Currently, John helps his client to estimate annual return for a bond portfolio. The characteristics and expectation of this bond portfolio is presented on the following:

• Current average bond coupon rate 4.23% p.a.
• Coupon frequency semi-annual
• Investment horizon 1 year
• Current average bond price in one year (% of par) 96.17
• Expected average bond price in one year (% of par) 97.23
• Average bond convexity 56
• Average bond modified duration 5.65
• Expected credit losses for the next year 0.16%

John expects yield curve and yield spread are unchanged next year and fully hedges the currency risk for this portfolio. Calculate the expected return for the next year on the fixed income portfolio.