ABRIDGED ANNUAL REPoRT FoR F.Y. 2013-2014 - · PDF fileABRIDGED ANNUAL REPoRT FoR F.Y. 2013-2014 ... Next to Kanjurmarg Railway Station, Kanjurmarg (East), ... the Fund in association

1 HDFC FMP 793D February 2014 (1) - Series 29

HDFC FMP 793D FEBRUARY 2014 (1) - HDFC FIXED MATURITY PLANS - SERIES 29A Close-ended InCome sCheme

TRUSTEE REPoRT

ABRIDGED ANNUAL REPoRT FoR F.Y. 2013-2014

SPoNSoRSHousing Development Finance Corporation LimitedRegistered Office:Ramon house, h. T. Parekh marg,169, Backbay Reclamation,Churchgate, Mumbai - 400 020.

Standard Life Investments LimitedRegistered Office :1 George Street, Edinburgh, EH2 2LL, United Kingdom.

TRUSTEEHDFC Trustee Company LimitedRegistered Office :HUL House, 2nd Floor, H.T. Parekh Marg, 165-166, Backbay Reclamation, Churchgate, Mumbai - 400 020.CIN : U65991MH1999PLC123026

ASSET MANAGEMENT CoMPANYHDFC Asset Management Company LimitedA Joint Venture with standard life Investments Registered Office :HUL House, 2nd Floor, H.T. Parekh Marg, 165-166, Backbay Reclamation, Churchgate, Mumbai - 400 020.CIN : U65991MH1999PLC123027

CUSToDIANHDFC Bank LimitedCustody Services,Lodha - I Think Techno Campus Office,Floor 8, Next to Kanjurmarg Railway Station,Kanjurmarg (East), Mumbai - 400 042.

STATUToRY AUDIToRSDeloitte Haskins & SellsChartered AccountantsIndiabulls Finance Centre Tower 3, 27th – 32nd Floor Senapati Bapat Marg Elphinstone Road (West) Mumbai - 400 013.

REGISTRAR AND TRANSFER AGENTComputer Age Management Services Pvt. LimitedNew No. 10, Old No. 178,M.G.R. Salai, Nungambakkam,Chennai - 600 034.

BoARD oF DIRECToRS(As at March 31, 2014)

HDFC Trustee Company LimitedMr. Anil Kumar Hirjee - ChairmanMr. Shishir K. DiwanjiMr. Vincent O’Brienmr. V. srinivasa RanganMr. Ranjan Sanghi

BoARD oF DIRECToRS(As at March 31, 2014)

HDFC Asset Management Company LimitedMr. Deepak S. Parekh - ChairmanMr. N. Keith SkeochMr. Keki M. Mistrymr. James AirdMr. P. M. ThampiMr. Humayun DhanrajgirDr. Deepak B. PhatakMr. Hoshang S. BillimoriaMr. Rajeshwar Raj BajaajMr. Vijay Merchantms. Renu s. KarnadMr. Milind Barve - Managing Director

HDFC MUTUAL FUNDHUL House, 2nd Floor, H.T. Parekh Marg, 165-166, Backbay Reclamation, Churchgate, Mumbai - 400 020.

Tel : (022) 6631 6333 l FAX : (022) 2282 1144 l WEBSITE : www.hdfcfund.com

HDFC Trustee Company Limited (the “Trustee”) presents its 14th report and the audited financial statements of the Schemes of HDFC Mutual Fund (the “Fund”), for the year ended March 31, 2014.

We are pleased to inform you that HDFC Asset Management Company Limited (“HDFC AMC”) and the Trustee, have entered into an agreement with Morgan Stanley Investment Management Private Limited (“MS AMC”) and the Board of Trustees of Morgan Stanley Mutual Fund (the “MS Trustees”), pursuant to which the schemes of MSMF (“MSMF Schemes”) will be transferred to and form part of the Fund, the Trustee will take over the trusteeship of the MSMF Schemes from the MS Trustees and HDFC AMC will take over the rights to manage the MSMF Schemes from MS AMC and become the investment manager of the MSMF Schemes (the “Transaction”). Pursuant to the Transaction, Morgan Stanley shall cease to be the sponsor, and Housing Development Finance Corporation Limited (HDFC Limited) and Standard Life Investments Limited shall assume the co-sponsorship of the MSMF Schemes. No objection for the said Transaction was received by HDFC AMC from SEBI.

A total of 8 Schemes (2 open ended equity schemes and 6 open ended debt / liquid schemes) with around 3.7 lakh investors and having net assets of ` 2,077.28 crores as of May 31, 2014 will be transferred to HDFC Mutual Fund. The transaction is expected to be completed by end of June 2014.

The Fund continued to launch simple and innovative products / facilities for the investors during the year as under:

HDFC Corporate Debt opportunities Fund

It is an open-ended income scheme. The investment objective of the Scheme is to generate regular income and capital appreciation by investing predominantly

in corporate debt. The net assets under the Scheme will be invested in Corporate Debt Securities and Money Market Instruments with maturities across the entire range of the yield curve to take advantage of various interest rate scenarios. The modified duration of the portfolio shall not exceed 5 years. The Scheme mobilised over ` 157 crores during the New Fund Offer Period.

HDFC Banking and PSU Debt Fund

It is an open-ended income scheme. The objective of the Scheme is to generate regular income through investments in debt and money market instruments consisting predominantly of securities issued by entities such as Scheduled Commercial Banks and Public Sector Undertakings (PSUs). Investments in securities issued by Scheduled Commercial Banks and PSUs shall be primarily made with the intention of maintaining high credit quality of the portfolio and to ensure safety in terms of timely repayment of interest and maturity proceeds. The Scheme mobilised over ` 114 crores during the New Fund Offer period.

HDFC Capital Protection oriented Fund – Series I & II

It is a Close-ended Capital Protection Oriented Income Scheme. The Scheme seeks to generate returns by investing in a portfolio of debt and money market instruments which mature on or before the date of maturity of the Scheme. The Scheme also seeks to invest a portion of the portfolio in equity and equity related instruments to achieve capital appreciation. Till March 31, 2014, the Fund launched 3 Plans under Series - I and 1 Plan under Series - II during the year having a tenure of 36 months and mobilised over ` 1,284 crores during the New Fund Offer Period of the respective Plans. The Plans under the Scheme are rated by an approved credit rating agency viz. ICRA.


HDFC Debt Fund For Cancer Cure 2014

Three (3) years ago, the Fund in association with the Indian Cancer Society (ICS) had launched ‘HDFC Debt Fund for Cancer Cure (‘HDFCC’)’ as a 3 year close-ended Capital Protection Oriented Income Scheme to provide financial assistance to needy cancer patients for their treatment by tapping those investor who would be willing to donate part of the dividend or entire dividend declared, if any, under HDFCC. The investors were provided with an option to donate either 50% or 100% of the dividends as donations to ICS. No investment and advisory fees was charged by HDFC AMC. HDFCC matured on March 10, 2014 and the maturity proceeds were paid to the Unitholders.

A total amount of ` 12.77 crore was donated to ICS on behalf of the investors of HDFCC.

To continue with this initiative of providing treatment to needy and under-privileged cancer patients, the Fund launched HDFC Debt Fund for Cancer Cure 2014 (‘the Scheme’), a 3 year close-ended capital protection oriented income scheme on the lines similar to its previous edition – HDFCC. The scheme mobilised over ` 171 crores during the New Fund Offer period.

HDFC Rajiv Gandhi Equity Savings Scheme

Under the Rajiv Gandhi Equity Savings Scheme, the Fund launched HDFC Rajiv Gandhi Equity Savings Scheme –Series 2 (‘the Scheme’) in January 2014. It is a 3 year close-ended Equity Scheme investing in Eligible Securities as per Rajiv Gandhi Equity Savings Scheme, as amended from time to time (‘RGESS’). The investment objective of the Scheme is to generate long term capital appreciation from a portfolio of Eligible Securities as specified in RGESS. A New Retail Investor shall be eligible for the tax benefit under RGESS only for three consecutive financial years beginning with the Initial Year (as defined in RGESS), in respect of the investment made in each financial year. The Scheme mobilised over ` 58 crores during the New Fund Offer Period.

HDFC Fixed Maturity Plans

The Fund launched 92 Fixed Maturity Plans (FMPs) under seven (7) series of close-ended income scheme during the year with gross mobilsation of over ` 19,169 crores. Noteworthy was the launch of a Plan with maturity of 3,360 days (over 9 years) which mobilised over ` 420 crores.

The said launched FMPs comprised of 2 FMPs under HDFC Fixed Maturity Plans – Series 25; 15 FMPs under HDFC Fixed Maturity Plans – Series 26; 12 FMPs under HDFC Fixed Maturity Plans – Series 27; 20 FMPs under HDFC Fixed Maturity Plans – Series 28; 40 FMPs under HDFC Fixed Maturity Plans – Series 29; 1 FMP under HDFC Fixed Maturity Plans – Series 30 and 2 FMPs under HDFC Fixed Maturity Plans – Series 31.

During the year ended March 31, 2014, HDFC AMC managed 52 schemes of the Fund. The break-up being 10 open-ended equity schemes, 2 close-ended equity scheme, 1 open-ended index linked scheme, 2 open-ended equity linked savings schemes, 3 open-ended balanced schemes, 11 open-ended income schemes, 2 interval income scheme, 1 open-ended gilt scheme, 2 open-ended liquid income schemes, 1 open-ended exchange traded fund, 1 open–ended Fund of Fund Scheme and 16 close-ended income schemes.

During the year ending March 31, 2014, HDFC Mutual Fund recorded strong growth in Assets Under Management (AUM). The AUM as at March 31, 2014 was ` 1,10,217.52 crore as against ` 93,766.13 crore as at March 31, 2013, representing an increase of 17.55%.

The equity schemes’ assets constitute 30.55% of the total assets under management of the Fund as at March 31, 2014.

This year too, HDFC Mutual Fund remained the largest Mutual Fund in India by Assets under Management. The total number of investors serviced by the Fund was 44.69 lac as at March 31, 2014.

During the financial year 2013-14, 1,51,42,543 Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) transactions were processed by the Fund.

Dividends were declared under various schemes as per the provisions contained in the respective Scheme Information Documents, after considering the distributable surplus available under the respective Schemes. Details of dividends declared can be viewed on website of the Fund viz. www.hdfcfund.com

1. SCHEME PERFoRMANCE, FUTURE oUTLooK AND oPERATIoNS

SCHEME PERFORMANCE AND OPERATIONS

HDFC Fixed Maturity Plans- Series -29 - Close-ended Income Scheme

During the year under review, the Fund managed 40 Plans under HDFC Fixed Maturity Plans - Series 29, a close-ended income scheme comprising several investment Plans that seek to generate income through investments in Debt / Money Market Instruments and Government Securities maturing on or before the maturity date of the respective Plan(s).

Each Plan is managed as a separate portfolio.

The Plan under the Scheme has generally performed in line with their respective benchmarks, by investing in securities in line with the yields prevailing for the relevant tenures at the time of launch.

Every investment opportunity is assessed with regard to credit risk, interest rate risk and liquidity risk. Investments in bonds and debentures are generally made in instruments rated by a Credit Rating Agency registered with seBI.

Please refer Annexure 1A for the performance/ returns as at March 31, 2014/ Date of Maturity.

FUTURE OUTLOOK

Fund outlook

The Financial Year ended 2013-14 was a mixed one with the first half of the year experiencing a lot of volatility in the currency, bond and equity markets. With FIIs pulling out money coupled with rise in Gold imports the current account deficit hit an all time high of 4.9% of the GDP in the first quarter of FY 13-14. The currency depreciated to a low of ~ `69 to a dollar for the first time. RBI raised short term rates to reduce the outflow of capital and put in place curbs for gold imports. The government also increased duty on gold imports. All these measures showed result in the second half of the year. The current account deficit has shown sharp improvement. On the fiscal front the government took measures to reduce the fiscal deficit to 4.1% of the GDP. With series of measures taken by the Government and the RBI, the economy appears to be stabilising. With inflation likely to moderate and the expectations of a stable government post the general elections, the sentiment in general also turned positive. The fiscal year ended on a positive note with both the S&P BSE SENSEX and Nifty closing at new highs.

HDFC Mutual Fund continued to maintain its leadership position in the industry at the end of the fiscal year. During the year we launched many new products like HDFC Capital Protection Oriented Fund – Series I and Series II, HDFC Rajiv Gandhi Equity Savings Scheme - Series-2, HDFC Corporate Debt Opportunities Fund and HDFC Banking & PSU Debt Fund in addition to Fixed Maturity Plans. We got an encouraging response to our new offerings. Further, we also launched our HDFC Debt Fund for Cancer Cure 2014, a follow up offering to our earlier fund. The dividend proceeds of the scheme go either partly or fully towards donations to the Indian Cancer Society (ICS). HDFC AMC has agreed to waive investment and management advisory fees and further shall match the dividend amount donated to ICS subject to a maximum of ` 5 crores to support needy patients fight cancer through ICS. The NFO collected over ` 171 crores.

In the coming financial year, with the prospects of economy improving, we see potential for greater inflows coming in across our products. Further, with the risk appetite of retail investors likely to increase, we anticipate more flows and wider participation in asset classes like equities as compared to the last financial year.

Debt Market outlook

Global economic activity strengthened in the second half of 2013, however, global growth remained sluggish at 3 percent for 2013. Global growth is likely to be around 3.5 percent in 2014 led by expansion in global output of advanced economies especially the US. The ongoing tapering of quantitative easing (QE) in the US, deflation concerns in the euro area, and inflation concerns in the emerging market economies are some of the risks to global growth.


The outlook for the Indian economy has shown improvement due to improved consumer confidence, positive business sentiments, expectations of a recovery in growth and decline in inflationary expectations. A modest recovery in growth to around 5.5 percent in 2014-15 is likely. Economic growth should be supported by a pick up in investment activity due to resolution of stalled projects as well as improvement in rural and external demand.

Weak demand conditions kept global commodity prices contained during the last year. In the backdrop of gradual recovery in the advanced economies and improved supplies, global food and commodity prices are likely to be stable. The Indian economy is set on a disinflationary path in the current year. Inflation in India is expected to continue to moderate given stable INR, stable commodity prices, weak demand conditions etc.

Given the moderating inflation, low CAD, moderating fiscal deficit, weak demand etc. outlook for interest rates continues to be positive i.e. interest rates should moderate in FY 2014- 15 & beyond.

2. BRIEF BACKGRoUND oF SPoNSoRS, TRUST, TRUSTEE CoMPANY AND ASSET MANAGEMENT CoMPANY

a. SPoNSoRS

HDFC Mutual Fund is sponsored by Housing Development Finance Corporation Limited and Standard Life Investments Limited. The Sponsors are the Settlors of the Mutual Fund Trust. The Sponsors have entrusted a sum of `1 lakh each to the Trustee as the initial contribution towards the corpus of the Mutual Fund.

HoUSING DEVELoPMENT FINANCE CoRPoRATIoN LIMITED (HDFC)

HDFC was incorporated in 1977 as the first specialised mortgage company in India. HDFC provides financial assistance to individuals, corporates and developers for the purchase or construction of residential housing. It also provides property related services (e.g. property identification, sales services and valuation), training and consultancy. Of these activities, housing finance remains the dominant activity. HDFC has a client base of around 13.25 lac borrowers, over 17.5 lac depositors, over 1.82 lac shareholders and over 25,000 deposit agents, as at March 31, 2014. The Company has a total asset size of ` 2,25,757 crore as at March 31, 2014 and cumulative approvals and disbursements of housing loans of ` 6,81,872 crore and ` 5,48,553 crore respectively as at March 31, 2014. As at March 31, 2014, HDFC had mortgage loan assets of ` 1,971.00 billion. Since inception, HDFC has financed over 4.6 million housing units. 74% of shareholders in HDFC are foreign investors. HDFC’s market capitalisation as at March 31, 2014 stood at approximately ` 1,379.35 billion.

HDFC’s borrowings consist of domestic term loans from banks and insurance companies, bonds and retail deposits. HDFC has received the highest rating for its bonds and deposits program for the Nineteenth year in succession.

As part of HDFC’s developmental initiatives, the company has set up institutions in various fields including Banking , Insurance, Life and General, Asset Management Credit Rating, Consumer Finance, IT-enabled services , Real Estate and Education Finance.

Over the years, the HDFC group has emerged as a strong financial conglomerate in the Indian capital markets with a presence in banking, life and general insurance, asset management and venture capital. HDFC’s key associate and subsidiary companies include HDFC Bank Limited, HDFC Standard Life Insurance Company Limited, HDFC Ergo General Insurance Company Limited, HDFC Asset Management Company Limited, GRUH Finance Limited, HDFC Venture Capital Limited and Credila Financial Services Limited. For more information log on to www.hdfc.com

STANDARD LIFE INVESTMENTS LIMITED

The Standard Life Assurance Company was established in 1825 and has considerable experience in global financial markets. The company was present in the Indian life insurance market from 1847 to 1938 when agencies were set up in Kolkata and Mumbai. The company re-entered the Indian market in 1995, when an agreement was signed with HDFC to launch an insurance joint venture.

On April 2006, the Board of The Standard Life Assurance Company recommended that it should demutualise and Standard Life plc float on the London Stock Exchange. At a Special General Meeting held in May voting members overwhelmingly voted in favour of this. The Court of Session in Scotland approved this in June and Standard Life plc floated on the London Stock Exchange on 10 July 2006.

Standard Life Investments was launched as an investment management company in 1998. It is the dedicated investment management company of the Standard Life group and is a wholly owned subsidiary of Standard Life Investments (Holdings) Limited, which in turn is a wholly owned subsidiary of Standard Life plc.

With global assets under management of approximately US$319.5 billion (£191.7 billion) as at March 31, 2014. Standard Life Investments Limited is a leading asset manager with an expanding global reach operating in the UK, Canada, Hong Kong, China, Korea, Ireland, France, Australia and the USA, and is responsible for investing money on behalf of five million retail and institutional clients worldwide.

In order to meet the different needs and risk profiles of its clients, Standard Life Investments Limited manages a diverse portfolio covering all of the major markets world-wide, which includes a range of private and public equities, government and company bonds, property investments and various derivative instruments. For more information log on to the website www.standardlifeinvestments.com

b. HDFC MUTUAL FUND

HDFC Mutual Fund (the “Fund”) has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882, as per the terms of the trust deed dated June 8, 2000 with Housing Development Finance Corporation Limited (HDFC) and Standard Life Investments Limited as the Sponsors / Settlors and HDFC Trustee Company Limited, as the Trustee. The Trust Deed has been registered under the Indian Registration Act, 1908. The Trustee has entered into an Investment Management Agreement dated June 8, 2000 with HDFC Asset Management Company Ltd. to function as the Investment Manager for all the Schemes of the Fund. The Fund was registered with SEBI on June 30, 2000

c. HDFC TRUSTEE CoMPANY LIMITED

HDFC Trustee Company Limited (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 SEBI (Mutual Funds) Regulations, 1996 (the “Regulations”) and the Trust Deed. The Trustee seeks to ensure that the Fund and the Schemes floated thereunder are managed by HDFC Asset Management Company Limited in accordance with the Trust Deed, the Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.


As at March 31, 2014, HDFC holds 100% of the paid-up equity share capital of HDFC Trustee Company Limited.

During the year under review, there has been no change in the composition of the Board of Directors of the Trustee..

d. HDFC ASSET MANAGEMENT CoMPANY LIMITED

HDFC Asset Management Company Limited (“HDFC AMC”) is a public limited company incorporated under the Companies Act, 1956 on December 10, 1999. HDFC AMC has been appointed as the Asset Management Company of HDFC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated June 8, 2000, and executed between HDFC Trustee Company Limited and HDFC AMC. HDFC AMC was approved to act as an Asset Management Company for HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. HDFC AMC is also registered with SEBI as a Portfolio Manager. Further, HDFC AMC shall also act as investment manager for HDFC AMC Real Estate AIF, a Category II Alternative Investment Fund.

During the year under review, there has been no change in the composition of the Board of Directors of HDFC AMC.

Shareholding Pattern

During the year under review, there has been a change in the equity shareholding pattern of HDFC AMC. The equity shareholding pattern as at March 31, 2014 of HDFC AMC is as follows:

Name of the Equity Shareholders % of the paid up equity capital

Housing Development Finance Corporation Limited (HDFC)

59.81

Standard Life Investments Limited (SLI) 39.87Other Shareholders (shares issued on exercise of stock options)

0.32

3. INVESTMENT oBJECTIVE oF THE SCHEME

Name of the Scheme Investment objectiveHDFC Fixed Maturity Plans - Series 29

To generate income through investments in Debt / Money Market Instruments and Government Securities maturing on or before the maturity date of the respective Plan(s). There is no assurance that the investment objective of the Scheme will be realized.

4. SIGNIFICANT ACCoUNTING PoLICIES

The Significant Accounting Policies form part of the Notes to the Accounts annexed to the Balance Sheet of the Schemes in the Full Annual Report. The Accounting Policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations, 1996.

5. UNCLAIMED DIVIDENDS & REDEMPTIoNS

Summary of No. of Investors & Corresponding amount as at March 31, 2014:

Name of the Plan Unclaimed Dividends Unclaimed Redemptions Amount (`) No. of

Investors Amount (`) No. of

Investors HDFC FMP 793D February 2014 (1) - Series 29

- - - -

6. STATUToRY INFoRMATIoN

a. Housing Development Finance Corporation Limited and Standard Life Investments Limited (the Sponsors) are not responsible or liable for any loss resulting from the operation of the Schemes of the Fund beyond their initial contribution of `1 lakh each for setting up the Fund, and such other accretions / additions to the same.

b. The price and redemption value of the Units, and income from them, can go up as well as down with fluctuations in the market value of its underlying investments.

c. Full Annual Report shall be disclosed on the website (www.hdfcfund.com) and shall be available for inspection at the Head Office of HDFC Mutual Fund. Present and prospective Unitholder can obtain copy of the trust deed, the full Annual Report of the Fund / HDFC AMC at a price.

7. ACKNoWLEDGEMENTS

The Trustee thanks SEBI, AMFI, the investors, Investor Service Centres, distributors, key partners, service providers, HDFC AMC and its employees for their commitment and looks forward to their continued support.

For and on behalf of the Board of Directors

HDFC Trustee Company Limited

Sd/-

Ranjan Sanghi

Director

Place : Mumbai

Date : June 13, 2014

ANNEXURE 1A - PERFoRMANCE/ RETURNS oF HDFC FIXED MATURITY PLANS AS AT MARCH 31, 2014/ DATE oF MATURITYReturns (%)^* AUM as on March 31,

2014/ Date of Maturity (` in crore)Scheme/ Plan Name Date of Allotment/

InceptionDate of

Maturity1 Year Since Inception

HDFC Fixed Maturity Plans - Series 29HDFC FMP 793D February 2014 (1) 26-Feb-14 - 266.23Growth Option n.A. 0.85HDFC FMP 793D February 2014 (1)- Direct PlanGrowth Option n.A. 0.87CRISIL Short Term Bond Fund Index # n.A. 1.26

^ Past Performance may or may not be sustained in future* Returns greater than 1 year are coumpounded annualized (CAGR). Returns less than 1 year are absolute.In case of Plans matured, the returns are calculated from the date of allotment till the date of maturity.# Benchmark IndexFace Value: ` 10 per unitN.A. – Not Available / Not Applicable


AUDIToRS’ REPoRT

To THE BoARD oF DIRECToRS oF

HDFC TRUSTEE CoMPANY LIMITED

HDFC FIXED MATURITY PLAN - 793D FEBRUARY 2014 (1) - SERIES 29

Report on the Financial Statements

We have audited the accompanying financial statements of HDFC FIXED MATURITY PLAN - 793D FEBRUARY 2014 (1) - SERIES 29 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2014 and the Revenue Account for period from February 26, 2014 to March 31, 2014, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Managements of HDFC Trustee Company Limited (the “Trustee”) and HDFC Asset Management Company Limited (the “AMC”) are responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Scheme 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 in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Scheme’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 to provide a basis for our audit opinion.

opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2014 and

(b) in the case of the Revenue Account, of the Surplus of the Scheme for the period ended on that date.

Emphasis of Matter

We draw attention to Note No. 2.2 in Schedule 8 of the financial statements wherein the Management of the AMC has explained its rationale regarding Accounting Standards issued by the Institute of Chartered Accountants of India as not being applicable to mutual funds.

Our opinion is not qualified in respect of this matter.

Report on Regulatory Requirements

1. As required by paragraph 55 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, we report that:(a) We have obtained all the information and explanations which to the

best of our knowledge and belief were necessary for the purposes of our audit.

(b) The Balance Sheet and the Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.

(c) In our opinion, the financial statements have been prepared 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.

2. As required by clause 2 (ii) of Eighth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, we report that, Non - traded securities have been valued following the “Principles of Fair Valuation” approved by the Board of Directors of the Trustee and the AMC, on the basis of average prices / yields provided by AMFI approved agencies. In our opinion, these valuations are fair and reasonable.

For DELoITTE HASKINS & SELLSChartered Accountants

(Registration No. 117365W)

Z. F. BillimoriaPartner

(Membership No. 42791)Mumbai, June 13, 2014


ABRIDGED REVENUE ACCoUNTFoR THE PERIoD FEBRUARY 26, 2014 To MARCH 31, 2014

` in Lacs

Current Period

INCoME

dividend -

Interest 168.85

Realised Gain / (Loss) on Foreign Exchange Transactions -

Realised Gains / (Losses) on Interscheme sale of investments -

Realised Gains / (Losses) on External sale / redemption of investments 41.73

Realised Gains / (Losses) on Derivative Transactions -

Other Income (Refer Note 5) -

(A) 210.58

EXPENSES

management fees -

Service tax on Management fees -

Transfer agents fees and expenses 0.44

Custodian fees 0.02

Trusteeship fees 0.28

Commission to Agents 3.18

Marketing & Distribution expenses -

Audit fees 0.05

Interest on Borrowings -

Transaction costs (Refer Note 7) 0.43

Investor Education and Awareness expenses 0.49

Other operating expenses * (0.93)

(B) 3.96

NET REALISED GAINS / (LoSSES) FoR THE YEAR / PERIoD (A -B=C) 206.62

Change in Unrealised Depreciation in value of investments (D) 0.06

NET GAINS / (LoSSES) FoR THE YEAR / PERIoD (E=(C-D)) 206.56

Change in unrealised appreciation in the value of investments (F) 19.63

NET SURPLUS / (DEFICIT) FoR THE YEAR / PERIoD (E + F = G) 226.19

Add: Balance transfer from Unrealised Appreciation Reserve ** -

Less: Balance transfer to Unrealised Appreciation Reserve -

Add / (Less): Equalisation -

Total 226.19

Dividend appropriation

Income Distributed during the year / period -

Tax on income distributed during the year / period -

Retained Surplus / (Deficit) carried forward to Balance sheet 226.19 * Expenses recovered from Asset Management Company are included in

other operating expenses.** Amount transferred from Revenue Reserve

` in LacsAs at

March 31, 2014LIABILITIESUnit Capital 26,396.65 Reserves & Surplus

Unit Premium Reserves - Unrealised Appreciation Reserve - other Reserves 226.19

Loans & Borrowings - Current Liabilities & Provisions

Provision for doubtful Income/Deposits - Other Current Liabilities & Provisions 4.11

ToTAL 26,626.95 ASSETSInvestmentsListed Securities:

Equity Shares - Preference Shares - Equity Linked Debentures - Other Debentures & Bonds 3,011.57 Securitised Debt securities -

Securities Awaited Listing:Equity Shares - Preference Shares - Equity Linked Debentures - Other Debentures & Bonds - Securitised Debt securities -

Unlisted SecuritiesEquity Shares - Preference Shares - Equity Linked Debentures - Other Debentures & Bonds 6,518.85 Securitised Debt securities -

Government Securities - Treasury Bills - Commercial Paper - Certificate of Deposits 17,006.17 Bill Rediscounting - Units of Domestic Mutual Fund - Foreign Securities - Total Investments 26,536.59 Deposits - other Current Assets

Cash & Bank Balance 3.05 CBLO/ Reverse Repo Lending 77.17 others 10.14

Deferred Revenue Expenditure - (to the extent not written off)

ToTAL 26,626.95

ABRIDGED BALANCE SHEET AS AT MARCH 31, 2014


Notes to Accounts - Annexure I to the Abridged Balance Sheet and Revenue Account for the period ended March 31, 20141 Investments:- 1.1. All investments of the scheme except Government Securities and

Treasury Bills are registered in the name of the Trustees for the benefits of the Schemes Unitholders. All investments in Government Securities and Treasury Bills are held in an SGL account in the name of “HDFC Mutual Fund”.

1.2. Open Position of derivatives as at March 31, 2014 is ` Nil. 1.3. Investments in Associates and Group Companies. Refer Annexure III 1.4. There are no open position of securities borrowed and / or lent by the

scheme as at March 31, 2014. 1.5. Non Performing Assets as at March 31, 2014 is ` Nil. 1.6. The Aggregate Unrealised Gain / (Loss) as at March 31, 2014 is

` 19.56 Lacs and as a percentage of net assets of the scheme as at March 31, 2014 is 0.07%.

1.7. The Aggregate value of investments purchased and sold (including matured) during the financial period and as a percentage of average weekly net assets are as under:

Purchase Value (` in Lacs)

% Sales Value (` in Lacs)

%

Current Period 107,484.81 405.22 81,041.73 305.53

1.8. The aggregate fair value of non-traded investments, valued in ‘good faith’ by the Investment Manager on the basis of the valuation principles laid down by SEBI as at March 31, 2014 is ` 26,536.58 Lacs and as a percentage of net assets of the scheme as at March 31, 2014 is 99.68%.

2 Disclosure Under Regulation 25(8) of the SEBI Regulations and other applicable Regulations.

Refer Annexure IV3 There are no Unit Holders holding over 25% of the Net Asset Value of the

Scheme as at March 31, 2014.4 Unit Capital movement during the period ended March 31, 2014. Refer Annexure II5 Other Income, if any includes load credited to scheme, compensation and

expense reimbursed by AMC.6 Expenses other than management fee are inclusive of service tax wherever

applicable.7 Transaction cost represent costs which are charged to the scheme and

not considered for computation of the total expense ratio as per SEBI Notification dated September 26, 2012.

8 As this is the first financial statement of the scheme since the date of commencement, there are no comparative figures.

9 Contingent Liability as at March 31, 2014 is ` Nil.

Annexure II - Unit Capital Movement

(Figures in Lacs)

ParticularsMarch 31, 2014

Units `

(A) Growth Option

Issued during the period 2,320.068 23,200.68

2,320.068 23,200.68

Repurchased during the period - -

At the end of the period (A) 2,320.068 23,200.68

(B) Dividend option

Issued during the period (including dividend reinvested) 2.565 25.65

2.565 25.65


At the end of the period (B) 2.565 25.65

(C) Quarterly Dividend option


3.355 33.55


At the end of the period (C) 3.355 33.55

(D) Direct Plan - Dividend option


0.500 5.00


At the end of the period (D) 0.500 5.00

(E) Direct Plan - Quarterly Dividend option


0.700 7.00


At the end of the period (E) 0.700 7.00

(F) Flexi Dividend option


0.850 8.50


At the end of the period (F) 0.850 8.50

(G) Direct Plan - Flexi Dividend option


0.053 0.53


At the end of the period (G) 0.053 0.53

(H) Direct Plan - Growth Option

Issued during the period 311.574 3,115.74

311.574 3,115.74


At the end of the period (H) 311.574 3,115.74

ToTAL (A) + (B) + (C) + (D) + (E) + (F) + (G) + (H) 2,639.665 26,396.65

Face value of units is ` 10.


Annexure IV - Disclosure under Regulation 25 (8) of the SEBI Regulations as amended

(i) Disclosure under Regulation 25(8) of the SEBI Regulation have been made in respect of amount paid to parties associated with sponsors in which the Asset Management Company or its major shareholders have a substantial interest as in accordance with the requirements given in SEBI’s Circular No. SEBI/IMD/CIR No 18 / 198647 /2010 dated 15th March, 2010.

(a) No brokerage on investments is paid to associates/related parties/group companies of sponsor/AMC during the current period.

(b) Commission on distribution of units to associates/related parties/group companies of sponsor/AMC during the current period.

Current Period

Name of associate/related

parties/group companies of

Sponsor/AMC

Nature of Association/

Nature of relation

(% holding)

Business given Commission related to the scheme

Amount (` in Lacs)

% of total business

received by the scheme

Amount (` in Lacs)

% of total commission

related to the scheme

HDFC Bank ltd.

Associate (22.64$) 398.28 1.51 - -

Pursuant to SEBI directives, no payment of commission has been made in respect of investments made by the Sponsor of the Mutual Fund.The above amount represents payments made to associates and is netted for the amount borne by the AMC, if any.(ii) The Scheme has made payments to its associates, for services rendered by

them, during the period as under: -

Entity Nature of Payment

Amount(` in Lacs)

% of equity capital held by the sponsors & its subsidiary/ associates

Current Period As at March 31, 2014

HDFC Trustee Company Ltd.

Trusteeship Fees 0.28 100**

HDFC Bank ltd.

Custody Charges 0.02 22.64$

Computer Age management Services Pvt. ltd.

Registrar and Transfer Agent Fees

0.44 23.17##

(iii) Amounts outstanding as at the Balance Sheet date :-

Entity Nature of Payment

Amount(` in Lacs)

% of equity capital held by the sponsors

& its subsidiary/ associates

As at March 31, 2014

As at March 31, 2014

Payable

HDFC Trustee Company Ltd.

Trusteeship Fees 0.05 100**

HDFC Bank ltd.

Custody Charges 0.02 22.64$

Computer Age management Services Pvt. ltd.

Registrar and Transfer Agent Fees

0.19 23.17##

The above amount represents payables to associates and is netted for the amount borne by the AMC, if any.

Receivable

HDFC Asset management Company Ltd.

Recovery of Expenses

2.02 99.68*

* 59.81% by HDFC Ltd.; 39.87% by Standard Life Investments Ltd.

** Held by HDFC Ltd.

$ Held by HDFC Ltd. (including through HDFC Investments Ltd. and HDFC Holdings Ltd.)

## Held by HDFC Ltd. (11.09%) , HDFC Bank Ltd. (6.17%) , HDB Employees Welfare Trust (5.91%)

Annexure III - Investments in Associates and Group Companies (` in Lacs)Nature of instruments Bill Re-discounting Deep Discount Bonds Equity Shares NCD/ KhokhaName of the Issuer # Investment

by the schemeAggregate Investment

by all schemes

Investment by the scheme

Aggregate Investment

by all schemes



by all schemes



by all schemesABB India ltd. - - - - - 701.09 - - Exide Industries Ltd. - - - - - 51.10 - - HCL Technologies Ltd. - - - - - 299.77 - - HDFC Bank Ltd. - 147,827.11 - - - 75,286.60 - - Housing Development Finance Corporation Ltd. - - - 36,519.01 - 24,402.57 - 289,314.08 IDFC Ltd. - - - - - 4,438.66 - 2,002.25 Infrastructure Leasing and Financial Services Ltd. - - - - - - - 1,029.28 Mahindra & Mahindra Ltd. - - - - - 1,453.53 - - siemens ltd. - - - - - 12,271.39 - - Strides Arcoblab Ltd. - - - - - 3,139.22 - - Sun Pharmaceutical Industries Ltd. - - - - - 652.48 - - United Spirits Ltd. - - - - - 6,532.77 - - Total - 147,827.11 - 36,519.01 - 129,229.18 - 292,345.61

# This disclosure has been made as Director(s) of the AMC is/are also a Director on the Board of the above Companies. The above investments were considered sound at the point of investment. Before making an investment, the same is evaluated on merits and on arm’s length basis and in accordance with the objective of the scheme. The investments under the respective Plans of HDFC Index Fund were made pursuant to their Investment Objectives.


KEY STATISTICS FoR THE PERIoD FEBRUARY 26, 2014 To MARCH 31, 2014

Current Period1. NAV per unit (`):

open (Allotment NAV)

Growth Option 10.0000

Normal Dividend Option 10.0000

Quarterly Dividend Option 10.0000

Direct Plan - Dividend Option 10.0000

Direct Plan - Quarterly Dividend Option 10.0000

Flexi Dividend Option 10.0000

Direct Plan - Flexi Dividend Option 10.0000

Direct Plan - Growth Option 10.0000

High









Low









End








Direct Plan - Growth Option 10.0869 Auditors’ Report and Abridged Audited Results have been extracted from the Auditors’ Report, Audited Balance Sheet, Revenue Account and Notes to Accounts. Full Annual Report shall be disclosed on the website (www.hdfcfund.com) and shall be available for inspection at the Head Office of HDFC Mutual Fund. Unit holder can obtain a copy of the same at a price.

MUTUAL FUND INVESTMENTS ARE SUBJECT To MARKET RISKS, READ ALL SCHEME RELATED DoCUMENTS CAREFULLY.

Current Period2. Closing Assets Under Management (` in Lacs)

end 26,622.84

Average (AAuM) 26,525.37

3. Gross income as % of AAuM1 8.52@

4. Expense Ratio5:

a. Total Expense as % of AAuM (plan wise)

Regular Plan 0.16@

Direct Plan 0.01@

b. Management Fee as % of AAuM (plan wise)

Regular Plan -

Direct Plan -

5. Net Income as a percentage of AAuM2 8.36@

6. Portfolio turnover ratio (%) 3 nA

7. Total Dividend per unit distributed during the period -

8. Returns (%) ^ :

a. Last one Year

Growth Option nA

Direct Plan - Growth Option nA

Benchmark # nA

b. Since Inception

Growth Option 0.85*

Direct Plan - Growth Option 0.87*

Benchmark # 1.26*

* Absolute Returns# CRISIL Short Term Bond Fund Index@ Annualised for the period from February 26, 2014 to March 31, 2014^ Past performance may or may not be sustained in the futureNA - Not Applicable1. Gross income = amount against (A) in the Revenue account i.e. Income.2. Net income = amount against (C) in the Revenue account i.e. NET

REALISED GAINS / (LOSSES) FOR THE YEAR / PERIOD3. Portfolio Turnover = Lower of sales or purchase divided by the Average

AuM for the year/period.4. AAuM=Average daily net assets5. Expense Ratio = Planwise expense divided by Planwise Average AuM for

the year / period.


Have you…Updated your KYC information with us?Provide us your latest KYC informationKYC is mandatory for all investments with effect from January 1, 2011. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc), unit holders need not undergo the same process again when they approach another intermediary. Unit holders have to keep their KYC information with HDFC Mutual Fund updated at all times. With effect from January 1, 2012, mutual funds have to conduct in-person verification (IPV) of individual unit holders and collect additional information from all investors as part of the KYC process. Unit holders who have completed their KYC procedure on or before December 31, 2011 may visit an Investor Service Centre (ISC) of HDFC Mutual Fund / CAMS or their financial advisor, if any, at the earliest for providing additional KYC information and undergoing IPV. KYC procedure can be completed at the Point of Service of any KYC Registration Agency (KRA) authorized by SEBI.Identification of Ultimate Beneficial Ownership for Non-individual investorsSEBI has mandated all registered intermediaries to obtain sufficient information from their investors / clients viz. non-individuals and trusts in order to identify and verify the identity of persons who beneficially own or control the investments. The beneficial owner is defined as the natural person or persons, who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted or those persons who exercise ultimate effective control over a legal person or arrangement. In view of the above we request you to submit the details of the beneficial ownership along with the requisite documents at the earliest. For the application form to provide the details for your organisation, please visit our website www.hdfcfund.com.Done your bit towards the environment?Provide us your latest contact information and opt for receiving documents by emailUpdate your email ID and mobile number in your folio(s) and experience the convenience of receiving transaction alerts and account statements immediately upon transacting. You can also request for scheduling an account statement to be sent regularly to your email ID. HDFC Mutual Fund offers eDocs facility which enables you to receive documents (account statements, annual reports etc.) by email. eDocs are convenient, easy to store / retrieve, free of cost as well as eco-friendly. After opting for the facility, if you need any document in the physical form, you may request for the same and we shall provide it at no cost to you.Transact using HDFCMFOnline, HDFCMFMobile and HDFCMF InstaInvestOur transacting facility HDFCMFOnline enables unit holders to transact online on our website www.hdfcfund.com on a 24*7 basis. On HDFCMFOnline unit holders can purchase, redeem or switch units, register for systematic transactions, view their account details online, download account statements and view their account profile. Unit holders can login using their HDFCMF Personal Identification Number (HPIN) to access the wide array of information available online. The HPIN can be requested for by submitting a duly filled eServices form at any our ISCs.We have recently launched apps for Android® and Apple® devices under the HDFCMFMobile suite. These apps facilitate transacting in our schemes and viewing your portfolio details on the go.Under HDFCMFOnline and HDFCMFMobile platforms, unit holders can effect payment for subscription of units using the net banking facility or debit cards issued by designated banks and they receive an instant email confirmation of their transaction.HDFCMF InstaInvestHDFC InstaInvest is a facility through which an investor can purchase / redeem units by sending instructions through Short Messaging Service (SMS) from a registered mobile number to 5676725. Currently, the facility is offered under HDFC Cash Management Fund – Treasury Advantage Plan – Retail Option.Experienced the convenience of receiving your dividend and redemption payout(s), if any, directly into your bank account?Update your IFSC code for receiving payouts electronically vide NEFT / RTGSSave your time and experience the convenience of receiving your dividend and redemption payout(s), if any, directly into your bank account. Electronic payouts facilitate safer, faster, reliable and hassle-free credit of redemption / dividend into your bank account.Registered a nominee in your folio?Submit the form for nominationNomination is highly recommended for all unit holders, especially those who hold units in a single name, so as to avoid any inconvenience, should there be an unforeseen event in future. By registering a nominee / nominees, the units can be transmitted directly to the nominee(s), with some simple procedures.Checked if you have received the redemptions and dividends, if any, in your folio?Check for any unclaimed redemptions / dividendsUnit holders should ensure that they have received all redemptions and dividends, if any, in their folio(s). If any payouts have not been received, our Investor Service Centres will assist unit holders in receiving any such payments.

Did you know? Units of select schemes of HDFC Mutual Fund can be held in your demat account and are available for transactions on the stock exchanges.Some of our facilities:• Consolidation of folios• Registration of multiple bank accounts• Multilingual Statement of AccountFor more information on the above and a suite of other facilities and services offered by HDFC Mutual Fund, visit your financial advisor, if any, or visit our Investor Service Centre closest to you or log on to www.hdfcfund.com. You may also call us on 1800 3010 6767 or email us at [email protected] new contact number : 1800 3010 6767 (toll-free)[Our call centre executives will be available Monday to Friday 8:00 a.m. to 8:00 p.m. and on Saturdays 8:00 a.m. to 1:00 p.m. to assist you]

IMPoRTANT!


FATCA, an acronym for Foreign Account Tax Compliance Act (FATCA), is a United States Federal law to improve tax compliance involving foreign financial assets and offshore accounts of US citizens. FATCA requires Foreign Financial Institutions (FFIs) to report certain information about financial accounts held by U.S. tax payers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest either directly or indirectly to the US tax authorities.

The Government of India and the United States of America (US) have reached an agreement in substance on the terms of an Inter-Governmental Agreement (IGA) to implement Foreign Accounts Tax Compliance Act (FATCA) and India is now treated as having an IGA in effect from April 11, 2014.However, the IGA may be signed in due course. Information on FATCA is available at: http://www.irs.gov/FATCA.

Pursuant to the new reporting regime required under FATCA, the AMC/Mutual Fund may need to collect and disclose information about its investors/Unitholders to Internal Revenue Service (IRS) or the Indian Tax Authorities, as the case may be for the purpose of onward transmission to the IRS. An investor/Unitholder will therefore be required to comply with the request of the AMC/Mutual Fund to furnish such information as and when sought by the AMC for the AMC/Mutual Fund to comply with the extant information reporting requirements. The information disclosed may include (but is not limited to) the identity of the investors and their direct or indirect beneficiaries, beneficial owners and controlling persons.

Information on FATCA


Bo

oK

-PosT

If undelivered, please return to:

Computer Age Management Services (P) Ltd.Unit : HDFC Mutual Fund“Rayala Towers”, Tower I, 6th Floor,158, Anna Salai, Chennai- 600 002. PR

INT

HOUS

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8