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5A, 5th Floor, Bakhtawar, 229, Nariman Point, Mumbai 400 021Tel.: (022) 5638 4444 l Fax : (022) 5638 4455

E-mail : [email protected] l Website : www.kotakmutual.com

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Please retain this Offer Document for future reference.

THE DATE OF THIS OFFER DOCUMENT IS SEPTEMBER 28, 2005.

INVESTORS SHOULD NOTE THATl 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 andin accordance with the guidelines for ELSS – 1992 Scheme, as amended till date and the Offer Document has been filed with SEBI. The Units offeredfor public subscription have neither been approved nor disapproved by SEBI, nor has SEBI certified the accuracy or adequacy of this Offer Document.

OFFER DOCUMENT

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

NEW FUND OFFERUnits at Rs. 10 each for Cash plus applicable Entry Load

Opens On : September 29, 2005Closes On : October 25, 2005

Continuous Offer Opens on or before : November 24, 2005

THE AUDITORS TO THE SCHEMEPrice Waterhouse252, Veer Savarkar Marg, Shivaji Park,Dadar, Mumbai - 400 028.

THE REGISTRARComputer Age ManagementServices Private LimitedA&B Lakshmi Bhawan,609, Anna Salai, Chennai 600 006

CUSTODIANSDeutsche Bank AG Standard Chartered BankKodak House, 222, Dr. D. N. Road, 23/25 M. G. Road,Fort, Mumbai 400 001 Mumbai 400 001

THE SPONSORKotak Mahindra Bank Ltd.36-38A, Nariman Bhavan,227, Nariman Point, Mumbai 400 021

THE TRUSTEEKotak Mahindra Trustee Co. Ltd.5A, 5th Floor, Bakhtawar,229, Nariman Point, Mumbai 400 021

THE ASSET MANAGEMENT COMPANYKotak Mahindra Asset Management Co. Ltd.5A, 5th Floor, Bakhtawar,229, Nariman Point, Mumbai 400 021

KOTAK ELSS SCHEMEAn Open-Ended Equity Linked Savings Scheme

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KOTAK ELSS SCHEME OFFER DOCUMENT

Page No. Page No.

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

I. Highlights, Risk Factors and Due Diligence 2II. Definitions and Abbreviations 8III. Constitution of the Fund 10

A. The Fund 10B. Sponsor Company 10C. Trustee Company (The Trustee) 10

1. Directors 112. Rights, Obligations, Responsibilities

and Duties of the Trustee 113. Trustee’s Fee 13

D. Asset Management Company 131. Name and Address 132. Directors on the Board of the AMC 133. Powers, Functions and Responsibilities

of the AMC 154. Schemes launched by the Mutual Fund 165. Borrowing by the Mutual Fund 236. Key Personnel of AMC 23

E. The Registrar 24F. The Custodians 24G. Bankers 25

IV. Investment of Fund 26A. Kotak ELSS Scheme 26

1. Type of Scheme 262. Investment Options 263. Investment Objective 264. Investment Strategy 265. Risk Profile and Investment Pattern 27

B. Policies and Regulations Applicableto the Scheme 281. Fundamental Attributes and

Changes Therein 282. Investment of Subscription Money 283. Borrowing Power 284. Depository 285. Policy on Inter Scheme Transfers 286. Underwriting 287. Mode of Investment 288. Investment in Derivatives 289. Investments by the AMC in the Fund 3110. Investment Limitation and Restrictions 3111. Computation of Net Asset Value 3412. Accounting Policies 3713. Recording of Investment Decisions 39

V. Units 40A. Units On Offer 40

1. Minimum Subscription Amount 402. New Fund Offer 403. New Fund Offer Price 404. Extension of New Fund Offer 405. Continuous Offer 406. Listing 407. Expenses of Initial Issue 408. Minimum Purchase and

Redemption Amounts 409. Applicable NAV 4110. Facilities Offered to Investors

under the Scheme 41

B. Purchase of Units 441. Who can invest? 442. Purchase Price 453. Mode of Payment 454. Where to submit application forms? 455. Choice of Option 466. Joint Applicants 467. Allotment 468. Account Statement / Unit Certificate 469. Refund 46

C. Redemption of Units 461. Redemption Price 472. How to Redeem? 473. Payment of Proceeds 474. Redemption by NRIs/FIIs 475. Effect of Redemptions 486. Right to Limit Redemption 487. Suspension of Redemption of Units 488. Unclaimed Redemption and

Dividend Amount 48VI. Loads and Recurring Expenses 49

A. Load Structure of The Scheme 49B. Fees and Expenses of the Scheme 49

1. Expenses of Initial Issue 492. Expenses of Past Initial Issue 503. Initial issue Expenses incurred

by the Schemes 514. Recurring Expenses of the Scheme 51

VII. Unitholders’ Rights and Services 53A. Unitholders’ Rights 53B. Voting Rights of the Unitholders 53C. Account Statements 53D. NAV Information 53E. Disclosure of Information

Under The Regulations 54F. Duration of the Scheme 57G. Procedure and Manner of Winding Up 57H. Services to Unitholders 57

1. Investor Services 572. Facilitating Enquiries and Transactions 573. Finding Solutions to Problems 574. Unitholder Grievances Redressal

Mechanism 575. History of Investor Complaints 58

I. Tax Benefits of Investingin the Mutual Fund 58

VIII. Other Matters 59A. Power to Make Rules 59B. Power to Remove Difficulties 59C. Transactions with Associate Companies 59D. Stock Lending by the Fund 62E. Policy On Offshore Investments

by the Scheme 62F. Investment in Securitised Debt 63G. Penalties and Pending Litigation 64H. Omnibus Clause 65I. Documents available for Inspection 65

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Features KOTAK ELSS SCHEME

Structure An open-ended Equity Linked Savings Scheme

Investment in The scheme will predominantly invest in equity and equity related instrumentsacross the market capitalisations. The scheme may also invest in PSU Bonds/ Debentures and Money Market Instruments, as per the Investment Pattern.

Suitable for Investors who seek capital appreciation and are interested in availing the taxbenefit under section 80C of the Income Tax Act, 1961.

Investment Objective To generate long-term capital appreciation from a diversified portfolio ofequity and equity related securities and enable investors to avail the incometax rebate, as permitted from time to time.

Liquidity Purchases and redemptions at prices related to Applicable NAV. Redemptionwill be allowed subject to the lock in period of 3 years, irrespective of theinvestment amount and irrespective of the type of the investor. The redemptioncheque will be despatched to the Unitholders within the statutory time limitof 10 business days prescribed by SEBI. However, on a best effort basis theFund will endeavour to despatch the redemption cheque within 3 workingdays after a valid redemption request is received at the Registrar’s office.

Lock-in Period The scheme is open for continuous redemption subject to the completion ofa lock-in period of 3 years, irrespective of the investment amount and irrespectiveof the type of the investor, from the date of allotment as prescribed in theexisting ELSS guidelines. In case this lock-in period is changed by any subsequentnotification issued by the Government and notified in the Official Gazette, thesame will apply.

The units under the present Scheme are offered to the Investors for enablingthem to avail the benefits under clause (xiii) of Sub-section (2) of Section 80Cof the Income-tax Act, 1961 (the “Act”), subject to this Scheme being eligibleunder any plan formulated by the Central Government by notification in theOfficial Gazette under this section. Investment made upto One Lakh rupeesby the eligible investor being an Individual or a Hindu Undivided Family in thescheme will qualify for income tax deduction on fulfillment of the conditionsof Section 80C of the Act. However, these benefits are subject to Income TaxAct and any other law for the time being in force.

However, in the event of the death of the sole unitholder, the nominee or legalheir, as the case may be, shall be able to withdraw the investment anytimeafter the completion of 1 year from the date of allotment of units.

The above does not constitute an advice or a representation. Investors arerequested to seek professional advice in this regard.

Investment by the scheme, tax advantage to the investors, lock-in period ofthe investments and other features under the scheme would be changed tocomply with the modifications in the applicable law(s), governing ELSS scheme,modifications thereof, issued from time to time.

Benchmark S&P CNX 500

Options Growth, Dividend

Dividends At the discretion of the Trustee. Dividends will be declared subject to availabilityand adequacy of surplus in the Scheme.

SIP / SWP / STP Available. SWP / STP available after expiry of lock-in period of 3 years.

During the New Fund Offer of Kotak ELSS Scheme, only SIPs through theDirect Debit facility would be accepted (i.e. SIP requests with post-datedCheques would not be accepted during the New Fund Offer).

SIP / SWP / STP Frequency & Dates Monthly and Quarterly. 1st, 7th, 14th and 21st of every month for MonthlyOption. 1st, 7th, 14th and 21st of last month in a series of 3 consecutivemonths in Quarterly Option

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

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SWP / STP Frequency Monthly and Quarterly.

SWP / STP Options Fixed Sum only

Minimum Investment Size

Initial Purchase (Non-SIP) Rs. 500 and in multiples of Rs. 500

Additional Purchase (Non-SIP) Rs. 500 and in multiples of Rs. 500

SIP Purchase Rs. 500 and in multiples of Rs. 500

STP Purchase Rs. 500 and in multiples of Rs. 500

Minimum Redemption Size Rs. 1000 or all units if the amount is less than Rs. 1000

In Rupees (SWP / STP) Rs. 1000

Cheques / Drafts to favour “KOTAK ELSS”

Load Structure

During New Fund Offer andContinuous Offer Entry:

a) For [1] Switch-in is made from another Equity/Balanced/Fund of FundsScheme of the Fund [2] purchase/switch-in amount greater than or equalto Rs. 3 Crores (Switch-ins being from non-Equity Schemes) [3] whereUnits are allotted on reinvestment of Dividends [4] purchase by a Fund-of-Funds Scheme as defined under the Regulations [5] purchase by aForeign Institutional Investor (FII) or sub account of FII : Nil

b) For purchase/switch-in amount less than Rs. 3 crores and case notcovered in (a) above: 2.25% of the Applicable NAV

Exit: NIL

Initial Issue Expenses Not exceeding 6.00% (i.e. upto 2.25% for Broker/Agents Commission [metout of entry load] and upto 3.75% for Marketing and Advertising, Printingand Mailing, Additional Brokerage/Commission, Registrar Expenses, Bankcharges and Other Expenses)

Tax benefits as per the provisions of Income Tax Act,1961 and Wealth Tax Act, 1957, prevailing as on August23, 2005:l Investment made by the eligible investor being an

Individual or a Hindu Undivided Family in the scheme willqualify for income tax deduction up to Rs. One Lakh onfulfillment of the conditions of Section 80C of the Act,subject to this Scheme being eligible under any planformulated by the Central Government by notificationin the Official Gazette under this section.

l Long Term Capital gains benefits, subject to provisionsof the Act.

l Investments in the Scheme are exempt from Wealth Tax.

RISK FACTORSl Mutual Funds and securities investments are subject to

market risks and there is no assurance or guarantee thatthe objectives of the Scheme will be achieved.

l As with any securities investment, the NAV of the Unitsissued under the Scheme can go up or down dependingon the factors and forces affecting the capital and moneymarkets.

l Past performance of the Sponsor/AMC/Fund or that ofany scheme of the Fund does not indicate the futureperformance of the Schemes of the Fund.

l Kotak ELSS Scheme is only the name of the Scheme anddoes not in any manner indicate the quality of theScheme, future prospects or returns.

l The NAV of the Units issued under the Scheme may beaffected, inter-alia, by trading volumes, settlementperiods, transfer procedures, changes in interest ratesand credit rating, performance of individual stocks; theNAV is also exposed to Price/Interest-Rate Risk and CreditRisk and may be affected inter-alia, by government policy,volatility and liquidity in the money markets and pressureon the exchange rate of the rupee.

l Tax laws may change, affecting the return on investmentin Units.

l In the event of receipt of a very large number ofredemption requests or very large value redemptionrequests or of restructuring of the Scheme’s portfolio,there may be delays in the redemption of Units. Pleaserefer to the paragraph, ‘Right to Limit Redemption’ inthis Offer Document.

l The Scheme and individual Plan(s), if any under theScheme shall have a minimum of 20 investors and nosingle investor shall account for more than 25% of thecorpus of the Scheme/Plan(s). However if such a situation

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arises during the NFO of the Scheme, in accordance withthe SEBI Regulations, the Fund will endeavour to ensurethat within a three months time period or the end of thesucceeding calendar quarter from the close of the NewFund Offer (NFO) of the Scheme, whichever is earlier, theScheme complies with these two conditions failing whichthe provisions of Regulation 39 (2) (c) of SEBI (MutualFunds) Regulations, 1996 would become applicableautomatically without any reference from SEBI andaccordingly the Scheme / Plan(s) shall be wound up andthe units would be redeemed at applicable NAV. The twoconditions mentioned above shall also be complied withineach subsequent calendar quarter thereafter, on anaverage basis, as specified by SEBI. SEBI has providedfurther clarifications with respect to determining thebreach of the 25% limit by an Investor – The average netassets of the scheme would be calculated daily and anybreach of the 25% holding limit by an investor wouldbe determined. At the end of the quarter, the averageof daily holding by each such investor will be computedto determine whether that investor has breached the 25% limit over the quarter. If there is a breach of limit byany investor over the quarter, a rebalancing period ofone month would be allowed and thereafter the investorwho is in breach of the rule shall be given 15 days noticeto redeem his exposure over the 25 % limit. Failure onthe part of the said investor to redeem his exposure overthe 25 % limit within the aforesaid 15 days would leadto automatic redemption by the Mutual Fund on theapplicable Net Asset Value on the 15th day of the noticeperiod. The Fund shall adhere to the requirementsprescribed by SEBI from time to time in this regard.

EXPLANATORY NOTE ON SPECIFIC RISKS IN DEBTMARKETS AND CAPITAL MARKETSInvestments in Financial Instruments are faced with thefollowing kinds of risks.

Risks associated with Debt / Money Markets (i.e. Marketsin which Interest bearing Securities or DiscountedInstruments are traded)Credit Risk:Securities carry a Credit risk of repayment of principal orinterest by the borrower. This risk depends on micro-economicfactors such as financial soundness and ability of the borroweras also macro-economic factors such as Industry performance,Competition from Imports, Competitiveness of Exports, Inputcosts, Trade barriers, Favourability of Foreign Currencyconversion rates, etc.

Credit risks of most issuers of Debt securities are rated byIndependent and professionally run rating agencies. Ratingsof Credit issued by these agencies typically range from “AAA”(read as “Triple A” denoting “Highest Safety”) to “D”(denoting “Default”), with about 6 distinct ratings betweenthe two extremes.

The highest credit rating (i.e. lowest credit risk) commands alow yield for the borrower. Conversely, the lowest credit ratedborrower can raise funds at a relatively higher cost. Onaccount of a higher credit risk for lower rated borrowerslenders prefer higher rated instruments further justifying thelower yields.

Sovereign risk: The Federal Government of a country (i.e.Central Govt. in case of India) is the issuer of the localcurrency in that country. The Government raises money tomeet its Capital and Revenue expenditure by issuing Debt orDiscounted Securities. Since payment of interest and principalamount has a sovereign status implying no default, suchsecurities are known as securities with sovereign credit. Fordomestic borrowers and lenders, the credit risk on suchSovereign credit is near zero and is popularly known as “risk-free security” or “Zero-Risk security”. Thus Zero-Risk is thelowest risk, even lower than a security with “AAA” rating andhence commands a yield, which is lower than a yield on“AAA” security.

Price-Risk or Interest-Rate Risk:From the perspective of coupon rates, Debt securities can beclassified in two categories, i.e., Fixed Income bearing Securitiesand Floating Rate Securities. In Fixed Income Bearing Securities,the Coupon rate is determined at the time of investment andpaid/received at the predetermined frequency. In the FloatingRate Securities, on the other hand, the coupon rate changes– ‘floats’ – with the underlying benchmark rate, e.g., MIBOR,1 yr. Treasury Bill.

Fixed Income Securities (such as Government Securities, bonds,debentures and money market instruments) where a fixedreturn is offered, run price-risk. Generally, when interest ratesrise, prices of fixed income securities fall and when interestrates drop, the prices increase. The extent of fall or rise in theprices is a function of the existing coupon, the payment-frequency of such coupon, days to maturity and the increaseor decrease in the level of interest rates. The prices ofGovernment Securities (existing and new) will be influencedonly by movement in interest rates in the financial system.Whereas, in the case of corporate or institutional fixed incomesecurities, such as bonds or debentures, prices are influencednot only by the change in interest rates but also by creditrating of the security and liquidity thereof.

The following table indicates the likely impact of interest ratechanges on prices of Government Securities. It will be seenthat if interest rate rises by 1%, the prices of GovernmentSecurities fall in the range of 0.49% and 7.01% of the prices.On the other hand, if the interest rate declines by 1%, theprices rise in the range of 0.49% to 7.68% for respectivematurities shown in the table.

Existing GovernmentSecurities

If Interest rate changes by

Security Coupon 1% point � 1% point �Maturity % p.a. then Price changes by

6 Month 4.50 0.49% � 0.49% �12 Month 4.75 0.96% � 0.97% �3 Year 5.00 2.69% � 2.77% �5 Year 5.25 4.18% � 4.40% �10 Year 5.50 7.01% � 7.68% �

The NAV of the Units of the Scheme can go up or down dueto the price fluctuations caused by various factors that affectthe money markets.

Floating rate securities issued by a government (coupon linkedto treasury bill benchmark or a real return inflation linkedbond) have the least sensitivity to interest rate movements,

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as compared to other securities. The Government of India hasalready issued a few such securities and the InvestmentManager believes that such securities may become availablein future as well. These securities can play an important rolein minimizing interest rate risk on a portfolio.

Risk of Rating Migration:The following table illustrates the impact of change of rating(credit worthiness) on the price of a hypothetical AA ratedsecurity with a maturity period of 3 years, a coupon of 7.00%and a market value of Rs. 100. If it is downgraded to Acategory, which commands a market yield of, say, 8.00%, itsmarket value would drop to Rs. 97.42 (i.e. by 2.58%). If thesecurity is up-graded to AAA category which commands amarket yield of, say, 6.00% its market value would increaseto Rs. 102.67 (i.e. by 2.67%). The figures shown in the tableare only indicative and are intended to demonstrate how theprice of a security can be affected by change in credit rating.

Rating Yield Market Value

AA 7.00% 100.00If upgraded to AAA 6.00% 102.67If downgraded to A 8.00% 97.42

Basis Risk:During the life of floating rate security or a swap the underlyingbenchmark index may become less active and may not capturethe actual movement in the interest rates or at times thebenchmark may cease to exist. These types of events mayresult in loss of value in the portfolio.

Spread Risk:In a floating rate security the coupon is expressed in termsof a spread or mark up over the benchmark rate. Howeverdepending upon the market conditions the spreads maymove adversely or favourably leading to fluctuation in NAV.

Reinvestment Risk:Investments in fixed income securities may carry reinvestmentrisk as interest rates prevailing on the interest or maturity duedates may differ from the original coupon of the bond.Consequently the proceeds may get invested at a lower rate.

Currency Risk:Should the Schemes be permitted to invest in offshoresecurities, such investments run currency risk in addition toother risks faced by the investments, investments made in USdollar or any other foreign currency denominated securitiesmay lose in value if the Indian rupee appreciates with respectto the foreign currency or gain in value if the Indian rupeedepreciates.

Liquidity Risk:The corporate debt market is relatively illiquid vis-a-vis thegovernment securities market. There could therefore bedifficulties in exiting from corporate bonds in times ofuncertainties. Liquidity in the scheme therefore may suffer.Even though the Government Securities market is more liquidcompared to that of other debt instruments, on occasions,there could be difficulties in transacting in the market due toextreme volatility or unusual constriction in market volumesor on occasions when an unusually large transaction has tobe put through. Liquidity of the Scheme may suffer if the

guidelines issued by RBI for dedicated Gilts Funds undergoadverse changes. In view of this, redemption may be limitedor suspended after approval from the Boards of Directors ofthe AMC and the Trustee, under certain circumstances asdescribed in this Offer Document.

Potential Loss associated with Derivative Tradingpertaining to Debt MarketsThe use of an Interest Rate Swap (‘IRS’) does not eliminatethe credit (default) risk on the original investment. While thefixed to floating rate IRS reduces interest rate risk caused byrise in interest rates, it also restricts the profit in case interestrates decline. In case of a floating to fixed rate swap, anysubsequent rise in interest rates will result in a loss like in anyfixed rate investment. Any IRS carries, the risk of default ofthe counterparty to the swap, which may lead to a loss. Suchloss is usually, a small proportion of the notional principalamount of the swap.

All the above factors may not only affect the prices of securitiesbut also the time taken by the Fund for redemption of Units,which could be significant in the event of receipt of a verylarge number of redemption requests or very large valueredemption requests. The liquidity of the assets may be affectedby other factors such as general market conditions, politicalevents, bank holidays and civil strife. In view of this, redemptionmay be limited or suspended after approval from the Boardsof Directors of the AMC and the Trustee, under certaincircumstances as mentioned elsewhere in this Offer Document.

Risks associated with Capital Markets or Equity Markets(i.e. Markets in which Equity Shares or Equity orientedinstruments are issued and traded)Price fluctuations and Volatility: Mutual Funds, likesecurities investments, are subject to market and other risksand there can be neither a guarantee against loss resultingfrom an investment in the Scheme nor any assurance that theobjectives of the Scheme will be achieved. The NAV of theUnits issued under the Scheme can go up or down becauseof various factors that affect the capital market in general,such as, but not limited to, changes in interest rates,government policy and volatility in the capital markets. Pressureon the exchange rate of the Rupee may also affect securityprices.

Concentration / Sector Risk: When a Mutual Fund Scheme,by mandate, restricts its investments only to a particularsector; there arises a risk called concentration risk. If thesector, for any reason, fails to perform, the portfolio value willplummet and the Investment Manager will not be able todiversify the investment in any other sector. Also, technologiesare prone to obsolescence, which may lead to erosion invalue.

Liquidity Risks: Liquidity in Equity investments may beaffected by trading volumes, settlement periods and transferprocedures. These factors may also affect the Scheme’s abilityto make intended purchases/sales, cause potential losses tothe Scheme and result in the Scheme missing certaininvestment opportunities. These factors can also affect thetime taken by the Fund for redemption of Units, which couldbe significant in the event of receipt of a very large numberof redemption requests or very large value redemptionrequests. In view of this, redemption may be limited orsuspended after approval from the Boards of Directors of the

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AMC and the Trustee, under certain circumstances asmentioned elsewhere in this Offer Document.

Potential Loss associated with Derivative Tradingpertaining to Equity Marketsl In case of investments in index futures, the risk would

be the same as in the case of investments in a portfolioof shares representing an index. The extent of loss is thesame as in the underlying stocks. In case futures are usedfor hedging a portfolio of stocks, which is different fromthe index stocks, the extent of loss could be more or lessdepending on the coefficient of variation of such portfoliowith respect to the index; such coefficient is known asBeta.

l The risk (loss) for an options buyer is limited to thepremium paid, while the risk (loss) of an options writeris unlimited, the latter’s gains being limited to thepremiums earned. However, in the case of the Fund, alloption positions will have underlying assets and thereforeall losses due to price-movement beyond the strike pricewill actually be an opportunity loss. The writer of a putoption bears a risk of loss if the value of the underlyingasset declines below the exercise price. The writer of acall option bears a risk of loss if the value of the underlyingasset increases above the exercise price.

Potential Loss associated with Offshore InvestmentsIn respect of investments in ADRs/GDRs, the risks associatedwith underlying stocks remain the same except for theadditional risk of the exchange rate of the Indian rupee vis-à-vis the currency in which ADRs/GDRs are denominated. Incase of other offshore investments the risk shall be exchangerate of the Indian rupee vis-à-vis the currency in which suchsecurities are issued and the country risk associated with aninvestment. Country risk would include events such asintroduction of extraordinary exchange control, economicdeterioration and bilateral conflict leading to immobilisationof the assets.

Potential Loss associated with Stock LendingIn the case of stock lending the additional risk is that therecan be temporary illiquidity of the securities that are lent outand the Fund may not be able to sell such lent-out securities,resulting in an opportunity loss. In case of a default bycounterparty, the loss to the Fund can be equivalent to thesecurities lent.

Risks pertaining to investments in Kotak ELSS SchemeLiquidity aspect of investments in the Scheme : The amountinvested in the Scheme shall be subject to a lock-in of 3 years,irrespective of whether the investment would be eligible fortax benefit or not.

The above does not constitute an advice or a representation.Investors are requested to seek professional advice in thisregard.

The portfolio of the scheme will comprise predominantly ofEquity and Equity Related instruments and there would beModerate to High risk on account of Price Fluctuations and

Volatility. Since this is not a sector scheme and plans to investgenerally in stocks across the market capitalisation, theConcentration and Sector Risks are low.

The Liquidity risks of the portfolio are also expected to be low,however, there being a 3-year lock in period, the investors willnot be allowed any redemption during this period. Someinvestments may also be made in Equity based derivativessuch as Options and Futures, in which case, the risks associatedwith such Derivatives would also be applicable. For a betterunderstanding of these risks, please refer to “Risks associatedwith Capital Markets or Equity Markets (i.e. Markets in whichEquity Shares or Equity oriented instruments are issued andtraded)”.

Since some portion of the portfolio may be invested in Debtand Money market securities, there would be moderate Creditrisk and moderate to Low Interest rate/Price risk. Since currently,the Scheme does not invest in Securities issued in ForeignCurrency, the Currency risk does not exist. However, at afuture date, if the Scheme does invest in such securities, theportfolio would face a risk of depreciation of the investmentvalue to the extent of the Foreign currency depreciatingagainst the Indian rupee. The portfolio would also face Basisrisks, Spread risks and Re-investment risks. For a betterunderstanding of these risks, please refer to “Risks associatedwith Debt / Money Markets (i.e. Markets in which Interestbearing Securities or Discounted Instruments are traded)”.

Different types of securities in which the scheme would investas given in the offer document carry different levels and typesof risk. Accordingly the scheme’s risk may increase or decreasedepending upon its investment pattern. E.g. corporate bondscarry higher amount of risk than government securities. Further,even among corporate bonds, bonds which are AAA ratedare comparatively less risky than bonds which are AA rated.

The scheme may from time to time invest in domesticsecuritised debt, for instance, in asset backed securities ormortgage backed securities. Typically, investments in securitiseddebt carry credit risk (where credit losses in the underlyingpool exceed credit enhancement provided) and thereinvestment risk (which is higher as compared to the normalcorporate or sovereign debt). The underlying assets insecuritised debt are receivables arising from automobile loans,personal loans, loans against consumer durables, loans backedby mortgage of residential / commercial properties, etc.

Asset Backed Securities (ABS)/ Mortgage Backed Securities(MBS) instruments reflect the proportionate undividedbeneficial interest in the pool of loans and do not representthe obligation of the issuer of ABS/MBS or the originator ofthe underlying receivables. Investments in securitised debt islargely guided by following factors :

a) Attractive yields i.e. where securitised papers offer betteryields as compared to the other debt papers and alsoconsidering the risk profile of the securitised papers.

b) Diversification of the portfolio

c) Better performance

The scheme may upto a maximum of 50% of the debtcomponent invest in domestic securitised debt. However, no

7


investments will be made in foreign securitised debt. Broadlyfollowing types of loans are securitised:

l Auto Loans (cars / commercial vehicles /two wheelers)

l Residential Mortgages or Housing Loans

l Consumer Durable Loans

l Personal Loans

Auto Loans

l The underlying assets (cars etc) are susceptible todepreciation in value whereas the loans are given at highloan to value ratios. Thus, after a few months, the valueof asset becomes lower than the loan outstanding. Theborrowers, therefore, may sometimes tend to default onloans and allow the vehicle to be repossessed.

l These loans are also subject to model risk. i.e. if a particularautomobile model does not become popular, loans givenfor financing that model have a much higher likelihoodof turning bad. In such cases, loss on sale of repossessionvehicles is higher than usual.

l Commercial vehicle loans are susceptible to the cyclicalityin the economy. In a downturn in economy, freight ratesdrop leading to higher defaults in commercial vehicleloans. Further, the second hand prices of these vehiclesalso decline in such economic environment.

Housing Loans

l Housing loans in India have shown very low default rateshistorically. However, in recent years, loans have beengiven at high loan to value ratios and to a much youngerborrower classes. The loans have not yet gone throughthe full economic cycle and have not yet seen a periodof declining property prices. Thus the performance ofthese housing loans is yet to be tested and it need notconform to the historical experience of low default rates.

Consumer Durable Loans

l The underlying security for such loans is easily transferablewithout the bank’s knowledge and hence repossessionis difficult.

l The underlying security for such loans is also susceptibleto quick depreciation in value. This gives the borrowersa high incentive to default.

Personal Loans

l These are unsecured loans. In case of a default, the bankhas no security to fall back on.

l The lender has no control over how the borrower hasused the borrowed money.

Further, all the above categories of loans have the followingcommon risks:

l All the above loans are retail, relatively small value loans.There is a possibility that the borrower takes differentloans using the same income proof and thus the incomeis not sufficient to meet the debt service obligations ofall these loans.

l In India, there is no ready database available regardingpast credit record of borrowers. Thus, loans may begiven to borrowers with poor credit record.

l In retail loans, the risks due to frauds are high.

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 and ELSS 1992 guidelines;

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 well-informed 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 Standard Chartered Bank, the Custodians, areregistered with SEBI and till date, such registration isvalid.

For Kotak Mahindra Asset Management Co. Ltd.Asset Management Company for

Kotak Mahindra Mutual Fund

Place : Mumbai Miten ChawdaDate : September 28, 2005 Compliance Officer

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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

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

Applicable NAV Unless stated otherwise in the Offer Document, ‘Applicable NAV’ is the NetAsset Value at the close of a Working Day, as of which the purchase orredemption is sought by an investor and determined by the Fund.

Asset Management Company or Kotak Mahindra Asset Management Company Limited, the AssetAMC or Investment Manager / KMAMCL 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 New Fund Offer,as mentioned elsewhere in this Offer Document or as appointed/changedfrom time to time.

Custodian(s) Deutsche Bank AG and Standard Chartered Bank, acting as Custodians tothe Scheme, or any other Custodian appointed by the Trustee.

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.

Equity Linked Savings Scheme (ELSS) ELSS means Equity Linked Savings Scheme as notified by Ministry of Finance(Department of Economic Affairs) vide notification S.O.928 (E) dated 28.12.92including any amendments thereof.

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 StateGovernment.

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 ELSS Scheme Open-Ended Equity Linked Savings 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 authorised 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 theNational Stock Exchange and published twice every day by Reuters, asspecifically applied 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 beprescribed by Regulations from time to time. The NAV will be computed upto three decimal places.

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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 ELSS Scheme.

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 laterdate.

Scheme Kotak ELSS Scheme

SEBI The Securities and Exchange Board of India.

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.

Undervalued Stocks The stock / shares of companies whose true long-term potential is not yetrecognised by the market.

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) of 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 onwhich 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 this Same meaning as in Trust Deed.Offer Document and not defined

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A. THE FUNDKotak Mahindra Mutual Fund (KMMF) has been establishedas a Trust under the Indian Trusts Act, 1882. The Trust Deedestablishing 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.

B. SPONSOR COMPANYKotak Mahindra Bank LimitedThe erstwhile Sponsor company, Kotak Mahindra FinanceLimited (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. As on June 30, 2005, the net worthof Kotak Bank is around Rs. 770 crores and combined withits subsidiaries, the Group net worth is around Rs. 1,900crores. There are over 41,000 shareholders of Kotak Bank.The Sponsor and its subsidiaries/associates offer wide rangingfinancial services such as loans, lease and hire purchase,consumer finance, home loans, commercial vehicles and carfinance, investment banking, stock broking, primary marketdistribution of equity and debt products and life insurance.The group has offices in over 82 Indian cities and also presentinternationally in Mauritius, London, Dubai and New York.Kotak Mahindra (UK) Limited, an ultimate subsidiary of KotakBank, is the first company owned from India to be registeredwith the Financial Services Authority in UK. Kotak MahindraCapital Company Limited and Kotak Securities Limited arejoint ventures between Kotak Bank and Goldman Sachs, the

latter being one of the largest global investment banks. KotakMahindra Old Mutual Life Insurance 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 Primus Limited,Kotak Mahindra International Limited, Kotak Mahindra Private-Equity Trustee Limited, Kotak Mahindra Investments Limited,Kotak Mahindra Inc., and Kotak Forex Brokerage Limited.

The Sponsor has been consistently profitable and dividendpaying company since inception. All group companies areprofessionally run companies, employing over 4400professional staff including CAs, MBAs and Engineers.

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

(Rs. in crores)

Description Quarterended Year Ended March 31

June 30,2005* 2005 2004 2003

Total Income 176.73 552.38 383.91 253.32

ProfitBefore Tax 30.73 118.39 120.79 70.01

ProfitAfter Tax 19.68 84.89 78.72 44.96

Free Reserves 647.23 627.55 546.13 482.24

Net Worth 770.55 750.87 605.67 541.45

Earnings perShare (Rs.) 1.60 7.08 6.63 7.59

Book Valueper Share (Rs.) 62.48 60.89 101.74 91.44

Dividend % NIL 12.50 24 21

Paid-up EquityCapital 123.32 123.32 59.53 59.21

*Un-audited

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.

C. TRUSTEE COMPANY (THE TRUSTEE)Kotak Mahindra Trustee Company Limited (The Trustee), acompany incorporated under the Companies Act, 1956, isthe Trustee of the Fund, by virtue of the Trust Deed madebetween the Sponsor and the Trustee.

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

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1. DirectorsNames and Addresses Other Directorships

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

Mr. Girish Sharedalal The Ruby Mills LimitedChartered Accountant FDC Limited111, Landmark, Stovec Industries LimitedM. L. Dahanukar Marg, Stellar Asset Management Private LimitedMumbai - 400 026 Maulik & Kaji Financial Services Private Limited

Ratan Trading Private LimitedTrumac Engineering Company Pvt. Ltd.

Mr. Tushar A. Mavani –AdvocateAryan Mahal, 6th Floor,“C” Road, Churchgate,Mumbai - 400 020

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

Mr. Chandrashekhar Sathe Kotak Mahindra Securities LimitedService Kotak Forex Brokerage LimitedC-10, Shri Dattaguru Coop. Housing Society, Maharashtra Foundation 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 20years 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 44years 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 14 years ofexperience in the legal field.

Mr. Anirudha Barwe is a postgraduate in Mathematics andalso a Certified Associate of Indian Institute of Bankers,Mumbai. Mr. Barwe has about 43 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. Barweretired as the Managing Director of SBI Capital MarketsLimited in October 1998. After retirement, Mr. Barwe workedwith IDFC as Chief Financial Officer for 3 years.

Mr. Chandrashekhar Sathe is a graduate with B. Tech.(Chemical Engineering) from IIT, Mumbai. He has over 27years’ experience in Banking and Finance. He has been a part

of 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 ofNova 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 is associated 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:

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.

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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 Custodianduly fulfill the functions respectively assigned to themunder the Mutual Fund Regulations.

5. The Trustee shall ensure before the launch of any Schemethat the Asset Management Company has:-

a) systems in place for its back office, dealing roomand 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 tobe 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 interestof 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 attributes of any scheme or the trust orfees and expenses payable or any other change whichwould modify the scheme and affects the interest ofUnitholders, is carried out unless, -

a) a written communication about the proposedchange is sent to each Unitholder and anadvertisement is given in one English daily newspaperhaving nationwide circulation as well as in anewspaper published in the language of the regionwhere the Head 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 Regulationsas 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 andshall hold the same in trust for the benefit of theUnitholders in accordance with the Mutual FundRegulations and the provisions of the Trust Deed.

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.

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Modifications, if any, in the rights and/or obligations andduties of the Trustee are on account of amendments to theRegulations and the Regulations supercede/override theprovisions of the Trust Deed, wherever the two are in conflict.

The Compliance Officer reports directly to a director of theTrustee to carry out the supervisory role on behalf of theTrustee. In addition, the Trustee may seek any informationfrom time to time from the AMC. A reputed firm of CharteredAccountants has been appointed to carry out internal auditof the Fund on a periodic basis to facilitate monitoring theactivities of the AMC. On a quarterly basis, an activity reportprepared by the AMC is discussed at the Board Meetings ofthe Trustee. During the year 2004-05, twelve meetings of theBoard of Directors of the Trustee were held. During the periodApril 2005 till date three meetings of the Board of Directorsof the Trustee were held. The Audit Committee, comprisingfour Directors of the Board of Directors of the Trustee, hasbeen constituted pursuant to the SEBI circular MFD/CIR/010/024/2000 dated 17.01.2000 chaired by an IndependentDirector. The Audit Committee has had three meetings duringthe year 2004-05. During the period April 2005 till date threemeetings of the Audit Committee were held.

3. Trustee’s FeeThe 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 to

the 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, acompany registered under the Companies Act, 1956, wasappointed to act as the Investment Manager of KotakMahindra 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 managementfee as prescribed by the Regulations for the services renderedby it to the Fund.

An approval by the Division of Funds, Investment ManagementDepartment under the SEBI (Portfolio Manager) Regulations,1993 and Mutual Funds Division of SEBI under the SEBI(‘Mutual Funds’) Regulations, 1996, has been granted to theCompany for undertaking Portfolio Management Service(PMS). There is no conflict of interest between the MutualFund and the PMS activity.

1. Name and AddressKotak Mahindra Asset ManagementCompany Limited5A, 5th Floor, Bakhtawar, 229, Nariman Point,Mumbai 400 021

2. Directors on the Board of the AMCNames and Addresses Other Directorships

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

Kotak Mahindra Old Mutual Life Insurance CompanyLimited – Chairman

Kotak Forex Brokerage LimitedThe Mahindra United World College of IndiaIndian Institute of Banking and Finance

Mr. R. C. Khanna Cooperheat India Private Limited304, Bakhtavar, Monsanto India LimitedOpp. Colaba Post Office, Tata Chemicals LimitedMumbai - 400 005. 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

Britannia Industries LimitedThe Bombay Dyeing & Mfg. Co. LimitedWadia BSN LimitedPlacid Plantations LimitedAssociated Biscuits International Limited, London– Alternate Director

ABI Holdings Limited, London – Alternate DirectorNowrosjee Wadia & Sons LimitedStandard Chartered Trustee Company LimitedGo Airlines (India) Private Limited

14


Mr. Chengalath Jayaram Kotak Mahindra Bank Limited’Satguru Simran’, Kotak Securities Limited7th Floor, 3rd Road, Kotak Mahindra Primus LimitedAlmeida Park, Bandra (West), Financial Planning StandardsMumbai - 400 050.

Mr. Bipin R. Shah Indus Venture Management Limited8 D, Ilpala, 220 Little Gibbs Road, Global Pharmatech Pvt. LimitedMalabar Hill, ITTI Pvt. LimitedMumbai 400 006. Marico Industries Limited

Dolphin Offshore Enterprises (India) LimitedHical Magnetics (P) Ltd.

Mr. Narayan S. A. Kotak Securities Limited1 Smruti, Pestom Sagar, Kotak Commodity Services LimitedPlot No. 27, Road No. 4, Kotak Mahindra Asset Reconstruction Company LimitedChembur, Mumbai 400 089.

Mr. Uday S. Kotak, a graduate in Commerce, holds a post-graduate degree in Business Administration from the JamnalalBajaj Institute of Management Studies, Bombay University.Mr. Kotak is the Vice Chairman of the Sponsor, Kotak MahindraBank Ltd., and the chairman of various other companies, andhas over 18 years of experience in the Financial Servicesindustry.

Mr. Romesh C. Khanna is a graduate in Commerce fromLondon University, a Fellow of the Institute of CharteredAccountants of England & Wales, a Fellow of the Institute ofChartered Accountants of India, an Associate of the CharteredInstitute of Management Accountants, London and anAssociate of the Institute of Cost and Works Accountants ofIndia. Till 31st March, 1998, Mr. Khanna was a partner in A.F. Ferguson & Co., a firm of Chartered Accountants. Mr.Khanna has over 54 years of experience in Audit, Taxation,Finance and other related areas.

Mr. Sukant S. Kelkar is a postgraduate in commerce. He hasabout 40 years of experience in finance, capital markets, andrelated areas. Mr. Kelkar has over 10 years experience in theBank of India, and has even been a foreign exchange dealerin London for 3 years during this tenure. Following this, Mr.Kelkar worked with Bombay Dyeing Manufacturing CompanyLimited for 31 years, finally retiring as Executive Director inJuly 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 - ’95, he wasresponsible for the businesses of financing 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 andfinancial 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.,where he currently holds the post of Vice Chairman. Mr. Shahis also a non Executive Director on the Board of severalcompanies, including CRISIL, the premier credit rating agencyin India.

Mr. Narayan S. A., 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, hebecame 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.

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3. Powers, Functions and Responsibilities of the AMCUnder 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 responsibilities 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 custodian, as the AMC may deem fit;

c) to determine the terms and conditions applicable toa 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 Scheme or under anyScheme, to carry forward, reinvest or otherwisedeal with any surplus and to transfer such sums asthe AMC 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 the Scheme for KMMF subject to prior approvalof the Trustee and to the extent required in the MutualFund Regulations.

4. The AMC shall be responsible for investing and managingthe funds mobilised under various Schemes in accordancewith the provisions of the Trust Deed, Mutual FundRegulations and Equity Linked Savings Scheme Guidelinesas notified by Ministry of Finance (Department ofEconomic Affairs) vide notification S.O.928 (E) dated28.12.92 including any amendments thereof.

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 againstany 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 indemnified 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 sufferedin 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 of thegenerality of the foregoing, in particular (but withoutlimitation) the AMC shall not be liable to the Mutual

16


Fund 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 ofcommission 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,a bona fide error of judgment not being regarded asdefault or negligence nor as an act of commission oromission.

4. Schemes launched by the Mutual FundIn 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 becameopen-ended on May 2, 2000. In October 2000, the Fund

launched 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. The name ofKotak Floater has been changed to Kotak Floater Short TermScheme with effect from August 23, 2004. In October 2003,Kotak Income Plus was launched and it became open-endedon December 03, 2003. Kotak Dynamic Income and KotakGlobal India were launched on December 15, 2003 andDecember 22, 2003 respectively and these became open-ended on December 29, 2003 and February 3, 2004,respectively. Kotak FMP (8) was launched on March 15, 2004.Kotak Equity FOF, Kotak Opportunities and Kotak FloaterLong Term Scheme were launched on July 1, 2004, July 27,2004 and August 2, 2004 respectively and these becameopen-ended on August 10,2004, September 10, 2004 andAugust 16, 2004, respectively. Kotak Midcap was launchedon December 30, 2004 and it became open ended on February25, 2005. In February 2005, Kotak FMP Series VIII, a close-ended fixed maturity scheme with 30 days maturity andKotak Dynamic Fund of Funds were launched. In March2005, FMP Series I, FMP Series II and FMP Series IV, closeended schemes with 366 days, 90 days and 34 days fixedmaturities respectively were launched. In June 2005, KotakContra Scheme was launched and it became open-ended onJuly 27, 2005. In September 2005, Kotak Flexi Fund of Fundsand Kotak Cash Plus were launched.

Condensed Financial Information (for the last three fiscal years)

Kotak Gilt Savings Plan Kotak Gilt Investment Kotak Gilt- Regular Plan Investment -

Provident Fund &Trust Plan

Apr '02 - Apr '03 - Apr '04 - Apr '02 - Apr '03 - Apr '04 - Nov '03 - Apr '04 -Mar '03 Mar '04 Mar '05 Mar '03 Mar '04 Mar '05 Mar '04 Mar '05

Date of Allotment 29-Dec-98 29-Dec-98 29-Dec-98 29-Dec-98 29-Dec-98 29-Dec-98 11-Nov-03 11-Nov-03

Beginning of Year / Allotment Date 1-Apr-02 1-Apr-03 1-Apr-04 1-Apr-02 1-Apr-03 1-Apr-04 11-Nov-03 1-Apr-04

End of Year / Last Date 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-04 31-Mar-05

NAV at beginning of year / Allotment Date (Rs.) 13.95 (G) 14.92 (G) 15.61 (G) 17.00 (G) 19.43 (G) 21.91 (G) 21.60 (G)‡ 21.93 (G)10.44 (D) 10.52 (MD) 10.40 (MD) / 10.71 (D) 10.70 (D) 10.54 (D) 10.74 (D)‡ 10.79 (D)

10.44 (AD)

Net Income per unit (Rs) 1.47 0.72 0.73 2.17 2.63 (0.32) 0.09 0.37

Dividends (Rs. per unit) *$$ 0.61 0.53 (MD) / 0.07 ( MD) 1.48 1.29 Nil 0.08 0.064.50 (AD)

Dividends (Rs. per unit) *†† 0.34 (MD) Nil Nil

Dividends (Rs. per unit) * ^^ 0.32 (MD) Nil 0.03

Transfer to reserves (Rs. crores) (4.58) 2.13 3.17 10.32 0.60 (65.22) 15.89 4.01

Nav as on : At the end of the year / period (Rs.) 14.92 (G) / 15.61 (G) / 16.39 (G) / 19.43 (G) / 21.91 (G) / 21.96 (G) / 21.93 (G) / 22.07 (G) /10.52 (D) 10.40 (MD) / 10.45 (MD) / 10.70 (D) 10.54 (D) 10.56 (D) 10.79 (D) 10.75 (D)

10.44 (AD) 10.97 (AD)

Annualised return ** 9.85 8.84 5.04 16.89 16.09 0.26 15.89 0.66

Absolute return *** – – – – – – 1.38 –

Net Assets at end of the year / period (Rs. crores) 15.92 47.53 27.10 279.53 241.01 90.84 31.49 39.21

Ratio of Recurring Expenses to Average Assets 1.00% 1.59% 1.18% 1.64% 1.65% 1.65% 1.30% 1.25%

17


Kotak Bond Kotak BondRegular Plan Deposit Plan

(formerly Kotak BondWholesale Plan)

Apr '02 - Apr '03 - Apr '04 - Apr '02 - Apr '03 - Apr '04 -Mar '03 Mar '04 Mar '05 Mar '03 Mar '04 Mar '05

Date of Allotment 25-Nov-99 25-Nov-99 25-Nov-99 25-Nov-99 25-Nov-99 25-Nov-99

Beginning of Year / Allotment Date 1-Apr-02 1-Apr-03 1-Apr-04 1-Apr-02 1-Apr-03 1-Apr-04

End of Year / Last Date 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-03 31-Mar-04 31-Mar-05

NAV at beginning of year /Allotment Date (Rs.) 14.00 (G) 15.67 (G) 17.25 (G) / 13.78 (G) 15.35 (G) 16.80(G)

10.20 (QD) / 10.58 (QD) / 10.49 (QD) / 10.28 (D) 10.77 (D) 10.70(D)10.66 (AD) 11.19 (AD) / 11.53 (AD) /

10.44 (B) 11.50 (B)

Net Income per unit (Rs.) 1.21 2.76 (0.31) 1.25 1.86 (0.07)

Dividends (Rs. per unit) *$$ 0.80 (QD) / 0.99 (QD) / 0.06 (QD) 0.63 0.93 0.060.75 (AD) 0.69 (AD)

Dividends (Rs. per unit) *†† 0.17 (QD) Nil

Dividends (Rs. per unit) * ^^ 0.25 (QD) Nil

Transfer to reserves (Rs. crores) 100.62 ¥ (89.81) (97.52) 18.94 (11.92) (13.54)

Nav as on : At the end of the year / 15.67 (G) / 17.25 (G) / 17.55 (G) / 15.35 (G) / 16.80 (G) / 16.98 (G) /period (Rs.) 10.58 (QD) / 10.49 (QD) / 10.30 (QD) / 10.77 (D) 10.70 (D) 10.75 (D)

11.19 (AD) / 11.53 (AD) / 11.73 (AD) /10.44 (B) 11.50 (B) 11.70 (B)

Annualised return ** 14.36 13.36 1.70 13.65 12.66 11.09

Absolute return *** – – – – – –

Net Assets at end of the year / period(Rs. crores) 887.54 428.84 54.32 119.33 74.09 22.72

Ratio of Recurring Expenses toAverage Assets 1.60% 1.65% 1.65% 2.14% 2.23% 2.25%

Kotak Bond Short Term Kotak Liquid Regular Plan

May '02 - Apr '03 - Apr '04 - Apr '02 - Apr '03 - Apr '04 -Mar '03 Mar '04 Mar '05 Mar '03 Mar '04 Mar '05

Date of Allotment 2-May-02 2-May-02 2-May-02 5-Oct-00 5-Oct-00 5-Oct-00

Beginning of Year / Allotment Date 2-May-02 1-Apr-03 1-Apr-04 1-Apr-02 1-Apr-03 1-Apr-04


NAV at beginning of year / Allotment Date (Rs.) 10.00 10.72 (G) 11.40(G) 11.33 (G) 12.09 (G) 12.67(G)10.16 (D) 10.08(D) 10.01 (D) 10.01 (D) 10.02(D)

Net Income per unit (Rs.) 1.33 0.96 2.36 0.89 0.52 0.51

Dividends (Rs. per unit) *$$ 0.54 0.62 0.09 0.66 0.41 0.10

Dividends (Rs. per unit) *†† 0.32 0.28

Dividends (Rs. per unit) * ^^ 0.30 0.26

Transfer to reserves (Rs. crores) 14.97 14.28 (26.15) 50.79 (41.32) 30.90

Nav as on : At the end of the year / period (Rs.) 10.72 (G) / 11.40 (G) / 11.93 (G) / 12.09 (G) / 12.67 (G) / 13.22 (G) /10.16 (D) 10.08 (D) 10.06 (D) 10.01 (D) 10.02 (D) 10.02 (D)

Annualised return ** – 7.08 4.61 7.93 7.02 4.33

Absolute return *** – – – – – –

Net Assets at end of the year / period (Rs. crores) 254.71 409.57 39.96 504.86 275.25 372.98

Ratio of Recurring Expenses to Average Assets 0.83% 0.86% 0.90% 0.89% 1.00% 1.00%

18


Kotak Liquid - Kotak Liquid - Kotak Kotak FloaterInstitutional Plan Institutional Liquid Short Term

Premium Plan SweepPlan

Mar '03 Apr '03 - Apr '04 - Nov '03 - Apr '04 - Aug'04 - Jul '03 - Apr '04 -Mar '04 Mar '05 Mar '04 Mar '05 Mar '05 Mar '04 Mar '05

Date of Allotment 12-Mar-03 12-Mar-03 12-Mar-03 4-Nov-03 4-Nov-03 3-Aug-04 14-Jul-03 14-Jul-03

Beginning of Year / Allotment Date 12-Mar-03 1-Apr-03 1-Apr-04 4-Nov-03 1-Apr-04 3-Aug-04 14-Jul-03 1-Apr-04


NAV at beginning of year / Allotment Date (Rs.) 12.05(G) ‡ 12.09(G) 12.71(G) / 12.48(G)‡ / 12.71(G) / 10.00(DD) 10.00 10.38(G) /10.01(D) ‡ 10.01(D) 10.02(WD) / 10.02(WD)‡ / 10.03(WD) / 10.00(WD) /

12.23(DD) 12.23(DD)‡ 12.23(DD) 10.02(MD)

Net Income per unit (Rs.) 0.02 1.05 0.60 0.15 0.56 0.14 0.09 0.36

Dividends (Rs. per unit) *$$ 0.01 0.43 (WD) / 0.10(WD) / 0.16 (WD) / 0.11(WD) / N.A 0.04 (WD) / 0.10(WD) /0.42 (DD) 0.13(DD) 0.20 (DD) 0.13(DD) 0.31 (MD) 0.10(MD)

Dividends (Rs. per unit) *†† 0.17(WD) / Nil 0.26 0.31(WD) /0.25(DD) 0.32(MD)

Dividends (Rs. per unit) * ^^ 0.28(WD) / 0.30(WD) / 0.20 0.29(WD) /0.35(DD) 0.36(DD) 0.30(MD)

Transfer to reserves (Rs. crores) 84.95 (38.33) (6.07) 281.69 80.23 0.52 6.93 24.91

Nav as on : At the end of the year / period (Rs.) 12.09 (G) / 12.71 (G) / 13.31 (G) / 12.71 (G) / 13.34 (G) / 10.01(DD) 10.38 (G) / 10.88 (G) /10.01 (D) 10.02 (WD) / 10.02 (WD) / 10.03 (WD) / 10.03 (WD) / 10.00 (WD) / 10.01 (WD) /

12.23 (DD) 12.23 (DD) 12.23 (DD) 12.23 (DD) 10.02 (MD) 10.03 (MD)

Annualised return** – 5.12 4.78 – 4.87 – – 4.90

Absolute return *** 0.31 – – 1.88 – 2.94 3.76 –

Net Assets at end of the year / period (Rs. crores) 535.51 416.22 268.84 1,812.21 2,291.77 16.47 337.76 958.83


Kotak 30 Kotak Balance Kotak Tech

Apr '02 - Apr '03 - Apr '04 - Apr '02 - Apr '03 - Apr '04 - Apr '02 - Apr '03 - Apr '04 -Mar '03 Mar '04 Mar '05 Mar '03 Mar '04 Mar '05 Mar '03 Mar '04 Mar '05

Date of Allotment 29-Dec-98 29-Dec-98 29-Dec-98 25-Nov-99 25-Nov-99 25-Nov-99 4-Apr-00 4-Apr-00 4-Apr-00

Beginning of Year / Allotment Date 1-Apr-02 1-Apr-03 1-Apr-04 1-Apr-02 1-Apr-03 1-Apr-04 1-Apr-02 1-Apr-03 1-Apr-04

End of Year / Last Date 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-03 31-Mar-04 31-Mar-05

NAV at beginning of year / 11.62 11.59 (G) § 25.19 (G) 9.84 10.10 13.15 3.06 2.85 3.97Allotment Date (Rs.) 11.59 (D) 17.01(D)

Net Income per unit (Rs.) 0.10 6.05 5.02 0.13 4.54 5.80 (0.20) 0.74 2.34

Dividends (Rs. per unit) *$$ Nil 7.00 1.50 Nil 2.75 0.50 Nil Nil Nil

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

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

Transfer to reserves (Rs. crores) 0.99 37.15 26.21 1.48 8.94 4.69 12.91 44.57 40.15

Nav as on : At the end of the year / 11.59 (G) § / 25.19 (G) / 32.12 (G) / 10.10 13.15 17.48 2.85 3.97 5.85period (Rs.) 11.59 (D) 17.01 (D) 19.90 (D)

Annualised return ** 11.20 24.73 27.52 2.66 13.33 37.15 (34.34) (20.65) 47.33

Absolute return *** – – – – – – – – –

Net Assets at end of the year /period (Rs crores) 39.30 125.81 154.38 30.67 37.52 30.33 46.00 48.07 49.80

Ratio of Recurring Expenses toAverage Assets 2.50% 2.50% 2.39% 2.44% 2.49% 2.50% 2.25% 2.25% 2.25%

19


Kotak Kotak Kotak KotakMNC Income Plus Global India Floater

LongTerm

Apr '02 - Apr '03 - Apr '04 - Dec '03 - Apr '04 - Jan '03 - Apr '04 - Aug'04 -Mar '03 Mar '04 Mar '05 Mar '04 Mar '05 Mar '04 Mar '05 Mar '05

Date of Allotment 4-Apr-00 4-Apr-00 4-Apr-00 2-Dec-03 2-Dec-03 30-Jan-04 30-Jan-04 13-Aug-04

Beginning of Year / Allotment Date 1-Apr-02 1-Apr-03 1-Apr-04 2-Dec-03 1-Apr-04 30-Jan-04 1-Apr-04 13-Aug-04


NAV at beginning of year / Allotment Date (Rs.) 8.00 7.00 14.24 10.00 10.25 (G) / 10.00 9.57 (G) 10 (G) /10.02 (MD) / 9.57 (D) 10 (MD) /

10.02 (QD) 10 (WD)

Net Income per unit (Rs.) (0.49) 4.35 7.63 0.11 0.61 (0.07) 5.37 0.23

Dividends (Rs. per unit) *$$ Nil Nil 4.50 0.20 (QD) / 0.05(MD) Nil 1.50 N.A0.20 (MD)

Dividends (Rs. per unit) *†† Nil 0.24(MD) / Nil 0.28(WD) /0.29(QD) 0.27(MD)

Dividends (Rs. per unit) * ^^ Nil 0.22(MD) / Nil 0.27(WD) /0.16(QD) 0.25(MD)

Transfer to reserves (Rs. crores) (2.66) 23.89 17.25 2.57 1.65 (13.51) 65.43 12.05

Nav as on : At the end of the year / period (Rs.) 7.00 14.24 15.99 10.25 (G) / 10.87 (G) / 9.57 (G) / 13.86 (G) / 10.33(G) /10.02 (MD) / 10.30 (MD) / 9.57 (D) 12.34 (D) 10.02(MD) /

10.02 (QD) 10.30 (QD) 10.01(WD)

Annualised return ** (11.23) 9.26 43.70 – 6.09 – 44.88 –

Absolute return *** – – – 3.56 – (4.35) – 3.34

Net Assets at end of the year / period (Rs. crores) 24.53 33.46 66.61 291.40 54.08 299.96 202.37 577.33


Kotak Kotak Kotak Kotak Kotak KotakOpportunities Equity Flexi Midcap FMP Dynamic

FOF Debt Series I FOF

Sep'04 - Aug'04- Dec'04- Feb '05 - Mar '05 - Mar '05 -Mar '05 Mar '05 Mar '05 Mar '05 Mar '05 Mar '05

Date of Allotment 9-Sep-04 9-Aug-04 6-Dec-04 24-Feb-05 31-Mar-05 31-Mar-05

Beginning of Year / Allotment Date 9-Sep-04 9-Aug-04 6-Dec-04 24-Feb-05 31-Mar-05 31-Mar-05


NAV at beginning of year / Allotment Date (Rs.) 10.00(G) 10.00(G) 10.00(G) 10.00(G) 10.00(G) 10.00(G)10.00(D) 10.00(D) 10.00(D) 10.00(D) 10.00(D)

Net Income per unit (Rs.) 3.39 5.23 0.20 0.11 0.01 0.01

Dividends (Rs. per unit) *$$ 0.75 N.A. N.A. Nil Nil N.A.

Dividends (Rs. per unit) *†† Nil Nil 0.16 Nil Nil N.A.

Dividends (Rs. per unit) * ^^ Nil Nil 0.15 Nil Nil N.A.

Transfer to reserves (Rs. crores) 10.77 30.61 0.55 5.80 0.28 0.05

Nav as on : At the end of the year / period (Rs.) 12.76 (G) / 13.17(G) / 10.21(G) / 10.10(G) / 10.01(G) / 10.00(G)12.02 (D) 13.17(D) 10.02(D) 10.10(D) 10.01(D)

Annualised return ** – – – – – –

Absolute return *** 27.64 31.70 2.05 (0.41) – –

Net Assets at end of the year / period (Rs. crores) 47.73 95.21 104.08 543.17 219.54 101.92

Ratio of Recurring Expenses to Average Assets 2.46% 0.74% 1.00% 2.19% 0.27% 0.75%

20


Latest NAV & Annualised ReturnsKotak Gilt Kotak Gilt Kotak Gilt Kotak Bond Kotak Bond -

Savings Plan Investment - Investment - Regular Plan DepositRegular Plan Provident (formerly Plan

Fund & Trust WholesalePlan Plan)

Date of allotment 29-Dec-98 29-Dec-98 11-Nov-03 25-Nov-99 25-Nov-99

Beginning of Year / Allotment date 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05

End of Year / Last Date 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05

NAV at beginning of year / Allotment date (Rs.) 16.40 (G) / 21.96 (G) / 22.07 (G) / 17.55 (G) / 16.99 (G) /10.46 (MD) / 10.56 (D) 10.75 (D) 10.30 (QD) / 10.75 (D)

10.97 (AD) 11.73 (AD) /11.70 (B)

Net Income per unit (Rs.) 0.34 0.38 0.58 0.29 0.37

Dividends (Rs. per unit) *† (Individuals) 0.02 ( MD) Nil 0.14 0.13 Nil

Dividends (Rs. per unit) *‡‡ (Others) 0.18 (MD) Nil 0.13 0.13 Nil

Transfer to Reserves (Rs. Crores) @ @ @ @ @

NAV as on : At the end of the period (Rs.) 16.80 (G) / 22.41 (G) / 22.57 (G) / 17.95 (G) / 17.37 (G) /10.49 (MD) / 10.78 (D) 10.83 (D) 10.38 (QD) / 10.98 (D)

11.24 (AD) 12.00 (AD) /11.96 (B)

Annualised Returns**

30-Aug-2005 8.09% 12.86% 2.38% 10.68% 10.04%

Absolute Return ***

30-Aug-2005 – – – – –

Benchmark Return – – – – –

30-Aug-2005 N.A. N.A. 2.19% N.A. N.A.

Net Assets at end of the year / period (Rs. Crores) 20.01 113.85 18.53 56.83 18.18

Ratio of Recurring Expenses to Average Assets 1.00% 1.65% 1.25% 1.65% 2.25%

Kotak Bond Kotak Liquid Kotak Liquid - Kotak Liquid -Short Term Regular Plan Institutional Institutional

Plan Plan Premium Plan

Date of allotment 02-May-02 05-Oct-00 12-Mar-03 04-Nov-03Beginning of Year / Allotment date 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05

End of Year / Last Date 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05

NAV at beginning of year / Allotment date (Rs.) 11.92 (G) / 13.22 (G) / 13.32 (G) / 13.34 (G) /10.07 (D) 10.02(D) 10.02 (WD) / 10.03 (WD) /

12.23 (DD) 12.23 (DD)

Net Income per unit (Rs.) 0.13 0.27 0.30 0.29

Dividends (Rs. per unit) *† (Individuals) 0.21 0.18 0.20 (WD) / 0.20 (WD) /0.24 (DD) 0.24 (DD)

Dividends (Rs. per unit) *‡‡ (Others) 0.20 0.17 0.18 (WD) 0.19 (WD)/0.22 (DD) 0.22 (DD)

Transfer to Reserves (Rs. Crores) @ @ @ @

NAV as on : At the end of 12.23 (G) / 13.49 (G) / 13.61 (G) / 13.65 (G) /the period (Rs.) 10.08 (D) 10.02 (D) 10.02 (WD) / 10.03 (WD) /

12.23 (DD) 12.23 (DD)


30-Aug-2005 6.24% 6.29% 5.04% 5.03%

Absolute Return ***

30-Aug-2005 – – – –

Benchmark Return – – – –

30-Aug-2005 4.27% N.A. 4.34% 4.25%

Net Assets at end of the year / period (Rs. Crores) 320.44 356.56 276.31 2389.55

Ratio of Recurring Expenses to Average Assets 0.90% 1.00% 0.55% 0.45%

21


Kotak Floater Kotak Global Kotak 30 Kotak Kotak Kotak KotakShort Term India Balance Technology MNC Income

Plus

Date of allotment 14-Jul-03 30-Jan-04 29-Dec-98 25-Nov-99 04-Apr-00 04-Apr-00 02-Dec-03

Beginning of Year / Allotment date 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05

End of Year / Last Date 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05

NAV at beginning of year / 10.89 (G) / 14.07 (G) / 32.62 (G) / 17.59 5.89 16.29 10.90 (G) /Allotment date (Rs.) 10.01 (WD) / 12.53 (D) 20.20 (D) 10.33 (MD) /

10.03 (MD) 10.33 (QD)

Net Income per unit (Rs.) 0.20 3.42 6.27 2.28 0.53 5.21 0.62

Dividends (Rs. per unit) *$$ (Individuals) 0.20 (WD) / Nil 1.00 0.75 Nil Nil 0.22 (MD) /0.21 (MD) 0.13 (QD)

Dividends (Rs. per unit) *†† (Others) 0.19 (WD) / Nil 1.00 0.75 Nil Nil 0.20 (MD) /0.20 (MD) 0.12 (QD)

Transfer to Reserves (Rs. Crores) @ @ @ @ @ @ @

NAV as on : At the end of 11.13 (G) / 16.99 (G) / 40.47 (G) / 20.48 6.36 20.43 11.54 (G) /the period (Rs.) 10.00 (WD) / 15.13 (D) 23.83 (D) 10.67 (MD) /

10.03 (MD) 10.78 (QD)


30-Aug-2005 5.17% 39.77% 29.03% 20.21% -8.03% 19.45% 8.56%

Absolute return *** – – – – – – –

30-Aug-2005 – – – – – – –

Benchmark Return – – – – – – –

30-Aug-2005 4.24% 21.42% 15.01% N.A. -8.95% 9.71% 5.96%

Benchmark Return (S&P CNX Nifty) – – – – – – –

30-Aug-2005 – – 16.13% – – – –

Net Assets at end of the year/period (Rs. Crores) 1512.92 164.97 18.11 79.34 48.49 61.16 48.23

Ratio of Recurring Expenses to Average Assets 0.75% 2.30% 2.40% 2.50% 2.25% 2.50% 2.16%

Kotak Midcap Kotak Kotak Kotak KotakDynamic FOF Equity FOF Flexi Debt Contra

Date of allotment 24-Feb-2005 31-Mar-2005 09-Aug-04 06-Dec-04 27-Jul-05

Beginning of Year/ Allotment date 01-Apr-2005 01-Apr-2005 01-Apr-2005 01-Apr-2005 27-July-05

End of Year / Last Date 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05

NAV at beginning of year/ Allotment date (Rs.) 10.20 (G) 10.01 (G) 13.39 (G) 10.21 (G) 10.00 (G) /10.20 (D) 13.39 (D) 10.02 (D) 10.00 (D)

Net Income per unit (Rs.) 4.39 1.60 3.22 0.14 0.77

Dividends (Rs. per unit) *† (Individuals) 0.50 Nil Nil 0.12 Nil

Dividends (Rs. per unit) *‡‡ (Others) 0.50 Nil Nil 0.11 Nil

Transfer to Reserves (Rs. Crores) @ @ @ @ @

NAV as on : At the end of the period (Rs.) 13.59 (G) 11.55 (G) 16.06 (G) / 10.46 (G) / 10.74 (G) /13.07 (D) 16.06 (D) 10.13 (D) 10.74 (D)

Annualised Returns** – – – – –

30-Aug-2005 – – 56.50% – –

Absolute return *** – – – –

30-Aug-2005 34.02% 15.48% – 4.64% 7.41%

Benchmark Return – – – – –

30-Aug-2005 15.02% 10.61% 41.31% 4.57% 3.53%

Benchmark Return (S&P CNX Nifty) – – – – –

30-Aug-2005 – – 41.31% – –

Net Assets at end of the year/period (Rs. Crores) 366.66 95.49 94.02 301.37 644.65

Ratio of Recurring Expenses to Average Assets 2.24% 0.75% 0.74% 1.00% 2.16%

22


Kotak Kotak Kotak Floater KotakFMP Liquid Sweep Long Term Opportunities

Series I Plan Scheme Scheme

Date of allotment 31-Mar-05 03-Aug-05 13-Aug-05 09-Sep-05

Beginning of Year/ Allotment date 01-Apr-05 01-Apr-05 01-Apr-05 01-Apr-05

End of Year / Last Date 30-Aug-05 30-Aug-05 30-Aug-05 30-Aug-05

NAV at beginning of year/ Allotment date (Rs.) 0.33 (G) 10.01 (DD) 10.33 (G)/ 13.04 (G)/10.01 (WD) 10.01 (WD)/ 12.28 (D)10.03 (MD) 10.03 (MD)

Net Income per unit (Rs.) 0.25 0.16 0.25 3.16

Dividends (Rs. per unit) *† (Individuals) 0.20 (WD) 0.19 0.20 (WD)/ Nil0.20 (MD) 0.20 (MD)

Dividends (Rs. per unit) *‡‡ (Others) 0.18 (WD) 0.17 0.18( WD)/ Nil0.18 (MD) 0.18 (MD)

Transfer to Reserves (Rs. Crores) @ @ @ @

NAV as on: At the end of the period (Rs.) 10.57 (G) 10.01 (DD) 10.57(G)/ 16.36 (G)/10.01 (WD) 10.01 (WD)/ 17.37 (D)10.03 (MD) 10.03 (MD)

Annualised Returns** – – – –

30-Aug-2005 5.45 4.81% 5.45% 73.72%

Absolute return *** – – – –

30-Aug-2005 – – – –

Benchmark Return – – – –

30-Aug-2005 4.66% 4.55% 4.66% 50.92%

Net Assets at end of the year/period (Rs. Crores) 487.78 59.38 487.78 105.65

Ratio of Recurring Expenses to Average Assets 0.80% 0.75% 0.80% 2.48%

Notes:G stands for Growth Option, D stands for Dividend Option,MD stands for Monthly Dividend Option, QD stands forQuarterly Dividend Option, WD stands for Weekly DividendOption, DD stands for Daily Dividend Option, AD stands forAnnual Dividend Option B stands for Bonus Option.* Applicable to the dividend option in case of Schemes,

which have Growth and Dividend Options.** Annualised Return (Compounded Annualised Growth

Rate) is calculated from the date of allotment of theUnits till the end of the period mentioned against it. Forthe last period in respect of the Scheme/Plan concerned,the annualised return is computed from the date ofallotment till March 31, 2005 and August 30, 2005respectively.In case of returns available for periods less than one yearfor the first accounting year, such returns have beenexpressed in absolute terms only.

*** Absolute Return is calculated from the date of allotmentof the Units till the end of the period mentioned againstit for the Scheme where such period is less than one year.In case of Scheme / Plan launched after August 30, 2005,the absolute return is also calculated from the date ofallotment till March 31, 2005 and August 30, 2005respectively. Annualised returns are computed for theGrowth Option of the Scheme. The Growth Option isnot available then the same has been computed assumingthe declared dividend is re-invested on the next availableNAV.

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

I SEC COMPOSITE INDEX, Kotak Bond - Regular, DepositPlans, Kotak Dynamic Income: CRISIL COMPOSITE BONDFUND INDEX, Kotak Bond Short Term, Kotak Liquid,Kotak Liquid Institutional Plan, Kotak Liquid InstitutionalPremium Plan, Kotak Liquid Sweep Plan, Kotak MahindraFixed Maturity Plans, Kotak FMP (8), Kotak Floater ShortTerm Scheme, Kotak Floater Long Term Scheme - CRISILLIQUID FUND INDEX, Kotak Balance - CRISIL BALANCEDFUND INDEX, Kotak Income Plus - CRISIL MIP BlendedIndex. Benchmark returns (as developed by AMFI) forschemes except Kotak Bond Short Term, Kotak GiltInvestment- Provident Fund and Trust Plan, Kotak LiquidInstitutional Plan, Kotak Liquid Institutional Premium Plan,Kotak Mahindra Fixed Maturity Plans, Kotak FMP (8),Kotak Floater Short Term Scheme, Kotak Dynamic Incomeand Kotak Income Plus are not shown due to non-availability of the data.

Benchmarks (as per Offer Document) used are: Kotak 30and Kotak MNC - BSE SENSITIVE INDEX and S & P CNXNIFTY; Kotak Dynamic FOF - Crisil Balanced Fund Index;Kotak Global India - BSE SENSITIVE INDEX; Kotak Tech- BSE IT INDEX; Kotak Opportunities and Kotak Contra- S&P CNX 500 Equity Index; Kotak Equity FOF: S&P CNXNifty

# These figures are less than 0.01.

~~ No units outstanding as at the beginning/end of theyear/period.

‡ NAV at which Units were first allotted under the respectiveoptions.

¥ Reserves of Kotak Bond Regular Plan - Bonus optionadjusted for bonus of 1 Unit issued for every 2 units heldas on the record date January 09, 2003.

23


@ transfer to reserves will be done at the end of the year$$ applicable to current period indicates Dividend paid from

record date April 01, 2004 to July 20, 2004.†† applicable to current period indicates Dividend paid from

record date July 21, 2004 to September 30, 2004 forIndividual / HUF unit holders.

^^ applicable to current period indicates Dividend paid fromrecord date July 21, 2004 to September 30, 2004 forOther unit holders.

§ Growth Option introduced under Kotak 30, effectiveFebruary 03, 2003.

† applicable to current period indicates Dividend paid fromrecord date April 01, 2005 to August 30, 2005 forIndividual / HUF unit holders.

‡‡ applicable to current period indicates Dividend paid fromrecord date April 01, 2005 to August 30, 2005 for otherunit holders.

5. Borrowing by the Mutual FundNo borrowing was made by any of the Schemes of KMMFtill the year ended March 31, 2005 and period ended August31, 2005.

6. Key Personnel of AMCMr. Sandesh KirkireMr. Sandesh Kirkire, 41, is a Mechanical Engineer and holdsa Masters degree in Management Studies from Jamnalal BajajInstitute of Management Studies, Mumbai University. Mr.Kirkire has over 15 years of experience in the areas CorporateFinance and Treasury management 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 inseveral capacities across the group, in the fields of InvestmentBanking, Treasury and Sales and Trading in debt markets. Mr.Kirkire’s latest assignment was as Chief Investment Officer(Debt) overseeing the investment management function ofthe Fund in Fixed Income Securities.

Mr. Kirkire is Chief Executive Officer of the AMC.

Mr. Nilesh ShahMr. Nilesh Shah, 36, is a CFA and holds a PGDRM from theInstitute of Rural Management, Anand (IRMA). He has over13 years of experience and achievement in financial services.Following his post graduation from IRMA in 1992, Mr. Shahjoined Gruh Finance Ltd., working in their Corporate Financedivision for 2 years before joining the Kotak Group. In theKotak Group, he handled assignments in the CorporateFinance and Capital Markets division before moving intoequities. Prior to joining the AMC, Mr. Shah was ExecutiveDirector, Equity Strategy, at Kotak Securities Ltd.

Mr. Shah is President of the AMC, and guides its equitystrategy, among other responsibilities.

Mr. R. KrishnanMr. R. Krishnan, 37, is a Chartered Accountant and CostAccountant with over 11 years of experience in the fields ofOperations, Systems, Finance, MIS, Accounting, Audit andTaxation. Prior to joining the Kotak Group in August 1994,Mr. Krishnan was a practicing Chartered Accountant for twoyears, handling Accounting, Audit and Taxation matters for

clients. Since joining the Kotak Group, Mr. Krishnan hashandled major assignments like the US GAAP implementationfor the erstwhile Kotak Mahindra Finance Limited (KMFL) andsubsidiary/group companies, Systems Development andImplementation, for the Retail Assets Group and KMFL’stransition to Kotak Bank. Mr. Krishnan’s latest assignmentwas as Head - Operations, Retail Assets, at Kotak Bank, fromwhere he joined Kotak Mutual in August 2004 as Senior VicePresident.

Mr. Krishnan is Chief Operations Officer, and oversees theOperations, Accounting and IT functions of the Fund.

Mr. Miten ChawdaMr. Miten Chawda, 30, holds a Bachelors degree in Law, andis a member of the Institute of Company Secretaries of India.Mr. Chawda has over 9 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 9 years experiencein company secretarial and compliance areas.

Mr. Chawda is Compliance Officer and Company Secretaryof Kotak Mahindra AMC Ltd.

Mr. Anand ShahMr. Anand Shah, 30, holds a B.E. (Electronics) degree fromREC, Surat, and a Post Graduate Diploma in BusinessManagement from IIM, Lucknow. Mr. Shah has a total of 7years of work experience. During the period 1996-1998,prior to his post-graduation, Mr. Shah worked with KirolskarOil Engines Ltd., Pune, as Senior Engineer, where he superviseda 16-member team, and was responsible for electrical andelectronics maintenance. Following completion of his post-graduation in 2000, Mr. Shah joined the Equity FundManagement team.

Mr. Shah is an Equity Fund Manager of the AMC

Ms. Lakshmi IyerMs. Lakshmi V. Iyer, 28, is a graduate in Commerce fromMumbai University, and holds a Diploma in BusinessManagement. Ms. Iyer has a total work experience of 6 yearsin the securities markets. Prior to joining the Kotak Mahindragroup, she worked at Credence Analytics, handling debtresearch and financial software development. In 1999, Ms.Iyer joined the AMC’s Fund Management team.

Ms. Iyer is a Debt Fund Manager of the AMC.

Mr. Ritesh JainMr. Ritesh Jain, 29, is a graduate in Commerce from DelhiUniversity, and holds a post-graduation in Business Economicsfrom Indore University and a Diploma in Capital Markets fromI.C.F.A.I. Mr. Jain has 7 years of experience. Having begun hiscareer in foreign exchange banking at Corporation Bank, hethen moved to IDBI Bank Ltd., where he managed moneymarket treasury (trading and ALM management). Prior tojoining the Kotak Mahindra group, he also worked briefly atRanbaxy Laboratories Ltd., managing US$ 500 Million offoreign exchange treasury. Mr. Jain joined the AMC in 2003as part of the Fund Management team.

Mr. Jain is a Debt Fund Manager of the AMC.

24


Mr. Sajit PisharodiMr. Sajit Pisharodi, who holds a Masters degree in BusinessAdministration, joined the AMC in February, 2004. Prior tothat, Mr. Pisharodi was involved in the equity dealing functionat SBI Funds Management Pvt. Ltd. He started his career withStock Holding Corporation of India Ltd., where he was involvedin objections clearance in the custodial services division andmoved on to IDBI Capital Markets Pvt. Ltd., where he was partof the broking arm, and involved in equity sales and dealing.Mr. Pisharodi, at 34, has nearly 11 years of experience in thefield of financial services.

Mr. Pisharodi is a Fund Manager and the Dealer in the equityfund management team.

FUND MANAGERMr. Anand Shah will be the Fund Manager for Kotak ELSSScheme.

The Chief Executive Officer and the President are based onthe 9th Floor, Bakhtawar, Nariman Point, Mumbai – 400 021while the Fund Management and Research Team of the Fundis located in the same building on the 7th Floor. The ChiefOperations Officer and the Compliance Officer are based at91/92, 9th Floor, Sakhar Bhawan, 230, Nariman Point,Mumbai – 400 021.

Other members of the Fund Management / ResearchTeam are:Mr. Deepak AgrawalA postgraduate in commerce, Mr. Deepak Agrawal, 25, is aqualified chartered accountant and company secretary. Hestarted his career with the AMC in September 2000, and hasbeen with the AMC since then.

Mr. Agrawal is the Dealer in the debt fund managementteam.

Mr. Manish K. LodhaMr. Manish Lodha, 29, is a Chartered Accountantand Company Secretary, with 5 years of experience in thefield of Financial Planning & Analysis, Investment Monitoringand Credit Research. Mr. Lodha began his career in 2000 inFinance function with BOC India Ltd, at their JamshedpurUnit, and later moved to Corporate Finance in Head Officeof the company. In 2004, he moved to UTI Bank,a leading new generation private sector bank in India. Priorto joining the Kotak Mahindra Group, Mr. Lodha spent 1 yearat UTI Bank where he was a part of investments monitoringteam and at the same time was involved in a number ofproject / credit appraisals. In 2005, Mr. Lodha joined KotakMahindra AMC as a Credit Analyst, and is a part of the FundManagement and Research team.

Mr. Pushpinder SinghMr. Pushpinder Singh, 32, holds a B. Tech. (Chemical) fromPTU, Jallandhar and an MBA from the College of MaterialsManagement (CMM), FMS, Jabalpur along with a diploma inElectronics and Communications Engineering. Prior to forayinginto equity markets, where he has had 4 years of experience,he worked as a trainee with BPCL, and customer supportengineer with Network Ltd. Mr. Singh moved into financialservices June 2000, joining Asit C. Mehta InvestmentIntermediaries Ltd. as an equity analyst tracking the Telecomand Oil&Gas industries. From there, he joined Refco-Sify

Securities (P) Ltd. in August 2001, analysing the Oil&Gas andPetrochemical industries, and, later, the power sector. Mr.Singh joined the AMC in October 2004, as a part of the equityfund management team, and is responsible for evaluatinginvestment opportunities in equities.

Mr. Singh is the Equity Analyst of the AMC.

Mr. Anurag JainMr. Anurag Jain, aged 28, is a Chemical Engineer from DCET,Punjab University, Chandigarh, post which he did his PostGraduate Diploma in Management from IIM Kolkatta. Anuragstarted his career with SBI Fund Management Pvt Ltd. andworked there as a senior manager in equity research team.Prior to taking up equity research at SSKI Institutional Securities,Anurag was managing corporate banking at ICICI Bank. Hejoined Kotak AMC in August 2005, as a part of the equityfund management team, and is responsible for evaluatinginvestment opportunities in equities. He comes with anexperience of 4 years in the equity markets.

Compliance OfficerMr. Miten ChawdaKotak Mahindra Asset Management Company Limited91/92, 9th Floor, Sakhar Bhawan,230, Nariman Point, Mumbai 400 021

Auditors to the SchemesPrice Waterhouse252, Veer Savarkar Marg,Shivaji Park, Dadar,Mumbai – 400 028

E. THE REGISTRARThe Mutual Fund has appointed Computer Age ManagementServices Pvt. Limited (‘CAMS’) to act as Registrar and TransferAgent (‘the Registrar’) to the Scheme. Registered with SEBIunder registration no. INR000002813, CAMS has beenperforming the functions of Registrar for all the Schemes ofthe Fund and the Trustee and the AMC have satisfiedthemselves that CAMS can provide the services required andhas adequate facilities, including systems capabilities andback up, to do so. As Registrar to the Scheme, CAMS acceptsand processes investors’ applications and advises the MutualFund in respect of the amounts received/disbursed forsubscription/purchase/redemption. They also handlecommunications with investors, perform data entry servicesand dispatch Account Statements to Unitholders.

CAMS is responsible for carrying out diligently the functionsof Registrar and Transfer Agent, as set out in the agreemententered into with them and as per any modification madethereto from time to time.

The AMC has the right to appoint additional Registrars orchange the Registrar, if it deems fit.

F. THE CUSTODIANSThe Trustee has appointed Deutsche Bank A G, Mumbai andStandard Chartered Bank , as the Custodians (the Custodians)for the Scheme. The Custodians are approved by SEBI underregistration nos. IN/CUS/003 and IN/CUS/006, respectively.

A Custodian keeps in safe custody all the securities and othersuch instruments belonging to the Fund, ensures smoothinflow/outflow of securities and such other instruments as

25


and when necessary in the best interest of the investors; andensures that the benefits due to the holdings are recovered.

A Custodian charges the Mutual Fund fees in accordancewith the terms of the custodian agreement:

for all purchase transactions, including direct purchases andrights/new issue applications.

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

l for Corporate Actions, MIS, Monitoring, Annual Reportsetc.

l for Custody of all assets held by them.

In addition, out-of-pocket expenses incurred by a Custodianmay also be charged to the Mutual Fund.

The Trustee has the right to appoint additional Custodian(s)or change the Custodian(s), if it deems fit.

To perform custodial services for securities of the Fund, aCustodian is bound to exercise the same degree of care as

it exercises in respect of its own property. It is obligatory fora Custodian to ensure that all the services rendered to KMMFare professional, prompt, cost effective and efficient in nature.A Custodian agreement, which, inter-alia, sets out theresponsibilities and functions of the Custodian, has beenentered into with each of the Custodians.

G. BANKERSThe Bankers to the New Fund Offer will be as under:

Name of Kotak Mahindra HDFC Bankthe Bank Bank Limited Limited

SEBIRegistration No. INBI00000927 INBI00000063

Applications for the New Fund Offer will be accepted at thedesignated collection centers of these Banks, as mentionedelsewhere in this Offer Document.

The AMC has the right to appoint additional Bankers to theNew Fund/Continuous Offer and change the Banker or anyof the Bankers appointed subsequently, if it deems fit.

26


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

A. KOTAK ELSS SCHEME1. Type of SchemeAn Open-Ended Equity Linked Savings Scheme

2. Investment OptionsThe Scheme will be available in two options:

a. Growth OptionUnder this option, there will be no distribution 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 OptionUnder this option, The Trustee may distribute by way ofdividend, the surplus by way of realised profit, dividends andinterest, net of losses, expenses and taxes, if any, to Unitholdersin the Dividend Option, if, in the opinion of the Trustee, suchsurplus is available and adequate for distribution. The Trustee’sdecision with regard to such availability and adequacy ofsurplus, rate, timing and frequency of distribution shall befinal. The dividend is paid to only those Unitholders whosenames appear on the register of Unitholders of the DividendOption on the record date, which will be announced inadvance. The Unitholder in the Dividend Option will have thechoice of receiving the dividend or having it reinvested.Dividend amounts will be reinvested in the Dividend Optionat the Applicable NAV announced immediately following therecord date. The dividend reinvested would be subject tolock-in period of three years, from the date of reinvestment.

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

3. Investment ObjectiveThe investment objective of the scheme is to generate long-term capital appreciation from a diversified portfolio of equityand equity related securities and enable investors to avail theincome tax rebate, as permitted from time to time.

The Scheme’s performance will be measured against thebenchmark S&P CNX 500.

Portfolio Turnover:The portfolio turnover will be moderate and normally will notexceed 150%. Portfolio turnover will exclude:

• the turnover caused on account of investing the initialcorpus;

• the turnover caused on account of investing in debt andmoney market securities; and

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

Turnover means simple average of the aggregate of purchasesand sales net of the above exclusions. These purchases andsales invite transaction costs viz. Securities Transaction Tax,brokerage, custodian transaction charges, etc.

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

4. Investment StrategyThe investment polices shall be in accordance with SEBI(Mutual Funds) Regulations, 1996 and rules and guidelinesfor ELSS - 1992 scheme (including any modification to them)and within the following guidelines:

1. The funds collected under the scheme shall be investedin equities, cumulative convertible preference shares andfully convertible debentures and bonds of companies.Investment may also be made in partly convertible issuesof debentures and bonds including those issued onrights basis subject to the condition that, as far as possible,the non-convertible portion of the debentures so acquiredor subscribed, shall be disinvested within a period of 12months.

2. It shall be ensured that funds of the scheme shall remaininvested to the extent of at least 80 percent in securitiesspecified in clause (1). The scheme shall strive to investtheir funds in the manner stated above within a periodof 6 months from the date of closure. In exceptionalcircumstances, this requirement may be dispensed withby the scheme, in order that the interests of the investorsare protected.

3. Pending investment of funds of the scheme in the requiredmanner, the scheme may invest the funds in short-termmoney market instruments or other liquid instrumentsor both. After three years of the date of allotment of theunits, the scheme may hold upto 20 percent of net assetsof the plan in short-term money market instruments andother liquid instruments to enable them to redeeminvestment of those unitholders who would seek totender the units for repurchase.

The scheme will endeavour to generate superior return byinvesting in equity and equity linked instruments across themarket capitalisations. The scheme will use bottom-up stockselection to build its portfolio. Risk will be managed byadequate diversification by spreading investments over arange of industries and companies.

The investment strategy of the AMC is directed to investingin stocks, which, in the opinion of the Investment Manager,are priced at a material discount to their intrinsic value. Suchintrinsic value is a function of both past performance andfuture growth prospects. The process of discovering theintrinsic value is through in-house research supplemented byresearch available from other sources.

For selecting particular stocks as well as determining thepotential value of such stocks, the AMC is guided, inter alia,by one or more of the following considerations:

1. The financial strength of the companies, as indicated bywell recognised financial parameters;

2. Reputation of the management and track record;

27


3. Companies that are relatively less prone to recessions orcycles, either because of the nature of their businessesor superior strategies followed by their management;

4. Companies which pursue a strategy to build strong brandsfor their products or services and those which are capableof building strong franchises; and

5. Market liquidity of the stock.

The Scheme is not restrained from investing in listed/unlistedand/or rated/unrated debt or money market securities,provided the investments are within the limits indicated in theInvestment Pattern Table. Investment in unrated debt securitiesis made with the prior approval of the Board of the AMC,provided the investment is in terms of the parameters approvedby the Board of the Trustee. Where the proposed investmentis not within the parameters as mentioned above, approvalof the Boards of both the AMC and the Trustee is takenbefore making the investment.

The Scheme may invest in GDRs/ADRs, if and in the mannerpermitted by SEBI/RBI. Such investments will be in conformitywith the investment objectives of the Scheme and theprevailing guidelines and Regulations. The Scheme may alsouse various derivative from time to time, in a manner permittedby SEBI to reduce the risk of the portfolio.

5. Risk Profile and Investment PatternThe asset allocation under the Scheme, under normalcircumstances, will be as follows:

Investments Indicative RiskAllocation Profile

Equity and Equity related 80% to MediumSecurities 100% to High

Debt and Money Market 0% to LowSecurities* 20%

* Debt securities shall be deemed to include securitiseddebts (excluding foreign securitised debt) and investmentin securitised debts shall not exceed 50% of the debtcomponent of the Scheme. Investments may be madein foreign debt securities not exceeding 20% of the debtcomponent of the Scheme. However, investments madein foreign debt securities would not include investmentin foreign securitised debt.

Investments may be made in GDRs/ADRs not exceeding 20%of the net assets scheme. The Scheme may engage in stocklending not exceeding 20% of the net assets of the Scheme.

The above percentages will be reckoned at the time ofinvestment and the above allocation is based on a steadystate situation.

Note: The asset allocation shown above is indicative and mayvary according to circumstances at the sole discretion of theFund Manager, on defensive consideration. Review andrebalancing will be conducted when the asset allocation fallsoutside the range indicated above. If the exposure falls outsidethe above range, it will be restored within Seven WorkingDays.

Overview of Debt MarketThe Indian Debt Market has grown in size substantially overthe years. The Reserve Bank of India has been taking stepsto make the Indian Debt Market efficient and vibrant. Broadly,the debt market is divided in two parts viz. the Money Marketand the Debt market. Money market instruments have atenor of less than one year while debt market instrumentshave a tenor of more than one year. Money market instrumentsare typically commercial paper, certificates of deposit, treasurybills, trade bills, repos, interbank call deposit receipts etc.Debt market comprises typically of securities issued byGovernments (Central and State), Banks, Financial Institutions,and Companies in the private and public sector, Corporations,Statutory Bodies etc.

The debt securities are mainly traded over the telephonedirectly or through brokers. The National Stock Exchange ofIndia has a separate trading platform called the WholesaleDebt Market segment where trades put through memberbrokers are reported. The debt market is very liquid with thedaily trades in the region of Rs. 2500-5000 crores.

RBI has introduced the Negotiated Dealing System (NDS)platform for screen-based trading in Government Securitiesand Money Market instruments. Most of the marketparticipants are now operating through NDS.

Promoted by major banks and financial institutions, TheClearing Corporation of India Ltd. (CCIL), was incorporatedon April 30, 2001. The CCIL guarantees the settlement of alltrades executed through NDS. The clearing and settlementrisks viz., Counter party Credit Risk and Operational Risk aremitigated by CCIL thereby facilitating a smooth settlementprocess.

The following table gives approximate yields prevailing as onJuly 15, 2005 on some of the money and debt marketinstruments. These yields are indicative and do not indicateyields that may be obtained in future as interest rates keepchanging.

Instrument Yield Range(% per annum)

Inter bank Call Money 5.00

91 Day Treasury Bill 5.40

364 Day Treasury Bill 5.75

P1+ Commercial Paper 90 Days 5.80

3-Year Government of India Security 6.40



Generally, for instruments issued by a non-Government entity,the yield is higher than the yield on a Government Securitywith corresponding maturity. The difference, known as creditspread, depends on the credit rating of the entity. Investorsmust note that the yields shown above are the yields prevailingon July 15, 2005 and they are likely to change consequentto changes in economic conditions and RBI policy.

28


B. POLICIES AND REGULATIONS APPLICABLETO THE SCHEME

1. Fundamental Attributes and Changes ThereinThe following constitute the fundamental attributes of theScheme

l The open-ended character and type of the Scheme,

l The investment objective, investment pattern andinvestment strategy as stated in this Offer Document

l Terms of issue of the Scheme restricted to liquidityprovisions and aggregate fees and expenses to be charged

In accordance with Regulation 18 (15A), the Trustee shallensure that there are no changes carried out in thefundamental attributes of the Scheme or the trust or fees andexpenses payable or any other change which would modifythe Scheme and affect the interest of Unitholders, unless;

(i) a written communication about the proposed change issent to each Unitholder and an advertisement is givenin one English daily newspaper having nationwidecirculation as well as in a newspaper published in thelanguage of the region where the Head Office of theFund is situated and

(ii) the Unitholders are given an option to exit at the prevailingNet Asset Value without any Exit Load.

The exercise of rights reserved by the Trustee under this offerdocument vis-à-vis prospective investments in any Schemeshall not constitute change in the fundamental attributes ofthe Scheme (refer paragraph “Power to Remove Difficulties”,mentioned elsewhere in this Offer Document).

2. Investment of Subscription MoneyOn receiving the minimum subscription amount for theScheme during the New Fund Offer, the Fund may commenceinvestment in instruments / securities as mentioned in thetable giving the proposed Investment Pattern for the Scheme.On allotment of Units the income earned out of suchinvestments will be merged into the investments of theScheme.

3. Borrowing PowerTo meet the temporary liquidity needs of the Scheme for thepurpose of repurchase, redemption, or payment of incometo Unitholders, the Scheme may borrow upto 20% of its netassets for a period of upto six months or as may be permittedby the pertinent rules and Regulations. The Fund may tie upwith various banks/institutions for the above-mentioned facility.The Scheme may bear the interest charged on borrowings.

4. DepositoryThe securities may be held in either physical or dematerialisedform. If the securities are held in dematerialised form, therules of the Securities and Exchange Board of India(Depositories and Participants) Regulations 1996 apply. In thecase of Government Securities, the provisions of the PublicDebt Act, 1944 and Rules thereunder apply.

5. Policy on Inter Scheme TransfersTransfer of Investments from one Scheme to another scheme,present or to be floated in future, may be made at thediscretion of the Fund Manager, as per the current regulations,only if:

l such transfer is done at the prevailing market price forquoted instruments on spot basis; and

l the security(ies) so transferred is/are in conformity withthe Investment objective of the scheme to which suchtransfer has been made.

In case of any amendment in the Regulations, transfer ofInvestments from one Scheme to another scheme, present orto be floated in future, may also be made, subject to theapplicable Regulations at the time of transfer, at the discretionof the Fund Manager.

6. UnderwritingThe Regulations provide that the Fund should obtain anapproval/registration from SEBI under the Securities andExchange Board of India (Underwriters) Regulations, 1993,and the Securities and Exchange Board of India (Underwriters)Rules, 1993, before entering into an underwriting agreement.Subject to Kotak Mahindra Mutual Fund obtaining suchapproval/ registration, the Scheme may accept obligations forunderwriting issue of securities consistent with its investmentobjective. As per the Regulations, the outstanding amount ofunderwriting shall not exceed the corpus of the Scheme. TheAMC may limit it to a lower proportion of the corpus afterreviewing the market conditions from time to time.

7. Mode of InvestmentThe securities in which the Investment Manager may invest,under the Scheme will be through the primary as well assecondary markets, private placement, preferential/firmallotments, auctions/book building, and such others. Thesesecurities may be those listed on the various stock exchangesrecognised by SEBI or unlisted securities and the investmentwill be in conformity with the pertinent rules and regulations,applicable at the time of making the investment.

8. Investment in DerivativesThe Fund may use derivative instruments such as index futures,stock futures, index options, stock options, warrants,convertible securities, swap agreements or any other derivativeinstruments that are permissible or may be permissible infuture under applicable regulations, as would becommensurate with the investment objective of the Scheme,in an attempt to protect the value of the portfolio andenhance Unitholders interest.

Hedging & Portfolio balancingAs part of the fund management exercise under the Scheme,the Trustee may permit the use of any of the instrumentsmentioned above or any other instrument that may becomepermissible in the future under applicable regulations. Suchinvestment in Index futures, Interest Rate Swaps, Stock options,Index Options, Stock Futures and other derivative instrumentswill be used with the objective of a) hedging the portfolioand/or b) rebalancing of the portfolio of the Scheme.

The note below explains the concept of Index Futures, Optionsand Interest Rate Swaps, with an example each, for theunderstanding of the Unitholders.

Index FuturesDue to ease of execution and settlement, index futures arean efficient way of buying/selling an Index compared tobuying/selling a portfolio of physical shares representing an

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Index. Index futures can be an efficient way of achieving aScheme's investment objectives. Index futures may do awaywith the need for trading in individual components of theIndex, which may not be possible at times, keeping in mindthe circuit filter system and the liquidity in some of the scripts.Index futures can also be helpful in reducing transaction costsand processing costs on account of ease of execution of onetrade compared to several trades of shares comprising theIndex and will be easy to settle compared to physical portfolioof shares representing an Index

The National Stock Exchange and the Bombay Stock Exchangeintroduced Index futures on Nifty (NSE-50) and Sensex (BSE30) for three serial months. For example, in the month of June2005, three futures were available i.e. June, July and August2005, each expiring on the last working Thursday of therespective month.

Let us assume the Nifty Index was 2087 as on June 29, 2005and three future indices were available as under:

Month Bid Price Offer Price

June 2005 2087 2088

July 2005 2098 2100

August 2005 2110 2113

The Fund could buy an Index of July 2005 as on June 29, 2005at an offer price of 2100. The Fund would have to pay theinitial margin as regulated by the exchanges and settle itsIndex position with daily marked to market i.e. receive profits/pay losses on a daily basis.

The following is a hypothetical example of a typical indexfuture trade and the associated costs compared with physicalstocks.

(Amount in Rupees)

Particulars Index ActualFuture Purchase

of Stocks

Index as on June 29, 2005 2087 2087

July 2005 Futures Cost 2100

A. Execution Cost

Carry costs 13.00 Nil(2100-2087)

B. Brokerage Cost

Assumed at 0.04% forIndex Future and 0.84 1.0430.05% for spot stocks(0.04% of 2100)(0.05% of 2087)

C. Securities Transaction Tax Nil 2.087

STT for Index Futures is NilSTT for Spot Stocks is 0.10%(0.10% of 2087)

D. Gains on Surplus Funds 9.366 Nil(assuming 6% return on91% of the money left afterpaying (9% margin)(6%*2087*91%*30 days/365)Cash Market/Sale Price at expiryof July 2005 contract 2100 2100

E. Brokerage on SaleAssumed at 0.04% for 0.84 1.05Index Future and 0.05% forSpot stocks(0.04% of 2100)(0.05% of 2100)

F. Securities Transaction Tax 0.279 2.10STT for Index Futures is 0.0133%STT for Spot Stocks is 0.10%(0.0133% of 2100)(0.10% of 2100)

Total Cost (A+B+C-D+E+F) 5.593 6.280

Profit 7.407 6.720

As the above example demonstrates, the cost differentialbetween purchasing Index Future and 50 stocks compromisingNifty (NSE-50) is a function of the carrying cost, the interestearned available to Fund Managers and the brokerage costapplicable in both cases. However, as mentioned earlier, asthe Indian equity markets continues to have limitations inexecution of trades due to the lack of adequate liquidity andthe concept of circuit breakers, index future can allow a fundto buy all the stocks comprising the index at a nominaladditional cost.

Please note that the above example is hypothetical in natureand the figures, brokerage rates etc. are assumed. In case theexecution and brokerage costs on purchase of Index Futuresare high and the returns on surplus funds are less, buying ofindex future may not be beneficial as compared to buyingstocks comprising the Index. The actual return may varybased on actuals and depends on final guidelines/proceduresand trading mechanism as envisaged by stock exchanges andother regulatory authorities.

Use of futuresFutures can effectively be used as a substitute for underlyingstocks e.g. if the Fund has received fresh subscriptions andif it is not immediately possible to invest the cash so receivedinto intended stocks, the Fund Manager can buy a Futurecontract and subsequently replace them by actual purchaseof stocks. The reverse can be done in case of redemption ofUnits.

The Fund typically holds cash in order to meet suddenredemption requests. This cash holding reduces the overallreturns of the Fund. By buying futures relative to this cashholding the Fund can effectively increase its exposure to themarket while keeping the cash required to meet redemptionrequirement.

Futures will be used to hedge or rebalance the Portfolio oras permitted by the Regulations from time to time.

Particulars Index ActualFuture Purchase

of Stocks

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Option Contracts (Stock and Index)In the global financial markets, particularly securities markets,options have been, for quite many years, a means of conveyingrights from one party to another at a specified price on orbefore a specific date, at a cost, which is called Premium. Theunderlying instrument can be an individual stock or a stockindex such as the BSE Sensex (such options being referred toas index options). Options are used widely the world over tomanage risk and generate income because options tradingprovides a cheap and effective means of hedging one'sportfolio against adverse and unexpected price fluctuations.

Option contracts are of two types - Call and Put; the formerbeing the right, but not obligation, to purchase a prescribednumber of shares at a specified price before or on a specificexpiration date and the latter being the right, but notobligation, to sell a prescribed number of shares at a specifiedprice before or on a specific expiration date. The specifiedprice at which the shares are contracted to be purchased orsold is called the strike price. Options that can be exercisedon or before the expiration date are called American Options,while those that can be exercised only on the expiration dateare called European Options. In India, all individual stockoptions are American Options, whereas all index options areEuropean Options. Option contracts are designated by thetype of option, name of the underlying, expiry month and thestrike price.

Example for OptionsBuying a Call Option: Let us assume that the Fund buys a calloption of ABC Ltd. with strike price of Rs. 3500, at a premiumof Rs. 100. If the market price of ABC Ltd on the expirationdate is more than Rs. 3500, the option will be exercised. TheFund will earn profits once the share price crosses Rs. 3600(Strike Price + Premium i.e. 3500+100). Suppose the price ofthe stock is Rs. 3800, the option will be exercised and theFund will buy 1 share of ABC Ltd. from the seller of the optionat Rs 3500 and sell it in the market at Rs. 3800, making aprofit of Rs. 200. In another scenario, if on the expiration datethe stock price falls below Rs. 3500, say it touches Rs. 3000,the Fund will choose not to exercise the option. In this casethe Fund loses the premium (Rs. 100), which will be the profitearned by the seller of the call option.

Thus for an option buyer, loss is limited to the premium thathe has paid and gains are unlimited. The risk of an optionwriter i.e. the seller of the option, is unlimited while his gainsare limited to the premiums earned. However, in the case ofthe Fund, all option positions will have underlying assets andtherefore all losses due to price-movement beyond the strikeprice will actually be an opportunity loss as illustrated in theexample below.

Writing a Call Option: Let us assume that the Fund ownsshares of ABC Ltd., which are trading at Rs. 3500. The Fundwishes to sell these shares at Rs. 3800. It can write call optionat Rs. 3800 and earn a premium of, say, Rs. 50. If the optionis not exercised, the Fund earns a premium and if the stockprice does reach Rs. 3800, the premium adds to the profitsthat the Fund would have booked by selling at that price. Inthis case, if the stock price of ABC Ltd. is less then Rs. 3800,the Fund earns Rs 50 and if it closes above Rs. 3800 and theoption gets exercised by the buyer, the Fund gets the strikeprice of Rs. 3800 plus a premium of Rs. 50, i.e. effectively Rs.3850. Any loss because of stock price movement beyond Rs.3850 is actually an opportunity loss, as the Fund wouldotherwise have sold the shares at Rs. 3800.

The above example is hypothetical in nature and all figuresare assumed for the purpose of illustrating the use of calloptions in individual stocks. Similarly, analogies can be drawnto illustrate the use of put options in individual stocks, andcall and put options in index.

Note on Risk: The risk (loss) for an option buyer is limited tothe premium paid, while the risk (loss) of an option writer isunlimited, the latter's gain being limited to the premiumsearned. However, in the case of the Fund, all option positionswill have underlying assets and therefore all losses due toprice-movement beyond the strike price will actually be anopportunity loss. The writer of a put option bears a risk ofloss if the value of the underlying asset declines below thestrike price. The writer of a call option bears a risk of loss ifthe value of the underlying asset increases above the strikeprice.

The Fund will use options only for the purpose of hedgingand portfolio balancing. Internal controls / limits for managingrisks associated with options have been set up / laid down.Option contracts will be undertaken only if the Fund can fullycover its positions in such contracts by holding underlyingassets as prescribed by the Regulations. Open positions in allcall option contracts bought and put option contracts written/sold will be covered with underlying cash/cash equivalents.Open positions in all put option contracts bought and calloption contracts written / sold will be covered with holdingsin underlying securities. Internal limits currently approved arespecified under the head 'Investment Limitation andRestrictions'.

Interest Rate Swap (IRS)IRS is a widely used derivative product in the financial marketsto manage interest rate risk. A typical transaction is a contractto exchange streams of interest rate obligation/income on anotional principle amount with a counter party, usually abank. The two interest streams are, fixed rate on one side andfloating rate on the other.

Example: Suppose you hold a fixed rate bond of maturity 5years carrying a fixed interest rate (coupon) of 6% p.a. payablehalf-yearly. Such an investment runs the risk of depreciationif interest rates rise. To manage this risk, an IRS, where youcontract to pay fixed rate, say 5.25% p.a., and receive afloating rate (say overnight call money rate), is done for anotional principal amount equal to the value of the investment.Thus a fixed rate income is offset by a fixed rate paymentobligation leaving only a floating rate income stream. Thus,without actually investing in a floating rate asset, you startearning a floating rate income, reducing the risk of depreciationassociated with the fixed rate investment. Following tablesummarises the cash flow streams.

Original Investment 6% p.a.

Pay (Fixed Rate) 5.25% p.a. (IRS)

Receive (Floating Rate) MIBOR

Net Flow MIBOR +0.75% p.a. (*)

* (6% p.a. - 5.25 % p.a.)

The floating rate reference is defined in the swap agreement.

The above example illustrates a case of fixed to floating rateswap. A swap could be done to move from floating rate tofixed rate in a similar fashion.

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Please note that the above example is hypothetical in natureand the interest rates are assumed. The actual return mayvary based on actuals and depends on the interest rateprevailing at the time the swap agreement is entered into.

The Fund will be allowed to take exposure in Interest RateSwaps only on a non-leveraged basis. A swap will beundertaken only if there is an underlying asset in the portfolio.The Fund may use other derivatives such as interest ratefutures, interest rate options, etc, to meet the investmentobjective of the Scheme, whenever such instruments areavailable in the market.

As per internal limits currently approved, exposure to interestrate swaps shall be restricted to 25% of the net assets of theScheme concerned. This limit may be revised by the Board ofDirectors of AMC from time to time and the exposure to IRSin the Scheme shall be within the revised limit.

9. Investments by the AMC in the FundThe AMC reserves the right to invest its own funds in theScheme as may be decided by the AMC from time to timeand in accordance with SEBI Circular no. SEBI/IMD/CIR No.10/22701/03 dated December 12, 2003 regarding minimumnumber of investors in the Scheme/ Plan. Under theRegulations, the AMC is not permitted to charge anyinvestment management and advisory services fee on its owninvestment in the Scheme.

10. Investment Limitation and RestrictionsThe following investment limitations and other restrictions,inter-alia, as contained in the Trust Deed and the Regulationsapply to the Scheme:

1. No loans may be advanced by the Mutual Fund and theFund shall not borrow except to meet temporary liquidityneeds of the Fund for the purpose of repurchase,redemption of Units or payment of interest or dividendsto Unitholders, provided the Fund shall not borrow morethan 20% of the net assets of the Scheme and theduration of such borrowing shall not exceed a period ofsix months or as may be permitted by the Regulationsfrom time to time.

2. The Scheme may invest in another scheme, under thesame AMC or any other mutual fund provided that theaggregate interscheme investments made by all schemesunder the same AMC or any other mutual fund shall notexceed 5% of the net assets of the Fund or any otherlimit as prescribed by the Regulations from time to time.The AMC is not permitted by the Regulations to chargeany investment management and advisory services feeon such investments.

3. The Fund shall buy and sell securities only againstdeliveries. In no case shall the Fund engage in shortselling, carry forward transactions or Badla Finance.Provided that the Fund may enter into derivativestransactions in accordance with the guidelines issued bySEBI.

4. Pending deployment of the funds of the Scheme insecurities in terms of investment objective, the Fund caninvest the funds of the Scheme in short term deposits ofscheduled commercial banks.

5. The Scheme shall not make any investment in:

a) any unlisted security of an associate or groupcompany of the Sponsor; or

b) any security issued by way of private placement byany associate or group company of the Sponsor; or

c) the listed securities of group companies of theSponsor in excess of 25% of its net assets.

6. The Scheme shall not invest in any Fund of Funds Scheme.

7. The Scheme shall not invest more than 15% of its NetAssets in debt instruments issued by a single issuer whichare rated not below investment grade; such limit may beextended to 20% of the Net Assets of the Scheme withthe prior approval of the Board of the Trustee and theBoard of the AMC;

Provided that such limit will not be applicable toinvestments in Money Market Instruments andGovernment Securities.

8. The Scheme shall not invest more than 10% of its NetAssets in unrated debt instruments issued by a singleissuer and the total investment in such instruments shallnot exceed 25% of the Net Assets of the scheme. Allsuch investments shall be as per the parameters approvedby the Boards of the Trustee and the AMC.

9. Debentures, irrespective of any residual maturity period(above or below one year), shall attract the investmentrestrictions as applicable for debt instruments as specifiedunder Clause 1 and 1 A of Seventh Schedule to theRegulations.

10. Investments of the Scheme, together with the investmentsof other schemes of the Fund in share capital of anycompany shall not exceed 10% of that company’s paid-up capital carrying voting rights.

For the purpose of determining the above limit, gross longposition, which will be a combination of positions of theunderlying securities and stock derivatives, will beconsidered.

11. The Scheme shall not invest more than 10% of its NetAssets in the equity or equity related instruments of anycompany.

For the purpose of determining the above limit, grosslong position, which will be a combination of positionsof the underlying securities and stock derivatives, will beconsidered.

12. The Scheme shall not invest more than 5% of its NetAssets in the unlisted equity shares or equity relatedinstruments of any company.

13. Wherever investments are intended to be of a long-termnature, the securities shall be purchased or transferredin the name of the Fund, on account of the Schemeconcerned.

Modifications, if any, in the Investment Restrictions on accountof amendments to the SEBI Regulations/ ELSS guidelines, andshall supercede/override the provisions of the Trust Deed.

Apart from the above investment restrictions, the Fund followscertain internal norms vis-à-vis limiting exposure to scrips,sectors, etc. and these are subject to change from time totime. Presently, following are some of the internal restrictionsfollowed:

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1. In case the Scheme invests in debt and money marketinstruments, investments shall be made in accordancewith ratingwise and issuerwise limits set for the purposeby the Credit Committee of the AMC.

2. The Board of Trustee has laid down parameters forinvestments in unrated debt securities. However, evenwhere an investment in any unrated debt security (ies)is made as per the said parameters, the prior approvalof the Credit Committee and the Board of the AMC shallbe obtained and subsequently, such investments will bereported to the Board of Trustee in the immediately nextBoard Meeting. Where the proposed investment is notwithin the parameters as mentioned above, approval ofthe Boards of both the AMC and the Trustee shall betaken before making the investment.

3. The Fund may take exposure to Interest Rate Swaps upto25% of non-equity holdings in the Scheme.

4. In case of equity instruments maximum investment limitshave been laid down for each scrip.

5. In case of investments in equity instruments, the momentexposure in any scrip reaches 9.50% of the net assetsof the Scheme, further purchases of that scrip shall bemade only with the prior approval of the ComplianceOfficer / Chief Executive Officer. Where the exposure inany scrip reaches 9.75% of the net assets of the Scheme,fresh purchases of the said scrip shall be immediatelyfrozen.

6. The internal limit for application by the Scheme in theIPO of the equity instruments of any Company, whereKotak Mahindra Capital Company Limited is a leadmanager, arranger or book runner shall be 7.5% of thenet assets of the Scheme. For any application in excessof 7.5% but not more than 9.75% of the net assets ofthe Scheme in any such IPO, approval of all theindependent Directors on the Board of AMC shall besought. No application shall be made in excess of 9.75%of the net assets of the Scheme in any such IPO.

7. Investments in GDRs/ADRs shall be within the overalllimit of 20% of net assets of the Scheme or suchpercentage as may be determined as per the guidelinesissued by SEBI from time to time.

8. The norms for the use of options and futures are laiddown below:

l The maximum derivatives net position would alwaysbe <=50% of Net Assets of the Scheme.

l In respect of the Scheme no derivatives positions(stock and index), requiring underlying cash/cashequivalents shall be taken in excess of 25% of thenet assets of the Scheme, and no derivatives positions(stock and index), requiring holdings in underlyingsecurities shall be taken in excess of 15% of the netassets or 25% of the equity portion of the scheme,whichever is lower.

l These limits shall apply at the time of makinginvestments.

l The limits in derivatives positions as mentioned abovemay exceed due to reasons other than fresh positions.However, the positions shall not be allowed to exceedthe following limits:

In respect of the Scheme, 30% of the net assets ofthe Scheme in the case of positions (stock andindex) requiring underlying cash/cash equivalentsand 20% of the net assets or 30% of the equityportion of the Scheme at the beginning of the day,whichever is lower in the case of positions (stockand index), requiring holdings in underlyingsecurities;

l The limits on unblocked cash and stocks shall be asfollows:

Cash:

In respect of Scheme, debt and money marketcomponent of the net assets excluding blockedcash/ cash equivalents shall not be less than 5% ofthe net assets of the Scheme;

Stocks:

Unblocked stock position shall not be less than40% of the net assets of the Scheme.

l The maximum limit for each long/short derivatives(stock/index) positions is as follows:

MAXIMUM LIMIT

No. DERIVATIVE ACTION At the time of Investment At any point of time

1 Index futures Buy 25% of net assets 30% of net assets

2 Index futures Sell 15% of net assets or 25% of equity 20% of net assets or 30% ofportion of the Scheme, whichever is equity portion of the Scheme,lower. whichever is lower.

3 Index Options - Call Buy 25% of net assets 30% of net assets

4 Index Options - Call Sell 15% of net assets or 25% of equity 20% of net assets or 30% ofportion of the Scheme, whichever is equity portion of the Scheme,lower. whichever is lower.

5 Index Options - Put Buy 15% of net assets or 25% of equity 20% of net assets or 30% ofportion of the Scheme, whichever is equity portion of the Scheme,lower. whichever is lower

6 Index Options - Put Sell 25% of net assets 30% of net assets

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7 Stock futures Buy 25% of net assets 30% of net assets

Per scrip limit: 10% of net assets subject to existing gross long positionwhich will be a combination of positions of the underlying security andstock derivatives.

8 Stock futures Sell 15% of net assets or 25% of equity 20% of net assets or 30% ofportion of the Scheme, whichever is equity portion of the Scheme,lower. whichever is lower.

Per Scrip limit: 100% of the particular stock holding in the portfoliosubject to existing blocked stock.

9 Stock options - Call Buy 25% of net assets 30% of net assets


10 Stock options - Call Sell 15% of net assets or 25% of equity 20% of net assets or 30% ofportion of the Scheme, whichever is equity portion of the Scheme,lower. whichever is lower.


11 Stock options - Put Buy 15% of net assets or 25% of equity 20% of net assets or 30% ofportion of the Scheme, whichever is equity portion of the Scheme,lower. whichever is lower.


12 Stock options - Put Sell 25% of net assets 30% of net assets


The above limits would be subject to the following positionlimits at the Mutual Fund (Fund) and the scheme level:

i. Position limit for the Fund in index options contracts

a. The Fund position limit in all index options contractson a particular underlying index shall be Rs. 250crore or 15% of the total open interest of themarket in index options, whichever is higher, perStock Exchange.

b. This limit would be applicable on open positions inall options contracts on a particular underlying index.

ii. Position limit for Mutual Funds in index futures contracts:

a. The Fund position limit in all index futures contractson a particular underlying index shall be Rs. 250crore or 15% of the total open interest of themarket in index futures, whichever is higher, perStock Exchange.

b. This limit would be applicable on open positions inall futures contracts on a particular underlying index.

iii. Additional position limit for hedging

In addition to the position limits at point (i) and (ii) above,Fund may take exposure in equity index derivatives subjectto the following limits:

MAXIMUM LIMIT

No. DERIVATIVE ACTION At the time of Investment At any point of time

1. Short positions in index derivatives (short futures,short calls and long puts) shall not exceed (in notionalvalue) the Fund’s holding of stocks.

2. Long positions in index derivatives (long futures,long calls and short puts) shall not exceed (in notionalvalue) the Fund’s holding of cash, governmentsecurities, T-Bills and similar instruments.

iv. Position limit for the Fund for stock based derivativecontracts

The Fund position limit in a derivative contract on a particularunderlying stock, i.e. stock option contracts and stock futurescontracts, stand modified in the following manner:-

1. For stocks in which the market wide position limitis less than or equal to Rs. 250 crore, the Fundposition limit in such stock shall be 20% of themarket wide position limit.

2. For stocks in which the market wide position limitis greater than Rs. 250 crore, the Fund position limitin such stock shall be Rs. 50 crore.

v. Position limit for the scheme of the Fund

The scheme-wise position limit / disclosure requirements shallbe –

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1. For stock option and stock futures contracts, thegross open position across all derivative contractson a particular underlying stock of the scheme ofthe fund shall not exceed the higher of: 1% of thefree float market capitalisation (in terms of numberof shares).

Or

5% of the open interest in the derivative contractson a particular underlying stock (in terms of numberof contracts).

2. This position limits shall be applicable on thecombined position in all derivative contracts on anunderlying stock at a Stock Exchange.

3. For index based contracts, the Fund shall disclosethe total open interest held by the scheme or allother schemes of the AMC put together in aparticular underlying index, if such open interestequals to or exceeds 15% of the open interest ofall derivative contracts on that underlying index.

11. Computation of Net Asset ValueThe NAV of the Units of the Scheme will be computed bydividing the net assets of the Scheme by the number of Unitsoutstanding on the valuation date.

a) Valuation NormsThe Fund shall value its investments according to the valuationnorms, as specified in the Eighth Schedule of the Regulations,or such guidelines / recommendations as may be specified bySEBI/AMFI from time to time.

The broad valuation norms are detailed below:

Traded Securities(i) Traded securities shall be valued at the last quoted price

on The National Stock Exchange (NSE). However, if thesecurities are not listed on NSE, the securities shall bevalued at the price quoted at the exchange where theyare principally traded.

(ii) When on a particular valuation day, a security has notbeen traded on NSE but has been traded on anotherstock exchange, the value at which it is traded on thatstock exchange shall be used.

(iii) When a security (other than debt securities) is not tradedon any stock exchange on a particular valuation day, thevalue at which it was traded on NSE or any other stockexchange as the case may be, on the earliest previousday may be used, provided that such day is not morethan thirty days prior to the valuation date.

Thinly Traded Securities / Non-Traded Securities:A. Thinly Traded / Non-Traded Equity and Equity Related

Securities

Thinly traded equity / equity related securities as defined inthe Regulations shall be valued in the manner as specified inthe guidelines issued by SEBI, as follows:

When trading in an equity/equity related security (such asconvertible debentures, equity warrants, etc.) in a month isboth less than Rs. 5 lacs and the total volume is less than50,000 shares, it shall be considered as a thinly traded securityand valued accordingly.

In order to determine whether a security is thinly traded ornot, the volumes traded in all recognised stock exchanges inIndia may be taken into account.

Where a stock exchange identifies the “thinly traded” securitiesby applying the above parameters for the preceding calendarmonth and publishes/provides the required information alongwith the daily quotations, the same can be used by themutual funds.

If the share is not listed on the stock exchanges which providesuch information, then it will be obligatory on the part of themutual fund to make its own analysis in line with the abovecriteria to check whether such securities are thinly tradedwhich would then be valued accordingly.

In case trading in an equity security is suspended upto 30days, then the last traded price would be considered forvaluation of that security. If an equity security is suspendedfor more than 30 days, then the Asset Management Company/Trustees will decide the valuation norms to be followed andsuch norms would be documented and recorded.

Non-traded / thinly traded securities shall be valued “in goodfaith” by the asset management company on the basis ofvaluation principles laid down below:

a) Based on the latest available Balance Sheet, net worthshall be calculated as follows:

Net Worth per share = [share capital+ reserves (excludingrevaluation reserves) – Misc. Expenditure and DebitBalance in P&L A/c] Divided by No. of Paid up Shares.

b) Average capitalisation rate (P/E ratio) for the industrybased upon either BSE or NSE data (which should befollowed consistently and changes, if any noted withproper justification thereof) shall be taken and discountedby 75% i.e. only 25% of the Industry average P/E shallbe taken as capitalisation rate (P/E ratio). Earnings pershare of the latest audited annual accounts will beconsidered for this purpose.

c) The value as per the net worth value per share and thecapital earning value calculated as above shall be averagedand further discounted by 10% for illiquidity so as toarrive at the fair value per share.

d) In case the EPS is negative, EPS value for that year shallbe taken as zero for arriving at capitalised earning.

e) In case where the latest balance sheet of the companyis not available within nine months from the close of theyear, unless the accounting year is changed, the sharesof such companies shall be valued at zero.

f) In case an individual security accounts for more than 5%of the total assets of the scheme, an independent valuershall be appointed for the valuation of the said security.

To determine if a security accounts for more than 5% of thetotal assets of the Scheme, it should be valued by the procedureabove and the proportion which it bears to the total netassets of the scheme to which it belongs would be computedon the date of valuation.

B. Thinly Traded / Non-Traded Debt SecuritiesA debt security (other than Government Securities) shall beconsidered as a thinly traded security if on the valuation date,

35


there are no individual trades in that security in marketablelots (currently Rs 5 crore) on the principal stock exchange orany other stock exchange.

Non-traded / Thinly traded Debt securities would be valuedas per the norms set below:

a) Thinly Traded / Non-Traded Debt Securities of Upto 182Days to Maturity:

As the money market securities are valued on the basis ofamortization (cost plus accrued interest till the beginning ofthe day plus the difference between the redemption valueand the cost spread uniformly over the remaining maturityperiod of the instruments) a similar process should be adoptedfor non-traded debt securities with residual maturity of upto182 days. Debt securities purchased with residual maturity ofupto 182 days are to be valued at cost (including accruedinterest till the beginning of the day) plus the differencebetween the redemption value (inclusive of interest) and costspread uniformly over the remaining maturity period of theinstrument. In case of a debt security with maturity greaterthan 182 days at the time of purchase, the last valuation priceplus accrued interest should be used instead of purchase cost.All other non-traded Non Government debt instruments shallbe valued using the method suggested below.

b) Thinly Traded / Non Traded Debt Securities of Over 182Days to Maturity

For the purpose of valuation, all Non Traded Debt Securitieswould be classified into “Investment grade” and “NonInvestment grade” securities based on their credit ratings.The non-investment grade securities would further be classifiedas “Performing” and “Non Performing” assets.

l All Non Government investment grade debt securities,classified as not traded, shall be valued on yield tomaturity basis as described below.

l All Non Government non investment grade performingdebt securities would be valued at a discount of 25%to the face value

l All Non Government non-investment grade non-performing debt securities would be valued based onthe provisioning norms.

The approach in valuation of non-traded debt securities isbased on the concept of using spreads over the benchmarkrate to arrive at the yields for pricing the non-traded security.

The Yields for pricing the non-traded debt security would bearrived at using the process as defined below.

Step AA Risk Free Benchmark Yield is built using the governmentsecurities (GOI Sec) as the base. GOI Secs are used as thebenchmarks as they are traded regularly; free of credit risk;and traded across different maturity spectrums every week.

Step BA Matrix of spreads (based on the credit risk) are built formarking up the benchmark yields. The matrix is built basedon traded corporate paper on the wholesale debt segmentof an appropriate stock exchange and the primary marketissuances. The matrix is restricted only to investment gradecorporate paper.

Step CThe yields as calculated above are Marked-up/Marked-downfor ill-liquidity risk.

Step DThe Yields so arrived are used to price the portfolio.

As per the recommendation of AMFI, CRISIL Bond ValuationMatrix is used to arrive at yields for pricing the portfolio.

Valuation of securities with Put / Call Options:However, the option embedded securities would be valuedas follows:

Securities with Call option:

The securities with call option shall be valued at the lower ofthe value as obtained by valuing the security to final maturityand valuing the security to Call option.

In case there are multiple call options, the lowest valueobtained by valuing to the various call dates and valuing tothe maturity date is to be taken as the value of the instrument.

Securities with Put option :

The securities with Put option shall be valued at the higherof the value as obtained by valuing the security to finalmaturity and valuing the security to Put option.

In case there are multiple put options, the highest valueobtained by valuing to the various put dates and valuing tothe maturity date is to be taken as the value of the instruments.

Securities with both Put and Call option on the same day

The securities with both Put and Call option on the same daywould be deemed to mature on the Put/Call day and wouldbe valued accordingly.

Unlisted Equity Shares:Unlisted equity shares of a company shall be valued “in goodfaith” on the basis of the valuation principles laid downbelow:

a. Based on the latest available audited balance sheet, networth shall be calculated as lower of (i) and (ii) below:

(i) Net worth per share = [share capital plus free reserves(excluding revaluation reserves) minus Miscellaneousexpenditure not written off or deferred revenueexpenditure, intangible assets and accumulatedlosses] divided by Number of Paid up Shares.

(ii) After taking into account the outstanding warrantsand options, Net worth per share shall again becalculated and shall be = [share capital plusconsideration on exercise of Option/Warrantsreceived/receivable by the Company plus freereserves (excluding revaluation reserves) minusMiscellaneous expenditure not written off or deferredrevenue expenditure, intangible assets andaccumulated losses] divided by {Number of Paid upShares plus Number of Shares that would beobtained on conversion/exercise of OutstandingWarrants and Options}

The lower of (i) and (ii) above shall be used forcalculation of net worth per share and for furthercalculation in (c) below.

36


b. Average capitalisation rate (P/E ratio) for the industrybased upon either BSE or NSE data (which should befollowed consistently and changes, if any, noted withproper justification thereof) shall be taken and discountedby 75% i.e. only 25% of the Industry average P/E shallbe taken as capitalisation rate (P/E ratio). Earnings pershare of the latest audited annual accounts will beconsidered for this purpose.

c. The value as per the net worth value per share and thecapital earning value calculated as above shall be averagedand further discounted by 15% for illiquidity so as toarrive at the fair value per share.

The above methodology for valuation shall be subject to thefollowing conditions:

i. All calculations as aforesaid shall be based on auditedaccounts.

ii. In case where the latest balance sheet of the companyis not available within nine months from the close of theyear, unless the accounting year is changed, the sharesof such companies shall be valued at zero.

iii. If the net worth of the company is negative, the sharewould be marked down to zero.

iv. In case the EPS is negative, EPS value for that year shallbe taken as zero for arriving at capitalised earning.

v. In case an individual security accounts for more than 5%of the total assets of the scheme, an independent valuershall be appointed for the valuation of the said security.To determine if a security accounts for more than 5% ofthe total assets of the scheme, it should be valued inaccordance with the procedure as mentioned above onthe date of valuation.

At the discretion of the AMC and with the approval of thetrustees, an unlisted equity share may be valued at a pricelower than the value derived using the aforesaid methodology.

Money Market InstrumentsInvestments in call money, collaterised borrowing & lendingobligation, bills purchased under rediscounting scheme andshort term deposits with banks shall be valued at cost plusaccrual. Money market instruments other than call money,bills purchased under rediscounting scheme and short termdeposits with banks, shall be valued at the last traded priceon the National Stock Exchange (NSE), and where not traded,shall be valued at the last traded price plus amortization onthe basis of the last traded price.

Government securitiesTraded and non- traded Government Securities shall be valuedas per the prices for Government Securities released by anagency suggested by AMFI for the sake of uniformity incalculation of NAVs across all mutual funds. Accordingly,traded and non-traded government securities are valued atprices obtained from The Credit Rating Information Servicesof India Limited.

Convertible debentures and bondsIn respect of convertible debentures and bonds, the non-convertible and convertible components shall be valuedseparately. The non-convertible component should be valued

on the same basis as would be applicable to a debt instrument.The convertible component shall be valued on the same basisas would be applicable to an equity instrument. If, afterconversion, the resultant equity instrument would be tradedpari passu with an existing instrument which is traded, thevalue of the latter instrument can be adopted after anappropriate discount for the non-tradeability of the instrumentduring the period preceding the conversion. While valuingsuch instruments, the fact as to whether the conversion isoptional or not shall also be factored in.

WarrantsIn respect of warrants to subscribe attached to instruments,the warrants can be valued at the value of the share whichwould be obtained on exercise of the warrant as reduced bythe amount which would be payable on exercise of thewarrant. A discount similar to the discount to be determinedin respect of convertible debentures shall be deducted toaccount for the period, which must elapse before the warrantcan be exercised.

Repo transactionsWhere instruments have been bought on ‘repo’ basis, theinstrument shall be valued at the resale price after deductionof applicable interest up to the date of resale. Where aninstrument has been sold on a ‘repo’ basis, adjustment shallbe made for the difference between the repurchase price(after deduction of applicable interest up to the date ofrepurchase) and the value of the instrument. If the repurchaseprice exceeds the value, the depreciation shall be provided forand if the repurchase price is lower than the value, credit shallbe taken for the appreciation.

Rights Entitlement / SharesUntil they are traded, the value of “rights” shares shall becalculated as:

Vr = n ÷ m x (Pex – Pof)

Where Vr = Value of rights

n = no. of rights offered

m = no. of original shares held

Pex

= Ex-rights price

Pof = Rights Offer Price

Where the rights are not treated pari passu with the existingshares, suitable adjustments shall be made to the value of therights. Where it is decided not to subscribe for the rights butto renounce them and renunciations are being traded, therights can be valued at the renunciation value.

The valuation guidelines as outlined above are as per theRegulations prevailing at present and are subject to changefrom time to time, in conformity with changes made by SEBI.

All other guidelines, not covered above and as specified inthe Mutual Fund Regulations, as well as any additions/modifications thereto as may be specified by SEBI from timeto time, shall be adhered to for the purpose of valuation.

b) Accrual of expenses and incomesAll expenses and incomes accrued up to the valuation dateshall be considered for the computation of net asset value.For this purpose, while major expenses like management fees

37


and other periodic expenses shall be accrued on a day to daybasis, other minor expenses and income need not be soaccrued, provided the non-accrual does not affect the NAVcalculations by more than 1%.

c) Recording of Securities and Units in the booksAny change in the portfolio of securities and in the numberof Units held shall be recorded in the books not later thanthe first valuation date following the date of transaction. Ifthis is not possible given the frequency of the Net Asset Valuedisclosure, the recording may be delayed up to a period ofseven days following the date of the transaction, providedthat as a result of the non-recording, the Net Asset Valuecalculations shall not be affected by more than 1%. In casethe Net Asset Value is affected by more than 1% due to suchnon-recording of transactions, the investors or the Scheme,as the case may be shall be paid the difference in the mannerprovided in the Regulations.

d) Calculation of NAVNAV of Units under the Schemes or Options thereunder willbe calculated as shown below:

Market or Current assets Current LiabilitiesFair Value + including – and provisions

of Scheme's Accrued including accruedinvestments Income expenses NAV =

No. of Units outstanding under the Scheme / Option

The NAV and the sale and repurchase prices of the Units willbe calculated and announced at the close of each WorkingDay. Computation of NAV will be done after taking intoaccount dividends paid, if any, and the distribution tax thereon,if applicable. Therefore, once dividends are distributed underthe Dividend Option, the NAV of the Units under the DividendOption would always remain lower than the NAV of the Unitsissued under the Growth Option.

The income earned and the profits realized in respect of theUnits issued under the Growth Option remain invested andare reflected in the NAV of the Units.

12. Accounting PoliciesIn accordance with the Mutual Fund Regulations, the Fundfollows the accounting policies and standards stated below:

1. For the Scheme, the AMC shall keep and maintain properbooks of accounts, records and documents, so as toexplain its transactions and to disclose at any point oftime the financial position of the Scheme and in particulargive a true and fair view of the state of affairs of theFund.

2. For the purposes of the financial statements, the MutualFund shall mark all investments to market and carryinvestments in the balance sheet at market value.However, since the unrealised gain arising out ofappreciation on investments cannot be distributed,provision shall be made for exclusion of this item whenarriving at distributable income.

3. Dividend income earned by the Scheme shall berecognised, not on the date the dividend is declared, buton the date the share is quoted on an ex-dividend basis.For investments, which are not quoted on a stockexchange, dividend income shall be recognised on thedate of declaration.

4. In respect of all interest-bearing investments, incomeshall be accrued on a day-to-day basis as it is earned.Therefore, when such investments are purchased, interestpaid for the period from the last interest due date uptothe date of purchase shall not be treated as a cost ofpurchase but shall be debited to Interest RecoverableAccount. Similarly, interest received at the time of salefor the period from the last interest due date up to thedate of sale shall not be treated as an addition to salevalue but shall be credited to Interest RecoverableAccount.

5. In determining the holding cost of investments and thegains or loss on sale of investments, the “average cost”method shall be followed.

6. Transactions for purchase or sale of investments shall berecognised as of the trade date and not as of thesettlement date, so that the effect of all investmentstraded during a financial year is recorded and reflectedin the financial statements for that year. Where investmenttransactions take place outside the stock market, forexample, acquisitions through private placement orpurchases or sales through private treaty, the transactionshall be recorded, in the event of a purchase, as of thedate on which the Scheme obtains an enforceableobligation to pay the price or, in the event of a sale, whenthe Scheme obtains an enforceable right to collect theproceeds of sale or an enforceable obligation to deliverthe instruments sold.

7. Bonus shares to which the Scheme becomes entitledshall be recognised only when the original shares onwhich the bonus entitlement accrues are traded on thestock exchange on an ex-bonus basis. Similarly, rightsentitlement shall be recognised only when the originalshares on which the rights entitlement accrues are tradedon the stock exchange on an ex-rights basis.

8. Where income receivable on investments has beenaccrued and has not been received for the period specifiedin the guidelines issued by SEBI, provision shall be madeby debiting to the revenue account the income so accruedin the manner specified by SEBI in this behalf.

9. When Units are sold, the difference between the saleprice and the face value of the Unit, if positive, shall becredited to reserves and if negative, debited to reserves,the face value being credited to Capital Account. Similarly,when Units are repurchased, the difference between thepurchase price and the face value of the Unit, if positiveshall be debited to reserves and, if negative, shall becredited to reserves, the face value being debited to thecapital account. Accordingly, upon issue and redemptionof units, the net premium or discount to the face valueof units is adjusted against the unit premium reserve ofthe Scheme / Options, after an appropriate portion ofthe issue proceeds and redemption payout is credited ordebited respectively to the income equalisation reserve.The unit premium reserve is available for dividenddistribution except to the extent it is represented byunrealised net appreciation in value of investments.

10. When Units are sold an appropriate part of the saleproceeds shall be credited to an Equalisation Accountand when Units are repurchased an appropriate amount

38


debited to the Equalisation Account. The net balance onthis account shall be credited or debited to the RevenueAccount. The balance on the Equalisation Accountdebited or credited to the Revenue Account shall notdecrease or increase the net income of the Fund but isonly an adjustment to the distributable surplus. It shall,therefore, be reflected in the Revenue Account only afterthe net income of the Fund is determined. Accordingly,Income equalisation reserve is maintained by crediting(or debiting) the income equalisation reserve account inrespect of purchase of units (or redemption of units) byan appropriate amount, which represents the distributableincome at the time of purchase (or redemption). Thebalance in the income equalisation reserve account istransferred to the revenue account at the end of theyear.

11. The cost of investments acquired or purchased shallinclude brokerage, stamp duty, applicable taxes and anycharge customarily included in the broker’s bought note.In respect of privately placed debt instruments any front-end discount offered shall be reduced from the cost ofthe investment.

12. Underwriting commission shall be recognised as revenueonly when there is no devolvement on the Scheme.Where there is devolvement on the Scheme, the fullunderwriting commission received and not merely theportion applicable to the devolvement shall be reducedfrom the cost of the investment.

13. For the Scheme, Initial Issue Expenses comprise BrokerageAgents' commission, advertising and marketing costs,registrar expenses, etc. and printing and dispatch costs.In case the Initial Issue Expenses are borne by the Scheme,the extent of expenses not met out of the entry load, ifany, collected during the New Fund Offer may beamortised over a period not exceeding three years.

14. Load Charges for the Scheme:

a) Load collected, if any, during the NFO shall be utilisedto meet the Broker/Agents Commission incurredduring the New Fund Offer.

b) Load collected, if any, during the continuous offerof the Scheme shall be retained under a separateaccount in the Scheme and shall be used to meetthe selling and distribution expenses of the Scheme.

15. Following the issue of the Guidance Note on ‘Accountingfor Investments in the Financial Statements of MutualFunds’ by the Institute of Chartered Accountants of India(pursuant to the Eleventh Schedule of the SEBIRegulations) net unrealised appreciation/ depreciation invalue of investments (including derivatives) is determinedseparately for each category of investments. Further, thechange in net unrealised appreciation / depreciation, ifany, between the two Balance Sheet dates/ date ofdetermination is recognised in the revenue account.Unrealised appreciation is reduced from the distributableincome at the time of income distribution. At the endof the financial year the balance in revenue accountincluding net change in unrealised appreciation /depreciation in value of investments (including derivatives)is transferred to the revenue reserve.

The identification and provisioning of Non Performing Assets(Debt Securities) shall be in accordance with circular no. MFD/CIR/8/92/2000 dated September 18, 2000 and modificationsthereto vide circular no. MFD/CIR/14/088/2001 dated March28, 2001, issued by SEBI. The circular dated September 18,2000 also contains provisions for the treatment of incomeaccrued on Non Performing Assets (NPA), treatment of assetson reclassification as performing assets, receipt of past dues,disclosures of NPAs on a half yearly basis along with the halfyearly portfolio of the relevant Scheme etc.

The accounting policies and standards as outlined aboveare in accordance with the present Mutual FundRegulations and are subject to change in accordancewith changes in the Mutual Fund Regulations.

All other policies and standards as specified in the MutualFund Regulations, as well as any additions/modificationsthereto as may be specified by SEBI from time to timeshall be adhered to while preparing the books ofaccounts and financial statements of the Fund.

The Trustee may, at its discretion, require the Fund tofollow more conservative accounting norms than asrequired by the Regulations in respect of non-performingassets or assets in default.

Accounting and Valuation Policies with respect toDerivative Products:

Interest Rate SwapsInterest rate swaps with a maturity period of more than 182days shall be marked to market by recording the net presentvalues of differences in outflows and inflows as unrealisedappreciation / depreciation. Interest rate swaps with a maturityperiod of 182 days and less shall be amortised.

Equity DerivativesThe Scheme may enter into derivative transactions in equity/index options/futures for the purpose of hedging and portfoliobalancing.

Optionsl Premium paid / received on bought / written option

contracts shall be debited / credited to “equity optionpremium account” and recorded as an asset / liability.

l When the option contracts are squared off before expiry,the difference between the premium paid and receivedon the squared off transactions shall be recognised in therevenue account. When the option contracts are exercisedon or before expiry, the difference between the optionsettlement price as determined by the exchange and thepremium shall be recognised in the revenue account. Ifmore than one option contracts in respect of the samestock / index with the same strike price and expiry dateto which the squared off / exercised contract pertains isoutstanding at the time of square off / exercise of thecontract, the weighted average method shall be followedfor determining the gain or loss.

l Premium asset / liability in respect of options not exercised /squared off as on expiry date shall be transferred torevenue account.

39


l As at the Balance Sheet date / date of determination, allopen option positions shall be valued at the last quotedprice at the exchange where it is traded. Non-tradedequity option contracts shall be valued at fair value asper procedures determined by the AMC and approvedby the Trustee. The unrealised appreciation / depreciationon all open positions shall be considered for determiningnet asset value.

Futures

l Futures contracts are marked to market daily at thefutures settlement price as determined by the exchange.The variation margin calculated as the difference betweenthe trade price or the previous day’s settlement price, asthe case may be, and the current day’s settlement priceshall be recorded as a receivable or payable.

l When a contract is closed (squared off)/ settled (onexpiry), the difference between the Final Settlement /Square-Off price and the contract price is recognised inthe revenue account. If more than one futures contractsin respect of the same stock / index and expiry date, towhich the squared off / settled contract pertains, isoutstanding at the time of square off / settlement of thecontract, the weighted average method shall be followedfor determining the gain or loss.

l As at the Balance Sheet date / date of determination, allopen futures positions are valued at the last quoted priceat the exchange where it is traded. Non-traded futurescontracts shall be valued at fair value as per proceduresdetermined by KMAMC and approved by the Trustee.The unrealised appreciation / depreciation on all openpositions is considered for determining the net assetvalue.

13. Recording of Investment DecisionsWith regard to investments in equity instruments, individualscrip wise reasons are maintained in respect of dailytransactions. Such reasons are recorded at the time of placingorders. Further, a detailed report is made before taking anydecision to invest in a new company and only after the priorapproval of Mr. Sandesh Kirkire, Chief Executive Officer of theAMC, which is signified in the said detailed report, the Fundis allowed to invest in a new security. When it is decided toexit completely from a scrip, reasons for such decision are alsorecorded. In respect of debt instruments also, records insupport of each investment decision are maintained. Eachdebt portfolio strategy is based on a duration objective.Investments in Government securities, as they do not carryany credit risk, are made based on the relevant portfoliostrategy. In respect of corporate bonds, as they carry a creditrisk, in addition to the duration objective, exposure limits forinvestment in a particular corporate are determined fromtime to time, and investments in these corporates are madewithin these exposure limits.

The decision of making investments will be exercised by theFund Managers based on the relevant norms/policy approvedby the Board of the AMC. The role of Mr. Sandesh Kirkire,Chief Executive Officer of the AMC revolves around ensuringthat due diligence is exercised while making investmentdecisions, that processes and procedures are followed, andreview is undertaken vis-à-vis norms, policies, mechanismsetc. laid down by the Board of the AMC. Performance of theScheme will periodically be tabled before the Boards of theAMC and the Trustee respectively. Performance of the Schemevis-à-vis benchmark indices would be monitored by the Boardsof the Trustee and the AMC periodically. Further, the Boardsof the Trustee and the AMC will also review the performanceof the Scheme in the light of performance of the mutual fundindustry as published from time to time by independentresearch agencies and financial newspapers and journals.

40


A. UNITS ON OFFER1. Minimum Subscription AmountThe Fund seeks to collect a minimum subscription amount ofRs. Fifty lakhs in the New Fund Offer of the Scheme. In theevent this amount is not raised during the New Fund Offer,the amount collected will be refunded to the applicants asmentioned elsewhere in this Offer Document.

There is no upper limit on the total amount that may becollected in the Scheme. After the minimum subscriptionamount has been collected, all valid applications are assuredof full allotment in the Scheme.

2. New Fund OfferThe New Fund Offer for the Scheme will be from September29, 2005 to October 25, 2005.

3. New Fund Offer PriceThe New Fund Offer price of Units under each Option of theScheme will be as follows:

For purchase attracting Entry Load during New Fund Offer =Rs. 10.225/- per Unit for Cash (Face Value = Rs.10/- and EntryLoad = Rs. 0.225)

For purchase not attracting Entry Load during new fundoffer= Rs. 10/- per Unit for Cash

4. Extension of New Fund OfferThe Trustee reserves the right to extend the closing date,subject to the condition that the New Fund Offer shall notbe kept open for more than 30 days. Any such extension shallbe announced by way of a notice in one national newspaper.

5. Continuous OfferCommencing not later than 30 days after the closing of theNew Fund Offer, the Scheme will become open-ended.Thereafter, existing Unitholders and New Applicants maypurchase additional Units at the purchase price or redeemtheir Units at the redemption price after the expiry of lock-in period of 3 years.

6. ListingSince the Scheme is open-ended, it is not necessary to list theUnits of the Scheme on any exchange. Liquidity is ensured toinvestors by the purchase and sale of Units (after the expiryof lock-in period of 3 years) from/to the Fund at prices relatedto the relevant Applicable NAV for the purpose of purchasingor redeeming Units from the Fund. The Trustee, however, hasthe right to list the Units under the Scheme on any stockexchange/s for better distribution and additional convenienceto existing/prospective Unitholders. Even if the Units are listed,the Fund shall continue to offer purchase and redemptionfacility as specified in this offer document. Any listing willcome only as an additional facility to investors who wish touse the services of a stock exchange for the purpose oftransacting business in the Units of the Scheme.

7. Expenses of Initial IssueAs per the Regulations, the Initial Issue expenses comprisingBroker/Agent's commission, advertising, publicity, marketing,

registrar expenses, etc., charged to the Scheme, shall notexceed 6% of the amount collected under the Scheme.

In respect of the Scheme, Initial Issue Expenses not exceeding6.00% may be incurred by the Fund as under:

a. Expenses relating to Broker / Agent's commission incurredduring the New Fund Offer (NFO) shall be met out of theEntry Load (2.25%) collected during the NFO.

b. Initial Issue Expenses comprising of Marketing andAdvertising, Printing and Mailing, Additional Brokerage/ Commission, Registrar Expenses, Bank charges andOther Expenses, subject to a maximum of 3.75% of theamount collected (net of Entry load) by the Scheme, willbe amortised over a period not exceeding three years.

Actual expenses incurred in respect of Initial Issue Expensesin excess of 6.00% as indicated above shall be borne by theAMC.

Thus the amount available to the Scheme for investments foreach Rs. 100/- contributed by the investor will be as under:

i. For purchase attracting Entry Load during New FundOffer - Rs. 94.1320 (Rs. 100 less Load amount utilisedfor payment of Broker/Agents commission (Rs. 2.2005)less Initial Issue Expenses comprising Marketing andAdvertising, Printing and Mailing, Additional Brokerage /Commission, Registrar Expenses, Bank charges and OtherExpenses (Rs. 3.6675)

ii. For purchase not attracting Entry Load during New FundOffer - Rs. 96.25 (Rs. 100 less Initial Issue Expensescomprising Marketing and Advertising, Printing andMailing, Additional Brokerage / Commission, RegistrarExpenses, Bank charges and Other Expenses (Rs.3.75)

8. Minimum Purchase and Redemption AmountsThe minimum purchase and redemption amounts for each ofthe Option under the Scheme are as follows:

Purchase

For Opening Unit Account

• During New Fund Offer Rs. 500 and inmultiples of Rs. 500

• During Continuous Offer Rs. 500 and inmultiples of Rs. 500

For Existing Unitholders

• Additions to existing Unit Rs. 500 and inAccounts multiples of Rs. 500

Redemption(after expiry of lock-inperiod of 3 years)

Redemption from existing Rs. 1000 or all unitsUnit Accounts if the amount is less

than Rs. 1000

V . U N I T S

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9. Applicable NAVFor the purpose of all purchases and switch-ins; redemptionand switch out transactions (after expiry of lock in period of3 years), the Applicable NAV is as follows:

For Valid Applications accepted

l upto 3 p.m. on a Working Day, the NAV of such WorkingDay

l after 3 p.m. on a Working Day, the NAV of the followingWorking Day

Further, where the AMC or the Registrar has provided afacility to the investors to redeem/switch-in/switch-out of theScheme through the medium of Internet by logging ontospecific web-sites or telephone and where investors havesigned up for using these facilities, the Applicable NAVs willbe as provided above. These Applicable NAVs will also applyto Systematic Investment Plan, Systematic Withdrawal Planand Systematic Transfer Plan.

10. Facilities Offered to Investors under the Schemea) Nomination FacilityIf an application for purchase of Units is made in the nameof a single holder, the Unitholder may nominate a successorto receive the Units upon his/her death, subject to theprescribed formalities.

Where the Units are held by more than one person jointly,the joint holders may together nominate a person in whomall the rights in the Units shall vest in the event of the deathof all the joint Unitholders.

This facility is subject to the law applicable to such succession.

b) TransmissionIn case of death of the Unitholder (individual), Units shall betransmitted in favour of the second-named joint holder ornominee or legal heir/successor, as the case may be, onproduction of a death certificate or any other document tothe satisfaction of the AMC/Registrar.

In the event of the death of the sole unitholder, the nomineeor legal heir, as the case may be, shall be able to withdrawthe investment anytime after the completion of 1 year fromthe date of allotment of units.

This facility is subject to the law applicable to such succession.

c) Fractional UnitsPurchases, redemptions and account balances of Units arecalculated upto three decimal places. Fractional Units in noway affect the investor’s ability to redeem the Units, eitherin part or in full, standing to the credit of the Unitholder.

d) Systematic Investment Plan (SIP)This facility enables investors to save and invest periodicallyover a longer period of time. It is a convenient way to “invest

as you earn” and affords the investor an opportunity to enterthe market regularly, thus averaging the acquisition cost ofUnits. Any Unitholder can avail of this facility subject tocertain terms and conditions contained in the ApplicationForm. The Fundamental Attributes and other terms andconditions regarding purchase/redemption, price and relatedmatters are the same as contained in this Offer Document.

In respect of investors who opt for SIP during the New FundOffer, the first systematic investment would be done on thedate of allotment of units for the New Fund Offer. Once thescheme re-opens for continuous offer, the first SIP can be forany date of the month on which a NAV is declared in thescheme. In respect of the second and all subsequent SIPs,investors can choose between 1st, 7th, 14th or 21st as theSIP Date and can also choose the SIP frequency as monthlyor quarterly subject however, to the condition that there shallbe a minimum gap of 28 days between the first and thesecond SIP.

The SIP request should be for a minimum of 6 months /quarters. The SIP payments can be made either by issue ofPost Dated Cheques or by availing the Direct Debit Facilitythrough ECS. However, the first investment in SIP through theDirect Debit Facility needs to be made compulsorily by issuanceof a cheque from the account from which the Direct Debitis requested.

During the New Fund Offer, only SIPs through the Direct Debitfacility would be accepted (i.e. SIP requests with post-datedCheques would not be accepted during the New Fund Offer).The minimum SIP instalment size is Rs. 500/-.

e) Systematic Withdrawal Plan (SWP)This facility enables the Unitholders to withdraw sums fromtheir Unit accounts in the Scheme at periodic intervals througha one-time request. The withdrawals can be made eitherMonthly (on 1st, 7th, 14th and 21st of every month) orQuarterly (on 1st, 7th, 14th and 21st of the last month in aseries of three consecutive months), after expiry of lock-inperiod of 3 years.

This facility is available under the Fixed Option to theUnitholders:

Fixed Option: Under this option, the Unitholder can seekredemption of a fixed amount of not less than Rs. 1000 fromhis Unit account. In this option the withdrawals will commencefrom the Start Date (being one of the dates indicated above)mentioned by the Unitholder in the Application Form for thefacility. The Units will be redeemed at the Applicable NAV ofthe respective dates on which such withdrawals are sought.The Fixed Option is explained by way of an illustration below:

Amount invested 1,00,000

SWP Start Date 01-Apr-05

SWP Frequency Monthly

42


f) Systematic Transfer Plan (STP)This facility enables the Unitholders to switch an amountfrom their existing investments in the Scheme to anotherScheme/Plan of the Fund at periodic intervals through a one-time request, after expiry of lock-in period of 3 years. Theswitch can be made:

(a) Four times a Month (on 1st, 7th, 14th and 21st ofevery month, hereinafter for the sake of brevityreferred to as “Weekly Transfer”);

(b) Monthly (specifying any one of the four indicateddates of the month i.e. 1st, 7th, 14th or 21st ofevery month), or

(c) Quarterly (specifying any one of the four indicateddates i.e. 1st, 7th, 14th or 21st of the last monthin a series of three consecutive months).

Under this facility the switch by the Unitholders would bewithin the same account/ folio number.

This facility is available under the Fixed Option to theUnitholders:

Fixed Option: Under this option, the Unitholder can switcha fixed amount of not less than Rs. 1000 from his Unitaccount. In this option the switch will commence from theStart / Commencement Date (being one of the dates indicatedabove) mentioned by the Unitholder in the Application Formfor the facility. The Units in the Scheme from which theswitch-out is sought will be redeemed at the Applicable NAVof the Scheme on the respective dates on which such switchis sought and the new Units in the Scheme to which theSwitch - in is sought will be created at the Applicable NAVof such Scheme on the respective dates.

Please refer to the table under SWP for the illustration of FixedOption. For this facility, the amount shown as amountwithdrawn under SWP in the Fixed Option table referredabove will be the amount switched.

Note: Investors who avail of either the SIP, SWP or STP facilitycan at any time opt out of the facilities or can purchase orredeem outside these facilities at their convenience.

g) Reinvestment of Dividend:Unitholders in the Dividend Option of the Scheme will havethe facility of reinvestment of dividend declared. The Units,for the purpose of reinvestment, will be created and creditedto the Unitholder’s account at the first ex-dividend NAV of theScheme. No Entry Load will be charged on Units allotted asa result of dividend reinvestment. The dividend reinvestedwould be subject to lock-in period of 3 years from the dateof reinvestment.

h) SwitchingDuring the New Fund Offer Period of the Scheme, investorshave the option to switch-in, all or part of their investmentin any other open ended Scheme / Plan / Option of the Fundto the Scheme/Option.

During the Continuous Offer, Unitholders of the Schemehave the option of switching all or part of their investmentsin the Scheme / Option, after expiry of lock-in period of 3years, to any other open-ended Scheme / Plan / Option of theFund, which is available for investment at that time or switchinto the Scheme / Option from any other Scheme / Plan /Option (whether open-ended or close-ended).

FIXED OPTIONDate Amount Amount Assumed Units Unit Value

Invested Withdrawn NAV per Balance afterunder SWP unit SWP

(Rs.) (Rs.) (Rs.) (Rs.)

A B C D E F

B / C Previous E - D E x C

01-Mar-05 1,00,000 – 10.0000 10,000.000 10,000.000 1,00,000

01-Apr-05 – 1,000 10.1201 98.813 9,901.187 1,00,201

01-May-05 – 1,000 10.2111 97.933 9,803.254 1,00,102

01-Jun-05 – 1,000 10.3502 96.616 9,706.638 1,00,466

01-Jul-05 – 1,000 10.4321 95.858 9,610.780 1,00,261

01-Aug-05 – 1,000 10.5301 94.966 9,515.814 1,00,203

01-Sep-05 – 1,000 10.6203 94.159 9,421.654 1,00,061

01-Oct-05 – 1,000 10.7291 93.204 9,328.450 1,00,086

01-Nov-05 – 1,000 10.8202 92.420 9,236.030 99,936

01-Dec-05 – 1,000 10.9371 91.432 9,144.598 1,00,015

01-Jan-06 – 1,000 11.0918 90.157 9,054.442 1,00,430

01-Feb-06 – 1,000 11.1329 89.824 8,964.618 99,802

01-Mar-06 – 1,000 11.2571 88.833 8,875.785 99,916

01-Apr-06 – 1,000 11.3987 87.729 8,788.056 1,00,172

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A switch has the effect of redemption from a Scheme/Plan/Option and a purchase in the other Scheme/Plan/Option towhich the switching has been done and all the terms andconditions pertaining to redemption and purchase of theunits of the respective Scheme shall apply to a switch, unlessotherwise specified. The switch should be made by redeemingexisting Units and reinvesting the redemption proceeds inanother Scheme/Plan/Option at the applicable purchase priceof the Scheme(s)/Plan(s)/Option(s) to which the switch ismade.

i) How to SwitchThe request for a switch can be either in terms of amount orin terms of the number of Units. Instructions for switchingmay be provided by completing a Switch Request form,which would be available at any of the Official AcceptancePoints or at the office of the Registrar at Chennai. The dulycompleted form must be submitted at any of the OfficialAcceptance Points or at the office of the Registrar at Chennai,on any Working Day.

The switch is effected by redeeming Units from a Scheme/Plan/Option and investing the net proceeds in the otherScheme/Plan/Option. The switch-in during the New FundOffer shall be effected at the New Fund Offer. The switchduring the Continuous Offer Period shall be effected at thePurchase/Redemption price applicable at the Cut Off time(refer sub – paragraph ‘Applicable NAV’ under paragraph‘Units on Offer’ in Chapter V ‘Units’) by which the Switchrequest is received.

j) Direct Debit Facility in SIP through ECSUnitholders investing under SIP in any Scheme of KotakMahindra Mutual Fund have the option to avail the facilityof Direct Debit through Electronic Clearing Service (ECS Facilityoffered by RBI). Direct Debit allows an investor to instruct hisbank to debit his bank account at periodic intervals formaking investments in mutual fund scheme(s). However thefirst investment in SIP under this mode shall be by way ofcheque only. Investors who are currently availing the SIPFacility by issue of post-dated cheques can opt to avail theAuto Debit Facility by giving a written request for the samein the ‘SIP through Auto-Debit’ Form at least 15 days beforethe currently running SIP date. If the Auto-Debit SIP is to beeffected from a different bank account than the one fromwhich the post-dated Cheques have been issued, the firstauto-debit SIP would need to be done by issuance of acheque from the new Bank. Investors can choose between1st, 7th, 14th and 21st of every month / quarter for the SIPwith the first SIP through cheque being allowed for any dateof the month subject however to the condition that there isa gap of at least 28 days between the first and the subsequentSIPs. This facility is available in select locations indicated onthe reverse of the SIP through Auto-Debit Form.

k) Transaction through electronic modeThe AMC may from time to time offer various facilities to theunitholders through electronic mode such as internet, mobilephones, Kiosk, etc. to facilitate transactions in units of thescheme. The AMC may enter into such arrangements/agreements as it may deem fit to give effect to the above.

However, investors intending to take benefit of these facilitiesshould note that they should use these services at their ownrisk. The Fund, the AMC, the Trustee, along with its directors,

employees and representatives shall not be liable for anydamages or injuries arising out of or in connection with theuse of internet, mobile phones, Kiosk, etc or its non-useincluding, without limitation, non-availability or failure ofperformance, loss or corruption of data, loss of or damageto property (including profit and goodwill), work stoppage,computer failure or malfunctioning, or interruption of business;error, omission, interruption, deletion, defect, delay inoperation or transmission, computer virus, communicationline failure, unauthorised access or use of information.

l) Group Life Insurance Cover1. The AMC may provide a Group Life Insurance Cover to

all Resident Individual applicants and the Karta of anHUF. Non-individuals as well as Non-resident Indians /Persons of Indian Origin will not be covered under theinsurance cover.

2. Insurance will be available for individuals above 18 yearsup to the age of 50 years under the Scheme for a periodof 3 years from the date of allotment of units or till thedate of valid redemption of the units, whichever is earlierduring the New Fund Offer as well as on an ongoingbasis.

3. Only the First / Sole unit holder will be covered under theinsurance. No insurance cover will be provided for thesecond / third unitholder.

4. The Insurance cover will be available for those unitholders,who have invested a minimum amount of Rs. 10,000/-(in case of investments through SIP/STP, where theaggregate investment amount, not market value -becomes Rs. 10,000/-) under the Scheme.

5. The investor will be required to sign a genuine “GoodHealth” declaration at the time of application forsubscribing to the units of the Scheme or at the time ofswitch in. if investment amount exceeds Rs.15 lacs,investor will have to undergo health check up and maybe required to furnish documents for financialunderwriting. The increase in life insurance cover overthe limit of Rs.15 lacs will be confirmed after examiningmedical reports and financial documents and will beeffective at a date specified by the insurance company.If medical requirements are not fulfilled or financialdocuments called for not submitted as specified by theinsurance company life insurance cover will be limited toRs.15 lacs. The investment limit of Rs.15 lacs will bereckoned for an individual (first /sole Unitholder) eitherunder a single folio or on aggregation of folios duringthe new fund offer and on an ongoing basis.

6. If the investment amount is higher than Rs. 15 lacs, aninvestor will have to go through the health check up asrequired by the Insurance Company. Only on theacceptable state of health, the cover would be valid.

7. The investor will necessarily be required to furnish his /her date of birth and details of the beneficiary on theapplication form, in absence of which, no insurancecover can be availed by the investor. The Group LifeInsurance Cover will be governed by the terms andconditions of the insurance policy with the relevantInsurance Company as determined by the AMC.

44


8. Under the insurance policy, the following Group Insurancecover will be available to the applicant.

l In case the investment amount is less thanRs.100,000,

n Natural death: equal to or greater than theinvestment amount

n Accidental death: two times the investmentamount

l In case the investment amount is equal to greaterthan Rs.100,000,

n Natural death: two times the investmentamount

n Accidental death: two times the investmentamount

The said limit(s) for the insurance cover may be changed bythe AMC prospectively, by giving at least one week’s publicnotice. The insurance cost will be borne by the AMC.

In case of death of the first unit holder, his / her legalrepresentatives may file a claim directly with the designatedbranch of the Insurance Company supported by all relevantdocuments as required by the Insurer and the payment of theclaim may be made to the legal representatives by the insurancecompany. All insurance claims will be settled in India and shallbe payable in Indian Rupees only. Settlement procedure willbe as stipulated by the Insurance Company. Insurance claimswill be directly settled by the Insurance Company. There willbe only one insurance cover linked to one folio.

This offer from the Insurance Company (with whom the AMCwill tie up) is being brought to the investors of the Schemeby the AMC on a best effort basis. The AMC will not beresponsible or liable for maintaining service levels and/or anydelay in processing claims arising out of this facility.

The Mutual Fund, Trustees, AMC, or their Directors, officersor employees shall not be liable for any claims (including butnot limited to rejection of any claim, non settlement, delaysetc.) arising out of the insurance cover provided to the unitholder.

Kotak Mutual Fund is bringing this offer to the investors ofthe Scheme only as an additional facility and is not acting asan agent for marketing/sales of insurance policies.

Subject to what has been stated above, the AMC reserves aright to modify / annul the said Group Insurance Cover ona prospective basis. The AMC also reserves the right to changethe insurance company from time to time.

The Group Insurance cover will be subject to the followingexclusions and such other terms and conditions as may beprescribed by the insurance certificate governing the cover :

l The Group Insurance cover shall not extend to coverinstances of death due to suicide in the first year of cover

l Death due to pre existing diseases shall not be coveredunder the policy.

B. PURCHASE OF UNITS1. Who can invest?The following are eligible to apply for purchase of the Units:

1. Resident Indian Adult Individuals, either singly orjointly (not exceeding three).

2. Hindu Undivided Families (HUFs), in the sole nameof the Karta.

Since the Scheme is a growth oriented investment avenueprimarily in equity shares with the objective of long termcapital appreciation, the following entities may also applyfor subscription to the Units of Kotak ELSS, subject towhere relevant, purchase of Units being permitted bythe respective constitutions, relevant laws and regulations.

These entities, will not, however, qualify for tax benefitsunder Section 80C of Income Tax Act, 1961.

3. Parents/Lawful guardians on behalf of Minors.

4. Companies, corporate bodies, registered in India.

5. Registered Societies and Co-operative Societiesauthorised to invest in such Units.

6. Religious and Charitable Trusts under the provisionsof Section 11(5) of the Income Tax Act, 1961 readwith Rule 17C of the Income Tax Rules, 1962.

7. Trustees of private trusts authorised to invest inmutual fund schemes under their trust deeds.

8. Partner(s) of Partnership Firms.

9. Association of Persons or Body of Individuals,whether incorporated or not.

10. Banks (including Co-operative Banks and RegionalRural Banks) and Financial Institutions and InvestmentInstitutions.

11. Non-Resident Indians/Persons of Indian originresident abroad (NRIs) on full repatriation or non-repatriation basis.

12. Other Mutual Funds registered with SEBI.

13. Foreign Institutional Investors (FIIs) registered withSEBI.

14. International Multilateral Agencies approved by theGovernment of India.

15. Army / Navy / Air Force, Para-Military Units andother eligible institutions.

16. Scientific and Industrial Research Organizations.

17. Provident/Pension/Gratuity and such other Funds asand when permitted to invest.

18. Universities and Educational Institutions.

19. Other schemes of Kotak Mahindra Mutual Fundmay, subject to the conditions and limits prescribedin the SEBI Regulations and/or by the Trustee, AMCor Sponsor, subscribe to the Units under the Scheme.

The list given above is indicative and the applicable law, if any,shall supercede the list.

45


2. Purchase PriceNew Fund Offer

For purchase attracting Entry Load during New Fund Offer =Rs. 10 x (1+Entry Load*)

For purchase not attracting Entry Load during New FundOffer = Rs. 10/- per Unit

Continuous Offer

The Purchase Price will be calculated on the basis of theApplicable NAV and Entry Loads, if any, for different Options,for example:

Purchase Price = Applicable NAV$ x (1 + Entry Load*)

eg: If the Applicable NAV is Rs. 10/-; Entry Load is 2.25%,then

Purchase price = 10 x (1+2.25%)= Rs. 10.225/-

* For Entry Load, please refer paragraph ‘Load Structureof the Schemes’ mentioned elsewhere in this OfferDocument.

$ For Applicable NAV, please refer paragraph ‘ApplicableNAV’ mentioned elsewhere in this Offer Document.

The Purchase Price for every Working Day will be publishedatleast in two daily newspapers.

3. Mode of Paymenta) Resident InvestorsResident investors may make payment for the Units by anyof the following means:

• By local MICR Cheques payable in the city in which theapplication form is submitted.

• By a Demand Draft payable in the city in which theapplication form is submitted and drawn on a bankwhich is a member of the Bankers Clearing House of thatcity.

Bank Charges for issue of DDs / Fund Transfer shall beborne by the Scheme only in respect of investors whoinvest from locations where there are no ISCs / TransactionPoints. The ceiling on Bank Charges would be restrictedto SBI DD Charges. Where Demand Drafts, as statedabove are issued, the investor must, in the ApplicationForm clearly indicate the Investment Amount, DD Chargesand Net Amount. In the absence of this indication, unitswill be allotted for the amount appearing on the face ofthe instrument. The AMC / Fund would not accept anyrequests for refund of DD Charges.

• In any other manner that may be, from time to time,accepted by the AMC for the smooth and efficientfunctioning of the Scheme.

PLEASE NOTE THAT THE FOLLOWING ARE NOT ACCEPTED

• Stockinvests

• Outstation Cheques

• Post Dated Cheques (except under the SIP facility, duringcontinuous offer)

All cheques and drafts should be crossed “Account PayeeOnly” and drawn in favour of “KOTAK ELSS”.

b) NRIsRepatriation BasisRBI has granted a general permission to Mutual Funds, whichare referred to in clause (23D) of Section 10 of the IncomeTax Act, 1961, to issue and repurchase Units of the Schemethat are approved by SEBI, to NRIs. Further, general permissionhas also been granted to send such Units to NRIs at theirplaces of residence or location as the case may be. NRIapplications on a repatriation basis will be accepted, if theamount representing the investment is received by inwardremittance through normal banking channels or by debit toNRE/FCNR account of the non-resident investor maintainedwith an authorised dealer in India.

Non-Repatriation BasisIn the case of NRIs/Persons of Indian Origin seeking to applyfor Units on a non-repatriation basis, the applications will beaccepted, if the amount representing the investment is receivedby inward remittance through normal banking channels or bydebit to the NRE/FCNR/NRO account of the non-residentinvestor maintained with an authorised dealer in India.

Payment whether on a repatriation or a non-repatriationbasis, shall be made by Cheques/Demand Drafts crossed“Account Payee Only”, in a similar fashion as in the caseof resident investors.

c) FIIsRBI has granted a general permission to Mutual Funds, whichare referred to in clause (23D) of Section 10 of the IncomeTax Act, 1961, to issue and repurchase Units of the Schemethat are approved by SEBI to and from FIIs. Further, a generalpermission has also been granted to send such Units /instruments out of India to their global custodians. Applicationsof FIIs on a repatriation basis will be accepted if the amountrepresenting the investment is received by inward remittancethrough normal banking channels or out of funds held inForeign Currency Account or Non-resident Rupee Accountmaintained by the FIIs with a designated branch of anauthorised dealer with the approval of RBI.

d) Applicants under Power of Attorney, Companies /Corporate Bodies / Registered Societies/ Trusts/Partnerships

In the case of an application under a Power of Attorney orby a limited company, body corporate, registered society,trust or partnership, the relevant Power of Attorney or therelevant resolution or authority to make the application or theTrust Deed or the Partnership Deed as the case may be, orduly certified copy thereof, along with a certified copy of theMemorandum and Articles of Association and/or bye-lawsmust be lodged at the office of the Registrar at Chennai,within 7 (Seven) days from the date of the application underthe New Fund Offer or Continuous Offer, failing which theapplication is liable to be rejected or a request for redemptionmay not be processed.

Note : The Trustee, at its discretion, may alter or addother modes of payment.

4. Where to submit application forms?Investors may submit completed Application Forms as under:

46


During the New Fund Offer1. KMAMCL Authorised Collection Centres2. Designated Collection Banks.

During the Continuous Offer Period1. ISCs and Transaction Points of the Registrar

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

2. Official Acceptance Points of KMAMCL listed inthe back cover

The addresses of the ISCs, Transaction Points, Registrar,KMAMC Authorised Collection Centres and CollectionBanks respectively are given elsewhere in this OfferDocument.

Application Forms, if sent by post, must be accompanied byCheques or Demand Drafts payable at the place where theapplication is being sent, and sent to any of the placesmentioned above.

As per the directives issued by SEBI, it is mandatory for aninvestor to declare his/her bank account number. To safeguardthe interest of Unitholders from loss or theft of their refundorders/redemption cheques, investors are requested to providetheir bank details in the Application Form. Wherever anapplication is for a total value of Rs. 50,000 or more, theapplicant or in the case of application in joint names, eachof the applicants, should mention his/her Permanent AccountNumber (PAN) allotted under the Income Tax Act, 1961,along with a proof of the PAN. In case where the investordoes not have a PAN, the investor has to submit to the mutualfund, Form 60/61 along with a proof of address, as prescribedunder Income Tax Act, 1961, along with application form.Any Application Form without these details will not beaccepted by the mutual fund.

Any application may be accepted or rejected at the soleand absolute discretion of the Trustee.

5. Choice of OptionIf the applicant does not indicate his choice of Option in theapplication form, the Fund accepts the application as beingfor the Growth Option of the Scheme. The Investor, however,is free to switch from the Scheme/Option to any other Scheme/Plan/Option of his choice as mentioned elsewhere in thisOffer Document.

If the applicant does not indicate the choice of the dividendpay-out / re-investment in the application form, then theFund will accept it as an application for dividend payoutoption.

6. Joint ApplicantsIf an Account has more than one holder, only the first-namedholder (as determined by the records of the Registrar) willreceive all notices and correspondence with respect to theAccount. Such Unitholder will receive the proceeds of anyredemption requests or dividends or other distributions. Inaddition, such holder will have the voting rights, as permitted,associated with such Units.

In the case of holdings specified as ‘jointly’, all requests haveto be signed by all the joint holders. However, in the case ofholdings specified as ‘any one or survivor’, any one of thejoint holders may sign such requests.

7. AllotmentSubject to the receipt of the specified Minimum SubscriptionAmount for the Scheme, full allotment will be made to allvalid applications received during the New Fund Offer. Theunits allotted under the Scheme cannot be transferred,assigned or pledged before the expiry of lock in period i.e.three years from the date of allotment. The Trustee reservesthe right, at their discretion without assigning any reasonthereof, to reject any application. Allotment will be completedwithin 30 (Thirty) days after the closure of the New FundOffer.

8. Account Statement / Unit CertificateAn Account Statement, stating the number of Units allotted,will be sent to each Unitholder within 30 (Thirty) days fromthe date of the closure of the New Fund Offer. The AccountStatement will be non-transferable.

Non-transferable Unit Certificates will be sent, if an applicantso desires, within 30 (Thirty) days after the receipt of a requestfor the certificate.

Any discrepancy in the Account Statement / Unit Certificateshould be brought to the notice of the Fund/AMC immediately.Contents of the Account Statement / Unit Certificate will bedeemed to be correct if no error is reported within 30 (Thirty)days from the date of Account Statement / Unit Certificate.

Units held, either in the form of Account Statements or UnitCertificates, are non-transferable. The Trustee reserves theright to make the Units transferable at a later date subjectto the Regulations issued from time to time.

All Units rank pari passu amongst Units within the Scheme/Option as to assets and earnings.

9. RefundRefund of subscription money to applicants in the case ofminimum subscription amount not being raised or applicationsrejected for any other reason whatsoever, will be made within30 (Thirty) days from the end of the New Fund Offer. Nointerest will be payable on any subscription money so refundedwithin the said 30 (Thirty) days. If the Mutual Fund refundsthe amount after the said 30 (Thirty) days, interest at the rateof 15% p.a. will be paid to the applicant and borne by theAMC for the period from the day following the date of expiryof the said 30 (Thirty) days until the actual date of the refund.Refund orders will be marked “Account Payee only” anddrawn in the name of the applicant in the case of a soleapplicant and in the name of the first applicant in all othercases. In both cases, the bank name and bank accountnumber, as specified in the application, will be mentioned inthe refund order. The bank and/or collection charges, if any,will be borne by the applicant.

All refund cheques will be mailed by Registered Post or as perthe Regulations.

C. REDEMPTION OF UNITSThe Units can be redeemed at the Redemption Price, afterexpiry of lock-in period of 3 years from the date of allotmentas prescribed in the existing ELSS guidelines. In case this lock-in period is changed under the ELSS guidelines or by anyGovernment authority, the same will apply.

For availing the tax benefits under Section 80C of the

47


Income Tax Act, 1961, investment in the Scheme will haveto be kept for a minimum period of three years from the dateof allotment of units. After the said period of three years, thesubscribers shall have option to tender the units to the MutualFund, for redemption.

Units purchased by cheque may not be redeemed until afterrealisation of the cheque.

A Unitholder has the option to request for redemption eitherin amount in Rupees or in number of Units. If the redemptionrequest indicates both amount in Rupees and number ofUnits, the latter will be considered as being requested. Wherea Rupee amount is specified or deemed to be specified forredemption, the number of Units redeemed will be computedas the amount redeemed divided by the Redemption Price.Alternatively, a Unitholder can request closure of his account,in which case, the entire Unit balance lying to the credit ofhis account will be redeemed.

The Fund reserves the right to redeem the entire amount lyingto the credit of the Unitholder’s account in that Scheme/Option if the Redemption request amount exceeds the balancelying to the credit of the Unitholder’s said account.

The number of Units redeemed is subtracted from theUnitholder’s account and a statement to this effect is issuedto the Unitholder.

If an investor has purchased Units on more than one WorkingDay, the Units purchased prior in time (i.e. those Units whichhave been held for the longest period of time), will be deemedto have been redeemed first, i.e. on a First In First Out Basisexcept when the Unitholder specifically requests redemptionof Units purchased on specific date(s).

1. Redemption PriceThe Redemption Price is calculated as follows.

Redemption Price = Applicable NAV$ x(1 - Exit Load)* - 0.20% (STT)

Eg: If Applicable NAV = Rs. 10/-;Exit Load = 2%, thenRedemption Price = 10 x (1-2%) – 0.20%

= Rs. 9.7804

$ For Applicable NAV, please refer paragraph ‘ApplicableNAV’ mentioned elsewhere in this Offer Document.

* For Exit Load, please refer paragraph ‘Load Structure ofthe Schemes’ mentioned elsewhere in this OfferDocument.

The Redemption Price for every Working Day will be publishedatleast in two daily newspapers.

As required under the Regulations, the Fund will ensure thatthe Redemption Price is not lower than 93% of the NAV andthe Purchase Price is not higher than 107% of the NAV,provided that the difference between the Redemption Priceand Purchase Price of the Units shall not exceed the permissiblelimit of 7% of the Purchase Price, as provided for under theRegulations.

2. How to Redeem?Pre-printed redemption request form will be sent to the

Unitholders along with the Account Statement. These formswill also be available at any of the Official Acceptance Points.

The fully completed form, can be submitted at any of theOfficial Acceptance Points listed in the Offer Document or canbe sent to the office of the Registrar at Chennai, in personor by post.

Where the Unitholder has opted to transact through theInternet, he may redeem his units through the website of theRegistrar, i.e. www.camsonline.com and/or through any otherwebsite, through which redemption may be facilitated infuture.

The Unitholder may either request mailing of the redemptionproceeds to his/her address or to be retained at the ISC forcollection by him/her. If the Unitholder opts for the “D-Kredit” facility, he can receive the amount by a direct creditto his bank account.

3. Payment of ProceedsRedemption proceeds will be paid by cheques, marked“Account Payee only” and drawn in the name of the soleholder/first-named holder (as determined by the records ofthe Registrar). The Bank Name and No, as specified in theRegistrar’s records, will be mentioned in the cheque, whichwill be payable at par at all the cities designated by the Fundfrom time to time. If the Unitholder resides in any othercity, he will be paid by a Demand Draft payable at thecity of his residence.

Redemption cheques will generally be sent to the Unitholder’saddress, (or, if there is more than one joint holder, the addressof the first-named holder) as per the Registrar’s records, bycourier within 3 Working Days from the day when the validrequest is accepted at the Official Acceptance Points, but inany case, not later than 10 Working Days from the date ofredemption. (Please refer to paragraph ‘Applicable NAV’ asmentioned elsewhere in this Offer Document for cut-offtimes for receiving the redemption request).

Redemption proceeds may also be paid to the Unitholder inany other manner that the Unitholder may request or theTrustee may, from time to time, decide, for the smooth andefficient functioning of the Scheme.

4. Redemption by NRIs/FIIsCredit balances in the account of NRIs may be redeemed bysuch investor in accordance with the procedure describedabove in paragraph 2. Such redemption proceeds (afterpayment of taxes) may be,

(a) credited at the NRI investor’s option, to his NRO account,where the payment for the purchase of the Units soldwas made out of funds held in NRO account, or

(b) remitted abroad or at the NRI investor’s option, creditedto his NRE/FCNR/NRO account, where the Units werepurchased on repatriation basis and the payment forpurchase of the Units sold was made by inward remittancethrough normal banking channels or out of the fundsheld in NRE/FCNR account.

In case of an FII, the designated branch of an authoriseddealer may allow remittance of net redemption proceeds(after payment of taxes) or the same may be credited to itsNon Resident Rupee Account or the Foreign Currency Account.

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5. Effect of Redemptionsa) On the FundAfter every redemption, the Unit capital and Reserves of theScheme stand reduced by an amount equivalent to the productof the number of Units redeemed and the Applicable NAVas on the date of redemption. Units once redeemed areextinguished and cannot be re-issued.

b) On the Unitholder’s accountThe balances in the Unitholder’s account stand reduced bythe number of Units redeemed. The following table illustratesa typical redemption case.

Calculation of If Exit LoadRedeemed Units of 1% is chargeableexplained:Unit Balance beforeRedemption A 2305.235NAV on date ofredemption B Rs. 10.412Exit Load Chargeable C Rs. 0.104

(10.412 x 1%)Redemption Price(Net of Load) D = B-C Rs. 10.308 (10.412-0.104)Securities TransactionTax (STT) Rate Payable E 0.20%If Redemption requestis in Rs. F Rs. 3500Redemption request(Gross of STT) G Rs. 3507(STT round off to thenearest rupee) (3500 + (3500 x 0.20%))No. of Units redeemed H = G/D 340.221

(3507 ÷ 10.308)No. of Units left I = A-H 1965.014

(2305.235 - 340.221)If Redemption requestis in Units J 350 UnitsRedemption amountwill be K = J x D Rs. 3607.80

(350 x 10.308)Amount receivable after L Rs. 3600.58STT (STT round off tonearest rupee) (3607.80 -

(3607.80 X 0.20%))No. of Units left M = A-J 1955.235

(2305.235-350.000)

Note: Situation, load and NAV figures are hypothetical andassumed for the sole purpose of the illustration.

6. Right to Limit RedemptionThe Board of Directors of the Trustee and the AMC may, inthe general interest of the Unitholders of the Scheme offeredunder this Offer Document and keeping in view the unforeseencircumstances/unusual market conditions, limit the totalnumber of Units which may be redeemed on any WorkingDay to 5% of the total number of Units then issued andoutstanding under the Scheme or to such other percentageas the said Boards may determine. In such a case, the approvalof both the Boards, giving details of circumstances andjustification for the proposed action shall be informed to SEBIin advance.

Any Units, which, by virtue of these limitations, are notredeemed on a particular Day, are carried forward forredemption to the next Day for which NAV is declared, in theorder in which the requests for redemption were received.Redemptions so carried forward are priced on the basis of theRedemption Price of the Day on which redemption is made.Under such circumstances, to the extent multiple redemptionrequests are received at the same time on a single WorkingDay, redemptions will be made on pro-rata basis, based onthe size of each redemption request, the balance amountbeing carried forward for redemption to the next Day(s) forwhich NAV is declared.

7. Suspension of Redemption of UnitsThe redemption of Units may be suspended temporarily orindefinitely when any of the following conditions exist:

1. The stock markets stop functioning or trading is restricted;

2. Extreme volatility occurs in the stock markets / moneymarket / debenture/bond market / foreign exchangemarket, which, in the opinion of the Investment Manager,is prejudicial to or to the disadvantage of the interestsof the investors;

3. There is a natural calamity, civil strife, complete breakdownof law and order, war, act of God or force majeure; andor

4. SEBI, by order, so directs.

In case of suspension of redemption, the approval of theBoards of Directors of the Trustee and the AMC, giving detailsof circumstances and justification for the proposed actionshall be informed to SEBI in advance.

8. Unclaimed Redemption and Dividend AmountAs per circular no. MFD/CIR/9/120/2000, dated November24, 2000 issued by SEBI, the unclaimed redemption anddividend amounts shall be deployed by the Fund in callmoney market or money market instruments only. Theinvestment management fee charged by the AMC formanaging such unclaimed amounts shall not exceed 50 basispoints. The circular also specifies that investors who claimthese amounts during a period of three years from the duedate shall be paid at the prevailing Net Asset Value. Thus,after a period of three years, this amount can be transferredto a pool account and the investors can claim the said amountsat the NAV prevailing at the end of the third year.

In terms of the circular, the onus is on the AMC to make acontinuous effort to remind investors through letters to taketheir unclaimed amounts.

The information on amount unclaimed and number of suchinvestors for each Scheme shall be disclosed in the annualreport sent to the Unitholders.

The AMC will invest the unclaimed redemption/dividendamounts under the Scheme in bank fixed deposits. In caseof a request from the investor claiming the unpaid redemption/dividend amounts due to him; the investor will be paid thesame along with the interest on such investment. Also theinvestors will be reminded through periodic communicationsto claim their unclaimed amounts. The AMC may charge feesfor managing these unclaimed redemption/dividend amountsas permitted under the Regulations.

49


A. LOAD STRUCTURE OF THE SCHEMEDuring New Fund Offer and Continuous OfferEntry :

a) For [1] Switch-in is made from another Equity/Balanced/Fund of Funds Scheme of the Fund [2] purchase/switch-in amount greater than or equal to Rs. 3 Crores (Switch-ins being from non-Equity Schemes) [3] where Units areallotted on reinvestment of Dividends [4] purchase by aFund-of-Funds Scheme as defined under the Regulations[5] *purchase by a Foreign Institutional Investor (FII) orsub account of FII : Nil

b) For purchase/switch-in amount less than Rs. 3 crores andcase not covered in (a) above: 2.25% of the ApplicableNAV

Exit : NIL

* Load is a method by which the expenses incurred forsales and marketing are recovered from the investors ofthe Scheme. Since there are no significant sales andmarketing expenses such as brokerage, sales promotion,associated with direct investment made by FII directly orthrough sub - accounts, we propose that no load (entry/ exit) be charged by the Scheme on investment madeby FIIs directly or through sub - accounts.

The Trustee reserves the right to change the load structureof the Scheme or introduce contingent deferred sales charge(CDSC) on a prospective basis. Should the Trustee, on anydate, decide to change the load structure or introduce/modifyCDSC, it will be on a prospective basis and investments madeby Unitholders prior to such date will continue to attract theloads/CDSC applicable prior to such change. Any change/introduction in the load structure/CDSC alongwith the detailswill be stamped in the acknowledgement slip issued to theinvestors on submission of the application form and will alsobe disclosed in the statement of accounts issued after theintroduction of the same.

Any Load or CDSC of the Scheme will be maintained in aseparate account to meet the selling and distribution expensesof the Fund and any excess over such expenses will becredited to the Scheme, whenever felt appropriate by theAMC.

B. FEES AND EXPENSES OF THE SCHEMEAs per the provisions of the Regulations, as amended up todate, the following fees and expenses are applicable to theScheme:

1. Expenses of Initial IssueAs per the Regulations, the Initial Issue expenses comprisingBroker/Agent's commission, advertising, publicity, marketing,

registrar expenses, etc., charged to the Scheme, shall notexceed 6% of the amount collected under the Scheme.

In respect of the Scheme, Initial Issue Expenses not exceeding6% may be incurred by the Fund as under:

a. Expenses relating to Broker / Agent's commission incurredduring the New Fund Offer (NFO) shall be met out of theEntry Load (2.25%) collected during the NFO.

b. Initial Issue Expenses comprising of Marketing andAdvertising, Printing and Mailing, Additional Brokerage /Commission, Registrar Expenses, Bank charges and OtherExpenses, subject to a maximum of 3.75 % of theamount collected (net of Entry load) by the Scheme, willbe amortised over a period not exceeding three years.For the Scheme, the aforesaid initial issue expenses areestimated as under:

Expenses other than Estimated %Broker/Agent's commission of Amount

Collected

Marketing and Advertising 1.25Printing and Mailing 0.50Additional Broker/Agent's Commission 1.25Registrar Expenses 0.25Bank charges and Other Expenses 0.50

Total 3.75

These estimates are made in good faith by the AMC andthe actual expenses may be different from theseestimates, inter se.

Actual expenses incurred in respect of Initial Issue Expensesin excess of 6 % as indicated above shall be borne by theAMC."

Illustration of Amount available to Scheme forInvestment

Assumptions made for the purpose of the illustration:l The impact has been explained for both categories of

investors, i.e.A. Where investments attract Entry Load as mentioned

under ‘Load Structure of the Scheme’B. Where investments does not attract Entry Load as

mentioned under ‘Load Structure of the Scheme’l The calculations are made for every Rs. 100 invested by

A and B.l The Entry Load amount collected is utilised for payment

of Broker/Agent commission.

V I . L O A D S A N D R E C U R R I N G E X P E N S E S

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A B

Unitholders Investment (Rs.) 100 100

Purchase Price at which Units are allotted (Rs.) 10.225 10

No of Units allotted 9.7800 10

Load Amount utilised for payment of Broker/Agent comm. (Rs.) 9.78 x 10 x 2.25% 0 = 2.2005

Balance Amount (Rs.) 97.7995 100

Initial Issue Expenses (comprising of Marketing and Advertising,Printing and Mailing, Additional Brokerage / Commission, 97.7995 x 3.75% 100.00 x 3.75%Registrar Expenses, Bank charges and Other Expenses) = 3.6675 = 3.7500

Amount available to Scheme for investment 94.1320 96.2500

The impact of initial issue expenses, which are to be amortised over a period of time, on the NAV is explained below.

Illustration of Impact of Initial Issue Expenses on NAV:Continuing the illustration further, if the total amount collected by the Scheme is Rs. 200 (as stated A and B above), furtherassumptions made for the purpose of the illustration:

l For illustrating the impact on NAV, no accruals, appreciation or depreciation on Investments has been assumed from thetime of New Fund Offer till the date of computation of NAV.

l The impact of entry/exit load during the Continuous Offer has not been considered for calculation of Purchase/ RedemptionPrice on first date of NAV computation.

l All Initial Issue Expenses specified in the table above are amortised over a period of exactly three years. There are no initialissue expenses identified for the purpose of amortization over a period of one year.

l Amortisation of Initial Issue Expenses starts from the date of allotment of Units.

Total Amount available for Investment to the Scheme (Rs.) 190.3820

Total No. of Units allotted 19.7800

Total Initial Issue Expenses amortised over 3 years (1096 days) (Rs.) 7.4175

Maximum period for amortization 3 years i.e. 1096 days

Per day amortisation of Initial Issue Expenses (Rs.) 7.4175 ÷ 1096=0.0068

Balance Initial Issue Expenses which will be included in Net Assets (Rs.) 7.4175 - 0.0068= 7.4107

NAV on first date of computation (Rs.) (190.382+7.4107) ÷ 19.7800 = 9.9996

Purchase Price on first date of NAV computation (Rs.) 9.9996

Redemption Price on first date of NAV computation (Rs.) 9.9996

2. Expenses of Past Initial IssueAs per the Regulations, for each Scheme, the Initial IssueExpenses comprising Broker/Agent’s commission, advertising,publicity, marketing, registrar expenses, etc. shall not exceed6% of the amount collected under the Scheme. For noScheme launched by the Fund did the initial issue expenseexceed the said limit. In the case of Kotak Gilt Investment,Kotak Gilt Savings, Kotak Gilt Serial, Kotak Bond, Kotak BondSerial, Kotak Bond Short Term, Kotak Liquid, Kotak FloaterShort Term Scheme, all Plans under Kotak Mahindra FixedMaturity Plans, Kotak FMP (8), Kotak Dynamic Income, Kotak30, Kotak Floater Long Term Scheme , Kotak Flexi DebtScheme, Kotak FMP Series VIII, Kotak FMP Series I, Kotak FMPSeries II and Kotak FMP Series IV, the entire Initial IssueExpense was borne by the AMC. As such, for every Rs. 100contributed by the investor, the entire Rs. 100 was availablefor investment. In the case of Kotak Balance, Kotak MNC andKotak Tech, the Schemes were respectively charged initialissue expenses of 1.5% of the amount collected during the

Initial Offer and the expenses so charged to the said Schemesare being amortised over a period of 5 years, as requiredunder Regulation 52(5) read with the Tenth Schedule. Amountsin excess of 1.5% of the amount collected were borne by theAMC and not charged to the said Schemes. Thus, for everyRs. 100 contributed by the investor, Rs. 98.50 was availableto the Schemes for investment. In case of Kotak Income Plus,Initial Issue Expenses of upto 2% of the amount collectedduring the Initial Offer Period was charged to the Scheme.Amount in excess of 2% were borne by the AMC. As such,for every Rs.100 contributed by the investor, atleast Rs.98was available to Kotak Income Plus for investment. In caseof Global India Initial Issue Expenses of upto 2.83% wascharged to the Scheme and thus for every Rs.100 contributedby the investor, atleast Rs.97.17 was available to the Schemefor investment. In case of Kotak Equity FOF Initial Issue Expensesof upto 3.75% was charged to the Scheme and thus for everyRs.100 contributed by the investor, atleast Rs.96.25wasavailable to the Scheme for investment. In case of Kotak

51


Opportunities Initial Issue Expenses of upto 2.82% wascharged to the Scheme and thus for every Rs.100 contributedby the investor, atleast Rs.97.18 was available to the Schemefor investment. In case of Kotak Midcap Initial Issue Expensesof upto 3.41% was charged to the Scheme and thus for everyRs.100 contributed by the investor, atleast Rs.96.59 wasavailable to the Scheme for investment. In case of KotakDynamic Fund of Funds, initial issue expenses of upto 2.25%were charged to the scheme. Thus, for every Rs. 100contributed by the investor, atleast Rs. 97.75 was availableto the scheme for investment. In case of Kotak Contra Scheme,initial issue expenses of upto 3.42% were charged to thescheme. Thus, for every Rs. 100 contributed by the investor,atleast Rs. 96.58 was available to the scheme for investment.

3. Initial issue Expenses incurred by the SchemesThe initial issue expenses for all the schemes are summarisedbelow:

Scheme Launched Initial Issue Borne by Borne by theIn Expenses AMC Scheme**

(Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs)Kotak Gilt December Combined In full –Investment, 1998 116Kotak GiltSavings,Kotak 30

Kotak Bond, October 58 In full –Kotak Balance 1999 133 48 85

Kotak Tech February 556 234 322Kotak MNC 2000 115 49 66Kotak Liquid October 7.62 In full –

2000Kotak Bond April 2002 2.77 In full –Short TermKotak FMP (1) May 2002 2.90 In full –

Kotak FMP (2) June 2002 7.93 In full –Kotak FMP (3) June 2002 – – –

Kotak FMP (4) July 2002 – – –Kotak FMP (5) July 2002 – – –

Kotak FMP (6) March 2003 4.52 In full –Kotak FMP (7) March 2003 2.62 In full -

Kotak Floater July 2003 1.11 In full –Short TermScheme

Kotak Income October 259.82 1.50 258.31Plus 2003

Kotak Dynamic December 2.77 In full –Income 2003

Kotak Global December 1014.57 1.09 1013.48India 2003

Kotak FMP (8) March 2004 1.44 In full –Kotak July 2004 695.46 0.21 695.25Equity FOF

Kotak July 2004 187.27 0.06 187.21Opportunities

Kotak Floater August 4.68 In full –Long Term 2004Scheme

Kotak Flexi November 1.94 In full –Debt Scheme 2004

Kotak Midcap December 1932.08 – In full2004

Kotak FMP February 0.98 In full –Series VIII 2005

Kotak FMP March 2005 4.38 In full –Series I

Kotak FMP March 0.53 In full –Series II 2005

Kotak FMP March 2005 0.61 In full –Series IV

Kotak Dynamic March 2005 235.53 0.023 23.51Fund of Funds

Kotak Contra June 2005 2154.14 – In fullScheme

** The initial issue expenses borne by the schemes arebeing amortised as per the Regulations.

The Initial Issue Expenses of the schemes did not vary adverselyfrom the estimated expenses of the respective schemes.

4. Recurring Expenses of the SchemeThe estimate of the ongoing fees and expenses of operatingthe Scheme on an annual basis, expressed as a percentageof the amount of the Scheme’s daily average net assets isgiven in the table below. The purpose of the table is to assistthe investor in understanding various heads of costs andexpenses that an investor in the Scheme will bear directly orindirectly.

Recurring Expenses

Description (% per annum of dailyaverage net assets)

Investment Management and 1.250Advisory Services Fees payableto AMC

Trustee Fees 0.050

Service Tax on Management 0.130& Trustee Fees

Custodian Fees 0.200

Marketing and Selling Expense 0.470(incl. Agents commission)

Registrar and Transfer 0.250Agent Fees

Other Operational Expenses 0.150attributable to the scheme

Total Annual Recurring 2.500Expenses (Estimated)

Scheme Launched Initial Issue Borne by Borne by theIn Expenses AMC Scheme**

(Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs)

52


These estimates are made in good faith by the InvestmentManager and are subject to change, both inter se and as anincrease or decrease in the estimated total annual recurringexpenses. Though the Investment Manager will make effortsto keep the recurring expenses to the minimum, actualexpenses under any head and / or the total expenses may bemore or less than the estimates. The Investment Managerretains the right to charge the actual expenses to the Fund,however the expenses charged will not exceed the statutorylimit prescribed by the Regulations.

The above estimates are based on an amount of Rs. 100crores for the Scheme and will change to the extent assetsare lower or higher.

The recurring expenses under the Scheme (includinginvestment and advisory fees) will be subject to the followingmaximum limits (as a percentage of Weekly Average NetAssets of the Schemes) as per Regulation 52. Expenses overand above the permitted limit under the applicable Regulationswill be borne by the AMC.

Weekly Average Net Assets (Rs.)

First 100 crores 2.50%

Next 300 crores 2.25%

Next 300 crores 2.00%

Balance assets 1.75%

Such expenses shall be lesser by atleast 0.25% of the WeeklyAverage Net Assets outstanding in each financial year inrespect of a Scheme investing in bonds.

The AMC may charge the Scheme with investment andadvisory fees subject to the currently applicable maximumlimits (as a percentage of Weekly Average Net Assets of theScheme) as per Regulation 52.

Weekly Average Net Assets Fees chargeableoutstanding in eachaccounting year (Rs.)

First 100 crores 1.25%

On balance assets 1.00%

As per the Regulations, the AMC may charge an additionalmanagement fee of upto 1% per annum of the weeklyaverage net assets outstanding in any financial year in respectof a Scheme where there is no entry/ exit load/spread/ levelload or their combination. The recurring expenses of theScheme, including the additional management fee shall beas per the limits prescribed under the Regulations. Further,the additional management fee may be charged only till theinitial issue expenses under the Scheme are recovered or asmay be prescribed by the Regulations.

The recurring expenses of the Scheme, including the additionalmanagement fee shall be as per the limits prescribed underthe Regulations.

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A. UNITHOLDERS’ RIGHTS1. Unitholders under the Scheme have a proportionate

right in the beneficial ownership of the assets of theScheme and to the dividend declared, if any, by the Fundunder the Scheme.

2. The Trustee shall be bound to make such disclosures tothe Unitholders as are essential in order to keep theminformed about any relevant information, especially whichmay have an adverse bearing on their investments.

3. If the Fund declares a dividend under the Scheme, it isrequired to dispatch dividend warrants within 30 daysfrom the date of declaration of the dividend.

4. The Fund is required to dispatch redemption chequeswithin 10 Working Days from the date of redemption.If the Fund fails to send the redemption cheques afterthe said 10 Working days, interest at the rate of 15%p.a. will be paid to the applicant and borne by the AMCfor the period from the day following the date of expiryof the said 10 Working days until the actual date of therefund.

5. The appointment of an AMC for the Fund may, with theprior approval of SEBI, be terminated by 75% of theUnitholders or by a majority of the Board of Directors ofthe Trustee.

6. Unitholders have the right to inspect all the documentslisted under the heading “Documents Available forInspection”.

7. 75% of the Unitholders of the Scheme can pass aresolution to wind-up the Scheme.

8. The Trustee is obliged to convene a meeting of theUnitholders of a Scheme on the requisition of 75% ofthe Unitholders of the Scheme.

9. The Trustee is obliged to obtain the consent of theUnitholders -

a) whenever required to do so by SEBI in the interestof the Unitholders; or

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

c) when the majority of the Board of Directors of theTrustee decides to wind up or prematurely redeemthe Units.

10. The Trustee shall ensure that no change in thefundamental attributes of any scheme or the trust orfees and expenses payable or any other change whichwould modify the scheme and affects the interest ofUnitholders, is carried out unless,

i. a written communication about the proposedchange is sent to each Unitholder and anadvertisement is given in one English daily newspaperhaving nationwide circulation as well as in a

newspaper published in the language of the regionwhere the Head Office of the Fund is situated; and

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

11. For any change in the scheme features, the addendumdetailing such changes will be attached to the offerdocuments and abridged offer documents. Theaddendum will be circulated to all the distributors/brokersso that the same can be attached to all offer documentsand abridged offer documents already in stock. Theaddendum will also be sent alongwith the newslettersent to the Unitholders after the changes. Arrangementswill be made to display the changes/modifications in theoffer document in the form of a notice in all the investorservice centres and distributors/brokers office.

B. VOTING RIGHTS OF THE UNITHOLDERSSubject to the provisions of the Regulations as amended fromtime to time, the consent of the Unitholders shall be obtained,entirely at the option of the Trustee, either at a meeting ofthe Unitholders or through postal ballot. Only one Unitholderin respect of each folio or account representing a holdingshall vote and he shall have one vote in respect of eachresolution to be passed.

C. ACCOUNT STATEMENTSAn Account Statement, stating the number of Units allotted/redeemed, will be sent to each Unitholder within 30 (Thirty)days from the date of the transaction. An Account Statementmay be sent to a Unitholder using e-mail with the consentof the Unitholder. Account Statements to be issued in lieu ofUnit Certificates under the Scheme are non-transferable.These Account Statements shall not be construed as proof oftitle and are only computer printed statements, indicating thedetails of transactions under the Scheme concerned duringthe relevant financial year and giving the closing balance ofUnits for the information of Unitholders. The Trustee mayissue a Unit Certificate in lieu of Account Statement in respectof Units held, to those Unitholders who request for the same,after receipt of a specific request from the Unitholderconcerned, at the cost and expense of the Unitholder orotherwise, as may be decided from time to time. Anydiscrepancy in the Account Statement / Unit Certificate shouldbe brought to the notice of the Fund/AMC immediately.Contents of the Account Statement / Unit Certificate will bedeemed to be correct if no error is reported within 30 daysfrom the date of Account Statement / Unit Certificate. Further,the Trustee also reserves the right to issue, on an ongoingbasis, in lieu of Account Statements, Transaction ConfirmationSlips, therein indicating the price and the Units debited orcredited to the Account of the Investor/Unitholder, alongwith the closing balance of his Account. Under this system,a periodical statement of holdings of the Investor in therelevant Scheme of KMMF will be given.

D. NAV INFORMATIONThe NAVs of the Scheme will be calculated and announcedby the Fund on each Working Day in at least two daily

V I I . U N I T H O L D E R S ’ R I G H T S A N D S E R V I C E S

54


newspapers. NAV information will also be posted, on eachWorking Day, on the Fund’s website - www.kotakmutual.comand on the AMFI website - www.amfiindia.com.

Investors may obtain information on loads on any WorkingDay by calling the office of the AMC or any of the InvestorService Centers. Information on applicability of loads will alsobe provided in the Account Statement.

E. DISCLOSURE OF INFORMATION UNDERTHE REGULATIONS

1. The Schemewise Annual Report / an abridged summarythereof, will be prepared and mailed to all Unitholders;as soon as may be but not later than six months fromthe date of closure of the relevant financial year. Wheneverthe report is sent in summary form, the full AnnualReport will be made available for inspection at theRegistered Office of the Trustee and a copy, made availableon request to the Unitholders on payment of a nominalfee.

2. The unaudited financial results will be published throughan advertisement in one English daily newspapercirculating in the whole of India and in a newspaperpublished in the language of the region where theRegistered Office of the Trustee is situated, before the

expiry of one month from the close of each half year, thatis the 31st of March and the 30th of September. Thesame will also be posted on the website of the Fund andthat of AMFI.

3. A complete statement of the portfolio of the Scheme willeither be sent to all Unitholders, or published by way ofan advertisement, before the expiry of one month fromthe close of each half year, that is the 31st of March andthe 30th of September, in one English daily newspapercirculating in the whole of India and in a newspaperpublished in the language of the region where the headoffice of the Trustee is situated. The same will also beposted on the website of the Fund.

4. In case any company has invested more than 5% of theNet Asset value of any scheme of the Fund, investmentmade by that scheme or any other scheme of the Fundin that company or its subsidiaries will be disclosed, asrequired by the Regulations, to the Trustee and in thehalf-yearly and annual accounts, with justification forsuch investments. As on March 31, 2005, the followingcompanies have made investments in the schemes of theFund in excess of 5% of the net asset value and duringthis period, other schemes of the Fund invested in thesecompanies.

(Rupees in Lakhs)

Company Schemes Investing Aggregate investmentsinvested Scheme(s)/Plan(s) made by the Scheme/(s)in by the in the Company for theCompany period under Regulation

Bharti Tele-Ventures Ltd. Kotak Floater Kotak 30 3,330.68Short Term Kotak Income Plus 76.72

Kotak Liquid 7,417.75Kotak MNC 1,063.56

Britannia Industries Ltd. Kotak FMP Series I Kotak 30 742.78Kotak Opportunities 204.27Kotak Midcap 1,051.03

Dr. Reddy’s Laboratories Ltd. Kotak FMP (8) Kotak Balance 70.47Kotak Global India 373.15Kotak 30 135.19

Finolex Cables Ltd. Kotak Balance Kotak Liquid 8,514.88Kotak Midcap 346.69

Finolex Industries Ltd. Kotak Balance Kotak Balance 31.73Kotak Income Plus 30.00Kotak Liquid 2,000.00

Global Trade Finance Pvt. Ltd. Kotak Dynamic Kotak Floater Long Term 4,000.00Income Kotak Liquid 20,200.00

Gujarat Gas Co. Ltd. Kotak Bond Kotak Balance 210.95Short Term Kotak Income Plus 39.73

Kotak Midcap 925.35

HCL Technologies Ltd. Kotak Bond Kotak 30 238.85Short Term Kotak Technology 536.94

HDFC Bank Ltd. Kotak Floater Kotak Bond 8,625.22Short Term Kotak Bond Short Term 7,808.93

Kotak Floater Short Term 33,452.85Kotak Floater Long Term 7,459.36Kotak Flexi Debt 507.53Kotak Dynamic Income 1,525.65Kotak Liquid 63,003.91

55


Hero Honda Motors Ltd. Kotak Floater Kotak 30 995.53Short Term Kotak Income Plus 115.91

Kotak MNC 257.70

Hindalco Industries Ltd. Kotak Floater Kotak Balance 65.28Short Term Kotak Bond 2,012.46

Kotak Bond Short Term 551.49Kotak 30 664.70

ICI India Ltd. Kotak FMP (8) Kotak Midcap 500.00ICICI Bank Ltd. Kotak Liquid Kotak Bond 2,259.77

Kotak Bond Short Term 4,894.35Kotak Floater Short Term 812.90Kotak 30 626.64Kotak Income Plus 878.23Kotak Opportunities 111.24Kotak Liquid 58,328.13

Infrastructure Leasing & Kotak Liquid Kotak Bond Short Term 500.00Financial Services Ltd. Kotak FMP (8) 1,000.00

Kotak Floater Short Term 10,580.55Kotak Liquid 57,381.08

Indian Aluminium Company Ltd. Kotak Floater Kotak Bond 1,500.00Short Term Kotak Liquid 1,000.00

Indian Rayon and Industries Ltd. Kotak Floater Kotak 30 871.32Short Term Kotak Opportunities 97.00

Indo Gulf Fertilisers Ltd. Kotak Floater Kotak Balance 58.78Short Term Kotak 30 60.57

Indusind Bank Ltd. Kotak Floater Kotak Liquid 1,188.09Long Term

Industrial Development Bank of India Kotak Liquid Kotak Bond 13,843.26Kotak Bond Short Term 20,284.77Kotak Floater Short Term 6,936.28Kotak Floater Long Term 5,623.44Kotak 30 81.29Kotak Income Plus 1,527.10Kotak Liquid 28,903.31

Infrastructure Development Kotak Floater Kotak Bond 4,490.06Finance Company Ltd. Short Term Kotak Floater Short Term 4,604.12

Kotak Liquid 6,426.95ITC Ltd. Kotak Bond Kotak Balance 103.58

Short Term Kotak 30 1,254.64Kotak Income Plus 351.32Kotak Opportunities 139.20Kotak MNC 687.52

Kotak Mahindra Bank Ltd. Kotak Liquid Kotak Liquid 2,495.12

Mahindra & Mahindra Ltd. Kotak Dynamic Kotak Balance 319.68Income Kotak Bond 1,854.62

Kotak 30 2,866.95Kotak Income Plus 984.62Kotak Opportunities 309.40Kotak Liquid 800.00

Maruti Udyog Ltd. Kotak Bond Kotak Balance 82.90Short Term Kotak Global India 1,184.19

Kotak 30 879.65Kotak Income Plus 358.63Kotak MNC 739.08

(Rupees in Lakhs)


56


Power Trading Corporation of India Ltd. Kotak FMP (8) Kotak 30 88.80

Raymond Ltd. Kotak Floater Kotak Bond 1,000.00Short Term Kotak Floater Short Term 1,000.00

Kotak Floater Long Term 1,000.00Kotak Global India 587.26Kotak Liquid 18,700.00

State Bank of India Kotak Global India Kotak Balance 667.87Kotak Bond 2,303.11Kotak Bond Short Term 2,868.50Kotak 30 4,078.61Kotak Income Plus 887.87

Sterlite Industries India Ltd. Kotak Bond Kotak Bond 1,000.00Short Term Kotak Bond Short Term 300.00

Kotak Floater Long Term 4,100.00Kotak 30 668.40Kotak Income Plus 500.00Kotak Liquid 7,000.00Kotak Midcap 2,200.00

Sun Pharmaceutical Industries Ltd. Kotak FMP (8) Kotak Global India 1,375.59Kotak 30 651.14

Tata Chemicals Ltd. Kotak Floater Kotak 30 68.55Short Term

Tata Motors Ltd. Kotak Liquid Kotak Bond Short Term 1,487.84Kotak Floater Long Term 846.68Kotak Global India 1,039.32Kotak 30 1,592.67Kotak Income Plus 115.25Kotak Liquid 1,039.78

The Tata Iron and Steel Company Ltd. Kotak Liquid Kotak Balance 883.30Kotak 30 1,229.54Kotak Income Plus 511.26

TVS Motor Co. Ltd. Kotak Floater Kotak 30 330.12Short Term

UCO Bank Kotak Bond Kotak Balance 1.40Short Term Kotak 30 1.40

UTI Bank Ltd. Kotak Liquid Kotak Bond 555.85Kotak Floater Short Term 4,487.96Kotak Floater Long Term 1,943.76Kotak Income Plus 37.59Kotak Opportunities 128.20Kotak Liquid 50,046.81Kotak FMP Series VIII 2,493.48

Vijaya Bank Kotak Opportunities Kotak Balance 378.76Kotak Income Plus 26.12Kotak Opportunities 188.77Kotak Midcap 868.88

Wipro Ltd. Kotak Liquid Kotak Balance 154.06Kotak Global India 1,164.90Kotak 30 1,870.96Kotak Income Plus 55.74Kotak Technology 2,199.25

These investments comprise debt and equity instruments and were made solely on the basis of sound fundamentals ofthese companies.

(Rupees in Lakhs)


57


F. DURATION OF THE SCHEMEThe duration of the Scheme is perpetual. However, the Schememay be wound up if:-

i. There are changes in the capital markets, fiscal laws orlegal system, or any event or series of event occurs,which, in the opinion of the Trustee, requires the Schemeto be wound up; or

ii. 75% of the Unitholders of the Scheme pass a resolutionthat the Scheme be wound up; or

iii. SEBI directs the Scheme to be wound up in the interestsof the Unitholders.

Where the Scheme is to be wound up pursuant to the aboveRegulations, the Trustee shall give notice of the circumstancesleading to the winding up of the Scheme:-

i. to SEBI; and

ii. in two daily newspapers having circulation all over Indiaand also in a vernacular newspaper circulating in theplace where the Mutual Fund is established.

G. PROCEDURE AND MANNER OF WINDING UPi. The Trustee shall call a meeting of the Unitholders to

consider and pass necessary resolutions by simple majorityof the Unitholders present and voting at the meeting forauthorising the Trustee or any other person to take stepsfor winding up the Scheme concerned.

ii. a) The Trustee or the person authorised as above, shalldispose off the assets of the Scheme concerned inthe best interest of the Unitholders of that Scheme.

b) The proceeds of the sale made in pursuance of theabove, shall, in the first instance, be utilised towardsdischarge of such liabilities as are properly due underthe Scheme and after making appropriate provisionfor meeting the expenses connected with suchwinding up, the balance shall be paid to theUnitholders in proportion to their respective interestsin the assets of the Scheme as on the date whenthe decision for the winding up was taken.

iii. On completion of the winding up, the Trustee shallforward to the Board and the Unitholders, a report onthe winding up containing particulars such ascircumstances leading to the winding up, steps taken forthe disposal of the assets of the Fund before winding up,expenses of the Fund for winding up, net assets availablefor distribution to the Unitholders and a certificate fromthe Auditors of the Scheme concerned.

iv. Notwithstanding anything contained herein, theprovisions of the Regulations in respect of disclosure ofhalf-yearly reports and annual reports shall continue toapply.

After the receipt of the report referred to above under‘Procedure and Manner of Winding Up’, if SEBI is satisfiedthat all measures for winding up of the Scheme concernedhave been completed, the Scheme shall cease to exist.

H. SERVICES TO UNITHOLDERS1. Investor ServicesIt is the endeavour of the Fund to provide consistently highquality service to its investors. This encompasses all interactionby the clients with the Fund. The Fund strives to upgrade thequality of services through implementation of technologyand through ensuring quality consciousness amongst its servicepersonnel and agencies associated with it.

The Fund strives to provide a high degree of convenience forthe investors’ dealings with itself and it is the constantendeavour of the Fund to increase this level of convenience.

2. Facilitating Enquiries and Transactionsa) Investor Service Centres in important cities

CAMS, which is the Registrar to the Fund, provides InvestorServices through its ISCs. Unitholders’ enquiries andtransactions during business hours are entertained at the ISCsat the addresses listed elsewhere in this Offer Document.

b) Master Account

Unless otherwise requested by the Unitholder, one MasterAccount number is assigned for one entity investing in differentSchemes of the Fund, provided while investing for a secondtime or any time thereafter, the Unitholder quotes his existingAccount Number. In such a case, on specific request, oneconsolidated account statement is provided.

c) Meeting in Person

A responsible official of the Asset Management Company willbe available every business day between 3.00 p.m. and 4.00p.m. for a personal meeting with any Unitholder at theregistered office of the AMC. The purpose of this facility isto discuss the investment needs of the client, address anyqueries on the Mutual Fund and to provide other services.

3. Finding Solutions to ProblemsThe Fund will follow up with the Investor Service Centres andthe Registrar on complaints and enquiries received frominvestors. The Fund will strive to speedily resolve investorcomplaints.

4. Unitholder Grievances Redressal MechanismInvestor grievances will normally be received at the AMCoffice or at any of the Investor Services Centres or directly bythe Registrar. All grievances will then be forwarded to theRegistrar, if required, for necessary action. The complaints willclosely be followed up with the Registrar to ensure timelyredressal and prompt investor service.

Mr. Vinod Venkateswaran has been appointed as the InvestorRelations Officer for the Fund. All related queries should beaddressed to:

Mr. Vinod VenkateswaranKotak Mahindra Asset Management Company Limited91/92, 9th Floor, Sakhar Bhavan,230, Nariman Point, Mumbai - 400 021Tel: 5638 4444Fax: 5638 4455e-mail: [email protected]

58


5. History of Investor Complaints for the periodApril 01, 2002 to August 31, 2005:

These were mostly in the nature of queries and requests, andwere attended to as follows:

Description No. of Resolved within Pendingqueriesreceived

1 day 2 days 3 days > 3days

Change ofAddress 30374 28824 583 510 457 0Change ofBank Mandate 35377 33755 598 470 554 0Non - Receiptof AccountStatement 35 28 4 0 3 0Other Queries 79736 72044 3232 1363 3095 2Total 145522 134651 4417 2343 4109 2ServiceStandard 100.00 92.53 3.04 1.61 2.82 0.00

I. TAX BENEFITS OF INVESTING IN THEMUTUAL FUND

The information set out below outlines the tax implicationswith respect to the Unitholders of the Scheme and withrespect to the Mutual Fund and is based on relevant provisionsof the Indian Income Tax Act, 1961 and the Wealth Tax Act,1957 as amended by the provisions of the Finance (No. 2)Act, 2005 (collectively known as “the relevant provisions”),and prevailing as on August 23, 2005.The implications stated herein have been reviewed by PriceWaterhouse, the auditors of the Scheme. However, PriceWaterhouse does not make any representation on theprocedures for ascertaining the tax implications nor do theymake any representations regarding any legal interpretations.Since the Information below is based on the relevant provisionsas on August 23, 2005 any subsequent changes in the relevantprovisions could affect the tax implications. Further, exceptfor the above procedure, Price Waterhouse has not performedany other services in connection with any other data orinformation included in the Offer Document.THE FOLLOWING INFORMATION IS PROVIDED FOR GENERALINFORMATION PURPOSES ONLY. IN VIEW OF THE INDIVIDUALNATURE OF TAX IMPLICATIONS, EACH INVESTOR IS ADVISEDTO CONSULT HIS OR HER OWN TAX ADVISER WITH RESPECTTO THE SPECIFIC TAX IMPLICATIONS ARISING OUT OF HIS ORHER PARTICIPATION IN THE SCHEME.A. For Unitholders1. Income from the Mutual Fund received by the Unitholders

would be tax free in the hands of the Unitholders as perthe provisions of section 10(35) of the Income Tax Act,1961 (Act).

2. Under Section 2(29A) of the Act, read with section 2(42A)of the Act, a unit of a Mutual Fund is treated as a longterm capital asset if the same is held for more than 12months. If the unit is held for 12 months or less, the sameis treated as a short term capital asset.

3. As per section 10(38) of the Act, long term capital gainarising from the sale of a unit of an equity oriented fund(an equity oriented fund is a fund where the investiblefunds are invested in equity shares of domestic companiesto the extent of more than 50% of the total proceeds

of such fund) is exempt from tax. However, at the timeof sale of units (redemption) the Unitholder will have topay Securities Transaction Tax (STT) of 0.2% on the valueof the sale.

4. The capital loss resulting from sale of units would beavailable for setting off against other capital gains madeby the investor and would reduce the tax liability of theinvestor to that extent. However, losses on transfer oflong term capital assets would be allowed to be set-offonly against gains from transfer of long-term capitalassets and the balance long-term capital loss shall becarried forward separately for a period of eight assessmentyears to be set off only against long-term capital gains.Further, if the gains on sale of units are exempt from taxthen the losses from such units may not be allowed tobe set off against other gains.

5. The units of this scheme are subject to lock in period ofthree years and accordingly the provisions of section94(7), section 94(8) and section 111A would not beapplicable.

6. Where the units are treated as ‘stock in trade’ and theprofits arising from the sale of units are taxed under thehead “Profits & Gains of business or profession”, anamount equal to the STT paid by the Unitholder can beclaimed as a rebate from the tax payable on the incomefrom such sale of units by virtue of the provisions ofsection 88E of the Act. No deduction would be allowedfor STT while calculating capital gains.

7. In terms of the provisions of section 80C an Individualor a Hindu Undivided Family is entitled to claim adeduction for the investments made in specified securitiesetc. With effect from April 1, 2005 the maximum amountof deduction allowed is Rs 100,000. Investment in a planformulated by mutual fund in accordance with the schemenotified by the Central Government qualifies for suchdeduction. Earlier the Central Government had notifiedEquity Linked Savings Scheme, 1992 (ELSS) for thepurpose of similar benefit available u/s 88.Subject to the Central Government notifying ELSS forthe purpose of section 80C, the Unitholders would beentitled to the benefits described in the above para forthe investments made under this Plan.

8. As per the provisions of Section 194K and 196A of theAct, no deduction of tax at source shall be made fromincome credited or paid by a mutual fund to a Unitholder.

9. As per circular no. 715 dated August 8, 1995 issued bythe CBDT in case of resident Unitholders, no tax isrequired to be deducted at source from capital gainsarising at the time of repurchase or redemption of theunits.

10. In case of non-resident Unitholders no tax would bededucted at source from the capital gains arising fromthe units on the basis that long term gains are exemptfrom tax.

11. Mutual Fund units are exempt from wealth tax.

B. For the Mutual Fund1. Kotak Mahindra Mutual Fund is a Mutual Fund registered

with SEBI and as such is eligible for benefits underSection 10(23D) of the Act. Accordingly, its entire incomeis exempt from income tax.

2. No distribution tax is payable by an open ended equityoriented fund.

59


A. POWER TO MAKE RULESSubject to the Regulations, the Trustee may, from time totime, prescribe such terms and make such rules as may benecessary for the purpose of giving effect to the Scheme,with power to the AMC to add to, alter or amend all or anyof the terms and rules that may be framed from time to time.

B. POWER TO REMOVE DIFFICULTIESIf any difficulty arises in giving effect to the provisions of theScheme, the Trustee may, subject to the Regulations, doanything not inconsistent with such provisions, which appearsto it to be necessary, desirable or expedient, for the purposeof removing such difficulty. Without diluting in any way thepowers granted to the Trustee as aforesaid, the Trustee hasthe following powers:1. Right to change the load structure;2. Right to change cut-off times for purchase and

redemption of Units;3. Right to change minimum amounts of purchase and

redemption;4. Right to determine frequency and amount of dividend;

and the right not to declare dividend; and5. Right to add to or alter the modes of payment by the

investor for purchase of Units.

The exercise of these powers, reserved by the Trustee underthis Offer Document vis-a-vis prospective investments in anyof the scheme, shall not constitute change in the fundamentalattributes of the Scheme.

C. TRANSACTIONS WITH ASSOCIATECOMPANIES

The Fund may from time to time, for the purpose of conductingits normal business, use the services of Kotak Securities Limited,which is a stock-broking company (an associate company),the Sponsor and various subsidiaries of the Sponsor. Thesesubsidiaries of the Sponsor, as on the date of this OfferDocument, include Kotak Mahindra Investments Limited(formerly known as Hamko Financial Services Limited) aninvestment company; Kotak Mahindra Trustee CompanyLimited (Trustee to the Fund); Kotak Mahindra Primus Limited,an auto finance company; Kotak Mahindra Securities Limited,a broker on NSE in the wholesale debt market segment;Kotak Mahindra Capital Company Limited, a Category 1Merchant Banker registered with SEBI and a Primary Dealerappointed by RBI; Kotak Mahindra (International) Limited;Kotak Mahindra (UK) Limited; Global Investment OpportunitiesFund Limited, an investment company, the subsidiarycompanies of Kotak Mahindra Capital Company Limited;Kotak Mahindra Old Mutual Life Insurance Company Limited,the life insurance joint venture of Kotak Mahindra BankLimited; Kotak Mahindra Private - Equity Trustee CompanyLimited, a private venture fund and Kotak Forex BrokerageLimited, a company dealing in foreign exchange and KotakMahindra Inc.

The Fund has neither invested in Group Companies, nortaken any underwriting obligations with respect to issues ofassociate companies.

V I I I . O T H E R M A T T E R S

Following subscriptions have been made in issues lead managed, arranged or book-running lead managed by Kotak MahindraCapital Company Limited during the period from April 01, 2002 to March 31, 2005.

Period Scheme Security Instrument Nature of AmountSubscribed (Rs. in Lakhs)

2002-2003 Kotak Balance Punjab National Bank Equity 93.00Kotak MNC I – Flex Solutions Limited Equity 79.50Kotak Tech I – Flex Solutions Limited Equity 492.50Kotak 30 I – Flex Solutions Limited Equity 79.50Kotak Balance Union Bank of India Equity 96.00Kotak Balance Divi’s Laboratories Limited Equity 10.36Kotak 30 Divi’s Laboratories Limited Equity 13.44Kotak Bond 7.30% LIC Housing Finance Limited NCD Option II Bond/NCD 500.00Kotak Bond Short Term Pass Through Certificates issued by India

MBS 2002, Series I Trust -27,India MBS 2002 Certificates Series ‘I-A’ Bond/NCD 499.22

2003-2004 Kotak Balance UCO Bank Limited Equity 36.00Kotak 30 UCO Bank Limited Equity 36.00Kotak MNC Maruti Udyog Limited Equity 231.25Kotak Bond Short Term Pass Through Certificate - BHPC Auto

Securitisation Trust (Series A1) June 2003 Bond/NCD 1,487.84Kotak Income Plus Bank of Maharashtra Equity 460.00Kotak 30 Biocon Limited Equity 850.19Kotak Balance Biocon Limited Equity 327.29Kotak Income Plus Biocon Limited Equity 2,104.20Kotak Global India Biocon Limited Equity 2,496.06

60


Kotak 30 Dredging Corporation of India Limited Equity 799.98Kotak Balance Dredging Corporation of India Limited Equity 219.96Kotak Income Plus Dredging Corporation of India Limited Equity 2,100.00Kotak Balance Hindustan Inks and Resins Limited Equity 15.28Kotak 30 IBP Company Limited Equity 93.00Kotak Balance IBP Company Limited Equity 155.00Kotak Income Plus IBP Company Limited Equity 62.00Kotak 30 Indian Petrochemicals Corporation Limited Equity 736.07Kotak Balance Indian Petrochemicals Corporation Limited Equity 332.96Kotak Income Plus Indian Petrochemicals Corporation Limited Equity 2,138.61Kotak 30 Indraprastha Gas Limited Equity 720.00Kotak Balance Indraprastha Gas Limited Equity 216.00Kotak Income Plus Indraprastha Gas Limited Equity 1,272.00Kotak 30 Oil and Natural Gas Corporation Limited Equity 1,063.80Kotak Balance Oil and Natural Gas Corporation Limited Equity 422.63Kotak Income Plus Oil and Natural Gas Corporation Limited Equity 2,716.95Kotak Global India Oil and Natural Gas Corporation Limited Equity 3,210.08Kotak 30 Patni Computer Systems Limited Equity 805.00Kotak Balance Patni Computer Systems Limited Equity 322.00Kotak Tech Patni Computer Systems Limited Equity 414.00Kotak Income Plus Patni Computer Systems Limited Equity 2,024.00Kotak Global India Patni Computer Systems Limited Equity 2,530.00Kotak 30 T.V. Today Network Limited Equity 912.00Kotak Balance T.V. Today Network Limited Equity 458.38Kotak Income Plus T.V. Today Network Limited Equity 2,148.90Kotak Liquid Corporate Loan Securitisation Series II Trust 2004 Bond/NCD 1,499.17Kotak FMP (8) Corporate Loan Securitisation Series II Trust 2004 Bond/NCD 1,499.17Kotak Liquid Corporate Loan Securitisation Series IV Trust 2004 Bond/NCD 1,011.90

2004-2005 Kotak 30 Gateway Distriparks Ltd. Equity 1238.59Kotak 30 ICICI Bank Ltd. Equity 369.60Kotak 30 National Thermal Power Corporation Ltd. Equity 1329.03Kotak 30 New Delhi Television Limited Equity 600.60Kotak 30 Punjab National Bank Equity 1474.20Kotak Balance Gateway Distriparks Ltd. Equity 232.63Kotak Balance ICICI Bank Ltd. Equity 113.40Kotak Balance National Thermal Power Corporation Ltd. Equity 258.97Kotak Balance New Delhi Television Limited Equity 309.40Kotak Balance Punjab National Bank Equity 275.89Kotak Income Plus Dena Bank Equity 251.10Kotak Income Plus Gateway Distriparks Ltd. Equity 469.54Kotak Income Plus ICICI Bank Ltd. Equity 861.00Kotak Income Plus National Thermal Power Corporation Ltd. Equity 1156.98Kotak Income Plus New Delhi Television Limited Equity 1190.00Kotak Income Plus Punjab National Bank Equity 562.77Kotak Opportunities Gateway Distriparks Ltd. Equity 374.35Kotak Opportunities National Thermal Power Corporation Ltd. Equity 472.32Kotak Opportunities Punjab National Bank Equity 445.07Kotak Opportunities Dena Bank Equity 216.00Kotak Midcap Dena Bank Equity 747.90Kotak Midcap Gateway Distriparks Ltd. Equity 2879.97Kotak Midcap Jet Airways (India) Ltd. Equity 2499.50Kotak Midcap Punjab National Bank Equity 5090.14Kotak Liquid LIC Housing Finance Ltd. Debt 2500.00Kotak Liquid Pass Through Certificate - VE Trust VIII series A Senior Debt 2500.00

Period Scheme Security Instrument Nature of AmountSubscribed (Rs. in Lakhs)

61


During the last three fiscal years, the Fund has had the following transactions with associate companies

(Rs. in Lakhs)

Nature of Period Kotak Gilt Kotak Gilt Kotak Gilt Kotak 30 Kotak Kotak Kotak Kotak Kotak Kotak Paid toTransaction Savings Investment Serial Plans Balance Bond Bond Bond Tech MNC

Plan Plan Serial Plan Short TermPlan

Commission / 2002-03 1.64 74.58 0.01 9.65 5.65 129.47 – 19.43 3.18 1.16 KotakPromotional 2003-04 5.03 51.31 0.01 15.9 7.79 90.32 – 22.83 3.92 2.55 Securitiesexpenses for 2004-05 0.21 15.00 # 47.26 2.65 18.56 – 7.73 2.77 4.00 LimitedDistributionof Units

Brokerage 2002-03 – – – 3.22 1.5 – – – 1.72 0.23 Kotaktowards 2003-04 – – – 5.62 1.08 – 1.07 0.47 SecuritiesPurchase 2004-05 – – – 8.65 0.57 – – 0.07 3.51 Limitedand Sale ofInvestments

Brokerage 2002-03 – – – – – – – 0.01 – – Kotaktowards 2003-04 MahindraPurchase and 2004-05 – – – – – – – – – – SecuritiesSale of LimitedInvestments

Commission / 2002-03 0.3 0.19 – – – 3.8 – 7.05 – – KotakPromotional 2003-04 0.84 0.02 # 0.05 0.7 Mahindraexpenses for 2004-05 0.07 0.01 – – # 0.01 0.06 – – CapitalDistribution of CompanyUnits Limited

Commission / 2003-04 1.16 0.83 – 10.82 0.72 4.84 5.43 0.01 0.48 KotakPromotional 2004-05 0.02 12.84 – 49.03 0.33 0.55 4.68 0.52 12.62 Mahindraexpenses for BankDistribution of LimitedUnits

Charges on 2003-04 0.35 0.26 0.03 0.03 Kotakbanking 2004-05 0.02 # – 1.61 0.20 0.26 – – – MahindraServices Bank

Limited

Nature of Period Kotak Kotak Kotak Kotak Kotak Kotak Kotak Kotak Kotak Kotak Paid toTransaction Income Global Liquid Mahindra Floater Dynamic FMP (8) Equity Opportu- Floater

Plus India Fixed Short Income FOF nities LongMaturity Term Term

Plans

Commission / 2002-03 KotakPromotional 39.66 0.15 – – – – – Securitiesexpenses for 2003-04 3.53 341.53 51.06 1.24 0.46 0.21 – – – – LimitedDistribution 2004-05 2.48 56.01 110.43 8.66 0.70 0.01 235.78 43.05 1.71of Units

Brokerage 2002-03 – – – Kotaktowards 2003-04 1.18 2.6 SecuritiesPurchase 2004-05 0.89 4.15 – – – – 2.26 – Limitedand Sale ofInvestments

Brokerage 2002-03 – – – Kotaktowards 2003-04 MahindraPurchase and 2004-05 – – – – – – – – – – SecuritiesSale of LimitedInvestments

62


Commission / 2002-03 9.5 – – KotakPromotional 2003-04 0.54 Mahindraexpenses for 2004-05 – – 0.04 # – – – # CapitalDistribution Companyof Units Limited

Commission / 2003-04 7.3 77.78 10.65 3.42 5.25 KotakPromotional 2004-05 6.89 42.13 29.39 16.99 1.58 3.02 52.87 29.84 7.50 Mahindraexpenses for BankDistribution Limitedof Units

Charges on 2003-04 1.17 0.83 # 0.10 Kotakbanking 2004-05 0.46 – – – – – 0.43 0.40 – MahindraServices Bank

Limited

Nature of Period Kotak Kotak Kotak Kotak Kotak Kotak Kotak Paid toTransaction Midcap Dynamic Flexi FMP FMP FMP FMP

FOF Debt Series VIII Series II Series IV Series I

Commission / Promotional expenses for 2004-05 46.47 1.11 0.07 - - # # KotakDistribution of Units Securities

Limited

Brokerage towards Purchase and Sale of Investments 2004-05 5.75 - - - - - - KotakSecuritiesLimited

Commission / Promotional expenses for 2004-05 - - # - - - - KotakDistribution of Units Mahindra

CapitalCompanyLimited

Commission / Promotional expenses for 2004-05 323.83 224.83 1.79 0.18 0.01 0.04 0.01 KotakDistribution of Units Mahindra

BankLimited

Charges on banking Services 2004-05 1.20 - # - - - - KotakMahindraBankLimited

# Less than Rs. 0.01 Lakhs

Nature of Period Kotak Kotak Kotak Kotak Kotak Kotak Kotak Kotak Kotak Kotak Paid toTransaction Income Global Liquid Mahindra Floater Dynamic FMP (8) Equity Opportu- Floater

Plus India Fixed Short Income FOF nities LongMaturity Term Term

Plans

These transactions were made at arms length and within thelimits set by the Regulations, wherever applicable. Commissionand brokerage were paid at the same rates as were appliedto other distributors and brokers

D. STOCK LENDING BY THE FUNDSubject to the Regulations and the applicable guidelinesissued by SEBI and ELSS guidelines, the Trustee may permitthe Fund to engage in stock lending. The Fund can temporarilylend stocks held with the Custodian to reputed counter-parties, for a fee, subject to prudent limits and controls forenhancing returns. The Fund is allowed to lend securitiessubject to a maximum of 20%, in aggregate, of the net assetsof the Scheme and 5% of the net assets of the Scheme inthe case of a single intermediary.

Stock Lending means the lending of securities to anotherperson or entity for a fixed period of time, at a negotiatedcompensation in order to enhance returns of the portfolio.

The borrower will return the securities lent on the expiry ofthe stipulated period or the lender can call the same back i.e.the scheme before its expiry. The fund may lend the securitiesfor a specific period, to generate better returns on thosestocks, which are otherwise bought with the intention tohold the same for a longer period of time.

E. POLICY ON OFFSHORE INVESTMENTSBY THE SCHEME

SEBI registered Indian fund managers, including Mutual Funds,are permitted to invest in overseas markets, initially within anoverall limit of US$ 1 billion and a ceiling of US$ 50 millionfor an individual mutual fund and within such other limits aswould be announced by RBI from time to time.

It is the Investment Manager’s belief that overseas marketsoffer new investment and portfolio diversification opportunitiesinto multi-market and multi-currency products. However, suchinvestments also entail additional risks. The Scheme may seek

63


applicable permission from SEBI and RBI to invest abroad inaccordance with its investment objectives, as and whenrequired.

Since the Scheme would invest only partially in overseassecurities, there may not be readily available and widelyaccepted benchmarks to measure the performance of theScheme.

The Scheme may, if consistent with its investment objective,invest in debt securities including money market instrumentsdenominated in a foreign currency issued in the offshoremarket consistent with their Investment Objective. Theinvestments in such foreign debt securities (excluding foreignsecuritised debt) shall not exceed 20% of the net assets ofthe debt component of the scheme and shall be made onlyso long as the country rating as assigned by credit ratingagencies of international repute such as Standard & Poor orMoody’s is investment grade. However, investments made inforeign debt securities would not include investment in foreignsecuritised debt. In this event, the investment pattern shownfor a Scheme shall remain the same but shall include suchoffshore securities. Investors should note that such permissionmay not be received. The Fund makes no representation thatsuch permission shall be or is likely to be received from SEBI/RBI.

Additional Risk Factors: In respect of investments in offshoresecurities, the risks associated with underlying stocks remainthe same except for the additional risk of the exchange rateof the Indian rupee vis-à-vis the US Dollar/ the currency inwhich securities are denominated. In case of other offshoreinvestments the risk shall be exchange rate of the Indianrupee vis-à-vis the currency in which such securities are issuedand the country risk associated with an investment. Countryrisk would include events such as introduction of extraordinaryexchange control, economic deterioration and bilateral conflictleading to immobilisation of the assets.

To achieve the objective as stated in the Chapter “Investmentof The Fund” above, the Fund shall make an application toSEBI/RBI.

To manage risks associated with foreign currency and interestrate exposure, the Fund shall use derivatives only for efficientportfolio management including hedging and in accordancewith conditions as may be stipulated by SEBI/RBI. Derivativesare a class of specially designed products, which deal withmarket risk associated with financial securities, currency orinterest rates. These products are based on underlying assetswith which those risks are associated.

Additional Risk factors: In case derivatives are used for hedgingportfolio risks of the Scheme, the Scheme may be exposedto risks such as counter-party risks. For detailed explanation,please see note on ‘Investment in Derivatives’ in Chapter IVof this Offer Document.

The Fund also hereby avers that offshore investments shall bemade subject to any/all approvals and conditions thereof, asmay be stipulated by SEBI/RBI and provided such investmentsdo not result in expenses to the Fund in excess of the ceiling,if any, on expenses prescribed by SEBI for offshore investment,and if no such ceiling is prescribed by SEBI, the expenses tothe Fund shall be limited to the level which, in the opinion

of the Trustees, is reasonable and consistent with costs andexpenses attendant to international investing. The Fund may,where necessary, appoint other intermediaries of repute asadvisors, sub-managers, sub-custodians etc. for managingand administering such investments. The appointment ofsuch intermediaries shall be in accordance with the applicablerequirements of SEBI and within the permissible ceilings ofexpenses. The fees and expenses would illustratively include,besides the investment management fees, custody fees andcosts, fees of appointed overseas advisors and sub-managers,transaction costs, and overseas regulatory costs.

F. INVESTMENT IN SECURITISED DEBTThe scheme may from time invest in domestic securitiseddebt such as asset backed securities (ABS) or mortgage backedsecurities (MBS). The underlying assets in securitised debt arereceivables arising from automobile loans, personal loans,loans against consumer durables, loans backed by mortgageof residential / commercial properties, etc.

ABS/MBS instruments reflect the proportionate undividedbeneficial interest in the pool of loans and do not representthe obligation of the issuer of ABS/MBS or the originator ofthe underlying receivables. Investments in securitised debt islargely guided by following factors :

a) Attractive yields i.e. where securitised papers offer betteryields as compared to the other debt papers and alsoconsidering the risk profile of the securitised papers.

b) Diversification of the portfolio

c) Better performance

The scheme may upto a maximum of 50% of the debtcomponent invest in domestic securitised debt. However, noinvestments will be made in foreign securitised debt. Broadlyfollowing types of loans are securitised:

l Auto Loans (cars / commercial vehicles /two wheelers)

l Residential Mortgages or Housing Loans

l Consumer Durable Loans

l Personal Loans

Auto Loansl The underlying assets (cars etc) are susceptible to

depreciation in value whereas the loans are given at highloan to value ratios. Thus, after a few months, the valueof asset becomes lower than the loan outstanding. Theborrowers, therefore, may sometimes tend to default onloans and allow the vehicle to be repossessed.

l These loans are also subject to model risk. i.e. if a particularautomobile model does not become popular, loans givenfor financing that model have a much higher likelihoodof turning bad. In such cases, loss on sale of repossessionvehicles is higher than usual.

l Commercial vehicle loans are susceptible to the cyclicalityin the economy. In a downturn in economy, freight ratesdrop leading to higher defaults in commercial vehicleloans. Further, the second hand prices of these vehiclesalso decline in such economic environment.

64


Housing Loansl Housing loans in India have shown very low default rates

historically. However, in recent years, loans have beengiven at high loan to value ratios and to a much youngerborrower classes. The loans have not yet gone throughthe full economic cycle and have not yet seen a periodof declining property prices. Thus the performance ofthese housing loans is yet to be tested and it need notconform to the historical experience of low default rates.

Consumer Durable Loansl The underlying security for such loans is easily transferable

without the bank’s knowledge and hence repossessionis difficult.

l The underlying security for such loans is also susceptibleto quick depreciation in value. This gives the borrowersa high incentive to default.

Personal Loansl These are unsecured loans. In case of a default, the bank

has no security to fall back on.l The lender has no control over how the borrower has

used the borrowed money.Further, all the above categories of loans have the followingcommon risks:l All the above loans are retail, relatively small value loans.

There is a possibility that the borrower takes differentloans using the same income proof and thus the incomeis not sufficient to meet the debt service obligations ofall these loans.

l In India, there is no ready database available regardingpast credit record of borrowers. Thus, loans may begiven to borrowers with poor credit record.

In retail loans, the risks due to frauds are high.

G. PENALTIES AND PENDING LITIGATIONa. All cases of penalties (indicating nature of penalty) awarded by

SEBI under the SEBI Act or any of its regulations against theSponsor of the Mutual Fund or any company associated withthe Sponsor in any capacity including the Asset ManagementCompany, Trustee Company/Board of Trustees, or any of thedirectors or key personnel (specifically the fund managers) ofthe Asset Management Company and Trustee Company.

For Sponsor and its associates, other than the penalties asmentioned above, the penalties awarded by any financialregulatory body, including stock exchanges, for defaults inrespect of shareholders, debenture holders and depositors shallalso be disclosed. Additionally, penalties awarded for anyeconomic offence and violation of any securities laws

Details of all cases of suspensions and cancellation of certificateof registration (for irregularities / violations in financial servicessector or for defaults in respect of share holders, debentureholders and depositors) of the AMC, Trustee Company andsponsor or any associate of the sponsor shall be disclosed forthe last 10 years.

b. Any pending material litigation proceedings incidental to thebusiness of the Mutual Fund to which the Sponsor of theMutual Fund or any company associated with the Sponsor inany capacity including the AMC, Board of Trustees /TrusteeCompany or any of the directors or key personnel is a party.

Any pending criminal cases against the Sponsor or any companyassociated with the Sponsor in any capacity including the AMC,Board of Trustees/Trustee Company or any of the directors orkey personnel.

None other than the following:

A notice under Rule 4 of SEBI (Procedure for holding inquiry andimposing penalties by Adjudication Officer), Rule 1995 was issuedby SEBI to the Fund and the AMC for alleged violation of the SEBI’sCircular MFD/CIR No.12/175/01 dated February 15, 2001, whilelaunching a close-ended Fixed Maturity Plan. The Fund and theAMC had submitted their explanations in writing to SEBI and alsogave the explanations at the time of the personal hearing onSeptember 27, 2002 by the Adjudicating and Enquiry Officer ofSEBI. A penalty of Rs. 50, 000 each has been imposed against theFund and the AMC vide order dated February 26, 2003 of theAdjudicating Officer under SEBI (Procedure for holding inquiry andimposing penalties by Adjudication Officer) Rule, 1995. The AMCand the Fund had filed an appeal to Securities and AppellateTribunal against the above-mentioned order. Securities AppellateTribunal has vide its order dated February 21, 2005, has directedto deposit Rs. 25000/- with SEBI, pending final hearing. The AMChas deposited Rs. 25000/- with SEBI.

None

None

An investor has filed a case against Kotak Mahindra AssetManagement Company Limited, Kotak Mahindra Trustee CompanyLimited, Kotak Mahindra Bank Limited and Computer AgeManagement Services Limited (Registrar & Transfer Agents) allegingthat the redemption of units held by it in a Scheme was not basedon its instruction. The facts of the case is that there was a liencreated on the units and the lien was invoked by the lien holder.A written statement is being filed by the company denying theallegation made.

None

65


c. Any deficiency in the systems and operations of the Sponsorof the Mutual Fund or any company associated with the sponsorin any capacity including the AMC or the Trustee Companywhich SEBI has specifically advised to be disclosed in the offerdocument, or which has been notified by any other regulatoryagency

d. Any enquiry/adjudication proceedings under the SEBI Act andthe Regulations made thereunder, that are in progress againstthe Sponsor of the Mutual Fund or any company associatedwith the Sponsor in any capacity such as the AMC, Board ofTrustees/Trustee Company or any of the Directors or keypersonnel of the Asset Management Company

The above information has been disclosed in good faith as per the information available to the AMC.

None

None

H. OMNIBUS CLAUSESubject to SEBI Regulation permitting:

Besides the AMC, the Trustee/Sponsor may also absorbexpenditures in addition to the limits laid down underRegulation 52 of SEBI Regulations.

Further, any amendment/clarification and guidelines in theform of notes or circulars issued from time to time by SEBIfor the operation and management of mutual fund shall beapplicable.

I. DOCUMENTS AVAILABLE FOR INSPECTIONFollowing documents are available for inspection by theprospective investors between 11.00 a.m. and 1.00 p.m. onany day (excluding Saturdays, Sundays and public holidays),at the office of the Mutual Fund:-

1. Copy of the Registration Certificate from SEBI

2. Copy of the Trust Deed and the Deed of Amendment.

3. Copy of the Investment Management Agreement andthe supplemental agreement.

4. Copy of the Memorandum and Articles of Associationof the Trustee.

5. Copy of the Memorandum and Articles of Associationof the AMC.

6. Copy of the Custodian agreement

7. Copy of the Registrar agreement

8. Consent of Auditors to act in the said capacity

9. A copy of this Offer Document

10. Copy of the SEBI (Mutual Funds) Regulations, 1996

11. Copy of the Indian Trusts Act, 1882.

J. USE OF BENCHMARK INDEXThe Scheme’s performance will be measured against thebenchmark S&P CNX 500, which is developed by India Index

Services & Products Limited (IISL). However, the benchmarkindex is not sponsored, endorsed, sold or promoted by IISL.IISL is also not responsible for any errors or omissions or theresults obtained from the use of such index and in no eventshall IISL have any liability to any party for any damages ofwhatsoever nature (including lost profits) resulted to suchparty due to purchase or sale or otherwise of the Schemebenchmarked to such index.

All points mentioned in the Standard Observations issued bySEBI vide their ‘Instructions for filing Offer Document withSEBI’ dated December 26, 2003 have been incorporated inthis Offer Document.

Notwithstanding anything contained in this Offer Document,the provisions of the SEBI (Mutual funds) Regulations, 1996,Equity Linked Savings Scheme Guidelines as notified by Ministryof Finance (Department of Economic Affairs) vide notificationS.O.928 (E) dated 28.12.92 including any amendmentsthereof / re-enactment and the Guidelines hereunder shall beapplicable.

Investors may ascertain about any further change after thedate of this Offer Document from the ISCs, as given elsewherein this document, or the registered office of KMAMCL or fromdistributors/brokers.

Note : The Scheme under this Offer Document was approvedby the Trustee at the meeting held December 16, 2004.

For and on behalf of the Board of Directors of

Kotak Mahindra Asset ManagementCompany Limited

[Asset Management Companyfor Kotak Mahindra Mutual Fund]

Place : Mumbai Sandesh KirkireDate : September 28, 2005 Chief Executive Officer

66


The following short names have been used in this Offer Document:

Short Name Used Scheme / Plan Name

Kotak Gilt Savings ................................................................... Kotak Mahindra Gilt Unit Scheme ’98 - Savings Plan

Kotak Gilt Investment .............................................................. Kotak Mahindra Gilt Unit Scheme ’98 - Investment Plan

Kotak Gilt Serial ...................................................................... Kotak Mahindra Gilt Unit Scheme ’98 - Serial Plans

Kotak 30 .................................................................................. Kotak Mahindra 30 Unit Scheme

Kotak Bond .............................................................................. Kotak Mahindra Bond Unit Scheme 99

Kotak Bond Short Term ........................................................... Kotak Mahindra Bond Unit Scheme 99 - Short Term Plan

Kotak Bond Serial .................................................................... Kotak Mahindra Bond Unit Scheme 99 - Serial Plans

Kotak Balance .......................................................................... Kotak Mahindra Balance Unit Scheme 99

Kotak Tech ............................................................................... Kotak Mahindra Technology Scheme

Kotak MNC .............................................................................. Kotak Mahindra MNC Scheme

Kotak Liquid ............................................................................ Kotak Mahindra Liquid Scheme

Kotak FMP ............................................................................... Kotak Mahindra Fixed Maturity Plans

Kotak Income Plus ................................................................... Kotak Mahindra Income Plus Scheme

Kotak Dynamic Income ........................................................... Kotak Mahindra Dynamic Income Scheme

Kotak Midcap .......................................................................... Kotak Mahindra Midcap Scheme

Kotak FMP Series VIII ............................................................... Kotak Mahindra FMP Series VIII

Kotak FMP Series I ................................................................... Kotak Mahindra FMP Series I

Kotak FMP Series II .................................................................. Kotak Mahindra FMP Series II

Kotak FMP Series IV ................................................................ Kotak Mahindra FMP Series IV

Kotak Dynamic Fund of Funds ................................................ Kotak Mahindra Dynamic Fund of Funds

Kotak Global India ................................................................... Kotak Mahindra Global India Scheme

Kotak Flexi Debt ...................................................................... Kotak Mahindra Flexi Debt

67


LOCATIONS WHERE APPLICATION FORMS ARE AVAILABLE ANDCOMPLETED APPLICATION FORMS CAN BE SUBMITTED

INVESTOR SERVICE CENTRES (ISCs)KOTAK MAHINDRA ASSET MANAGEMENT COMPANY LIMITEDMumbai : 91/92, 9th Floor, Sakhar Bhavan, 230, Nariman Point, Mumbai 400 021.Ahmedabad : 713-714, 7th Floor, Sakar-2, Opp. Town Hall, Ellisbridge, Ahmedabad - 380 006.Bangalore : #305, Infantry Court, 130, Infantry Road, Bangalore - 560 001Chennai : 1st Floor, Ceebros Centre, MD 45, Monthieth Road, Egmore, Chennai - 600 008.Kolkata : Appejay House, Block C, 7th Floor, 15 Park Street, Kolkata - 700 016.New Delhi : 12-14, Upper Ground Floor, Ambadeep Building, 14, Kasturba Gandhi Marg, New Delhi - 110 001.Pune : 201-202, 2nd Floor, Sohrab Hall, 21, Sasoon Road, Pune - 411 001

COMPUTER AGE MANAGEMENT SERVICES PRIVATE LIMITED (CAMS) – INVESTOR SERVICE CENTRESAhmedabad : 402-406, 4th Floor, Devpath Building, Off C. G. Road, Behind Lal Bungalow, Ellis Bridge, Ahmedabad - 380 006.Bangalore : Trade Centre, 1st Floor, 45, Dickenson Road, (next to Manipal Centre), Bangalore - 560 042.Bhubaneswar : 101/7, Janpath, Unit - III, Bhubaneswar - 751 001.Chandigarh : SCO 154-155,1st Floor, Sector 17-C, Chandigarh - 160 017.Chennai : A & B, Lakshmi Bhawan, Ground Floor, 609, Anna Salai, Chennai - 600 006.Coimbatore : 66, Lokmanya Street (W), Ground Floor, R. S. Puram, Coimbatore - 641 002.Indore : Dalal Chambers, 101, Sagarmatha Apartments, 1st Floor, 18/7, M. G. Road, Indore - 452 003.Jaipur : G-III, Park Saroj, Behind Ashok Nagar Police Station, C-Scheme, R-7, Yudhisthir Marg, Jaipur - 302 001.Kanpur : G-27/28, Ground Floor, Citi Centre, 63/2, The Mall, Kanpur - 208 001.Kochi : 40/9633 D, Veekshanam Road, Near International Hotel, Kochi - 682 035.Kolkata : Lords Buildings, 7/1, Lord Sinha Road, Ground Floor, Kolkata - 700 071.Lucknow : 3, 1st Floor, Saran Chambers 1, 5, Park Road, Lucknow - 226 001.Ludhiana : 20-21, (Ground Floor), Prince Market, Near Traffic Lights, Sarabha Nagar Pulli, Pakhowal Road, P.O. Model Town, Ludhiana - 141 002.Mangalore : 6, 1st Floor, West Gate Terminus, Falnir Road, Opp. Unity Health Complex, Highlands, Mangalore - 575 002.Mumbai : Rajabahadur Compound, Opp. Allahabad Bank, 30, Mumbai Samachar Marg, Fort, Mumbai - 400 023.Nagpur : 145, Lendra Park, Behind Shabari, New Ramdaspeth, Nagpur - 440 010.New Delhi : 304-305, Third Floor, Kanchenjunga Building, 18, Barakhamba Road, New Delhi - 110 001.Panaji : 108, 1st Floor, Gurudutta Bldg., Above Weekender, M G Road, Panaji - 403 001.Patna : Kamlalaye Shobha Plaza, (1st Floor), Behind RBI, Near Ashiana Tower, Exhibition Road, Patna - 800 001.Pune : Nirmiti Eminence, Office No. 6, 1st Floor, Opp. Abhishek Hotel, Mehandale Garage Road, Erandawane, Pune - 411 004.Secunderabad : 102, 1st Floor, Jade Arcade, Paradise Circle, Secunderabad - 500 003.Surat : Niva Apartments, Above Sagrampura-Rudarpura Co-op.Bank, Bhatia Street, Nanpura, Surat - 395 001.Vadodara : 109, Silver Line, Besides World Trade Centre, Sayajigunj, Vadodara - 390 005.Visakhapatnam : 47/9/17, 1st Floor, 3rd Lane, Dwaraka Nagar, Visakhapatnam - 530 016.

COMPUTER AGE MANAGEMENT SERVICES PRIVATE LIMITED (CAMS) – TRANSACTION POINTSAgra : F-39/203, Sky Tower, Sanjay Place, Agra - 282 002.Allahabad : 1st Floor, Chandra Shekhar Azad Complex, (near Indira Bhavan) 5, S.P. Marg, Civil Lines, Allahabad - 211 001.Amaravati : 81, Gulsham Tower, Near Panchsheel, Amaravati - 444 601.Amritsar : 378-Majithia Complex, 1st Floor, M. M. Malviya Road, Amritsar - 143 001.Asansol : G.T. Road, Beside George Telegraph Office, Asansol - 713 301.Aurangabad : Office No. 1, 1st Floor, Amodi Complex, Juna Bazar, Aurangabad - 431 001.Belgaum : 21, Ground Floor, Arvind Complex, 1552, Maruti Galli, Belgaum - 590 002.Bhilai : 209 , Khichariya Complex, Opp. IDBI Bank, Nehru Nagar Square, Bhilai - 490 020.Bhopal : C-12, 1st Floor, Above Life Line Hospital, Zone-I, M. P. Nagar, Bhopal - 462 011.Calicut : 17/28 H, 1st Floor, Manama Towers, Marvoor Road, Calicut - 673 001.Cuttack : Cantonment Road, cuttack - 753 001.Dehradun : 81, Chakrata Road, Dehradun - 248 001.Dhanbad : Urmila Towers, Room no. 111, (First Floor) Bank More, Dhanbad - 826 001.Durgapur : SN-10, Ambedkar Sarani, City Centre, Durgapur - 713 216.Guntur : Shamsundar Golden Towers, Ground Floor, Third Lane, Brodipet, Adj. to Overbridge, Guntur - 522 002.Guwahati : A.K. Azad Road, Rehabari, Guwahati -781 008.Hubli : 208, A Block, 1st Floor, Kundagol Complex, Opp. Court Club Road, Hubli - 580 029.Jabalpur : 975, Chouksey Chambers, Near Gitanjali School, 4th Bridge Napier Town, Jabalpur (M.P.) - 482 001.Jalandhar : 367/8, Central Town, Opp. Gurudwara Diwan Asthan, Jalandhar - 144 001.Jamnagar : 207/209, K P. Shah House I, KV Road Jamnagar - 361 001.Jamshedpur : Panch Bhawan, 'R' Road, Bistupur, Gr. Floor, (near Rajasthan Bhavan)Jamshedpur - 831 001.Jodhpur : 1/5, Nirmal Tower, Ist Chopasani Road, Jodhpur - 342 003.Kota : B-33, Kalyan Bhavan, Triangle Park, Vallabh Nagar, Kota - 324 007.Madurai : 86/71 - A, Tamil Sangam Road (Opp. Bell Hotel), First Floor, Madurai - 625 001.Manipal : Academy Annex, First Floor, Opposite Corporation Bank, Upendra Nagar, Manipal - 576 104.Meerut : 108, 1st Floor, Shivam Plaza, Opp. Eves Cinema, Hapur Road, Meerut - 250 002.Moradabad : B-612 ‘Sudhakar’, Lajpat Nagar, Moradabad - 244001 (U.P.).Mysore : 3, 1st Floor, CH-26, 7th Main, 5th Cross, Saraswathy Puram, Mysore - 570 009.Nasik : “Varsha Bungalow”, 1st Floor, Near Rungtha High School, 493, Ashok Stambh, Nasik - 422 001.Nellore : Shop No. 13, 1st Floor, KAC Plaza, R. R. Street, Nellore - 524 001.Panipat : 13, First Floor, Gaushala Mandi Market, G. T. Road, Panipat – 132 103.Patiala : 35, New Lal Bagh Colony, Patiala - 147 001.Pondicherry : S-8, 100, Jawaharlal Nehru Street, New Complex, Pondicherry - 605 001.Raipur : C-23, Sector 1, Devendra Nagar, Raipur - 492 004.Rajahmundry : D 7-27-4, Krishna Complex, Baruvari Street, T Nagar, Rajahmundry - 533 101.Rajkot : 111, Pooja Complex, Harihar Chowk, Near GPO, Rajkot - 360 001.Ranchi : 223, Tirath Mansion (Near Overbridge), 1st Floor, Main Road, Ranchi - 834 001.Rourkela : 1st Floor, Mangal Bhawan, Phase II, Power house Road, Rourkela - 769 001.Salem : 28, 1st Floor, Advytha Ashram Road, Salem - 636 004.Siliguri : 8, Swamiji Sarani, Ground Floor, Hakimpara, Siliguri – 734 401.Trichur : VIII/350/15, O. K. John Memorial Buillding, Ekkanda Warrier Road, Trichur - 680 001.Trichy : 8, 1st Floor, 8th Cross West Extension, Thillainagar, Trichy - 620 018.Trivandrum : TC 15/2012, Sheelatha Building, Women’s College Lane, Vazuthacadu, Trivandrum - 695 014.Udaipur : 32, Ahinsapuri, Fatehpura Circle, Udaipur - 313004.Valsad : C/o. CAD House, Siddhivinayak Complex, 1st Floor, Opp. LIC Office, Halar Road, Valsad - 396 001.Varanasi : C 27/249 - 22A, Vivekanand Nagar Colony, Maldhaiya, Varanasi - 221 002.Vijayawada : 40-1-48/2, Bandar Road, Adjacent to HDFC Bank, Vijayawada - 520 010.

68


I. KMAMC AUTHORISED COLLECTION CENTRESAgra : Mr. Rohit Khare - Tel.: 91-9719222156 • Ahmedabad : Ms. Nirali Shah - 713-714, 7th Floor, Sakar-2, Opp. Town Hall, Ellisbridge, Ahmedabad - 380 006. Tel.: 91-79-2657 4992/93 • Amritsar : Mr. NomitSharma - Tel.: 91-9888265777 • Bangalore : Ms. Manju Sheshadri - No. 305, Infantry Court, 130, Infantry Road, Bangalore - 560 001. Tel.: 91-80-2286 3524/5 • Baroda : Mr. Rajeev Abroal - 108, 1st Floor,Avanti Chambers, Anand Society, Behind Express Hotel, R. C. Dutt Road, Baroda. Tel.: 91-265-553 3957, 9879216278 • Bhavnagar : Mr. Ashish Joshi - Tel.: 91-9824402507 • Bhopal : Mr. Ajay Chhabria - 91-9893055571 • Bhubaneswar : Mr. Arunkumar Mohanty - 226, Saheed Nagar, Bhubaneshwar - 751 007 Tel.: 91-9561126118 • Chandigarh : Mr. Gopal Sood - 1st Floor, Deepak Towers, S.C.O., 154-155,Sector 17C, Chandigarh - 160 017. Tel.: 91-172-554 0850/272 7598 • Chennai : Mr. Kannan J - Basement Floor, Ceebros Complex, 39 (Old No. 45), Montieth Road, Egmore, Chennai - 600 008. Tel.: 91-44-5214 6753, 2851 7686 • Coimbatore : Mr. C . Loganathan - Krisan Business Centre, Old No. 41, New No. 81, Government Arts College Road, Coimbatore - 641 018. Tel.: 91-422-557 2165 • Dehradun :Mr. Himanshu Sharma - Tel.: 91-9897205575 • Goa : Mr. Mandar Acharya - Tel.: 91-9850471642 • Guwahati : Ms. Swapna Boruah - 2nd Floor, Jain Complex, G. S.. Road, Guwahati - 781 005 Tel.: 91-361-259 9038 • Hyderabad : Ms. Nagarani Patlolla - Jewel Pavani Towers, 2 Floor, 6-3-1109/1, Somaji Guda, Hyderabad - 500 082. Tel.: 91-40-5568 2308/9 • Hubli : Mr. Roshan D'Souza - 4/5, 14/15, 2nd Floor,Vivekanand Corner, Desai Road Tel.: 91-9886642994 • Indore : Mr. Pratik Kaushik - 2nd Floor, Indraprastha Tower, M. G. Road, Indore - 452 001. Tel.: 91-9827240411 • Jallandhar : Mr. Anit Banta -Tel.: 91-9888022494 • Jamshedpur : Mr. Tridip Das - Tel.: 91-9835341494 • Kanpur : Mr. Sachin Chauhan - 111, 1st Floor, Kan Chambers, 14/113, Civil Lines, Kanpur - 208 001. Tel.: 91-512-233 1185/6/7 • Kochi :Mr. Rajesh Kumar - 4 Floor, Thadikkaran Centre, Palarivattom, Kochi - 682 025. Tel.: 91-484-233 3358 • Kolkata : Ms. Tripti Khaitan - 7th Floor, Block ‘C’, Apeejay House, 15th, Park Street, Kolkata - 700 016.Tel.: 91-33-2209 3000/42/43 • Lucknow : Mr. Gaurav Agarwal - C/o. The Business Bridge, 1 Floor, Saran Chambers II, 5, Park Road, Lucknow - 226 001. Tel.: 91-522-223 9626, 223 6739 • Ludhiana :Mr. Rohit Aggarwal - Tel.: 91-9814818980 • Madurai : Mr. K. Tirugnanam - A. R. Plaza, No. 16 & 17, North Veli Street, Madurai - 625 001. Tel.: 91-452-537 8728 • Mangalore : Sequeira Jewels, Opp. InfosysTechnologies Ltd., Kottara, Mangalore - 575 006. Tel.: 91-824-528 3834/35, 9886738530 • Meerut : Mr. Vikrant Kumar Tel.: 91-9719459071 • Moradabad : Mr. Sudipto Mahindar - Tel.: 91-9719056435 • Mumbai :Ms. Shravani Nikam - 91/92, 9th Floor, Sakhar Bhavan, 230, Nariman Point, Mumbai 400 021. Tel.: 91-22-5638 4444 • Mysore : Mr. V . Srinivas - Tel.: 91 - 9886315187 • Nagpur : Mr. Ninad Sutaone - 101 / 102,Usha Complex, Sardar Vallabhai Patel Road, Kingsway, Nagpur - 440 001. Tel.: 91-9822747585 • Nellore : Mr. Srinivasa Rao Chintam - Tel.: 91-9247160465 • New Delhi : Ms. Namrata Sachdev - 12-14, UpperGround Floor, Ambadeep Bldg., 14, Kasturba Gandhi Marg, New Delhi - 110 001. Tel.: 91-11-5530 6900/1/2 • Pune : Ms. Sucheta 201-202, 2nd Floor, Sohrab Hall, 21, Sasoon Road, Pune - 411 001.Tel.: 91-20-2605 3338/9053 • Rajkot : Mr. Nain Maniar - 1st Floor, 124 Star Plaza, Phulchhab Chowk, Rajkot 360 001 Tel.: 91-9824294527 • Surat : Mr. Ashwani Wadhwa - 2nd Floor, Megh Mayur Plaza, SuratDumas Road, Park Point, Surat - 395 007. Tel.: 91-261-221 0596 • Trichy : Mr. P Senthil Kumar - Tel.: 91-9842995983 • Varanasi : Mr. Saurabh Singh - D/64/127-CH, 1st Floor, Arihant Complex, Sigra,Varanasi - 221 010. Tel.: 91-542-222 7309 • Vijayawada : Mr. Kiran Kumar - Tel.: 91-9885089780 • Visakhapatnam : Mr. Ravi Kumar - Tel.: 91-9885714419.

II. COLLECTION BANKSKotak Mahindra Bank

Ahmedabad : 213/214, Sakar II, Ellis Bridge Corner, Ashram Road, Ahmedabad, Gujarat-380 006 • Bangalore : LCC Bangalore, Raheja Towers, Second Floor, Bangalore - 560 001 • Chennai : Capitale’ GroundFloor, 555, Anna Salai, Chennai - 600 018 • Coimbatore : Skanda Square 727, Avinashi Road, Coimbatore – 641 018 • Himatnagar : Gr. Floor, Jagubhai Dodia Complex, Opp. Government Godown, Nr. CivilCircle, Station Road, Himmatnagar - 383 001 • Hyderabad : Pavani Jewel Tower, Ground Floor, Somajiguda, Hyderabad - 500 089 • Indore : 580, M. G. Road, Indore (M.P.) - 452 001 • Jaipur : Krishna Tower,57, Sardar Patel Marg, C - Scheme, Jaipur - 302 001 • Kadi : Kunal Complex Opp. J. K. Petrol Pump,Highway Cross Roads, Kadi. • Kanpur : 17/3 B, The Mall, Meghdoot Hotel Building, Kanpur, UP - 208 001• Kochi : Kumar Pillai Estate, M.G. Road, Kochi - 682 031 • Kolkata : Apeejay House, 15, Park Street Kolkata -700 016 • Ludhiana : SCO 120, Ground Floor, Feroze Gandhi Market, Ludhiana - 141 001 • Mehsana :Rajendra Estate, Opp. Gayatri Temple, State Highway, Mehsana - 384 002 Gujarat • Mumbai : 5 C/ II, Mittal Court, 224, Nariman Point, Mumbai - 400 021 • Namakkal : SKK Complex, 9-1, - A & B MohanurRoad, Namakkal - 637 001 • New Delhi : Ground Floor, Ambadeep, 14, K.G. Marg, New Delhi-110 001 • Pune : M-4, Virwani Plaza,11, East Street, Pune • Rajkot : Shree Nath Complex, Race Course ChowkNath Vihar, Dr. Yagnik Road Opp Jilla Panchayat, Rajkot - 360 001 • Sankari : 17-New Edappadi Road, Sankari, Salem District, Tamil Nadu - 637 301 • Surat : Megh Mayur Plaza, Parle Point, Surat Dumas Road,Athwa Lines, Surat - 395 007 • Unjha : 2nd Floor, Old APMC Building, Above Bhojnalaya, Ganj Bazar, Unjha - 384 170 Gujarat • Vadodara : Panorama Building, Ground Floor, R.C.Dutta Road, Alkapuri,Vadodara-390 005

HDFC BankAgra : Shop No-11, Block No-17/2/4, Friends Plaza, Sanjay Place, Agra - 282 002 • Ahmedabad : 5th Floor, Broadway Business Centre, Law Garden, Navrangpura, Ahmedabad - 380 009 • Ahmednagar : AmberPlaza, Station Road, Opp. ADCC Bank, Sahakar Gruh, Ahmednagar - 414 001 • Ajmer : No-13/10 & 14/10, Near Suchma Kendra, Adjacent to Swami Complex, Ajmer - 305 001 • Akola : Sethi Heights, Opp.Collector Office, Z P Road, Akola - 444 001 • Aligarh : 3-316, Ramghat Road, Aligarh - 202 001 • Allahabad : 54/1 S.P. Marg, Civil Lines, Allahabad - 211 003. UP • Ambala : Shingar Palace Complex, NicholsonRoad, Ambala Cantt- 133 001 • Amravati : C/o Rasik Plaza, Jaistambh Chowk, Morshi Road, Amravati - 444 601 • Amritsar : 39, The Mall, Amritsar • Anand : 1st Floor, Sanket Towers, Opp. Anand Arts College,Grid Road, Anand - 388 001 • Ankleshwar : SA Motors Bulding, Old National H No. - 8, Ankleshwar - 395 002 • Asansol : P. C. Chatterjee Market, G.T. Road, Rambandhu Tala, Asansol - 713 303 • Aurangabad :Shivani Chambers, Manjeet Nagar, Jalna Road, Opp Akashwani, Auranagabad.- 431 001. • Balasore : C/o Bharat Motors, F.M. Circle, Balasore - 756 001. (Orissa) • Bangalore : 25/1, Shankarnarayana Building,Next Rajeha Towers, M. G. Road, Bangalore - 560 001 • Bardoli : Shree Ambika Niketan Temple, Bardoli Dist., Surat - 394 601 • Bareilly : 154, Krishna Palace, Civil Lines, Bareilly - 1 • Belgaum : 4830/28AOpp Dist Hospital, Dr. Ambedkar Road, Belgaum - 590 002 • Bharuch : Near Octroi Naka, Link Rd., Bharuch 392 001 • Bhavnagar : Gopi Arcade, Opp. Takhteshwar Post Office • Bilwara : 2-3-4, S. K. PlazaComplex, Pur Road, Bhilwara - 311 001. (RAJ.) • Bhopal : E-1/57, Arera Colony, Bhopal - 462 016 (M.P). • Bhubaneshwar : Junction of Janpath & Gandhi Marg, Hotel Jajati Complex, Kharvelanagar, Unit - III,Master canteen Square, Bhubaneswar - 751 001 • Bhuj : 101 & 102 Sunrise Tower, 11 - Vijaynagar Society, Hospital Road, Bhuj - 370 001. • Bokaro : B-9 City Centre , Sector IV, Bokaro Steel City, Bokaro -827 004 • Burdwan : 45 G .T. Road, Birhata, Burdwan - 713 001 • Calicut : Malabar Palace, G. H. Road, Calicut - 673 001 • Chandigarh : SCO 371/372, Sector 35-b, Chandigarh • Chengannur : Govt HospitalJunction, Chengannur - 689 121• Chennai : 751 - B, Anna Salai, Mariam Centre, Chennai - 600 002 • Coimbatore : 1635 Classic Towers, Trichy Road, Coimbatore - 641 018 • Cuttack : Bajrakbati Road, Cuttack,Orissa - 753 001 • Dehradun : 56, Rajpur Road, Dehradun - 248 001 (Uttaranchal) • Dhanbad : Sri Ram Plaza, 1st Floor, Bank More Dhanbad, Jharkhand - 826 001 • Durgapur : A102 & 103, City Centre,Bengal Shristi Complex, City Centre, Durgapur Branch, West Bengal - 713 216 • Erode : 456 Brough Road, Erode - 638 001 • Gandhidham : Tagore Road, Gandhidham - 370 201 • Gaya : Gaya, Bihar - 823 001• Gorakhpur : Prahlad Rai Trade Centre, Ayodhya Crossing, Bank Road, Gorakhpur - 273 001 • Guntur : 87-90, Main Road, Lakshmipuram, Guntur - 522 007, A.P. • Guwahati : Guwahati Branch, House No. 126,Opp. Times of India, Bhangagarh, Guwahati - 781 005 • Gwalior : Anand Deep Building, City Center, Gwalior • Haldwani : 8/6, Nainital Road, Bhotia, Prao, Haldwani - 263 141 • Himatnagar : Durga Oil MillCompound, Himmatnagar - 383 001 (Gujarat). • Hoshiarpur : SCO 1-2-3, Improvement Trust, Hoshiarpur - 146 001 • Hubli : T. B. Revankar Complex, Vivekanand Hospital Road, Hubli - 580 029 • Hyderabad :6-1-73 3rd Floor, Saeed Plaza, Lakdikapul, Hyderabad - 500 004 • Indore : IIIrd Floor, IIIrd, 9/1A , U. V. House, South Tukoganj, Indore - 452 001 • Jabalpur : 1702, Napier Town, Model Road, Jabalpur M.P.482 002 • Jaipur : 1st Floor, O-10, Ashok Marg, Ahimsa Circle, C-Scheme Jaipur • Jalandhar : 911, G.T. Road, Near Narinder Cinema, Jalandhar • Jalgaon : Facing Mahabal Road, DSP Chowk, Jalgaon - 425 001• Jamnagar : Plot No. 6, Park Colony, Opp. St. Ann's School, Bedi Bunder Road, Jamnagar - 361 008 • Jamshedpur : C/o. Mithila Motors Ltd., Near Rammandir, Bistupur, Jamshedpur - 831 001 • Jhansi : DumrooCinema Complex, Civil Lines, Jhansi - 284 001 • Jodhpur : 57/B "Swapndeep", Chopasani Road, Jodhpur - 342 003 (Raj.) • Junagadh : Moti Palace, Ground Floor, Moti Baug Road, Junagadh - 362 001 • Kadi :Near N.C. Desai Petrol Pump, Highway Char Rasta, Kadi - 382 715 • Kalyani : B-7/40 & 41(S), Central Avenue West, Central Park, Kalyani, Nadia - 741 235 • Kannur : K. V. R. Towers, South Bazar Road, Kannur- 670 002 • Kanpur : Navin Market Branch, 15/46, Civil Lines, Kanpur - 208 001 • Karad : Hotel Sangam, Pune-Bangalore Highway, Karad - 415 110, Dist. Satara • Karnal : SCO 778-779, Opp. Mahabir DalHospital, Kunjpura Road, Karnal • Kochi : 2nd Floor, Elmar Square, M.G. Road, Ravipuram, Kochi - 682 016 • Kolhapur : Jaju Arcade, Tarabai Park, Kolhapur - 416 003 • Kolkata : CMS, Abhilasha II, 6 RoydStreet,1st Floor, Kolkata - 700 016 • Kota : Show Room No-13-14, Main Jhalawar Road, Kota • Kottayam : Unity Building, Opp MDC Centre, K.K. Road, Kottayam 686 002 • Latur : CTS 4705, 31/1 M.G. Road,Near Nagar, Parishad, Latur - 413 512 • Lucknow : 31/31, M.G. Marg, Hazratganj, Lucknow - 226 001 • Ludhiana : 5th Floor, The Mall, Mall Road, Ludhiana • Madurai : 7-A, West Veli Street, Opp. RailwayStation, Madurai - 625 001. • Mangalore : M. N. Towers, Kadri, Mangalore - 575 002 • Mathura : Opp BSA College, Gaushala Road, Mathura - 281 001 • Meerut : 381 Western Kachery Road, Meerut - 250 001• Mehsana : Prabhu Complex, Nr. Raj Kamal Petrol Pump, Abu Highway, Mehsana. - 384 002. • Moradabad : Chaddha Shopping Complex, GMD Road, Moradabad - 244 001 • Morvi : Om Shopping Centre,Ravapar Road, Morvi. • Mumbai : Maneckji Wadia Bldg., Nanik Motwani Marg, Mumbai 400 023 • Muzzafarpur : Above Maruti Showroom, Choti Saria Ganj, Muzzafarpur - 842 001. • Mysore : NageethaComplex, Vishwamanawa Double Road, Saraswathi Puram, Mysore - 570 009 • Nadiad : Shoot Out Bldg, Nadiad Ice Factory Compound, College Road, Nadiad - 387 001 • Nagpur : 303 & 304, 3rd Floor,Wardh Road, Transactional Banking Group, 12, Milestone, Near Lokmat Square, Nagpur - 440 010 • Nasik : Archit Centre, 3rd Floor, Chandak Circle Link Road, Opposite Sandeep Hotel,Near Mahamarg Bus Stand,Nasik - 422 002 • Navsari : Nandini Complex, Ground Floor, Station Road, Sandh Kuva, Navsari - 396 445 • Nellore : G.T Road, Nellore - 524 001 • New Delhi : Fig-ops,1st Floor, Kailash Bldg., 26, K G Marg,New Delhi 110001 • Palakkad : 8/246, Chandra Nagar, Palakkad - 678 007 • Panipat : 801/4, G.T. Road, Panipat - 132 103 • Panjim : Minum Residency, 18th June Road, Panjim - 403 001 (Goa) • Pathanamthitta :Aban Arcade Ward # 9/1128, Pathanathitta-Kumbazha Road, Pathanathitta - 689 645 • Patiala : S.C.O. 70-73, Leela Bhawan Market, Patiala - 147 001 (Punjab) • Patna : Rajendra Ram Plaza, Exhibition Road,Patna - 800 001 • Perinthalmanna : Sree Complex, Calicut Road, Perinthalmanna, Malappuram Dist,Kerala 679 322. • Pondicherry : TS No 6, 100 Feet Road, Ellaipillaichavady, Pondicherry - 605 005 • Porbandar :Om Shiv Shakti, R.D. Chambers, Porbandar - 360 575 • Pune : 5th floor, Millennium Tower, Bhandarkar Road, Shivajinagar, Pune - 411 004 • Quilon : VGP Buildings, Door No. XVI / 1539 (1320A), VadakumbhagomWard, Irumpupalam, Kollam - 691 001 • Raipur : Chawla Complex, Near Vanijya Bhawan, Sai Nagar, Devendra Nagar Road, Raipur - 492 009 (Chhatishgarh ) • Rajahmundry : H. No: 46-17-20, Main Road,Danavaipet, Rajahmundry - 533 103 • Rajkot : Opp. Alfred High School, 2nd Floor, Panchratna Building, Jawahar Road, Rajkot • Ranchi : Ranchi Club Shopping Complex, Apt No .11, Main Road, Ranchi - 834 001• Ratlam : 90 Station Road, Ratlam - 475 001 • Rourkela : Bisra Road, Dwivedi Bhawan, Dwivedi Square, Rourkela - 769 001 • Rudrapur : Plot No. 1 & 2, Nanital Road, Rudrapur - 263 153 • Saharanpur :Mission Compound, Court Road, Adj. Top Shop, Saharanpur - 247 001 • Salem : 5/241-F, Rathna Arcade, Omalur Main Road, Salem - 636 004. • Sangli : 640, Venkatesh Senate, Sangli -Miraj Rd, Sangli - 416 416• Sanjauli (Shimla) : Jankidas Building, 3, The Mall ,Shimla 171 001 • Siliguri : 3 No. Ramkrishna Samity Building, Sevoke Road, Pani Tanki More, Siliguri - 734 401 • Silvassa : 1-16, Jaypee House, Opp. PatelPetrol Pump, Vapi-Silvassa Road, Silvassa - 396 230 • Surat : Chataniya Jyoti Building, Near Parle Point Circle, Surat - 395 007 • Thiruvalla : Illampallil Buildings, 26/149(1&2), M.C. Road, Tiruvalla - 689 101• Tirupathi : H. No.10-14-575/A3, Mosque Road (V. V. Mahal Road), Tirupati - 517 501 • Trichur : Kalliyath Royal Square, Palace Road,Trichur - 680 020 • Trichy : A-10, " Lakshmi Arcade", 11th Cross MainRoad, Thillainagar, Trichy 620 018 • Trivandrum : Kenton Towers, Vazhuthacaud, Trivandrum - 695 014 • Udaipur : Chetak Circle, GPO Road, Udaipur • Unjha : Suvidhi Complex, 1st Floor, Nr. Radha KrishnaTemple, Station Road, Unjha - 382170, Dist. Patan • Vadodara : 5th Floor,’Midway Heights’ Next to Panchmukhi Hanuman Temple,Lokmanya Tilak Rd, Kirti Mandir,Near Kala Ghoda, Raopura, Vadodara - 390 001• Valsad : Ekta Appt., Nr., R.J.J. High School, Thithal Road, Valsad - 1. • Vapi : Lower Ground, Emperor Arcade, Chala Road, Vapi - 396 191 • Varanasi : D 58/2 Kuber Complex, Rathyatra Crossing, Varanasi- 221 010• Veraval : Amrutdeep,Opp. Public Garden, Rajmahal Road, Veraval 362 265. • Vijayawada : 40-1-48/2, M. G. Road, Labbipet, Vijayawada - 520 010 • Visakhapatnam : Potluri Castle, Dwaraka Nagar,Visakhapatnam • Warangal : D. No 1-8-605/1 Nakkalgutta, Hanamkonda, Warangal - 506 002

UTI BankChennai : 82, Dr. Radhakrishnan Salai, Mylapore, Chennai 600 004 • Coimbatore : Vigneswar Cresta, No.1095, Avinashi Road, Pappanaickenpalayyam, Coimbatore - 641 037 • Erode : R.S. No. 418/2, AdjoiningSudha Nursing Home, Perundurai Rd., Veerappan Chathiram Panchayat, Erode 638 011 • Karur : No. 5, Dindigul Road, Karur 639 001 • Madurai : Chellam Bappusamy Hall, 80 Feet Road, K.K. Nagar, Madurai625 020 Mumbai : Royal Accord IV, Lokhandwala Complex, Swami Samarth Nagar Circle, Andheri (W), Mumbai 400 053 Navi Mumbai : Block No. 84, Vardhaman Chambers, Sector 17, Vashi, Navi Mumbai400 705 • Ooty : Lingadevi Complex, 421, Ettines Road, Ooty (Ootacamund) 643 001 • Salem : Door No. 115-1A, Sharptronics Shopping Complex, Opposite TVS, Omalur Main Road, Salem 636 009 • Sivakasi :64, N R K R, Rajarathnam Street, Sivakasi 626 123 Thane : Near Mohan Three Wheelers Ltd. Showroom, Dheeraj Baug, L. B. S. Marg, Thane (W) 400 602 • Thanjavur : C/o. Life Insurance Corporation of India,Thanjavur Main Branch, Jeevan Chola Building, Trichy Road, Thanjavur 613 007 • Tirunelveli : 12, East Car Street, Tirunelveli 627 006 • Tirupur : 3, Court Street, Coimbatore District, Tirupur - 641 601,• Trichy (Tiruchirapalli) : No.75 E/1, Salai Road, Near Thillai Nagar Arch, Thillai Nagar, Tiruchirapalli 620 018 • Tuticorin : “V.V.D. Mahaal”, 181, Palayamkottai Road, Tuticorin - 628 003.

OFFICIAL COLLECTION CENTRES (For New Fund Offer)

5A, 5th Floor, Bakhtawar, 229, Nariman Point, Mumbai 400 021Tel.: (022) 5638 4444 l Fax : (022) 5638 4455

E-mail : [email protected] l Website : www.kotakmutual.com

alok

graphics

Please retain this Offer Document for future reference.

THE DATE OF THIS OFFER DOCUMENT IS SEPTEMBER 28, 2005.

INVESTORS SHOULD NOTE THATl 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 andin accordance with the guidelines for ELSS – 1992 Scheme, as amended till date and the Offer Document has been filed with SEBI. The Units offeredfor public subscription have neither been approved nor disapproved by SEBI, nor has SEBI certified the accuracy or adequacy of this Offer Document.

OFFER DOCUMENT

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

NEW FUND OFFERUnits at Rs. 10 each for Cash plus applicable Entry Load

Opens On : September 29, 2005Closes On : October 25, 2005

Continuous Offer Opens on or before : November 24, 2005

THE AUDITORS TO THE SCHEMEPrice Waterhouse252, Veer Savarkar Marg, Shivaji Park,Dadar, Mumbai - 400 028.

THE REGISTRARComputer Age ManagementServices Private LimitedA&B Lakshmi Bhawan,609, Anna Salai, Chennai 600 006

CUSTODIANSDeutsche Bank AG Standard Chartered BankKodak House, 222, Dr. D. N. Road, 23/25 M. G. Road,Fort, Mumbai 400 001 Mumbai 400 001

THE SPONSORKotak Mahindra Bank Ltd.36-38A, Nariman Bhavan,227, Nariman Point, Mumbai 400 021

THE TRUSTEEKotak Mahindra Trustee Co. Ltd.5A, 5th Floor, Bakhtawar,229, Nariman Point, Mumbai 400 021

THE ASSET MANAGEMENT COMPANYKotak Mahindra Asset Management Co. Ltd.5A, 5th Floor, Bakhtawar,229, Nariman Point, Mumbai 400 021

KOTAK ELSS SCHEMEAn Open-Ended Equity Linked Savings Scheme