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KOTAK FUNDS

Société d'Investissement à Capital Variable (SICAV)

R.C.S. Luxembourg B 131.576

SEMI-ANNUAL REPORT AND UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2015

No subscription can be received on the basis of financial reports. Subscriptions are only valid if made on the basis of the current prospectus,

accompanied by the latest annual report or semi-annual report if published thereafter.

KOTAK FUNDS

TABLE OF CONTENTS

Page

Management and Administration 2

Investment Objectives 3

Directors’ Report 5

Statement of Net Assets 8

Statement of Operations 9

Statement of Changes in Net Assets 10

Statistical Information 11

Schedule of Investments

Kotak Funds – India Growth Fund 13

Kotak Funds – India Midcap Fund 15

Kotak Funds – India Fixed Income Fund 18

Notes to the Financial Statements 20

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MANAGEMENT AND ADMINISTRATION Directors Management Company Ruchit Puri RBS (Luxembourg) S.A. Chief Executive Officer 33, rue de Gasperich Kotak Mahindra (UK) Limited L-5826 Hesperange Singapore 048581 Grand Duchy of Luxembourg Jérôme Wigny Global Distributor Partner Elvinger, Hoss & Prussen Kotak Mahindra (UK) Limited Luxembourg 55, Baker Street London W1U 7EU Raj Pandit United Kingdom Independent Director 26, Cedars Close Auditors London NW4 1TR United Kingdom KPMG Luxembourg Société coopérative 39, avenue John F. Kennedy Christopher Daniel L-1855 Luxembourg Senior Vice President, Compliance Grand Duchy of Luxembourg Kotak Mahindra (UK) Limited London Administrator, Registrar and Transfer Agent and Domiciliary Agent Registered Office HSBC Bank plc, Luxembourg Branch 16, boulevard d’Avranches 16, boulevard d’Avranches L-1160 Luxembourg L-1160 Luxembourg Grand Duchy of Luxembourg Grand Duchy of Luxembourg Investment Manager For the Mauritius Subsidiaries Kotak Mahindra (UK) Limited Cim Fund Services Limited 55, Baker Street 33, Edith Cavell Street, London W1U 7EU Port Louis, United Kingdom Mauritius Depositary Bank Legal Advisers in Luxembourg HSBC Bank plc, Luxembourg Branch Elvinger, Hoss & Prussen 16, boulevard d’Avranches 2, place Winston Churchill L-1160 Luxembourg L-1340 Luxembourg Grand Duchy of Luxembourg Grand Duchy of Luxembourg Legal Advisers in India Khaitan & Co One Indiabulls Centre 13th Floor, Tower 1 841 Senapati Bapat Mary Mumbai 400013 India

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INVESTMENT OBJECTIVES Kotak Funds - India Growth Fund The objective of the Sub-Fund is to achieve long term capital appreciation by primarily investing at least two thirds of its total assets in equity and equity linked securities of companies registered in India or deriving a significant portion of their business from India.

The Sub-Fund will invest directly and/or indirectly in equity and equity-linked securities of companies that in the opinion of the Investment Manager have one or more of the following characteristics:

a) Companies which are expected to sustain high growth due to their ability to create new markets, develop nascent business segments, operate successfully in niche segments with scale-up potential.

b) Companies expected to create and deliver long term value due to innovation and IPR development. c) Companies with the potential for value unlocking in the medium to long term due to strategic sale,

change in management, deregulation, economic legislation and reform. d) Companies which are sectoral leaders and enjoy leadership in their respective segments. e) Companies which are strong asset plays. f) Companies which are expected to witness operational and financial improvement due to positive

swing in their business cycles.

The Sub-Fund can invest up to one third of its total assets temporarily in liquid assets, including money-market instruments having a residual maturity not exceeding twelve months and demand or time deposits.

The Sub-Fund may also invest, for the exclusive purposes of hedging and efficient portfolio management, in financial derivative instruments such as futures, equity swaps, options and forward currency contracts and in other currency and equity derivatives including index based derivative instruments. Kotak Funds - India Midcap Fund The objective of the Sub-Fund is to achieve long term capital appreciation by primarily investing at least two thirds of its total assets in equity and equity linked securities of mid-capitalisation companies registered in India or deriving a significant portion of their business from India.

The Sub-Fund can invest up to one third of its total assets temporarily in liquid assets, including money-market instruments having a residual maturity not exceeding twelve months and demand or time deposits. Kotak Funds - India Fixed Income Fund The objective of the Sub-Fund is to generate total returns by primarily investing in debt securities issued by the central or state governments of India or issued by companies of Indian origin or deriving a significant portion of their business in India.

The Sub-Fund will principally gain exposure to the following instruments:

a) Debt securities issued by the Central and State Governments in India (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills).

b) Debt securities issued by Indian governmental agencies and statutory bodies, which may or may not carry a Central/ State Government guarantee in India.

c) Corporate debt securities denominated in INR and issued by companies of Indian origin or deriving a significant portion of their business from India (including but not limited to Commercial Paper (CPs), Non-Convertible Debentures (NCD’s) and bonds including zero coupon bonds).

d) Corporate debt securities denominated in currencies other than INR and issued by companies of Indian origin or deriving a significant portion of their business from India.

e) Mutual funds domiciled in India and regulated by Securities and Exchange Board of India.

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INVESTMENT OBJECTIVES (CONTINUED) Kotak Funds – India Fixed Income Fund (continued) The Sub-Fund may invest more than 35% of its net asset value in debt securities issued and/or guaranteed by the Indian government in accordance with section III c) of the Investment Restrictions. If such limit of 35% is exceeded, section III f) of the Investment Restrictions will apply.

The Sub-Fund may on an ancillary basis, invest directly or indirectly in sovereign debt securities issued by developed world countries (including US treasury bills and bonds) denominated in any currency.

The Sub-Funds will not invest more than 10% of its assets in other UCIs.

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DIRECTORS’ REPORT We are pleased to present you the Semi-Annual Report as at 30 June 2015 of Kotak Funds. Markets and Performance Indian equity market was volatile in the six-month period ending 30 June 2015 yet ended virtually flat in the face of adverse global news-flow and risk-on/off sentiments. MSCI India Index returned 1.86% as against 3.07% and 2.98% return on the MSCI Emerging Market Index and MSCI World Index respectively (all in USD term). Midcap space in India saw a relatively stronger performance with the CNX Midcap Index returning 3.82% (in USD term) during the period. On the currency side, the rupee was fairly resilient depreciating by just c.90 bps to close at around 63.6/USD when most other EM currencies faltered during the period in the face of the impending US Fed rate lift-off. The period January-June 2015 saw heightened global volatility largely due to the Greek crisis and the threat of a default by Greece on its sovereign debt and a potential Euro-exit. After months of brinkmanship between Greece and the troika, the Greek prime-minister called for a public referendum on 5 July. While the country goes in for a referendum on bailout conditions, the capping of European Central Bank’s Emergency Liquidity Assistance (ELA) at EUR 89bn has led to liquidity shock and thus, capital controls. Capital controls once imposed, are difficult to roll back as seen in Cyprus and Iceland. While Greece missed its EUR 1.5bn International Monetary Fund’s repayment deadline on 30 June, the outcome of the referendum will also decide the fate of debt repayments funding. Greece’s external debt is at ~EUR 460bn (216% of GDP), with external debt at risk at ~184% of GDP. China meanwhile, has been the other focal point for global investors as the market has seen a very sharp correction since its peak of 12 June and has entered the bear market territory with the index declining more than 20% by June-end. More worrisome has been the fact that the correction has continued despite the People's Bank of China injecting liquidity via rate/RRR cuts by as many as 3 times in the last 5 months and resorting to desperate measures to curb speculation in recent days. So far, there has not been a significant contagion effect from the rout in China to other markets. The US Fed in its June Federal Open Market Committee (FOMC) meeting sounded mildly dovish emphasizing the need to see more decisive evidence on growth despite acknowledging that progress on consumer sentiment, household spending and labor market has been modest after slowing in the winter months. The FOMC lowered their forecast for the benchmark policy rate by 25 bps for 2016 and 2017, while keeping the 2015 end projection unchanged at 0.625%. The FOMC also revised lower the economic growth projections for 2015 to a median of 1.9% (from 2.5% earlier) while leaving the other year forecasts unchanged. The median point for unemployment rate was raised to 5.25% from 5.1% in March. As far India is concerned, as expected, the March 2015 quarter earnings season was disappointing with earnings of companies belonging to technology, state-owned banks and cement sectors far below analyst estimates. Reported earnings of banks in the private sector were largely in line with estimates and these banks continue to gain market share, both in advances and deposits. On the positive front, ever since the Modi Government came into power, the Parliament has seen some of the most productive sessions in its history. Since May 2014, the Lok Sabha (Lower House) held 90 sittings while the Rajya Sabha (Upper House) held 87, the highest in the last 10 years. Both the Houses passed 47 Bills, the best in the last six years. The key bills passed by the Indian parliament in the Budget session include: Insurance Amendment Bill whereby Foreign Direct Investment (FDI) limit in Insurance sector was increased to 49% from 26% earlier; Mines and Minerals (Development and Regulation) Amendment Bill, 2015 with the intention to introduce a system of auctions for allocation of mining licenses with a validity of 50 years; and the Coal Mines Special Provisions Bill that provides for auction of coal blocks.

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DIRECTORS’ REPORT (CONTINUED) Despite relentless efforts from the Modi government, the Goods and Services Tax (GST) Bill and the Land Acquisition Bill could not be cleared through the Upper House in the Budget and Monsoon session of Parliament. From a macroeconomics perspective, the Reserve Bank of India (RBI) cut the Repo rate by 25 bps to 7.25% while keeping the CRR and SLR unchanged 4% and 21.5% respectively. The RBI highlighted three risks to the Indian economy, namely a below-normal southwest monsoon, firming up of crude prices and volatility in the external environment, which could impact inflation. The RBI also highlighted that the rate cut is front-loaded and that it will wait for more data to determine further policy action. The RBI has revised its inflation expectations slightly higher to 6% by January 2016 (up from ~5.8% projected in April), factoring in Indian Meteorological Department’s monsoon forecast and inflationary impact of higher service tax rate of 14%. 4QFY15 (January-March 2015) CAD/GDP narrowed significantly to 0.3% (USD 1.5bn) from 1.6% in 3QFY15 (October-December 2014, USD 8.4bn). The trade deficit narrowed to USD 31.7bn. However, expectations of a current account surplus in 4QFY15 were belied thanks to higher-than-expected deviation (mostly defense related imports) between Directorate General of Commercial Intelligence and Statistics and RBI data. FY15 trade deficit narrowed to USD 144.2bn from USD 147.6bn in FY14. India’s WPI inflation came in at -2.36% in May 2015 compared to -2.65% in April. On the positive side, food inflation was at 3.8% compared to 5.7% in April. Sequentially, food prices increased by 0.5% compared to 1.4% in April, defying expectations of any sharp uptick from unseasonal rains towards the start of the year. Price pressures on pulses (7.5% MoM) and vegetables (2.9%) have led the increase. Fuel inflation continued to contract for the seventh month (-10.5%) but rose on a sequential basis (2.9%) due to price hike in petrol, diesel, etc. Prices of furnace oil, petrol and diesel increased by 12%, 8% and 4%, respectively in May. However, CPI inflation remained soft, printing 5.01% in May compared to 4.87% in April. Food inflation on a YoY basis remained benign at 5.13%. However, vegetable prices increased MoM (after eight months of contraction) by 1.7% while pulses prices jumped 4.6% sequentially. India’s trade deficit moderated to USD 10.4bn in May from USD 11bn in April. Exports contracted further by 20.2% YoY even as it marginally inched up sequentially to USD 22.3bn. The fall in exports in May has been broad-based with ‘gems and jewelry’ and ‘engineering goods’ leading the fall with contraction of 13% and 8% respectively. Petroleum products exports contracted 59% YoY. Imports also contracted further by 16.5% YoY from a contraction of 7.5% in April, printing USD 32.8bn against USD 33bn in April. A large part of import compression continues to come from lower oil prices. Gold imports also moderated, falling to USD 2.4bn in May from USD 3.1bn in April. Indirect taxes estimate for May 2015 that was released during June indicates a growth of 37.3% over the same time last year. Most of the growth was led by excise tax collection growth of 84.2% on the back of higher duty on petrol and diesel. Customs duty growth was 16% and services tax collection growth was at 13.2%. We expect real GDP growth in FY16 to range between 7.5-7.7% (8% earlier). Weak rural and export growth coupled with a gradual revival in the investment cycle will likely cap India’s growth in FY16. This coupled with a weak March 2015 quarter earnings season could lead to downward revision in FY16 NIFTY earnings estimates.

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DIRECTORS’ REPORT (CONTINUED) In terms of drivers for the markets going forward, global macro events can potentially turn off the risk appetite of global portfolio flows and will be crucial in the short to medium term for determining the market returns from emerging markets including India. Progress of monsoons in key agricultural states and overall in general is a significant factor being monitored. Much awaited pick-up in corporate earnings over the coming quarters will also remain pivotal in influencing market direction. Kotak Funds - India Growth Fund For the 6-month period ended 30 June 2015, Kotak Funds - India Growth Fund returned 1.44%^ and the Nifty Index returned 0.10% for the same period. Kotak Funds - India Midcap Fund Kotak Funds - India Midcap Fund yielded a return of 6.53%^ with the CNX Midcap Index returning 2.70% for the same period. Kotak Funds - India Fixed Income Fund For the 6-month period ended 30 June 2015, Kotak Funds - India Fixed Income Fund returned 1.68%*. ^ The performance mentioned for the sub-funds are for Class A USD and % returns mentioned above are in USD. * The performance mentioned for Fixed Income fund is for Class I USD and % returns mentioned above are in USD. Corporate Governance Statement The Board of Directors confirms its adherence to the principles contained in the ALFI (Association Luxembourgeoise des Fonds d'Investissement) Code of Conduct for Luxembourg Investment Funds. The Board of Directors 30 June 2015

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STATEMENT OF NET ASSETS AS AT 30 JUNE 2015

INDIA INDIA INDIAGROWTH MIDCAP FIXED INCOME

COMBINED FUND FUND FUNDNOTES USD USD USD USD

Investments

Investments in securities at cost 503,419,878 134,954,782 313,096,468 55,368,628 Unrealised appreciation/(depreciation) 44,992,667 18,690,704 26,460,613 (158,650)

Investments in securities at market value 2.d 548,412,545 153,645,486 339,557,081 55,209,978

Other Assets

Cash at bank 63,937,991 4,701,311 56,235,236 3,001,444 Receivable resulting from sales of securities 5,526,535 507,982 7,793 5,010,760 Unrealised appreciation on futures contracts 2.g,10 24,199 24,199 - - Due from shareholders 3,683,695 482,010 3,168,593 33,092 Interest receivable 895 895 - - Sundry debtors and prepayments 2,922,812 540,614 606,658 1,775,540

76,096,127 6,257,011 60,018,280 9,820,836

Total Assets 624,508,672 159,902,497 399,575,361 65,030,814

Liabilities

Options sold 2.h,11 2,398 2,398 - - Unrealised depreciation on futures contracts 2.g,10 59,483 - 59,483 - Payable resulting from purchases of securities 9,538,082 10,632 5,365,557 4,161,893 Due to shareholders 1,810,708 674,380 1,135,987 341 Sundry creditors and accruals 2,181,846 893,870 1,180,367 107,609

Total Liabilities 13,592,517 1,581,280 7,741,394 4,269,843

Net Assets 610,916,155 158,321,217 391,833,967 60,760,971

The accompanying notes form an integral part of these financial statements.

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STATEMENT OF OPERATIONSFOR THE PERIOD ENDED 30 JUNE 2015


COMBINED FUND FUND FUNDNOTES USD USD USD USD

Income

Dividend income 2.e 1,467,325 726,366 740,959 - Bond interest 2.e 2,053,581 - - 2,053,581 Other income 5,984 - - 5,984

Total income 3,526,890 726,366 740,959 2,059,565

Expenses

Management fees 3 2,800,107 1,229,058 1,413,192 157,857 Facilitation fees 4 123,262 123,262 - - Administration and custodian fees 5 256,950 93,283 139,690 23,977 Audit and professional fees 61,897 27,145 26,183 8,569 Management company fees 9 93,252 33,142 46,626 13,484 Subscription tax 6 84,060 26,105 55,247 2,708 Transaction costs 51,136 26,921 19,793 4,422 Directors' fees and expenses 8 15,770 5,742 7,127 2,901 Bank interest and charges 19,847 6,583 7,912 5,352 Other expenses 206,755 73,852 72,732 60,171

Total expenses 3,713,036 1,645,093 1,788,502 279,441

Net (Loss)/Profit from Investments (186,146) (918,727) (1,047,543) 1,780,124

Net profit/(loss) realised on: - investments portfolio 2.d 11,666,693 6,178,352 5,606,368 (118,027) - futures contracts 2.g 68,820 54,430 14,390 - - foreign exchange transactions 2.c (2,540,928) (133,027) (1,304,215) (1,103,686)

Net Realised Gain/(Loss) 9,194,585 6,099,755 4,316,543 (1,221,713)

Net change in unrealised appreciation/(depreciation) on: - investment portfolio 2.d 3,984,413 (3,764,399) 8,408,590 (659,778) - options 2.h 766 766 - - - futures contracts 2.g (40,100) 19,383 (59,483) -

Net Change in Unrealised Appreciation/(Depreciation) 3,945,079 (3,744,250) 8,349,107 (659,778)

Results from Operations 12,953,518 1,436,778 11,618,107 (101,367)


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STATEMENT OF CHANGES IN NET ASSETSFOR THE PERIOD ENDED 30 JUNE 2015


COMBINED FUND FUND FUNDUSD USD USD USD

Net Assets at beginning of the period 272,042,210 132,945,570 124,545,757 14,550,883

Increase/(Decrease) in Net Assets as a Result of Operations 12,953,518 1,436,778 11,618,107 (101,367)

Capital Transactions

Subscriptions received 392,524,379 50,264,086 291,220,085 51,040,208

Redemptions paid (65,109,698) (26,325,217) (34,055,728) (4,728,753)

Dividends and distributions

Dividends paid (1,494,254) - (1,494,254) -

Net Increase in Net Assets as a Result of Capital Transactions 325,920,427 23,938,869 255,670,103 46,311,455

Total Increase in Net Assets in the period

Net Assets at end of the period 610,916,155 158,321,217 391,833,967 60,760,971

46,210,088 338,873,945 25,375,647 267,288,210


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STATISTICAL INFORMATION


FUND FUND FUNDUSD USD USD

Net asset value

30 June 2015 USD 158,321,217 USD 391,833,967 USD 60,760,971 31 December 2014 USD 132,945,570 USD 124,545,757 USD 14,550,883 31 December 2013 USD 63,213,778 USD 28,293,267 USD 5,687,048

Number of shares

30 June 2015 Class A Shares USD 7,038,585 3,958,127 500,319 Class A Shares GBP 68,086 303,831 - Class A Shares EUR 20,000 - - Class I Shares USD 3,461,405 892,813 3,984,227 Class I Distribution Shares EUR - - 132,852 Class A Distribution Shares GBP 10,091 91,124 - Class X Distribution Shares JPY - 1,315,903 - Class I Shares EUR 301,819 - 492,376 Class B Shares USD - 25,224 - Class B Shares GBP - 11,990 - Class B Shares EUR - 4,287 - Class J Shares USD - 2,068,932 - Class C Shares USD 82,685 19,246 14,846 Class C Shares GBP - - 16,674 Class C Distribution Shares GBP - - 24,997

31 December 2014 Class A Shares USD 5,533,430 2,972,181 - Class A Shares GBP 72,953 327,655 - Class I Shares USD 3,508,278 894,537 592,148 Class A Distribution Shares GBP 8,458 72,401 - Class X Distribution Shares JPY - 233,898 - Class I Shares EUR - 2,278 493,916 Class B Shares USD - 17,373 - Class B Shares GBP - 16,844 - Class B Shares EUR - 3,375 - Class J Shares USD - 852,487 - Class C Shares USD 76,078 10,000 14,846 Class C Shares GBP - - 700

31 December 2013 Class A Shares USD 6,110,175 2,430,566 - Class A Shares GBP 31,211 41,151 - Class I Shares USD 339,323 255,282 150,000 Class A Distribution Shares GBP 1,319 7,981 - Class X Distribution Shares JPY - 17,867 - Class I Shares EUR - 2,278 300,000 Class B Shares USD - 21,577 - Class B Shares GBP - 12,898 - Class B Shares EUR - 3,375 -


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STATISTICAL INFORMATION (CONTINUED)


FUND FUND FUNDUSD USD USD

Net asset value per share

30 June 2015 Class A Shares USD USD 13.69 USD 16.34 USD 9.75 Class A Shares GBP GBP 13.35 GBP 13.95 - Class A Shares EUR EUR 9.74 - - Class I Shares USD USD 16.20 USD 15.30 USD 11.50 Class I Distribution Shares EUR - - EUR 9.76Class A Distribution Shares GBP GBP 17.39 GBP 17.79 - Class X Distribution Shares JPY - JPY 25,792.29 - Class I Shares EUR EUR 9.16 - EUR 14.11Class B Shares USD - USD 19.13 - Class B Shares GBP - GBP 16.02 - Class B Shares EUR - EUR 20.63 - Class J Shares USD - USD 12.51 - Class C Shares USD USD 10.46 USD 11.15 USD 10.45 Class C Shares GBP - - GBP 10.20Class C Distribution Shares GBP - - GBP 9.64

31 December 2014 Class A Shares USD USD 13.49 USD 15.34 - Class A Shares GBP GBP 13.31 GBP 13.25 - Class I Shares USD USD 15.89 USD 14.36 USD 11.31 Class A Distribution Shares GBP GBP 17.34 GBP 16.88 - Class X Distribution Shares JPY - JPY 23,802.02 - Class I Shares EUR - EUR 13.60 EUR 12.83Class B Shares USD - USD 18.05 - Class B Shares GBP - GBP 15.28 - Class B Shares EUR - EUR 17.99 - Class J Shares USD - USD 11.69 - Class C Shares USD USD 10.26 USD 10.41 USD 10.28 Class C Shares GBP - - GBP 10.14

31 December 2013 Class A Shares USD USD 9.64 USD 9.33 - Class A Shares GBP GBP 8.97 GBP 7.60 - Class I Shares USD USD 11.24 USD 8.74 USD 10.11 Class A Distribution Shares GBP GBP 11.68 GBP 9.68 - Class X Distribution Shares JPY - JPY 13,123.72 - Class I Shares EUR - EUR 7.28 EUR 10.09Class B Shares USD - USD 11.09 - Class B Shares GBP - GBP 8.85 - Class B Shares EUR - EUR 9.73 -


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INDIA GROWTH FUND

Market Value as

Number of shares/ Market Value a percentage

Nominal Value Security USD of Net Assets

Transferable securities and money market instruments admitted to an

official exchange listing or dealt in on another regulated market

Equities

India

110,778 ACC 2,515,197 1.59 84,212 Akzo Nobel India 1,654,578 1.05 159,000 Amara Raja Batteries 2,207,577 1.39 249,714 Astral Poly Technik 1,525,020 0.96 729,868 Axis Bank 6,412,142 4.05 924,550 Bank of Baroda 2,094,744 1.32 13,038 Bayer CropScience 812,080 0.51 582,746 Berger Paints India 1,789,281 1.13 248,000 Bharat Petroleum 3,427,672 2.17 344,000 Bharti Airtel 2,271,147 1.43 80,000 Britannia Industries 3,474,152 2.19 51,741 Cadila Healthcare 1,461,114 0.92 205,789 Cipla 1,990,515 1.26 538,500 Crompton Greaves 1,375,387 0.87 840,000 Dish TV 1,404,115 0.89 301,929 Gateway Distriparks 1,627,027 1.03 136,800 Godrej 2,660,185 1.68 201,596 Havells India 895,606 0.57 237,199 HCL Technologies 3,429,008 2.17 280,079 HDFC 5,707,188 3.60 481,382 HDFC Bank 8,074,231 5.10 1,594,900 ICICI Bank 7,720,937 4.88 581,122 IL&FS Transportation Network 1,299,745 0.82 270,370 IndusInd Bank 3,708,594 2.34 588,492 Infosys Technologies 9,104,917 5.75 1,198,155 ITC 5,934,938 3.75 121,954 Kajaria Ceramics 1,397,843 0.88 249,500 Larsen & Toubro 6,991,318 4.42 102,500 Lupin 3,027,168 1.91 58,400 Maruti Suzuki India 3,693,061 2.33 256,438 Max India 1,947,579 1.23

SCHEDULE OF INVESTMENTS

30 June 2015


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INDIA GROWTH FUND (CONTINUED)

Market Value as





Equities (continued)

India (continued)

165,399 MBL Infrastructures 1,326,223 0.84 135,000 Motherson Sumi Systems 1,100,616 0.70 5,011 MRF 2,696,050 1.70 269,511 Phoenix Mills 1,602,502 1.01 243,331 Reliance Industries 3,824,959 2.42 11,430 Shree Cement 2,037,442 1.29 203,734 SKS Microfinance 1,494,470 0.94 965,000 State Bank of India 3,985,253 2.52 347,860 Sun Pharmaceuticals 4,781,893 3.02 227,632 Tata Communications 1,585,335 1.00 174,563 Tata Consultancy Services 6,999,065 4.42 981,121 Tata Motors 'A' 4,020,217 2.54 246,508 Tech Mahindra 1,851,241 1.17 489,000 The Ramco Cements Limited 2,587,074 1.63 93,872 Thermax 1,542,795 0.97 53,333 Ultratech Cement 2,509,308 1.59 150,701 United Breweries 2,212,917 1.40 80,738 V-Guard Industries 1,136,649 0.72 244,500 Yes Bank 3,242,873 2.05 255,000 Zee Entertainment 1,474,538 0.93

Total Equities 153,645,486 97.05

153,645,486 97.05

Total Investments 153,645,486 97.05

Other Net Assets and Liabilities 4,675,731 2.95

Net Asset Value 158,321,217 100.00

SCHEDULE OF INVESTMENTS (CONTINUED)

30 June 2015

Total Transferable securities and money market instruments admitted to an official exchange listing or dealt in on another regulated market

No schedule of investment changes has been included into the report. Such information is available upon request from HSBC Bank plc, Luxembourg Branch, the Fund's Administrator.


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15

INDIA MIDCAP FUND

Market Value as





Equities

India

250,467 Akzo Nobel India 4,921,118 1.26 496,933 Alembic Pharmaceuticals 5,178,029 1.32 503,288 Amara Raja Batteries 6,987,716 1.78 1,594,732 Ashoka Buildcon 4,437,818 1.13 393,148 Astral Poly Technik 2,400,982 0.61 251,869 Atul 4,731,525 1.21 298,035 Aurobindo Pharma 6,801,736 1.74 1,019,080 Axis Bank 8,952,969 2.28 251,224 Bajaj Finserv 6,049,704 1.54 91,701 Bata India 1,524,482 0.39 38,534 Bayer CropScience 2,400,115 0.61 1,539,993 Berger Paints India 4,728,441 1.21 362,638 Bharat Forge 6,060,306 1.55 230,408 Britannia Industries 10,005,906 2.55 258,346 Cadila Healthcare 7,295,433 1.86 650,333 Century Textiles 7,208,318 1.84 544,499 CESC 4,781,900 1.22 590,437 Cipla 5,711,063 1.46 2,401,839 Crompton Greaves 6,134,556 1.57 1,142,776 Dabur India 5,031,067 1.28 1,994,478 Dish TV 3,333,900 0.85 149,714 Divis Laboratories 4,423,555 1.13 14,003 Eicher Motors 4,310,903 1.10 274,924 Emami 5,011,444 1.28 3,064,338 Federal Bank 7,118,639 1.82 794,931 Gateway Distriparks 4,283,704 1.09 349,008 Gujarat Gas 4,076,322 1.04 3,074,186 Gujarat State Petronet 5,733,024 1.46 662,151 Havells India 2,941,656 0.75 371,269 HCL Technologies 5,367,158 1.37 680,764 Hindustan Petroleum 7,801,881 1.99


30 June 2015


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INDIA MIDCAP FUND (CONTINUED)

Market Value as






India (continued)

674,323 HSIL 3,711,145 0.95 1,106,487 ICICI Bank 5,356,522 1.37 360,315 IFB Industries 2,880,628 0.74 496,000 IL&FS Transportation Network 1,109,360 0.28 638,845 IndusInd Bank 8,762,869 2.24 583,000 Inox Wind 3,875,182 0.99 325,000 Ipca Laboratories 3,625,045 0.93 368,432 JK Cement 3,905,357 1.00 753,653 JK Lakshmi Cement 4,115,164 1.05 424,847 Kajaria Ceramics 4,869,618 1.24 1,347,287 Kalpataru Power Transmission 5,521,668 1.41 300,369 KNR Constructions 2,476,204 0.63 1,099,064 KPIT Cummins Infosys 1,609,132 0.41 120,000 Lupin 3,544,001 0.90 534,318 Marico 3,776,246 0.96 900,232 Max India 6,837,026 1.74 661,187 MBL Infrastructures 5,301,613 1.35 1,208,457 Motherson Sumi Systems 9,852,202 2.51 7,687 MRF 4,135,809 1.06 544,759 Persistent Systems 5,139,947 1.31 275,631 Phoenix Mills 1,638,892 0.42 740,121 PNC Infratech 4,529,857 1.16 509,867 Ramkrishna Forgings 5,213,028 1.33 1,004,743 Sadbhav Engineering 4,588,405 1.17 11,449 Shree Cement 2,040,829 0.52 346,865 Shriram Transport Finance 4,652,908 1.19 889,307 SKS Microfinance 6,523,420 1.66 48,049 Solar Industries India 2,803,922 0.72 2,804,251 Syndicate Bank 4,330,473 1.11 520,088 Tata Chemicals 3,440,659 0.88 747,315 Tata Communications 5,204,647 1.33


30 June 2015


KOTAK FUNDS

17

INDIA MIDCAP FUND (CONTINUED)

Market Value as






India (continued)

885,260 The Ramco Cements Limited 4,683,503 1.20 190,463 Torrent Pharmaceuticals 3,896,045 0.99 1,365,677 Torrent Power 3,005,120 0.77 1,182,626 Tube Investments of India 6,428,669 1.64 1,589,870 Union Bank of India 3,689,614 0.94 576,056 United Phosphorus 4,849,435 1.24 309,108 Whirlpool of India 3,613,459 0.92 623,834 Yes Bank 8,274,088 2.11

Total Equities 339,557,081 86.66

339,557,081 86.66



Net Asset Value 391,833,967 100.00


30 June 2015




KOTAK FUNDS

18

SCHEDULE OF INVESTMENTS (CONTINUED)INDIA FIXED INCOME FUND (CONTINUED)30 June 2015

Market Value as





Debt Instruments

India

100,000,000 Bank of India 11% Perpetual 1,683,943 2.77 400,000,000 Food Corp 8.8% 22/03/2028 6,439,149 10.60 335,000,000 Food Corp 9.95% 07/03/2022 5,676,197 9.34 45,000,000 Gail India 8.3% 23/02/2024 704,685 1.16 125,000,000 HDFC 9.65% 19/01/2019 2,020,339 3.32 5,000,000 India Govt 7.16% 20/05/2023 74,296 0.12 100,000,000 India Govt 7.88% 19/03/2030 1,544,347 2.54 2,150,000 India Govt 8.17% 01/12/2044 33,939 0.06 100,000,000 India Govt 8.24% 10/11/2033 1,578,268 2.60 135,000,000 India Govt 8.28% 21/09/2027 2,142,265 3.52 50,000,000 India Govt 8.32% 02/08/2032 799,231 1.31 50,000,000 India Govt 8.6% 02/06/2028 815,981 1.34 50,000,000 India Govt 8.83% 25/11/2023 826,823 1.36 104,000,000 India Govt 9.2% 30/09/2030 1,776,057 2.92 150,000,000 India Infradebt 8.55% 04/02/2020 2,312,454 3.80 190,000,000 India Infrastructure Finance 7.9% 28/04/2024 2,908,099 4.79 12,000,000 NTPC 8.49% 25/03/2025 2,362,165 3.89 50,000,000 Nuclear Power Corp of India 8.14% 25/03/2026 777,451 1.28 50,000,000 Nuclear Power Corp of India 8.14% 25/03/2027 781,938 1.29 80,000,000 Power Finance Corporation 8.98% 08/10/2024 1,290,753 2.12 100,000,000 Power Grid Corporation of India 8.85% 19/10/2024 1,608,825 2.65 80,000,000 Punjab National Bank 8.23% 09/02/2025 1,237,754 2.04 100,000,000 Reliance 9.75% 02/08/2024 1,614,762 2.66 150,000,000 Reliance Jio Infocomm 9.25% 16/06/2024 2,411,204 3.97 125,000,000 Reliance Ports 8.45% 12/06/2023 1,911,956 3.15 100,000,000 State Bank of Patiala 8.29% 22/01/2025 1,559,310 2.57 150,000,000 Steel Authority of India 9% 14/10/2024 2,446,214 4.03

Total Debt Instruments 49,338,405 81.20

49,338,405 81.20



KOTAK FUNDS

19

SCHEDULE OF INVESTMENTS (CONTINUED)INDIA FIXED INCOME FUND (CONTINUED)30 June 2015

Market Value as



Other transferable securities and money market instruments

Debt Instruments

India

100,000,000 Infrastructure Leasing and Finance 8.78% 15/06/2018 1,576,141 2.59 17,000,000 IOT Utkal 9.843% 20/06/2019 280,657 0.46 13,600,000 IOT Utkal 9.843% 20/03/2020 226,168 0.37 15,300,000 IOT Utkal 9.843% 20/04/2020 254,701 0.42 150,000,000 PNB Housing Finance 8.59% 17/06/2020 2,360,467 3.89 75,000,000 Shriram Transport Finance 9.8% 28/11/2024 1,173,439 1.93

Total Debt Instruments 5,871,573 9.66

Total Other transferable securities and money market instruments 5,871,573 9.66



Net Asset Value 60,760,971 100.00



KOTAK FUNDS

20

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015 1. General information

Kotak Funds (the ‘Company’ or the ‘Fund’) is an investment company organised under the laws of the Grand Duchy of Luxembourg and is qualified as a Société d’Investissement à Capital Variable (SICAV). The Company, incorporated on 12 September 2007, is registered under Part I of the Luxembourg Law of 17 December 2010 regarding undertakings for collective investment as amended. The Company offers investors the choice between several classes of shares (each a “class”) in a number of Sub-funds. As at 30 June 2015, the Company was composed of the following Sub-Funds: - Kotak Funds - India Growth Fund; - Kotak Funds - India Midcap Fund; - Kotak Funds - India Fixed Income Fund. The following share classes were in issue as at 30 June 2015:

(i) Class A shares which are available to all investors. (ii) Class I and Class J shares which are reserved to institutional investors in the meaning of article

174 of the Luxembourg Law of 17 December 2010 as amended. The Class J shares is only available in India Midcap Fund.

(iii) Class B shares which are available to investors who at the time the relevant subscription order is received are customers of certain distributors appointed by the Global Distributor specifically for the purpose of distributing the Class B shares. The class is only available in India Growth Fund and India Midcap Fund.

(iv) Class X shares which are only available in certain jurisdictions and shall be offered at the discretion of the Global Distributor.

(v) Class C Shares may be offered in certain limited circumstances for distribution in certain countries and through certain distributors or sub-distributors who in the opinion of the Global Distributor, is wholly or partially impacted by the UK Retail Distribution Review.

The main objective of the Sub-Funds is to invest in sufficiently liquid transferable securities and other eligible assets in order to provide returns for investors. The Company has incorporated India Bluechip (Mauritius) Ltd (“the Bluechip Subsidiary”) on 14 December 2009, India Midcap (Mauritius) Ltd (“the Midcap Subsidiary”) on 19 April 2010 and K Debt (Mauritius) Limited (“the Debt Subsidiary”) on 27 September 2013 as wholly-owned subsidiaries. The subsidiaries hold a substantial proportion of the assets of the Sub-Funds. The subsidiaries have received a tax residence certificate from the Director General of Mauritius Revenue Authority, on which basis the subsidiaries should be entitled to appropriate relief under the India/Mauritius Double Tax Treaty. As wholly-owned subsidiaries of the Company all assets and liabilities, income and expenses of the subsidiaries are in the statements of net assets and operations of the respective Sub-Funds. All investments held by the subsidiaries are disclosed in the accounts of the Sub-Funds.

KOTAK FUNDS

21

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015 (CONTINUED) 2. Summary of significant accounting policies

a) Accounting convention The financial statements have been prepared in accordance with Luxembourg generally accepted accounting principles applicable to investment funds.

b) Financial statements Financial statements are presented for each Sub-Fund in the base currency of the Sub-Fund and the statements of net assets, operations and changes in net assets are presented in USD, based on the exchange rate ruling at the date of these financial statements. c) Foreign currency translation Assets and liabilities in currencies other than the Sub-Funds’ base currency have been translated into that currency at exchange rates ruling at the date of these financial statements. Transactions occurring during the period in currencies other than the base currency are translated at rates of exchange ruling at the transaction dates. The exchange rates applicable as at 30 June 2015 are:

USD/GBP 0.6346USD/EUR 0.8918USD/INR 63.6213USD/JPY 122.4140

d) Investments Securities listed on Regulated Markets, which operate regularly and are recognized and open to the public, are valued at the last available price of the main market for the relevant security. Securities listed on the Indian stock exchanges are valued at the closing price on the National Stock Exchange failing which the closing price on the Stock Exchange, Mumbai (BSE) failing which the closing price on any other exchange whereat the security is traded shall be considered. Securities not listed on Regulated Markets, which operate regularly and are recognized and open to the public, are valued on the basis of their last available price. In the event that extraordinary circumstances render such a valuation impracticable or inadequate, the Directors may, at their discretion, prudently and in good faith follow other methods of valuation to be used if they consider such method of valuation better reflects the value and is in accordance with good accounting practice in order to achieve a fair valuation of the assets of the Company. Gains or losses arising on the disposal of investments are calculated by reference to the net sales proceeds and the average cost attributable to those investments. e) Income and expenses Dividends arising on the Company’s equity investments are credited to the statement of operations when the security is quoted ex-dividend, net of withholding taxes where applicable. Interest income is recognised as the interest accrues (taking into account the effective yield on the asset) unless recoverability is in doubt. Where the Company incurs an expense which relates to any particular Sub-Fund or to any action taken in connection with a particular Sub-Fund, such liability shall be allocated to the relevant Sub-Fund. In the case where any expense of the Company cannot be considered as being attributable to a particular Sub-Fund, such expense shall be allocated to all the Sub-Funds pro rata to their NAV’s or in such other ways that the Directors deem equitable. Notwithstanding the provisions of the preceding paragraph, all liabilities of the Company, whatever Sub-Fund they are attributable to, shall, unless otherwise agreed upon with the creditors, be binding upon the Company as a whole.

KOTAK FUNDS

22

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015 (CONTINUED) 2. Summary of significant accounting policies (continued) e) Income and expenses (continued)

Swing pricing Under certain circumstances (for example, large volumes of deals) investment and/or disinvestment costs may have an adverse effect on the Shareholders’ interests in a Sub-Fund. In order to prevent this effect called “dilution”, the Directors have the authority to allow for the Net Asset Value per Share to be adjusted by effective dealing and other costs and fiscal charges which would be payable on the effective acquisition or disposal of assets in the relevant Sub-Fund if the net capital activity exceeds, as a consequence of the sum of all subscriptions, redemptions or conversions in such a Sub-Fund, such threshold percentage (the “Threshold”) as may be determined from time to time by the Directors, of the Sub-Fund's total net assets on a given Valuation Day. If the net capital activity on a given Valuation Day leads to a net inflow of assets in excess of the Threshold in the relevant Sub-Fund, the Net Asset Value used to process all subscriptions, redemptions or conversions in such a Sub-Fund is adjusted upwards by the swing factor that shall be determined from time to time by the Directors. If the net capital activity on a given Valuation Day leads to a net outflow of assets in excess of the Threshold in the relevant Sub-Fund, the Net Asset Value used to process all subscriptions, redemptions or conversions in such a Sub-Fund is adjusted downwards by the swing factor that shall be determined from time to time by the Directors. f) Forward foreign exchange contracts The Company may enter into forward foreign exchange contracts, into call or put options on currencies to hedge against exposures to foreign currency fluctuations. The carrying value of these contracts is the gain or loss that would be realised if the position were closed out on the valuation date, and is recorded as an unrealised gain or loss. Upon the closing of the contract, the gain or loss is recorded in the net realised gain or loss on foreign exchange. As at 30 June 2015, there was no open forward foreign exchange contract.

g) Futures contracts Financial futures contracts are valued at the exchange quoted settlement price. Initial margin deposits are made upon entering into the contracts and can be either in cash or securities. During the period the contracts are open, changes in the value of the contracts are recognised as unrealised gains and losses by “marking-to-market” on a daily basis to reflect the market value of the contracts at the end of each business day’s trading. Variation margin payments are made or received, depending upon whether losses or gains are incurred. When a contract is closed, the Sub-Fund records a realised gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the initial cost of the contract. h) Option contracts Premiums received on issued options are recorded as liabilities and premiums paid on the purchase of options are recorded as assets in the statement of net assets. Option contracts outstanding as at 30 June 2015 are valued at the last known price on the stock exchanges or regulated markets. Realised and change in unrealised gains and losses are recorded in the statement of operations. i) Dividends payable Within each Sub-Fund, there may be created different Classes which are entitled to regular dividend payments (“Distribution Shares”) or with earnings reinvested (“Accumulation Shares”). If a dividend is declared by the Company, it will be paid to each Shareholder concerned in the currency of the relevant Sub-Fund or Class. During the period ended 30 June 2015, the Fund distributed the following dividends:

India Midcap Fund Ex Date Pay date

11 February 2015 18 February 201512 May 2015 18 May 2015

Class X Distribution Shares JPYClass X Distribution Shares JPY

Rate per shareUSD 1.2756USD 1.2154

KOTAK FUNDS

23

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015 (CONTINUED) 2. Summary of significant accounting policies (continued)

j) Formation expenses Formation expenses are amortised on a straight line basis over 5 years from the date on which the Company/Sub-Funds commenced business. Formation expenses include initial set-up costs, registration fees and related legal fees. k) Dilution adjustment

The Board may implement a dilution adjustment for subscriptions and redemptions of shares of a sub-fund on a subscription and/or redemption day in order to mitigate the dilutive effect such transactions may have on such sub-fund. The dilution adjustment will be recorded in the relevant sub-fund’s NAV and becomes part of the relevant sub-fund’s NAV. The dilution adjustment is a percentage adjustment applied to each share class in a sub-fund on a dealing day determined on the basis of estimates of any effective dealing, other costs and fiscal charges that the Board of Directors believes are appropriate to take into account in respect of that sub-fund. The Board of Directors will apply the dilution adjustment if the existing shareholders (in case of subscriptions) or remaining shareholders (in case of redemptions) might otherwise be adversely affected. As the dilution adjustment for each sub-fund will be calculated by reference to the costs of the dealing spread, which can vary with market conditions, the amount of dilution adjustment can vary over time.

3. Management fees

Kotak Mahindra (UK) Limited as Investment Manager is entitled to receive fees from the Company in respect of their respective investment management services. The management fees are calculated based on a certain percentage per annum of the net asset values of the various Sub-Funds. The percentages of management fees at 30 June 2015 are as follows: Kotak Funds - India Growth Fund Class A: 2.00% Class I: 1.00% Class B: 2.00% Class X: 1.00% Class C: 1.00% Kotak Funds - India Midcap Fund Class A: 2.00% Class I: 2.00% Class B: 2.00% Class X: 1.00%* Class J: 1.00% Class C: 1.00% Kotak Funds - India Fixed Income Fund Class A: 1.20% Class I: 0.75% Class C: 0.75% *The Investment Manager has agreed with the Fund to contractually waive 0.25% of the management fees on behalf of Class X of the India Midcap Sub-Fund since the launch of the Class. Management fees, for the period ended 30 June 2015 amounted to USD 1,229,058 for the India Growth Fund, USD 1,413,192 for the India Midcap Fund and USD 157,857 for the India Fixed Income Fund are disclosed in the statement of operations.

4. Facilitation fees

The Investment Manager will receive a facilitation fee in respect of each of the Classes of India Growth Fund and India Midcap Fund, payable for each security transaction executed, which is not exceeding 0.50% of the transaction value. The Facilitation Charges for India Midcap Fund have been waived with effect from 3 January 2011 until further notice.

Facilitation fees for the period ended 30 June 2015 amounted to USD 123,262 for the India Growth Fund and is disclosed in the statement of operations.

KOTAK FUNDS

24

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015 (CONTINUED) 5. Administration and custodian fees

HSBC Bank plc, Luxembourg Branch, as administrator and custodian is entitled to receive from the Fund fees payable monthly based on the average Net asset value of each Sub-Fund. These fees are as follows:

Administration fee rate

Depositary fee rate

Custodian fee rate

USD 0 - USD 250,000,000 0.050% 0.010% 0.030% USD 250,000,000 - USD 500,000,000 0.040% 0.010% 0.025% Above USD 500,000,000 0.030% 0.010% 0.020% Administration and custody fees are subject to a minimum annual fee of EUR 15,000 (USD 16,820). The fee based on the average Net asset value of each Sub-Fund is disclosed separately in the statement of operations. The Administrator of the subsidiaries, Cim Fund Services Limited, is entitled to the following fees per annum:

(i) For administration, registrar and company secretary services: From the Bluechip Subsidiary and the Midcap Subsidiary USD 10,000 p.a. for NAV up to USD 20 million, USD 20,000 p.a. for NAV up to USD 50 million and USD 30,000 p.a. for NAV above USD 50 million. From the Debt Subsidiary 0.03% of the NAV of the subsidiary with a maximum fee of USD 30,000 p.a.

(ii) For services relating to the preparation and filing of annual tax returns in Mauritius: USD 1,000.

(iii) For services relating to the tax residency certificate: USD 500. (iv) For directorship: USD 2,000 per director.

6. Subscription tax

Under current law and practice, the Company is not liable to Luxembourg taxes on income or capital gains. The Company is subject to the “taxe d’abonnement” (subscription tax) at the rate of 0.05% per annum, except for the share classes dedicated to institutional investors which benefit from a reduced tax rate of 0.01%. Interest and dividend income, and gains on securities, may be subject to non-recoverable withholding taxes deducted at source in the countries of origin.

7. Taxation The Company invests in India through wholly owned Mauritian subsidiaries (the ‘Subsidiaries’) and the Company expects to obtain benefits under the double taxation treaty between Mauritius and India. To obtain benefits under the double taxation treaty the Subsidiaries have to meet certain tests and conditions, including the establishment of Mauritius tax residence and related requirements. The Subsidiaries have obtained a tax residence certification from the Mauritian authorities. No Mauritian capital gain tax is payable on profit arising from sale of securities, and any dividends and redemption proceeds paid by the Company to its shareholders will be exempt in Mauritius from any withholding tax. The Subsidiaries are private companies limited by Shares incorporated under the Mauritius Companies Act 2001. They were registered in Mauritius on 14 December 2009, 19 April 2010 and 27 September 2013 respectively for the India Growth Sub-Fund, India Midcap Sub-Fund and India Fixed Income Sub-Fund. The Subsidiaries are liable to pay income tax on their net income at a rate of 15%. The Subsidiaries are however entitled to a tax credit equivalent to the higher of actual foreign tax suffered and 80% of Mauritius tax payable in respect of their foreign source income tax thus reducing the maximum effective tax rate to 3%. The foregoing is based on current interpretation and practice and is subject to any future changes in Indian or Mauritius tax laws and in the tax treaty between India and Mauritius.

KOTAK FUNDS

25

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015 (CONTINUED) 8. Directors’ expenses

In addition to directors’ fees, directors are entitled to be reimbursed for reasonable traveling, hotel and other incidental expenses in respect of attending meetings of the Directors or General Meetings of the Fund. Total directors’ fees incurred during the period amount to USD 15,770.

9. Management company fee

On 12 September 2007, the Management Company, RBS (Luxembourg) S.A. was appointed in order to meet the requirements of the UCITS III (Undertakings for Collective Investment in Transferable Securities) Directive 85/611/EEC of 20 December 1985.

The Management Company is responsible on a day-to-day basis, under the supervision of the Directors of the Company, for providing administration, marketing and investment management services in respect of all Sub-Funds of the Company.

The Management Company delegates its investment management duties to Kotak Mahindra (UK) Limited, the investment manager of the assets of the Fund.

HSBC Bank plc, Luxembourg Branch has been appointed to perform central administration duties for the Company pursuant to a delegation of such duties to it by the Management Company.

RBS (Luxembourg) S.A. is entitled for the provision of the Management Company services rendered to the Fund, to receive a fee not exceeding 0.05% of the net asset value of the Sub-Funds per annum. The fee payable is subject to a minimum annual fee of EUR 24,000 (USD 26,912).

10. Futures

The following futures contracts were open as at 30 June 2015:

India Growth Fund

Description Maturity date Number Commitment Cost Market Unrealised of Value appreciation

contractsUSD USD USD USD

HDFC Bank Ltd 30 July 2015 236 989,635 967,088 986,919 19,831 HDFC Bank Ltd 27 August 2015 100 419,337 416,116 420,485 4,368 Unrealised appreciation futures contracts 24,199 India Midcap Fund

Description Maturity date Number Commitment Cost Market Unrealised of Value depreciation

contractsUSD USD USD USD

NSE CNX NIFTY 27 August 2015 3,280 10,785,963 10,899,676 10,840,193 (59,483) Unrealised depreciation futures contracts (59,483)

All of the above futures contracts are listed. The counterparty of all the futures contracts is Kotak Mahindra Bank Ltd.

KOTAK FUNDS

26

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2015 (CONTINUED) 11. Options

The following futures contracts were open as at 30 June 2015:

India Growth Fund

Options Maturity date Number Currency Commitment Fair Value % of sold of Net Assets

contractsUSD USD USD

Yes Bank Ltd 30 July 2015 (20) INR (1,326,364) (1,752) - United Breweries 30 July 2015 (5) INR (18,356) (646) - Total options sold (2,398) -

12. Risk transparency disclosures

The Board of Directors has decided to implement the following methodology to calculate the global exposure for each of the below mentioned Sub-funds.

Sub-fund Methodology applied for measuring the Global

Exposure

India Growth Fund Commitment approach

India Midcap Fund Commitment approach

India Fixed Income Fund Commitment approach

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