Nippon India Fixed Horizon Fund XXXX Series 5 Direct

Investment objective & Benchmark
1. The investment objective of the fund is that ” The scheme seeks to generate returns and growth of capital by investing in a diversified portfolio of Central and State Administration securities and Other fixed income/ debt securities maturing on or before the date of maturity of the scheme with the objective of limiting interest rate volatility. ”
2. It is benchmarked against CRISIL Composite Bond Index.

Asset Allocation & Portfolio Composition
1. The portfolio allocation of debt securities primarily have 2 kinds of risks: interest rate risk & credit risk. While the interest rate movements are driven by the fund’s duration, credit quality of debt securities are based on the weighted average credit ratings of a fund. Generally, funds with high credit quality will have the weighted average credit rating of AA- and higher rated securities, funds with medium credit quality will hold securities having credit rating lying between A- to BBB- and funds with low credit quality will hold securities having average credit rating of less than BBB-. Credit rating is a qualitative tool that basically assesses the creditworthiness and financial soundness of a company and takes into consideration a number of factors including the default rate and solvency of the concerned business entity.
2. The portfolio of the fund has securities with varying levels of maturities. Duration takes into consideration the sensitivity of the average maturity of these securities with respect to the interest rate changes. The Average Maturity of Nippon India Fixed Horizon Fund XXXX – Series 5 – Direct Plan is 0.03 years and Duration is 0.02562363 years. Generally, securities with high maturity are more sensitive to interest rate changes. So, an investor with a low risk appetite may look to invest in a fund with low maturity and duration vis-a-vis category levels.
3. All these parameters – average maturity, duration, interest rate changes, credit quality, credit rating, liquidity etc. need to be looked at in conjunction with each other to determine the quality of portfolio of a fund.

Tax Implications
1. If units are redeemed within 3 years of investment, the whole amount of gain will get went on to the investor’s income and will be taxed as per his/her applicable slab rate.
2. For units redeemed after 3 years of investment, gains will be taxed at a rate of 20% post indexation benefits. Indexation is a process of recalculating the purchase price after accounting for inflation into it. The benefit of indexation lies in lowering down one’s capital gains which brings down the taxable income and thereby reduces taxes on it.
3. For Dividend Distribution Tax, the dividend income from this fund will get went on to the income of an investor and taxed according to his/her respective tax slabs.
4. Also, for dividend income in excess of Rs 5,000 in a financial year; the fund house shall deduct a TDS of 10% on such income.