Target Maturity cum Gilt cum Index Fund_IDFC Mutual Fund

IT’S NOT AN FMP, BUT IT HAS A FIXED MATURITY. WHAT IS IT?

IDFC Presents Target Maturity + Sovereign Only + Index Funds IDFC Gilt 2027 Index Fund (An open-ended Target Maturity Index fund, investing in constituents of CRISIL Gilt 2027 Index.) & IDFC Gilt 2028 Index Fund (An open-ended Target Maturity Index fund, investing in constituents of CRISIL Gilt 2028 Index.)

OPPORTUNITY TO DIVERSIFY BEYOND FIXED DEPOSIT

A large portion of Household saving is still in FDs Composition of Household Financial Assets - Outstanding 7% Commercial Bank deposits 13% Cooperative Banks 24% 4% 52% Life Insurance Currency Mutual Funds

Target Maturity Fund – Why it could be a better option? IDFC Gilt Index Funds Fixed Deposit Invests in Government securities and treasury bills N. A Quality Tenor Highest Quality Depends on credit rating of the bank Withdrawal Fixed tenor Market Risk Fixed tenor On maturity, and may have a penalty* Duration Risk No June 30,20271 or April 05, 20282 N. A Guaranteed Returns Any business day. One can even avail of SWP facility Yes Indexation Benefit (systematic withdrawal plan) No – Interest will be taxed as per individual’s tax Yes – daily NAV is published depending on market bracket prices Initially high, then it keeps reducing as residual maturity decreases No – but because these are target maturity schemes, one can have a reasonable visibility of performance Yes (IDFC Gilt 2027 Index Fund offers 6 years and IDFC Gilt 2028 Index Fund offers 7 years of indexation benefit)

HOW DOES THE FUND BENEFIT A CLIENT?

Client Seeks 1 Highest Quality 2 Easy Liquidity 3 Low Expense 4 Tax Benefit 5 Fixed Maturity & Predictability of returns

Fund Offers 1 It invests in sovereign instruments only – Government securities of specific maturity (2027/2028) and Treasury Bills. 2 Provides liquidity - enter /exit on any business day. 3 Offers low cost participation in government of India bonds. 4 Offers indexation benefit for investments >3 years. 5 Because these are target maturity schemes, one can have a reasonable visibility of performance

HOW DOES THE FUND BENEFIT A DISTRIBUTOR?

Benefits for the Distributor Goals Diversify Wallet Share

Benefits for the Distributor Goals Gilt index funds could be a suitable opportunity for investors preferring a conservative asset class and with goal fulfillment requirements in the year 2027 and/or year 2028 An open-ended fund that matures

Benefits for the Distributor Here’s an option to diversify your client’s Diversify debt allocation (beyond traditional FDs) via funds that have ‘target maturity’ and high quality ‘gilt’. A fund that invests in government security with an easy to understand strategy

Benefits for the Distributor While Gilt index funds cannot guarantee returns, it can by From 0bps (FD) its nature of being target-maturity fund offer reasonable visibility in performance. 25bps in Gilt Index funds Diversifying a client’s portfolio can be a win-win opportunity by generating revenue from increased AuM share Wallet Share

FEW POINTS TO PONDER

Few Points to Ponder I don’t understand the various securities in debt market – NCDs, commercial papers, money markets instruments… These funds simply invests in sovereign securities - government securities and treasury-bills

Few Points to Ponder I want reasonably predictable returns Because these are fixed maturity schemes, one can have a reasonable visibility of performance

Few Points to Ponder I want a fund that provides better post-tax returns IDFC Gilt 2027 Index Fund offers 6 years and IDFC Gilt 2028 Index Fund offers 7 years of indexation benefit Traditional Debt Crisil Gilt 2027 Investment Index Tenure (in years) 6.17 6.17 Indexations Availed N.A 6 Return 6.10% 6.10% Amount Invested 100,000 100,000 Redemption Value 144,100 144,100 Gains 44,100 44,100 Indexation Cost N.A 126,532 Gains (post indexation as applicable) N.A 17,568 Tax applicable 30% 20% Tax Payable 13,230 3,514 Post Tax Gains 30,870 40,586 Post Tax Redemption Value 130,870 140,586 This is for illustration purpose only Returns 4.46% 5.68% Data as on 31st March’21. Traditional investment is taxed at 30% and is assumed to be at the same rate as index (for illustration) and index fund is taxed at 20% post indexation. Cess and surcharge are excluded. Indexed cost arrived at assuming 4%p.a. growth rate in CII (Cost Inflation Index). Expenses, cost of reinvestment, impact of roll down have not been considered.

A SNAPSHOT

For Highest Quality Fixed Maturity Easy Liquidity Low Cost Indexation Benefit Reasonable predictability Invest in IDFC’s Target Maturity Offering

Product Label IDFC Gilt 2027 Index Fund IDFC Gilt 2028 Index Fund (An open-ended Target Maturity Index fund investing in (An open-ended Target Maturity Index fund investing in constituents of CRISIL Gilt 2027 Index) constituents of CRISIL Gilt 2028 Index) MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

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