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

July , 2020

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

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

Riskometer

A portfolio of quality corporate bonds!^

^Please refer slide 8

1

Increase in risk aversion

• Since default of IL&FS in Sep’18 and subsequent default by Dewan

Housing Finance Corporation Limited, risk aversion towards lower rated

issuers had risen significantly.

• Write-down of Additional Tier I bonds of Yes Bank in Q4FY20 added to

the prevailing risk aversion

• Disruption due to Covid-19, lockdown and lack of clarity on moratorium

on debt taken by NBFCs led to risk aversion rising further; this led to

higher pace of redemptions in mutual fund schemes

• Subsequently, a Mutual Fund announced the winding up of 6 schemes,

leading to further rise in redemptions for credit risk fund category

• Due to redemption pressure, non-AAA corporate bond and

NBFCs/HFCs spreads over Gsec rose sharply in April-2020 but have

moderated during May/June 2020

Corporate bond spreads over 3 Year Gsec

Source: Bloomberg

AAA average spread is average spread of 2-3 Yr. bond yields for select large AAA rated NBFCs over 3 Yr benchmark Gsec. AA average spread is average spread of 2-3 Yr. bond yields for select

large AA rated NBFCs over 3 Yr benchmark Gsec . If the rating on any NBFC is downgraded, it is removed from calculation of spread of that category.

Refer disclaimer on slide 19

Source: Daily valuation provided by ICRA/CRISIL, Bloomberg, RBI

2

RBI Measures – Steps in right direction

• RBI announced large set of measures to counter the disruption due to COVID-19

Reduction in policy rates twice

– Other major steps taken and their possible impact

Feb-2020 (%) June-2020 (%) Remarks

Repo Rate 5.15 4.00Spread between Repo and reverse repo rate increased to 65 bps from 25 bps

Reverse repo rate 4.90 3.35

Cash Reserve ratio 4.00 3.00For a period of one year ending March 26, 2021. This is likely to infuse liquidity of

INR 1.37 lakh crore in the system.

Steps taken Key Details & Rationale Impact, in our view

Targeted Long Term Repos

Operations (TLTROs)

RBI conducted TLTROs for banks, of INR 1 lakh crore at floating and linked to repo

rate.

Amount availed under this facility has to be deployed in investment grade rated CPs

and corporate bonds/NCDs

It also announced TLTROs 2.0 of INR 50,000 crore to be deployed in CPs, NCDs

and bonds issued by NBFCs, with 50% of amount carved out for small NBFCs and

MFIs

To improve the liquidity for higher rated corporates and NBFCs.

AAA rated corporate bond spreads (over Gsec) to compress

Limited impact on liquidity of lower rated corporates/NBFCs

Moratorium on term loans

instalments and interest on

working capital

All commercial banks, NBFCs, HFCs, MFIs etc. allowed to give moratorium of 6

months on term loans instalments and interest on working capital facilities

outstanding as on 1st Mar’20.

Bank and NBFC loans to commercial real estate (RE) have been given additional

one-year extension for RE projects delayed for reasons beyond the control of

promoters.

This should ease immediate liquidity requirements of borrowers

Special Refinance Facility for

some PFIs

A special refinance facility for a total amount of INR 50,000 cr to NABARD (INR

25000 cr), SIDBI (INR 15000 cr) and NHB (INR 10000 cr), to help meet sectoral

credit needs.

Limited impact as these institutions have adequate market

access. To improve system liquidity and reduce market supply

of bonds

Special Liquidity Facility for

mutual funds (SLF-MF)

RBI to conduct repo operations of 90 days tenor at the fixed repo rate. Amount

availed under these scheme to be used for extending loan to MFs and /or

purchasing securities from MFs.

Total amount available under this scheme is INR 50,000 crores

Initial response has been muted as risk aversion remains high.

Source: RBI. Refer disclaimer on slide 193

Interest Rates Outlook

Factors supporting lower yields

• Sharp rate cuts by RBI and major central banks; easing bias likely

to continue

• Accommodative stance to remain till “it is necessary to revive

growth & mitigate the impact of COVID-19 on the economy” - RBI

• Concerns over global growth due to disruption caused by spread of

coronavirus

• Weak growth and soft commodity prices likely to result in lower

inflation in medium term

• Unconventional tools used by RBI to improve transmission of rate

cuts (Operation TWIST, LTROs, Targeted LTROs)

• Muted credit growth vs. deposit growth; Ample global and domestic

liquidity

Factors opposing lower yields

• Excess SLR securities holding of PSU banks

• Large supply of dated securities by Central and State

Governments

• Food prices may keep near term inflation over RBI’s target

of 4%

• Sharp reductions in oil production might lead to higher oil

prices over a year

Short to medium end of the yield curve offers better risk adjusted returns, in our judgement

4Refer disclaimer on slide 19

Our Investment Philosophy for Fixed Income

• In-depth credit assessment / risk control is key to our credit investments

• Indian fixed income markets have limited liquidity, hence philosophy of SLR for credit,

generally prioritized in that order

Safety – Superior credit quality

Liquidity – Prefer securities with better liquidity; focused on portfolio liquidity

Returns – Risk reward is the key & not yield alone

• Given that credit markets can deteriorate without much warning, even in the best of

credit environments, our endeavour is to be prudent on credit risk.

5Refer disclaimer on slide 19

How do we control risk ?

• Key strategies for risk control:

Risk Assessment - Intense focus on underlying credit evaluation, focus on 4 C’s

Risk Mitigation - Adequate covenants, right sizing, diversification, regular monitoring etc

Risk Pricing – Take risk only when it pays

• Emphasis on Four C’s of Credit

Character of Management (e.g. avoided exposure to a large distressed housing finance company)

Capacity to Pay (e.g. avoided exposure to a large distressed infrastructure company)

Collateral pledged to secure debt (e.g. recovered large portion of investment backed by shares of large media company)

Covenants of debt (e.g. recovered investment from a MFI player due to covenants)

Risk Control achieved through conservative sizing of exposure based on proprietary Credit Scoring Model which factors in –

Parentage, Financials, Rating & Outlook.

List of companies / Groups which faced stress*

Deccan Chronicle

GroupReligare Group

Dewan Housing

Group

Amtek Auto Limited Vodafone Idea Ltd.Anil Ambani

Group

Jindal Steel & Power

- GroupSintex Group Cox & Kings Ltd

Ballarpur (BILT)

Group

IL&FS Group

(other than SPVs)

Cafe Coffee Day

Group

Yes Bank Altico Capital

IDBI BankJana Small

Finance Bank

Zee Promoter

Group

IL&FS SPVs$

(backed by NHAI

annuity)

Simplex

Infrastructures$

• Over last decade, in our assessment, MFs have experienced instances of credit stress* innearly 18 companies / Groups.

• HDFC MF was not exposed to most such stressed cases (Highlighted in Red)

• Even is cases where HDFC MF had exposure, we recovered major portion of ourinvestment due to Covenants, good business/Collateral and parentage (Highlighted in Green)

• Overall credit costs have been minimal for HDFC MF (Stressed exposures at ~0.66% of AUM ofaffected schemes as on 30th June 2020)

$ Principal exposure to IL&FS SPV and Simplex Infrastructure at time of credit stress was ~Rs. 358 cr. As of June’20 after the 50% haircut the market value of these exposure was ~Rs. 179 cr or

~0.66% of total AUM of affected schemes. *Stress is defined as companies whose ratings were eventually downgrade to BBB or below rating category

Refer disclaimer on slide 19.6

HDFC Corporate Bond Fund: Portfolio Positioning

• Portfolio is focused on maintaining higher credit quality. Minimum investment

of 80% in AAA & AA+ rated corporate bonds. Currently*, 100% of the portfolio

is invested in AAA & Equivalent securities.

• HDFC MF’s in-depth internal credit evaluation is demonstrated by the fact that

it has till now avoided exposure to highly rated groups which subsequently

experienced credit stress (Refer Table 1).

• Fund manager will seek to maintain the average maturity of the portfolio

between 1-5 years depending upon the interest rate outlook & term spreads.$

Currently*, the portfolio’s average maturity is 4.19 years.

*As on June 30, 3030For complete portfolio details refer www.hdfcfund.com. HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteedreturns on investments made in the scheme. $The current investment strategy is subject to change.@Stress is defined as companies whose ratings were eventually downgraded to BBB or below rating category.

7

List of AAA companies /

Groups which were avoided

by HDFC MF and which

faced subsequent stress@

Dewan Housing Group

Anil Ambani Group

IL&FS Group

(other than SPVs)

Vodafone Idea Ltd.

Table 1:

HDFC Corporate Bond Fund

8

Source: MFI Explorer, AAA includes Sovereign, Cash, Cash Equivalents and Net Current Assets. Add in footnote -HDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme. For complete portfolio details refer www.hdfcfund.com. The portfolio composition as on June 30, 2020.

Quality Portfolio with range bound maturity

• Aims to maintain a quality portfolio.

• Disciplined and timely modulation of maturity to optimize returns

-

10

20

30

40

50

60

70

80

90

100

Allocation to AAA & Equivalent Securities (% of NAV)

1

1.5

2

2.5

3

3.5

4

4.55.5

6

6.5

7

7.5

8

8.5

9

Jun-1

5

Sep-1

5

Dec-

15

Mar-

16

Jun-1

6

Sep-1

6

Dec-

16

Mar-

17

Jun-1

7

Sep-1

7

Dec-

17

Mar-

18

Jun-1

8

Sep-1

8

Dec-

18

Mar-

19

Jun-1

9

Sep-1

9

Dec-

19

Mar-

20

Jun-2

0

10 Y AAA 10 Y Gsec Average Maturity (RHS)

HDFC Corporate Bond Fund: Sources of Returns

• Interest accruals

• Capital gains/losses due to rate movements

• Capital Gains on account of Roll Down of the curve

• Tactical opportunities in Corporate Bond vs. Sovereign Bond spread (Up to amaximum of 20% of the AUM)

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. Thecurrent investment strategy is subject to change depending on the market conditions.

9

Analysis of Distribution of Returns since inception

10

Annual Rolling - Since inception, the fund has given more than 6% returns approximately 91% of the times.

3 year Rolling - Since inception, the fund has given more than 7.5% returns – 97.15% of the times.

Inception Date: June 29, 2010. 1 year and 3 year Rolling returns are calculated since inception of the fund up to June 30, 2020, based on daily frequency. Forcomplete performance details refer Slide 16. Past performance may or may not be sustained in the future. HDFC Mutual Fund/AMC is notguaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme.

Annual Returns (%) % of times

More than 6% 91.09%

More than 7.5% 77.78%

More than 9% 50.48%

Annual Returns(%) % of times

More than 6% 100%

More than 7.5% 97.15%

More than 9% 45.72%

1 Year Rolling Returns 3 Year Rolling Returns

11

• Attractive term spreads.

• Steep yield curve provides an opportunity for roll down

benefits

• The spread between the YTM of HDFC Corporate Bond Fund

and 91-day T-bills has widened and is at attractive levels,

significantly higher than the long term average.

Steep yield curve and elevated term spreads

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

3.5

4.5

5.5

6.5

7.5

8.5

Jun-1

5

Sep-1

5

Dec-

15

Mar-

16

Jun-1

6

Sep-1

6

Dec-

16

Mar-

17

Jun-1

7

Sep-1

7

Dec-

17

Mar-

18

Jun-1

8

Sep-1

8

Dec-

18

Mar-

19

Jun-1

9

Sep-1

9

Dec-

19

Mar-

20

Jun-2

0

Repo Rate 10Y AAA 3Y AAA 1Y AAA

-

1

2

3

4

Jun-1

4

Sep-1

4

Dec-

14

Mar-

15

Jun-1

5

Sep-1

5

Dec-

15

Mar-

16

Jun-1

6

Sep-1

6

Dec-

16

Mar-

17

Jun-1

7

Sep-1

7

Dec-

17

Mar-

18

Jun-1

8

Sep-1

8

Dec-

18

Mar-

19

Jun-1

9

Sep-1

9

Dec-

19

Mar-

20

Jun-2

0

HDFC Corporate Bond Fund - Spread over 91-day T-bill (%)

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

3M

6M

1Y

2Y

3Y

4Y

5Y

6Y

7Y

8Y

10Y

12Y

15Y

30Y

%Yield curve steepened significantly

since 2019

29/Feb/20

31/Dec/20

30/Jun/20

Apr-19

Summary: HDFC Corporate Bond Fund

• Focus on in-depth credit assessment

• Prudent Risk Control: Track record of maintaining controlled duration

• Ideal for investors with focus on credit quality and having an investment

horizon of 12 months or more

12

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. Investments must be tailored to investor’s individual situation and objectives andtherefore, investors should consult their financial advisors to ascertain whether the products are suitable for them.

Portfolio Statistics

13

Average Maturity* Modified Duration* Yield To Maturity*

4.19 years 3.18 years 5.80%

*Computed on the invested amount. For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on June 30, 2020.

Portfolio Classification by rating class (%)

Sovereign 16.57

AAA/AAA(SO)/A1+/A1+(SO) & Equivalent 80.07

Cash, Cash Equivalents and Net Current Assets 3.36

16.57

0.65 2.50

76.92

3.36

0

10

20

30

40

50

60

70

80

90

G-Sec, SDL Securitized DebtInstruments

CD Credit Exposure Cash, CashEquivalents and

Net CurrentAssets

Allocation to asset class (% of NAV)

Type 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 29, 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 (since October 27, 2015)

Investment Plan Regular Plan & Direct Plan

Investment OptionsUnder Each Plan: Growth & Dividend (Quarterly & Normal). The Dividend Option offers Dividend Payout andReinvestment 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 Corporate Bond Index

CRISIL 10 Year GILT Index

Fund Facts

14

$ Dedicated Fund Manager for Overseas Investments: Mr. Chirag DagliFor further details, please refer to the Scheme Information Document available on website www.hdfcfund.com.

Asset Allocation

15

Under normal circumstances, the asset allocation 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 mayinvest up to a maximum 75% of the total assets in Foreign Debt Securities. The Scheme may invest up to 100% of its total assets in Derivatives.For further details, please refer to the Scheme Information Document available on website www.hdfcfund.com.

Scheme Performance Summary

16

PeriodScheme Returns

(%)Benchmark

Returns (%) #

Additional Benchmark

Returns (%) ##

Value of Rs 10,000 invested

Scheme (Rs)Benchmark

(Rs)#

Additional Benchmark

(Rs)##

Last 1 year 12.22 12.13 11.12 11,222 11,213 11,112

Last 3 years 8.90 8.37 6.87 12,917 12,729 12,208

Last 5 years 9.09 8.75 8.44 15,460 15,221 15,004

Since inception – June 29, 2010

9.10 8.78 7.18 23,912 23,227 20,018

Past performance may or may not be sustained in the future.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. #NIFTY Corporate Bond Index. ##CRISIL 10 Year Gilt Index. Different plans viz. Regular Plan and Direct Plan have a differentexpense structure. The expenses of the Direct Plan under the Scheme will be lower to the extent of the distribution expenses / commission charged in the Regular Plan. Returns ason June 30, 2020.

Scheme Performance Summary – SIP Returns

17

Since Inception

15 year SIP 10 year SIP 7 year SIP 5 year SIP 3 year SIP 1 year SIP

Total Amount Invested (Rs.) 1,210,000 N.A. 1,200,000 840,000 600,000 360,000 120,000

Market Value as on June 30, 2020 (Rs.)

1,961,186 N.A. 1,937,273 1,171,794 762,230 422,167 128,538

Returns (%) 9.26% N.A. 9.26% 9.36% 9.51% 10.64% 13.52%

Benchmark Returns (%)# 9.03% N.A. 9.04% 9.00% 9.04% 10.03% 12.95%

Additional Benchmark Returns(%)# #

8.05% N.A. 8.06% 8.58% 8.59% 10.29% 10.37%

Past performance may or may not be sustained in the future.The above data are of Regular Plan - Growth Option, assuming Rs. 10,000 is invested systematically on the first business day of every month over a period of time. CAGR returns arecomputed after accounting for the cash flow by using XIRR method (investment internal rate of return). The above investment simulation is for illustration purposes only and shouldnot be construed as a promise on minimum returns and safeguard of capital.#NIFTY Corporate Bond Index. ##CRISIL 10 Year Gilt Index.

18

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

Scheme Managing scheme since

Cumulative Performance

1 year3 year 5 year

CAGR (in %) CAGR (in %)

Anupam Joshi manages 19 other schemes which have completed 1 year

Performance of Top 3 schemes managed by Anupam Joshi

HDFC Liquid Fund Oct 27, 15 5.43 6.50 6.87

CRISIL Liquid Fund Index # 5.81 6.81 7.03

HDFC Low Duration Fund Oct 27, 15 8.19 7.21 7.47

NIFTY Low Duration Index # 8.03 7.58 7.74

HDFC FMP 1381D September 2018 Sept 19, 18 11.78 NA NA

CRISIL Composite Bond Fund Index # 13.08 NA NA

Performance of Bottom 3 schemes managed by Anupam Joshi

HDFC FMP 1208D March 2018 Mar 16, 18 9.60 NA NA

CRISIL Composite Bond Fund Index # 13.08 NA NA

HDFC FMP 1141D August 2018 Aug 14, 18 8.25 NA NA

CRISIL Composite Bond Fund Index # 13.08 NA NA

HDFC FMP 1487D August 2018 Sept 4, 18 9.92 NA NA

CRISIL Composite Bond Fund Index # 13.08 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 for computation ofperformance. On account of difference in the type of the Scheme, asset allocation, investment strategy, inception dates, the performance of these schemes is strictly notcomparable. Performance of close-ended schemes is not strictly comparable with that of open-ended schemes since the investment strategy for close-ended schemes is primarilybuy-and-hold whereas open-ended schemes are actively managed. Top 3 and bottom 3 schemes managed by the Fund Manager have been derived on the basis of returns sinceinception. In case the 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 June 30, 2020. Different plans viz. Regular Plan and Direct Plan have a different expense structure. The expenses of the Direct Plan under the Scheme will be lower tothe extent of the distribution expenses/ commission charged in the Regular Plan. NA – Not available. # Benchmark of the scheme

Disclaimer

This presentation dated July 14, 2020 has been prepared by HDFC Asset Management Company Limited (HDFCAMC) 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. Stocks/Sectors referred above are illustrative and not recommended byHDFC Mutual Fund / AMC. The Fund may or may not have any present or future positions in these sectors. Theinformation herein has been prepared on the basis of information which is already available in publicly accessiblemedia. The same should not be construed as an investment advice or a research report or a recommendation byHDFC Mutual Fund/HDFC AMC to buy or sell the stock or any other security covered under the respectivesector/s. Past performance may or may not be sustained in future. Neither HDFC AMC and HDFC Mutual Fundnor 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 seek appropriateprofessional advice and shall alone be fully responsible / liable for any decision taken on the basis of informationcontained herein. For complete portfolio/details refer to our website www.hdfcfund.com.

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

19

Thank You

20