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TTTTTABLE OF CONTENTSABLE OF CONTENTSABLE OF CONTENTSABLE OF CONTENTSABLE OF CONTENTS

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I.I.I.I.I. HIGHLIGHTS/SUMMARY OF THE SCHEMEHIGHLIGHTS/SUMMARY OF THE SCHEMEHIGHLIGHTS/SUMMARY OF THE SCHEMEHIGHLIGHTS/SUMMARY OF THE SCHEMEHIGHLIGHTS/SUMMARY OF THE SCHEME 22222

Investment Objective 2

Investment In 2

Liquidity 2

Benchmark 2

NAV Information 2

Load Structure 2

Minimum Application Amount 2

Maturity of the schemes. 2

Listing 2

Options available 2

Dematerialization 2

Cost of trading on the stock exchange 2

Transfer of Units 2

II.II.II.II.II. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION 33333

A . Risk Factors 5

B . REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME 5

C . DEFINITIONS 5

D . SPECIAL CONSIDERATION 7

E. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY 7

III.III.III.III.III. INFORMAINFORMAINFORMAINFORMAINFORMATION ABOUT THE SCHEMETION ABOUT THE SCHEMETION ABOUT THE SCHEMETION ABOUT THE SCHEMETION ABOUT THE SCHEME 8 8 8 8 8

A . Type of the scheme 8

B . What is the investment objective of the scheme? 8

C . How will the scheme allocate its assets? 8

D . Where will the scheme invest 8

E. What are the investment strategies? 9

F. Fundamental attributes 9

G. How will the scheme benchmark its performance? 9

H . Who manages the scheme? 1 0

I. What are the investment restrictions? 1 0

J. How has the scheme performed? 1 1

IVIVIVIVIV..... UNITS AND OFFERUNITS AND OFFERUNITS AND OFFERUNITS AND OFFERUNITS AND OFFER 12 12 12 12 12

A . NEW FUND OFFER (NFO) 1 2

New Fund Offer Price 1 2

Maximum Amount to be raised (if any) 1 2

Plans / Options offered 1 2

Allotment 1 2

Refund 1 2

Dividend Policy 1 2

Who can invest 1 3

Where can you submit the filled up applications 1 3

How to Apply 1 4

Listing 1 4

B . ONGOING OFFER DETAILS 1 4

C . PERIODIC DISCLOSURES 1 7

D . COMPUTATION OF NAV 1 7

VVVVV..... FEES AND EXPENSESFEES AND EXPENSESFEES AND EXPENSESFEES AND EXPENSESFEES AND EXPENSES 1 91 91 91 91 9

A . New Fund Offer (NFO) expenses 1 9

B . Annual scheme recurring expenses 1 9

C . Load structure 1 9

VI.VI.VI.VI.VI. RIGHTS OF UNITHOLDERSRIGHTS OF UNITHOLDERSRIGHTS OF UNITHOLDERSRIGHTS OF UNITHOLDERSRIGHTS OF UNITHOLDERS 2 02 02 02 02 0

VII.VII.VII.VII.VII. PENALPENALPENALPENALPENALTIES, PENDING LITIGATIES, PENDING LITIGATIES, PENDING LITIGATIES, PENDING LITIGATIES, PENDING LITIGATION OR PROCEEDINGS,TION OR PROCEEDINGS,TION OR PROCEEDINGS,TION OR PROCEEDINGS,TION OR PROCEEDINGS,FINDINGS OF INSPECTIONS OR INVESTIGAFINDINGS OF INSPECTIONS OR INVESTIGAFINDINGS OF INSPECTIONS OR INVESTIGAFINDINGS OF INSPECTIONS OR INVESTIGAFINDINGS OF INSPECTIONS OR INVESTIGATIONS FORTIONS FORTIONS FORTIONS FORTIONS FORWHICH ACTION MAWHICH ACTION MAWHICH ACTION MAWHICH ACTION MAWHICH ACTION MAY HAY HAY HAY HAY HAVE BEEN TVE BEEN TVE BEEN TVE BEEN TVE BEEN TAKEN OR IS IN THEAKEN OR IS IN THEAKEN OR IS IN THEAKEN OR IS IN THEAKEN OR IS IN THEPROCESS OF BEING TPROCESS OF BEING TPROCESS OF BEING TPROCESS OF BEING TPROCESS OF BEING TAKEN BY ANYAKEN BY ANYAKEN BY ANYAKEN BY ANYAKEN BY ANYREGULAREGULAREGULAREGULAREGULATORTORTORTORTORY AUTHORITYY AUTHORITYY AUTHORITYY AUTHORITYY AUTHORITY 2 12 12 12 12 1

Investment ObjectiveInvestment ObjectiveInvestment ObjectiveInvestment ObjectiveInvestment Objective The investment objective of the Scheme is to generate returns through investments in debt andmoney market instruments with a view to significantly reduce the interest rate risk.

Investment InInvestment InInvestment InInvestment InInvestment In Debt / Money Market Instruments and Government Securities, only maturing on or before maturityof the scheme.

L iquidityL iquidityL iquidityL iquidityL iquidity Units of this scheme will be listed on National Stock Exchange. Investors may sell their units in thestock exchange(s) on which these units are listed on all the trading days of the stock exchange. Theunits cannot be redeemed with KMMF until the maturity of the scheme.

BenchmarkBenchmarkBenchmarkBenchmarkBenchmark CRISIL Composite Bond Fund Index

N AN AN AN AN AV InformationV InformationV InformationV InformationV Information The Mutual Fund shall endeavour to update the Net asset value of the scheme on every businessday on AMFI's website www.amfiindia.com by 9.00 p.m The NAVs shall also be updated on thewebsite of the Mutual Fund www.kotakmutual.com and will be released in two newspapers forpublication.

Options availableOptions availableOptions availableOptions availableOptions available Growth and Dividend Payout

Load StructureLoad StructureLoad StructureLoad StructureLoad Structure Exit Load: Nil.

Minimum Application AmountMinimum Application AmountMinimum Application AmountMinimum Application AmountMinimum Application Amount Rs. 5, 000/- and in multiples of Rs 10 for purchase and switch-ins. This clause is applicable only forpurchases and switch in during the NFO.

Maturity of the schemeMaturity of the schemeMaturity of the schemeMaturity of the schemeMaturity of the scheme 370 days from the date of allotment of units.

Without any further act by the Unitholder(s) all units will be compulsorily redeemed on the MaturityDate of the Scheme, at the Applicable NAV as on that date. If this day is not a Working Day thenthe immediate following Working Day will be considered as the Maturity Date.

L ist ingList ingList ingList ingList ing The units of the scheme will be listed on NSE on allotment.

DematerializationDematerializationDematerializationDematerializationDematerialization Unit holders given an option to hold the units in demat form in addition to account statement asper current practice.

The Unit holder intending to hold/trade the units the units in Demat form are required to have abeneficiary account with the Depository Participant (DP) (registered with NSDL / CDSL) and will berequired to indicate in the application the DP's name, DP ID Number and the beneficiary accountnumber of the applicant with the DP.

In case Unit holders do not provide their Demat Account details, an Account Statement shall besent to them. Such investors will not be able to trade on the stock exchange.

Investors are requested to fill in their demat account details in the space provided for the same inKey Information Memorandum (KIM) and application forms.

Cost of trading on theCost of trading on theCost of trading on theCost of trading on theCost of trading on the Investor will have to bear the cost of brokerage and other applicable statutory levies when the unitsstock exchangestock exchangestock exchangestock exchangestock exchange are bought or sold on the stock exchange.

TTTTTransfer of Unitsransfer of Unitsransfer of Unitsransfer of Unitsransfer of Units Units held by way of an Account Statement cannot be transferred.

Units held in Demat form are transferable in accordance with the provisions of The DepositoriesAct, SEBI (Depositories and Participants) Regulations, and Bye laws and business rules of depositories.

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I . H I G H L I G H T S / S U M M A R Y O F T H E

S C H E M E

A .A .A .A .A . R i sk Fac torsR i sk Fac torsR i sk Fac torsR i sk Fac torsR i sk Fac tors

Standard R isk Factors :Standard R isk Factors :Standard R isk Factors :Standard R isk Factors :Standard R isk Factors :

Investment in Mutual Fund Units involves investmentrisks such as trading volumes, settlement risk, liquidityrisk, default risk including the possible loss of principal.

As the price / value / interest rates of the securities inwhich the scheme invests fluctuates, the value of yourinvestment in the scheme may go up or down. The valueof investments may be affected, inter-alia, by changesin the market, interest rates, changes in credit rating,trading volumes, settlement periods and transferprocedures; the NAV is also exposed to Price/Interest-Rate Risk and Credit Risk and may be affected inter-alia,by government policy, volatility and liquidity in themoney markets and pressure on the exchange rate ofthe rupee

Past performance of the Sponsor/AMC/Mutual Funddoes not guarantee future performance of the scheme.

The name of the scheme does not in any manner indicateeither the quality of the scheme or its future prospectsand returns.

The sponsor is not responsible or liable for any lossresulting from the operation of the scheme beyond theinitial contribution of Rs.2,50,000 made by it towardssetting up the Fund.

The present scheme is not a guaranteed or assuredreturn scheme.

Scheme Spec i f i c R i sk FactorsScheme Spec i f i c R i sk FactorsScheme Spec i f i c R i sk FactorsScheme Spec i f i c R i sk FactorsScheme Spec i f i c R i sk Factors

a) The portfolio of Kotak FMP 370 days Series 1, willcomprise of securities issued by central and stategovernment as also debt & money market instrumentsissued by corporates as mentioned under the paragraph'How will the Scheme allocate its assets'. All suchsecurities will normally mature on or before maturity ofthe scheme. As the securities are normally held tomaturity, the interest rate risk is significantly mitigated.The debt securities issued by the corporates do carry acredit risk as also the liquidity risk.

b) The Schemes will invest entirely in Debt/ Money MarketInstruments and Government securities. Liquidity inthese investments may be affected by trading volumes,settlement periods and transfer procedures. Thesefactors may also affect the Scheme's ability to makeintended purchases/sales, cause potential losses to theScheme and result in the Scheme missing certaininvestment opportunities.

c) Different types of securities in which the scheme wouldinvest as given in the SID carry different levels and typesof risk. Accordingly the scheme's risk may increase ordecrease depending upon its investment pattern. E.g.corporate bonds carry higher amount of risk thangovernment securities. Further, even among corporatebonds, bonds, which are AAA rated, are comparativelyless risky than bonds, which are AA rated.

d) The market price of Kotak FMP 370 days Series 1, likeany other listed security, is largely dependent on twofactors, viz., (1) the intrinsic value of the unit (or NAV),and (2) demand and supply of units in the market.Sizeable demand or supply of the units in Exchange

I I . I N T R O D U C T I O N

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may lead to market price of the units to quote atpremium or discount to NAV. Hence the price of theunits is likely to hold significant variance (large premiumor discount) from the latest declared NAV all the time.

e )e )e )e )e ) R isks assoc iated with Secur i t i sed Debt:R isks assoc iated with Secur i t i sed Debt:R isks assoc iated with Secur i t i sed Debt:R isks assoc iated with Secur i t i sed Debt:R isks assoc iated with Secur i t i sed Debt:

The Schemes may from time to time invest in domesticsecuritised debt, for instance, in asset backed securities(ABS) or mortgage backed securities (MBS). Typically,investments in securitised debt carry credit risk (wherecredit losses in the underlying pool exceed creditenhancement provided, (if any) and the reinvestmentrisk (which is higher as compared to the normal corporateor sovereign debt). The underlying assets in securitiseddebt are receivables arising from automobile loans,personal loans, loans against consumer durables, loansbacked by mortgage of residential / commercialproperties, underlying single loans 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 debtis largely guided by following factors :

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.

Diversification of the portfolio

Better performance

Broadly following types of loans are securitised:

a )a )a )a )a ) Au to Loan sAu to Loan sAu to Loan sAu to Loan sAu to Loan s

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 value ofasset becomes lower than the loan outstanding. Theborrowers, therefore, may sometimes tend to default onloans and allow the vehicle to be repossessed.

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 likelihood ofturning bad. In such cases, loss on sale of repossessionvehicles is higher than usual.

Commercial vehicle loans are susceptible to the cyclicality inthe economy. In a downturn in economy, freight rates dropleading to higher defaults in commercial vehicle loans.Further, the second hand prices of these vehicles also declinein such economic environment.

b )b )b )b )b ) Hous ing LoansHous ing LoansHous ing LoansHous ing LoansHous ing Loans

Housing loans in India have shown very low default rateshistorically. However, in recent years, loans have been givenat high loan to value ratios and to a much younger borrowerclasses. The loans have not yet gone through the fulleconomic cycle and have not yet seen a period of decliningproperty prices. Thus the performance of these housing loansis yet to be tested and it need not conform to the historicalexperience of low default rates.

c ) Consumer Durab le Loansc ) Consumer Durab le Loansc ) Consumer Durab le Loansc ) Consumer Durab le Loansc ) Consumer Durab le Loans

The underlying security for such loans is easilytransferable without the bank's knowledge and hencerepossession is difficult.

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

d )d )d )d )d ) Persona l LoansPersona l LoansPersona l LoansPersona l LoansPersona l Loans

These are unsecured loans. In case of a default, the bankhas no security to fall back on. The lender has no controlover how the borrower has used the borrowed money.Further, all the above categories of loans have the followingcommon risks:

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.

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.

e )e )e )e )e ) S ingle Loan PTCSingle Loan PTCSingle Loan PTCSingle Loan PTCSingle Loan PTC

A single loan PTC is a securitization transaction in which aloan given by an originator (Bank/ NBFC/ FI etc.) to a singleentity (obligor) is converted into pass through certificatesand sold to investors. The transaction involves theassignment of the loan and the underlying receivables bythe originator to a trust, which funds the purchase by issuingPTCs to investors at the discounted value of the receivables.The PTCs are rated by a rating agency, which is based on thefinancial strength of the obligor alone, as the PTCs have norecourse to the originator.

The advantage of a single loan PTC is that the ratingrepresents the credit risk of a single entity (the obligor) andis hence easy to understand and track over the tenure of thePTC. The primary risk is that of all securitized instruments,which are not traded as often in the secondary market andhence carry an illiquidity risk. The structure involves anassignment of the loan by the originator to the trustee whothen has no interest in monitoring the credit quality of theoriginator. The originator that is most often a bank is in thebest position to monitor the credit quality of the originator.The investor then has to rely on an external rating agency tomonitor the PTC. Since the AMC relies on the documentationprovided by the originator, there is a risk to the extent of theunderlying documentation between the seller andunderlying borrower.

SPECIF IC R ISKS IN DEBT MARKETS AND CAPITSPECIF IC R ISKS IN DEBT MARKETS AND CAPITSPECIF IC R ISKS IN DEBT MARKETS AND CAPITSPECIF IC R ISKS IN DEBT MARKETS AND CAPITSPECIF IC R ISKS IN DEBT MARKETS AND CAPITA LA LA LA LA LM A R K E T SM A R K E T SM A R K E T SM A R K E T SM A R K E T S

Investments in Financial Instruments are faced with thefollowing kinds of risks.

Risks associated with Debt / Money Markets (i.e. Markets inwhich Interest bearing Securities or Discounted Instrumentsare traded)

a )a )a )a )a ) Credi t R isk:Credi t R isk:Credi t R isk:Credi t R isk:Credi t R isk:

Securities carry a Credit risk of repayment of principal orinterest by the borrower. This risk depends on micro-economic factors such as financial soundness and ability ofthe borrower as also macro-economic factors such asIndustry performance, Competition from Imports,Competitiveness of Exports, Input costs, Trade barriers,Favourability of Foreign Currency conversion 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 ratingsbetween the two extremes.

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

b )b )b )b )b ) Pr ice-Risk or Interest-Rate Risk:Pr ice-Risk or Interest-Rate Risk:Pr ice-Risk or Interest-Rate Risk:Pr ice-Risk or Interest-Rate Risk:Pr ice-Risk or Interest-Rate Risk:

From the perspective of coupon rates, Debt securities can beclassified in two categories, i.e., Fixed Income bearingSecurities and Floating Rate Securities. In Fixed IncomeBearing Securities, the Coupon rate is determined at thetime of investment and paid/received at the predeterminedfrequency. In the Floating Rate Securities, on the other hand,the coupon rate changes - 'floats' - with the underlyingbenchmark rate, e.g., MIBOR, 1 yr. Treasury Bill.

Fixed Income Securities (such as Government Securities,bonds, debentures and money market instruments) where afixed return is offered, run price-risk. Generally, when interestrates rise, prices of fixed income securities fall and wheninterest rates drop, the prices increase. The extent of fall orrise in the prices is a function of the existing coupon, thepayment-frequency of such coupon, days to maturity andthe increase or decrease in the level of interest rates. Theprices of Government Securities (existing and new) will beinfluenced only by movement in interest rates in the financialsystem. Whereas, in the case of corporate or institutionalfixed income securities, such as bonds or debentures, pricesare influenced not only by the change in interest rates butalso by credit rating of the security and liquidity thereof.

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, ascompared 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.

c )c )c )c )c ) Risk of Rat ing Migrat ion:Risk of Rat ing Migrat ion:Risk of Rat ing Migrat ion:Risk of Rat ing Migrat ion:Risk of Rat ing Migrat ion:

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 10.00%p.a. and a market value of Rs. 100. If it is downgraded to Acategory, which commands a market yield of, say, 11.00% p.a.,its market value would drop to Rs. 97.53 (i.e. 2.47%) If thesecurity is up-graded to AAA category which commands amarket yield of, say, 9.00% p.a. its market value would increaseto Rs102.51 (i.e. by 2.51%). The figures shown in the table areonly indicative and are intended to demonstrate how the priceof a security can be affected by change in credit rating.

Rat ingRat ingRat ingRat ingRat ing Yield (% p.a.)Yield (% p.a.)Yield (% p.a.)Yield (% p.a.)Yield (% p.a.) Market VMarket VMarket VMarket VMarket Value (Rs.)alue (Rs.)alue (Rs.)alue (Rs.)alue (Rs.)A A 1 0 . 0 0 1 0 0 . 0 0If upgraded to AAA 9.00 1 0 2 . 5 1If downgraded to A 1 1 . 0 0 9 7 . 5 3

d )d )d )d )d ) Bas is R isk:Bas is R isk:Bas is R isk:Bas is R isk:Bas is R isk:

During the life of floating rate security or a swap theunderlying benchmark index may become less active andmay not capture the actual movement in the interest ratesor at times the benchmark may cease to exist. These types ofevents may result in loss of value in the portfolio. Whereswaps are used to hedge an underlying fixed income security,

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CCCCC DEF IN I T IONSDEF IN I T IONSDEF IN I T IONSDEF IN I T IONSDEF IN I T IONS

In th i s S ID, the fo l lowing worIn th i s S ID, the fo l lowing worIn th i s S ID, the fo l lowing worIn th i s S ID, the fo l lowing worIn th i s S ID, the fo l lowing words and exprds and exprds and exprds and exprds and express ions sha l l have the meaning spec i f ied be lowess ions sha l l have the meaning spec i f ied be lowess ions sha l l have the meaning spec i f ied be lowess ions sha l l have the meaning spec i f ied be lowess ions sha l l have the meaning spec i f ied be low, un less the, un less the, un less the, un less the, un less thecontext otherwise requires :context otherwise requires :context otherwise requires :context otherwise requires :context otherwise requires :

App l i cab le NAApp l i cab le NAApp l i cab le NAApp l i cab le NAApp l i cab le NAVVVVV Unless stated otherwise in the SID, 'Applicable NAV' is the Net Asset Value at theclose of a Business Day as of which the purchase or redemption is sought by aninvestor and determined by the Fund.

Asset Management Company orAsset Management Company orAsset Management Company orAsset Management Company orAsset Management Company or Kotak Mahindra Asset Management Company Limited, the Asset ManagementAMC or Inves tment ManagerAMC or Inves tment ManagerAMC or Inves tment ManagerAMC or Inves tment ManagerAMC or Inves tment Manager Company incorporated under the Companies Act, 1956, and authorised by SEBI

to act as Investment Manager to the Schemes of Kotak Mahindra Mutual Fund.

C u s t o d i a nC u s t o d i a nC u s t o d i a nC u s t o d i a nC u s t o d i a n Deutsche Bank AG, acting as Custodian to the Scheme, or any other Custodianappointed by the Trustee.

D e p o s i t o r yD e p o s i t o r yD e p o s i t o r yD e p o s i t o r yD e p o s i t o r y A depository as defined in the Depositories Act, 1996 (22 of 1996) and includesNational Securities Depository Ltd (NSDL) and Central Depository Services Ltd(CDSL).

En t r y LoadEnt r y LoadEnt r y LoadEnt r y LoadEnt r y Load The charge that is paid by an Investor when he invests an amount in the Scheme.

Ex i t LoadEx i t LoadEx i t LoadEx i t LoadEx i t Load The charge that is paid by a Unitholder when he redeems Units from the Scheme.

F I IF I IF I IF I IF I I Foreign Institutional Investors, registered with SEBI under Securities and ExchangeBoard of India (Foreign Institutional Investors) Regulations, 1995.

Gilts / Government Securit ies /Gi lts / Government Securit ies /Gi lts / Government Securit ies /Gi lts / Government Securit ies /Gi lts / Government Securit ies / Securities created and issued by the Central Government and / or StateG . S e c sG . S e c sG . S e c sG . S e c sG . S e c s Government.

I M AI M AI M AI M AI M A Investment Management Agreement dated 20th May 1996, entered into betweenthe Fund (acting through the Trustee) and the AMC and as amended up to date,or as may be amended from time to time.

Investor Serv ice Centres or ISCsInvestor Serv ice Centres or ISCsInvestor Serv ice Centres or ISCsInvestor Serv ice Centres or ISCsInvestor Serv ice Centres or ISCs Designated branches of the AMC / other offices as may be designated by theAMC from time to time.

Kotak FMP 370 days Ser ies 1Kotak FMP 370 days Ser ies 1Kotak FMP 370 days Ser ies 1Kotak FMP 370 days Ser ies 1Kotak FMP 370 days Ser ies 1 Close-Ended Debt Scheme

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basis risk could arise when the fixed income yield curve movesdifferently from that of the swap benchmark curve.

e )e )e )e )e ) Spread R isk:Spread R isk:Spread R isk:Spread R isk:Spread R isk:

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.

f )f )f )f )f ) Re inves tment R i sk :Re inves tment R i sk :Re inves tment R i sk :Re inves tment R i sk :Re inves tment R i sk :

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

g )g )g )g )g ) L iquidi ty R isk:L iquidi ty R isk:L iquidi ty R isk:L iquidi ty R isk:L iquidi ty R isk:

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 a scheme therefore may suffer. Eventhough 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. In view of this, redemption may be limited orsuspended after approval from the Boards of Directors of theAMC and the Trustee, under certain circumstances asdescribed in the Statement of Additional Information (SAI).

R isk Associated with Investment in Der ivat ivesRisk Associated with Investment in Der ivat ivesRisk Associated with Investment in Der ivat ivesRisk Associated with Investment in Der ivat ivesRisk Associated with Investment in Der ivat ivesMa r ke tMa r ke tMa r ke tMa r ke tM a r ke t

Derivative products are leveraged instruments and canprovide disproportionate gains as well as disproportionatelosses to the investor. Execution of such strategies dependsupon the ability of the fund manager to identify suchopportunities. Identification and execution of the strategiesto be pursued by the fund manager involve uncertainty anddecision of fund manager may not always be profitable. Noassurance can be given that the fund manager will be ableto identify or execute such strategies. The risks associatedwith the use of derivatives are different from or possiblygreater than, the risks associated with investing directly insecurities and other traditional investment

B .B .B .B .B . REQUIREMENT OF MIN IMUM INVESTORS INREQUIREMENT OF MIN IMUM INVESTORS INREQUIREMENT OF MIN IMUM INVESTORS INREQUIREMENT OF MIN IMUM INVESTORS INREQUIREMENT OF MIN IMUM INVESTORS INT H E S C H E M ET H E S C H E M ET H E S C H E M ET H E S C H E M ET H E S C H E M E

The Scheme(s) and individual Plan(s) under the Scheme(s)shall have a minimum of 20 investors and no single investorshall account for more than 25% of the corpus of theScheme(s)/Plan(s). These conditions will be complied withimmediately after the close of the NFO itself i.e. at the timeof allotment. In case of non-fulfillment with the conditionof minimum 20 investors, the Scheme(s)/Plan(s) shall bewound up in accordance with Regulation 39 (2) (c) of SEBI(MF) Regulations automatically without any reference fromSEBI. In case of non-fulfillment with the condition of 25%holding by a single investor on the date of allotment, theapplication to the extent of exposure in excess of thestipulated 25% limit would be liable to be rejected and theallotment would be effective only to the extent of 25% ofthe corpus collected. Consequently, such exposure over 25%limits will lead to refund within 6 weeks of the date ofclosure of the New Fund Offer.

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Kotak Bank / SponsorKotak Bank / SponsorKotak Bank / SponsorKotak Bank / SponsorKotak Bank / Sponsor Kotak Mahindra Bank Limited.

KMMF / Fund / Mutual FundKMMF / Fund / Mutual FundKMMF / Fund / Mutual FundKMMF / Fund / Mutual FundKMMF / Fund / Mutual Fund Kotak Mahindra Mutual Fund, a trust set up under the provisions of The IndianTrusts Act, 1882.

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

Matur i t y DateMatur i t y DateMatur i t y DateMatur i t y DateMatur i t y Date The date on which all the units under the Scheme would be redeemedcompulsorily and without any further act by the Unitholders at the ApplicableNAV of that day. If this day is not a Business Day then the immediate followingBusiness Day will be considered as the Maturity Date.

Money Market Ins t rumentsMoney Market Ins t rumentsMoney Market Ins t rumentsMoney Market Ins t rumentsMoney Market Ins t ruments Includes commercial papers, commercial bills, treasury bills, Governmentsecurities having an unexpired maturity upto one year, call or notice money,certificate of deposit, usance bills, and any other like instruments as specified bythe Reserve Bank of India from time to time.

M I B O RM I B O RM I B O RM I B O RM I B O R The Mumbai Interbank Offered Rate published once every day by the NationalStock Exchange and published twice every day by Reuters, as specifically appliedto each contract.

Mutual Fund Regulat ions /Mutual Fund Regulat ions /Mutual Fund Regulat ions /Mutual Fund Regulat ions /Mutual Fund Regulat ions / Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, asRegu la t ionsRegu la t ionsRegu la t ionsRegu la t ionsRegu la t ions amended up to date, and such other regulations as may be in force from time to

time.

N AN AN AN AN A VVVVV Net Asset Value of the Units of the Scheme (including the options thereunder)as calculated in the manner provided in this SID or as may be prescribed byRegulations from time to time. The NAV will be computed up to four decimalplaces.

N R IN R IN R IN R IN R I Non-Resident Indian and Person of Indian Origin as defined in Foreign ExchangeManagement Act, 1999.

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

Redempt ion Pr i ceRedempt ion Pr i ceRedempt ion Pr i ceRedempt ion Pr i ceRedempt ion Pr i ce Redemption Price to an investor of Units under the Scheme (including Optionsthereunder) computed in the manner indicated elsewhere in this SID.

Reg i s t r a rReg i s t r a rReg i s t r a rReg i s t r a rReg i s t r a r Computer Age Management Services Private Limited ('CAMS'), acting as Registrarto the Scheme, or any other Registrar appointed by the AMC.

R e p oR e p oR e p oR e p oR e p o Sale of securities with simultaneous agreement to repurchase them at a laterdate.

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

Rever se RepoRever se RepoRever se RepoRever se RepoRever se Repo Purchase of securities with a simultaneous agreement to sell them at a laterdate.

S c h e m eS c h e m eS c h e m eS c h e m eS c h e m e Kotak FMP 370 days Series 1. All references to the Scheme would deem toinclude the plans and options thereunder unless specifically mentioned.

Standard In format ionStandard In format ionStandard In format ionStandard In format ionStandard In format ion This document issued by Kotak Mahindra Mutual Fund, offering for subscriptionDocument ( S ID )Document ( S ID )Document ( S ID )Document ( S ID )Document ( S ID ) of Units of the Scheme.

Statement of Addit ionalStatement of Addit ionalStatement of Addit ionalStatement of Addit ionalStatement of Addit ional It contains details of Kotak Mahindra Mutual Fund, its constitution, and certainInformat ion (SAI )Informat ion (SAI )Informat ion (SAI )Informat ion (SAI )Informat ion (SAI ) tax, legal and general information. It is incorporated by reference (is legally a

part of the Scheme Information Document)

SEB ISEB ISEB ISEB ISEB I The Securities and Exchange Board of India.

TTTTTransact ion Po intsransact ion Po intsransact ion Po intsransact ion Po intsransact ion Po ints Centres designated by the Registrar, to accept investor transactions and scanthem for handling by the nearest ISC.

TTTTTrus t Deedrus t Deedrus t Deedrus t Deedrus t Deed The Trust Deed entered into on 20th May 1996 between the Sponsor and theTrustee, as amended up to date, or as may be amended from time to time.

TTTTTrus t Fundrus t Fundrus t Fundrus t Fundrus t Fund The corpus of the Trust, Unit capital and all property belonging to and/or vestedin the Trustee.

U n i tU n i tU n i tU n i tU n i t The interest of the investors in the Scheme, which consists of each Unitrepresenting one undivided share in the assets of the Scheme.

Un i tho lde rUn i tho lde rUn i tho lde rUn i tho lde rUn i tho lde r A person who holds Unit(s) of the Scheme

VVVVValuat ion Daya luat ion Daya luat ion Daya luat ion Daya luat ion Day For the Scheme, each Business Day and any other day when the Debt and/ormoney markets are open in Mumbai.

Bus ines s DayBus ines s DayBus ines s DayBus ines s DayBus ines s Day A day other than:

1. Saturday and Sunday

2. A day on which the banks in Mumbai and RBI are closed for business/clearing

3. A day on which Purchase and Redemption is suspended by the AMC

4. A day on which the money markets are closed/not accessible.

5. A day on which the National Stock Exchange or Bombay Stock Exchange isclosed

6. A day on which NSDL or CDSL is closed for the purpose of transfer of securitiesbetween depository (demat) accounts.

Additionally, the days when the banks in any location where the AMC's Investorservice center are located, are closed due to local holiday, such days will betreated as non business days at such centers for the purpose of acceptingsubscriptions. However if the Investor service center in such location is open onsuch local holidays, only redemption and switch request will be accepted atthose centers provided it is a business day for the scheme.

The AMC reserves the right to change the definition of Business Day.

The AMC reserves the right to declare any day as a Business Day or otherwise atany or all ISCs.

Words and Express ionsWords and Express ionsWords and Express ionsWords and Express ionsWords and Express ions Same meaning as in Trust Deed.used in this SID andused in this SID andused in this SID andused in this SID andused in this SID andnot def inednot def inednot def inednot def inednot def ined

7

D .D .D .D .D . SPEC IAL CONS IDERASPEC IAL CONS IDERASPEC IAL CONS IDERASPEC IAL CONS IDERASPEC IAL CONS IDERAT I O N :T I O N :T I O N :T I O N :T I O N :

1. Trustees shall ensure that before launch of the scheme the in-principle approval for listing has been obtained from thestock exchange(s) and appropriate disclosures are made in the Scheme Information Document

2. Nomination: For Unit holders holding uits in demat form: The units will be issued in demat form through depositorysystem. The unitholder will be entitled to the nomination facility offered by the depository with whom the unitholderhas an account.

3. Transmission: The units will be issued in demat form through depository system. The unitholder will be entitled to andsubject to the transmission facility and procedure of the depository with whom the unitholder has an account.

4. Inter option transfer: Transfer of units from growth to dividend or vice-versa will not be allowed under the scheme.

E .E .E .E .E . DUE D I L IGENCE BY THE ASSET MANAGEMENT COMPDUE D I L IGENCE BY THE ASSET MANAGEMENT COMPDUE D I L IGENCE BY THE ASSET MANAGEMENT COMPDUE D I L IGENCE BY THE ASSET MANAGEMENT COMPDUE D I L IGENCE BY THE ASSET MANAGEMENT COMPA N YA N YA N YA N YA N Y

DUE D I L IGENCE CERDUE D I L IGENCE CERDUE D I L IGENCE CERDUE D I L IGENCE CERDUE D I L IGENCE CERT I F ICAT I F ICAT I F ICAT I F ICAT I F ICAT ET ET ET ET E

It is confirmed that:

(i) the Scheme Information Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996and the guidelines and directives issued by SEBI from time to time.

(ii) all legal requirements connected with the launching of the scheme as also the guidelines, instructions, etc., issued bythe Government and any other competent authority in this behalf, have been duly complied with.

(iii) the disclosures made in the Scheme Information Document are true, fair and adequate to enable the investors to makea well informed decision regarding investment in the proposed scheme.

(iv) the intermediaries named in the Scheme Information Document and Statement of Additional Information are registeredwith SEBI and their registration is valid, as on date.

For Kotak Mahindra Asset Management Company L imi tedFor Kotak Mahindra Asset Management Company L imi tedFor Kotak Mahindra Asset Management Company L imi tedFor Kotak Mahindra Asset Management Company L imi tedFor Kotak Mahindra Asset Management Company L imi ted

Asset Management Company for Kotak Mahindra Mutual Fund

Place : Mumbai VVVVV. R. Naras imhan. R. Naras imhan. R. Naras imhan. R. Naras imhan. R. Naras imhan

Date : October 5, 2009 Chief Compl iance Off icerChief Compl iance Off icerChief Compl iance Off icerChief Compl iance Off icerChief Compl iance Off icer

8

Kotak FMP 370 days Series 1

A .A .A .A .A . TTTTType of the scheme :ype of the scheme :ype of the scheme :ype of the scheme :ype of the scheme :

Close ended debt scheme

B .B .B .B .B . What is the investment object ive of theWhat is the investment object ive of theWhat is the investment object ive of theWhat is the investment object ive of theWhat is the investment object ive of thes c h e m e ?s c h e m e ?s c h e m e ?s c h e m e ?s c h e m e ?

The investment objective of the Scheme is to generate returnsthrough investments in debt and money market instrumentswith a view to significantly reduce the interest rate risk.

C .C .C .C .C . How wil l the scheme al locate i ts assets?How wil l the scheme al locate i ts assets?How wil l the scheme al locate i ts assets?How wil l the scheme al locate i ts assets?How wil l the scheme al locate i ts assets?

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

Inves tmentsInves tmentsInves tmentsInves tmentsInves tments Indicative AllocationIndicative AllocationIndicative AllocationIndicative AllocationIndicative Allocation Risk Profi leRisk Profi leRisk Profi leRisk Profi leRisk Profi le(% to net assets)(% to net assets)(% to net assets)(% to net assets)(% to net assets)

*Debt and Money Market 1 0 0 Low toinstruments and mediumgovernment securities

* Debt instruments shall be deemed to include securitised debts(excluding foreign securitised debt) and investment in securitiseddebts shall not exceed 50% of the net assets of the Scheme.

Overv iew of Debt MarketOverv iew of Debt MarketOverv iew of Debt MarketOverv iew of Debt MarketOverv iew of Debt Market

The 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 marketinstruments are typically commercial paper, certificates ofdeposit, treasury bills, trade bills, repos, interbank call depositreceipts etc. Debt market comprises typically of securitiesissued by Governments (Central and State), Banks, FinancialInstitutions, 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.

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 ofall trades 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 ason September 23, 2009 on some of the money and debtmarket instruments. These yields are indicative and do notindicate yields that may be obtained in future as interestrates keep changing.

Ins t rumentIns t rumentIns t rumentIns t rumentIns t rument Yield RangeYield RangeYield RangeYield RangeYield Range(% per annum)(% per annum)(% per annum)(% per annum)(% per annum)

bank Call Money 3.00- 3.25

91 Day Treasury Bill 3.00 - 3.10

364 Day Treasury Bill 3 .70-3.80

P1+ Commercial Paper 90 Days 3.05 - 3.25

3-Year Government of India Security 5.60 - 5.70

5-Year Government of India Security 6.30 - 6.40

10-Year Government of India Security 6.85- 6.95

Generally, for instruments issued by a non-Governmententity, the yield is higher than the yield on a GovernmentSecurity with corresponding maturity. The difference, knownas credit spread, depends on the credit rating of the entity.Investors must note that the yields shown above are theyields prevailing on September 23, 2009 and they are likelyto change consequent to changes in economic conditionsand RBI policy.

D .D .D .D .D . Where wi l l the scheme investWhere wi l l the scheme investWhere wi l l the scheme investWhere wi l l the scheme investWhere wi l l the scheme invest

The amount collected under the scheme will be investedonly in debt and money market instruments. Subject to theRegulations, the amount collected under this scheme canbe invested in any (but not exclusively) of the followingsecurities/ debt instruments:

a. Securities created and issued by the Central and StateGovernments and/or repos/reverse repos in suchGovernment Securities as may be permitted by RBI(including but not limited to coupon bearing bonds,zero coupon bonds and treasury bills).

b. Securities guaranteed by the Central and StateGovernments (including but not limited to couponbearing bonds, zero coupon bonds and treasury bills).

c. Debt obligations of domestic Government agencies andstatutory bodies, which may or may not carry a Central/State Government guarantee

d. Corporate debt (of both public and private sectorundertakings).

e. Obligations/ Term Deposits of banks (both public andprivate sector) and development financial institutions

f. Money market instruments permitted by SEBI/RBI, havingmaturities of up to one year or in alternative investmentfor the call money market as may be provided by the RBIto meet the liquidity requirements.

g. Certificate of Deposits (CDs).

h. Commercial Paper (CPs).

i. Securitised Debt, not including foreign securitised debt.

j. The non-convertible part of convertible securities.

k. Any other domestic fixed income securities as permittedby SEBI / RBI from time to time.

l. Derivative instruments like Interest Rate Swaps, ForwardRate Agreements and such other derivative instrumentspermitted by SEBI/RBI.

m. Any other instruments / securities, which in the opinionof the fund manger would suit the investment objectiveof the scheme subject to compliance with extantRegulations.

I I I . I N F O R M A T I O N A B O U T T H E S C H E M E

9

The securities/debt instruments mentioned above could belisted or unlisted, secured or unsecured, rated or unratedand of varying maturities and other terms of issue. Thesecurities may be acquired through Initial Public Offerings(IPOs), secondary market operations, private placement, rightsoffer or negotiated deals. The Schemes may also enter intorepurchase and reverse repurchase obligations in allsecurities held by it as per guidelines/regulations applicableto such transactions.

Interest Rate Swap ( IRS)Interest Rate Swap ( IRS)Interest Rate Swap ( IRS)Interest Rate Swap ( IRS)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 sideand floating rate on the other.

Example: Suppose the Fund holds a fixed rate bond ofmaturity 5 years carrying a fixed interest rate (coupon) of6% p.a. payable half yearly. Such an investment runs the riskof depreciation if interest rates rise. To manage this risk, theFund can enter into an IRS with another market participant,here the Fund contracts to pay fixed rate, say 6.75% p.a.,and receive a floating rate (say overnight MIBOR). Thistransaction is done for a notional principal amount equal tothe value of the investment. By such a contract a fixed rateincome is offset by a fixed rate payment obligation leavingonly a floating rate income stream. Thus, without actuallyinvesting in a floating rate asset, the Fund starts earning afloating 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) MIBORNet 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.

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

E .E .E .E .E . What are the investment st rategies?What are the investment st rategies?What are the investment st rategies?What are the investment st rategies?What are the investment st rategies?

For the purpose of achieving the investment objective, theScheme will invest in a portfolio of Debt and Money Marketsecurities only maturing on or before maturity profile of theScheme.

The AMC has an internal policy for selection of assets of theportfolio. The portfolio is constructed taking into accountratings from different rating agencies, rating migration,credit premium over the price of a sovereign security, generaleconomic conditions and such other criteria. Such an internalpolicy from time to time lays down maximum/minimumexposure for different ratings, norms for investing in unratedpaper, liquidity norms, and so on. Through such norms, theScheme is expected to maintain a high quality portfolio andmanage credit risk well.

Investment in unrated debt securities will be made with theprior approval of the Board of the AMC. Such investmentswould be within the parameters approved by the Board ofthe Trustee. Where the proposed investment is not within

the parameters as mentioned above, approval of the Boardsof both the AMC and the Trustee will be taken before makingthe investment. Investment in unrated debt securities willbe made subject to prescribed SEBI Regulations.

Investments may be made in instruments, which, in theopinion of the Fund Manager, are of an acceptable creditrisk and chance of default is minimum. The Fund Managerwill generally be guided by, but not restrained by, the ratingsannounced by various rating agencies on the assets in theportfolio.

R isk Contro l Measures for investment s t rategyRisk Contro l Measures for investment s t rategyRisk Contro l Measures for investment s t rategyRisk Contro l Measures for investment s t rategyRisk Contro l Measures for investment s t rategy

The internal systems have all the SEBI limits incorporated.This ensures that all limits are tracked at the entry stageitself. The system has the capability to alert certain dealsthat require special attention in case they are beyond certainprescribed parameters. The deals then cannot proceed furtherwithout the approval of of the appropriate authority. Thuschecks is in place to ensure no breach of limit occurs.

FFFFF..... Fundamenta l a t t r ibutesFundamenta l a t t r ibutesFundamenta l a t t r ibutesFundamenta l a t t r ibutesFundamenta l a t t r ibutes

Following are the fundamental attributes of the scheme, interms of Regulation 18 (5A) of SEBI (MF) Regulations:

1. Type of the scheme

2. Investment Objective

3. Investment Pattern

4. Terms of Issue:

a. Liquidity provisions such as listing, repurchase,redemption.

b. Aggregate fees and expenses charged to thescheme.

c. Any safety net or guarantee provided.

In accordance with Regulation 18(15A) of the SEBI (MF)Regulations, the Trustees shall ensure that no change in thefundamental attributes of the Scheme(s) and the Plan(s) /Option(s) thereunder or the trust or fee and expensespayable or any other change which would modify theScheme(s) and the Plan(s) / Option(s) thereunder and affectthe interests of Unitholders is carried out unless:

A written communication about the proposed changeis sent 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 theMutual Fund is situated; and

The Unitholders are given an option for a period of 30days to exit at the prevailing Net Asset Value withoutany exit load

G .G .G .G .G . How wi l l the scheme benchmark i tsHow wi l l the scheme benchmark i tsHow wi l l the scheme benchmark i tsHow wi l l the scheme benchmark i tsHow wi l l the scheme benchmark i tsp e r f o r m a n c e ?p e r f o r m a n c e ?p e r f o r m a n c e ?p e r f o r m a n c e ?p e r f o r m a n c e ?

The performance of Kotak FMP 370 days Series 1 will bemeasured against CRISIL Composite Bond Fund Index. CRISILComposite Bond Fund Index being a widely used benchmark(for products with similar tenor / average maturity etc.) inthe market, the same has been selected as a standardbenchmark for the purpose of this Scheme.

The Trustee reserves right to change benchmark in futurefor measuring performance of the scheme.

H .H .H .H .H . Who manages the scheme?Who manages the scheme?Who manages the scheme?Who manages the scheme?Who manages the scheme?

Mr. Deepak Agarwal and Mr. Abhishek Bisen will be thefund managers for Kotak FMP 370 days Series 1

10

NAMENAMENAMENAMENAME AGEAGEAGEAGEAGE QUALIFICAQUALIFICAQUALIFICAQUALIFICAQUALIFICATIONSTIONSTIONSTIONSTIONS BUSINESS EXPERIENCEBUSINESS EXPERIENCEBUSINESS EXPERIENCEBUSINESS EXPERIENCEBUSINESS EXPERIENCE OTHER SCHEMES MANAGEDOTHER SCHEMES MANAGEDOTHER SCHEMES MANAGEDOTHER SCHEMES MANAGEDOTHER SCHEMES MANAGED

MrMrMrMrMr. Deepak. Deepak. Deepak. Deepak. DeepakAgrawalAgrawalAgrawalAgrawalAgrawal

27years

Post Graduate inCommerce,CharteredAccount,CompanySecretary andcurrently pursuingCFA.

Mr. Deepak Agrawal's career hasstarted from Kotak AMC.When hejoined the organization inDecember 2002 where he wasinitially in Research, Dealing andthen moved into FundMangement from November2006.

All Fixed Maturity Plans and IntervalPlans , Kotak Floater Long Term, KotakFloater Short Term Kotak Bond, KotakLiquid and Kotak Gilt.

29years

MrMrMrMrMr. Abhishek. Abhishek. Abhishek. Abhishek. AbhishekBisenBisenBisenBisenBisen

B. A. and MBA(Finance)

Mr. Abhishek Bisen has beenassociated with the company sinceOctober 2006 and his keyresponsibilities include fundmanagement of debt schemes.Prior to joining Kotak AMC,Abhishek was working withSecurities Trading Corporation OfIndia Ltd where he was looking atSales & Trading of Fixed IncomeProducts apart from doing PortfolioAdvisory. His earlier assignmentsalso include 2 years of merchantbanking experience with a leadingmerchant banking firm.

All Fixed Maturity Plans and IntervalPlans , Kotak Floater Long Term,Kotak Floater Short Term KotakBond, Kotak Liquid and Kotak GiltKotak Balance, Kotak Income Plus,Kotak Equity Arbitrage Fund.

I .I .I .I .I . What are the investment rest r ic t ions?What are the investment rest r ic t ions?What are the investment rest r ic t ions?What are the investment rest r ic t ions?What are the investment rest r ic t ions?

The 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 the Fund shall not borrow except to meet temporary liquidity needsof the Fund for the purpose of repurchase, redemption of Units or payment of interest or dividends to Unitholders,provided the Fund shall not borrow more than 20% of the net assets of the Scheme and the duration of such borrowingshall not exceed a period of six months or as may be permitted by the Regulations from time to time.

2. The Scheme may invest in another scheme, under the same AMC or any other mutual fund provided that the aggregateinterscheme investments made by all schemes under the same AMC or any other mutual fund shall not exceed 5% of thenet assets of the Fund or any other limit as prescribed by the Regulations from time to time. The AMC is not permittedby the Regulations to charge any investment management and advisory services fee on such investments.

3. Pending deployment of the funds of the Scheme in terms of the investment objective, the Fund can invest the funds ofthe Scheme in short term deposits of scheduled commercial banks as per the guidelines given in SEBI Circular no. SEBI/IMD/CIR No. 1/91171/07 dated April 16, 2007 and June 23, 2008.

4. The Scheme shall not make any investment in:

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

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

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

5. The Scheme shall not invest in any Fund of Funds Scheme and foreign securities

6. The Scheme shall not invest more than 15% of its Net Assets in debt instruments, including debentures issued by asingle issuer which are rated not below investment grade; such limit may be extended to 20% of the Net Assets of theScheme with the prior approval of the Board of the Trustee and the Board of the AMC;

7. The scheme shall not invest more than 30% of its net assets in money market instruments of an issuer; Provided thatsuch limit shall not be applicable for investments in Government securities, treasury bills and collateralized borrowingand lending obligations.

8. The Scheme shall not invest more than 10% of its Net Assets in unrated debt instruments, including debentures,(Irrespective of residual maturity period) issued by a single issuer and the total investment in such instruments shall notexceed 25% of the Net Assets of the scheme. All such investments shall be as per the parameters approved by the Boardsof the Trustee and the AMC.

9. Wherever investments are intended to be of a long-term nature, the securities shall be purchased or transferred in thename of the Fund, on account of the Scheme concerned.

11

10. Investments in Debentures shall be with respect to maturity period of the scheme and shall attract the investmentrestrictions as applicable for debt instruments as specified under Clause 1 and 1 A of Seventh Schedule to the Regulations.

11. The fund may engage in short selling in accordance with SEBI circular no MRD/DoP/SE/Dep/Cir- 14 /2007 dated December20, 2007 and from such date that SEBI may declare.

12. Transfer 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:

Such transfer is done at the prevailing market price for quoted instruments on spot basis; and

The securities so transferred is/are in conformity with the Investment objective of the scheme to which such transferhas been made.

Modifications, if any, in the Investment Restrictions on account of amendments to the Regulations shall supercede/overridethe provisions of the Trust Deed.

Investments by the AMC in the FundInvestments by the AMC in the FundInvestments by the AMC in the FundInvestments by the AMC in the FundInvestments by the AMC in the Fund

The AMC reserves the right to invest its own funds in the Scheme as may be decided by the AMC from time to time and inaccordance with SEBI Circular no. SEBI/IMD/CIR No. 10/22701/03 dated December 12, 2003 regarding minimum number ofinvestors in the Scheme/ Plan. Under the Regulations, the AMC is not permitted to charge any investment management andadvisory services fee on its own investment in the Scheme.

J .J .J .J .J . How has the scheme per formed?How has the scheme per formed?How has the scheme per formed?How has the scheme per formed?How has the scheme per formed?

This is a new scheme and does not have any performance track record.

12

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

This section provides details you need to know for investing in the scheme.

A .A .A .A .A . NEW FUND OFFER (NFO )NEW FUND OFFER (NFO )NEW FUND OFFER (NFO )NEW FUND OFFER (NFO )NEW FUND OFFER (NFO )

S c h e m e N a m eS c h e m e N a m eS c h e m e N a m eS c h e m e N a m eS c h e m e N a m e NFO Open On:NFO Open On:NFO Open On:NFO Open On:NFO Open On: NFO Closes On:NFO Closes On:NFO Closes On:NFO Closes On:NFO Closes On:

Kotak FMP 370 days Series 1 October 8, 2009 October 13, 2009

The AMC reserves the right to extend the closing date, subject to the condition that the New Fund Offer shall not be keptopen for more than maximum number of days permissible under Regulations. Any such extension shall be announced byway of a notice in one national newspaper.

New Fund Offer Pr ice:New Fund Offer Pr ice:New Fund Offer Pr ice:New Fund Offer Pr ice:New Fund Offer Pr ice: Rs. 10 per Unit.

This is the price per unit that the investors haveto pay to invest during the NFO.

Min imum Amount for App l i ca t ionMin imum Amount for App l i ca t ionMin imum Amount for App l i ca t ionMin imum Amount for App l i ca t ionMin imum Amount for App l i ca t ion Rs.5, 000/- and in multiples of Rs 10 for purchasein the NFO of schemein the NFO of schemein the NFO of schemein the NFO of schemein the NFO of scheme and switch-ins

Min imum TMin imum TMin imum TMin imum TMin imum Target amountarget amountarget amountarget amountarget amount The Fund seeks to collect a minimum subscription amountThis is the minimum amount required to operate the of Rs. 2,00,00,000/- (Rupees Two Crores Only), in the Newscheme and if this is not collected during the NFO period, Fund Offer of Kotak FMP 370 days Series 1then all the investors would be refunded the amountinvested without any return. However, if AMC fails torefund the amount within 6 weeks, interest as specified bySEBI (currently 15% p.a.) will be paid to the investors fromthe expiry of six weeks from the date of closure of thesubscription period.

Maximum Amount to be raised ( i fMaximum Amount to be raised ( i fMaximum Amount to be raised ( i fMaximum Amount to be raised ( i fMaximum Amount to be raised ( i f any) any) any) any) any) There is no upper limit on the total amount that may beThis is the maximum amount which can be collected collected. After the minimum subscription amount has beenduring the NFO period, as decided by the AMC. collected, allotment will be made to all valid applications.

Opt ions of feredOpt ions of feredOpt ions of feredOpt ions of feredOpt ions of fered The scheme has two options namely Dividend payout Optionand Growth Option

If the applicant does not indicate the choice of Option inthe Application Form, the Fund accepts the application asbeing for the Growth Option.

A l l o t m e n tA l l o t m e n tA l l o t m e n tA l l o t m e n tA l l o t m e n t Subject 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. TheTrustee reserves the right, at their discretion withoutassigning any reason thereof, to reject any application.Allotment will be completed within 30 (Thirty) days after theclosure of the New Fund Offer. In case of applicant whohave quoted their demat account, the units will be creditedto the demat account as per the depository account detailsas stated by the applicant in the application form. Allotmentof units and dispatch of allotment advice to FIIs will be subjectto RBI approval if required.

R e f u n dR e f u n dR e f u n dR e f u n dR e f u n d If application is rejected, full amount will be refunded within6 weeks of closure of NFO. If refunded later than 6 weeks,interest @ 15% p.a. for delay period will be paid and chargedto the AMC.

Div idend Po l i cyDiv idend Po l i cyDiv idend Po l i cyDiv idend Po l i cyDiv idend Po l i cy Growth Opt ion:Growth Opt ion:Growth Opt ion:Growth Opt ion:Growth Opt ion:

Under the Growth option, there will be no distribution ofincome and the return to investors will be only by way ofcapital gains, if any, through redemption at applicable NAVof Units held by them.

Div idend Opt ionDiv idend Opt ionDiv idend Opt ionDiv idend Opt ionDiv idend Opt ion

Under the Dividend option, the Trustee may at any timedecide to distribute by way of dividend, the surplus by wayof realised profit and interest, net of losses, expenses and

13

taxes, if any, to Unitholders if, in the opinion of the Trustee,such surplus is available and adequate for distribution. TheTrustee's decision with regard to such availability andadequacy of surplus, rate, timing and frequency ofdistribution shall be final. The Trustee may or may notdistribute surplus, even if available, by way of dividend.

Dividend will be paid on the number of units held by theunit holder on the record date as per the records of CAMS(the Registrar) and /or as per the records maintained bydepositories. The record date shall be announced in advance.

Dividend Payout Option: Unitholders will have the optionto receive payout of their dividend by way of dividend warrantor any other means which can be enchased or by way ofdirect credit into their account.

However, the Trustees reserve the right to introduce newoptions and / or alter the dividend payout intervals,frequency, including the day of payout.

Who can investWho can investWho can investWho can investWho can invest The following are eligible to apply for purchase of the Units:

This is an indicative list and you are requested to consult Resident Indian Adult Individuals, either singly or jointlyyour financial advisor to ascertain whether the scheme (not exceeding three).is suitable to your risk profile. Parents/Lawful guardians on behalf of Minors.

Companies, corporate bodies, registered in India.

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

Religious and Charitable Trusts under the provisions of11(5) of the Income Tax Act, 1961 read with Rule 17Cof the Income Tax Rules, 1962.

Trustees of private trusts authorised to invest in mutualfund schemes under their trust deeds.

Partner(s) of Partnership Firms.

Association of Persons or Body of Individuals, whetherincorporated or not.

Hindu Undivided Families (HUFs).

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

Non-Resident Indians/Persons of Indian origin residentabroad (NRIs) on full repatriation or non-repatriation basis.

Other Mutual Funds registered with SEBI.

Foreign Institutional Investors (FIIs) registered with SEBI.

International Multilateral Agencies approved by theGovernment of India.

Army/Navy/Air Force, Para-Military Units and othereligible institutions.

Scientific and Industrial Research Organizations.

Provident/Pension/Gratuity and such other Funds as andwhen permitted to invest.

Universities and Educational Institutions.

Other schemes of Kotak Mahindra Mutual Fund may,subject to the conditions and limits prescribed in theSEBI Regulations and/or by the Trustee, AMC or Sponsor,subscribe to the Units under the Scheme.

The list given above is indicative and the applicable law, ifany, shall supersede the list.

Where can you submit the f i l led up appl icat ions.Where can you submit the f i l led up appl icat ions.Where can you submit the f i l led up appl icat ions.Where can you submit the f i l led up appl icat ions.Where can you submit the f i l led up appl icat ions. Applications can be made either by way of a "RegularApplication or Transaction slip" along with a cheque/DD orfund transfer instruction. The Fund may introduce other newer

Ongoing Offer PeriodOngoing Offer PeriodOngoing Offer PeriodOngoing Offer PeriodOngoing Offer Period The scheme is a close ended scheme. Investors can onlyThis is the date from which the scheme will reopen for invest during NFO. After listing of the scheme , units ofsubscriptions/redemptions after the closure of the the scheme can be traded on stock exchangeNFO period.

Ongoing pr ice for subscr ipt ion (purchase)Ongoing pr ice for subscr ipt ion (purchase)Ongoing pr ice for subscr ipt ion (purchase)Ongoing pr ice for subscr ipt ion (purchase)Ongoing pr ice for subscr ipt ion (purchase) Not Applicable/ sw i t ch - in/ sw i t ch - in/ sw i t ch - in/ sw i t ch - in/ sw i t ch - in

Ongoing pr ice for redemption (sale) /switch outsOngoing pr ice for redemption (sale) /switch outsOngoing pr ice for redemption (sale) /switch outsOngoing pr ice for redemption (sale) /switch outsOngoing pr ice for redemption (sale) /switch outs On maturity the redemption will be at the applicable NAV.(to other schemes/plans of the Mutual Fund) by(to other schemes/plans of the Mutual Fund) by(to other schemes/plans of the Mutual Fund) by(to other schemes/plans of the Mutual Fund) by(to other schemes/plans of the Mutual Fund) byinve s to r s .i n ve s to r s .i n ve s to r s .i n ve s to r s .i n ve s to r s .

This is the price you will receive for redemptions/switch outs.

Example: If the applicable NAV is Rs. 10, exit load is 2%then redemption price will be:

Rs. 10* (1-0.02) = Rs. 9.80

Cut off t iming for subscr ipt ions/ redemptions/Cut off t iming for subscr ipt ions/ redemptions/Cut off t iming for subscr ipt ions/ redemptions/Cut off t iming for subscr ipt ions/ redemptions/Cut off t iming for subscr ipt ions/ redemptions/ Not Applicable, all units of the scheme shall be redeemeds w i t c h e ss w i t c h e ss w i t c h e ss w i t c h e ss w i t c h e s on maturity.

This is the time before which your application (completein all respects) should reach the official points of acceptance.

Where can the appl icat ions for purchase/Where can the appl icat ions for purchase/Where can the appl icat ions for purchase/Where can the appl icat ions for purchase/Where can the appl icat ions for purchase/ Not Applicableredempt ion switches be submit ted?redempt ion switches be submit ted?redempt ion switches be submit ted?redempt ion switches be submit ted?redempt ion switches be submit ted?

Min imum amount for purchase /Min imum amount for purchase /Min imum amount for purchase /Min imum amount for purchase /Min imum amount for purchase / Not Applicable

14

methods of application which will be notified as and whenintroduced. Investors should complete the Application Formand deliver it along with a cheque/draft (i.e. in case of "RegularApplication") or fund transfer instructions at any of the officialpoints of acceptance of transactions listed below,

Offices of the AMC

The addresses of the Official points of acceptance oftransactions are given on the back cover of this document

How to App lyHow to App lyHow to App lyHow to App lyHow to App ly Application form and Key Information Memorandum maybe obtained from the offices of AMC or Investor ServicesCenters of the Registrar or distributors or downloaded fromwww.Kotakmutual.com. Investors are also advised to referto Statement of Additional Information before submittingthe application form.

All cheques and drafts should be crossed "Account Payee"Account Payee"Account Payee"Account Payee"Account PayeeOnly"Only"Only"Only"Only" and drawn in favour "Kotak FMP 370 days Series"Kotak FMP 370 days Series"Kotak FMP 370 days Series"Kotak FMP 370 days Series"Kotak FMP 370 days Series1 "1 "1 "1 "1 "

Please refer to the SAI and Application form for theinstructions.

L i s t i ngL i s t i ngL i s t i ngL i s t i ngL i s t i ng The units of the scheme will be listed on NSE on allotment.

Special Products / facilities available during the NFO Systematic Investment Plan, Systematic Transfer Plan,Systematic Withdrawal Plan are not available under the scheme

The policy regarding reissue of repurchased units, Not Applicableincluding the maximum extent, the manner of reissue,the entity (the scheme or the AMC) involved in the same.

Restrictions, if any, on the right to freely retain or dispose Units held by way of an Account Statement cannot beof units being offered. transferred.

Units held in Demat form are transferable in accordancewith the provisions of The Depositories Act and Bye lawsand business rules of depositories.

B .B .B .B .B . ONGOING OFFER DETONGOING OFFER DETONGOING OFFER DETONGOING OFFER DETONGOING OFFER DETA I LSA I L SA I L SA I L SA I L S

15

redempt ion / sw i t chesredempt ion / sw i t chesredempt ion / sw i t chesredempt ion / sw i t chesredempt ion / sw i t ches

Specia l Products avai lableSpecia l Products avai lableSpecia l Products avai lableSpecia l Products avai lableSpecia l Products avai lable Systematic Investment Plan, Systematic Transfer Plan,Systematic Withdrawal Plan are not available under thescheme

Accoun t s S t a tement sAccoun t s S t a tement sAccoun t s S t a tement sAccoun t s S t a tement sAccoun t s S t a tement s For normal transact ions (other than SIP/STP/SWP)For normal transact ions (other than SIP/STP/SWP)For normal transact ions (other than SIP/STP/SWP)For normal transact ions (other than SIP/STP/SWP)For normal transact ions (other than SIP/STP/SWP)dur ing NFO and repurchase:dur ing NFO and repurchase:dur ing NFO and repurchase:dur ing NFO and repurchase:dur ing NFO and repurchase:

The AMC shall issue to the investor whose application(other than SIP/STP/SWP) has been accepted, an accountstatement specifying the number of units allottedwithin 30 (Thirty)days from the date of the transaction.The account statements will be sent to Unitholders inaccordance with SEBI circular dated November 20, 2006.An Account Statement may be sent to a Unitholderusing e-mail. Account Statements to be issued in lieuof Unit Certificates under the Scheme are non-transferable. These Account Statements shall not beconstrued as proof of title and are only computerprinted statements, indicating the details of transactionsunder the Scheme concerned during the relevantfinancial year and giving the closing balance of Unitsfor the information of Unitholders. The Trustee mayissue a Unit Certificate in lieu of Account Statement inrespect of Units held, to those Unitholders who requestfor the same within six weeks of the receipt of request,at the cost and expense of the Unitholder or otherwise,as may be decided from time to time. Any discrepancyin the Account Statement / Unit Certificate should bebrought to the notice of the Fund/AMC immediately.Contents of the Account Statement / Unit Certificatewill be deemed to be correct if no error is reportedwithin 30 days from the date of Account Statement /Unit Certificate. Further, the Trustee also reserves theright to issue, on an ongoing basis, in lieu of AccountStatements, Transaction Confirmation Slips, thereinindicating the price and the Units debited or creditedto the Account of the Investor/Unitholder, along withthe closing balance of his Account. Under this system,a periodical statement of holdings of the Investor inthe relevant Scheme of KMMF will be given.

For those unitholders who have provided an e-mailaddress, the AMC will send the account statement bye-mail.

The unitholder may request for a physical accountstatement by writing/calling the AMC/ISC/R&T. The unitholder can write to any of the AMC office or call the callcentre (Toll Free Number) and come in person to any ofthe ISC of the AMC / RTA for physical account statement.AMC / RTA would do the basic verification of identity ofthe unitholder and issue / mail the account statementas per the unit holder's request.

In case of unit holder who have given demat accountdetails, the transfer of units shown to their credit asper the statement of account issued by depositoriesshall be final.

Annua l Account S ta tement :Annua l Account S ta tement :Annua l Account S ta tement :Annua l Account S ta tement :Annua l Account S ta tement :

The Mutual Funds shall provide the Account Statementto the Unitholders who have not transacted duringthe last six months prior to the date of generation ofaccount statements. The Account Statement shallreflect the latest closing balance and value of the Unitsprior to the date of generation of the accountstatement.

The account statements in such cases may be generated

16

and issued along with the Portfolio Statement orAnnual Report of the Scheme.

Alternately, soft copy of the account statements shallbe mailed to the investors' e-mail address, instead ofphysical statement, if so mandated.

D i v i d e n dD i v i d e n dD i v i d e n dD i v i d e n dD i v i d e n d The dividend warrants shall be dispatched to theunitholders within 30 days of the date of declaration ofthe dividend.

Dividend may also be paid to the Unitholder in any othermanner viz., through ECS, Direct Credit or NEFT in to Bankaccount, RTGS facility offered RBI or through Banker'scheque, etc as the AMC may decide, from time to time forthe smooth and efficient functioning of the Scheme.

R e d e m p t i o nR e d e m p t i o nR e d e m p t i o nR e d e m p t i o nR e d e m p t i o n Investors will not be able to redeem their units during thetenor of the Scheme directly from the fund and there willbe redemption by the fund only on the maturity of theScheme. The redemption proceeds shall be dispatched tothe unit holders within 10 working days from the date ofmaturity of the Scheme.

Redemption proceeds will be paid by cheques, marked"Account Payee only" and drawn in the name of the soleholder/first-named holder (as determine by the records ofthe Registrar/Depositories). The Bank Name and No., asspecified in the Registrar's/Depositories records, will bementioned in the cheque, which will be payable at par atall the cities designated by the Fund from time to time. Ifthe Unitholder resides in any other city, he will be paid bya Demand Draft payable at the city of his residence.

Redemption cheques will generally be sent to theUnitholder's address, (or, if there is more than one jointholder, the address of the first-named holder) as per theRegistrar's/Depositories records, by courier. The paymentsto unitholders as per the Depository Records will besufficient discharge of its obligations by the AMC. Anyfurther claims shall not be entertained by the AMC.

Redemption proceeds may also be paid to the Unitholderin any other manner viz., through ECS, Direct Credit orNEFT in to Bank account, RTGS facility offered RBI orthrough Banker's cheque, etc as the AMC may decide,from time to time for the smooth and efficient functioningof the Scheme.

Delay in payment of redemption /Delay in payment of redemption /Delay in payment of redemption /Delay in payment of redemption /Delay in payment of redemption / The Asset Management Company shall be liable to payrepurchase p roceedsrepurchase p roceedsrepurchase p roceedsrepurchase p roceedsrepurchase p roceeds interest to the unitholders at such rate as may be specified

by SEBI for the period of such delay (presently @ 15% perannum).

Bank A/c Detai lsBank A/c Detai lsBank A/c Detai lsBank A/c Detai lsBank A/c Detai ls As per the directives issued by SEBI it is mandatory for aninvestor to declare his/her bank account number. The Bankaccount details as mentioned with the Depository shouldbe mentioned in case investors who hold units in dematform. For investors investing through the accountstatement mode, the bank details as mentioned on theapplication form shall be treated as final for all actions,relating to his account. To safeguard the interest ofUnitholders from loss or theft of their refund orders/redemption cheques, investors are requested to providetheir bank details in the Application Form.

C. PER IODIC D ISCLOSURESC. PER IODIC D ISCLOSURESC. PER IODIC D ISCLOSURESC. PER IODIC D ISCLOSURESC. PER IODIC D ISCLOSURES

Net Asset VNet Asset VNet Asset VNet Asset VNet Asset Va luea luea luea luea lue The Mutual Fund shall endeavor to update the Net assetThis is the value per unit of the scheme on a particular day. value of the scheme on every business day on AMFI's websiteYou can ascertain the value of your investments by www.amfiindia.com by 9.00 p.m. The NAVs shall also bemultiplying the NAV with your unit balance. updated on the website of the Mutual Fund

www.kotakmutual.com and will be released in twonewspapers for publication.

Half yearly Disclosures: Portfol io / FinancialHalf yearly Disclosures: Portfol io / FinancialHalf yearly Disclosures: Portfol io / FinancialHalf yearly Disclosures: Portfol io / FinancialHalf yearly Disclosures: Portfol io / Financial The unaudited financial results will be published throughR e s u l t sR e s u l t sR e s u l t sR e s u l t sR e s u l t s an advertisement in one English daily newspaper circulatingThis is a list of securities where the corpus of the scheme in the whole of India and in a newspaper published in theis currently invested. The market value of these language of the region where the Registered Office of theinvestments is also stated in portfolio disclosures. Trustee is situated, before the expiry of one month from

the close of each half year, that is the 31st of March andthe 30th of September. The same will also be posted onthe website of www.kotakmutual.com and will be sent toAMFI for posting on its website www.amfiindia.com.

Hal f YHal f YHal f YHal f YHal f Year ly Resul tsear ly Resul tsear ly Resul tsear ly Resul tsear ly Resul ts A complete statement of the portfolio of the Scheme willeither be sent to all Unitholders, or published by way of anadvertisement, before the expiry of one month from theclose of each half year, that is the 31st of March and the30th 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 be postedon the website of the www.kotakmutual.com

Annua l Repor tAnnua l Repor tAnnua l Repor tAnnua l Repor tAnnua l Repor t Scheme wise Annual Report or an abridged summarythereof shall be mailed to all unitholders within six monthsfrom the date of closure of the relevant accounts year i..e.31st March each year.

Assoc ia te TAssoc ia te TAssoc ia te TAssoc ia te TAssoc ia te Transac t ionsransac t ionsransac t ionsransac t ionsransac t ions Please refer to Statement of Additional Information (SAI).

TTTTTaxa t ionaxa t ionaxa t ionaxa t ionaxa t ion

The information is provided for general information only.However, in view of the individual nature of theimplications, each investor is advised to consult his or herown tax advisors/authorised dealers with respect to thespecific amount of tax and other implications arising outof his or her participation in the schemes.

Note: The above table is indicative; the actual ratesapplicable to each unitholder depend on the specific taxstatus of the unitholder. For further details on taxationplease refer to the clause on Taxation in the SAI. Any taxliability on account of change in tax treatment with respectto dividend distribution tax, shall be borne by investor

Inves tor se rv i cesInves tor se rv i cesInves tor se rv i cesInves tor se rv i cesInves tor se rv i ces Mr. R. Chandrasekaran

Kotak Mahindra Asset Management Company Limited

6TH Floor Kotak Towers, Building No 21, Infinity Park, OffWestern Express Highway, Goregaon - Mulund Link Road,Malad (East) , Mumbai 400067

Phone: 66384400; Fax: 6638 4455

e-mail: mutual@kotak.com

17

Res ident InvestorsRes ident InvestorsRes ident InvestorsRes ident InvestorsRes ident Investors Mutua l FundMutua l FundMutua l FundMutua l FundMutua l Fund( d i v i d e n d( d i v i d e n d( d i v i d e n d( d i v i d e n d( d i v i d e n ddist r ibut ion tax)d is t r ibut ion tax)d is t r ibut ion tax)d is t r ibut ion tax)d is t r ibut ion tax)

TTTTTax onax onax onax onax on NIL Nil (please refer to theD i v i d e n dD i v i d e n dD i v i d e n dD i v i d e n dD i v i d e n d note below)

Capi ta l Ga ins :Capi ta l Ga ins :Capi ta l Ga ins :Capi ta l Ga ins :Capi ta l Ga ins :

Long Term 10/20 % Nil(please refer to thenote below)

Short Term 30 %

18

D .D .D .D .D . C O M P U TC O M P U TC O M P U TC O M P U TC O M P U TAAAAAT I O N O F N AT I O N O F N AT I O N O F N AT I O N O F N AT I O N O F N AVVVVV

The NAV of the Units of the Scheme will be computed bydividing the net assets of the Scheme by the number ofUnits outstanding on the valuation date.

The Fund shall value its investments according to thevaluation norms, as specified in the Eighth Schedule of theRegulations, or such guidelines / recommendations as maybe specified by SEBI/AMFI from time to time. The broadvaluation norms are detailed in the Statement of AdditionalInformation.

NAV of Units under the Scheme will be calculated as shownbelow:

NAV for the Scheme and the repurchase prices of the Unitswill be calculated and announced at the close of eachBusiness Day. The NAV shall be computed upto four decimals

Computation of NAV will be done after taking into accountdividends declared, if any, and the distribution tax thereon,if applicable. The income earned and the profits realized inrespect of the Units remain invested and are reflected in theNAV of the Units.

Market or Fair Value ofMarket or Fair Value ofMarket or Fair Value ofMarket or Fair Value ofMarket or Fair Value of Current assets Current assets Current assets Current assets Current assets Current Liabilities and Current Liabilities and Current Liabilities and Current Liabilities and Current Liabilities andScheme’Scheme’Scheme’Scheme’Scheme’s investments +s investments +s investments +s investments +s investments + including Accrued – provisions including including Accrued – provisions including including Accrued – provisions including including Accrued – provisions including including Accrued – provisions including

IncomeIncomeIncomeIncomeIncome accrued expenses accrued expenses accrued expenses accrued expenses accrued expenses

No. of Units outstanding under the Scheme/Option.No. of Units outstanding under the Scheme/Option.No. of Units outstanding under the Scheme/Option.No. of Units outstanding under the Scheme/Option.No. of Units outstanding under the Scheme/Option.NAV =NAV =NAV =NAV =NAV =

V . F E E S & E X P E N S E S

19

Weekly Average Net Assets (Rs . )Weekly Average Net Assets (Rs . )Weekly Average Net Assets (Rs . )Weekly Average Net Assets (Rs . )Weekly Average Net Assets (Rs . )

First 100 crores 2.25%

Next 300 crores 2.00%

Next 300 crores 1.75%

Balance Assets 1.50%

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(2).

Week ly Average Net AssetsWeek ly Average Net AssetsWeek ly Average Net AssetsWeek ly Average Net AssetsWeek ly Average Net Assets F e e sF e e sF e e sF e e sF e e soutstanding in each account ingoutstanding in each account ingoutstanding in each account ingoutstanding in each account ingoutstanding in each account ing cha rgeab l echa rgeab l echa rgeab l echa rgeab l echa rgeab l eyear (Rs. )year (Rs. )year (Rs. )year (Rs. )year (Rs. )

First 100 crores 1.25%On Balance Assets 1.00%

Listing fees shall be a permissible expense to be chargedunder Regulation 52(4)

C. Load s t ructureC. Load s t ructureC. Load s t ructureC. Load s t ructureC. Load s t ructure

Load is an amount which is paid by the investor to subscribeto the units or to redeem the units from the scheme. Thisamount is used by the AMC to pay commissions to thedistributor and to take care of other marketing and sellingexpenses. Load amounts are variable and are subject tochange from time to time. For the current applicablestructure, please refer to the website ofwww.kotakmutual.com or may call at 1800-22-2626 or yourdistributor.

For Kotak FMP 370 days Ser ies 1For Kotak FMP 370 days Ser ies 1For Kotak FMP 370 days Ser ies 1For Kotak FMP 370 days Ser ies 1For Kotak FMP 370 days Ser ies 1

Exit Load: Ni lExit Load: Ni lExit Load: Ni lExit Load: Ni lExit Load: Ni l

Investors may obtain information on loads on any BusinessDay by calling the office of the AMC or any of the InvestorService Centers. Information on applicability of loads willalso be provided in the Account Statement.

All loads including Contingent Deferred Sales Charge(CDSC) for the Scheme shall be maintained in a separateaccount and may be utilised towards meeting the sellingand distribution expenses. Any surplus in this account maybe credited to the scheme, whenever felt appropriate by theAMC.

The investor is requested to check the prevailing loadstructure of the scheme before investing.

For any change in load structure AMC will issue anaddendum and display it on the website/Investor ServiceCentres.

This section outlines the expenses that will be charged tothe scheme.

A .A .A .A .A . New Fund Offer (NFO) expensesNew Fund Offer (NFO) expensesNew Fund Offer (NFO) expensesNew Fund Offer (NFO) expensesNew Fund Offer (NFO) expenses

These expenses are incurred for the purpose of variousactivities related to the NFO like sales and distribution feespaid marketing and advertising, registrar expenses, printingand stationary, bank charges etc.

The AMC shall bear the sales, marketing and such otherexpenses connected with sales and distribution of schemeduring the new fund offer.

B .B .B .B .B . Annua l scheme recur r ing expensesAnnua l scheme recur r ing expensesAnnua l scheme recur r ing expensesAnnua l scheme recur r ing expensesAnnua l scheme recur r ing expenses

These are the fees and expenses for operating the scheme.These expenses include Investment Management andAdvisory Fee charged by the AMC, Registrar and TransferAgents' fee, marketing and selling costs etc. as given in thetable below:

The AMC has estimated that the following percentage ofthe weekly average net assets of the scheme will be chargedto the scheme as expenses. For the actual current expensesbeing charged, the investor should refer to the website ofthe mutual fund.

For Kotak FMP 370 days Series 1:For Kotak FMP 370 days Series 1:For Kotak FMP 370 days Series 1:For Kotak FMP 370 days Series 1:For Kotak FMP 370 days Series 1:

Descr ipt ionDescr ipt ionDescr ipt ionDescr ipt ionDescr ipt ion (% per annum of dai ly(% per annum of dai ly(% per annum of dai ly(% per annum of dai ly(% per annum of dai lyaverage net assets)average net assets)average net assets)average net assets)average net assets)

Investment Management and AdvisoryServices Fees payable to AMC 1.00Trustee Fees 0 .05Service Tax on Management& TrusteeFees 0 .05Custodian Fees 0 .05Marketing and Selling Expense(incl. Agents commission) 0 .85Registrar and Transfer Agent Fees 0 .10Other Operational Expensesattributable to the scheme, includinglisting fees 0 .15TTTTTotal Annual Recurr ing Expensesotal Annual Recurr ing Expensesotal Annual Recurr ing Expensesotal Annual Recurr ing Expensesotal Annual Recurr ing Expenses(Est imated)(Est imated)(Est imated)(Est imated)(Est imated) 2 .252 .252 .252 .252 .25

These estimates are made in good faith by the Investment Managerand are subject to change, both inter se and as an increase ordecrease in the estimated total annual recurring expenses. Thoughthe Investment Manager will make efforts to keep the recurringexpenses to the minimum, actual expenses under any head and/ or the total expenses may be more or less than the estimates. TheInvestment Manager retains the right to charge the actual expensesto the Fund, however the expenses charged will not exceed thestatutory limit 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 of the Scheme (including investmentand advisory fees) will be subject to the following maximumlimits (as a percentage of Weekly Average Net Assets) as perRegulation 52(6).

Expenses over and above the permitted limit under theapplicable Regulations will be borne by the AMC.

20

V I . R I G H T S O F U N I T H O L D E R S

Please refer to SAI for details.

21

VII. PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OFINSPECTIONS OR INVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN

TAKEN OR IS IN THE PROCESS OF BEING TAKEN BY ANY REGULATORYAUTHORITY

SEB I Requ i rementsSEB I Requ i rementsSEB I Requ i rementsSEB I Requ i rementsSEB I Requ i rements

Details of all monetary penalties imposed and/ or action taken during the last three years orpending with any financial regulatory body or governmental authority, against Sponsor(s) and/or the AMC and/ or the Board of Trustees /Trustee Company; for irregularities or for violations inthe financial services sector, or for defaults with respect to share holders or debenture holdersand depositors, or for economic offences, or for violation of securities law.

Details of all enforcement actions taken by SEBI in the last three years and/ or pending with SEBIfor the violation of SEBI Act, 1992 and Rules and Regulations framed there under includingdebarment and/ or suspension and/ or cancellation and/ or imposition of monetary penalty/adjudication/enquiry proceedings, if any, to which the Sponsor(s) and/ or the AMC and/ or theBoard of Trustees /Trustee Company and/ or any of the directors and/ or key personnel (especiallythe fund managers) of the AMC and Trustee Company were/ are a party

Any pending material civil or criminal litigation incidental to the business of the Mutual Fund towhich the Sponsor(s) and/ or the AMC and/ or the Board of Trustees /Trustee Company and/ orany of the directors and/ or key personnel are a party

Any deficiency in the systems and operations of the Sponsor(s) and/ or the AMC and/ or theBoard of Trustees/Trustee Company which SEBI has specifically advised to be disclosed in the SID,or which has been notified by any other regulatory agency

R e s p o n s eR e s p o n s eR e s p o n s eR e s p o n s eR e s p o n s e

Nil

Nil

Nil

NIl

Notwithstanding anything conta ined in th is Scheme Informat ion Document, the prov is ions of the SEBINotwithstanding anything conta ined in th is Scheme Informat ion Document, the prov is ions of the SEBINotwithstanding anything conta ined in th is Scheme Informat ion Document, the prov is ions of the SEBINotwithstanding anything conta ined in th is Scheme Informat ion Document, the prov is ions of the SEBINotwithstanding anything conta ined in th is Scheme Informat ion Document, the prov is ions of the SEBI(Mutual Funds) Regulations, 1996 and the guidel ines there under shal l be appl icable.(Mutual Funds) Regulations, 1996 and the guidel ines there under shal l be appl icable.(Mutual Funds) Regulations, 1996 and the guidel ines there under shal l be appl icable.(Mutual Funds) Regulations, 1996 and the guidel ines there under shal l be appl icable.(Mutual Funds) Regulations, 1996 and the guidel ines there under shal l be appl icable.

Note: The Scheme under this Scheme information Document was approved by the Trustee through resolution passed bycirculation on April 1, 2009.

OFFICIAL COLLECTION CENTRES (For New Fund Offer)OFFICIAL COLLECTION CENTRES (For New Fund Offer)OFFICIAL COLLECTION CENTRES (For New Fund Offer)OFFICIAL COLLECTION CENTRES (For New Fund Offer)OFFICIAL COLLECTION CENTRES (For New Fund Offer)

CAMS, Registrar and TCAMS, Registrar and TCAMS, Registrar and TCAMS, Registrar and TCAMS, Registrar and Transfer Agent to Kotak Mutual Fund will be the ofransfer Agent to Kotak Mutual Fund will be the ofransfer Agent to Kotak Mutual Fund will be the ofransfer Agent to Kotak Mutual Fund will be the ofransfer Agent to Kotak Mutual Fund will be the official point of accepantance for electrficial point of accepantance for electrficial point of accepantance for electrficial point of accepantance for electrficial point of accepantance for electronic transaction ronic transaction ronic transaction ronic transaction ronic transaction receivedeceivedeceivedeceivedeceivedthrough specified banks, Financial Institutions with whom Kotak Mahindra Mutual Fund has entered or may enter into specific arrangementthrough specified banks, Financial Institutions with whom Kotak Mahindra Mutual Fund has entered or may enter into specific arrangementthrough specified banks, Financial Institutions with whom Kotak Mahindra Mutual Fund has entered or may enter into specific arrangementthrough specified banks, Financial Institutions with whom Kotak Mahindra Mutual Fund has entered or may enter into specific arrangementthrough specified banks, Financial Institutions with whom Kotak Mahindra Mutual Fund has entered or may enter into specific arrangementfor purchase/sale/switch of units and secured internet s ite operated by Kotak Mahindra Mutual Fundfor purchase/sale/switch of units and secured internet s ite operated by Kotak Mahindra Mutual Fundfor purchase/sale/switch of units and secured internet s ite operated by Kotak Mahindra Mutual Fundfor purchase/sale/switch of units and secured internet s ite operated by Kotak Mahindra Mutual Fundfor purchase/sale/switch of units and secured internet s ite operated by Kotak Mahindra Mutual Fund

AhmedabadAhmedabadAhmedabadAhmedabadAhmedabad: 9,10,11- 2nd floor, Siddhi Vinayak complex,Shivranjani Cross Roads, Satellite, Ahmedabad - 380015 Bangalor Bangalor Bangalor Bangalor Bangaloreeeee:2nd Fl., Umiya Landmark10/7, Lavelle Road, Bangalore - 560001 Chenna i Chenna i Chenna i Chenna i Chenna i: 1st Floor, Eldorado Building, 112, NungambakkamHigh Road, Chennai - 600034 HyderabadHyderabadHyderabadHyderabadHyderabad: Jade Arcade, 102A, 1ST Floor, 126,MG Road, Near Paradise Circle, Hyderabad- 500003 Kolkata Kolkata Kolkata Kolkata Kolkata: 1st Floor, Horizon, 57 Chowranghee Road, Kolkata - 700 071 MumbaiMumbaiMumbaiMumbaiMumbai: 6th Floor, Kotak Infinity, BuildingNo. 21, Infinity Park, Off. Western Express Highway, Gen.A.K. Vaidya Marg, Malad (E) Mumbai - 400 097. New DelhiNew DelhiNew DelhiNew DelhiNew Delhi:12-14, Upper Ground Floor, Ambadeep Building, 14, Kasturba Gandhi Marg, New Delhi - 110 001 PunePunePunePunePune: Yeshwant, Officeno 31, 3rd Floor, Plot No 37/10 B, Opposite Lane no 9, Prabhat Road, Erandwana, Pune – 411004.

KMAMC AUTHORISED COLLECT ION CENTRESKMAMC AUTHORISED COLLECT ION CENTRESKMAMC AUTHORISED COLLECT ION CENTRESKMAMC AUTHORISED COLLECT ION CENTRESKMAMC AUTHORISED COLLECT ION CENTRES