Why Small and Midcap Companies

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1 August

2 Why Small and Midcap Companies Superior Growth Growth Presence in generally new & faster growing segments MATURITY Ability to gain share due to DECLINE new technology, better products / services etc. GROWTH Small base INCEPTION Time Focus on Small and Mid Caps here 2

3 Small in size, big on stature! Did you know India s. Company Market Cap. (INR crore) Category Largest Batteries Company Exide Industries Ltd. 10,910 Mid Cap Largest AC and Commercial Refrigeration Company Blue Star Ltd. 1,715 Mid Cap Market leader in specialty ceramics Vesuvius India Ltd. 717 Mid Cap and refractory products Largest manufacture & exporter of Explosives in India Solar Industries India Ltd 1,615 Mid Cap One of India s largest ceramics and abrasives manufacturers Carborundum Universal Ltd. 2,835 Mid Cap Source: NSE ( Exide Industries Ltd: Largest power storage solutions company in India. Company website Blue Star Ltd: India's largest air conditioning and commercial refrigeration company. Company website Vesuvius is a world wide leader in developing, manufacturing and marketing high performance specialty ceramics and refractory supplier. Company website- Solar Industries Limited. company website Carborundum Universal Ltd. company website Market capitalization as on July 31, 2012 (NSE India). Stocks referred above are purely illustrative and are not recommended by HDFC Mutual Fund/ HDFC Asset Management Company Ltd. The Fund may or may not have any present or future positions in these stocks. 3

4 Relative Index Performance (January 1, 2001 July 31, 2012) Over a longer period of time, the performance of mid-caps (represented by CNX Midcap) compensates for their inherently greater volatility relative to large-caps (represented by S&P CNX Nifty). S&P CNX Nifty: 13.11% CAGR CNX Midcap Return: % CAGR Source: National Stock Exchange All returns are calculated by HDFC Asset Management Company Ltd. Returns are of July 31, Past Performance may or may not be sustained in the future 4

5 Presenting HDFC Mid Cap Opportunities Fund (An Open-Ended Equity ) 5

6 Product Rationale Provide investors with exposure to a portfolio constituted primarily of small and mid cap companies Such a portfolio offers a higher return potential than one comprising primarily large cap companies but also carries relatively higher risk, particularly over the short and medium term Small and mid cap companies offer the potential of higher returns due to the following reasons: Relatively less known by market participants / price discovery by market is not full Better growth prospects due to presence in a new segment / area that is growing at a faster pace Ability to gain market share due to new technology / better product / service etc. Room for P/E multiples to expand if the company transitions from a small / mid cap to a large cap 6

7 Market Capitalization Breakup (As on July 31, 2012) HDFC Mid Cap Opportunities Fund offers investors greater exposure to small and mid caps relative to broad based market indices % 88.5% 80.00% 70.00% 54.33% 49.56% 50.09% 45.67% 60.00% 50.00% 40.00% 30.00% 20.00% 0.0% 0.35% 0.00% 5.5% 10.00% 0.00% Large Cap Mid Cap Small Cap 500 BSE 200 Index HDFC Mid - Cap Opportunities Fund Source: NSE ( & BSE Ltd ( Mid Cap Companies: Those companies that are either a constituent of CNX Midcap Index or companies that have market capitalization of ` 500 crore or more but do not exceed the market capitalization of the largest constituent of the CNX Midcap Index. Small Cap Companies: Those companies whose market capitalization is lower than ` 500 crore. Large Cap Companies: All stocks other than the above two categories. 7

8 Industry Allocation - % of Net Assets (As at July 31, 2012) Banks Industrial Products Pharmaceuticals Consumer Non Durables Software Auto Ancillaries Chemicals Consumer Durables Construction Media & Entertainment Petroleum Products Industrial Capital Goods Others Oil Finance Others include: Construction Project (0.59%), Telecom - Services (0.49%), Power (0.38%), Textile Products (0.23%), Ferrous Metals (0.14%) 8

9 Portfolio Composition (As at July 31, 2012) % to Net Assets Total Equity & Equity Related Holdings Cash, Cash Equivalents and net Current Assets 6.02 Grand Total Average AUM for the quarter ended June 30, 2012 (` in Lakhs) 2, Average Market Capitalization (INR Crore) 6,714 Market Capitalization of Largest Company (INR Crore) 43,226 Market Capitalization of Smallest Company (INR Crore) 105 9

10 Risk Management Small and Mid Cap companies may carry higher risk than large cap companies, particularly over the short and medium term The endeavors to control risk by adopting the following investment strategy: Aims to maintain a well diversified portfolio (70 stocks as on July 31, 2012) CNX Midcap # S&P CNX Nifty Top 5 Stocks Top 10 Stocks The investment in small cap stocks to be restricted to 15% of net assets The scheme permits investments in companies other than small and mid cap companies and in Debt and Money Market Instruments up to 25% of the net assets Portfolio concentration (%) as on July 31, # Benchmark index Additional Benchmark index 10

11 SCHEME PERFORMANCE SUMMARY HDFC Mid-Cap Opportunities Fund- Growth Option NAV as at June 29, 2012 ` A. Cumulative Performance Value of Investment of `10,000@ NAV Per Unit (`) Returns (%) ^ CNX Midcap (%) # NIFTY (%) (`) CNX Midcap (`) # NIFTY (`) Date Period B. Discrete 12 Month Returns (%) CNX 29-Jun-11 Last 1 Year ,985 9,228 9,426 Period ^ Midcap # NIFTY 29-Jun-10 Last 2 Years ,351 9,081 10,043 Jun 29, 11 to Jun 29, Jun-09 Last 3 Years ,747 13,195 12,022 Jun 29, 10 to Jun 29, Jun-07 Since Inception ,104 12,617 12,394 Jun 29, 09 to Jun 29, ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR) # Benchmark of the. Additional Benchmark of the current value of ` 10,000/- invested at the beginning of a given period. Performance of dividend option under the schemes for the investors would be net of distribution tax applicable. 11

12 Date SCHEME PERFORMANCE SUMMARY Of other schemes managed by Chirag Setalvad HDFC Balanced Fund- Growth Option NAV as at June 29, 2012 ` Period A. Cumulative Performance NAV Per Unit (`) Returns (%) ^ * CRISIL Balanced Fund Index (%) # NIFTY (%) Value of Investment of `10,000@ CRISIL (`) Balanced Fund Index (`) # NIFTY (`) B. Discrete 12 Month Returns (%) CRISIL Balanced Fund Index ^ * # NIFTY 29-Jun-11 Last 1 Year ,140 9,956 9,426 Period 29-Jun-10 Last 2 Years ,518 10,574 10,043 Jun 29, 11 to Jun 29, Jun-09 Last 3 Years ,994 12,144 12,022 Jun 29, 10 to Jun 29, Sep-00 Since Inception N.A ,211 N.A. 36,247 Jun 29, 09 to Jun 29, HDFC Capital Builder Fund- Growth Option NAV as at June 29, 2012 ` A. Cumulative Performance Value of Investment of `10,000@ NAV Per Unit (`) Returns (%) ^ 500 (%) # NIFTY (%) (`) 500 (`) # NIFTY (`) Date Period B. Discrete 12 Month Returns (%) 29-Jun-11 Last 1 Year ,429 9,284 9,426 Period ^ 500 # NIFTY 29-Jun-10 Last 2 Years ,225 9,514 10,043 Jun 29, 11 to Jun 29, Jun-09 Last 3 Years ,942 11,731 12,022 Jun 29, 10 to Jun 29, Feb-94 Since Inception ,226 39,242 42,920 Jun 29, 09 to Jun 29, The scheme is co-managed by Chirag Setalvad and Miten ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). # Benchmark of the. Additional Benchmark of the. N.A : Not Availalble Performance of dividend option under the schemes for the investors would be net of distribution tax the current value of `10,000/- invested at the beginning of a given period. * 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.@@ Miten Lathia since May 10,

13 SCHEME PERFORMANCE SUMMARY Of other schemes managed by Chirag Setalvad HDFC Long Term Advantage Fund- Growth Option NAV as at June 29, 2012 ` A. Cumulative Performance Value of Investment of `10,000@ NAV Per Unit (`) Returns (%) ^ SENSEX (%) # NIFTY (%) (`) SENSEX (`) # NIFTY(`) Date Period B. Discrete 12 Month Returns (%) 29-Jun-11 Last 1 Year ,470 9,324 9,426 Period ^ SENSEX # NIFTY 29-Jun-10 Last 2 Years ,441 9,941 10,043 Jun 29, 11 to Jun 29, Jun-09 Last 3 Years ,337 11,788 12,022 Jun 29, 10 to Jun 29, Jan-01 Since Inception ,509 43,370 41,507 Jun 29, 09 to Jun 29, HDFC CHILDREN'S GIFT FUND - INVESTMENT PLAN NAV as at June 29, 2012 ` A. Cumulative Performance Value of Investment of `10,000@ Date Period NAV Per Unit (`) Returns (%) ^ $ * Crisil Balanced Fund (%) # S& P CNX Nifty (%) (`) Crisil Balanced Fund (`) # S& P CNX Nifty (`) B. Discrete 12 Month Returns (%) Crisil ^ $ * Balanced Fund # S& P CNX Nifty 29-Jun-11 Last 1 Year ,130 9,956 9,426 Period 29-Jun-10 Last 2 Years ,178 10,574 10,043 Jun 29, 11 to Jun 29, Jun-09 Last 3 Years ,794 12,144 12,022 Jun 29, 10 to Jun 29, Mar-01 Since Inception N.A ,796 N.A. 40,410 Jun 29, 09 to Jun 29, ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). # Benchmark of the. Additional Benchmark of the. $ Adjusted for bonus units declared under the the current value of ` 10,000/- invested at the beginning of a given period. Performance of dividend option under the schemes for the investors would be net of distribution tax applicable. * 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 Open Ended Equity Linked Savings with a lock-in period of 3 years 13

14 HDFC CHILDREN'S GIFT FUND- SAVINGS PLAN NAV as at June 29, 2012 ` A. Cumulative Performance Date SCHEME PERFORMANCE SUMMARY Of other schemes managed by Chirag Setalvad Period NAV Per Unit (`) Returns (%) ^ $ ** CRISL MIP Blended Index (%) # Crisl 10 Year Gilt Index (%) Value of Investment of `10,000@ Crisl 10 (`) CRISL MIP Blended Index (`) # Year Gilt Index (`) B. Discrete 12 Month Returns (%) CRISL MIP ^ $ ** Blended Crisil 10 year Gilt Index 29-Jun-11 Last 1 Year ,763 10,669 10,683 Period Index # 29-Jun-10 Last 2 Years ,802 11,211 10,919 Jun 29, 11 to Jun 29, Jun-09 Last 3 Years ,957 12,023 11,266 Jun 29, 10 to Jun 29, Mar-01 Since Inception N.A N.A 32,630 N.A. N.A Jun 29, 09 to Jun 29, HDFC MULTIPLE YIELD FUND- PLAN Growth Option NAV as at June 29, 2012 ` A. Cumulative Performance Value of Investment of `10,000@ Crisil 1 Crisil 1 NAV CRISL MIP Year T-bill CRISIL MIP Year T-bill Per Returns Blended Index (%) Blended Index (`) Date Period Unit (`) (%) ^ ** Index (%) # (`) Index (`) # B. Discrete 12 Month Returns (%) CRISIL MIP Crisil 1 Blended Year T-bill 29-Jun-11 Last 1 Year ,791 10,669 10,775 Period ^ * * Index # Index 29-Jun-10 Last 2 Years ,576 11,211 11,230 Jun 29, 11 to Jun 29, Jun-09 Last 3 Years ,640 12,023 11,472 Jun 29, 10 to Jun 29, Aug-05 Since Inception ,066 16,327 14,313 Jun 29, 09 to Jun 29, The is co-managed by Chirag Setalvad (Equities) and Anil Bamboli (Debt). ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). N.A: Not Available # Benchmark of the. Additional Benchmark of the. $ Adjusted for bonus units declared under the the current value of ` 10,000/- invested at the beginning of a given period. 14 Performance of dividend option under the schemes for the investors would be net of distribution tax applicable. ** 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..

15 Why HDFC Mid Cap Opportunities Fund? Opportunity to invest in a diversified portfolio of small and mid sized companies with faster growth potential Provides diversification to an investor s overall equity mutual fund portfolio Attractive valuations of small and mid cap companies One of the most experienced fund management and research teams in the country with a track record of managing equity assets across market cycles Strong emphasis on risk management to mitigate the inherently greater volatility of a portfolio dominated by small and mid cap companies 15

16 Product Features Type of Open-ended Equity Inception Date (Date of allotment) June 25, 2007 Investment Objective To generate long term capital appreciation from a portfolio that is substantially constituted of equity and equity related securities of small and mid cap companies Fund Manager $ Mr. Chirag Setalvad (since June 25, 2007) Options Minimum Application Amount (Under Each Option) Load Structure Benchmark Additional Benchmark Growth and Dividend. Dividend option offers payout and reinvestment facility. Purchase: ` 5,000 and any amount thereafter Additional Purchase: ` 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. 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 No Entry/ Exit Load shall be levied on bonus units and units allotted on dividend reinvestment CNX Midcap Index S&P CNX Nifty $ Dedicated Fund Manager for Overseas Investments: Mr. Rakesh Vyas since May 10,

17 Asset Allocation Pattern Under normal circumstances, the asset allocation of the scheme s portfolio will be as follows: Type of Instruments Minimum Allocation (% of Net Assets) Maximum Allocation (% of Net Assets) Risk Profile of the Instrument Equity and equity related securities of Small and Mid-Cap companies of which Small-Cap companies Mid-Cap companies High Equity and equity related securities other than above 0 25 High Debt and Money Market Securities 0 25 Low to Medium The investment in Securitised Debt will not normally exceed 25% of the net assets of the The may seek investment opportunity in the ADR / GDR / Foreign Equity and Debt Securities (max. 25% of net assets) subject to SEBI (Mutual Funds) Regulations, The may use derivatives mainly for the purpose of hedging and portfolio balancing (max. 20% of net assets) based on the opportunities available subject to SEBI (Mutual Funds) Regulations,

18 Disclaimer & Risk Factors DISCLAIMER: This presentation has been prepared by HDFC Asset Management Company Limited ( HDFC AMC ) on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only. 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. Neither HDFC AMC and HDFC Mutual Fund (the 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 seek appropriate professional advice and shall alone be fully responsible / 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. 18

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