HDFC Banking & PSU Debt Fund(An Open Ended Income Scheme)

1September 2017

RiskometerThis product is suitable for investors who are seeking*:• Regular income over medium to long term• Investments in debt and money market instruments consisting

predominantly of securities issued by Scheduled CommercialBanks and Public Sector undertakings.

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

As simple as it can be?

What is this Fund all about ?

• HDFC Banking and PSU Debt Fund aims to offers superior credit quality with 80-100% investment inScheduled Commercial Banks# (Public and Private) or PSUs

– Papers issued by banks are generally considered to be high credit quality as banks are wellregulated and have high reserve requirement (CRR and SLR)

– PSUs by virtue of government ownership carry relatively lower credit risk

• 0-20% of assets may be invested in G-secs and/or other high safety instruments (normally AA- orhigher)

• HDFC Banking and PSU Debt Fund intends to maintain a medium maturity profile, in foreseeablefuture

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# For the purpose of this document all references to banks would relate to scheduled commercial banksHDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in the scheme(s)

Advantages of this strategy

• Attractive portfolio yield

• Lower volatility / Interest rate risk as the Fund intends to maintain medium duration

• With minimum 80% invested in banks and other PSUs, the Fund carries lower credit risk

• In addition, given our medium term outlook , there is also moderate potential for capital appreciation. (refer slides 4-8)

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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(s)

Key Interest Rate Determinants And Their Outlook

• Fiscal Deficit – Consolidation continues; from 4.9% in FY13 to 3.2% in FY18BE

• Inflation – Expected to average around 4% in FY18

• CAD – Manageable, even with an increase to over 1% in FY18

• Global – Heightened external risks due to uncertain policy & geopolitical environment

• RBI Policy – “Neutral” stance to continue; 25 bps rate cuts possible

Source: Budget documents, publicly available information, HDFC AMC estimates 4

10 Year Benchmark G-sec: Downward Bias Continues

Source: Bloomberg, HDFC AMCHDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in this scheme 5

4.5

5.5

6.5

7.5

8.5

9.5

10.5

Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17

10 Year Benchmark Gsec Yield v/s Repo Rate

10 year benchmark Repo

Real Rates Still High – Supportive Of Lower Yields

Consistently Positive Real Interest Rates Since Last 3 Years..

Source: Bloomberg, HDFC AMCHDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in this scheme 6

-4.00

-3.00

-2.00

-1.00

-

1.00

2.00

3.00

4.00

5.00

6.00

Real Interest Rates = Difference between 10Y GSec Yield and CPI

India Real Rates US Real Rates

Source: Bloomberg, HDFC AMCHDFC Mutual Fund/AMC is not guaranteeing/offering/communicating any indicative yields or guaranteed returns on investments made in this scheme

Narrowing Differentials: Room For More

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-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

India CPI-US CPI Yield Spread (10 Yr India-10 Yr US)

Going Forward

• GDP - Reform agenda (GST, remonetisation. etc.) to aid growth to improve

• Inflation - Likely to average around 4% in FY18

• Liquidity - Significant improvement to drive lending rates lower

• Credit - Steady improvement offers great value

• RBI Policy - “ Neutral” stance to continue; 25bps rate cuts possible

Source: Budget documents, publicly available information, HDFC AMC Research

Recommendation: Short-Medium Term Bond & Credit Space most attractive

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Fund Outlook

• We maintain our view of lower yields over the medium term

• HDFC Banking and PSU Debt Fund offers attractive yield with lower volatility

• With minimum 80% invested in banks and other PSUs, the Fund carries lower credit risk

In the current environment of low yields, HDFC Banking and PSU Debt Fund offers a sound investment opportunity in our opinion.

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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(s)

Portfolio Facts

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Portfolio Classification by Rating Class (%)

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

59.35

AA+ & Below 35.74

Total 95.09

Average Maturity Modified Duration Yield To Maturity

4.34 years 3.20 years 7.93%

For complete portfolio details refer www.hdfcfund.com. Portfolio details provided as on 31st August 2017.

Banking Companies PSU Companies Others Cash & Cash Equivalents

26% 52% 17% 4.91%

95.09

4.91

0

20

40

60

80

100

Credit Exposure Cash,Cash Equivalents and NetCurrent Assets

Portfolio Classification by Asset Class(%)

Taxation

Resident Individual/HUF Domestic Companies @ NRI$/#

Dividend Distribution Tax Applicable To Schemes Other Than Equity Oriented Schemes (Payable By The Scheme)

25% + 12% Surcharge + 3% Cess = 28.84%

30% + 12% Surcharge + 3% Cess = 34.608%

25% + 12% Surcharge + 3% Cess = 28.84%

Capital Gains Taxation Applicable To Schemes Other Than Equity Oriented Schemes

Long Term Capital gains(Units held for a period of

more than 36 months) Listed Units

20% with indexation + 15% Surcharge + 3% Cess =

23.690%

20% with indexation + Surcharge as applicable+ 3%

Cess = 23.072%

20% with indexation + 15% Surcharge + 3% Cess =

23.690%

Tax Deducted at Source Nil Nil 23.690%

Short Term Capital gains(Units held for a period of less

than 36 months) Listed Units

30%^+15% Surcharge + 3% = 35.5350%

30% + Surcharge as applicable + 3% = 34.608% or 33.063%

30%^+15% Surcharge + 3% = 35.5350%

Tax Deducted at Source Nil Nil 35.5350%

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^ Assuming the investor falls in the highest tax bracket. @ Surcharge as the rate of 7% for domestic corporate unit holders where the income exceeds Rs 1 Cr butless than Rs 10 Cr and the rate of 12% where income exceeds Rs 10 Cr.$ Surcharge when income exceeds Rs 1 Cr. # Tax will be deducted at the time of redemptionof units in case of NRI investors only.The information set out here is neither complete nor constitute as tax or legal advice. Due to the individual nature of taxation please consult your tax advisorbefore investing.

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Product Features

12$ Mr. Rakesh Vyas. (Dedicated Fund Manager for Overseas Investments)

Type of Scheme An Open-ended Income Scheme

Inception Date March 26, 2014

Investment ObjectiveTo generate regular income through investments in debt and money market instruments consisting predominantlyof securities issued by entities such as Scheduled Commercial Banks and Public Sector undertakings. There is noassurance that the investment objective of the Scheme will be realized.

Investment PlansDirect Plan

Regular Plan

Investment OptionsUnder both the Plans: Growth Option and Dividend Option. Dividend Option offers Payout and Reinvestmentfacility.

Minimum ApplicationAmount (Under eachPlan/Option)

Purchase: Rs 5,000 and any amount thereafter

Additional Purchase: Rs 1,000 and any amount thereafter

Load Structure

Entry Load:

Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registeredDistributor) based on the investors’ assessment of various factors including the service rendered by the ARNHolder.

Exit Load

Nil

In respect of Systematic Transactions such as SIP, GSIP, STP, Flex STP, Swing STP, Flex index, Exit Load, if any,prevailing on the date of registration / enrolment shall be levied. For further details on load structure, please referto the Scheme Information Document/Key information memorandum of the Scheme.

Fund Manager $ Anil Bamboli

Benchmark CRISIL Short Term Bond Fund Index

Asset Allocation Pattern

Types of InstrumentsAllocation (% of Net Assets)

Risk ProfileMin Max

Debt* and Money Market Instrumentsissued by scheduled commercial banksand public sector undertakings (PSU)

80 100 Low to Medium

Debt* (including governmentsecurities) and money marketinstruments issued by entities otherthan the above@#

0 20 Low to Medium

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Under normal circumstances, the asset allocation (% of net assets) of the Scheme’s portfolio will be as follows:

* Including investments in securitized debt. Total investment in securitised debt shall not exceed 50% of the net assets.@ The non banking / non PSU part of the portfolio will have exposure to companies from the private sector.The scheme shall not invest in any banks other than scheduled commercial banks.# The Scheme may seek investment opportunity in the Foreign Debt Securities, in accordance with guidelines stipulated in this regardby SEBI and RBI from time to time. Investment in Foreign Debt Securities will be made only in government securities and indebt/money market instruments issued by Foreign Commercial Banks/PSUs. Under normal circumstances, the Scheme shall not havean exposure of more than 20% of its assets in Foreign Debt Securities subject to regulatory limits. Investments in CBLO and Reposmade by the Scheme shall not exceed 20% of the net assets. The Scheme shall not undertake repo / reverse repo transactions inCorporate Debt Securities.

Disclaimer & Risk Factors

This presentation dated 14th September 2017 has been prepared by HDFC Asset Management CompanyLimited (HDFC AMC) based on internal data, publicly available information and other sources believed tobe reliable. Any calculations made are approximations, meant as guidelines only, which you mustconfirm before relying on them. The information contained in this document is for general purposesonly. The document is given in summary form and does not purport to be complete. The document doesnot have regard to specific investment objectives, financial situation and the particular needs of anyspecific person who may receive this document. The information/ data herein alone are not sufficientand should not be used for the development or implementation of an investment strategy. Thestatements contained herein are based on our current views and involve known and unknown risks anduncertainties that could cause actual results, performance or events to differ materially from thoseexpressed or implied in such statements. Past performance may or may not be sustained in future.Neither HDFC AMC and HDFC Mutual Fund nor any person connected with them, accepts any liabilityarising from the use of this document. The recipient(s) before acting on any information herein shouldmake his/her/their own investigation and seek appropriate professional advice and shall alone be fullyresponsible / liable for any decision taken on the basis of information contained herein.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

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Thank You