed on the Indian Stock Exchanges

(listed universe) is screened for Shariah compliance based on the Primary and Secondary filters as mentioned in the section “Shariah Compliance Screening”, to arrive at the ITE Shariah

Compliant Universe. The ITE Shariah Compliant Universe typically covers about 67-72% of the TTM Average Market Capitalisation of the total listed universe. The ITE Shariah Compliant

Universe acts a primary set of stocks to be included in the ITE Shariah Index Family.

Stock Selection

The initial stock selection is conducted as follows:

1. The listed universe of companies is categorised under Large Cap, Mid Cap, Small Cap, and Micro Cap segments based on 70%-15%-10%-5% Market Capitalization coverage

respectively. These percentage-based segmentations create sub-universe for Large, Mid,

Small and Micro Cap companies. Each of the sub-universes has an Index to represent.

Universe Segment bracket (% of Total Market Cap)

Representative Index

Large Cap 70 ITE Shariah 35

Mid Cap 15 ITE Shariah Mid Cap 51

Small Cap 10 ITE Shariah Small Cap 101

Micro Cap 5 ITE Shariah Micro Cap 151

Thresholds based on Full Float Market Cap are standardized for each segment (Large, Mid, Small, Micro) of the Universe, as explained below.

Segment Max Min

Full Float Market Cap (In Rs. Crores)

Large Cap No max Limit 16,000

Mid Cap 16,000 4,000

Small Cap 4,000 1,000

Micro Cap 1,000 250

http://www.islamitijara.com/

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Size Segment

1. Large Cap Universe comprises the first 70% of the total listed universe Full Float

Market Capitalization. Each of the stock in the Large Cap Universe is qualified for a place

in the Frontline Index, ITE Shariah 35 if it fulfils the following conditions:

Turnover Multiple* is 0.25 or more

Volume Multiple* is 0.25 or more

Free Float factor is 0.10 or more

Free Float Market Cap is at least Rs.5,000 crores

2. Mid Cap Universe comprises the next 15% of the total listed universe Full Float Market Capitalization. Each of the stock in the Mid Cap Universe is qualified for a place in the

ITE Shariah Mid Cap 51 Index, if it fulfils the following conditions:

Turnover Multiple is 0.25 or more

Volume Multiple is 0.25 or more


Free Float Market Cap is at least Rs.2,000 crores

3. Small Cap Universe comprises the next 10% of the total listed universe Full Float

Market Capitalization. Each of the stock in the Small Cap Universe is qualified for a place in the ITE Shariah Small Cap 81 Index, if it fulfils the following conditions:




Free Float Market Cap is at least Rs.500 crores

4. Micro Cap Universe comprises the next 5% of the total listed universe Full Float

Market Capitalization. Each of the stock in the Small Cap Universe is qualified for a place in the ITE Shariah

Micro Cap 151 Index, if it fulfils the following conditions:




Free Float Market Cap is at least Rs.100 crores

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ITE Shariah 251 Index ITE Shariah 251 is a broad based 251 Stock Index and comprises of 9 core Shariah Compliant

Sectors* of the economy. ITE Shariah Indices are designed to reflect the Indian equity markets

and, through the markets, the Indian economy. The ITE Shariah 251 index is a balanced representation of the

Large Cap, Mid Cap, and Small Cap

segments of the market. ITE Shariah 251 Index does not include stocks from Micro Cap Universe

of Companies. As the 251 Index it includes a significant portion of the total value of the market, the index represents 93% of the ITE Shariah Compliant Universe total Full Float Market

Capitalization and 96% of the total Free Float Market Capitalisation. Companies in the ITE Shariah 251 are considered to be significant in their respective economy sector.

Each of the stock in the Large, Mid and Small Cap Universe is qualified for a place in the ITE

Shariah 251 Index, if it fulfils the following conditions:




Parent Index: The ITE 251 Index is an index with a balanced representation from Large, Mid and Small Cap Companies. ITE 251 Index includes stocks from the ITE Shariah 35, ITE Shariah

Mid Cap, and ITE Shariah Small Cap Indices. This Index acts as a superset of all the Size Segment Indices.

Sector

All the 9 Economy Sector Indices, viz, the ITE Shariah Automobiles, ITE Shariah Construction & Realty, ITE Shariah Consumer, ITE Shariah Healthcare, ITE Shariah Industrials & Capital Goods,

ITE Shariah Information Technology, ITE Shariah Metals & Mining, ITE Shariah Oil & Gas, ITE Shariah Power & Utilities are derived from the list of 251 stocks.

Sector Indices are designed based on the following rules.

The stock is either from the Large Cap or the Mid Cap Universe. Small Cap stocks are not

eligible to be included in the Sector Indices.

Stocks in order of descending Free Float Market Capitalization are selected. Each Sector Index should represent at least 75% of the total Free Float Market Capitalization of the

Companies (within 251 Index) in that respective sector.

Each Sector Index should have a balanced representation of the respective sub-

industries.

For example, the ITE Shariah Automobiles Sector Index contains 10 stocks and the Total Free Float Market Cap of these 10 stocks is 91% of the total Free Float Market Cap of all Auto Sector

Compliant Companies.

For Index specific methodologies, please refer the link www.islamitijara.com/iteindices

* Turnover multiple is annual total turnover for the stock / Free Float market cap as of end of each quarter

* Volume multiple is annual total volume for the stock in Crores / Free Float number of shares

http://www.islamitijara.com/iteindices

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ITE Shariah Index Family

The following are the various Indices based on specific criteria:

1. ITE Shariah 251: ITE Shariah 251 is a free float broad-based index comprising of top-251 compliant stocks in the Large, Mid and the Small Cap Universe by Market

Capitalisation. The ITE Shariah 251 Index acts as a superset of all the 13 ITE Shariah

Size Segment and Sector Indices.

The ITE Shariah 251 Index typically covers about 85-90% of the total TTM Average

Market Capitalisation of the Compliant Universe and is representative of the entire ITE Shariah Compliant Universe across Sectors and Industry.

2. ITE Shariah 111: ITE Shariah 111 is a free float broad-based index comprising of top-

111 compliant stocks by TTM Average Market Capitalisation. The total TTM Average Market Capitalisation of ITE Shariah 111 Index usually constitutes about 80-85% of the

total TTM Average Market Capitalisation of the Compliant Universe; and about 90-95% of total TTM Average Market Capitalisation of ITE Shariah 251 Index.

3. ITE Shariah 35: ITE Shariah 35 Index is a free float index comprising of 35 front line economy sector leaders, and are amongst the highly liquid stocks. The total TTM Average

Market Capitalisation of ITE Shariah 35 Index typically constitutes about 60% of the total

TTM Average Market Capitalisation of the Compliant Universe; and about 80% of total TTM Average Market Capitalisation of ITE Shariah 251 Index. The ITE Shariah 35 index is

derived from the universe of frontline stocks and includes companies that are the industry leaders, driving the economy sectors.

4. ITE Shariah Mid Cap Index: ITE Shariah Mid Cap Index contains 51 stocks selected

from the Mid-cap universe. The Mid Cap Index includes Stocks with Float Adjusted TTM Average Market Capitalisation of at least Rs. 2,000 crores.

5. ITE Shariah Small Cap Index: ITE Shariah Small Cap Index contains 81 stocks selected from the Small-cap universe. The Small Cap Index includes Stocks with Float

Adjusted TTM Average Market Capitalisation of at least Rs. 500 crores.

6. ITE Shariah Sector Indices: The Index Research Group has developed 9 Sector Indices to represent the core sectors of the economy. These sector indices represent the

economic performance of respective sectors and industries.

As defined by the ITE - Shariah Industry Classification (ITE-SIC), the ITE Shariah Sector

Indices are composed of 9 Economy Sectors:

Automobiles Healthcare Metals & Mining

Construction & Realty Industrials & Capital Goods Oil & Gas

Consumer Information Technology Power & Utilities

Stocks in these Sector Indices are selected from the parent index i.e. the ITE Shariah

251, resulting in the 9 ITE Shariah Sector Indices.

ITE Shariah 251 acts as a superset of all the ITE Shariah Indices, and is Islami Tijara’s investible universe of compliant stocks.

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Representation

All Sector Indices are representative of their respective ITE-SIC sectors and industries, and are sufficiently liquid and investable. The ITE Shariah 251 Index typically covers about 85-90% of the

total TTM Average Market Capitalisation of the Compliant Universe, and represents the entire ITE

Shariah Compliant Universe across Sectors and Industry. The ITE Shariah 251 Index acts as a parent index for all the ITE Shariah Indices.

The parentage of each of the ITE Shariah Indices is explained the Index Funnel below.

ITE Shariah Compliant Index Funnel

For Index specific eligibility criteria please refer to the respective Index methodology documents available on our website www.islamitijara.com

Index Construction

This section of the document covers the mathematics of index calculations. To understand and successfully use indices for investment analyses, it is important to know how they are calculated

and how the adjustments are done when constituents change or when different kinds of corporate actions occur.

Index Calculations:

The ITE Shariah Indices are calculated using the Free-float methodology. The level of an index

reflects the total float-adjusted market value of all of the component stocks relative to a particular base period. The total market value of a company is determined by multiplying the

price of its stock by the number of shares available after float adjustment. An indexed number is used to represent the result of this calculation in order to make the value easier to work with and

track over time.

ITE Shariah Compliant Universe

ITE Shariah 251

ITE Shariah 111

ITE

Shariah 35

9 ITE Shariah Sector Indices

ITE Shariah Mid-Cap and Small Cap Indices


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Free Float:

The free float of a company is defined as those shares that are readily available for trading. In an

Index the concept of free float is particularly important for assigning a weight to a listed company based on the Float Adjusted Market Capitalisation.

The definition for restricted shares includes share holding in the following categories:

Promoters holdings

Government holdings

Directors holdings

Strategic holdings

Shares listed on a different exchange (GDR, ADRs)

Share holdings larger than a certain percentage (5%)

Free float is an important issue for smaller companies which commonly have several strategic

shareholders and where directors can be significant shareholders usually called closely held

companies.

The use of free float in the calculation of an index is useful for performance measurement as it provides a benchmark more closely related to what fund managers can actually buy.

For each of the stocks listed, PWM calculates the Investible Weight Factor (IWF), which is the percentage of available shares to the Total Outstanding shares.

IWF = Freely Tradable Shares / Total Shares Outstanding

Based on the IWF, the Index Research Group at PWM calculates the Float Adjusted market

capitalisation.

Float Adjusted Market Capitalisation = IWF X Closing Market Capitalisation of the Stock

Index Divisor:

The Index Divisor is an arbitrary number that is first defined when an index is first calculated. On

the first day of calculation the Index Divisor is arrived, by dividing the Float adjusted market capitalisation of the Index constituents by the Index value on the first date of calculation, such as

1000. Subsequently, the Index Divisor remains constant and Index value is derived by dividing the Float Adjusted Market Capitalisation.

Divisor adjustments

The Index Divisor is adjusted for:

1. Index Management Changes: Stocks are included and excluded from an Index based on new listings, Delisting, or changes recommended by the PWM Index Research Group.

There is remarkable difference between a stocks index and stocks portfolio. For an instance, when a stock is added to or deleted from an index the change in the market capitalization is adjusted through a divisor so that equilibrium is maintained. To ensure

than the Index value, or Index level, does not change when stocks are added or

deleted; the divisor is adjusted to offset the change in market value of the index.

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2. Corporate Actions: Adjustments are made to the divisor to eliminate the impact of corporate actions such as rights issue, merger or demerger, amalgamation etc.

Float Change (more than 5%): Changes in the IWF for Index constituents for

more than 500 bps are taken into effect as soon as reasonably possible, for example (from 0.55 to 0.60). For changes less than 5 percentage points (500

bps), the Index constituents are review on a quarterly basis.

On any given day, the index value is the quotient of the total available market capitalization of its

constituents and its divisor. Continuity in index values is maintained by adjusting the divisor for

all changes in corporate actions on an ongoing basis. The divisor is adjusted such that the index value at an instant just prior to a change in base capital equals the value at an instant

immediately following that change. Divisor adjustments consider all the change in base market capitalization (post the base date), due to replacement of Index constituents and/or any

corporate actions.

Timing of Changes: ITE Shariah Indices are reviewed every quarter for Index constituents

1. Compliance Status

2. Stock Performance

3. Average Liquidity or Volumes for the quarter

However, the changes for Float of more than 5%, Amalgamation, Mergers, Demergers, and Corporate Actions such as Rights Issues, FPOs are done on an immediate basis, Post closing.

Index Inclusion & Exclusion Policy

Inclusions

Once an announcement is made of an impending addition to an underlying index, the IRG

screens it for compliance. If the stock is found to be compliant, after approval by the Shariah

Board, it will be included in the respective Shariah index. IRG will also regularly monitor the existing non-compliant stocks of the underlying index. If any of these stocks become compliant

because of changes in financial ratios or a change in business activity due to mergers or restructuring, it will be added to the respective ITE Shariah Index with notice on the website.

Exclusions

The IRG conducts a quarterly review of the existing ITE Shariah Compliant Universe of stocks for

continued inclusion in the relevant indices. All exclusions from the Parent Index i.e. the ITE

Shariah 251 will result in exclusions from each of the respective ITE Shariah Indices on the same day. Inclusions and Exclusions from indices which occur due to quarterly reviews and changes in

compliance status will be done in the first week of the next month, post end of each quarter.

In general, the Shariah indices are reviewed once every quarter and Inclusions / Exclusions

are made accordingly, based on:

1. Shariah Compliance (As per ITE Shariah Compliant Universe)

2. Performance of the stock (i.e. if the stock fails to satisfy the Index Eligibility Criteria

explained above)

3. Inclusions / Exclusions are also considered with respect to changes in the industry weight

to unfavourable degrees due to changes in market capitalization of stock

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4. Changes to the Index constituents may occur as and when the Index Research Group deems necessary

5. The complete list of Inclusions / Exclusions for all the ITE indices is available on our website www.islamitijara.com

Corporate Actions

Maintaining the ITE Shariah Indexes includes monitoring and completing the adjustments for company additions and deletions, share changes, stock splits, stock dividends, and stock price

adjustments due to restructurings or spin-offs. Some corporate actions, such as stock splits and stock dividends, require simple changes in the common shares outstanding and the stock prices

of the companies in the Index. Other corporate actions, such as share issuances change the market value of an index and require an Index Divisor adjustment to prevent the value of the

Index from changing.

The Index Divisor is adjusted for float changes (more than 5%) and other corporate actions such as mergers and demergers. Adjusting the divisor keeps the value of the index accurate as a

barometer of stock market performance. Divisor adjustments are made post close of trading and after the calculation of the closing value of the index. Corporate actions such as splits, stock

dividends, spin-offs, rights offerings, and share changes are applied on the ex-date.

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Index Governance

The Index Research Group The Index Research Group (IRG) at PWM monitors and manages overall policy guidelines and methodologies, as well as inclusions and exclusions from these indices. The IRG comprises

PWM’S analysts and researchers, responsible for matters relating to methodology, maintenance,

constituent selection and index procedures. The Index Research Group meets periodically to review market developments, and convenes as needed to address major corporate actions.

Shariah Research Group The Shariah research group comprises of qualified Muftis and Islamic Scholars, working in

coordination with the Shariah Supervisory Board i.e. IIFB (Islamic Investment and Finance Board) and the Index Research Group (IRG). The Shariah Research Group Supervises, Monitors and

Certifies the ITE Shariah Compliant Universe and the ITE Shariah Indices.

Base Currency The ITE Indexes are calculated in INR (Indian National Rupee) denominations.

Base Date

The table below indicates the base dates for the various ITE Shariah Indices

ITE Shariah Indices

ITE Shariah Size-Segment Indices Base dates

ITE Shariah 35 01-Jan-03

ITE Shariah Mid-Cap

01-Jan-06 ITE Shariah Small-Cap

ITE Shariah 111

ITE Shariah 251

ITE Shariah Sector Indices Base dates

ITE Shariah Automobiles

01-Jan-06

ITE Shariah Construction & Realty

ITE Shariah Consumer

ITE Shariah Healthcare

ITE Shariah Industrials & Capital Goods

ITE Shariah Information Technology

ITE Shariah Metals & Mining

ITE Shariah Oil & Gas

ITE Power & Utilities

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Index Data Disclosure

Index Notices All inclusions, exclusions, share outstanding and free-float changes are normally announced well

ahead of the effective date. These announcements are posted on PWM’s website (www.islamitijara.com) and sent to clients by email. Quarterly changes are also announced a

few days before the effective date. As a policy we follow the national trading holiday schedule for

Index calculations.

Holiday Schedule In situations where an exchange is forced to close early due to unforeseen events, such as

Network or infrastructure power failures, weather conditions or other events,

PWM will calculate the closing price of the indices based on 1. The closing prices published by the exchange, or

2. If no closing price is available, the last closing price recorded before the exchange closed. If the exchange fails to open due to unforeseen circumstances, the index will use

the prior day’s closing prices. If exchange fails to open, PWM may determine not to

publish the index for that day.

Daily Prices: The 14 ITE indices are calculated real-time on all trading days. Real time quotes

for ITE Shariah Indices can be obtained on the home page of our website www.islamitijara.com.

Historical Data: Daily index levels are available on our website real time and historical index

levels are available on subscription.

For further information, please refer to ITE Indices page link at www.islamitijara.com/iteindices

Index Data Sourcing

Data utilized in calculation of Indexes is sourced from Capital Market Publishers India Pvt. Ltd.

Disclaimer

© 2010 Pragmatic Wealth Management Pvt. Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means,

electronic, mechanical, photocopying, recording or otherwise, without prior written permission of PWM Pvt. Ltd... The ITE Indexes are calculated by the PWM Index Research Group. All rights in

and to the ITE Indexes vest in PWM and/or its relevant partners. “Islami Tijara” is a trade mark

of Pragmatic Wealth Management Pvt. Ltd. PWM nor any relevant partners / licensors shall be liable for any loss (including negligence) arising out of the use of the ITE Indexes by any person.



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