NFO Period: 19th April to 3rd May, 2021

What Are Ultra Short Duration Funds

Fund offers relatively lower volatility compared to schemes having longer maturity.

The investment objective of the

scheme is to generate income

through investments in a range of

debt and money market

instruments

As per the SEBI mandate, the Fund

invests in debt and money market

instruments such that the Macaulay

duration of the portfolio to be

between 3 to 6 months

An open-ended Ultra- Short term

debt scheme investing in

instruments with sufficient liquidity

and low to moderate risk

Fund Positioning

Note: ***Maturity denotes as per SEBI--Macaulay Duration (Duration) measures the price volatility of fixed income securities. It is often used in the comparison of interest rate risk between securities with

different coupons and different maturities. It is defined as the weighted average time to cash flows of a bond where the weights are nothing but the present value of the cash flows themselves. It is expressed

in years. The duration of a fixed income security is always shorter than its term to maturity, except in the case of zero coupon securities where they are the same

Ultra Short Duration Fund- Investments Universe

Universe

Examples

Banks’

Certificate of

Deposits / Bonds

• HDFCBank,

• SBI

• ICICI Bank

• AXIS Bank

• Bank ofBaroda

• Indian Bank

• NTPC, GAIL

• EXIM

• NABARD

• PGCIL / Coal India

• IOC/HPCL

• PFC/REC/IRFC

From Groups such as:

• RIL

• HDFC

• SUNDARAM

• TATA,GODREJ

• L&T

• G-Sec

• State Government

Loans (SGL)

• T-Bills

• TREPs,

• Reverse Repo

PSUs & PFIs

Commercial Papers /

Bonds

Corporate

Commercial

Papers / Bonds

Sovereign

Paper/Bonds

Note: The stock(s)/issuer(s) mentioned above are for illustration purposes only and do not constitute any research report/recommendation of the same and the Fund may or may not have any future position in these stock(s)/

issuer(s)

Advantages Of Ultra Short Duration Funds

Who Should Invest?

Looking for

RELATIVE SAFETY

High Credit Quality

Looking for

STABILITY

High Exposure to

low duration gives

safety on interest

rate risk

Looking for

REGULAR INCOME

Low Volatile Regular

Returns

Looking for

LIQUIDITY

Highly Liquid Portfilio

Looking for

TAX EFFICIENT RETURNS

Tax Efficient Returns

over other traditional

options

(Indexation benefit as per

income tax act 1961)

Why Invest In Ultra Short Duration Funds?

HIGH CREDIT

QUALITY

Invests majority of funds in AAA/ A1+ rated debt and money market instruments

This provides reasonably good relative safety and enhances the liquidity profile.

HIGH

LIQUIDITY*

Certificate of Deposits / Commercial papers / Treasury bills and money

market instruments are generally highly liquid.

PERFORMANCE^This category of funds have provided stable returns during various market

phases and have displayed better risk reward. Yield to Maturity likely to be

higher than traditional savings products.

TAXATION# Investing for a holding period of more than 3 years, gives an edge over

conventional Fixed Income products due to benefit of indexation with relatively

low credit risk.

SHORT TERM

PARKING OF

FUNDS:

Ideal for investors looking to park their money for shorter

duration. No Lock-in and No Entry/Exit Load

ITI ULTRA SHORT DURATION FUND

Low Volatile Return

Notes: Returns for less than one year are absolute and above one year are annualized Past performance may or may not sustain in future. The data/performance provided above pertains to the ^Average returns of CRISIL Index

across all categories are considered for analysis and does not in any manner constitute performance of any individual scheme of ITI Mutual Fund.

Source: 31st March 2021

The category has shown encouraging performance in recent times despite volatility in the debt market.

Category Returns 3 Months Returns 6 Months Returns 1 Year Return 3 Years Returns 5 Years Returns 10 Years Returns

Crisil Ultra Short-term Index 0.98% 2.18% 5.41% 6.99% 7.17% 8.17%

Crisil Liquid Index 0.91 1.91 4.61 6.34 6.63 7.62

Crisil Overnight Index 0.79% 1.55% 3.08% 4.87% 5.37% 6.69%

Better Risk Adjusted Performance

Past performance may or may not sustain in future. The data/ performance provided above pertains to the CRISIL Indices Funds across all categories are considered for analysis and does not in any manner constitute

performance of any individual scheme of ITI Mutual Fund.

Source: The above data is as per last three financial year i.e 31st March 2018 till 31st March 2021

The superior performance of the category in the last one year also came on the back of low volatility and higher risk adjusted

returns.

Risk Ratio Of Categories Standard Deviation Sharpe Ratio

Ultra Short Duration Funds 0.69 0.48

Corporate Bond Funds 1.12 0.38

Credit Risk Funds 2.49 0.04

Dynamic Bond Funds 1.00 0.27

Medium Duration Funds 1.29 0.12

Medium to Long Duration Funds 1.21 0.23

Taxation Benefit

Above is for illustration purpose. Consult your tax consultant for taxation

The Scheme is not providing any assured or guaranteed returns, neither forecasting any returns. The comparison is limited to tax efficiency, which is subject to changes in prevailing tax laws. Changes in tax structure may affect post tax returns. In view of

individual nature of tax consequences, each investor is advised to consult his/her own professional tax advisor.

Investing in Ultra Short Duration Fund for a holding period of more than 3 years, gives an edge over conventional investment

products due to benefit of indexation with relatively low credit risk.

Ultra Short Duration Fund Fixed Deposit

Amount Invested ₹ 1,00,000 ₹ 1,00,000

Assumed Rate of Return (Annualized) 7.00% 8.00% 9.00% 7.00% 8.00% 9.00%

Value at Redemption/Maturity ₹ 1,22,527 ₹ 1,25,998 ₹ 1,29,533 ₹ 1,22,527 ₹ 1,25,998 ₹ 1,29,533

Indexed Cost of Acquisition ₹ 1,10,230 ₹ 1,10,230 ₹ 1,10,230 - - -

Capital Gain ₹ 12,297 ₹ 15,768 ₹ 19,303 ₹ 22,527 ₹ 25,998 ₹ 29,533

Tax Rate 28.496% 28.496% 28.496% 42.744% 42.744% 42.744%

Taxable Gain ₹ 12,297 ₹ 15,768 ₹ 19,303 ₹ 22,527 ₹ 25,998 ₹ 29,533

Tax Payable ₹ 3,504 ₹ 4,493 ₹ 5,501 ₹ 9,629 ₹ 11,113 ₹ 12,624

Post Taxation Value ₹ 1,19,023 ₹ 1,21,505 ₹ 1,24,032 ₹ 1,12,898 ₹ 1,14,885 ₹ 1,16,909

Profit Earned ₹ 19,023 ₹ 21,505 ₹ 24,032 ₹ 12,898 ₹ 14,885 ₹ 16,909

CAGR Investment Yield (Post Tax) 5.98% 6.71% 7.44% 4.13% 4.73% 5.35%

Why Invest Now?

High surplus liquidity

likely to remain due to

accommodative stance

by RBI, rising FPI flows

and low credit-offtake

keeping short-term

rates benign .

Yields are relatively

higher compared to

traditional savings

products

Currently, high credit

quality papers are having

decent accruals with lower

interest rate risk. Upward

sloping yield curve will

have faster roll down

benefits

Fund scores higher in Comparison with SBI FD rates

Pre-Tax Returns, providing any day liquidity with no exit load

Source: Crisil, SBI, as on 31 March 2021. Disclaimer: Ultra short term fund returns is as per the financial year

0.00%

4.00%

8.00%

12.00%

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Avg FD rate - SBI (Maturity 91 to 179 dayes) Ultra short term fund returns Difference

Outlook Is Neutral, Positive On Short To Medium Duration

GLOBAL

DOMESTIC NEUTRAL OUTLOOK

POSITIVE OUTLOOK

GDP Growth

Fiscal

Crude Oil & Currency

Credit Growth

Inflation

Liquidity

• Good growth rebound visible from FY 2021-22

• Market tolerance for fiscal expansion high due to current scenario

• Crude Oil prices are now favorable • Currency may appreciate

• Credit growth might shoot up higher

• Expected to ease with bumper harvest, weak demand & easing of supply-side issues

• Surplus liquidity expected to sustain

Central Bank Policy

Geo Political Scenario

• Fed rate cut to zero and Co-ordinated Global Central Bank easing underway

• to support growth recovery

• Easing of trade wars expected

Growth Outlook • After covid-19 vaccine discovery, a normalization phase is likely

to be followed with good growth recovery

Notes: The above is the current approach of the scheme and may change in future depending on the market conditions

Investment Universe

Maintain a high credit quality portfolio through bottom-up

& top-down approach by analysing companies credit

strength and secondary market liquidity

Will maintain minimum 10% in cash/ Sovereign papers

Will invest in G-Sec / T-Bills for active management of

portfolio duration and liquidity

Fund looks to invest in a portfolio mix of issuers with a

minimum short term credit rating of ‘A1+’ and long term

rating of ‘AAA’ to ‘AA

Will not invest in lower rated & illiquid papers

Bank CD /

Bonds

Corporate CP

/ BONDS

G-SEC/ T-BILLS

PFIs / PSUs

CP / BONDS

Notes: The above is the current approach of the scheme and may change in future depending on the market conditions

Market Outlook

Bank CD /

Bonds

Corporate CP

/ BONDS

G-SEC/ T-BILLS

PFI / PSU CP /

BONDS

• RBI likely to maintain accommodative stance over the medium term

• Inflation to remain in the upper half of 2%-6% corridor, but do not foresee a rate hike in CY2021

• Staggered unwinding of COVID led system liquidity measures expected to gradually shift

yield curve anchor from the current reverse repo rate to the repo rate

• Short end of yield curve reasonably well positioned for this anticipated transition.

• System liquidity to continue to remain in significant surplus as compared to pre COVID era.

• Fiscal deficit glide path indicates that budget borrowings to remain elevated over medium term

• Central Bank likely to continue to “anchor” long bond yields and “allow” gradual hardening.

• OMOs and “Operation Twist” from RBI to continue in FY2022

• Reasonable probability of inclusion of India Government Bonds (GSecs) in Global Bond Indices

• Passive bond inflows will be bond supportive

• Expect markets to remain volatile as compared to CY2020, but also provide tactical opportunities.

Duration Outlook

Scenario Duration Management

GLOBAL DOMESTIC

Positive

Neutral /Positive

Neutral/Negative

Negative

Negative

Positive

Positive

Neutral /Positive

Neutral/Negative

Positive

Negative

Negative

Aggressive

Moderate

Cautious

Moderate/ Cautious

Protective

Defensive

Why We follow Active Management Strategy?

Investment Style/

Market Cycle

Active/Flexible

Management

Passive/ Rollover

Management

Early Cycle Positive Positive

Mid Cycle Neutral Neutral

Late Cycle Positive Negative

Flat Cycle Positive Negative

Raising Interest Rate

Cycle

Positive Negative

Active management strategy in the current scenario will be more helpful as short term yields has already soften and because of continued liquidity provided by

RBI. Active management of duration and relative spreads in debt instruments available under investment guidelines is the priority and won’t compromise on

credit quality

Market conditions will keep on changing

Fixed Income Investment Approach

Top Down Approach

Macro Fundamentals

Sentiments

Valuation

INVESTMENT

APPROACH

Fixed Income Investment Process

INTEREST RATE

OUTLOOK

Interest Rate Outlook is

based on Domestic and

Global Factors

CREDIT OUTLOOK

& FRAMEWORK

Internal Credit

Assessment INTERNAL CREDIT

ASSESSMENT

Industry Analysis

PORTFOLIO

APPROACH

Diversification &

Concentration Limits

Liquidity Risk Parameters

Portfolio Tenure

Interest Rate Outlook

DOMESTIC GLOBAL

Inflation

Liquidity

Central

Bank

Policy

Geopolitical

ScenarioGrowth

Outlook

GDP

Growth

Fiscal

Crude Oil

& currency

Credit Growth

Credit Assessment Process

• Based on the Financial Risk as well as the Business Risk

• Financial risk measured using a set of ratios focusing on profitability, liquidity & debt protection capabilities

• Business Risk includes analysis of various parameters

• Strategy

• Financial Discipline

• Agility to Adapt

• Business Approach

• Business and Management Track Record

• Cashflow Focus

• Capital Allocation History

• Succession Planning

• Internal Control Systems

• Have an Internal Risk Assessment Framework for Financial Risk and Business Risk

Investment Framework For ITI Ultra Short Duration Fund

Portfolio will focus on maintaining superior credit quality with focus on accruals

Fund will have

higher Allocation in

A1+ & AAA rated

instruments

High Liquidity by

investing in Money

Market Instruments

Will maintain duration of

3 to 6 months with no major

cash calls

Active management

based on credit spread

and interest rate outlook

RELATIVE SAFETY

LIQUIDITY

DURATION

STYLE

Notes: The above is the current approach of the scheme and may change in future depending on the market conditions

Investment Strategy

Bank CD /

Bonds

G-SEC/ T-BILLS

PFI / PSU CP /

BONDS

ITI Ultra Short Duration Fund – 3 PillarsLiquidity Stability Credit Quality

Majority of the portfolio consists of Certificates of Deposits, Commercial Papers, T-Bills and Corporate Bonds which are highly liquid.

Focus on High Accrual Income by implementing a buy and hold strategy

Majority of investments in AAA / A1+ or equivalent rated securities; Prefer good credit quality papers on the basis of quantitative and qualitative filters

Key points:• Investment team follows a rigorous process to spot mispriced credit opportunities and thereby,

enhance yield with controlled risk.• Tactical exposure to G-Sec/ T-Bills• Switches based on relative spread valuation and also within the permitted duration • Currently targeting average maturity between 0.35-0.50 years

ITI Ultra Short Duration Fund Snapshot

Benchmark

NIFTY Ultra-Short Duration Debt Index

Risk Profile

Low to Moderate Risk

Entry/Exit Load

Nil

Minimum Investment Amount

Rs. 5,000/ and in multiples of 1/ thereafter.

Fund Manager

Mr. Vikrant Mehta

Scheme Features

Suitable for short-term investments.

Relatively low interest rate risk and volatility

Useful for STPs (Systematic Transfer Plans)

Goal

Regular Income with Tax efficiency

Ideal Investment Horizon

3-6 months

www.itimf.com

Toll Free Number 1800 266 9603 | Emailmfassist@itiorg.com

All figures and data given in the document are dated unless stated otherwise. In the preparation of the material contained in this document, the AMC has used

information that is publicly available, including information developed in-house. However, the AMC does not warrant the accuracy, reasonableness and/ or

completeness of anyinformation.

The information provided is not intended to be used by investors as the sole basis for investment decisions, who must make their own investment decisions,

based on their own investment objectives, financial positions and needs of specific investor.

Investors are advised to consult their own legal tax and financial advisors to determine possible tax, legal and other financial implication or consequence of

subscribing to the units of ITI Mutual Fund. The information contained herein should not be construed as a forecast or promise nor should it be considered

as an investmentadvice.

The AMC (including its affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage

of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use

of this material in anymanner.

Disclaimers

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

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