March 21, 2014

Fixed Maturity Plans (FMP)

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FMP NFOs Current & Forthcoming
Scheme name

Tenure

Open Date

Close Date

Minimum Investments

BNP Paribas FTF Series 29 Plan C (G)

370 Days

21Mar14

27Mar14

5000

IDFC FTP Sr.89 (G)

742 Days

20Mar14

26Mar14

10000

IDBI FMP Sr.IV 376Days(March 2014)L (G)

376 Days

21Mar14

26Mar14

5000

Tata FMP Sr.47 Scheme D (G)

371 Days

18Mar14

26Mar14

5000

Religare Invesco FMP Sr.XXIII Plan G (G)

376 Days

24Mar14

26Mar14

5000

DWS FMP Series 63 373Days (G)

373 Days

24Mar14

25Mar14

5000

L&T FMP Series X Plan T(377Days) (G)

377 Days

21Mar14

25Mar14

10000

HDFC FMP 378DaysMar 2014(1)(XXIX) (G)

378 Days

21Mar14

25Mar14

5000

IDFC FTP Sr.88 (G)

372 Days

19Mar14

25Mar14

10000

Tata FMP Sr.47 Scheme B (G)

369 Days

19Mar14

25Mar14

5000

JPMorgan India FMP Series 37 (G)

378 Days

25Mar14

25Mar14

5000

LIC NOMURA MF FMP Series 79 Regular (G)

373 Days

20Mar14

25Mar14

10000

Principal PNB FMP 377Days Sr.B15 (G)

377 Days

21Mar14

25Mar14

5000

12 Months

21Mar14

25Mar14

5000

SBI Debt Fund Series A 15 (G)

745 Days

18Mar14

24Mar14

5000

UTIFTI Series XVIII IV(366Days)Reg (G)

366 Days

19Mar14

24Mar14

5000

DWS FMP Series 59 367Days (G)

367 Days

20Mar14

24Mar14

5000

DWS FMP Series 62 367Days (G)

367 Days

24Mar14

24Mar14

5000

L&T FMP Series X Plan S(380Days) (G)

380 Days

20Mar14

24Mar14

10000

IDFC FTP Sr.87 (G)

366 Days

19Mar14

24Mar14

10000

Tata FMP Sr.47 Scheme C (G)

373 Days

14Mar14

24Mar14

5000

Kotak FMP Series 149 386 Days Regular (G)

386 Days

19Mar14

24Mar14

5000

1 Year & Above

Baroda Pioneer FMP Sr.O Plan A (G)

DSP BR FMP Series 155 12Mth (G)

12 Months

17Mar14

24Mar14

5000

Sundaram FTP Plan FK (G)

378 Days

20Mar14

24Mar14

5000

Reliance Fixed Horizon XXVI Sr.4 (G)

1094 Days

19Mar14

24Mar14

5000

Reliance Fixed Horizon XXVI Sr.5 (G)

376 Days

21Mar14

24Mar14

5000

Religare Invesco FMP Sr.XXIII Plan F (G)

367 Days

24Mar14

24Mar14

5000

Birla Sun Life FTP Series KW (G)

374 Days

21Mar14

24Mar14

5000

SBI Debt Fund Series A 14 (G)

380 Days

18Mar14

21Mar14

5000

DWS FMP Series 61 375Days (G)

375 Days

21Mar14

21Mar14

5000

Reliance Dual Advantage FTF V Plan D (G)

1094 Days

11Mar14

21Mar14

5000

Birla Sun Life FTP Series KV (G)

367 Days

20Mar14

21Mar14

5000

12 Months & 120 Days

21Mar14

24Mar14

5000

Reliance Dual Advantage FTF V Plan E (G)

1108 Days

12Mar14

26Mar14

5000

HDFC FMP 3360DaysMar 2014(1)(XXX) (G)

3360 Days

14Mar14

25Mar14

5000

DWS FMP Series 60 37Mths (G)

37 Months

20Mar14

24Mar14

5000

HDFC FMP 1127DaysMar 2014(1)(XXIX) (G)

1127 Days

20Mar14

24Mar14

5000

HDFC FMP 1095DaysMar 2014(1)(XXIX) (G)

1095 Days

14Mar14

24Mar14

5000

Reliance Fixed Horizon XXV Sr.35 (G)

1832 Days

14Mar14

24Mar14

5000

ICICI Pru FMP Series 73 1120Days Plan LReg(G)

1120 Days

14Mar14

24Mar14

5000

JPMorgan India FMP Series 35 (G)

1831 Days

13Mar14

24Mar14

5000

Baroda Pioneer FMP Sr.N Plan A (G)

3 Years & Above

Prologue: Fixed Maturity Plans are closeended debt schemes with a maturity horizon varying from one month to five years. They are launched with predetermined maturity
date; so as the investments are made in such securities which mature at or around the same time as the schemes do. Investors are not allowed for premature redemption
during period and are warranted to stay till maturity. However, premature withdrawals are allowed on the stock exchanges where these units are listed and traded at market

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prices. However this route is not yet very liquid. The schemes are shut down generally once they get matured. In a rising interest rate scenario, FMPs are seen as best
investment tools. They are better investment options than bank fixed deposits (FD) as they offer higher after tax returns with minimal extra risk.
Structure: The objective of FMPs is to generate steady returns over a fixed period and safeguarding the investor against market fluctuations. They invest in Government
securities, corporate debts and money market instruments. They invest in those instruments that get matured at or around the same time as their schemes. Given the
structure, it is implied that the returns are always in positive terrain if held till maturity. Even though the schemes are listed & traded in stock exchanges, liquidity is currently
limited as their prices trade at a huge discount to their NAVs. It is best suited for the investors who are comfortable locking in their investment until maturity. FMPs NFOs are
generally opened for one to three days and minimum investment amount is set at Rs. 5,000. The difference in returns that are yielded by two different FMPs, having same
tenure, arises out of the risk taken on in the portfolio by the fund managers. The one which invests in higher rated debt instruments would yield lesser return compared to
another with lower rated (risky) debt instruments. Industry regulators have taken ample measures to promote such products as an efficient investment tool and to protect
the investors from any misleading. It is noteworthy to say that the SEBI strictly instructed all the fund houses to stop selling fixed maturity plans on the basis of indicative
returns as such practice is unethical and boils down to guaranteeing returns. SEBI has also stopped fund houses from giving an exit option. Earlier, an investor had the option
to redeem FMP units to the mutual fund house before maturity by paying an exit load of 2% of the net asset value.
Tax Treatment: FMPs are taxefficient. They are subject to capital gains tax and dividend distribution tax. The tax treatment depends on the choosing of investment options
such as growth or dividend. In Dividend option, investors have to bear dividend distribution tax, whereas in the Growth option returns earned are treated as capital gains
(shortterm or longterm depending on tenure of investment). Dividend option is best suited for investors who fall under higher tax bracket (if the investment horizon is less
than a year). Though the dividend received is tax free in the hands of investors, a Dividend Distribution Tax (DDT) of 28.325% is levied by the mutual funds and deducted
from investors proceeds before pay out. As far as effective tax rate on DDT is concerned, the effective rates are lower for investors as the DDT is calculated on actual dividend
distributed and not on gross returns. But for an investor, the tax rate is calculated from the gross returns of his investment. Actually, the AMC has to pay 28.33% on the
dividend of retail investors which is the same as 22.07% tax on the gross returns of the investment of the investors.
An investor in an FMP with tenure of over a year who opts growth option to take gains as capital appreciation will attract a tax rate of 10% or 20% (depending on whether or
not indexation is applicable). As against this, interest on banks Fixed Deposit of similar tenure might be taxed at 30%. In case of shortterm capital tax, it is similar to interest
income from bank fixed deposits. The returns are added to the income of the investor and taxed as per his/her slab. FMPs of longerterm maturities spanning over more than
two financial years also offer better tax efficiency through double indexation benefits. For instance, if you buy an FMP of 14 months in February 2010, scheme will mature in
April, 2011. In this case, the investor will get inflation indexation benefits for the years 200910 and 201112.
Indexation benefit: Inflation erodes the real value of any investment. So every year, an inflation index based on the prevailing rate of inflation is announced. The cost of
investment is indexed by multiplying the index of the year of maturity and divided by the inflation index prevailing in the year of investment. If you have arrived at an indexed
cost, then the longterm capital gain is taxed at 20.6% and if you do not opt for the indexed cost, then the tax is 10.3% of the gains. As per the current law, investors can claim
double indexation benefit if the holding period is over three financial years. Consider the case of a 375day FMP, which starts on 30 March 2012 and matures on 9 April
2013. Since it is spread over three financial years201112 (investing year), 201213 (holding year) and 201314 (redemption year)the indexation will be for two years. In this
case, one can report a longterm capital loss (instead of gain) and it can be set off against other longterm capital gains reducing the tax liability further. One can come across
several FMPs with double indexation benefits in March every year. However, investors can claim (single) indexation benefit if the holding period is over two financial years
(for the investment period of minimum one year).
Conclusion: FMPs are taxefficient and yielding favorable returns. However, they offer no guaranteed returns (unlike fixed deposits) and ample liquidity. Given the present
credit market tightness, fund houses launch more FMPs. Investing in short term FMPs is advisable at this point of time. They can be an excellent investment for investors who
clearly understand the risks associated with them.

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Disclaimer: Mutual Funds investments are subject to risk. Past performance is no guarantee for future performance. This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for
circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources
believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to
time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for nonInstitutional Clients.

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