equity fof

8/9/2019 Equity Fof

1/51

Please retain this Offer Document for future reference.THE DATE OF THIS OFFER DOCUMENT IS JUNE 25, 2004.

INVESTORS SHOULD NOTE THAT :

l This Offer Document sets forth concisely the information about the Scheme that a prospective investor ought to know before investing. Investors

should carefully read the Offer Document before making an investment decision.

l This Offer Document remains effective until a material change occurs. Material changes will be filed with SEBI and circulated to all Unitholders.

l

The Scheme particulars have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, asamended till date and the Offer Document has been filed with SEBI. The Units offered for public subscription have neither been approved nor

disapproved by SEBI, nor has SEBI certified the accuracy or adequacy of this Offer Document.

OFFER DOCUM ENT

Kotak Mahindra Mutual Fund5A, 5th Floor, Bakhtawar, 229, Nariman Point, Mumbai 400 021

INITIAL OFFERUnits at Rs. 10 each for cash plus applicable Entry Load

Offer Opens : July 01, 2004Offer Closes : July 19, 2004

CONTINUOUS OFFERUnits at price related to applicable NAV

Opens On or Before : August 16, 2004

AUDITORS TO THE SCHEMEPrice Waterhouse

1102/1107, Raheja Chambers,

Nariman Point Mumbai 400 021

THE REGISTRAR

Computer Age Management

Services Private Limited

A&B Lakshmi Bhawan, 609,Anna Salai Chennai 600 006

CUSTODIANS

Deutsche Bank AG ABN AMRO Bank N.V.

Kodak House, 222, Dr. D.N. Road, Brady House, 1st Floor, 14 Veer Nariman Road,

Fort, Mumbai 400 001 Fort, Mumbai 400 023

THE SPONSOR

Kotak Mahindra Bank Ltd.

36-38A, Nariman Bhavan

227, Nariman Point, Mumbai 400 021

THE TRUSTEE

Kotak Mahindra Trustee Co. Ltd.

5A, 5th Floor, Bakhtawar


THE ASSET MANAGEMENT COMPANY

Kotak Mahindra Asset Management Co. Ltd.

5A, 5th Floor, Bakhtawar


KOTAK EQUITY FOF

An Open - Ended Equity Fund of Funds Scheme

8/9/2019 Equity Fof

2/51

1

I. Highlights, Risk Factors and Due Diligence 2

II. Definitions And Abbreviations 5

III. Constitution of the Fund 7A. The Fund 7B. Sponsor Company 7C. Trustee Company (The Trustee) 8

1. Directors 82. Rights, Obligations, Responsibilities

and Duties of the Trustee 83. Trustee's Fee 10

D. Asset Management Company 101. Name and Address 102. Directors on the Board of the AMC 103. Powers, Functions and

Responsibilities of the AMC 124. Schemes launched by the Mutual Fund 135. Borrowing by the Mutual Fund 186. Key Personnel of AMC 18

E. The Registrar 19F. The Custodians 20G. Bankers 20

IV. Investment of the Fund 21A. Kotak Equity FOF 21

1. Type of Scheme 212. Investment Options 213. Investment Objective 214. Investment Strategy 21

5. The Risk Profile and Investment Pattern 22B. Policies and RegulationsApplicable to the Scheme 221. Fundamental Attributes

and Changes Therein 222. Investment of Subscription Money 233. Borrowing Power 234. Depository 235. Policy on Inter-Scheme Transfers 236. Mode of Investment 237. Investment in Derivatives 238. Investments by the AMC in the Fund 239. Investment Limitation and Restrictions 2310. Computation of Net Asset Value 2411. Accounting Policies 2512. Recording of Investment Decisions 26

V. Units 27A. Units On Offer 27

1. Minimum Subscription Amount 272. Initial Offer Period 273. Initial Offer Price 274. Extension of Initial Offer Period 275. Continuous Offer 276. Listing 277. Expenses of Initial Issue 278. Minimum Purchase and Redempt ion 27

9. Applicable NAV 2710. Facilities Offered to Investorsunder the Scheme 28

B. Purchase of Units 301. Who can invest? 302. Purchase Price 313. Mode of Payment 314. Where to submit Application Forms? 325. Choice of Option 326. Joint Applicants 327. Allotment 328. Account Statement / Unit Cert if icate 329. Refund 32

C. Redemption of Units 321. Redemption Price 332. How to Redeem? 333. Payment of Proceeds 334. Redemption by NRIs/FIIs 335. Effect of Redemptions 336. Right to Limit Redemption 347. Suspension of Redempt ion of Units 348. Unclaimed Redemption and

Dividend Amount 34VI. Loads and Recurring Expenses 35

A. Load Structure of the Scheme 35B. Fees and Expenses of the Scheme 35

1. Expenses of Initial Issue 352. Expenses of Past Initial Issue 363. Initial Issue Expenses incurred

by the Schemes 364. Recurring Expenses of the Scheme 36

VII. Unitholders' Rights and Services 38A. Unitholders' Rights 38B. Voting Rights of t he Unitholders 38C. Account Statement 38D. NAV Informat ion 38E. Disclosure of Information

Under the Regulations 39F. Duration of the Scheme 41G. Procedure and Manner of Winding Up 41H. Services to Unitholders 41

I. Tax Benefits of Investing inthe Mutual Fund 42

VIII. Other M atters 44A. Power to make Rules 44B. Power to Remove Difficulties 44C. Transactions wi th Associate Companies 44D. Stock Lending by the Fund 47E. Penalties, pending litigation or

proceedings, findings of inspectionsor investigations for which actionmay have been taken or is in processof being taken by any regulatory

authority 47F. Omnibus Clause 48G. Documents Available for Inspection 48

Page No. Page No.

T A B L E O F C O N T E N T S

8/9/2019 Equity Fof

3/51

2

I . H I G H L I G H T S , R I S K F A C T O R SA N D D U E D I L I G E N C E

Features KOTAK EQUITY FOF

Structure An Open- Ended Equity Fund of Funds Scheme

Investment inl

90% to 100% of net assets will be invested in Diversified Equity Schemesu 20% to 25% of its net assets will be invested in Diversified Equity Schemes of

KMMF.

u The balance amount will be invested in schemes recommended by the DesignatedAgency.

l Upto 10% in Inter bank call and/or reverse repo and/or short-term fixed depositsand/or schemes which invest predominantly in the money market or floating ratesecurities.

Suitable for Investors who seek capital appreciat ion associated with investment in diversif ied equityschemes, based on the recommended list of a Designated Agency. Currently KotakSecurities has been appointed as Designated Agency to provide the recommended list.

Investment Objective The Investment Objective of the Scheme is to generate long-term capital appreciationfrom a portfolio created by investing predominantly inopen-ended diversified equityschemes of Mutual Funds registered with SEBI.

Liquidity Open-ended. Fresh Purchases and Redempt ions at NAV related prices on each WorkingDay.

Benchmark Index S&P CNX Nifty

Options Growth, Dividend

Dividend Frequency At the discretion of the Trustees, subject to availability and adequacy of distributablesurplus

RIF/RWF/RTF facilities Available

RIF frequency and dates Monthly - 5th or 25th of the Month

RWF/RTF Frequency Monthly and Quarterly

RWF/RTF Dates Any Date

RWF/RTF Options Fixed Sum or Entire Appreciation

Minimum Investment Size

Initial Purchase (non-RIF) Rs. 5,000/-

Addl. Purchase(non-RIF) Rs. 1,000/-

RIF Purchase Rs. 500/-

RTF Purchase Rs. 500/- / Full Appreciation

Minimum Redemption Size

In Rupees (Non-RWF/RTF) Rs. 1,000/-

In Units (Non-RWF/RTF) 100 units

In Rupees (RWF/RTF) Rs. 500/- / Full Appreciation

Cheques/Drafts to favour KOTAK EQUITY FOF

8/9/2019 Equity Fof

4/51

3

Load Structure

During Initial Offer Entry : 2.25%Exit : NIL

During Continuous Offer Entry :

a) For: (i) purchase through Recurring Investment Facility (RIF); and(ii) units allotted on re-investment of dividends: NIL;

b) For Purchase not covered under (a) above: 2.25% of the Applicable NAV

Exit :

a) For purchase through RIF : 1% on redemptions of Units allotted/purchasedwithin 1 year prior to the date of redemption;

b) For purchase not covered in (a) above : NIL

Initial Issue Expenses Initial Issue Expenses of upto 4.25% (i.e. upto 2.25% for Broker/Agents commission(met out of Entry Load) and upto 2% for expenses other than Broker/Agents commission)may be incurred by the Fund.

Tax Benefits as per the provisions of Income Tax Act, 1961 and Wealth Tax Act, 1957, prevailing as on M arch 30, 2004:

l No TDS on redemption irrespective of amount redeemed, for Unitholders Resident in India.

l Investment in the Scheme is exempt from Wealth Tax.l Investors who redeem Units held for more than twelve months are taxed at a rate of 10% or are entitled to the benefit

of indexation while paying Long term capital gains tax at the rate of 20%.

l Dividends received under the Scheme are exempt from income tax in the hands of investors. However the Fund willhave to pay tax at applicable rates on the amount distributed as dividends under the Scheme.

RISK FACTORS

l Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that theobjectives of the Scheme will be achieved.

l As with any securities investment, the NAV of the Units issued under the Scheme can go up or down depending onthe factors and forces affecting the capital and money markets.

l Past performance of the Sponsor/AMC or that of any scheme of the Fund does not indicate the future performance

of the Scheme of the Fund.l Kotak Equity FOF is only the name of the Scheme and does not in any manner indicate the quality of the Scheme,

future prospects or returns.

l The NAV of the Units issued under the Scheme may be affected by changes in the NAV of the underlying schemes,changes in the interest rates, and may also be affected inter-alia, by government policy, volatility and liquidity in themoney markets.

l As per SEBI Circular No. SEBI/IMD/CIR No.10/22701/03 dated December 12, 2003, the Scheme and individual plan(s)under the Scheme, if any, shall have a minimum of 20 investors and no single investor shall account for more than25% of the corpus of the Scheme/Plan(s). In case of non-fulfillment with either of the above two conditions in a threemonths time period or the end of succeeding calendar quarter, whichever is earlier, from the close of the Initial PublicOffering (IPO) of open-ended schemes or on an ongoing basis for each calendar quarter, the Scheme /Plan(s) shall bewound up by following the guidelines prescribed by SEBI and the investor's money would be redeemed at Applicable

NAV.l Tax laws may change, affecting the return on investment in Units.

l In the event of receipt of a very large number of redemption requests or very large value redemption requests or ofrestructuring of the Scheme's portfolios or in case of limitation or suspension of redemption in the underlying schemes,there may be delays in the redemption of Units. Please refer to the paragraph, 'Right to Limit Redemption' in this OfferDocument.

8/9/2019 Equity Fof

5/51

4

Note on some of the Risk Factors

KOTAK EQUITY FOF

1. The Scheme proposes to invest predominantly in thediversified equity schemes of Mutual Funds, registeredwith SEBI. Hence the Scheme's performance will dependupon the performance of the underlying schemes. Anychange in the investment policies or the fundamentalattributes of the underlying schemes may affect theperformance of the Scheme.

2. Investments in underlying equity schemes will have allthe risks associated with such schemes includingperformance of underlying stocks, derivative investments,off shore investments, stock lending, etc.

3. Investments in underlying debt schemes will have all therisks associated with such schemes including changes incredit rating, trading volumes, settlement periods andtransfer procedures; Price/Interest-Rate Risk and CreditRisk, volatility and liquidity in the money markets, pressureon the exchange rate of the rupee, Basis Risk, SpreadRisk, Reinvestment Risk, off shore investments, derivativeinvestments, stock lending, etc.

4. The investors of the Scheme shall bear the recurringexpenses of the Scheme in addition to the expenses ofthe underlying schemes. Hence the investor under theScheme may receive lower pre-tax returns than whatthey may receive if they had invested directly in theunderlying schemes in the same proportions.

5. The Portfolio disclosure of the Scheme will be limited toproviding the particulars of the underlying schemes wherethe Scheme has invested and will not include theinvestments made by the underlying schemes.

6. The portfolio rebalancing may result in higher transactioncosts.

7. The portfolio of the Scheme will normally be comprisedof schemes of KMMF and other schemes from therecommended list. Though adequate care will be takento ensure that the methodology adopted by theDesignated Agency is proper, there may be any analytical

error (like assigning overweightage or underweightageto various risk-return parameters), execution error etc. bythe Designated Agency, which may result in the sub-optimal performance of the Scheme.

8. Since the Scheme proposes to invest atleast in 5 underlyingschemes, the significant underperformance in even oneof the underlying schemes may adversely affect theperformance of the Scheme.

DUE DILIGENCE CERTIFICATE

It is confirmed that:

1. the draft Offer Document forwarded to SEBI is inaccordance with the Securities and Exchange Board ofIndia (Mutual Funds) Regulations, 1996 as amended upto date and the guidelines and directives issued by SEBIfrom time to time;

2. all legal requirements connected with the launching ofthe Scheme as also the guidelines, instructions, etc.,issued by the Government and any other competentauthority in this behalf, have been duly complied with;

3. the disclosures made in the Offer Document are true, fairand adequate to enable the investors to make a wellinformed decision regarding investment in the Scheme;

4. according to the information given to us, Computer AgeManagement Services Private Limited, the Registrar andTransfer Agent, is registered with SEBI and till date suchregistration is valid; and

5. according to the information given to us, Deutsche BankAG and ABN AMRO Bank N.V., the Custodians, areregistered with SEBI and till date such registration is valid.

for Kotak Mahindra Asset Management Co. Ltd.Investment Manager -

Kotak Mahindra Mutual Fund

Place : Mumbai Miten ChawdaDate : March 26, 2004 Compliance Officer

8/9/2019 Equity Fof

6/51

5

In this Offer Document, the following words and expressions shall have the meaning specified below, unless the contextotherwise requires:

Applicable NAV For the Scheme, unless stated otherwise in this Offer Document, 'Applicable

NAV' is the Net Asset Value at the close of a Working Day as of which thepurchase or redemption is sought by an investor and determined by theFund.

Asset Management Company or Kotak Mahindra Asset Management Company Limited, the AssetAMC or Investment Manager Management Company incorporated under the Companies Act, 1956, and

authorised by SEBI to act as Investment Manager to the Schemes of KotakMahindra Mutual Fund.

Collection Bank Branches of Bank authorised to receive Applications for the Initial Offer, asmentioned elsewhere in this document or as appointed/changed from timeto time.

Custodian Deutsche Bank AG and ABN AMRO Bank N.V., acting as Custodians to theScheme, or any other Custodian appointed by the Trustee.

Designated Agency The agency appointed by AMC to provide periodically the recommended listof schemes. Currently Kotak Securities has been appointed as the DesignatedAgency.

Entry Load The charge that is paid by an Investor when he invests an amount in theScheme.

Exit Load The charge that is paid by a Unitholder when he redeems Units from theScheme.

FII Foreign Institutional Investors, registered with SEBI under Securities andExchange Board of India (Foreign Institutional Investors) Regulations, 1995.

Gilts/Government Securities Securities created and issued by the Central Government and/or State

Government.

IMA Investment Management Agreement dated 20th May, 1996 entered intobetween the Fund (acting through the Trustee) and the AMC and as amendedup to date, or as may be amended from time to time.

Investor Service Centres or ISCs Designated branches of the AMC / other offices as may be designated bythe AMC from time to time.

Kotak Equity FOF An Open-Ended Equity Fund of Funds Scheme

Kotak Bank/ Sponsor Kotak Mahindra Bank Limited

KMMF/Fund/ Mutual Fund Kotak Mahindra Mutual Fund, a trust set up under the provisions of TheIndian Trusts Act, 1882.

KMTCL/Trustee Kotak Mahindra Trustee Company Limited, a company set up under theCompanies Act, 1956, and approved by SEBI to act as the Trustee for theSchemes of Kotak Mahindra Mutual Fund.

MIBOR The Mumbai Interbank Offered Rate published once every day by the NationalStock Exchange and published twice every day by Reuters, as specificallyapplied to each contract.

Mutual Fund Regulations/ Regulations Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,as amended up to date, and such other regulations as may be in force fromtime to time.

NAV Net Asset Value of the Units of the Scheme (including the options thereunder)as calculated in the manner provided in this Offer Document or as may be

prescribed by Regulations from time to time. The NAV will be computed upto three decimal places.

I I . D E F I N I T I O N S A N D A B B R E V I A T I O N S

8/9/2019 Equity Fof

7/51

6

NRI Non-Resident Indian and Person of Indian Origin as defined in ForeignExchange Management Act, 1999.

Offer Document This document issued by Kotak Mahindra Mutual Fund, offering forsubscription of Units of Kotak Equity FOF.

Purchase Price Purchase Price, to an investor, of Units under the Scheme (including Optionsthereunder) computed in the manner indicated elsewhere in this OfferDocument.

Redemption Price Redemption Price to an investor of Units under the Scheme (includingOptions thereunder) computed in the manner indicated elsewhere in thisOffer Document.

Registrar Computer Age Management Services Private Limited ('CAMS'), acting asRegistrar to the Scheme, or any other Registrar appointed by the AMC.

Repo Sale of securities with simultaneous agreement to repurchase them at a laterdate.

Reserve Bank of India/RBI Reserve Bank of India, established under the Reserve Bank of India Act, 1934.

Reverse Repo Purchase of securities with a simultaneous agreement to sell them at a later

date.Scheme Kotak Equity FOF.

SEBI The Securities and Exchange Board of India.

Securities For the purpose of this Offer Document, Securities shall include units of theunderlying schemes.

Transaction Points Centres designated by the Registrar, to accept investor t ransactions and scanthem for handling by the nearest ISC.

Trust Deed The Trust Deed entered into on 20th May 1996 between the Sponsor andthe Trustee, as amended up to date, or as may be amended from time totime.

Trust Fund The corpus of the Trust, Unit Capital and all property belonging to and/orvested in the Trustee.

Underlying scheme(s) The open - ended schemes of Mutual Funds registered with SEBI in whichthe Scheme proposes to invest.

Unit The interest of the investors in the Scheme, which consists of each Unitrepresenting one undivided share in the assets of the Scheme.

Unitholder A person who holds Unit(s) under the Scheme.

Valuation Day Working Day of the Scheme.

Working Day A day other than any of the following: (i) Saturday or Sunday; (ii) a day on

which both the National Stock Exchange and the Bombay Stock Exchangeare closed (iii) a day on which the Purchase and Redemption of Units issuspended.

Words and Expressions used in thisOffer Document and not defined Same meaning as in Trust Deed.

8/9/2019 Equity Fof

8/51

7

A. THE FUND

Kotak Mahindra Mutual Fund (KMMF) has been establishedas a Trust under the Indian Trusts Act, 1882. The Trust Deed

establishing KMMF and the Deed of Amendment has beenregistered under the Registration Act, 1908 by the office ofthe Sub-Registrar of Assurances at Mumbai. KMMF has beenregistered with SEBI vide registration number MF/038/98/1dated 23rd June 1998. The underlying objective of the Fundis to raise monies through the sale of Units to the public ora section of the public under one or more schemes forinvesting in securities, including money market instruments.

B. SPONSOR COMPANY

Kotak Mahindra Bank Limited

The erstwhile Sponsor company, Kotak Mahindra Finance

Limited (KMFL) was converted into Kotak Mahindra BankLimited (Kotak Bank) in March 2003 after being granted abanking license by the Reserve Bank of India. Thus, theSponsor of the Fund is Kotak Bank. KMFL promoted by Mr.Uday S. Kotak, Mr. S.A.A. Pinto and Kotak & Co., wasincorporated on November 21, 1985 under the name KotakCapital Management Finance Limited. In early 1986, thepromoters were joined by Late Mr. Harish Mahindra and Mr.Anand G. Mahindra and the Company's name was changedto Kotak Mahindra Finance Limited.

Kotak & Co. (now Kotak & Co. Limited) is a highly respectedtrading company of Mumbai, with international business. Mr.

Uday Kotak, a scion of the Kotak family, was an outstandingstudent through school, Sydenham College (BombayUniversity) and Jamnalal Bajaj Institute of Management Studies(Bombay University). Mr. S.A.A. Pinto, trained as a lawyer, hasheld senior positions in well-known organisations like ICI andGrindlays Bank. For instance, he was part of the team inGrindlays Bank, which started the first merchant banking unitin India in 1968. Mr. Harish Mahindra was an industrialist ofrepute and had played a prominent role in social service andpublic life, thereby earning him high esteem. Mr. AnandMahindra, an MBA from Harvard University, is the ManagingDirector of one of India's most reputed industrial firms,

Mahindra & Mahindra Limited.

KMFL started with a capital base of Rs. 30.88 lakhs. Frombeing a provider of a single financial product, KMFL grewsubstantially during the seventeen years of its existence intoa highly diversified financial services company and has nowconverted into a Bank. The net worth of Kotak Bank exceedsRs. 600 crores and combined with its subsidiaries, the Groupnet worth is around Rs. 1200 crores. There are over 95,000share, debenture and fixed deposit (Term Deposit) holders ofKotak Bank. The Sponsor and its subsidiaries/associates offerwide ranging financial services such as loans, lease and hire

purchase, consumer finance, home loans, commercial vehiclesand car finance, investment banking, stock broking, primarymarket distribution of equity and debt products and life

insurance. The group has offices in over 59 Indian cities andalso present internationally in Mauritius, London, Dubai andNew York. Kotak Mahindra (UK) Limited, an ult imate subsidiaryof Kotak Bank, is the first company owned from India to beregistered with the Financial Services Authority in UK. KotakMahindra Capital Company Limited and Kotak SecuritiesLimited are joint ventures between Kotak Bank and GoldmanSachs, the latter being one of the largest global investmentbanks. Kotak Mahindra Primus Limited and Ford Credit KotakMahindra Limited (an associate company) are joint venturesbetween Kotak Bank and Ford Credit International, the globalcar-financing arm of Ford Motor Company. OM KotakMahindra Life Insurance Company Limited is a joint venturebetween Kotak Bank and Old Mutual Plc based in the UK andwith large presence in the South African insurance market.Some of the other subsidiaries of Kotak Bank are KotakMahindra Securities Limited, Kotak Mahindra InternationalLimited, Kotak Mahindra Private-Equity Trustee Limited, KotakMahindra Investments Limited, Kotak Mahindra Inc., andKotak Forex Brokerage Limited.

The Sponsor has been consistently profitable and dividendpaying company since inception. All group companies areprofessionally run companies, employing over 2800professional staff including CAs, MBAs and Engineers.

Given below is a summary of the Sponsor's financials:

(Rs. in crores)

Description Year ended March 31

2004 2003 2002

Total Income 383.91 253.32 187.23

Profit Before Tax 120.79 70.01 75.01

Profit After Tax 78.73 44.96 54.52

Free Reserves 546.13 482.24 450.51

Net Worth 605.67 541.45 509.72

Earnings per Share (Rs.) 13.11 7.59 9.21

Book Value per Share (Rs.) 101.74 91.44 86.08

Dividend (%) 24.00 21.00 41.00

Paid up Equity Capital 59.53 59.21 59.21

The Sponsor has contributed Rupees One Lakh as the initialcontribution to the corpus for the setting up of the Trust. TheSponsor has also contributed Rupees One Lakh Fifty Thousandas additional corpus. The Sponsor has vested the trusteefunctions in the Trustee. The Sponsor is represented by directorson the boards of the Trustee and the AMC in accordance withthe Regulations.

The Sponsor is neither responsible nor liable for any lossresulting from the operations of the Scheme.

I I I . C O N S T I T U T I O N O F T H E F U N D

8/9/2019 Equity Fof

9/51

8

C. TRUSTEE COMPANY (THE TRUSTEE)

Kotak Mahindra Trustee Company Limited (The Trustee), a company incorporated under the Companies Act, 1956, is the Trusteeof the Fund, by virtue of the Trust Deed made between the Sponsor and the Trustee.

1. Directors

The Directors of the Trustee are:

Names and Addresses Other Directorships

Mr. Amit Krishnakant Desai Minesota Finance Private LimitedAdvocate7, Shivtirth - 1Bhulabhai Desai RoadMumbai - 400 026Chairman

Mr. Girish Sharedalal The Ruby Mills LimitedChartered Accountant FDC Limited111, Landmark Stovec Industries LimitedM.L. Dahanukar Marg Trumac Engineering Company Limited - AlternateMumbai - 400 026 Stellar Asset Management Private Limited

Kaji & Maulik Securities Private Limited

Maulik & Kaji Financial Services Private LimitedRatan Trading Private Limited

Mr. Tushar A. Mavani AdvocateAryan Mahal, 6th Floor" C" Road, ChurchgateMumbai - 400 020

Mr. Anirudha Barwe Jain Irrigation Systems LimitedDirector Sigma Laboratories LimitedB-1, Bageshree IFCI Financial Services LimitedShankar Ghanekar Marg Investsmart India LimitedPrabhadevi, Mumbai - 400 025

Mr. Chandrashekhar Sathe Kotak Mahindra Securities LimitedService Kotak Forex Brokerage LimitedC-10, Shri Dattaguru Coop. Housing Society Maharashtra Foundat ion IndiaDeonar, Mumbai - 400 089 Kotak Mahindra Private Equity Trustee Limited

Mr. Amit Desai is a graduate in Commerce and Law fromthe Bombay University. He is an advocate and has about 19years of experience in criminal, economic and revenue laws.Mr. Desai is associated with the Sponsor.

Mr. Girish Sharedalal is a graduate in Commerce and Artsand also a Fellow of the Institute of Chartered Accountantsof India. Formerly a Senior Partner of Messrs Dalal, Desai andKumana, a firm of Chartered Accountants, he has about 43years of experience in the field of audit, taxation andmanagement consultancy.

Mr. Tushar Mavani is a graduate in Commerce and Lawfrom the Bombay University. He is a partner with Messrs Mulla& Mulla & Craigie Blunt & Caroe and has about 13 years ofexperience in the legal field.

Mr. Anirudha Barwe is a post-graduate in Mathematics andalso a Certified Associate of Indian Institute of Bankers,Mumbai. Mr. Barwe has about 42 years of experience in thefield of banking and financial services. Mr. Barwe was activelyassociated with and responsible to a great extent for thesuccess of the Resurgent India Bond issue of SBI. Mr. Barwe

retired as the Managing Director of SBI Capital Markets Limitedin October 1998. After retirement, Mr. Barwe worked withIDFC as Chief Financial Officer for 3 years.

Mr. Chandrashekhar Sathe is a graduate with B. Tech(Chemical Engineering) from IIT, Mumbai. He has over 26years' experience in Banking and Finance. He has been a partof the Senior Management team of the Kotak MahindraGroup since 1992 and was responsible for setting up theFixed Income Securities capability of Kotak Mahindra CapitalCompany. Prior to Kotak Mahindra, he was with the Bank of

Nova Scotia and Bank of Maharashtra and has wide rangingexperience in Banking, Finance, Administration, Credit, ForeignExchange and Money Markets. Mr. Sathe is a widely consultedexpert on Foreign Exchange and Money Markets in India andis a frequent contributor to financial newspapers, magazinesand TV News channels. Mr. Sathe was the Chief ExecutiveOfficer of the AMC for the period, 1st April 1998 to 30thNovember 2001 and currently heads the Risk Managementfunction at Kotak Mahindra Bank Limited. Mr. Sathe isassociated with the Sponsor.

2. Rights, Obligations, Responsibilities andDuties of the Trustee

Pursuant to the Trust Deed constituting the Fund and in termsof the Regulations, the rights and obligations of the Trusteeare as under:

8/9/2019 Equity Fof

10/51

9

1. The Trustee has the legal ownership of the Trust Fund.The general superintendence and management of theTrust and all powers incidental to the purpose of the trustvest absolutely in the Trustee subject to the Trust Deed.

2. The Trustee shall take into its custody or under its controlall the capital and property of every Scheme of theMutual Fund and hold it in trust for the Unitholders ofthe Scheme.

3. The Trustee is entitled to delegate any power and/orresponsibility vested in it to the AMC, which is accountableto the Trustee and bound to carry out the functionsassigned to it from time to time. Notwithstanding anysuch delegation, the Trustee Company is at all timesresponsible for the acts of negligence or acts of omissionand commission of the AMC.

4. The Trustee shall ensure that the AMC and the Custodiansduly fulfill the functions respectively assigned to themunder the Mutual Fund Regulations.

5. The Trustee shall ensure before the launch of any Scheme

that the Asset Management Company has:-a) systems in place for its back office, dealing room

and accounting;

b) appointed all key personnel including fundmanager(s) for the Scheme and submitted to theTrustee their resume containing particulars of theireducational qualifications and past experience inthe securities market within fifteen days of theirappointment;

c) appointed auditors to audit the accounts of theScheme;

d) appointed a compliance officer who shall beresponsible for monitoring the compliance of theSEBI Act, rules and regulations, notifications,guidelines, instructions,etc. issued by SEBI or theCentral Government and for redressal of investors'grievances;

e) appointed registrars and laid down parameters fortheir supervision;

f) prepared a compliance manual and designed internalcontrol mechanisms including internal audit systems;and

g) specified norms for empanelment of brokers andmarketing agents.

6. In carrying out responsibilities, the Trustee shall maintainarms' length relationship with other companies, orinstitutions or financial intermediaries or any bodycorporate with which it may be associated.

7. The Trustee shall not be liable to the Mutual Fund or theUnitholders, if the Mutual Fund suffers a decline in itsNet Asset Value or if any share or other security comprisedin the Trust Fund depreciates in its market value or failsto achieve any increase therein, unless such decline,depreciation or failure is caused by the willful default orgross negligence of the Trustee.

8. The Trustee shall not be under any liability on accountof anything done or omitted to be done or suffered to

be done by the Trustee in good faith, bona fide and afterdue diligence and care, in accordance with or on theadvice of the AMC or any other professional person, firmor company.

9. For avoidance of doubt, it is hereby agreed and declaredthat references to the Trustee in this clause shall bedeemed to include references to the officers, servantsand delegates of the Trustee.

10. The Trustee shall ensure that the AMC has been managingthe Scheme independently of other activities and hastaken adequate steps to ensure that the interest of theinvestors of no Scheme is being compromised with thatof the investors of other schemes or of other activitiesof the AMC.

11. The Trustee shall ensure that the Trust Fund shall beapplied and be available absolutely for the purposes ofthe Trust and shall not be applied directly or indirectly forany purpose other than the purposes referred to underthe Trust Deed.

12. The Trustee shall call for a meeting of the Unitholders,a) whenever required to do so by SEBI in the interest

of the Unitholders; or

b) whenever required to do so on the requisition madeby three-fourths of the Unitholders of any Scheme;or

c) when the majority of the Directors of the TrusteeCompany decide to wind up or prematurely redeemthe Units.

13. The Trustee shall ensure that no change in thefundamental att ributes of any scheme or the trust or fees

and expenses payable or any other change which wouldmodify the scheme and affects the interest of Unitholders,is carried out unless,

a) a written communication about the proposed changeis sent to each Unitholder and an advertisement isgiven in one English daily newspaper havingnationwide circulation as well as in a newspaperpublished in the language of the region where theHead Office of the mutual fund is situated; and

b) the Unitholders are given an option to exit at theprevailing Net Asset Value without any Exit Load.

14. Subject to the provisions of the Mutual Fund Regulations

as amended from time to time, the consent of theUnitholders shall be obtained, entirely at the option ofthe Trustee, either at a meeting of the Unitholders orthrough postal ballot. Only one Unitholder in respect ofeach folio or account representing a holding shall voteand he shall have one vote in respect of each resolutionto be passed. The procedure of voting shall be as per thedirectives issued by SEBI, from time to time.

15. The Trust Fund shall be held in trust and managed by theTrustee in accordance with the Trust Deed.

16. The Trustee shall be accountable for, and be the custodianof, the funds and property of the respective Scheme and

shall hold the same in trust for the benefit of theUnitholders in accordance with the Mutual FundRegulations and the provisions of the Trust Deed.

8/9/2019 Equity Fof

11/51

10

17. The Trust Deed shall not be amended without obtainingthe prior approval of SEBI, and approval of the Unitholdersshall be obtained where it affects their interests.

18. The appointment of the AMC can be terminated by amajority of the Board of Directors of the Trustee or by75% of the Unitholders of the Scheme.

Modifications, if any, in the rights and/or obligations and

duties of the Trustee are on account of amendments tothe Regulations and the Regulations supercede/overridethe provisions of the Trust Deed, wherever the two arein conflict.

The Compliance Officer reports directly to a director ofthe Trustee to carry out the supervisory role on behalf ofthe Trustee. In addition, the Trustee may seek anyinformation from time to time from the AMC. A reputedfirm of Chartered Accountants has been appointed tocarry out internal audit of the Fund on a periodic basisto facilitate monitoring the activities of the AMC. On a

quarterly basis, an activity report prepared by the AMCis discussed at the Board Meetings of the Trustee. Duringthe year 2003-2004, nine meetings of the Board ofDirectors of the Trustee were held. The Audit Committee,comprising three Directors of the Board of Directors ofthe Trustee, has been constituted pursuant to the SEBIcircular MFD/CIR/010/024/2000 dated January 17, 2000chaired by an Independent Director. The Audit Committee

has had four Committee meetings during the year 2003-2004.

3. Trustee's Fee

The Trustee shall, during the continuance of this Trust anduntil KMMF is finally wound up and whether or not KMMFis in the course of administration by or under the order ordiscretion of any court, be entitled to receive, in addition tothe reimbursement of all costs, charges and expenses, a sumat the rate of 0.050% per annum of the Trust Fund as definedunder the Trust Deed, or a sum of Rs.15,00,000/-, whicheveris higher, payable monthly.

D. ASSET MANAGEMENT COMPANYKotak Mahindra Asset Management Company Limited, a company incorporated under the Companies Act, 1956, on August08,1994, has been appointed to act as the Investment Manager to Kotak Mahindra Mutual Fund vide Investment ManagementAgreement dated 20th May, 1996, as amended up to date. It is a wholly owned subsidiary of the Sponsor, Kotak Bank.

The Investment Manager is entitled to charge a management fee as prescribed by the Regulations for the services renderedby it to the Fund.

An approval has been granted to the Company by the Division of Funds, Investment Management Department of SEBI forundertaking Portfolio Management Service under the SEBI (Portfolio Manager) Regulations, 1993. An approval under SEBI(Mutual Fund) Regulations, 1996 is being obtained.

1. Name and Address

Kotak Mahindra Asset Management Company Limited5A, 5th Floor, Bakhtawar, 229, Nariman Point, Mumbai 400 021

2. Directors on the Board of the AMC


Mr. Uday S. Kotak Kotak Mahindra Bank Limited - Executive Vice Chairman62, NCPA Apartments & Managing DirectorDorabjee Tata Marg Kotak Mahindra Capital Company Limited - ChairmanNariman Point, Mumbai - 400 021 Kotak Mahindra Primus Limited - ChairmanChairman Kotak Securities Limited - Chairman

OM Kotak Mahindra Life Insurance Company Limited -Chairman

Kotak Forex Brokerage Limited

The Mahindra United World College of IndiaMr. R. C. Khanna Ador Technopak Limited304, Bakhtavar Cooperheat India Private LimitedOpp. Colaba Post Office Monsanto India LimitedMumbai - 400 005 Tata Chemicals Limited

Schrader Duncan Limited

Mr. Sukant Sadashiv Kelkar Macrofill Investments LimitedNo. 1, Sindhula P.T. Five Star Industries Limited., IndonesiaN. Gamadia Road Naperol Investments LimitedMumbai - 400 026 Harvard Plantations Limited

Scal Investments LimitedBritannia Industries Limited

Nesslene Chemicals & Fibres LimitedNational Peroxide Employees' Welfare Company LimitedThe Bombay Dyeing & Mfg. Company Limited

8/9/2019 Equity Fof

12/51

11

Wadia BSN LimitedPlacid Plantations LimitedAssociated Biscuits International Limited,

London - AlternateABI Holdings Limited, London - AlternateNowrosjee Wadia & Sons Limited

Mr. Chengalath Jayaram Kotak Mahindra Bank LimitedBalmoral Hall Kotak Securities LimitedFlat No. 2B, 2nd Floor Kotak Mahindra Primus LimitedMount Mary RoadBandra (West)Mumbai 400 050

Mr. Bipin R. Shah Crisil Limited8 D, Ilpala 220 Little Gibbs Road Indus Venture Management LimitedMalabar Hill Indus Capital Market Services Company Pvt. Limited.Mumbai 400 006 Kancor Flavours and Extracts Limited

Global Pharmatech Pvt. LimitedITTI Pvt. LimitedMarico Industries LimitedSona Okegawa Precision Forgings LimitedDolphin Offshore Enterprises (India) Limited

Mr. Narayan S. A. Multifaced Finstock Private Limited1 Smruti, Pestom Sagar Telecom Investments India Private LimitedPlot No. 27, Road No.4 Jay Kay Finholding (India) Private LimitedChembur, Mumbai 400 006 UMT Investments Limited

Kotak Securities LimitedHutchison Telecom East LimitedKotak Mahindra Asset Reconstruction Company LimitedUsha Martin Telematics LimitedKotak Commodity Services Limited


Mr. Uday S. Kotak is a graduate in Commerce and a post-graduate in Business Administration from Jamnalal BajajInstitute of Management Studies of Mumbai University. Mr.Kotak has over 18 years of experience in the financial servicesindustry. Mr. Kotak is the Vice Chairman and ManagingDirector of the Sponsor, and the chairman of various othercompanies.

Mr. R. C. Khanna is a graduate in Commerce from LondonUniversity, Fellow of the Institute of Chartered Accountantsof England & Wales, Fellow of the Institute of CharteredAccountants of India, Associate of the Chartered Institute of

Management Accountants, London and Associate of theInstitute of Cost and Works Accountants of India. He was apartner till 31st March 1998 in A. F. Ferguson & Co., a firmof Chartered Accountants. Mr. Khanna has over 54 years ofexperience in Audit, Taxation, Finance and other related areas.

Mr. Sukant S. Kelkar is a post-graduate in commerce. Hehas about 40 years of experience in finance, capital markets,and related areas. Mr. Kelkar has over 10 years experience inthe Bank of India, and has even been a foreign exchangedealer in London for 3 years during this tenure. Following this,Mr. Kelkar worked with Bombay Dyeing ManufacturingCompany Limited for 31 years, finally retiring as Executive

Director in July 2001.Mr. Chengalath Jayaram holds a postgraduate diploma inManagement from IIM, Calcutta, and has over 25 years'

experience in the field of Finance. Mr. C. Jayaram began hiscareer nearly two decades ago in the Financial Services industry.He joined the Kotak Mahindra Group in 1990, before whichhe had worked with several renowned organizations such asICICI Limited and A. F. Fergusons. At Kotak Mahindra, besidesbeing instrumental in setting up the car finance business, hewas also responsible for the distribution business, which wasthen called FICOM. During the period 1990 to 1995, he wasresponsible for the businesses of f inancing against shares andproprietary investments. From 1995 to 1999, he was theManaging Director of Kotak Securities Limited and currentlyhe is the Executive Director of Kotak Bank.

Mr. Bipin R. Shah, 72, a member of the Institute of CharteredAccountants of India, holds a Bachelor's Degree in Commercefrom Bombay University, and has 48 years of work experience.Mr. Shah began his career in 1956, with Hindustan LeverLimited, where he held various Senior CommercialAssignments, including the post of Commercial Manager atits largest soaps, detergents and foods factory in Bombay,Chief Buyer, Raw Materials and Head of Foods Business. Hebecame a Director of the company in 1979, assumingresponsibility for Foods, Animal Feeds, Agri Products andExports Business, and managed a commendable turnaroundof the company's dairy business.

In 1981, Mr. Shah also became Chairman of another Unileversubsidiary, Lipton India Limited, which was facing losses and

8/9/2019 Equity Fof

13/51

12

financial crisis. Mr. Shah was responsible for turning thecompany around, and for reviving employee and investorconfidence. Mr. Shah was also Chairman of Export Businessof four Unilever Companies in India viz. Hindustan Lever Ltd.,Lipton India Ltd., Brooke Bond India Ltd and Ponds India Ltd.

On his retirement from the Lever Group of Companies in1992, Mr. Shah joined Indus Venture Management Ltd., wherehe currently holds the post of Vice Chairman. Mr. Shah is alsoa non Executive Director on the Board of several companies,including CRISIL, the premier credit rating agency in India.

Mr. S. A. Narayan, 44, is a member of the Institute ofChartered Accountants of India, holds a Bachelor's Degree inCommerce from Bombay University, and has spent 13 yearsin the Kotak Group, handling various responsibilities andportfolios. He began his career as a consultant, handlingseveral statutory and internal audit assignments, besidesCompany law and taxation matters.

Mr. Narayan joined the Kotak Group in 1991, as an AssistantVice President in the Operations Department, where he wasresponsible for accounts, audit and systems. In 1993, he

became Vice President, handling the Southern Region andInvestment Portfolio of the Group, before going on to becomeChief Operating Officer for Kotak Securities Limited in 1996.Mr. Narayan rose to become Executive Director of KotakSecurities Limited in May 1997, and then took over asManaging Director of the company in June 2003, a post hecurrently holds.

Mr. Uday Kotak, Mr. C. Jayaram and Mr. Narayan S.A. areassociated with the Sponsor.

3. Powers, Functions and Responsibilitiesof the AMC

Under the IMA, the AMC has been appointed as the AssetManagement Company to provide management andadministrative services to the Trust and to deploy the fundsraised by KMMF under its schemes. The Trustee has authorisedthe AMC to do all such acts and things on behalf of the Trustas are necessary for the discharge of the responsibilit ies of theAMC. The duties and responsibilities of the AMC are asfollows:

1. The Trustee has granted the AMC certain powers andauthorities as stipulated under the Trust Deed and maygrant such other powers as may be deemed fit from timeto time, and communicate the same in writing to theAMC.

2. The following are, inter-alia, the specific powers:

a) to invest, acquire, hold, manage or dispose of all orany securities and to deal with, engage in and carryout all other functions and to transact all businesspertaining to KMMF;

b) to keep the moneys belonging to KMMF with banksand custodians, as the AMC may deem fit;

c) to determine the terms and conditions applicable tothe Scheme and to decide the category of personswho may participate in any Scheme and to formulate,introduce, make, announce or launch one or moreScheme;

d) to issue, sell or purchase Units under any Schemeof KMMF;

e) to ascertain, appropriate and distribute the surplusgenerally or under various schemes or under anyScheme, to carry forward, reinvest or otherwise dealwith any surplus and to transfer such sums as theAMC may deem fit to one or more reserve fundswhich may be established at the discretion of theTrustee;

f) to sign, seal, execute, deliver and register accordingto law, all deeds, documents, and assurances inrespect of or in any manner relating to KMMF;

g) to do all acts, deeds, matters and things, which arenecessary for any object, purpose or in relation toKMMF in any manner or in relation to any Schemeof KMMF.

3. The AMC shall be responsible for making, floating andissuing Schemes for KMMF subject to prior approval ofthe Trustee and to the extent required in the MutualFund Regulations.

4. The AMC shall be responsible for investing and managing

the funds mobilised under various Schemes in accordancewith the provisions of the Trust Deed and Mutual FundRegulations.

5. The AMC shall make such disclosures or submit suchdocuments as may be required by the Trustee and /orSEBI.

6. The AMC shall provide management and administrativeservices for KMMF in accordance with the provisions ofIMA and any resolution passed by the Board of Directorsof the Trustee from time to time and communicated inwriting to the AMC.

7. The AMC shall be responsible for the day-to-daymanagement of KMMF.

8. The AMC shall provide the Trustee with all informationconcerning the operation of the various Schemes ofKMMF at such intervals and in such manner as requiredby the Trustee.

9. The AMC shall maintain books and records of theoperation of various Schemes of KMMF to ensurecompliance with the Mutual Fund Regulations and shallsubmit a Scheme wise report on the functioning of theFund to the Trustee on a quarterly basis or at suchintervals and in such manner as may be required or calledfor by the Trustee or SEBI.

10. The AMC shall be responsible for its acts of negligence,commission and omission and those of its employeesand/or the persons whose services have been engagedby the AMC and the AMC shall indemnify the Trusteeand each and every one of the Directors of the TrusteeCompany against all damages, losses, costs andconsequences and any liabilities whatsoever that mayarise on account of such acts of negligence and acts ofcommission and omission by any of the above mentionedpersons.

11. No loss or damage or expenses incurred by the AMC orofficers of the AMC or any delegate of the AMC, shallbe met out of the Trust Fund.

12. The AMC is not exempted from or indemnified against

8/9/2019 Equity Fof

14/51

13

any liability for (i) negligence, dishonesty or fraud or (ii)failure to show the degree of care and diligence requiredof it while carrying out its duties. Notwithstandinganything contained in any contract or agreement or anytermination settlement, neither the AMC nor its directorsor other officers shall be absolved of liability to theMutual Fund for their acts of commission or omissionwhile holding such position or office.

13. The AMC hereby undertakes to hold harmless andindemnify the Trustee or procure the Trustee to be heldharmless and indemnif ied against all actions, proceedings,claims, and demands, cost and expenses incidentalthereto, including all legal, professional and otherexpenses incurred, which may be brought against,suffered or incurred by the Trustee by reason of theperformance or non-performance by the AMC of itsduties. Such indemnification shall be by the AMC andnot out of the Trust Fund.

14. The AMC shall not be liable to the Trustee for any errorof judgment or mistake of law or for any loss suffered

in connection with the subject matter of the IMA, unlesssuch error of judgment or mistake constitutes or suchloss is caused by any acts of commission or omission orby fraud or willful default or negligence of the AMC orany of its agents or delegates. Without prejudice to thegenerality of the foregoing, in particular (but withoutlimitation) the AMC shall not be liable to the MutualFund for any loss which may be sustained in the purchase,holding or sale of any investments or other assets by themutual fund or on any of its assets as a result of loss,delay, misdelivery or error in transmission of cabled,telexed, telecopied, facsimiled, telegraphic or othercommunication unless such loss arose by any acts of

commission or omission or from fraud, bad faith, willfuldefault or negligence in the performance or non-

performance of its duties as mentioned in the IMA.

15. The AMC shall not be liable to the Trustee in the eventthat the Mutual Fund suffers a decline in its Net AssetValue or fails to achieve any increase therein unless suchdecline or failure is caused by any acts of commission oromission or by the default or negligence of the AMC, abona fide error of judgment not being regarded asdefault or negligence nor as an act of commission oromission.

4. Schemes launched by the Mutual Fund

In December 1998, the Fund launched Kotak Gilt SavingsPlan, Kotak Gilt Investment Plan and Kotak 30. Kotak GiltSavings Plan and Kotak Gilt Investment Plan opened forcontinuous offer from January 5, 1999 and Kotak 30, fromJanuary 21, 1999. It further launched Kotak Gilt Serial Planson September 27, 1999. In October 1999, two more Schemes,viz. Kotak Bond and Kotak Balance, were launched and thesebecame open-ended on November 29, 1999. The next additionhappened in February 2000 when the Fund further launchedtwo Schemes, viz., Kotak Tech and Kotak MNC. These became

open-ended on May 2, 2000. In October 2000, the Fundlaunched Kotak Liquid, which became open-ended on October6, 2000. In November, 2000, the Fund launched Serial Plansunder Kotak Bond. Then, on April 22, 2003, Kotak BondShort Term Plan was launched. In May 2002, Kotak FMP, aclose-ended Scheme comprising of several fixed maturityplans was launched. In July 2003, Kotak Floater was launched,which became open-ended on July 15, 2003. In October2003, Kotak Income Plus was launched and it became open-ended on December 03, 2003. Further, Kotak Dynamic Incomeand Kotak Global India were launched on December 15,2003 and December 22, 2003 respectively and these becameopen-ended on December 29, 2003 and February 3, 2004,respectively. Kotak FMP (8) was launched on March 15, 2004.

Condensed Financial Information

Kotak Gilt Savings Plan Kotak Gilt Investment - Regular Plan

Apr '01 - Apr '02 - Apr '03- Apr '01 - Apr '02 - Apr '03 -Mar '02 Mar '03 Mar 04 Mar '02 Mar '03 Mar '04

Date of Allotment 29-Dec-98 29-Dec-98 29-Dec-98 29-Dec-98 29-Dec-98 29-Dec-98

Beginning of Year / Allotment Date 01-Apr-01 01-Apr-02 01-Apr-03 01-Apr-01 01-Apr-02 01-Apr-03

End of Year / Last Date 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-02 31-Mar-03 31-Mar-04

NAV at beginning of year / 12.63 (G)/ 13.95 (G)/ 14.92 (G)/ 13.31 (G)/ 17.00 (G)/ 19.43 (G)/Allotment Date (Rs.) 10.44 (D) 10.44 (D) 10.52 (MD) 10.61 (D) 10.71 (D) 10.70 (D)

Net Income per unit (Rs.) 1.75 1.47 0.72 2.83 2.17 2.63Dividends (Rs. per unit) * 0.92 0.61 0.53 (MD)/ 2.32 1.48 1.29

4.50 (AD)

Transfer to reserves (Rs. crores) (4.48) (4.58) 2.13 60.94 10.32 0.60

NAV as on : At the end of the 13.95 (G)/ 14.92 (G)/ 15.61 (G)/ 17.00 (G)/ 19.43 (G)/ 21.91 (G)/year / period (Rs.) 10.44 (D) 10.52 (D) 10.40 (MD)/ 10.71 (D) 10.70 (D) 10.54 (D)

10.44 (AD)

NAV as on : 07-Jun-04 15.70 (G)/ 21.82 (G)/10.41 (MD)/ 10.49 (D)10.50 (AD)

Annualised return * * 10.77% 9.85% 8.84% 17.72% 16.89% 16.09%

07-Jun-04 8.63% 15.41%

Net Assets at end of the

year / period (Rs. crores) 54.83 15.92 47.53 366.48 279.53 241.01Ratio of Recurring Expensesto Average Assets 1.02% 1.00% 1.59% 1.64% 1.64% 1.65%

8/9/2019 Equity Fof

15/51

14

Kotak Gilt Serial Plan 2005 Kotak Gilt Serial Plan 2007 Kotak Gilt Serial Plan 2011

Apr '01 - Apr '02 - Apr '03 - Apr '01 - Apr '02 - Apr '03 - Apr '01 - Apr '02 - Apr'03 -Mar '02 Mar '03 Mar '04 Mar '02 Mar '03 Mar '04 Mar '02 Mar '03 Mar '04

Date of Allotment 03-Nov-99 03-Nov-99 03-Nov-99 10-Nov-99 10-Nov-99 10-Nov-99 09-Jan-01 09-Jan-01 09-Jan-01

Beginning of Year /Allotment Date 01-Apr-01 01-Apr-02 01-Apr-03 01-Apr-01 01-Apr-02 01-Apr-03 01-Apr-01 01-Apr-02 01-Apr-03

End of Year / Last Date 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-02 31-Mar-03 31-Mar-04

NAV at beginning of 11.10 (G)/ 12.83 (G)/ 13.72 (G)/ 12.15 (G)/ 14.83 (G)/ 16.07 (G)/ 10.48 (G) 13.20 (G)/ 14.81 (G)/year / Allotment Date (Rs.) 11.10 (D) 11.15 (D) 11.22 (D) 11.14 (D) 11.28 (D) 12.18 (D) 11.07 (D) ~~ (D)

Net Income per unit (Rs.) 2.10 1.75 0.99 2.54 1.49 3.75 1.74 1.50 8.78

Dividends (Rs. per unit) * 1.41 0.69 0.74 1.99 Nil 0.90 1.77 Nil N.A.

Transfer to reserves (Rs crores) 0.06 (0.01) (0.01) 0.10 0.03 (0.03) 0.01 # (#)

NAV as on : At the end of 12.83(G)/ 13.72 (G)/ 14.63 (G)/ 14.83 (G)/ 16.07 (G)/ 17.34 (G)/ 13.20 (G)/ 14.81 (G)/ 16.59 (G)/the year / period (Rs.) 11.15 (D) 11.22 (D) 11.11 (D) 11.28 (D) 12.18 (D) 12.09 (D) 11.07 (D) ~~(D) ~~(D)

NAV as on : 07-Jun-04 14.69 (G)/ 17.38 (G)/ 16.55 (G)/11.15 (D) 12.12 (D) ~~ (D)

Annualised return * * 10.90% 9.72% 8.99% 17.94% 15.04% 13.37% 25.52% 19.32% 16.99%

07-Jun-04 8.73% 12.85% 15.91%

Net Assets at end of theyear / period (Rs. crores) 0.38 0.22 0.15 0.44 0.42 0.29 0.06 0.04 0.01

Ratio of Recurring Expensesto Average Assets 0.61% 0.61% 0.51% 0.62% 0.61% 0.60% 0.62% 0.60% 0.60%

Kotak Gilt Serial Plan 2013 Kotak Gilt Serial Plan 2019

Apr '01 - Apr '02 - Apr '03 - Jun '01 - Apr '02 - Apr '03 -Mar '02 Mar '03 Mar '04 Mar '02 Mar '03 Mar '04

Date of Allotment 26-Dec-00 26-Dec-00 26-Dec-00 15-Jun-01 15-Jun-01 15-Jun-01

Beginning of Year / Allotment Date 01-Apr-01 01-Apr-02 01-Apr-03 15-Jun-01 01-Apr-02 01-Apr-03


NAV at beginning of year / Allotment Date (Rs.) 10.59 (G) 14.01 (G)/ 15.91 (G)/ 10.00 (D) 12.93 (G)/ 15.13 (G)/

11.19 (D) 11.70 (D) 10.43 (D) 10.42 (D)

Net Income per unit (Rs.) 4.40 4.07 1.99 0.79 1.90 4.14

Dividends (Rs. per unit) * 2.41 0.99 0.90 2.05 1.72 1.23

Transfer to reserves (Rs. crores) 0.10 0.03 0.02 0.07 0.11 0.01

NAV as on : At the end of the year / period (Rs.) 14.01 (G)/ 15.91 (G)/ 17.70 (G)/ 12.92 (G)/ 15.13 (G)/ 16.97 (G)/11.19 (D) 11.70 (D) 11.95 (D) 10.43 (D) 10.42 (D) 10.24 (D)

NAV as on : 07-Jun-04 17.69 (G)/ ; 16.94 (G)/11.95 (D) 10.23 (D)

Annualised return * * 30.66% 22.82% 19.11% 26.02% 20.82%

07-Jun-04 17.99% 19.35%

Absolute return * * * 29.22%

Net Assets at end of the year / period (Rs. crores) 0.39 0.35 0.36 0.62 0.70 0.48Ratio of Recurring Expenses to Average Assets 0.61% 0.61% 0.60% 0.46% 0.61% 0.60%

Kotak Bond Kotak Bond Kotak Bond Kotak BondWholesale Plan Deposit Plan Short Term Plan Institutional Plan

Apr '01 - Apr '02 - Apr '03 - Apr '01 - Apr '02 - Apr '03 - May '02 - Apr '03 - Mar '03 Apr '03 -Mar '02 Mar '03 Mar '04 Mar '02 Mar '03 Mar '04 Mar '03 Mar '04 Mar '04

Date of Allotment 25-Nov-99 25-Nov-99 25-Nov-99 25-Nov-99 25-Nov-99 25-Nov-99 02-May-02 02-May-02 28-Mar-03 28-Mar-03

Beginning of Year /Allotment Date 01-Apr-01 01-Apr-02 01-Apr-03 01-Apr-01 01-Apr-02 01-Apr-03 02-May-02 01-Apr-03 28-Mar-03 01-Apr-03

End of Year / Last Date 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-03 31-Mar-04 31-Mar-03 31-Mar-04

NAV at beginning of year / 11.88 (G)/ 14.00 (G)/ 15.67 (G)/ 11.75 (G)/ 13.78 (G)/ 15.35 (G)/ 10.00 10.72 (G)/ 15.56 (G) / 15.66 (G)/Allotment Date (Rs.) 10.06 (D) 10.20 (QD)/ 10.58 (QD)/ 10.19 (D) 10.28 (D) 10.77 (D) 10.16 (D) 10.50 (D) 10.57 (D)

10.67 (AD) 11.19 (AD)/10.44 (B)

8/9/2019 Equity Fof

16/51

15

Net Income per unit (Rs.) 0.56 1.21 2.76 1.61 1.25 1.86 1.33 0.96 # 1.95

Dividends (Rs. per unit)* 1.41 (QD)/ 0.80 (QD)/ 0.99 (QD)/ 1.41 0.63 0.93 0.54 0.62 Nil 0.963.00 (AD) 0.75 (AD) 0.69 (AD)

Transfer to reserves(Rs. crores) 94.67 100.62 (89.81) 11.61 18.94 (11.92) 14.97 14.28 47.06 14.05

NAV as on : At the end of 14.00 (G)/ 15.67 (G)/ 17.25 (G)/ 13.78 (G)/ 15.35 (G)/ 16.80 (G)/ 10.72 (G)/ 11.40 (G)/ 15.66 (G)/ 17.35 (G)/the year / period (Rs.) 10.20 (QD)/ 10.58 (QD)/ 10.49 (QD)/ 10.28 (D) 10.77 (D) 10.70 (D) 10.16 (D) 10.08 (D) 10.57 (D) 10.55 (D)

10.67 (AD) 11.19 (AD)/ 11.53 (AD)/10.44 (B) 11.50 (B)

NAV as on 07-Jun-04 17.25 (G)/ 16.78 (G)/ 11.49 (G)/ 17.37 (G)/10.49 (QD)/ 10.69 (D) 10.07 (D) 10.56 (D)11.53 (AD)/

11.50 (B)

Annualised return * * 15.42% 14.36% 13.36% 14.64% 13.65% 12.66% 7.08% 11.38%

07-Jun-04 12.77% 12.08% 6.82% 9.62%

Absolute return * * * 7.20% 0.60% 07-Jun-04

Benchmark Return 5.42% 5.10% 0.38% 9.14%

07-Jun-04 5.01% 7.68%

Net Assets at end of theyear / period (Rs. crores) 760.09 887.54 428.84 110.44 119.33 74.09 254.71 409.57 168.94 188.20

Ratio of RecurringExpenses to Average Assets 1.49% 1.60% 1.65% 2.04% 2.14% 2.23% 0.83% 0.86% 0.01% 1.00%

Kotak Liquid Regular Plan Kotak Liquid Kotak KotakInstitutional Plan Floater FM P (8)

Apr '01 - Apr '02 - Apr '03 - Mar '03 Apr '03 - Jul '03 - Mar '04

Mar '02 Mar '03 Mar '04 Mar '04 Mar '04Date of Allotment 05-Oct-00 05-Oct-00 05-Oct-00 14-Mar-03 14-Mar-03 14-Jul-03 30-Mar-04

Beginning of Year / Allotment Date 01-Apr-01 01-Apr-02 01-Apr-03 14-Mar-03 01-Apr-03 14-Jul-03 30-Mar-04

End of Year / Last Date 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-03 31-Mar-04 31-Mar-04 31-Mar-04

NAV at beginning of year / Allotment Date (Rs.) 10.48 (G)/ 11.33 (G)/ 12.09 (G)/ 12.05 (G) / 12.09 (G)/ 10.00 10.0010.01 (D) 10.01 (D) 10.01 (D) 10.01 (D) 10.01 (D)

Net Income per unit (Rs.) 0.78 0.89 0.52 0.02 1.05 0.09 0.02

Dividends (Rs. per unit) * 0.70 0.66 0.41 0.01 0.43 (WD)/ 0.04 (WD)/ Nil0.42 (DD) 0.31 (M D)

Transfer to reserves (Rs. crores) 30.28 50.79 (41.32) 84.95 (38.33) 6.93 0.16

NAV as on : At the end of the year / period (Rs.) 11.33 (G)/ 12.09 (G)/ 12.67 (G)/ 12.09 (G)/ 12.71 (G)/ 10.38 (G)/ 10.01(G)

10.01 (D) 10.01 (D) 10.02 (D) 10.01 (D) 10.02 (WD)/ 10.00 (WD)/12.23 (DD) 10.02 (MD)

NAV as on: 07-Jun-04 12.76 (G)/ 12.81 (G)/ 10.46 (G)/ 10.12 (G)10.02 (D) 10.03 (WD)/ 10.01 (WD)/

12.23 (DD) 10.03 (MD)

Annualised return * * 8.73% 7.93% 7.02% 5.12%

07-Jun-04 6.87% 5.02%

Absolute return * * * 0.31% 3.76%

07-Jun-04 4.62% 1.01%

Benchmark return 0.21% 4.37% 2.91%

07-Jun-04 4.32% 3.68% 0.77%

Net Assets at end of the year / period (Rs. crores) 395.58 504.86 275.25 535.51 416.22 337.76 110.57

Ratio of Recurring Expenses to Average Assets 1.00% 0.89% 1.00% 0.04% 0.72% 0.75% #

Kotak Bond Kotak Bond Kotak Bond Kotak BondWholesale Plan Deposit Plan Short Term Plan Institutional Plan

Apr '01 - Apr '02 - Apr '03 - Apr '01 - Apr '02 - Apr '03 - May '02 - Apr '03 - Mar '03 Apr '03 -Mar '02 Mar '03 Mar '04 Mar '02 Mar '03 Mar '04 Mar '03 Mar '04 Mar '04

8/9/2019 Equity Fof

17/51

16

Kotak 30 Kotak Balance

Apr '01 - Apr '02 - Apr '03 - Apr '01 - Apr '02 - Apr '03 -Mar '02 Mar '03 Mar '04 Mar '02 Mar '03 Mar '04

Date of Allotment 29-Dec-98 29-Dec-98 29-Dec-98 25-Nov-99 25-Nov-99 25-Nov-99



NAV at beginning of year / Allotment Date (Rs.) 12.68 11.62 11.59 (G)/ 8.73 9.84 10.1011.59 (D)

Net Income per unit (Rs.) (3.59) 0.10 6.05 (0.48) 0.13 4.54

Dividends (Rs. per unit) * 1.00 Nil 7.00 Nil Nil 2.75

Transfer to reserves (Rs. crores) 5.52 0.99 37.15 6.41 1.48 8.94

NAV as on : At the end of the year / period (Rs.) 11.62 11.59 (G) / 25.19 (G)/ 9.84 10.10 13.1511.59 (D) 17.01 (D)

NAV as on : 07-Jun-04 22.88 (G)/ 12.7415.45 (D)

Annualised return * * 15.01% 11.20% 24.73% 0.03% 2.66% 13.33%

07-Jun-04 23.09% -11.96%

Absolute return * * *

07-Jun-04

~Benchmark Return 4.09% 0.02% 12.24% -4.93%

07-Jun-04 9.28%

~Benchmark Return (S&P CNX Nifty) 8.27% 2.72% 14.42%

07-Jun-04 11.03%

Net Assets at end of the year / period (Rs. crores) 28.40 39.30 125.81 45.11 30.67 37.52

Ratio of Recurring Expenses to Average Assets 2.50% 2.50% 2.50% 2.48% 2.44% 2.49%

Kotak Technology Kotak MNC

Apr '01 - Apr '02 - Apr '03 - Apr '01 - Apr '02 - Apr '03 -Mar '02 Mar '03 Mar '04 Mar '02 Mar '03 Mar '04

Date of Allotment 04-Apr-00 04-Apr-00 04-Apr-00 04-Apr-00 04-Apr-00 04-Apr-00



NAV at beginning of year / Allotment Date (Rs.) 3.47 3.06 2.85 8.40 8.00 7.00

Net Income per unit (Rs.) (4.52) (0.20) 0.74 (1.42) (0.49) 4.35

Dividends (Rs. per unit) * Nil Nil Nil Nil Nil Nil

Transfer to reserves (Rs. crores) 5.89 12.91 44.57 (1.10) (2.66) 23.89

NAV as on : At the end of the year / period (Rs.) 3.06 2.85 3.97 8.00 7.00 14.24

NAV as on: 07-Jun-04 4.09 13.39

Annualised return * * -45.02% -34.34% -20.65% -10.67% -11.23% 9.26%

07-Jun-04 -19.25% 7.23%

Absolute return * * *

~Benchmark Return -38.99% -35.67% -23.37% -14.13% 13.43% 4.49%

07-Jun-04 -21.52% 1.23%

~Benchmark Return (S&P CNX Nifty) -11.17% -11.89% 5.55%

07-Jun-04 1.86%

Net Assets at end of the year / period (Rs. crores) 56.63 46.00 48.07 31.25 24.53 33.46

Ratio of Recurring Expenses to Average Assets 2.25% 2.25% 2.25% 2.48% 2.47% 2.49%

8/9/2019 Equity Fof

18/51

17

Kotak Gilt Kotak Liquid Kotak Kotak KotakInvestment - Institutional Income Plus Dynamic Global

Provident Fund Premium Plan Income Indiaand Trust Plan

Nov '03 - Nov '03 - Dec '03 - Dec '03 - Jan '03 -Mar'04 Mar '04 Mar '04 Mar '04 Mar '04

Date of Allotment 11-Nov-03 04-Nov-03 02-Dec-03 26-Dec-03 30-Jan-04

Beginning of Year / Allotment Date 11-Nov-03 04-Nov-03 02-Dec-03 26-Dec-03 30-Jan-04End of Year / Last Date 31-Mar-04 31-Mar-04 31-Mar-04 31-Mar-04 31-Mar-04

NAV at beginning of year / Allotment Date (Rs.) 21.63 (G) / 12.48 (G) / 10.00 10.00 10.0010.74 (D) 12.23 (DD) )/

10.02 (WD)

Net Income per unit (Rs.) 0.09 0.15 0.11 0.18 (0.07)

Dividends (Rs. per unit) * 0.08 0.16 (WD)/ 0.20 (QD)/ 0.12 Nil0.20 (DD) 0.20 (MD)

Transfer to reserves (Rs. crores) 15.89 281.69 2.57 0.72 (13.51)

NAV as on : At the end of the year / period (Rs.) 21.93 (G)/ 12.71 (G)/ 10.25 (G)/ 10.20 (G)/ 9.57 (G)/10.79 (D) 10.03 (WD)/ 10.02 (MD)/ 10.06 (D) 9.57 (D)

12.23 (DD) 10.02 (QD)

NAV as on : 07-Jun-04 21.86 (G)/ 12.82 (G)/ 10.10 (G)/ 10.20 (G)/ 9.40 (G)/10.76 (D) 10.03 (WD)/ 9.82 (MD)/ 10.06 (D) 9.40 (D)

12.23 (DD) 9.87 (QD)

Absolute return * * * 1.38% 1.88% 2.20% 1.97% -4.35%

07-Jun-04 1.06% 2.74% 0.73% 1.99% -5.08%

Benchmark Returns 1.95% 1.62% 3.56% 2.17% -1.84%

07-Jun-04 2.29% 2.38% 1.72% 2.19% -13.30%

Net Assets at end of the period (Rs. crores) 31.49 1812.21 291.40 42.69 299.96

Ratio of Recurring Expenses to Average Assets 1.30% 0.56% 0.69% 0.44% 0.38%

Notes:

G stands for Growth Option, D stands for Dividend Option,

QD stands for Quarterly Dividend Option, AD stands forAnnual Dividend Option, B stands for Bonus Option, WDstands for Weekly Dividend Option, DD stands for DailyDividend Option and MD stands for Monthly Dividend Option.

* Applicable to the Dividend Option in case of Schemes, whichhave Growth and Dividend Options.

* * Annualised Return (Compounded Annualised Growth Rate) iscalculated from the date of allotment of the Units till the endof the period mentioned against it. For the last period in respectof the Scheme/ Plan concerned, the annualised return iscomputed from the date of allotment t ill March 31, 2004 andJune 07, 2004 respectively.

In case of returns available for periods less than one year forthe first accounting year, such returns have been expressed inabsolute terms only.

* * * Absolute Return is calculated from the date of allotment of theUnits till the end of the period mentioned against it for theScheme where such period is less than one year. In case ofScheme / Plan launched after June 07, 2003, the absolutereturn is also calculated from the date of allotment till March31, 2004 and June 07, 2004 respectively.

~ Benchmarks (as developed by AMFI): Kotak Gilt Savings, KotakGilt Serial Plan 2005: I SEC SI-BEX, Kotak Gilt Investment-Regular and Provident Fund and Trust Plans: I SEC COMPOSITEINDEX, Kotak Gilt - Serial Plan 2007: I SEC MI-BEX, Kotak Gilt

- Serial Plans 2011, 2013, 2019: I SEC LI-BEX, Kotak Bond -Wholesale, Deposit, Institutional Plans, Kotak Dynamic Income:CRISIL COMPOSITE BOND FUND INDEX, Kotak Bond Short

Term, Kotak Liquid, Kotak Liquid Institutional Plan, Kotak LiquidInstitutional Premium Plan, Kotak Mahindra Fixed Maturity

Plans, Kotak FMP (8), Kotak Floater - CRISIL LIQUID FUNDINDEX, Kotak Balance - CRISIL BALANCED FUND INDEX, KotakIncome Plus - CRISIL MIP Blended Index. Benchmark returns (asdeveloped by AMFI) for schemes except Kotak Bond ShortTerm, Kotak Gilt Investment- Provident Fund and Trust Plan,Kotak Liquid Instit utional Plan, Kotak Liquid Institut ional PremiumPlan, Kotak Bond Institutional Plan, Kotak Mahindra FixedMaturity Plans, Kotak FMP (8), Kotak Floater, Kotak DynamicIncome and Kotak Income Plus are not shown due to non-availability of the data.

Benchmarks (as per Offer Document) used are: Kotak 30 KotakMNC, Kotak Global India - BSE SENSITIVE INDEX and S & P CNXNIFTY; Kotak Tech - BSE IT INDEX.

# These figures are less than 0.01.~~ No units outstanding as at the beginning/end of the year/

period.

NAV at which Units were first allotted under the respectiveoptions.

Reserves of Kotak Bond Wholesale Plan - Bonus option adjustedfor bonus of 1 Unit issued for every 2 unit s held as on the recorddate January 09, 2003.

Growth Option introduced under Kotak 30, effective February03, 2003.

Kotak FMP (1), Kotak FMP (2), Kotak Gilt Serial Plan 2003,

Kotak FMP (6) and Kotak FMP (7) matured on June 11, 2003,July 01, 2003, December 31, 2003, April 16, 2004 and April05, 2004 respectively.

8/9/2019 Equity Fof

19/51

18

5. Borrowing by the Mutual Fund

No borrowing was made by any of the Schemes of KMMF tillthe year ended March 31, 2004.

6. Key Personnel of AMC

Mr. Ajay Bagga

Mr. Ajay Bagga, 36, holds a Post Graduate Diploma in BusinessManagement (PGDBM) from XLRI, Jamshedpur and has over

13 years of work experience. Immediately following hisPGDBM, in 1990, Mr. Bagga joined Citibank N.A. He workedwith Citibank for over ten years, and spearheaded severalnew init iatives, of which Citibank Suvidha is but one. Followinghis stint at Citibank, Mr. Bagga held the position of NationalHead, Sales, Distribution and Business Development at theerstwhile Pioneer ITI Asset Management Company Ltd., wherehis tenure was marked by rapid expansion of branches andcustomer base, the building of a debt fund presence and theintroduction of several innovative products. Prior to joiningKotak Mahindra Asset Management Company on 27thFebruary 2004, Mr. Bagga headed Marketing for the creditcard Joint Venture between GE Capital and SBI Cards, a role

he held for a year and a half.Mr. Bagga is Chief Executive Officer of the AMC.

Mr. Prakash Dalal

Mr. Prakash B. Dalal, 41, holds a B. E. (Mech.) degree fromGujarat University and M. S. (Mech.) degree from RensselaerPolytechnic Institute, New York, USA. Mr. Dalal has over 18years of work experience. He started his career with BridgeportMachine Tools in the USA, where he was responsible fordeveloping their Computer Aided Manufacturing softwarefor CNC lathes and in providing technical support to customers.On his return to India in 1989, Mr. Dalal worked with hisfamily's stock broking firm, operating on the Bombay Stock

Exchange, for 4 years. Having joined the Kotak MahindraGroup in 1993, Mr. Dalal established and headed its Branchoff ice at Ahmedabad. During this time, he built and supervisedthe Investment Banking, Corporate Finance and Retail Financebusinesses at Ahmedabad, and was instrumental inestablishing business relations for Kotak Mahindra with publicand private sector business groups in Gujarat as well as withthe Government of Gujarat.

Mr. Dalal is Senior Vice President in the AMC and is in chargeof the marketing function of the Fund.

Mr. Krishna Kumar T.

Mr. Krishna Kumar, 44, is a Senior Vice President in the AMC

and is the head of sales. He is a postgraduate in managementfrom Karnatak University and has over 23 years of workexperience. He joined Kotak Mahindra Finance Ltd. atBangalore in the year 1991 and set up the Bangalore Branchbefore moving to Mumbai to head the Treasury function in1994. He has gained valuable experience, having spent anumber of years in other Kotak Group companies workingon corporate debt origination and institutional sales. He startedhis career at Wipro Limited in their corporate off ice, workingin the Corporate Planning and Finance department and workedwith the company for over 10 years in various other capacities

Mr. Srikar Baljekar

Mr. Srikar Baljekar, 43, is a Chartered Accountant and CompanySecretary with over 18 years of experience in the fields ofAccounts, Audit, Taxation and Systems. Prior to joining the

Kotak Mahindra Group, Mr. Baljekar worked for seven yearswith Voltas Ltd., where his experience ranged from Productionand Sales Accounting to Systems Management at theirrefrigeration plant. Mr. Baljekar joined Kotak Mahindra BankLtd. in 1992. During his tenure with Kotak Bank, he helpedset up the Internal Audit Department and later took over asthe head of the Information Technology Department. He wasresponsible for driving the InfoTech strategy of the Kotak

Mahindra Group. Mr. Baljekar is a Senior Vice President, andChief Operations Officer of the AMC and oversees theoperations, accounting and IT functions of the Fund.

Mr. Sandesh Kirkire

Mr. Sandesh Kirkire, 39, is a Mechanical Engineer and holdsa Masters degree in Management Studies from Jamnalal BajajInstitute of Management Studies, Mumbai University. Mr.Kirkire has over 13 years of experience in the areas of CorporateFinance and Proprietary Trading, among others. His priorassignments were with SBI Capital Markets Ltd and ITCBhadrachalam Finance & Investments Ltd. After joining theKotak Mahindra group in 1994, Mr. Kirkire has worked in

several capacities across the group, in the fields of InvestmentBanking, Treasury and Sales and Trading in debt markets. Mr.Kirkire is Senior Vice President in the AMC and oversees theinvestment management function of the Fund in Fixed IncomeSecurities.

Mr. Rushabh Sheth

Mr. Rushabh Sheth, 31, is a qualified Cost Accountant andan alumnus of Sydenham College in Mumbai. Mr. Sheth hasover 10 years of experience in the equity markets. He beganhis career as an Investment Analyst with ASK Investment andFinancial Consultants, subsequently, joining the FundManagement team at ASK Raymond James Securities IndiaLtd. He then moved on to become a Portfolio Manager for

ASK Raymond James Securities, managing funds for foreigninstitutional investors. Mr. Sheth also played a key role insetting up the Portfolio Management Business at ASK RaymondJames, and was instrumental in building offshore business.He joined the Kotak Mahindra Group in 2003, as Vice Presidentin the Portfolio Management Group of Kotak Securities. Mr.Sheth is Senior Vice President in the AMC and oversees theinvestment management function of the fund in equities.

Mr. Miten Chawda

Mr. Miten Chawda, 28, holds a Bachelors degree in Law, andis a member of the Institute of Company Secretaries of India.

Mr. Chawda has over 8 years of work experience. Havingbegun his career with Thomas Cook (India) Limited, he movedto Mehta and Mehta, a firm of practicing Company Secretaries.Prior to joining Kotak Mahindra AMC in 2004, Mr. Chawdaheld the post of Company Secretary and Compliance Officerat Principal AMC Ltd for 2 years, and has 8 years experiencein company secretarial and compliance areas.

Mr. Chawda is Compliance Officer of Kotak Mahindra AMCLtd.

Mr. Kenneth Andrade

Mr. Kenneth Andrade, 33, is a graduate in commerce fromthe Mumbai University. Mr. Andrade has over 12 years of

wide-ranging experience in the Indian capital markets. Havingbegun his career in 1991 as a trainee with Capital Market,an investment journal, Mr. Andrade has since worked in

8/9/2019 Equity Fof

20/51

8/9/2019 Equity Fof

21/51

20

F. THE CUSTODIANS

The Trustee has appointed Deutsche Bank A G, Mumbai andABN AMRO Bank N.V., Mumbai, as the Custodians ('theCustodians') for the Scheme. The Custodians are approvedby SEBI under Registration Nos. IN/CUS/003 and IN/CUS/013,respectively.

The Custodians keep in safe custody all the securities and

other such instruments belonging to the Fund, ensures smoothinflow/outflow of securities and such other instruments asand when necessary in the best interest of the investors; andensures that the benefits due to the holdings are recovered.

The Custodians charge the Mutual Fund fees in accordancewith the terms of the custodian agreement:

l for all purchase transactions, including direct purchasesand rights/new issue applications.

l for all sale transactions, including direct sale and rightsrenunciation/sale.

l for Corporate Actions, MIS, Monitoring, Annual Reports,

etc.l for Custody of all assets held by them.

In addit ion, out-of-pocket expenses incurred by the Custodiansmay also be charged to the Mutual Fund.

The Trustee has the right to appoint additional Custodians orchange the Custodian, if it deems fit.

To perform custodial services for securities of the Fund, theCustodians are bound to exercise the same degree of care asit exercises in respect of its own property. It is obligatory forthe Custodians to ensure that all the services rendered toKMMF are professional, prompt, cost effective and efficientin nature. A Custodian agreement, which, inter-alia, sets outthe responsibilities and functions of a Custodian, has beenentered into with the Custodians.

G. BANKERS

The Bankers to the Initial Offer will be as under:

Name of Kotak Mahindra HDFC Bankthe Bank Bank Limited Limited

SEBIRegistration No. INBI00000927 INBI00000063

Applications for the Initial offer will be accepted at thedesignated collection centres of these Banks, as mentioned

elsewhere in this Offer Document.

The AMC has the right to appoint additional Bankers to theInitial/Continuous Offer and change the Banker or any of theBankers appointed subsequently, if it deems fit.

8/9/2019 Equity Fof

22/51

21

A. KOTAK EQUITY FOF

1. Type of Scheme

An Open-Ended Equity Fund of Funds Scheme

2. Investment Options

The Scheme will be available in two options:

a) Growth Option

Under this option, there will be no distribut ion of income andthe return to investors will be only by way of capital gains,if any, through redemption at Applicable NAV of Units heldby them.

b) Dividend Option

Under this Option, the Trustee may decide to distribute byway of dividend, the surplus by way of realised profit, dividendsand interest, net of losses, expenses and taxes, if any, to

Unitholders in the Dividend Option of the Scheme if suchsurplus is available and adequate for distribution in the opinionof the Trustee. The Trustee's decision with regard to suchavailability and adequacy of surplus, rate, timing and f requencyof distribution shall be final. The Dividend will be due to onlythose Unitholders whose names appear in the register ofUnitholders in the Dividend Option of the Scheme on therecord date, which will be announced in advance. TheUnitholder in the Dividend Option will have the choice ofreceiving the dividend or having it reinvested. Dividendamounts will be reinvested in the Dividend Option at theApplicable NAV announced for the first Working Dayimmediately following the record date.

The NAVs of the above Options will be dif ferent and separatelydeclared; the portfolio of investments remaining the same.Please refer to sections on calculation of NAV for details.

3. Investment Objective

The Investment Objective of the Scheme is to generate long-term capital appreciation from a portfolio created by investingpredominantly in open-ended diversified equity schemes ofMutual Funds registered with SEBI.

Benchmark: The Scheme proposes to invest in underlyingequity schemes, which are diversified across sectors. A largeportion of these investments will happen in diversified equity

schemes, which are largely invested in large cap stocks.Since S&P CNX Nifty captures the combination of large capstocks and diversification, the performance of the Schemewill be benchmarked against S&P CNX Nifty.

Portfolio Turnover:

The Scheme has no specific target relating to portfolio turnover.However, the Fund Manager may need to turnover the portfolioon account of rebalancing the port folio, to remain consistentwith the investment objective and investment strategy of theScheme.

Portfolio turnover will exclude:

l the turnover caused on account of investing the initialcorpus; and

l the turnover caused on account of fresh purchases andredemptions by Unitholders.

Turnover means simple average of the aggregate of purchases

and sales net of the above exclusions. These purchases andsales may invite transaction costs like custodian transactioncharges.

There is no assurance that the investment objectives ofthe Scheme will be realised.

4. Investment Strategy

The Scheme will invest predominantly in open-ended diversifiedequity schemes of Mutual Funds, which are registered withSEBI.

The Fund Manager will always invest 20% to 25% of the netassets in one or more diversified equity schemes of KMMF.However in exceptional circumstances the investments inKMMF diversified equity schemes may go below 20% of thenet assets of the Scheme. The balance shall be invested indiversified equity schemes from the recommended list providedby the Designated Agency. The Fund Manager may inexceptional circumstances not invest as per the recommendedlist. Further, the Fund Manager reserves the right to invest onbasis of in-house research in such circumstances where therecommended list is not received from the Designated Agency.

The AMC shall appoint a Designated Agency to provideperiodically the recommended list of diversified equity schemes.The Designated Agency may be a bank, which distributesfinancial products, a research house or a distribution house.

The Designated Agency may charge fees in accordance withthe terms of the agreement entered into with it, which shallbe borne by the AMC. The portfolio will be reviewed andrebalanced on the receipt of the recommended list from theDesignated Agency.

Currently, the AMC has appointed Kotak Securities Limited(Kotak Securities) as a Designated Agency to provide therecommended list. Kotak Securities established in 1994, isone of the largest stock broking houses in the country anda leading distributor of primary market offerings. It is a jointventure between Kotak Mahindra Bank and Goldman Sachs,the international investment banking and brokerage firm. Itis a subsidiary of Kotak Bank.

Kotak Securities has the business in the areas of InstitutionalStock Broking, Private Client Services, Client MoneyManagement, Retail distribution, Depository Services. PrivateClient Services is a special investment division for high net-worth individuals, non-resident Indian investors, trusts,corporates and banks. Client Money Management divisionprovides portfolio management services to high net-worthindividuals and corporates. The expertise of Kotak in researchand stock broking gives it the right perspective to provideinvestment advisory services. Kotak Securities is the largestPortfolio Management Service (PMS) provider in the country.Under the PMS, Kotak Securities is currently managing the

corpus of more than Rs.950 cr. Kotak Securities conductsextensive research for its wealth management products.

I V . I N V E S T M E N T O F T H E F U N D

8/9/2019 Equity Fof

23/51

22

The AMC has the right to designate an additional Agency forobtaining the recommended list. The AMC may also changethe Designated Agency, if it deems fit.

The research methodology to be adopted by the DesignatedAgency for providing the recommended list shall be reviewedby the Board of Directors of AMC and Trustees. Any changein the research methodology shall also be reviewed by theBoards of AMC and Trustees.

Kotak Securities will identify a universe of diversified equityschemes. This list will consist of schemes whose averageAUMs are higher than a pre defined limit. These schemes willbe analysed for making a recommended list.

Broadly, the following two parameters will be used todetermine the universe of diversified equity schemes andanalyse them.

1. Investment Style : This is the general approach a fundmanager uses when selecting securities for a scheme.This approach is stated in the investment objective andstrategy of the offer document and is reflected in the

nature of the portfolio. This parameter in conjunctionwith the market capitalisation of underlying stocks ineach scheme is used for defining the universe of diversifiedequity schemes.

This approach is used to determine whether a schemeis part of the diversified large cap category, diversifiedaggressive category or none of these.

If a scheme has most of its holdings in large cap stocks,is generally well diversified across sectors and does nothave large concentration in any one sector, it would beusually categorised as large cap diversified scheme. If ascheme has predominantly mid cap stocks or has largecap stocks but with concentration in sectors may be

categorised as a diversified aggressive scheme.The portfolio over the latest six months is used to decidethe category.

2. Performance Analysis : This parameter is used foranalysing the schemes within the large cap diversifiedand large cap aggressive categories.

Performance Analysis of a scheme can be done in manyways. One way is comparing returns of schemes acrossdifferent time frames. Another method would be toanalyse the degree of risks taken by different schemesto produce returns. This is essentially a return risk analysis.

We have adopted the Risk Return Analysis method.

Returns of a scheme are computed for a fixed timeperiod. Say, weekly returns are computed over a one-year period. All of these returns are then comparedagainst a benchmark. In our case, the benchmark isusually the market expectation of returns from equityinvestments arrived at by polling clients. Out performanceor under performance of these returns over a benchmarkand the frequency of this out / under performance iscalculated. This exercise is carried out for all the schemesin contention.

Risk is computed based on the degree of

underperformance of a scheme to a benchmark andfrequency of all its under performance compared to thebenchmark.

This return to risk ratio gives the excess returns potentialof a particular scheme vis a vis a benchmark and can beused as a measure of performance consistency. Thisanalysis is carried out for all schemes in contention.

The Scheme may also invest in underlying schemes,which invest predominantly in the money market orfloating rate securities for meeting the liquidityrequirements.

Pending deployment of the Funds of the Scheme inaccordance with the Investment Objective, the Schememay invest in short term deposits of ScheduledCommercial Banks, subject to the regulations.

5. The Risk Profile and Investment Pattern

The asset allocation under the Scheme, under normalcircumstances, will be as follows:

Investments Indicative RiskAllocation Profile

Open-Ended Diversified 90% to Medium

Equity Schemes 100% to HighInter bank Call and/or 0% to 10% Lowreverse repo and/orshort-term fixed depositsand/or Schemes whichinvest predominantly inthe money market orfloating rate securities*

* The Fund Manager will normally invest in Kotak MahindraLiquid Scheme and Kotak Mahindra Floating Rate Scheme.However, the Fund Manager may invest in any other schemeof a mutual fund registered with SEBI, which invest

predominantly in the money market or f loating rate securities.The asset allocation shown above is in