KOTAK TERM FUND

MEDIUM

An Open Ended Debt Scheme

Kotak Medium Term Fund is suitable for investors who are seeking*:

• Income over a medium term investment horizon

• Investment in debt, government securities & money market instruments with a portfolio weighted average maturity between 3-7 years

• Low risk (Blue)

* Investors should consult their financial advisors if in doubt about whether the product is suitable for them.

Note: Risk may be represented as:

Investors understand that their principal will be atLow Risk (Blue)

Medium Risk (Yellow)

High Risk (Brown)

Accrual Approach –

Accumulating the yields in the portfolio

Potential for Mark toMarket gains -

if yields ease in the future

Kotak Medium Term Fund

Investment options for a conservative investor with a 2 year horizon:

Options Risk Returns Investment Approach Volatility

Fixed Deposit Credit Risk Fixed at the time of investment Fixed Interest Rate Nilof the Bank*

Fixed Maturity Low Yield levels prevalent for 2-3 Accrual Approach / LowPlans year papers minus the expense accumulate the portfolio yield

Income Funds Relatively Depends on duration of the Active Approach / increase or HighHigh portfolio & interest rate decrease duration depending on

movement in the economy the interest rate outlook

*FDs are insured by RBI to the tune of Rs. 1 Lakh

The Dilemma

• Fixed Maturity Plans – One may be able to lock in today’s yield levels but there would be no mark to marketgains if interest rates come down

• Income Funds – Good for capital gains in case yields ease, but its more volatile and risky

The Question?

Can one have an option that has only moderate volatility, has an accrual approach and can benefit from mark to market gains if interest rates ease in future?

Kotak Medium Term Fund – The answer

• A scheme that focuses on accrual approach. It invests indebt & money market instruments at the current yieldlevels to accumulate the yields in the portfolio

• In addition to accrual, the portfolio would have thepotential to benefit from mark to market gains ifinterest rates ease in the future

Kotak Medium Term Fund is an open ended debt scheme which aims to generate regular income and capital appreciation by investing in a portfolio of medium term debt and money market instruments.

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Return Potential

Income & Gift Scheme

Kotak Medium Term Fund

Short Term Debt Scheme

Ultra Short Term Scheme

Liquid Scheme

Where does it fit in?

The fund is suitable for conservative investors who seek regular income over a medium term horizon.

The ideal investment horizon for an investor to look at this scheme is 2 years & above.

Kotak Medium Term Fund

How will the scheme invest?

• The fund would invest in medium term debt & money market securities so as to generate regular income and capital appreciation.

• The fund will optimize returns by keeping its weighted average maturity anywhere between 3 years & 7 years.

• The fund seeks to generate income through investments in a range of debt & money market instruments with a view to maximize income while maintaining an optimum balance of yield, safety & liquidity.

Scenario Analysis

Even in the case of MTM losses due to yields moving up, a portfolio may still have positive returns in the medium to long term because it continues to accrue the portfolio yield

The above calculation is for illustrative purpose only and for getting a better perspective of the yield fluctuations on the performance of a fixed income portfolio. This should not be construed as any kind of assurance or confirmation about the expected scheme returns.

To understand the impact of change in yield levels on a hypothetical fixed income portfolio with:

Fixed Income portfolio with an YTM of 11.5% (YTM post expense of 10%)

Average Maturity of 5 years and modified duration of 3.5

Expense p.a. of 1.5%

Holding period of 2 years

Assumed Yield levels yield after loss after after return after after 2 years 2 years 2 years 2 years 2 years

Rs. Rs. Rs. Rs.

9.5% 100 21.0 7 128.0 13.1%

10.0% 100 21.0 5.25 126.3 12.4%

10.5% 100 21.0 3.5 124.5 11.6%

11.0% 100 21.0 1.75 122.8 10.8%

11.5% 100 21.0 0 121.0 10.0%

12.0% 100 21.0 -1.75 119.3 9.2%

12.5% 100 21.0 -3.5 117.5 8.4%

Investment Accumulation of MTM gain/ Amount Annualised portfolio

Load Structure

Benchmark

Plans available

Options available

FEATURE

Minimum ApplicationAmount

Asset Allocationunder normalcircumstances

Entry Load: NILExit load: • For exit on or before 18 months from date of allotment of units: 2%,

For exit after 18 months from the date of allotment of units: Nil

CRISIL Composite Bond Fund Index

Regular Plan and Direct Plan.The portfolio of both plans will be unsegregated

GrowthQuarterly Dividend (Payout and Reinvestment Option)Annual Dividend (Payout and Reinvestment Option)

Initial Purchase (Non-SIP) - Rs. 5,000/- and in multiples of Rs 1 for purchases and of Re 0.01 for switches.

Additional Purchase (Non-SIP) - Rs. 1000/- and in multiples of Rs 1 for purchases and of Re 0.01 for switches

SIP purchase - Rs. 1000/- (Subject to a minimum of 6 SIP installments of Rs. 1000/- each)

Investments Indicative Allocation Risk Profile

Debt Instruments 60% - 100% Low – Medium

Government Securities 0% - 40% Low – Medium

Money Market Instruments 0% - 40% Low

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Scheme Details:

DETAILS