HDFC Small Cap Fund+

(An Open Ended Equity Scheme)

(Erstwhile HDFC Small & Midcap Fund)

Small is Powerful!

This product is suitable for investors who are seeking*: Riskometer

Capital appreciation over long term
investment predominantly in equity and equity related instruments of
Small-Cap and Mid-Cap companies
*Investors should consult their financial advisers if in doubt about
whether the product is suitable for them.

+W.e.f November 9th 2016, the fundamental attributes and the name of HDFC Small & Midcap fund has been amended. For complete
scheme related information refer slide 13 onwards or the scheme information document. December 12016
 Fund History

Launched as Morgan Stanley A.C.E. Fundon April 3, 2008 as a multi-cap fund.

Scheme acquired by HDFC Mutual Fund in 2014* and fund repositioned as HDFC Small & Mid-cap
Fund with a focus on small and midcap stocks.

Scheme repositioned** in November 2016 and renamed as HDFC Small Cap Fund, with a focus on
Small cap stocks

*Scheme acquisition as on close of business hours on June 27th 2014.

** W.e.f. November 9th 2016 2
 HDFC Small Cap Fund What Has Changed

Small cap Exposure 50-75%

Midcap Exposure 25% 50%
Before
Number of Companies 65 Stocks
Weighted Average Market Capitalization ~ 13,000 Crores
Small cap Exposure 80-100%
Midcap Exposure 0% - 20%
After
Number of Companies 50 to 60 Stocks
Weighted Average Market Capitalization 6,000 8,000 Crores

Predominantly small cap oriented equity fund

Impact
Improved focus on Small cap ideas and themes

For complete scheme related information refer slide 13 onwards or the scheme information document. 3
 Why Small Caps?
High Growth Potential to drive higher returns relative to large caps*

But volatility risk is not higher^ - Volatility exhibited by small caps^^ is in line with that of large caps (See slide 6)

Large Universe - ideal for stock picking - Over 1,200 traded stocks with high dispersion of returns. (See slide 7)

Scope for P/E Expansion to drive higher returns

Large Universe
Higher Growth Potential

Smaller base of operations Large Market Cap above Rs

caps 19 120,000 Cr
Ability to gain market share
Companies
Focus on niche segment
Mid caps Market Cap above Rs
20,000 Cr
84 Companies

Small caps Others below Rs

1,228 Companies 20,000 Cr

Source: BSE & NSE. Stocks that have been traded in each of the past 3 financial years have been considered. Market Cap data as on October 31st 2016. Definition of large caps
Market cap above the largest stock by market cap in the Nifty Midcap 100 Free float index, Midcaps Market cap above the largest stock by market cap in the Nifty
Smallcap 100 Free float index. All other stocks are classified as small caps. Stock cut off Market Cap above Rs 150 Cr
*carry a higher risk of market fluctuations and are prone to higher liquidity risk. Small caps are strictly not comparable to Large caps stocks. ^ Historical performance
indications and financial market scenarios are not reliable indicator for current or future performance. ^^ Quality companies, strong balance sheets and well managed4
companies
 Why Small Caps?
Scope for P/E Expansion
Size of the company increases Big things often have small beginnings
Analysts start tracking stocks -Unknown
Institutional holding increases
Better disclosure levels can lead to greater familiarity and high multiples
As a result, smaller stocks which are often mis-priced get re-priced

Under Researched: Limited Analyst Coverage Under Owned: Lower Institutional Holding

Index Average Analyst Coverage Ownership Pattern amongst Index Constituents (%)

Promoter
Nifty 50 Index 42 Index Institutional Retail
Group
Nifty free float Midcap 100 Index 20 Nifty 50 Index 44 40 15
Nifty free float Smallcap 100 Index 6 Nifty free float Midcap 100 Index 54 29 17
Nifty free float Smallcap 100 Index 57 19 24
For small cap stocks, company specific factors have a
much higher impact than macro factors
Source: Bloomberg, HDFC AMC Research, Company Reports
Average analyst coverage is the average number of analysts covering each of the index constituents as on November 30 th 2016.
Ownership pattern as disclosed by index constituent companies to the NSE as on QE September 2016
5
 Why Small Caps?
Is risk higher?

A common perception is that small caps are riskier

Volatility exhibited by the Small Cap benchmark is in line with large and midcaps. (See charts below)

Numbers say otherwise

Small caps fall similar to Large / Mid caps on bad days Small caps are equally volatile as Large / Mid caps
Number of Days The Index Has fallen > 1%, 1.5% & 2% Annualized Volatility
30.0%
700
574 567 24.5% 24.0%
534 25.0% 23.4%
550
383 20.0%
400 332 344
256 15.0%
250 209 216
10.0%
100
Fall > 1% Fall > 1.5% Fall > 2% 5.0%
Nifty free float Smallcap Nifty free float Midcap Nifty 50
Nifty Smallcap 100 Freefloat Index Nifty Midcap 100 Freefloat Index Nifty 50 100 Index 100 Index

Source: HDFC AMC Research, Bloomberg

Calculations done from 1st Jan 2004 (Nifty Small cap 100 Index Inception date) for all indices for the purpose of consistency of data. All calculations as of November 30th
2016. Annualized volatility calculated based on day wise changes in index values of mentioned indices. Past performance may not be sustained in the future.
Historical performance indications and financial market scenarios are not reliable indicator for current or future performance. Small Caps carry a higher risk of market
fluctuations and are also prone to higher liquidity risks. Small caps are strictly not comparable to Large caps stocks. 6
 Why Small Caps?
A Case for Active Investing

Within small caps there are large number of companies that show high returns and ones with low
returns = High return dispersion

Therefore, scope for active stock picking

Focus on quality of business and management, consistency in earnings growth and reasonable valuations
can lead to alpha generation

2016 2015
Returns
Large Cap Mid Cap Small Cap Large Cap Mid Cap Small Cap
Greater Than 50% - 1 232 3 35 629
20 to 50% 1 7 136 11 27 200 High Return
0 to 20% 2 27 196 2 11 166 Dispersion
0 to -20% 10 24 303 3 9 127
-20 to -50% 6 23 304 - 2 88

In God we trust; all others bring data.

- W. Edwards Deming
Source: HDFC AMC Research, Bloomberg
Definition of large caps Market cap above the largest stock by market cap in the Nifty Midcap 100 Free float index , Midcaps Market cap above the largest stock by market
cap in the Nifty Smallcap 100 Free float index. All other stocks are small caps. Stocks selected have been traded in each of the past 2 financial years. The above chart is for
illustrative purposes only. Small Caps carry a higher risk of market fluctuations and are also prone to higher liquidity risks. Small caps are strictly not comparable to Mid-
caps/Large caps stocks. 7
 Small Caps Have Outperformed Large Caps
Returns 1 Year 3 Year 5 Year 1st Jan 2004
700.00 Nifty 50 3.65% 10.02% 11.22% 7.60%
Nifty Smallcap 100 Free Float index 12.52% 24.73% 17.55% 11.39%

600.00

500.00

400.00

300.00

200.00

100.00

0.00
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Nov-16

Nifty 50 Nifty Smallcap 100 freefloat Index

Source: HDFC AMC Research, Bloomberg
All calculations as of November 30th 2016. The current investment strategy is subject to change depending on the market conditions. 1st January 2004 is the inception date of
the Nifty Small cap 100 free float index. Historical performance indications and financial market scenarios are not reliable indicator for current or future performance. Small
Caps carry a higher risk of market fluctuations and are also prone to higher liquidity risks. Small caps are strictly not comparable to Large caps stocks. 8
 India Calling
Indias Growth is Accelerating Improving Macros 2015-16 2016-17E 2017-18E

GDP Growth (%) 7.6 7.1 7.7

Real GDP growth (average % change)
7.7 7.6
7.2 CPI Inflation 4.9 5.1 4.5
5.4 5.7
Fiscal Deficit (% Of GDP) 3.9 3.5 3.1
3.9 3.7
3.1
CAD(% of GDP) 1.1 0.5 1.2

FDI (% of GDP) 1.7 NA NA

1951-60 1961-70 1971-80 1981-90 1991-00 2001-10 2011-15 2016-20E 6.4

Interest Rates (%) 7.5 NA
Latest
Real GDP Growth (IMF Forecasts) 2017 estimates
World Average 3.4% India one of the better placed economies
United States 2.2% amongst large economies of the world.
United Kingdom 1.1%
With a focus on rejuvenating growth, the
government has undertaken a series of policy
Japan 0.6% measures.
China 6.6% Economic Growth should continue to
Emerging Markets & Developing accelerate. Impact of higher infra allocation to
4.6%
Economies Average be felt strongly from FY17.
India 7.6%

Source: Bloomberg, CEIC, CSO, RBI, Kotak Institutional Equity Research ; E- Kotak Institutional Equity Research Estimates. Forecast of 2016-2020 from IMF
September 2016 World Economic Outlook. 9
Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation).
 Equity Markets Market cap to GDP near 10 year lows
India Market Cap To GDP Ratio - Calendar Year ends 2005 - 18 (%) EBIDTA margins of S&P BSE Sensex companies are seen improving
37% 24%
180 22.8 25
23%
160 20.0 20.3 32%
22%
167 17.5 18.2 20
140 16.816.3 15.9 21%
15.1 27%
120 14.2 15.2 20%
13.2 12.6
10.9 108 112 15 22% 19%
100 98
18%
80 76 87 17%
62 79 80 79 74 10 17%
60 69 71
66
16%
12%
40 5 15%
20 Mcap/GDP (%) P/E 7% 14%
0 - 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Consumer (%) Healthcare (%) S&P BSE Sensex EBIDTA Margin (%) RHS

S&P BSE SENSEX EBITDA margins are improving steadily

S&P BSE Sensex 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16E 4QFY16E 1QFY17E 2QFY17E
EBIDTA Margin (%) 17.4% 17.0% 17.0% 16.8% 18.2% 18.0% 18.3% 18.7% 18.3% 19.4%

Improving EBITDA margins, lower interest rates should lead to improved EPS / Profit growth in coming years

Notes:
(a) From 2000-15, S&P BSE SENSEX PE is based on 1 year rolling forward,
(b) For 2016-18E, we have calculated S&P BSE SENSEX PE is based on PAT numbers as of Mar-16, Mar-17 and Mar-18 end and used market cap as of Sep 30 2016.
10
Source : Kotak Institutional Equities, Bank Of America Merrill Lynch, Bloomberg.
 Investment Approach
Stock Universe
Focus on well managed small cap companies 1,312 Stocks

Businesses operating in a niche environment

Market Capitalization Range
Identify businesses at a relatively early stage in
Rs 200 Cr 20,000 Cr
their life-cycle
1,087 Stocks
Focus on quality metrics like ROCE & ROE

Investments into growth companies with

expanding businesses and improvement in
profitability Quality & Valuation Criteria

Seeking undervalued businesses

Final Portfolio
50 - 60 Stocks

The current investment strategy is subject to change depending on the market conditions 11
 Taking the SIP Route
Slow & Easy

Why SIP ? Why an SIP in HDFC Small Cap Fund ?

Imbibes financial discipline. An open ended Fund with a well defined
portfolio strategy.
Drops of water help fill a glass Small and
regular investments build a corpus over time. Targeted allocation to small cap stocks with
good growth and earnings potential.
Eliminates the need to time the markets.
Given the volatility that small caps bring to the
Enables setup and plan financial goals. portfolio, an SIP helps weather such inherent
volatility

Option to stop at anytime thus providing

flexibility.

Aids in long term wealth creation.

SIP does not assure a profit or guarantee protection against a loss in a declining market. The user before acting on any information herein should make
his/her/their own investigation and seek appropriate professional advice and shall along liable for any decision taken on the basis of information contained
herein. In view of individual nature of tax consequences each investor is advised to consult his/her own professional tax advisor. 12
 Fund Facts
Type of Scheme Open-ended Equity Scheme

Inception Date
April 3, 2008
(Date of allotment)

Investment Objective To provide long-term capital appreciation by investing predominantly in Small & Mid Cap companies

Fund Manager$ Mr. Chirag Setalvad

Direct Plan
Plans
Regular Plan

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

Minimum Application Amount Purchase: Rs 5,000 and any amount thereafter

(Under Each Plan/Option) Additional Purchase: Rs 1,000 and any amount thereafter

Entry Load:
Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registered
Distributor) based on the investors assessment of various factors including the service rendered by the ARN
Holder.
Load Structure Exit Load:
In respect of each purchase / switch-in of Units, an Exit Load of 1.00% is payable if Units are redeemed /
switched-out within 1 year from the date of allotment.
No Exit Load is payable if Units are redeemed / switched-out after 1 year from the date of allotment.

Benchmark Index Nifty Free float Small cap 100 Index

$ Fund Manager Overseas investment Rakesh Vyas

For further details, refer SID and KIM available on www.hdfcfund.com and at Investor Service Centres of HDFC Mutual Fund 13
13
 Asset Allocation Pattern

Under normal circumstances, the asset allocation of the schemes portfolio will be as follows:

Type of Instruments Minimum Allocation Maximum Allocation Risk Profile of the

(% of Net Assets) (% of Net Assets) Instrument

Equity and equity related instruments of 80 100

Small and Mid-Cap companies of which
High
Small-Cap companies 80 100
Mid-Cap companies 0 20

Equity and Equity related instruments 0 20 Medium to High

other than the above

Debt and Money Market Securities 0 20 Low to Medium

(Including securitized debt*)
*Investment in Securitised debt, if undertaken, would not exceed 20% of the net assets of the Scheme.

The scheme may seek investment opportunity in the ADR / GDR / Foreign Securities (max. 30% of net assets) &
Foreign Securities (max 20% of net assets) subject to SEBI (Mutual Funds) Regulations, 1996. The scheme may use
derivatives (max 50% of net assets). Refer Disclaimer on Slide 16.
14
 Performance
Discrete Returns in % Value of investment of
NAV as on 30 Sep 2015 to 30 30 Sep 2014 to 30 30 Sep 2013 to 30 Since Inception Rs. 10,000 Since
Scheme Inception Dates 30 Sep 2016 Sep 2016 Sep 2015 Sep 2014 CAGR (in %) Inception (Rs.)
HDFC Small Cap Fund+ 3/Apr/08 30.553 18.49 11.06 55.38 14.04 30,553
Nifty Smallcap 100 Freefloat Index 1 17.27 5.87 80.47 6.17 16,630
Nifty 50 Index 2 8.33 -0.20 38.87 7.19 18,047
Other Funds Managed by Chirag Setalvad, Fund Manager of HDFC Small Cap Fund
HDFC Balanced Fund @ 11/Sep/00 122.081 13.65 11.65 60.86 16.86 122,081
CRISIL Balanced Fund Index 1 9.68 4.38 28.89 NA NA
Nifty 50 Index 2 8.33 -0.20 38.87 11.70 59,128
HDFC Mid- Cap Opportunities Fund 25/Jun/07 45.406 21.40 17.32 91.44 17.72 45,406
Nifty Midcap 100 Freefloat Index 1 18.70 13.72 63.17 11.06 26,451
Nifty 50 Index 2 8.33 -0.20 38.87 7.89 20,217
HDFC Capital Builder Fund# 1/Feb/94 223.679 15.42 7.59 61.63 14.69 223,679
Nifty 500 Index 1 11.27 3.59 46.08 8.93 69,578
Nifty 50 Index 2 8.33 -0.20 38.87 8.96 70,013
HDFC Long Term Advantage Fund @@ 2/Jan/01 267.685 18.94 -0.93 61.80 23.20 267,685
S&P BSE SENSEX 1 6.54 -1.79 37.41 13.08 69,338
Nifty 50 Index 2 8.33 -0.20 38.87 12.91 67,708
HDFC Children's Gift Fund - Investment Plan $ @ 2/Mar/01 93.777 14.13 7.71 51.81 17.40 121,910
CRISIL Balanced Fund Index 1 9.68 4.38 28.89 NA NA
Nifty 50 Index 2 8.33 -0.20 38.87 12.86 65,918
HDFC Children's Gift Fund - Savings Plan $ ^ 2/Mar/01 40.794 12.46 11.17 11.11 11.29 53,033
CRISIL MIP Blended Index 1 10.59 10.72 13.76 NA NA
CRISIL 10 Year Gilt Index 2 24.74 15.45 6.85 NA NA
HDFC Multiple Yield Fund- Plan 2005 +^ 17/Aug/05 27.819 10.53 6.31 22.93 9.63 27,819
CRISIL MIP Blended Index 1 11.17 10.72 15.45 8.49 24,770
CRISIL 1 Year T - Bill Index 2 7.36 8.86 8.35 6.21 19,542
Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). The above returns are
of `regular plan - growth option. $ Adjusted for bonus units declared under the scheme# The Scheme is co-managed by Chirag Setalvad and Miten Lathia.
+The Scheme is co-managed by Chirag Setalvad (Equities) and Anil Bamboli (Debt). @Scheme performance may not strictly be comparable with that of its
Additional Benchmark in view of balanced nature of the scheme where a portion of scheme's investments are made in debt instruments. ^Scheme
performance may not strictly be comparable with that of its Additional Benchmark in view of hybrid nature of the scheme where a portion of scheme's
investments are made in equity instruments. @@ Open Ended Equity Linked Savings Scheme with a lock-in period of 3 years. Load is not taken into
consideration for computation of performance. 1. Benchmark 2. Additional Benchmark . NAV at Inception for all the above schemes was Rs 10.15 + W.e.f
th
November 9 2016, the fundamental attributes and the name of HDFC Small & Midcap fund has been amended.
Disclaimer
The presentation is dated 21st December 2016 and 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. Any
calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The
information contained in this document is for general purposes only and is not an offer to sell or a solicitation to buy/sell
any mutual fund units/securities. The document is given in summary form and does not purport to be complete. The
document does not have regard to specific investment objectives, 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 or implementation of an investment strategy. The same should not be construed as investment
advice to any party. The statements contained herein are based on our current views and involve known and unknown
risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or
implied in such statements. Neither HDFC Asset Management Company (HDFC AMC) and HDFC Mutual Fund (the Fund)
nor any person connected with them, accepts any liability arising from the use of this document.

HDFC Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The current investment
strategy is subject to change depending on the market conditions The recipient(s) before acting on any information herein
should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible
/ liable for any decision taken on the basis of information contained herein. Past performance may not be sustained in the
future. Investments in Small cap stocks are entail risk of loss of capital invested. Investors are advised to take due caution
while investing in this scheme.

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

16 16
Thank You