Mahindra Asset Management Company Private Limited

Transcription

1 Abridged Annual Report FY

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3 Sr. No. index Page 1. TRUSTEE REPORT 2 2. INDEPENDENT AUDITORS REPORT Abridged Balance Sheet as at March 31, Abridged Revenue Account for the YEAR / PERIOD ended March 31, Key Statistics for the YEAR / PERIOD ended March 31, Notes Accounts 21 Mahindra Asset Management Company Private Limited Registered Office: A Wing, 4th Floor, Mahindra Towers, Dr. G.M. Bhosale Marg, P.K. Kurne Chowk, Worli, Mumbai , India Corporate Office: Sadhana House, 1st Floor, 570, P.B. Marg, Worli, Mumbai , India m finvesrs@mahindra.com Tel: Fax: Website: Toll free:

4 TRUSTEE REPORT REPORT FROM MAHINDRA TRUSTEE COMPANY PRIVATE LIMITED TO THE UNIT HOLDERS OF THE SCHEMES OF MAHINDRA MUTUAL FUND We have pleasure in presenting the Second Annual Report along with the audited financial statements of the schemes of Mahindra Mutual Fund ( the Fund ) for the financial year ended March 31, SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES A. Performance of the schemes: The performance of the schemes of the Fund as on March 31, 2018 is as follows: Particulars Mahindra Liquid Fund^ Regular Plan Growth Direct Plan Growth Mahindra Mutual Fund Kar Bachat ^^ Regular Plan Growth Direct Plan Growth Mahindra Dhan Sanchay Equity Savings^^ Regular Plan Growth Direct Plan Growth Mahindra Low Duration Bachat ^ Regular Plan Growth Direct Plan Growth Mahindra Mutual Fund Badhat ^^ Regular Plan Growth Direct Plan Growth Mahindra Unnati Emerging Business ^^ Regular Plan Growth Direct Plan Growth Last 1 year returns of the scheme 6.72% 6.87% 3.50% 6.00% 6.07% 8.53% 6.07% 7.12% N.A. N.A. Last 1 year returns of the benchmark 6.84% 12.53% 10.90% 6.84% N.A. N.A. Returns since inception of the scheme 6.85% 7.00% 9.51% 12.17% 7.51% 10.03% 6.23% 7.28% 4.81% 7.27% -5.03% -4.75% Benchmark returns since inception of the scheme 6.87% 13.41% 13.72% 6.87% 8.28% -9.12% NAV as on March 28, Benchmark Index Crisil Liquid Fund Index Nifty 200* 55% Nifty + 30% Crisil Crisil Liquid Fund Index Nifty 200* S&P BSE Midcap Index* Composite Bond Fund Index+15% Crisil Liquid Fund Index* Date of inception / allotment of scheme 04-Jul Oct Feb Feb May Jan-2018 Past Performance may or may not be sustained in future. As the schemes (Mahindra Mutual Fund Badhat and Mahindra Unnati Emerging Business ) have not completed one year, returns shown under heading Since launch of the Scheme are in absolute terms which are calculated from the date of allotment. Returns greater than one year are compounded annualized (CAGR). Returns are calculated for the Growth Options of the respective Scheme(s)/Plan(s). ^Returns are calculated on Rs. 1000/- invested at inception. ^^Returns are calculated on Rs. 10/- invested at inception. *Pursuant SEBI Circular no. SEBI/HO/IMD/DF3/CIR/P/2018/04 dated Jan 4, 2018, the performance of the schemes has been benchmarked Total Return variant of their respective benchmark indices. Brief comments on the performance of the schemes Mahindra Liquid Fund The direct plan of the scheme has outperformed its benchmark since inception while the regular plan underperformed, albeit marginally. The in-line performance was due optimal mix of certificate of deposit and commercial paper & tactical allocation mark market assets. The net asset of the scheme amounted Rs crores as on March 31, The scheme has continued maintain its portfolio strategy of low volatility and high quality during the course of the year and will continue do so. Performances of the plans of the scheme are different the extent of the difference in expense ratios. The scheme is meant for invesrs looking deploy funds for a short span of time. The intention is offer reasonable returns at lower level of risk while maintaining the liquidity profile. Mahindra Mutual Fund Kar Bachat The scheme has underperformed its benchmark for last one year and since inception period. The underperformance was due overweight in Pharma secr and underweight in IT secr. 2

5 The net asset of the scheme amounted Rs crores as on March 31, As on March 31, 2018, 97.49% of the net assets were invested in equity and equity related instruments 2.51% in other current assets and CBLO. The scheme s focus is on creating an appropriate diversified portfolio of companies with a long term perspective. The scheme will follow a p down approach select secrs and follow a botm up approach pick scks across secrs based on growth and value opportunities available across secrs and scks. Mahindra Dhan Sanchay Equity Savings The scheme has underperformed its benchmark for last one year and since inception period. The underperformance was due underweight in Financial services and overweight in Pharma secr. The net asset of the scheme amounted Rs crores as on March 31, As on March 31, 2018, 65.65% of the net assets were invested in equity and equity related instruments 34.25% in Debt and other current assets and CBLO. The scheme s focus is on creating an appropriate diversified portfolio based on appropriate asset allocation with a long term perspective. The scheme will focus on extensive macro and micro research identify appropriate economic environment and reasonable price entry and exit points across asset class. The debt portion of the scheme carried a low modified duration, throught out the year, helping the scheme mitigate the risk due the rising interest rates. We would continue maintain actively manage the duration of the scheme ensure stability and outperformance of the scheme. Mahindra Low Duration Bachat The direct plan outperformed the benchmark since inception while the regular plan underperformed the benchmark. Rising interest rates majorly attributed the tepid performance. The net asset of the scheme amounted Rs crores as on March 31, The scheme is meant for invesrs looking deploy funds for a short span of time. The scheme will be managed according the investment objective, thereby seeking generate reasonable returns commensurate with low risk. The scheme will invest in money market and other debt securities and shall maintain high liquidity for the purpose of meeting the liquidity requirements of the invesrs. Mahindra Mutual Fund Badhat The scheme has underperformed its benchmark since inception. The underperformance was due overweight in midcaps and small caps compared large caps. The financial year saw large caps outperforming mid and small cap companies. The net asset of the scheme amounted Rs crores as on March 31, As on March 31, 2018, 94.60% of the net assets were invested in equity and equity related instruments 5.40% in other current assets and CBLO. The scheme s focus is on creating an appropriate diversified portfolio of companies with a long term perspective. The scheme will follow a p down approach select secrs and follow a botm up approach pick scks across secrs based on the quality of business model and quality of management. Mahindra Unnati Emerging Business The scheme has outperformed its benchmark since inception. The outperformance was due overweight in consumer secr and underweight in financial secr. The net asset of the scheme amounted Rs crores as on March 31, As on March 31, 2018, 97.11% of the net assets were invested in equity and equity related instruments 2.89% in other current assets and CBLO. The scheme s focus is on creating an appropriate diversified portfolio of companies with a long term perspective. The scheme will follow a botm up approach pick scks across the secrs and Sck picking will be based on the industry, macro and long term potential of the business. The focus will be build an appropriate portfolio capture the growth opportunities in India and identify companies which can grow become the next leaders in their segment. 3

6 Future Outlook Indian Economy The year witnessed two key events. The Goods and Services Tax (`GST ) was implemented from July 1, 2017 thus paving the way wards a `One Nation, One Tax system. Further, a new Insolvency and Bankruptcy Code was notified which is expected resolve the issues related non-performing assets of the Banking system. The second advance estimate of Gross Domestic Product (GDP) released by the Central Statistics Office in February 2018 estimated the real GDP growth at 6.60 percent (constant prices) in (7.10 percent in ). While the GDP growth was lower than last year, partly because of adjustments the GST regime, there were silver linings on the horizon. Credit Growth started accelerating and after several quarters, investment activity showed some green shoots and the Gross Capital Formation (GCF) GDP ratio inched up 31.40%. Global economic activity has continued strengthen and is becoming synchronized gradually. Inflation measured by Consumer Price Index (CPI) remained benign, averaging around 3.50% during the year and the exchange rate measured against the US Dollar was broadly stable through the year. The year also marked an upward movement in crude prices. Such movements, if they continue, could possibly endanger both inflation and growth expectations for the next financial year. Equity Markets The S&P BSE Sensex ended the year with gains of more than 11% close at 32,968 while the NIFTY 50 closed with gains of more than 10% close at 10,113. The S&P BSE mid cap index after rallying ahead of frontline indices for major part of the year closed at a commensurate gain of more than 12% during the year. Globally majority of the equity indices did well. The rally was led by infusion of liquidity by Domestic Institutional Invesrs (~USD 22bn) due strong retail participation despite Foreign Institutional Invesrs being net sellers (~USD 1.4 bn). Majority of the secrs participated in the rally in the indices barring the pharmaceutical secr. The year may see higher volatility in global equity markets due rising global interest rates. India, despite its strong long term macro fundamentals, may also see high volatility due the upcoming elections. Fixed Income Markets The interest rate environment, which was benign in , saw a sharp upward movement in rates. The benchmark sovereign 10-year rates, moved up by around 70 basis points close at 7.35%. The year was marked by volatility as the benchmark saw a low of around 6.40% in the first half of the year and moved up a high of around 7.80% during the latter part of the fiscal year. What contributed the upward bias was a combination of increase in fiscal deficit and rising crude and commodity prices resulted in increased inflationary expectations. The US Fed act of increasing the Fed rates and shrinking its balance sheet acted as headwinds the interest rate environment. Overview of the Mutual Fund Industry The Mutual Fund Industry had another good year. The Assets under Management (AUM) as on March 31, 2018 were Rs lakh crores compared Rs lakh crores as on March 31, Assets grew by 21.7 percent during the year. Net inflows in mutual funds during the year were Rs lakh crores showing a decline over net inflows over the previous year. However, the decline was mainly due sharp reduction in inflows in debt and liquid schemes. Both these scheme classes actually witnessed a net outflow in assets. There was a surge in inflows in equity schemes. Equity schemes saw net inflows of Rs lakh crores which was more than 2.6 times of the inflows in the previous year. The popularity of balanced schemes continued with inflows growing more than 2.4 times last year and uching Rs. 89,757 crores. Inflows in ELSS schemes also increased by 43%. The p ten players increased their market share during this year. Their combined share of tal assets increased 81% from 74% last year. During the year, SEBI issued the product classification guidelines and requested all Asset Management Companies review their product portfolio in accordance with these guidelines and submit their rationalization proposal SEBI. Going forward, this provides clarity AMCs, distriburs and cusmers and allows them have a better understanding of the different schemes offered by Mutual Funds. The Mutual Fund Industry has been showing robust growth over the last five years. In spite of this growth, mutual fund penetration continues remain low in terms of number of unique household accounts. Therefore, the potential for future growth is quite high and the industry will continue attract new households from the smaller wns and cities as well as urban centres. 4

7 B. Operations of the Schemes As of March 31, 2018, Mahindra Asset Management Company Pvt. Ltd. ( the AMC ) managed 6 schemes of the Fund which includes: 1 open ended equity linked savings scheme (ELSS); 3 open ended equity scheme; 1 open ended liquid scheme; 1 open ended debt scheme. The net assets under management of the schemes of the Fund as at March 31, 2018 were Rs. 2, crores and the average assets under management during the financial year was Rs. 2, crores. The tal numbers of invesrs under the schemes of the Fund as at March 31, 2018 were 98,624. The AMC operates through 26 branches, including Mumbai. The Fund continues provide value added services invesrs and distriburs with a view provide easier and better means of transacting, seeking information, etc. The Fund has continued modify its processes, wherever required, remain compliant with the regulary requirements at all times. 2. BRIEF BACKGROUND OF SPONSORS, TRUST, TRUSTEE CO. AND THE AMC CO. A. Mahindra Mutual Fund Mahindra Mutual Fund ( the Mutual Fund / the Fund ) was set up as a Trust by the Settlor, Mahindra and Mahindra Financial Services Limited ( MMFSL ) on September 29, 2015 with Mahindra Trustee Company Pvt. Ltd. ( the Trustee / the Trustee Company ) as a Trustee in accordance with the provisions of the Indian Trust Act, 1882 and is duly registered under the Indian Registration Act, The Trustee has entered in an Investment Management Agreement dated September 30, 2015 with Mahindra Asset Management Company Pvt. Ltd. function as the Investment Manager for all the Schemes of the Fund. The Mutual Fund was registered with SEBI on February 4, 2016 under Registration Code MF/069/16/01. B. Sponsor Mahindra Mutual Fund is sponsored by Mahindra and Mahindra Financial Services Limited ( MMFSL ). The Sponsor is the Settlor of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000/- (Rs. One Lakh only) Mahindra Trustee Company Private Limited ( the Trustee / the Trustee Company ) as the initial contribution wards the corpus of the Fund. MMFSL is a subsidiary of Mahindra and Mahindra Limited, one of India s leading tracr and utility vehicle manufacturers. MMFSL is one of India s leading non-banking finance companies focused on the rural and semi-urban secr. MMFSL has over 5.3 Million cusmers and has an AUM of over USD 8.49 Billion. MMFSL is a leading vehicle and tracr financier and also offers fixed deposits and loans SMEs. MMFSL has 1,289 offices across the country and it offers a wide range of loans, investment solutions and insurance solutions. MMFSL is the only Non-Banking Financial Company from India be listed on Dow Jones Sustainability Index in Emerging Market Category. MMFSL has been ranked in Top 15 India's Best Workplaces Work in BFSI, 2018 by Great Place Work Institute India. C. Mahindra Trustee Company Pvt. Ltd. The Trustee 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 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 Sck Exchanges, the Association of Mutual Funds in India and other regulary agencies. D. Mahindra Asset Management Company Pvt. Ltd. Mahindra Asset Management Company Private Limited ( the AMC ) is a company incorporated under the Companies Act, 1956, on June 20, 2013, having its registered office at 4 th Floor, A-wing, Mahindra Towers, Dr. G M Bhosale Marg, P K Kurne Chowk, Mumbai The AMC has been appointed as the Investment Manager of the Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated September 30, 2015 executed between the Trustee and the AMC. MMFSL holds 100% of the tal issued and paid up equity share capital of the AMC. 5

8 3. Investment Objectives of the Schemes Sr. Scheme Name No. 1 Mahindra Liquid Fund (An open ended liquid scheme) 2 Mahindra Mutual Fund Kar Bachat, (An open ended equity linked savings scheme with a statury lock in of 3 years and tax benefit) 3 Mahindra Dhan Sanchay Equity Savings, (An open ended scheme investing in equity, arbitrage and debt) 4 Mahindra Low Duration Bachat, [An open ended low duration debt scheme investing in instruments such that the Macaulay duration of the Portfolio is between 6 months and 12 months (Please refer page 29 of SID)] 5 Mahindra Mutual Fund Badhat (Multi Cap Fund - An open ended equity scheme investing across large cap, mid cap, small cap scks) 6 Mahindra Unnati Emerging Business (Mid Cap Fund - An open ended equity scheme predominantly investing in mid cap scks) 4. Significant Accounting Policies: Investment Objectives The Scheme seeks deliver reasonable market related returns with lower risk and higher liquidity through a portfolio of money market and debt instruments. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns. The investment objective of the Scheme is generate long-term capital appreciation through a diversified portfolio of equity and equity related securities. The Scheme does not guarantee or assure any returns. The Scheme seeks generate long term capital appreciation and also income through investments in equity and equity related instruments, arbitrage opportunities and investments in debt and money market instruments. However, there can be no assurance that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns. The investment objective of the Scheme is provide reasonable returns, commensurate with a low moderate level of risk and high degree of liquidity, through a portfolio constituted of money market and debt instruments. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns. The investment objective of the Scheme is provide medium long term capital appreciation through appropriate diversification and taking low risk on business quality. The diversified portfolio would predominantly consist of equity and equity related securities including derivatives. However, there can be no assurance that the investment objective of the Scheme will be achieved. The investment objective of the Scheme is seek generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and derivatives predominantly in mid cap companies. However, there can be no assurance that the investment objective of the Scheme will be achieved. Accounting policies are in accordance with Securities Exchange Board of India (Mutual Fund) Regulations Summary of significant accounting policies is disclosed in Financial Statements of the schemes. 5. Unclaimed Dividends & Redemptions Summary of number of invesrs & corresponding amount as at March 31, 2018: Scheme Name Unclaimed Dividends Unclaimed Redemptions Amount (Rs.) No. of Invesrs Amount (Rs.) No. of Invesrs Mahindra Mutual Fund Kar Bachat 1,18,158/ Total 1,18,158/ Note: The Amounts of Unclaimed Dividends and Redemptions which are pending for more than 3 months are considered as unclaimed. 6. Redressal of invesr complaints for the financial year Please refer Annexure - 1 for the details on Redressal of Complaints received against the Fund during the financial year ended March 31, Voting Policy and disclosures a. In terms of the SEBI circular no SEBI/IMD/CIR No 18 / /2010 dated March 15, 2010, the Fund has adopted the Proxy Voting Policy and Procedures ( the Policy ) for exercising voting rights in respect of securities held by the Schemes. The Policy is attached as Annexure -2. b. In terms of the requirement of SEBI circular ref. no. CIR/IMD/DF/05/2014 dated March 24, 2014 read with SEBI circular SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10, 2016, the AMC has obtained a certification from M/s. Deloitte 6

9 Haskins & Sells, Chartered Accountants on the voting report for the financial year The certificate dated May 8, 2018 issued by M/s. Deloitte Haskins & Sells, Chartered Accountants is hosted on the website of the Fund ( and also disclosed in Annual Report of the schemes of the Fund. c. The summary of the votes cast by the schemes of the Fund across all its investee companies and its break-up in terms of tal number of votes cast in favor, against or abstained, during the financial year is given below. Summary of Votes cast during the financial year Total no. of Break-up of Vote decision F.Y. Quarter resolutions For Against Abstained Jun Sep Dec Mar Further, the above mentioned summary is uploaded on the website of the Fund ( in the prescribed format and the same is also disclosed in Annual Report of the schemes of the Fund. d. Details of votes cast by the schemes of the Fund across all its investee companies during the financial year are uploaded on the website of the Fund ( in the prescribed format and the same is also disclosed in Annual Report of the schemes of the Fund. 8. Liabilities and responsibilities of the Trustees and the Settlor The main responsibility of the Trustees is safeguard the interest of the Unit holders and inter-alia ensure that the AMC functions in the interest of invesrs and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed, Statement of Additional Information and the Scheme Information Document(s) of the respective schemes. From the information provided the Trustee by the AMC and the reviews the Trustee has undertaken, the Trustee believes that the AMC has operated in the interests of the Unit holders. The Sponsor/Settlor is not responsible or liable for any loss or shortfall resulting from the operation of the schemes beyond the initial contribution of Rs.1 lakh made by them wards setting up of the Fund. 9. Statury Information a. The Sponsor is not responsible or liable for any loss resulting from the operation of the schemes of the Fund beyond their initial contribution ( the extent contributed) of Rs. 1,00,000/- for setting up the Fund, and such other accretions / additions 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 ( and shall be available for inspection at the Head Office of the mutual fund. Present and prospective unit holder can obtain copy of the trust deed, the full Annual Report of the Fund / AMC. Acknowledgements The Trustees wish thank the unit holders of the schemes for their faith in Mahindra Mutual Fund and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Cusdian, Bankers, Distriburs and Brokers. The guidance and services provided by the Audirs, sincerity and dedication of the employees of Mahindra Asset Management Company Pvt. Ltd. is also appreciated. For and on behalf of Mahindra Trustee Company Pvt. Ltd. Sd/- Gautam Parekh Trustee Sd/- Manohar G. Bhide Trustee Date: June 22, 2018 Place: Mumbai 7

10 Annexure -1 The report on redressal of invesr complaints received by Mahindra Mutual Fund during the financial year is as follows: Total No. of Folios as on March 31, 2018: 1,26,737 Complaint code Type of complaint# I A Non receipt of Dividend on Units I B Interest on delayed payment of Dividend I C Non receipt of Redemption Proceeds I D Interest on delayed payment of Redemption (a) No. of complaints pending at the beginning of the year (b) No of complaints received during the year Within 30 days days Resolved days Action on (a) and (b) Beyond 180 days Non Actionable* 0-3 months 3-6 months Pending 6-9 months II A Non receipt of Statement of Account/ Unit Certificate II B Discrepancy in Statement of Account II C Data Corrections in Invesr details II D Non receipt of Annual Report/Abridged Summary III A Wrong switch between Schemes III B Unauthorized switch between Schemes III C Deviation from Scheme attributes III D Wrong or excess charges/load III E Non updation of changes viz. address, PAN, bank details, nomination, etc IV Others** V Others - Transmission VI Others - MFU Portal Account Opening Total # including against its authorized persons/ distriburs/ employees. etc. *Non actionable means the complaint that are incomplete / outside the scope of the mutual fund **If others include a type of complaint which is more than 10% of overall complaint, provide that reason seperately This statement is reviewed and approved by the Board of Direcrs of Mahindra Trustee Company Pvt. Ltd. at their meeting held on April 17, months 8

11 Annexure-2 Proxy Voting Policy and Procedures 1.1 Background: As the investment manager the Mutual Fund, the AMC has a fiduciary duty act solely in the best interests of the unit holders of the Mutual Fund. As a part of this duty, we recognize that we must exercise voting rights fulfill our fiduciary duties of fidelity and care in good faith, the unit holders of the Mutual Fund. The AMC recognizes the importance of good corporate governance in ensuring that management and boards of direcrs fulfill their obligations shareholders. As part of our investment process, we take in account the approach of a company s board of direcrs and management wards corporate governance issues at the time of deciding whether invest in that company. 1.2 Philosophy of voting policy The investment guidelines are invest in companies which have acceptable standards of corporate governance, standard norms and effective management. The investment manager may generally attend and/or vote with the management of Investee Company on routine matters. However when the Investment Manager believes the interest of the shareholder is affected/prejudiced by any proposal, then the investment manager will attend and/or vote against such proposal. In case of exception, for such matters, the Investment Manager also decide abstain from voting where it has insufficient information or there is a conflict of interest or the Investment Manager does not have a clear stance on the proposal. The fund managers shall review all voting proposals and shall ensure that such proposals are identified and voted in a manner that maximizes the value of unit holders. The Investment Manager will generally vote in accordance with voting policy, but may act differently if relevant facts and circumstances so warrant. The Investment manager may deviate from Voting Policy guidelines if it feels necessary protect the right of the unit holders. Voting policy Investee Companies for Arbitrage Trades Every arbitrage trade is initiated based on opportunities available between Futures and Cash Market. The trade does not reflect a fundamental opinion on the company. The trade is a function of the spreads available between the Cash and Future Market. Since it is not a fundamental opinion based on the company per se, the Investment Manager shall abstain from voting with respect voting proposal(s) pertaining Investee Companies (i) where position(s) have been taken by the scheme(s) of Mahindra Mutual Fund only for the purpose of arbitrage opportunities; AND (ii) such position is less than 3% of the paid up capital of investee company. 1.3 Voting Guidelines The list being exhaustive, the following policies reflect what Investment Manager believes be good governance measures and its stand on various items. 1. Corporate governance matters, including changes in the state of incorporation, merger and other corporate restructuring, and anti takeover provisions Investment manager shall act in accordance the interest of the unit holder. 2. Changes capital structure, including increases and decreases of capital and preferred sck issuances Investment Manager will review it on a cases case basis, proposal by companies. Changes resulting in excessive dilution of existing shareholder value will not be supported. 3. Sck option plans and other management compensation issues The Investment Manager would support such remuneration proposal which are tied achieving long term performance and enhancing shareholder value. Options that are excessively generous or if it dilutes shareholder value will not be supported. 4. Social and corporate responsibility issues As such responsibilities are in growing need, Investment Manager shall focus on these issues. 5. Appointment and removal of direcrs As the Investment Manager believes in philosophy of having an independent board of direcrs, it will support an independent board of direcrs, and the key committees such as IPO, Audit and remuneration committees etc. 6. Any other issue that may affect the interest of the shareholders in general and interest of the unit-holders in particular Investment Manager shall analyse such issues and review such proposals 9

12 1.4 Review and control The voting guidelines and the actual exercise of proxy voting will be reviewed periodically by the management of the Investment Manager either through a committee or otherwise. The management will review the proxy voting required as per the voting policy and actual exercise of proxy votes. Further, management will also review the process of exercise of proxy votes and governance. AMC shall obtain audir s certification on the voting reports being disclosed by them. Such audir s certification shall be submitted the trustees. Board of AMC s and Trustees of Mutual Funds shall review and ensure that AMC s have voted on important decisions that may affect the interest of invesrs and the rationale recorded for vote decision is prudent and adequate. The confirmation of the same, along with any adverse comments made by audirs, shall be reported SEBI in half yearly trustee reports. Conflict of Interest It is the responsibility of the Fund Management personnel exercise discretion, in a case, where there are any direct or indirect conflict regarding proxy voting and should not be influenced by any overriding interests. The Compliance function should be consulted on any conflict concerns. 1.5 Disclosure of voting policy and exercise of Proxy Votes The Investment team of the AMC will maintain documentation on the voting information which will inter alia contain record of the rationale for voting. Further, the actual exercise of proxy votes in the general meetings of the investee companies in respect of the relevant matters will be disclosed on an annual basis on the website of the Mutual Fund as well as in the annual report distributed the unit holders of the Mutual Fund in the format prescribed by SEBI In addition the annual disclosure, quarterly disclosure of voting cast on their website (in spreadsheet format) on or within 10 working days from the end of the quarter. 10

13 INDEPENDENT AUDITORS REPORT TO THE BOARD OF DIRECTORS OF MAHINDRA TRUSTEE COMPANY PRIVATE LIMITED 1. Report on the Financial Statements We have audited the accompanying financial statements of the under mentioned Open Ended Debt and Equity Schemes (the schemes ) which comprise the Balance Sheets, the Revenue Accounts and the Cash Flow Statement (Mahindra Liquid Fund) for the year / period and as at the dates mentioned below and a summary of the significant accounting policies and other explanary information. Name of the Scheme Period covered for Revenue Account Balance Sheet date and Cash Flow Statement Mahindra Liquid Fund April 1, 2017 March 31, 2018 March 31, 2018 Mahindra Mutual Fund Kar Bachat April 1, 2017 March 31, 2018 March 31, 2018 Mahindra Dhan Sanchay Equity Saving April 1, 2017 March 31, 2018 March 31, 2018 (Formerly known as Mahindra Mutual Fund Dhan Sanchay ) Mahindra Low Duration Bachat April 1, 2017 March 31, 2018 March 31, 2018 (Formerly known as Mahindra Mutual Fund Alp-Samay Bachat ) Mahindra Mutual Fund Badhat May 11, 2017 March 31, 2018 March 31, 2018 Mahindra Unnati Emerging Business January 30, 2018 March 31, 2018 March 31, Management s Responsibility for the Financial Statements The Managements of Mahindra Trustee Company Private Limited (the Trustee ) and Mahindra Asset Management Company Private Limited (the AMC ) are responsible with respect the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows (where applicable) of the Schemes in accordance with accounting policies and standards as specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments there ( the SEBI Regulations ), including the Accounting Standards issued by the Institute of Chartered Accountants of India, as applicable and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due fraud or error. 3. Audirs Responsibility Our responsibility is express an opinion on these financial statements based on our audit. In conducting our audit, we have taken in account the provisions of SEBI Regulations, the applicable accounting and auditing standards and matters which are required be included in the audit report under the provisions of the SEBI Regulations. We conducted our audit of the financial statements 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 obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the audir s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due fraud or error. In making those risk assessments, the audir considers internal control relevant the Scheme s preparation of the financial statements that give a true and fair view in order design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Scheme s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate provide a basis for our audit opinion on the financial statements. 11

14 4. Opinion In our opinion and the best of our information and according the explanations given us, the aforesaid financial statements give the information required by the SEBI 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, 2018; (b) in the case of the Revenue Accounts, of the Net Surplus/(Deficit) as applicable of the respective Schemes for the year / period ended March 31, 2018; and (c) in the case of the Cash Flow Statement of Mahindra Liquid Fund of the cash flows for the year ended March 31, Report on Regulary Requirements 1. As required by paragraph 55 and Clause 5 of the Eleventh Schedule of the SEBI Regulations, we report that: (a) We have obtained all the information and explanations which the best of our knowledge and belief were necessary for the purposes of the audit. (b) The Balance Sheets; the Revenue Accounts and the Cash Flow Statement (Mahindra Liquid Fund) dealt with by this Report are in agreement with the books of account of the Schemes. (c) The financial statements have been prepared in accordance with accounting policies and standards as specified in the Ninth Schedule of the SEBI Regulations. 2. As required by clause 2 (ii) of Eighth Schedule of the SEBI Regulations, we report that, Non - traded securities have been valued following the Principles of Fair Valuation approved by the Boards of Direcrs of the Trustee and the AMC. In our opinion, these valuations are fair and reasonable. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firms Registration No W/W ) Sd/- R. Laxminarayan Partner Mumbai, June 22, 2018 (Membership No ) 12

15 Abridged Balance Sheet as at March 31, 2018 (Rupees in Lakhs) Mahindra Liquid Fund Mahindra Mutual Fund Kar Bachat As at As at As at As at March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 LIABILITIES 1 Unit Capital 145, , , , Reserves & Surplus 2.1 Unit Premium Reserve (15.60) , Unrealised Appreciation Reserve , Other Reserves 14, , , Loans & Borrowings Current Liabilities & Provisions 4.1 Provision for doubtful Income/Deposits Other Current Liabilities & Provisions 13, TOTAL 173, , , , ASSETS 1 Investments 1.1. Listed Securities: Equity Shares , , Preference Shares Equity Linked Debentures Other Debentures & Bonds 5, , Securitised Debt securities Securities Awaited Listing: Equity Shares Preference Shares Equity Linked Debentures Other Debentures & Bonds Securitised Debt securities Unlisted Securities Equity Shares Preference Shares Equity Linked Debentures Other Debentures & Bonds Securitised Debt securities Government Securities Treasury Bills 13, Commercial Paper 116, , Certificate of Deposits 36, , Bill Rediscounting Units of Domestic Mutual Fund Foreign Securities Total Investments 172, , , , Deposits Other Current Assets 3.1 Cash & Bank Balance CBLO/ Reverse Repo Lending , , Others , Deferred Revenue Expenditure ( the extent not written off) TOTAL 173, , , , Notes Accounts - Annexure I 13

16 Abridged Balance Sheet as at March 31, 2018 Mahindra Dhan Sanchay Equity Savings (Earlier known as Mahindra Mutual Fund Dhan Sanchay ) As at March 31, 2018 As at March 31, Mahindra Low Duration Bachat (Earlier known as Mahindra Mutual Fund Alp- Samay Bachat ) As at March 31, 2018 As at March 31, 2017 Mahindra Mutual Fund Badhat As at March 31, 2018 (Rupees in Lakhs) Mahindra Unnati Emerging Business As at March 31, 2018 LIABILITIES 1 Unit Capital 30, , , , , , Reserves & Surplus 2.1 Unit Premium Reserve (7.35) Unrealised Appreciation Reserve 2.3 Other Reserves 1, (200.39) (1,891.68) 3 Loans & Borrowings Current Liabilities & Provisions 4.1 Provision for doubtful Income/Deposits 4.2 Other Current Liabilities & Provisions TOTAL 33, , , , , , ASSETS 1 Investments 1.1. Listed Securities: Equity Shares 21, , , , Preference Shares Equity Linked Debentures Other Debentures & Bonds 3, , , , Securitised Debt securities Securities Awaited Listing: Equity Shares Preference Shares Equity Linked Debentures Other Debentures & Bonds Securitised Debt securities Unlisted Securities Equity Shares Preference Shares Equity Linked Debentures Other Debentures & Bonds Securitised Debt securities Government Securities 3, Treasury Bills Commercial Paper 1, , , Certificate of Deposits - - 1, , Bill Rediscounting Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 30, , , , , , Deposits 1, Other Current Assets 3.1 Cash & Bank Balance CBLO/ Reverse Repo , Lending 3.3 Others Deferred Revenue Expenditure ( the extent not written off) TOTAL 33, , , , , , Notes Accounts - Annexure I

17 Abridged Revenue Account for the year / period ended March 31, 2018 Mahindra Liquid Fund April 01, 2017 March 31, 2018 July 04, 2016 March 31, 2017 (Rupees in Lakhs) Mahindra Mutual Fund Kar Bachat April 01, 2017 March 31, 2018 August 22, 2016 March 31, INCOME 1.1 Dividend Interest 12, , Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / 4.33 (6.11) 3, redemption of investments 1.6 Realised Gains / (Losses) on Derivative Transactions Other Income ^ ( A ) 12, , , EXPENSES 2.1 Management fees Service tax / GST on Management fees Transfer agents fees and expenses Cusdian fees Trusteeship fees Commission Agents Marketing & Distribution expenses Audit fees Invesr Education Fund Expense Other operating expenses ( B ) NET REALISED GAINS/(LOSSES) FOR THE PERIOD (A -B = C) 11, , , Change in Unrealised Depreciation in value of (0.28) investments (D) 5 NET GAINS/(LOSSES) FOR THE PERIOD (E=(C-D)) 11, , , Change in unrealised appreciation in the value of (1,362.04) 1, investments (F) 7 NET SURPLUS/(DEFICIT) FOR THE PERIOD ( E + F = G ) 12, , , Add: Balance transfer from Unrealised Appreciation , Reserve 7.2 Less: Balance transfer Unrealised Appreciation (76.16) (13.77) - (1,362.04) Reserve 7.3 Add / (Less): Equalisation (708.27) 1, Total 11, , , Dividend appropriation 9.1 Income Distributed during the period 1, , Tax on income distributed during the period Retained Surplus/(Deficit) carried forward 8, , , Balance sheet ^ - Includes load income Notes Accounts - Annexure I 15

18 Abridged Revenue Account for the year / period ended March 31, 2018 Mahindra Dhan Sanchay Equity Savings (Earlier known as Mahindra Mutual Fund Dhan Sanchay ) April 01, 2017 March 31, 2018 January 10, 2017 March 31, 2017 Mahindra Low Duration Bachat (Earlier known as Mahindra Mutual Fund Alp- Samay Bachat ) April 01, 2017 March 31, 2018 February 14, 2017 March 31, 2017 Mahindra Mutual Fund Badhat May 11, 2017 March 31, 2018 (Rupees in Lakhs) Mahindra Unnati Emerging Business January 30, 2018 March 31, INCOME 1.1 Dividend Interest Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on (0.37) Interscheme sale of investments 1.5 Realised Gains / (Losses) on External 2, (18.52) sale / redemption of investments 1.6 Realised Gains / (Losses) on Derivative (258.77) Transactions 1.7 Other Income ^ ( A ) 3, (62.68) , EXPENSES 2.1 Management fees Service tax / GST on Management fees Transfer agents fees and expenses Cusdian fees Trusteeship fees Commission Agents Marketing & Distribution expenses Audit fees Invesr Education Fund Expense Other operating expenses ( B ) NET REALISED GAINS/(LOSSES) 3, (132.55) FOR THE PERIOD (A -B = C) 4 Change in Unrealised Depreciation in 1, , value of investments (D) 5 NET GAINS/(LOSSES) FOR THE 1, (199.49) (1,646.15) PERIOD (E=(C-D)) 6 Change in unrealised appreciation in the (457.49) (1.36) value of investments (F) 7 NET SURPLUS/(DEFICIT) FOR THE (1,646.15) PERIOD ( E + F = G ) 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer Unrealised (95.17) (552.66) (6.17) (7.53) - - Appreciation Reserve 7.3 Add / (Less): Equalisation (0.90) (245.53) 8 Total 1, (200.39) (1,891.68) 9 Dividend appropriation 9.1 Income Distributed during the period Tax on income distributed during the period 10 Retained Surplus/(Deficit) carried 1, (200.39) (1,891.68) forward Balance sheet ^ - Includes load income Notes Accounts - Annexure I 16

19 Key Statistics for the year / period ended March 31, 2018 Mahindra Liquid Fund April 01, 2017 March 31, 2018 July 04, 2016 March 31, 2017 Mahindra Mutual Fund Kar Bachat April 01, 2017 March 31, 2018 August 22, 2016 March 31, NAV per unit (Rs.): Open Regular Plan - Growth Option 1, ^^ ^^ Regular Plan - Daily Dividend Option 1, ^^ N.A. N.A. Regular Plan - Weekly Dividend Option 1, ^^ N.A. N.A. Regular Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Regular Plan - Dividend Option N.A. N.A ^^ Direct Plan - Growth Option 1, ^^ ^^ Direct Plan - Daily Dividend Option 1, ^^ N.A. N.A. Direct Plan - Weekly Dividend Option 1, ^^ N.A. N.A. Direct Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Direct Plan - Dividend Option N.A. N.A ^^ High Regular Plan - Growth Option 1, , Regular Plan - Daily Dividend Option 1, , N.A. N.A. Regular Plan - Weekly Dividend Option 1, , N.A. N.A. Regular Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Regular Plan - Dividend Option N.A. N.A Direct Plan - Growth Option 1, , Direct Plan - Daily Dividend Option 1, , N.A. N.A. Direct Plan - Weekly Dividend Option 1, , N.A. N.A. Direct Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Direct Plan - Dividend Option N.A. N.A Low Regular Plan - Growth Option 1, , Regular Plan - Daily Dividend Option 1, , N.A. N.A. Regular Plan - Weekly Dividend Option 1, , N.A. N.A. Regular Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Regular Plan - Dividend Option N.A. N.A Direct Plan - Growth Option 1, , Direct Plan - Daily Dividend Option 1, , N.A. N.A. Direct Plan - Weekly Dividend Option 1, , N.A. N.A. Direct Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Direct Plan - Dividend Option N.A. N.A End Regular Plan - Growth Option 1, , Regular Plan - Daily Dividend Option 1, , N.A. N.A. Regular Plan - Weekly Dividend Option 1, , N.A. N.A. Regular Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Regular Plan - Dividend Option N.A. N.A Direct Plan - Growth Option 1, , Direct Plan - Daily Dividend Option 1, , N.A. N.A. Direct Plan - Weekly Dividend Option 1, , N.A. N.A. Direct Plan - Monthly Dividend Option N.A. N.A. N.A. N.A. Direct Plan - Dividend Option N.A. N.A