Q1. Mirae Asset Healthcare Fund ( ) has completed 1 year. Though it is a short period of time, how would you assess the performance of the fund over this period?

An open ended equity scheme investing in healthcare and allied sectors

Yes, one year is a very short time period to assess the performance of any fund, nevertheless the underlying sector performance is largely on expected lines. During our communication around NFO, we had suggested an ideal investment time horizon of 4-5 years to our investors. The reason for advocating longer time horizon was the extended downturn and substantial re-orientation the sector had gone through. Post such disruption, we have seen that it takes time to show the results. A year ago, we were expecting bottoming out of the US business (the core issue) over 12-18 months. As we reassess the situation, after a year, our thesis seems to be playing out as we see some pockets of growth in some companies for their US business.The fund has outperformed its benchmark and this, we believe suggests that we are on the right track in terms of stock /portfolio construction.

Conversation withMr. Vrijesh Kasera (Fund Manager)

Mirae Asset Healthcare Fund

Q2. What is the assessment of earnings that companies have been delivering, and do you see strong earnings growth ahead?

Q3. What have been the themes and segments you have been bullish on and investing within this portfolio?

Last few years have been quite bad for the pharmaceutical companies where we have seen most of them having decline in earnings on the back of increased investments and decline in the pricing ability in the US. However, efforts in the last couple of years of cost rationalization, reduction in the extent of decline in the US business along with monetization of much of the investment made in the specialty and complex pipeline is expected to help the companies report improved earnings growth going forward.

Within healthcare we believe there is a lot of benefit that the intermediate players might get from the environmental disruption in China and lot of these products where Indian manufacturers were not competitive or not present might act as an opportunities for these intermediate players.Further, we believe the domestic market might continue to offer potential opportunity to deliver sustainable double digit growth over a longer period of time, thus we prefer companies both in health services and pharmaceuticals having major presence in the domestic market. Also, over the medium to long term as and when US market improve, some of the major pharmaceutical companies should do well.

Past performance may or may not be sustained in future and is no guarantee of future results.

Returns ( in %, annualized)

Fund

Benchmark

Excess Return

3M

-7.01

-11.67

4.66

6M

-4.49

-9.05

4.56

1 Year

-1.36

-9.58

8.22

YTD

-3.26

-8.31

5.05

Since Inception

-0.70

-8.11

7.41

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

Allocation - Top Sectors^^Industrywise classification as recommended by AMFI

2.03%

5.89%

9.03%

81.96%

0% 30% 60% 90%

Finance

Healthcare Services

Chemicals

Pharmaceuticals

54.98%

29.57%

14.49%

0.96%

Healthcare Fund Cap Allocation

Large Cap Mid Cap

Small Cap Cash and Others

Product LabellingRISKOMETER

Investors understand that their principal will be at High Risk

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hQ4. Can you elaborate more on the current portfolio psychographics of the fund and investment process?

We have a good mix of large, mid & small cap companies with a split of ~60:40 in favor of large caps, further the top 10 #

stocks consist of ~69% of the portfolio, thus providing enough diversification.The focus while creating the portfolio was to have a bottom up approach in stock selection. Key criteria looked at were

#earnings growth, management quality and incremental capital allocation strategy.

# Portfolio may or may not remain the same.

The information contained in this document is compiled from third party and publically available sources Mirae Asset Global Investments (India) Private Limited (the AMC) shall have no responsibility/liability whatsoever for the accuracy or any use or reliance thereof of such information. The AMC, its associate or sponsors or group companies, its Directors or employees accepts no liability for any loss or damage of any kind. Views expressed by the Fund Manager cannot be construed to be a decision to invest. The statements contained herein are based on current views and involve known and unknown risks and uncertainties. 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.

.

Q5. What are the key triggers that will help drive the healthcare sector and the future outlook on the healthcare sector?Stabilization in the US market would be a key trend that would be watched, as over the last 3-4 years the loss in pricing in the US market impacted the overall profitability even though companies continued to grow in other markets. Further, the domestic healthcare market has its own share of disruptions with demonetization, GST, FDC ban, trade margin cap among others that impacted growth, we believe with the extent of under penetration of healthcare services in the country there is huge potential for the market to again report good double digit growth for the next years. Having said that the main trigger in our assessment would come from more clarity on the regulatory actions both domestic and in the US would help get investor interest back in the sector. On earning growth we expect FY19-21 earnings growth to be ~26% for the portfolio companies and trading at reasonable valuations of ~19x fwd estimates.

Pharma Sector P/E below 10 yr. average

Past performance may or may not be sustained in future and is no guarantee of future results.

19.0

22.3

5.0

15.0

25.0

35.0

45.0

Jun-0

5

Oct-

06

Jan-0

8

Apr-

09

Jul-1

0

No

v-11

Feb

-13

Ma

y-1

4

Aug-1

5

De

c-16

Ma

r-1

8

Jun-1

9Healthcare P/E (x) Avg (x)

Source: Motilal Oswal estimates (1 year forward P/E of Coverage Universe), June, 2019