HDFC Corporate Bond Fund(An open ended debt scheme predominantly investing in AA+ and above rated corporate bonds)

October, 2019

This product is suitable for investors who are seeking*:• Income over short to medium term.• To generate income/capital appreciation through investments predominantly in AA+ and above rated corporate

Bond.*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Riskometer

A portfolio of high quality corporate bonds!^

^Please refer slide 9

1

• Real yields* in India high

• CPI outlook remains benign led by food inflation

• Healthy differential with US Real yields

• Outlook on headline inflation remains benign

• US Fed cut rates by 50 bps on weak global growth outlookand muted inflation; ends balance sheet unwinding 2months before schedule

– US 10Y yields have come off materially from the highmade in Nov’18;

– Divergence of view on further rate cuts implies that anyfuture rate cuts is likely to be data dependent

– Development around Trade war remains the keyvariable;

* Real Yields = Month-end 10Y GSec Yield and CPI; Updated till 31st August’19. CPI-IW is used to calculate real yields for period before 2012

Source: CMIE, Bloomberg, RBI, Kotak Institutional research.

2

1.25

1.50

1.75

2.00

2.25

2.50

2.75

3.00

3.25

May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19

%US 10 Year Yield

Data beyond August 2019 are RBI estimates

0.0

2.0

4.0

6.0

8.0

Jul/15 Jul/16 Jul/17 Jul/18 Jul/19

%

Inflation outlook remains benign

Rates Outlook: Forces favoring lower Interest rates

2

Risk of reversal of food price inflation

• WPI and CPI food inflation have largely moved in tandem in past

• Divergence has increased sharply since Jan19

* Adj SLR = Investments in Statutory Liquidity Ratio (SLR) Securities adjusted for securities under LAF# Regulatory Requirements = SLR + Liquidity coverage requirement requirements (~15-17% of NDTL) – carve out allowed from SLR^REER stands for Real Effective exchange rate and data is provided by RBI and is calculated using weighted average currency basket of 36 currenciesSource: RBI, Kotak Institutional research, NSDL

3

Excess SLR Investments, especially with PSU banks

• Incremental demand for G-sec could remain muted

Fiscal slippage imminent with corporate tax rates

• Fiscal deficit impact of tax rate cuts is estimated to be ~0.3% of GDP

for centre and another ~0.2% for states

• Additional supply of dated government securities poses risk to yield,

given the weak demand

3.0%

7.7%

-5.0%

5.0%

15.0%

25.0%

Jun/1

2

Nov/12

Apr/13

Sep/13

Feb/14

Jul/1

4

Dec/14

May/15

Oct/15

Mar/16

Aug/16

Jan/17

Jun/1

7

Nov/17

Apr/18

Sep/18

Feb/19

Jul/1

9

Divergence between Food component of WPI

and CPI

CPI Food

WPI Food

27.9%

18.6%17.00%

27.00%

Aug/1

5

Nov/1

5

Feb/1

6

May/1

6

Aug/1

6

Nov/1

6

Feb/1

7

May/1

7

Aug/1

7

Nov/1

7

Feb/1

8

May/1

8

Aug/1

8

Nov/1

8

Feb/1

9

May/1

9

Aug/1

9

Excess SLR holdings with PSU Banks

Adj SLR*

3.1%

1.0%

3.0%

5.0%

7.0%

9.0%

Au

g/0

7

Au

g/0

8

Au

g/0

9

Au

g/1

0

Au

g/1

1

Au

g/1

2

Au

g/1

3

Au

g/1

4

Au

g/1

5

Au

g/1

6

Au

g/1

7

Au

g/1

8

Au

g/1

9

TTM Fiscal deficit as % of GDP

Rates Outlook: Forces adversely impacting interest rates

3

Positives

• High real yields* in India

• Healthy real rates* differential between India & US

• Headline CPI outlook remains benign

• Scope of further rate cuts; Stance remains accommodative

• Concerns over Trade war and thus Global growth

Negatives

• Excess SLR securities holding of PSU banks

• Fiscal slippage imminent, thus additional Gsec supply

• Ample liquidity and large dividend from RBI may result in

lower OMOs purchases

• Reversal in food prices can take inflation higher

• Growth likely to recover from H2FY20

Yields likely to be range bound with downward bias

4

* Month-end 10Y benchmark yield less headline inflation for the month

Interest Rates Outlook – Range bound

Source: Daily valuation provided by ICRA/CRISIL; Bloomberg; Data is updated till 30th September 2019. Refer disclaimer

Liquidity concerns post IL&FS default addressed by

• Timely actions by RBI and Government

• Securitisation / asset sale, unutilised bank lines etc.

Growth expected to moderate for NBFCs

• Cost of funds rising with widening of spreads

• Risk aversion amongst lenders

Concern over NBFCs / HFCs with higher yielding real estate exposures.

Driven by widening of spreads for NBFCs, even corporate bond spreads have widened

* AAA Average spread is average spread of 9 large AAA rated NBFCs 3 Yr. bond yields over 3 Yr benchmark Gsec. AA Average spread is average spread of 4 large AA rated NBFCs 3 Yr. bond yieldsover 3 Yr benchmark Gsec^ AAA spread is average monthly spread of 3 Year AAA rated corporate bond yields over 3 Yr benchmark Gsec yields. AA spread is average monthly spread of 3 Year AA rated corporate bondyields over 3 Yr benchmark Gsec yields

In our opinion, cautious approach towards credit needs to be maintained

5

Liquidity concerns for NBFCs addressed, Mixed outlook

5

• Conflicting forces lead to a mixed outlook on interest rates

• Near term challenges of NBFCs have diminished; cautious approach needs to be maintained

• In view of the above, HDFC Corporate Bond Fund offers -

Controlled duration

Currently, a portfolio predominantly invested in AAA rated and equivalent

securities

Investments must be tailored to investor’s individual situation and objectives and therefore, investors should consult their financial advisors to ascertain whetherthe products are suitable for them. For complete portfolio details refer www.hdfcfund.com. The portfolio composition as on September 30, 2019.

Current Fixed Income environment

6

HDFC Corporate Bond Fund: Sources of Returns

• Interest accruals

• Capital gains/losses due to rate movements

• Taking advantage of tactical opportunities in Corporate Bond vs. Sovereign Bond spread

HDFC Corporate Bond Fund primarily focuses on returns through interest accruals

HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme.

7

HDFC Corporate Bond Fund: Portfolio Positioning

• Portfolio is focused on maintaining superior credit quality with minimum

investment of 80% in AA+ above rated corporate bonds with focus on

accruals.

• Fund manager will seek to maintain the Macaulay duration of the Portfolio

around 2-4 years.

The current investment strategy is subject to change depending on the market conditions. For complete portfolio details refer www.hdfcfund.com. HDFC MutualFund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme. The product positioningand intended duration is based on current view and is subject to change.

Macaulay Duration (Duration) measures the price volatility of fixed income securities. It is often used in the comparison of interest rate risk between securitieswith different coupons and different maturities. It is defined as the weighted average time to cash flows of a bond where the weights are nothing but the presentvalue of the cash flows themselves. It is expressed in years. The duration of a fixed income security is always shorter than its term to maturity, except in the caseof zero coupon securities where they are the same.

8

HDFC Corporate Bond Fund

9

Source: MFI Explorer, AAA includes Sovereign, Cash, Cash Equivalents and Net Current Assets

High Quality Portfolio with range bound maturity

1

1.5

2

2.5

3

3.5

4

4.5

Mar-

12

Jul-12

Nov-1

2

Mar-

13

Jul-13

Nov-1

3

Mar-

14

Jul-14

Nov-1

4

Mar-

15

Jul-15

Nov-1

5

Mar-

16

Jul-16

Nov-1

6

Mar-

17

Jul-17

Nov-1

7

Mar-

18

Jul-18

Nov-1

8

Mar-

19

Jul-19

Average Maturity

-

10

20

30

40

50

60

70

80

90

100

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3

Sep-1

3

Jan-1

4

May-1

4

Sep-1

4

Jan-1

5

May-1

5

Sep-1

5

Jan-1

6

May-1

6

Sep-1

6

Jan-1

7

May-1

7

Sep-1

7

Jan-1

8

May-1

8

Sep-1

8

Jan-1

9

May-1

9

Sep-1

9

Allocation to AAA & Equivalent securities

Analysis of Distribution of Returns since inception

10

Annual Rolling Returns

Annual Rolling - Since inception, the fund has given 6% or higher returns 90.29% of the times.

3 Year Rolling Returns

3 year Rolling - Since inception, the fund has given more than 7.5% returns – 97.94% of the times.

1 year and 3 year Rolling returns are calculated since inception of the fund based on daily frequency. For Detailed performance refer Slide no 14. Past performance may or may not be sustained in the future. HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme. Inception date: June 29, 2010

Annual Returns (%) % of times

Less than 6 9.71%

6% to 7.5% 14.39%

7.5% to 9% 29.34%

9% to 12% 45.14%

More than 12% 1.41%

Annual Returns(%) % of times

Less than 6 -

6% to 7.5% 2.06%

7.5% to 9% 46.81%

9% to 12% 51.13%

More than 12% -

2

4

6

8

10

12

14

Jun-1

1Sep-1

1D

ec-

11

Mar-

12

Jun-1

2Sep-1

2D

ec-

12

Mar-

13

Jun-1

3Sep-1

3D

ec-

13

Mar-

14

Jun-1

4Sep-1

4D

ec-

14

Mar-

15

Jun-1

5Sep-1

5D

ec-

15

Mar-

16

Jun-1

6Sep-1

6D

ec-

16

Mar-

17

Jun-1

7Sep-1

7D

ec-

17

Mar-

18

Jun-1

8Sep-1

8D

ec-

18

Mar-

19

Jun-1

9Sep-1

9

7

7.5

8

8.5

9

9.5

10

10.5

11

11.5

Jun-1

3

Sep-1

3D

ec-

13

Mar-

14

Jun-1

4

Sep-1

4D

ec-

14

Mar-

15

Jun-1

5

Sep-1

5D

ec-

15

Mar-

16

Jun-1

6

Sep-1

6D

ec-

16

Mar-

17

Jun-1

7

Sep-1

7D

ec-

17

Mar-

18

Jun-1

8

Sep-1

8D

ec-

18

Mar-

19

Jun-1

9

Sep-1

9

Fund Suitability

• The Fund is suitable for investors wanting to take advantage of higher credit

quality with relatively lower volatility

• Ideal for investors having an investment horizon of 6 to 12 months or more

(3+ years to avail LTCG exemption*)

• Investors looking to diversify their debt holdings with focus on accruals

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HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme. Thesuggested investment horizon is based on current view and is subject to change.*Refer slide 17 and 18

Portfolio Statistics

12

Average Maturity Modified Duration Yield To Maturity

4.23 years 3.10 years 7.49%

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on September 30, 2019.

Portfolio Classification by Asset Class(%)Portfolio Classification by rating class (%)

Sovereign 14.57

AAA/AAA(SO)/A1+/A1+(SO) & Equivalent 76.67

AA+ 3.16

Cash, Cash Equivalents and Net Current Assets 5.6

14.57

1.93 0.19 2.74

74.97

5.6

0

10

20

30

40

50

60

70

80

G-Sec, SDL SecuritizedDebt

Instruments

CP CD CreditExposure

Cash, CashEquivalents

and NetCurrentAssets

Allocation to asset class

Nature of Scheme An open ended debt scheme predominantly investing in AA+ and above rated corporate bonds

Category of Scheme Corporate Bond Fund

Inception Date

(Date of allotment)June 29th, 2010

Investment ObjectiveTo generate income/capital appreciation through investments predominantly in AA+ and above rated

corporate bonds. There is no assurance that the investment objective of the Scheme will be realized.

Fund Manager $ Anupam Joshi

Investment Plan Regular Plan & Direct Plan

Investment Options Under Each Plan: Growth & Dividend. The Dividend Option offers Dividend Payout and Reinvestment facility

Minimum Application Amount.(Under Each Plan/Option)

Purchase: Rs. 5,000 and any amount thereafter

Additional Purchase: Rs. 1,000 and any amount thereafter

Benchmark

Additional Benchmark

NIFTY Corporatre Bond Index*

CRISIL 10 Year GILT Index

Fund Facts

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$ Dedicated Fund Manager for Overseas Investments: Mr. Chirag DagliFor further details, please refer to the Scheme Information Document.*Benchmark has been revised to NIFTY Corporate Bond Index from CRISIL Composite Bond Fund Index w.e.f. 7th October, 2019

Asset Allocation

14

Under normal circumstances, the asset allocation of the Scheme’s portfolio will be as follows:

Types of InstrumentsMinimum Allocation

(% of Total Assets)Maximum Allocation (%

of Total Assets)Risk Profile of the

instrument

Corporate Bond (including Securitised Debt)#

80 100 Low to Medium

Government Securities and Money Market Instruments

0 20 Low

Units issued REITs and InvITs 0 10 Medium to High

#Minimum 80% of the total assets shall be invested in AA+ and above rated corporate bonds

(including securitised debt)

The scheme may invest in the schemes of Mutual Funds in accordance with the applicable extant SEBI (Mutual Funds) Regulations as amended from time to time.The Scheme may invest upto a maximum 75% of the total assets in Foreign Debt Securities. The Scheme may invest upto 100% of its total assets in Derivatives.For further details, please refer to the Scheme Information Document.

Scheme Performance Summary

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Value of Rs 10,000 invested

Scheme Returns (%)

Benchmark Returns (%)

#

Additional Benchmark Returns (%)

## $

Scheme (Rs)

Benchmark (Rs)#

Additional Benchmark

(Rs)##

Last 1 year 11.35 13.63 15.67 11,135 11,363 11,567

Last 3 years 7.78 7.25 6.25 12,520 12,337 11,995

Last 5 years 8.69 9.13 8.67 15,173 15,484 15,162

Since inception – June29, 2010

8.81 8.27 6.88 21,865 20,867 18,513

Returns greater than 1 year are compounded annualized (CAGR). The above scheme has been managed by Anupam Joshi since October 27, 2015.The above returns are of Regular Plan - Growth Option. #CRISIL Composite Bond Fund Index. ##CRISIL 10 Year Gilt Index. $The benchmark has been revised toNIFTY Corporate Bond Index with effect from 7th October, 2019. Different plans viz. Regular Plan and Direct Plan have a different expense structure. The expensesof the Direct Plan under the Scheme will be lower to the extent of the distribution expenses / commission charged in the Regular Plan. Returns as on 30th

September, 2019.

16

Performance of other schemes managed by the Fund manager (Top 3 & Bottom 3)

Scheme Managing scheme since

1 year3 year 5 year

CAGR (in %) CAGR (in %)

Anupam Joshi manages 20 other schemes which have completed 1 year

Performance of Top 3 schemes managed by Anupam Joshi

HDFC FMP 1161D July 2016 Jul 27, 16 8.53 8.23 NA

CRISIL Composite Bond Fund Index 13.63 7.25 NA

HDFC Liquid Fund Oct 27, 15 7.10 6.88 7.42

CRISIL Liquid Fund Index 7.37 7.09 7.50

HDFC Low Duration Fund Oct 27, 15 8.44 7.03 7.50

CRISIL Composite Bond Fund Index* 7.37 7.09 7.50

Performance of Bottom 3 schemes managed by Anupam Joshi

HDFC FMP 1208D March 2018 Mar 16, 18 7.83 NA NA

CRISIL Composite Bond Fund Index 13.63 NA NA

HDFC FMP 1141D August 2018 Mar 13, 16 7.67 NA NA

CRISIL Composite Bond Fund Index 13.63 NA NA

HDFC FMP 1487D August 2018 Sept 4, 18 7.47 NA NA

CRISIL Composite Bond Fund Index 13.63 NA NA

Past performance may or may not be sustained in the future. The above returns are of Regular Plan – Growth Option. Load is not taken into consideration forcomputation of performance. On account of difference in the type of the Scheme, asset allocation, investment strategy, inception dates, the performance of theseschemes is strictly not comparable. Top 3 and bottom 3 schemes managed by the Fund Manager have been derived on the basis of returns since inception. In casethe benchmark is not available on the Scheme’s inception date, the returns for the concerned scheme is considered from the date the benchmark is available.Returns as on 30th September, 2019. Different plans viz. Regular Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under theScheme will be lower to the extent of the distribution expenses/ commission charged in the Regular Plan. *The benchmark has been revised to NIFTY Low DurationDebt Index w.e.f. 7th October, 2019.

Taxation – Domestic Companies^

17

^It is assumed that the domestic company shall opt for provisions of sec 115BAA.Companies with highest tax Bracket have been considered as applicable for the financial year 2019-20The rates are as per Finance Act, 2019, Finance (No. 2) Act, 2019 and The Taxation Laws (Amendment) Ordinance, 2019In view of the individual circumstances and tax profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

17

Taxation – Individuals^

18^The rates are as per Finance Act, 2019, Finance (No. 2) Act, 2019 and The Taxation Laws (Amendment) Ordinance, 2019In view of the individual circumstances and tax profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

18

Disclaimer

This presentation dated 12th October 2019 has been prepared by HDFC Asset Management Company Limited(HDFC AMC) based on internal data, publicly available information and other sources believed to be reliable. Anycalculations made are approximations, meant as guidelines only, which you must confirm before relying onthem. The information contained in this document is for general purposes only. The document is given insummary form and does not purport to be complete. The document does not have regard to specific investmentobjectives, financial situation and the particular needs of any specific person who may receive this document.The information/ data herein alone are not sufficient and should not be used for the development orimplementation of an investment strategy. The statements contained herein are based on our current views andinvolve known and unknown risks and uncertainties that could cause actual results, performance or events todiffer materially from those expressed or implied in such statements. HDFC Mutual Fund/AMC is notguaranteeing any returns on investments made in the Scheme(s). The data/statistics are given to explain generalmarket trends in the securities market, it should not be construed as any research report/researchrecommendation. Past performance may or may not be sustained in future. Neither HDFC AMC and HDFCMutual Fund nor any person connected with them, accepts any liability arising from the use of this document.The recipient(s) before acting on any information herein should make his/her/their own investigation and seekappropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis ofinformation contained herein.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

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Thank You

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