Registrar. Kotak Mahindra Mutual Fund

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2 Kotak Mahindra Mutual Fund 27 BKC, C-27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai Tel: mutual@kotak.com Website : assetmanagement.kotak.com BOARD OF DIRECTORS Kotak Mahindra Trustee Company Limited CIN: U65990MH1995PLC (Trustee to Kotak Mahindra Mutual Fund) Mr. Amit Desai - Chairman Mr. Arun Palkar Mr. Chandrashekhar Sathe Mr. Balan Wasudeo Mr. Noshir Dastur INVESTOR RELATIONS OFFICER Ms. Sushma Mata Tel: mutual@kotak.com Registrar Computer Age Management Services Pvt. Limited No 178/10, M G R Salai, Nungambakkam, Chennai Tel: enq_k@camsonline.com BOARD OF DIRECTORS Kotak Mahindra Asset Management Company Limited CIN: U65991MH1994PLC (Investment Manager to Kotak Mahindra Mutual Fund) Mr. Uday S. Kotak - Chairman Mr. Nilesh Shah - Managing Director Mr. Sukant S. Kelkar Mr. C. Jayaram Mr. Bipin Shah Mr. Gaurang Shah Mr. Nalin Shah M. Mr. Sanjiv Malhotra AUDITORS Price Waterhouse Chartered Accountants 1

3 report of the Trustee Kotak Mahindra Mutual Fund 27 BKC, C-27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai Trustee Report We have pleasure in presenting the Nineteenth Annual Report of the Schemes of Kotak Mahindra Mutual Fund ( the Fund ) for the year ended March 31, 2017, along with the audited financial statements for that period. 1. Scheme Performance, Future Outlook and Operations of the Schemes Investors are required to refer to page no 94 to 113, for Key performance statistics of the schemes. Outlook on the Equity Markets FY17 witnessed some key events like the passage of the Goods and Services Tax Bill (GST) in India, Britain voting in favor of a Brexit, the demonetization drive of the Indian Government to combat black money and corruption, the election of Donald Trump as the new US President, the appointment of Dr. Urjit Patel as the new RBI Governor, the appointment of a new Monetary Policy Committee (MPC) in India for the formulation of monetary policy and the US Federal Reserve hiking rates in Dec 16. Outlook on the Debt Markets On the fixed income front, expectations of monetary easing by the Reserve bank of India (RBI) led to easing across the yield curve. RBI changed its Monetary Policy stance to neutral from accommodative. The 10 year benchmark Gilt yield ended the year FY 17 at 6.68% from 7.46% at the start of the financial year. In FY17 the benchmark repo rate was cut by 50 bps to 6.25%. It was also heartening to note that the government continued to adhere to fiscal prudence by targeting 3.0% fiscal deficit for FY18. Global markets painted a bleak picture through the last year. Liquidity injection measures by Central Banks continued in most developed economies. Deflationary expectations, declining global commodity prices, negative treasury yields in most parts of Euro zone, Japan, etc. were some of the key focus points last year. The US Fed has hiked rate by 50 bps and seems committed to gradually increase rates going forward in com. A brief commentary on the operations and performance of our schemes are as follows: Kotak Select Focus Fund: Kotak Select Focus outperformed its benchmark in FY This was driven by both sector allocation as well as positive selection of stocks. The fund has consistently delivered better than benchmark returns since inception. Kotak Opportunities: Kotak Opportunities outperformed its benchmark in FY This was largely on account of positive selection of stocks. The scheme has also outperformed the benchmark in the period since inception. Kotak Midcap Scheme: Despite marginal underperformance against the benchmark during the year under the review, the fund has outperformed its benchmark since inception owing to the positive sector and stock selection. Kotak Emerging Equity Scheme: The scheme has outperformed its benchmark in FY This was on account of positive selection of sectors and stocks. The returns since inception till date have exceeded benchmark returns. Kotak Mahindra 50 Unit Scheme: The scheme has outperformed its benchmark in FY This was largely on account of positive selection of stocks. The returns since inception till date have also been higher than the benchmark. Kotak Classic Equity: The scheme has outperformed its benchmark in FY 2017 on account of positive selection of sectors and stocks. The fund has marginally underperformed its benchmark since inception. Kotak Mahindra Balance Unit Scheme 99: The scheme has outperformed its benchmark in FY The scheme has been in inception much before the formation of its benchmark and therefore its returns during this period cannot be accurately compared with the benchmark. Kotak Tax Saver: The scheme has outperformed its benchmark in FY 2017 on account of positive selection of sectors and stocks. The returns since inception till date have also been higher than the benchmark returns. Kotak Equity Arbitrage Scheme: The scheme outperformed its benchmark in FY The scheme has been in inception much before the formation of its benchmark and therefore its returns during this period cannot be accurately compared with the benchmark. Kotak Equity Savings Fund: Despite underperformance against its benchmark in FY 2017, the fund has delivered better than benchmark returns since inception till date. Kotak Infrastructure & Economic Reform Fund: The scheme has outperformed its benchmark during FY 2017 and in period since inception. This can be attributed to the portfolio strategy of having invested in a down cycle in flow related companies exhibiting consistently high return ratios. Kotak World Gold Fund: The fund has underperformed its benchmark in FY This is attributable to the underperformance of the underlying fund to its benchmark. Kotak World Gold Fund has outperformed its benchmark in period since inception. Kotak US Equity Fund: The fund underperformed its benchmark in FY 2017 and in period since inception. This is attributable to underperformance in the underlying fund. Kotak Asset Allocator Fund: The scheme has outperformed its benchmark during FY This is attributable to a low equity exposure as assigned by the quantitative model run for portfolio construction. The fund has also outperformed the benchmark since inception till date. Kotak Global Emerging Market Fund: The scheme has underperformed its benchmark in FY This is attributable to underperformance in the underlying funds. The scheme return since inception till date has exceeded benchmark returns. Kotak Mahindra Gilt Unit Scheme 98 Investment Plan: The scheme outperformed its benchmark in FY 2017 as the fund was positioned for rally in bond prices. However, towards the end of the year, the fund witnessed some underperformance as RBI decision to hold rates and change stance from accommodative to neutral was contrary to our expectations.

4 Kotak Mahindra Bond Unit Scheme 99: The scheme underperformed its benchmark in FY The scheme did well throughout the year. However, during the last few months of the year, the RBI decision to hold rates and change the stance from accommodation to neutral was in contradiction to our expectation. Kotak Banking & PSU Debt Fund: The scheme outperformed its benchmark in FY The scheme has been in inception much before the formation of the benchmark and therefore does not have an appropriate comparison for that period under assessment. Kotak Bond Short Term Plan: The scheme outperformed its benchmark in FY The fund was positioned a tad conservative in terms of the portfolio duration and hence was able to deliver outperformance. Kotak Medium Term Fund: The scheme underperformed its benchmark in FY 2017 and in the period since inception. The underperformance is attributable to relatively lower duration of the fund in comparison to the benchmark. Kotak Low Duration Fund: The scheme has outperformed its benchmark in FY 2017 and has marginally underperformed the benchmark in the period since inception. The outperformance can be attributed to the higher duration and aggressive portfolio approach relative to the benchmark. The fund also had a reasonably high YTM (Yield to maturity) which aided performance. Kotak Monthly Income Plan: The scheme has outperformed its benchmark in FY 2017 and has marginally underperformed in the period since inception. Active management in both fixed income and equities led to such outperformance. Kotak Mahindra Liquid Scheme and Kotak Floater Short Term Scheme: The performances of both the schemes exceeded the benchmark returns in FY This was largely attributable to the relatively higher duration and higher portfolio yield as compared to the benchmark. The returns since inception till date have also exceeded benchmark returns. Kotak Treasury Advantage Fund: The fund outperformed its benchmark in FY 2017 and in the period since inception. The fund was running higher duration relative to the benchmark and this resulted in outperformance during the year. The portfolio had a bias towards higher rated assets in FY 17 Kotak Flexi Debt Scheme: The fund outperformed its benchmark in FY 2017 and in the period since inception. This can be attributed to the active duration management strategy of the fund against the benchmark. Kotak Income Opportunities Fund: The fund outperformed its benchmark in FY 2017 and in the period since inception. The fund increased exposure to non AAA rated issuers vis-à-vis the benchmark. The spreads of such category vis a vis AAA assets witnessed some compression leading to outperformance. Kotak Corporate Bond Fund: The fund has underperformed its benchmark in FY This is attributable to relatively lower duration as compared to the benchmark. The scheme has outperformed its benchmark in the period since inception. Kotak Multi Asset Allocation Fund: The scheme has outperformed the benchmark in FY The scheme has underperformed the benchmark since inception due to the conservative approach adopted by the scheme earlier. The lag effect of underperformance in the previous years and the recent volatility witnessed is getting reflected in the inception performance. Kotak Hybrid Fixed Term Plan - Series II: The scheme underperformed the benchmark in FY 2017 till its maturity date of January 30, This is attributable to the fact that the predominant debt component of the benchmark comprises composite duration fund index. On the other hand, the debt component of the scheme comprises hold-to-maturity portfolio devised during the inception of the scheme. Thus the fund is unable to actively churn and rebalance the portfolio as need may arise Kotak Gold Fund: The scheme has underperformed the benchmark in FY 2017 and in period since inception. This is attributable to the fact that the exchange prices are trading at a discount (to physical gold which is the benchmark) due to 1% VAT impact.. Also, the gold ETF cannot generate alpha and has to mirror the underlying asset (gold). Thus, the expense ratio difference, which is not present in the physical gold prices, shows as underperformance for the scheme. Kotak Gold ETF: The ETF scheme has underperformed the benchmark (physical gold price) in FY 2017 and also in the period since inception. This is attributable to the fact that gold ETF cannot generate alpha and has to mirror the underlying asset (gold). Thus, the expense ratio difference, which is not present in the physical gold prices, shows as underperformance for the scheme. Kotak PSU Bank ETF: The ETF scheme has outperformed the Nifty PSU Bank Index benchmark since inception. The scheme has also outperformed the benchmark in the FY 2017 period. The outperformance is due to reinvestment of dividend amount into the scheme received from index constituents. Kotak Sensex ETF: The scheme has outperformed its commensurate benchmark in the financial year and in the period since inception. The outperformance is due to reinvestment of dividend amount into the scheme received from index constituents. Kotak Nifty ETF: The scheme has outperformed its commensurate benchmark in the financial year and in the period since inception. The outperformance is due to reinvestment of dividend amount into the scheme received from index constituents. Kotak Banking ETF: The fund outperformed its benchmark in FY 2017 and in the period since inception. The outperformance is due to reinvestment of dividend amount into the scheme received from index constituents. Kotak Fixed Maturity Plans (FMPs) and Kotak Quarterly Interval Plans (QIPs): These are passive managed funds and hence can t be compared with the benchmark. This is because the portfolios are normally HTM and are not dynamically managed like the benchmark and the portfolio construction is based on a narrowly defined setup, the limitations of which are not incumbent on the benchmark. Therefore they typically underperform the benchmark.

5 2. Brief background of Sponsor, Trust, Trustee Company and AMC a) Sponsor Kotak Mahindra Mutual Fund is sponsored by Kotak Mahindra Bank Limited (KMBL). The Sponsor is the Settlor of the Mutual Fund Trust. The Sponsor has contributed Rs. One Lakh as the initial contribution to the corpus for the setting up of the Trust. The Sponsor has also contributed Rs. One Lakh Fifty Thousand as additional corpus. KMBL started with a capital base of Rs lakh. From being a provider of a single financial product, KMBL grew substantially into a highly diversified financial services company. As on March 31, 2017, the net worth (capital plus reserves & surplus) of Kotak Bank is Rs. 27,616 crores. The Sponsor and its subsidiaries/associates offer wide ranging financial services such as loans, lease and hire purchase, consumer finance, home loans, commercial vehicles and car finance, investment banking, stock broking, mutual funds, primary market distribution of equity and debt products and life insurance. b) Kotak Mahindra Mutual Fund Kotak Mahindra Mutual Fund (the Mutual Fund ) has been constituted as a trust on May 20, 1996, in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882) with Kotak Mahindra Bank Limited, as the Sponsor and Kotak Mahindra Trustee Company Limited as the Trustee. The Trust Deed has been registered under the Indian Registration Act, Kotak Mahindra Asset Management Company Limited has been appointed as the Asset Management Company of the Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 20, 1996, as amended up to date, and executed between the Trustee and the AMC. The Mutual Fund was registered with SEBI on June 23, 1998 under Registration Code MF/038/98/1. c) Kotak Mahindra Trustee Company Limited Kotak Mahindra Trustee Company Limited is the exclusive owner of the Trust Fund and holds the same in trust for the benefit of the unitholders. The Trustee has been discharging its duties and carrying out the responsibilities as provided in the Regulations and the Trust Deed. The Trustee seeks to ensure that the Fund and the Schemes floated there under are managed by the AMC in accordance with the Trust Deed, the Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies. However, under Regulation 18(26) of SEBI (Mutual Funds) Regulations, 1996, the Trustees shall not be liable for acts done in good faith if they have exercised adequate due diligence honestly. d) Kotak Mahindra Asset Management Company Limited Kotak Mahindra Asset Management Company Limited (AMC) is a limited company incorporated under the Companies Act, 1956 on August 2, Kotak Mahindra Asset Management Company Limited has been appointed as the Asset Management Company of the Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 20, 1996, as amended up to date, and executed between the Trustee and the AMC. Kotak Mahindra Asset Management Company Limited is a wholly owned subsidiary of the Sponsor, Kotak Mahindra Bank Ltd. An approval by the Division of Funds, Investment Management Department under the SEBI (Portfolio Manager) Regulations, 1993 and Mutual Funds Division of SEBI under the SEBI ('Mutual Funds') Regulations, 1996, has been granted to the AMC for undertaking Portfolio Management Service (PMS). There is no conflict of interest between the Mutual Fund and the PMS activity. Kotak Mahindra Pension Fund Limited, a subsidiary of Kotak Mahindra Asset Management Company Limited is providing pension fund management services. Kotak Mahindra Asset Management Company has received a no objection certificate from SEBI for management of pension funds through the subsidiary. 3. Investment Objectives of the Schemes Kotak Mahindra 50 Unit Scheme: An open ended equity scheme. To generate capital appreciation from a portfolio of predominantly equity and equity related securities. The portfolio will generally comprise of equity and equity related instruments of around 50 companies which may go up to 59 companies. Kotak Mahindra Balance Unit Scheme 99: An open ended balanced scheme. To achieve growth by investing in equity and equity related instruments, balanced with income generation by investing in debt & money market instruments. Kotak Asset Allocator: An open ended fund of funds scheme. To generate long-term capital appreciation from a portfolio created by investing in specified open-ended equity, and debt schemes of Kotak Mahindra Mutual Fund. Kotak Opportunities: An open ended equity growth scheme. To generate capital appreciation from a diversified portfolio of equity and equity related securities. Kotak Midcap Scheme: An open ended equity growth scheme. To generate capital appreciation from a diversified portfolio of equity and equity related securities. Kotak Classic Equity: An open ended equity growth scheme. To generate capital appreciation from a diversified portfolio of equity and equity related instruments. Kotak Emerging Equity Scheme: An open ended equity growth scheme. To generate long-term capital appreciation from a portfolio of equity and equity related securities, by investing predominantly in mid and small cap companies. Kotak Tax Saver Scheme: An open ended equity linked tax savings scheme. To generate long-term capital appreciation from a diversified portfolio of equity and equity related securities and enable investors to avail the income tax rebate, as permitted from time to time. Kotak Global Emerging Market Fund: An open ended equity Scheme. To provide long-term capital appreciation by investing in an overseas mutual fund scheme that invests in a diversified portfolio of securities as prescribed by SEBI from time to time in global emerging markets. Kotak Select Focus Fund: An open ended equity scheme. To generate long-term capital appreciation from a portfolio of equity and equity related securities, generally focused on a few selected sectors. Kotak Equity Arbitrage Scheme: An open ended equity growth scheme. To generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and by investing the balance in debt and money market instruments. Kotak Equity Savings Fund: An open ended equity scheme. To generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash

6 and derivatives segment of the equity market, and enhance returns with a moderate exposure in equity & equity related instruments. Kotak Infrastructure & Economic Reform Fund: An open ended equity scheme. To generate long-term capital appreciation from a diversified portfolio of predominantly (at least 65%) equity and equity-related securities of companies involved in economic development of India as a result of potential investments in infrastructure and unfolding economic reforms. Kotak India Growth Fund Series I A 3 years close ended equity scheme. The investment objective of the scheme is to generate capital appreciation from a diversified portfolio of equity & equity related instruments across market capitalisation and sectors. Kotak World Gold Fund: An open ended fund of funds scheme. To provide long term capital appreciation by investing predominantly in units of Falcon Gold Equity Fund. The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes. The Scheme may also invest a certain portion of its corpus in debt and money market securities and/or units of debt/liquid schemes of Mutual Funds, in order to meet liquidity requirements from time to time. Kotak US Equity Fund: An open ended fund of funds scheme investing overseas. To provide long term capital appreciation by investing in units of a fund that invests predominantly in equity and equity-related securities of companies having assets, products or operations in the United States Kotak Mahindra Gilt Unit Scheme 98: An open ended dedicated gilt scheme. To generate risk free returns through investments in Sovereign securities issued by the Central Government and / or State Government and / or reverse repo in such securities. Kotak Banking & PSU Debt Fund: An open ended debt scheme. To generate income by predominantly investing in debt & money market securities is sued by Banks & PSUs and Reverse repos in such securities, sovereign securities issued by the Central Government and State Governments, and / or any security uncondition ally guaranteed by the Govt. of India. Kotak Mahindra Bond Unit Scheme 99: An open ended debt scheme. To create a portfolio of debt instruments of different maturities so as to spread the risk across a wide maturity horizon and different kinds of issuers in the debt markets. Kotak Bond Short Term Plan: An open ended debt scheme. To provide reasonable returns and high level of liquidity by investing in debt instruments such as bonds, debentures and Government securities; and money market instruments such as treasury bills, commercial papers, certificates of deposit, including repos in permitted securities of different maturities, so as to spread the risk across different kinds of issuers in the debt markets. The Scheme may invest in the call money/term money market in terms of RBI guidelines in this respect. To reduce the risk of the portfolio, the Scheme may also use various derivative and hedging products from time to time, in the manner permitted by SEBI. Subject to the maximum amount permitted from time to time, the Scheme may invest in offshore securities in the manner allowed by SEBI/RBI, provided such investments are in conformity with the investment objective of the Scheme and the prevailing guidelines and Regulations. Kotak Monthly Income Plan: An open ended income scheme (Monthly Income is not assured & is subject to availability of distributable surplus). To enhance returns over a portfolio of Debt Instruments with a moderate exposure in Equity and Equity related Instruments. Kotak Mahindra Liquid Scheme: An open Ended Debt Scheme.To provide reasonable returns and high level of liquidity by investing in Debt and money market instruments of different maturities so as to spread risk across different kinds of issuers in the Debt Markets. Kotak Floater Short Term Scheme: An open ended debt scheme.to reduce the interest rate risk associated with investments in fixed rate instruments by investing predominantly in floating rate securities, money market instruments and using appropriate derivatives. Kotak Treasury Advantage Fund: An open ended debt scheme. To generate returns through investments in debt and money market instruments with a view to reduce the interest rate risk. Kotak Flexi Debt Scheme: An open ended debt scheme. To maximize returns through an active management of a portfolio of debt and money market securities Kotak Income Opportunities Fund: An open ended debt scheme. To generate income by investing in debt /and money market securities across the yield curve and credit spectrum. The scheme would also seek to maintain reasonable liquidity within the fund. Kotak Multi Asset Allocation Fund: An open ended hybrid scheme. To generate income by investing predominantly in debt and money market securities, to generate growth by taking moderate exposure to equity and equity related instruments and provide diversification by investing in Gold ETFs. Kotak Medium Term Fund: An open ended debt scheme. To generate regular income and capital appreciation by investing in a portfolio of medium term debt and money market instruments. Kotak Corporate Bond Fund: An open ended debt scheme. To generate income and capital appreciation largely through investments in corporate debt securities. Kotak Low Duration Fund: An open ended debt scheme. To generate income through investment primarily in low duration debt & money market securities. Kotak Gold Fund: An open ended Fund of Funds. The investment objective of the scheme is to generate returns by investing in units of Kotak Gold ETF. Kotak Gold ETF: An open ended Gold exchange traded Fund. To generate returns that is in line with the returns on investment in physical gold, subject to tracking errors. Kotak PSU Bank ETF: An open ended exchange traded fund. To provide returns that closely corresponds to the total returns of NIFTY PSU Bank Index, subject to tracking errors. Kotak Sensex ETF: An open ended exchange traded fund. To provide returns before expenses that closely corresponds to the total returns of the S&P BSE SENSEX subject, to tracking errors. Kotak Nifty ETF: An open ended exchange traded fund. To provide returns before expenses that closely corresponds to the total returns of the Nifty 50 subject, to tracking errors. Kotak Banking ETF: An open ended exchange traded fund. To provide returns before expenses that closely corresponds to the total returns of stocks as represented by the Nifty Bank Index subject to tracking errors.

7 Series 105, Series 106,Kotak FMP Series 107, Series 108,Kotak FMP Series 109, Series 110, Series 111, Series 112, Series 113, Series 114, Series 115, Series 116, Series 117,Kotak FMP Series 118, Series 119,Kotak FMP Series 122, Series 124,Kotak FMP Series 127, Series 128, Series 129, Series 131, Series 132, Series 133, Series 135, Series 136, Series 137, Series 140, Series 141,Kotak FMP Series 142, Series 143, Kotak FMP Series 145, Series 146, Series 147, Series 148, Series 149, Series 150, Series 151, Series 153, Series 154, Series 156, Series 157,Kotak FMP Series 158, Series 159,Kotak FMP Series 160, Series 161, Series 162, Series 163, Series 171, Series 172, Series 175, Series 176, Series 178, Series 179, Series 180, Kotak FMP Series 181, Series 182, Kotak FMP Series 183, Series 185, Series 186, Series 187, Series 189, Series 190, Series 191, Series 192, Series 193, Series 194, Series 196, Series 199, Series 200 and Series 202: Close ended debt schemes. To generate returns through investments in debt and money market instruments with a view to significantly reduce the interest rate risk. Kotak Quarterly Interval Plan 2, Kotak Quarterly Interval Plan 3, Kotak Quarterly Interval Plan 6, Kotak Quarterly Interval Plan 7, Kotak Quarterly Interval Plan 9: debt oriented interval funds. To generate returns through investments in debt and money market instruments. Kotak Hybrid Fixed Term Plan Series-2 -Close Ended Debt Scheme with 24 months maturity. To generate income and minimize interest rate volatility by investing in Debt & Money Market securities that mature on or before the maturity of the scheme and also to generate capital appreciation by investing in equity/ equity related instruments. 4. Significant Accounting Policies: The Accounting Policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations, Unclaimed Dividends & Redemptions Following are the scheme wise details of unclaimed dividend and redemption: Scheme Name Unclaimed Dividend Unclaimed Redemption No. of Investors Amount (Rs. in Lacs) No. of Investors Amount (Rs. in Lacs) Kotak , Kotak Asset Allocator Fund Kotak Balance Scheme Name Unclaimed Dividend Unclaimed Redemption No. of Investors Amount (Rs. in Lacs) No. of Investors Amount (Rs. in Lacs) Kotak Bond Kotak Bond Short Term Kotak Classic Equity Kotak Corporate Bond Fund Kotak Dynamic Asset Allocation ** Kotak Dynamic FOF ** Kotak Dynamic Income ** Kotak Emerging Equity Kotak Equity Arbitrage Fund Kotak Equity Savings Fund Kotak Flexi Debt Kotak Floater Short Term M Series 10 ** M Series 2 ** M Series 8 ** M Series 9 ** M Series 3 ** Days Series 9 ** # 6M Series 7 ** M Series 9 ** Series 110 ** Series 113 ** Series 122 ** Series 29 ** Series 34 ** Series 38 ** 1 # - - Series 46 ** Series 52 ** # Series 54 ** Series 55 ** Series 59 ** Series 73 ** Series Series 86 ** Series 99 ** 1 # - - Kotak Gilt Investment Kotak Global Emerging Market Fund Kotak Gold ETF # Kotak Banking and PSU Debt Fund Kotak Gold Fund

8 Scheme Name Unclaimed Dividend Unclaimed Redemption Kotak Hybrid Fixed Term Plan Series 2 ** Kotak Hybrid Fixed Term Plan Series I ** No. of Investors Amount (Rs. in Lacs) No. of Investors Amount (Rs. in Lacs) Kotak Income Opportunities Fund Kotak Infrastructure and Economic Reform fund Kotak Liquid Kotak Low Duration Fund Kotak Medium Term Fund 1 # Kotak Midcap Kotak MNC ** Kotak Monthly Income Plan Kotak Multi Asset Allocation Fund Kotak Nifty ETF Kotak Opportunities 7, , Kotak PSU Bank ETF Kotak Quarterly Interval Plan Series 10 Kotak Quarterly Interval Plan Series 7 Kotak Quarterly Interval Plan Series 9 Kotak Quarterly Interval Plan- Series I Kotak Quarterly Interval Plan- Series II Kotak Quarterly Interval Plan- Series III Scheme Name Unclaimed Dividend Unclaimed Redemption Kotak Quarterly Interval Plan- Series IV No. of Investors Amount (Rs. in Lacs) No. of Investors Amount (Rs. in Lacs) # Kotak Select Focus Fund 2, , Kotak Sensex ETF Kotak Tax Saver 7, Kotak Technology ** Kotak Treasury Advantage Fund Kotak Twin Advantage Sr II ** Kotak Twin Advantage Sr III ** Kotak US Equity Fund KOTAK Wealth Builder Series I ** Kotak World Gold Fund ** Total 23, ,870 1, ** Matured/Wound up/merged Scheme. # Less than Rs Lakhs 6. Statutory Information: a. The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of the Fund beyond their initial contribution of Rs. One Lakh for setting up the Fund and such other additions to the same. b. The price and redemption value of the units, and income from them, can go up as well as down with fluctuations in the market value of its underlying investments. c. Full Annual Report shall be disclosed on the website (assetmanagement. kotak.com) and shall be available for inspection at the Head Office of Kotak Mahindra Mutual Fund. Present and prospective unit holders can obtain copy of the trust deed, the full Annual Report of the Fund / AMC at a price.

9 7. Disclosure of investor complaints. In accordance with SEBI circular No. Cir / IMD / DF / 2 / 2010 dated May 13, 2010, disclosure on investor complaints with respect to schemes of Kotak Mahindra Mutual Fund during Financial Year is enclosed herewith vide Annexure 2. Complaint Code Redressal of Complaints received against Mutual Funds (MFs) during Name of Mutual Fund and total number of folios: Kotak Mahindra Mutual Fund, Nos. of folios - 12,22,889. Type of Complaint# (a) No.of Action on (a) and (b) Complaints Resolved Non pending at the beginning Within Actionable* of the year 30 days days days (b) No of complaints received during the year April 2016 To March 2017 IA Non-Receipt of Dividend on Units IB Interest on delayed payment of Dividend IC Non-Receipt of Redemption Proceeds ID Interest on delayed payment of Redemption IIA Non receipt of Statement of Account/Unit Certificate IIB Discrepancy in Statement of Account IIC Non receipt of Annual Report/Abridged Summary IIIA Wrong switch between Schemes IIIB Unauthorized switch between Schemes IIIC Deviation from Scheme attributes IIID Wrong or excess charges/load IIIE Non updation of changes viz.address, PAN, bank details, nomination, etc IV Others TOTAL Beyond 180 days 0-3 months 3-6 months Pending 6-9 months 9-12 months For Kotak Mahindra Trustee Company Limited Chandrasekhar Sathe Director Balan Wasudeo Director Place: Mumbai Date: June 22, 2017 General Policies and Procedures for exercising the voting rights In view of SEBI guidelines related to Role of Mutual Funds in Corporate Governance of Public Listed Companies, the company has formulated its Policy for Proxy Voting in Public Listed Companies. The said policy and details of actual exercise of proxy votes along with the summary of votes cast and the scrutinizer's certification during the Financial Year is available on our website assetmanagement.kotak.com and in full Annual Report for the Financial Year

10 INDEPENDENT AUDITORS REPORT To the Trustee of Kotak Mahindra Mutual Fund Report on the Financial Statements 1. We have audited the accompanying financial statements of the under mentioned Schemes of Kotak Mahindra Mutual Fund (the Schemes ), which comprise the Balance Sheets as at March 31, 2017, and the related Revenue Accounts and Cash Flow Statements, where applicable, for the year/period then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report. The Schemes Year/Period Kotak Mahindra 50 Unit Scheme April 1, 2016 to March 31, 2017 Kotak Mahindra Balance Unit Scheme 99 April 1, 2016 to March 31, 2017 Kotak Opportunities April 1, 2016 to March 31, 2017 Kotak Midcap Scheme April 1, 2016 to March 31, 2017 Kotak Classic Equity Scheme April 1, 2016 to March 31, 2017 Kotak Tax Saver Scheme April 1, 2016 to March 31, 2017 Kotak Monthly Income Plan April 1, 2016 to March 31, 2017 Kotak Asset Allocator Fund April 1, 2016 to March 31, 2017 Kotak Equity Arbitrage Scheme April 1, 2016 to March 31, 2017 Kotak Emerging Equity Scheme April 1, 2016 to March 31, 2017 Kotak Gold ETF April 1, 2016 to March 31, 2017 Kotak Global Emerging Market Fund April 1, 2016 to March 31, 2017 Kotak PSU Bank ETF April 1, 2016 to March 31, 2017 Kotak Sensex ETF April 1, 2016 to March 31, 2017 Kotak Select Focus Fund April 1, 2016 to March 31, 2017 Kotak Nifty ETF April 1, 2016 to March 31, 2017 Kotak Multi Asset Allocation Fund April 1, 2016 to March 31, 2017 Kotak Gold Fund April 1, 2016 to March 31, 2017 Kotak Hybrid Fixed Term Plan Series II April 1, 2016 to January 30, 2017 Kotak Equity Saving Fund April 1, 2016 to March 31, 2017 Kotak Banking ETF April 1, 2016 to March 31, 2017 Kotak Infrastructure & Economic Reform April 1, 2016 to March 31, 2017 Fund Kotak US Equity Fund April 1, 2016 to March 31, 2017 Kotak World Gold Fund April 1, 2016 to March 31, 2017 Kotak India Growth Fund Series I April 1, 2016 to March 31, 2017 Kotak Capital Protection Oriented April 1, 2016 to March 31, 2017 Scheme - Series 1 Kotak NV 20 ETF April 1, 2016 to March 31, 2017 Kotak Capital Protection Oriented April 1, 2016 to March 31, 2017 Scheme -Series 2 Kotak Capital Protection Oriented April 1, 2016 to March 31, 2017 Scheme -Series 3 Kotak Capital Protection Oriented May 16, 2016 to March 31, 2017 Scheme -Series 4 Trustee s and Management s Responsibility for the Financial Statements 2. The Trustee of Kotak Mahindra Mutual Fund and the Management of Kotak Mahindra Asset Management Company Limited (the Management ) are responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Schemes in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the Regulations ). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors Responsibility 3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2017 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the financial statements. 5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion 6. In our opinion, and to the best of our information and according to the explanations given to us, the accompanying financial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheets, of the state of affairs of the Schemes as at March 31, 2017; (b) in the case of the Revenue Accounts, of the net surplus/ (deficit) for the year / period ended on that date; and (c) in the case of the Cash Flow Statements, where applicable, of the cash flows for the year / period ended on that date. Report on Other Legal and Regulatory Requirements 7. As required by section 55(4) of the Regulations, we report that: (a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit; and (b) In our opinion, the Balance Sheets, Revenue Accounts and Cash Flow Statements, where applicable, dealt with by this report have been prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of the Regulations. 8. As required by clause 5 ((2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheets, Revenue Accounts, and Cash Flow Statements, where applicable, dealt with by this Report are in agreement with the books of account of the Schemes. 9. In our opinion, the methods used to value non-traded securities as at March 31, 2017, as determined by Kotak Mahindra Asset Management Company Limited under procedures approved by the Trustee of Kotak Mahindra Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable. For Price Waterhouse Firm Registration Number: E Chartered Accountants Partha Ghosh Place: Mumbai Partner Date: June 22, 2017 Membership Number: 55913

11 Kotak Mahindra Mutual Fund Kotak 50, Kotak Balance, Kotak Opportunities, Kotak Midcap, Kotak Classic Equity, Kotak Tax Saver, Kotak Monthly Income Plan, Kotak Asset Allocator Fund, Kotak Equity Arbitrage Fund Balance Sheet as at March 31, ASSETS Schedule Kotak 50 Kotak Balance Kotak Opportunities Kotak Midcap Kotak Classic Equity Kotak Tax Saver Kotak Monthly Income Plan Kotak Asset Allocator Fund Kotak Equity Arbitrage Fund Investments 1 127, , , , , , , , , , , , , , , , , , Deposits , , , , Other Current Assets 3 4, , , , , , , , , , , , , , , TOTAL 132, , , , , , , , , , , , , , , , , , LIABILITIES Unit Capital 4 12, , , , , , , , , , , , , , , , Reserves and Surplus 5 119, , , , , , , , , , , , , , , , , , Loans & Borrowings (0.00) Current Liabilities and Provisions , , , , , , , , , TOTAL 132, , , , , , , , , , , , , , , , , , Notes to the Financial Statements 8 The schedules referred to herein form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our report of even date (0.00) (0.00) (0.00) 0.00 (0.00) (0.00) (0.01) For PRICE WATERHOUSE For Kotak Mahindra Trustee Company Ltd. For Kotak Mahindra Asset Management Company Ltd. Firm Registration Number E Chartered Accountants PARTHA GHOSH Chandrashekhar Sathe Balan Wasudeo Gaurang Shah Nilesh Shah Harsha Upadhyaya Harish Krishnan Devender Singhal Partner Director Director Director Managing Director Fund Manager - Equity Fund Manager - Equity Fund Manager - Equity Membership No. : Mumbai Abhishek Bisen Pankaj Tibrewal Deepak Gupta Date: June 22, 2017 Date: June 22, 2017 Date: June 22, 2017 Fund Manager - Debt Fund Manager - Equity Fund Manager - Equity

12 Kotak Mahindra Mutual Fund Kotak 50, Kotak Balance, Kotak Opportunities, Kotak Midcap, Kotak Classic Equity, Kotak Tax Saver, Kotak Monthly Income Plan, Kotak Asset Allocator Fund, Kotak Equity Arbitrage Fund Revenue Account for the year ended March 31, to to Kotak Classic Equity Kotak Tax Saver Kotak Monthly Income Plan Kotak Asset Allocator Fund Kotak Equity Arbitrage Fund Kotak 50 Kotak Balance Kotak Opportunities Kotak Midcap Schedule INCOME AND GAINS Dividends (Note 2.4) 1, , , , , Interest (Note 2.4) , , , Net Profit on Sale/Redemption of Investments and Derivatives (Note 2.3, 2.5 and 17) 7, , , , , , , , , , , , Net Profit on Inter-scheme Sale of Investments (Note 2.3) 2, , , , , Other Income TOTAL 12, , , , , , , , , , , , , , , , EXPENSES AND LOSSES Net Loss on Sale/Redemption of Investments and Derivatives (Note 2.3, 2.5 and 17) , Net Loss on Inter-scheme Sale of Investments (Note 2.3) Investment Management Fees (Note 4) 1, , , , Trusteeship Fees (Note 5) Custodian Fees (Note 6) Registrar/Transfer Agent Fees and Expenses Marketing and Distribution Expenses (Note 12) 1, , , , , , Audit Fees Investor Education & Awareness Expenses Provision for Outstanding Accrued Income Investor Communication Costs Interest On Funds Borrowed Other Operating Expenses , , , , , , , , , , Less: Expenses to be Re-imbursed by the Investment Manager (Note 15) - (226.44) (180.00) TOTAL 2, , , , , , , , , , Net Realised Gains for the Year 9, , , , , , , , , , , , , , , Change in Net Unrealised Depreciation in of Investments and Derivatives (Note 2.2 and 9) (112.96) - 5, (180.30) (11.91) - (1,778.54) Net Gains for the Year 9, , , , , , , , , , , , , , , Change in Net Unrealised Appreciation in value of Investments and Derivatives (Note 2.2 and 9) Net Surplus for the Year including unrealised appreciation in value of Investment and Derivatives Change in Net Unrealised Appreciation in value of Investments and Derivatives transferred from / (to) Unrealised Appreciation Reserve 11, , , , , , (7,895.12) (1,871.50) (9,189.51) (4,348.15) (1,883.92) (5,393.97) (523.72) , , , , , , , , (4,227.26) (609.63) (3,867.88) (1,013.15) (4,048.38) , (11,830.71) (8,712.75) (13,512.24) (9,049.10) (487.36) (4,632.47) (608.50) (237.98) (20,205.76) 7, , , , , , (1.06) (26.21) Net Surplus for the Year 9, , , , , , , , , , , , , , ,658.98

13 Schedule Kotak Mahindra Mutual Fund Kotak 50, Kotak Balance, Kotak Opportunities, Kotak Midcap, Kotak Classic Equity, Kotak Tax Saver, Kotak Monthly Income Plan, Kotak Asset Allocator Fund, Kotak Equity Arbitrage Fund Revenue Account for the year ended March 31, 2017 (Rs. Lacs) to to Kotak 50 Kotak Balance Kotak Opportunities Kotak Midcap Kotak Classic Equity Kotak Tax Saver Kotak Monthly Income Plan Kotak Asset Allocator Fund Kotak Equity Arbitrage Fund Total Total Total Total Total Total Total Total Total Net Surplus for the Year 9, , , , , , , , , , , , , , , Income Equalisation Reserve (Note 2.8) 4, , , , (1,598.50) 2, , (32.09) 45, , (1,709.93) 4, (948.94) (638.68) (122.38) 20, Balance Transferred from Revenue Reserve 75, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Dividend Distribution (2,897.03) (1,964.42) (2,391.59) (582.73) (89.65) (1,202.97) (180.71) - (28,417.81) (23,563.42) (1,018.05) (1,598.54) (326.35) (97.14) (1,321.68) (150.77) - (28,561.17) Dividend Tax Thereon (76.02) (61.60) - - Balance Transferred to Revenue Reserve 87, , , , , , , , , , , , , , , , , , Notes to the Financial Statements 8 $ including dividend tax Rs Lacs (2016 : Rs Lacs ) for Kotak Monthly Income Plan The schedules referred to herein form an integral part of the Revenue Account. This is the Revenue Account referred to in our report of even date. For PRICE WATERHOUSE For Kotak Mahindra Trustee Company Ltd. For Kotak Mahindra Asset Management Company Ltd. Firm Registration Number E Chartered Accountants PARTHA GHOSH Chandrashekhar Sathe Balan Wasudeo Gaurang Shah Nilesh Shah Harsha Upadhyaya Harish Krishnan Devender Singhal Partner Director Director Director Managing Director Fund Manager - Equity Fund Manager - Equity Fund Manager - Equity Membership No. : Mumbai Abhishek Bisen Pankaj Tibrewal Deepak Gupta Date: June 22, 2017 Date: June 22, 2017 Date: June 22, 2017 Fund Manager - Debt Fund Manager - Equity Fund Manager - Equity