Axis Nifty India Defence Index Fund

SCHEME INFORMATION DOCUMENT Axis Nifty India Defence Index Fund SO – 1 & 2 (An Open-Ended Index Fund tracking Nifty India Defence TRI.) Name of Mutual Fund : Axis Mutual Fund Name of Asset Management Company : Axis Asset Management Company Ltd. Address of AMC : One Lodha Place, 22nd & 23rd Floor, Senapati Bapat Marg, Lower Parel, Mumbai, Maharashtra, Pin code - 400013 Website of AMC : www.axismf.com Name of Trustee Company : Axis Mutual Fund Trustee Ltd. Address of Trustee Company : One Lodha Place, 22nd & 23rd Floor, Senapati Bapat Marg, Lower Parel, Mumbai, Maharashtra, Pin code - 400013 Name of the Scheme : Axis Nifty India Defence Index Fund Category of Scheme : Index Fund Scheme Code : ________________________ SO - 7 NFO open date : ________________________ NFO close date : ________________________ (Any modification to the New Fund Offer Period shall be announced by way of an Addendum uploaded on website of the AMC) SO - 34 Offer for Units of Rs. 10/- each during the New Fund Offer and Continuous Offer for Units at NAV based prices. Investment objective Scheme Risk-o-meter Benchmark Risk-o-meter Axis Nifty India Defence Index Fund To provide returns before expenses that correspond to the performance of Nifty India Defence TRI subject to tracking error. There is no assurance that the investment objective of the scheme will be achieved. SO - 5 Nifty India Defence TRI Investors are advised to refer to the Statement of Additional Information (SAI) for details of the Axis Mutual Fund, Standard Risk Factors, Special Considerations, Tax and Legal issues and other general information on www.axismf.com. The particulars of the Scheme have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations 1996, (herein after referred to as SEBI (MF) Regulations) as amended till date and circulars issued thereunder filed with SEBI. The units being offered for public subscription have not been approved or recommended by SEBI nor has SEBI certified the accuracy or adequacy of the Scheme Information Document. The Scheme Information Document sets forth concisely the information about the scheme that a prospective investor ought to know before investing. Before investing, investors should also ascertain about any further changes to this Scheme Information Document after the date of this Document from the Mutual Fund / Investor Service Centres / Website / Distributors or Brokers. SAI is incorporated by reference (is legally a part of the Scheme Information Document). For a free copy of the current SAI, please contact your nearest Investor Service Centre or log on to our website. The Scheme Information Document should be read in conjunction with the SAI and not in isolation. This Scheme Information Document is dated ______.DISCLAIMER: Index Disclaimer: The Axis Nifty India Defence Index Fund is not sponsored, endorsed, sold or promoted by NSE INDICES LIMITED (formerly known as India Index Services & Products Limited ("IISL"). NSE INDICES LIMITED does not make any representation or warranty, express or implied, to the owners of the Axis Nifty India Defence Index Fund or any member of the public regarding the advisability of investing in securities generally or in the Product(s) particularly or the ability of the Nifty India Defence TRI to track general stock market performance in India. The relationship of NSE INDICES LIMITED to the Issuer is only in respect of the licensing of the Indices and certain trademarks and trade names associated with such Indices which is determined, composed and calculated by NSE INDICES LIMITED without regard to the Issuer or the Product(s). NSE INDICES LIMITED does not have any obligation to take the needs of the Issuer or the owners of the Product(s) into consideration in determining, composing or calculating the Nifty India Defence TRI. NSE INDICES LIMITED is not responsible for or has participated in the determination of the timing of, prices at, or quantities of the Product(s) to be issued or in the determination or calculation of the equation by which the Product(s) is to be converted into cash. NSE INDICES LIMITED has no obligation or liability in connection with the administration, marketing or trading of the Product(s). NSE INDICES LIMITED does not guarantee the accuracy and/or the completeness of the Nifty India Defence TRI or any data included therein and NSE INDICES LIMITED shall not have any responsibility or liability for any errors, omissions, or interruptions therein. NSE INDICES LIMITED does not make any warranty, express or implied, as to results to be obtained by the Issuer, owners of the product(s), or any other person or entity from the use of the Nifty India Defence TRI or any data included therein. NSE INDICES LIMITED makes no express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the index or any data included therein. Without limiting any of the foregoing, NSE INDICES LIMITED expressly disclaim any and all liability for any claims, damages or losses arising out of or related to the Products, including any and all direct, special, punitive, indirect, or consequential damages (including lost profits), even if notified of the possibility of such damages. An investor, by subscribing or purchasing an interest in the Product(s), will be regarded as having acknowledged, understood and accepted the disclaimer referred to in Clauses above and will be bound by it.HIGHLIGHTS/SUMMARY OF THE SCHEME Sr. Title Description No. I. Benchmark (TRI) Nifty India Defence TRI Justifications of Benchmark: The scheme aims to provide returns before expenses that closely correspond to the Nifty India Defence TRI subject to tracking errors. Hence, the benchmark. The Trustee/AMC reserves the right to change the benchmark for the evaluation of the performance of the Scheme from time to time, keeping in mind the investment objective of the Scheme and the appropriateness of the benchmark, subject to SEBI guidelines and other prevalent guidelines. Tier 2 Benchmark: Not Applicable. II. Plans and Options Plans Plans/Options and sub options under the 1. Axis Nifty India Defence Index Fund – Regular Plan Scheme 2. Axis Nifty India Defence Index Fund – Direct Plan Options under each plans: Growth Regular Plan Regular Plan is available for investors who purchase /subscribe Units in a Scheme through a Distributor. Direct Plan Direct Plan is only for investors who purchase/ subscribe Units in a Scheme directly with the Fund and is not available for investors who route their investments through a Distributor. Eligible investors / modes for applying All categories of investors (whether existing or new Unitholders) as permitted under the Scheme Information Document of the Scheme are eligible to subscribe under Direct Plan. Investments under Direct Plan can be made through various modes offered by the Fund for investing directly with the Fund {except Platform(s) where investors’ applications for subscription of units are routed through Distributors}. All the plans will have a common portfolio. For detailed disclosure on default plans, kindly refer SAI. 3III. Load Structure Entry Load: Not Applicable In accordance with para 10.4 of SEBI Master Circular on Mutual Funds as amended from time to time, there shall be no entry load. Exit Load: a) if redeemed/ switched out within 15 days from the date of allotment: 0.25%. b) If redeemed/ switched out after 15 days from the date of allotment: Nil. At the time of changing the Load Structure: 1. The AMC shall be required to issue an addendum and display the same on its website immediately; 2. The addendum shall be circulated to all the distributors / brokers so that the same can be attached to all Scheme Information Document and Key Information Memorandum already in stock. 3. Latest applicable addendum shall be a part of KIM and SID of the respective Scheme(s). 4. Further, the account statements shall continue to include applicable load structure. The Trustee/AMC reserves the right to change the load structure subject to the limits prescribed under the Regulations. Any change in load structure shall be only on a prospective basis i.e. any such changes would be chargeable only for Redemptions from prospective purchases (applying first in first out basis). For switches within the Scheme from Regular to Direct Plan or vice versa, no exit load shall be charged. The above mentioned load structure shall be equally applicable to the special products offered under the Scheme such as SIP, STP, SWP, etc. offered by the AMC. Exit load charged to the investors will be credited back to the Scheme net of GST. Investors are requested to check the prevailing load structure of the Scheme before investing. For any change in load structure AMC will issue an addendum and display it on the website/ Investor Service Centres. Para 10.4 of SEBI Master Circular for Mutual Funds has decided that there shall be no entry Load for all Mutual Fund schemes. Under the Scheme, the AMC/ Trustee reserves the right to change / modify the load structure if it so deems fit in the interest of smooth and efficient functioning of the Mutual Fund. The AMC/ Trustee reserves the right to introduce / modify the load depending upon the circumstances prevailing at that time subject to maximum limits as prescribed under the Regulations. The Redemption Price however, will not be lower than 95% of the NAV. Any imposition or enhancement of Load in future shall be applicable on prospective investments only. 4IV. Minimum Application • During NFO: Amount/switch in Rs. 100 and in multiples of Re. 1/- thereof. • On continuous basis: Rs. 100 and in multiples of Re. 1/- thereafter. Minimum application amount is applicable at the time of creation of new folio and at the time of first investment in a scheme. V. Minimum Additional Rs. 100 and in multiples of Re. 1/- thereafter Purchase Amount VI. Minimum Redemption/ On continuous basis: switch out amount There will be no minimum redemption criterion. VII. Tracking Error The tracking error i.e. the annualised standard deviation of the difference in daily returns between underlying Index and the NAV of the Scheme based on past one year rolling over data (For the Scheme in existence for a period of less than one year, annualized standard deviation shall be calculated based on available data) shall not exceed 2% or as may be prescribed by regulations from time to time. Regular Plan Direct Plan The Scheme being a new scheme, this is not currently applicable. VIII. Tracking Difference Tracking Difference shall be targeted to be 50 bps (over and above actual TER charged). Regular Plan Direct Plan The Scheme being a new scheme, this is not currently applicable. IX. Computation of NAV The Net Asset Value (NAV) per Unit under the Scheme will be computed by dividing the net assets of the Scheme by the number of Units outstanding on the valuation day. The Mutual Fund will value its investments according to the valuation norms, as specified in Schedule VIII of the SEBI (MF) Regulations, or such norms as may be specified by SEBI from time to time. The Net Assets Value (NAV) of the Units under the Scheme shall be calculated as shown below: - Market or + Current Assets - Current Fair Value including Liabilities of Accrued and NAV Scheme’s Income Provisions (Rs.) = Investments No. of Units outstanding under Scheme on the Valuation Day The NAV shall be calculated up to four decimal places. Separate NAV will be calculated and disclosed for each Plan/Option. The NAVs will be calculated and disclosed on all the Business Days. 5X. Asset Allocation This scheme tracks Nifty India Defence TRI. 95% allocation is to the constituents of index and 5% to Money Market Instruments^ and units of debt & liquid mutual fund schemes. Under normal circumstances, the asset allocation pattern will be: Indicative Instruments Allocation (% of total assets) Minimum Maximum Securities covered 95 100 under Nifty India Defence Index* Money Market 0 5 Instruments^ and units of debt & liquid mutual f und schemes *The net assets of the scheme will be invested in stocks constituting the Nifty India Defence Index. This would be done by investing in all the stocks comprising the underlying index in the same weightage that they represent in the said index. SO – 13 & 21 ^Residual portion of 5% of the net assets of the Scheme are provided for liquidity purposes. For liquidity purposes, the Scheme would invest in ‘liquid assets’ as per clause 4.5.1 of SEBI Master Circular of Mutual funds as amended from time to time. The Scheme may take an exposure to equity derivatives of constituents of the underlying index upto 15% of the Net assets of the Scheme. Investment in equity derivatives of underlying securities forming part of the index shall be undertaken in case the underlying security is not available for purchase, in sufficient or for rebalancing in cases of events such as corporate action, etc. Such investment in derivatives shall be for short term and defensive considerations. The Scheme may use derivatives for such purposes as may be permitted by the Regulations, based on the opportunities available and subject to guidelines issued by SEBI from time to time. Pending deployment and/or in cases of extreme market conditions, special events or corporate events, like declaration of dividend by the companies comprising the index, additional ad- hoc reconstitution and rebalancing of the index, the AMC may invest funds as part of the total assets in cash and cash equivalents. Further, due to corporate action in companies comprising the Underlying Index, the scheme may be allocated/allotted securities which are not part of the Underlying Index. Such security will be considered for asset allocation basis the security asset class. SO – 14 & 17 6The cumulative gross exposure through equity, Money Market Instruments^ and units of debt & liquid mutual fund schemes and equity derivative position should not exceed 100% of the net assets of the Scheme in accordance with Para 12.24 of Master Circular of Mutual Fund as amended from time to time. Cash or cash equivalents with residual maturity of less than 91 days shall be treated as not creating any exposure. SEBI vide letter dated November 3, 2021 has clarified that Cash Equivalent shall consist of Government Securities, T-Bills and Repo on Government Securities having residual maturity of less than 91 days. The Scheme may take exposure through equity derivative transactions in the manner and up to the limit as specified above. The Scheme shall not invest in Overseas securities/ADR/GDR, Securitized debt, InvITs, Repo/ Reverse repo transactions in corporate debt, Unrated debt instruments, Credit Default Swaps, debt instruments having Structured obligations / Credit enhancements and instruments with special features as specified in Para 12.2 of Master circular for Mutual Fund. The Scheme shall not engage in short-selling. Stock Lending The Scheme shall adhere to the following limits should it engage in Stock Lending. 1. Not more than 20% of the net assets of the Scheme can generally be deployed in Stock Lending. 2. Not more than 5% of the net assets of the Scheme can generally be deployed in Stock Lending to any single counter party (as may be applicable). Investment in Units of Mutual Fund The Scheme may invest up to 5% of the net assets of the Scheme in units of debt & liquid mutual fund schemes of Axis AMC or of other mutual funds in terms of the prevailing SEBI (MF) Regulations. Investment in short term deposits Pending deployment of the funds in securities in terms of investment objective of the Scheme, the AMC may park the funds of the Scheme in short term deposits of the Scheduled Commercial Banks, subject to the guidelines issued by Para 12.16 of Master Circular for Mutual Funds. In terms of Para 3.4 of Master Circular for Mutual Funds which specifies the portfolio concentration norms as follows and as amended from time to time, shall be complied with respect to the underlying Index: • The index has a minimum of 10 stocks as its constituents. • No single stock in the index shall have more than 35% weight in the index. • The weightage of the top three constituents of the index, 7cumulatively shall not be more than 65% of the Index. • The individual constituent of the index shall have a trading frequency greater than or equal to 80% and an average impact cost of 1% or less over the previous six months. Indicative Table (Actual instrument/percentages may vary subject to applicable SEBI circulars) SO – 19 & 20 Sr. No. Type of Percentage of Circular Instrument exposure references 1. Derivatives The Scheme may Para 12.5 of for non- take an exposure to SEBI hedging equity derivatives of Master purposes constituents of the Circular underlying index for Mutual upto 15% of the Net Funds assets of the and Para E Scheme. Investment of in equity derivatives Section 2 of of underlying SEBI securities forming circular part of the index shall dated be undertaken in December case the underlying 31, security is not 2024 on MF available for lite purchase, in framework. sufficient or for rebalancing in cases of events such as corporate action, etc 2. Securities The Scheme shall Para 12.11 Lending adhere to the of SEBI and following limits to Master borrowing engage in Stock Circular for Lending. Mutual 1. Not more than Funds as 20% of the net amended assets of the from time to Scheme can time. generally be deployed in Stock Lending. 2. Not more than 5% of the net assets of the Scheme can generally be deployed in Stock Lending to any single counter party/ intermediary (as 8may be applicable). 3. Tri party Allocation may be - Repo made to TREPS from any amounts that are pending deployment or on account of any adverse market situation. 4. Mutual The Scheme may Clause 4 of Fund Units invest up to 5% of the Seventh net assets of the Schedule of Scheme in units of SEBI (MF) debt & liquid mutual Regulations, fund schemes of Axis 1996 AMC or of other mutual funds in terms of the prevailing SEBI (MF) Regulations. The limits given above shall be subject to Schedule VII of the Regulations / circulars issued by SEBI and shall stand revised to the extent of changes in the Regulations/ circulars from time to time. The Scheme shall not invest in following instruments: Sr. No. Type of Instrument 1 Securitized Debt 2 Overseas Securities 3 InVITS 4 Credit default swaps 5 Debt Derivatives 6 Debt Instruments with special features AT1 and AT2 Bonds 7 Repo and Reverse repo in corporate debt securities 8 Debt instruments having Credit Enhancement /Structured Obligations 9 The Scheme shall not undertake short selling 10 Unrated Debt Securities (except G-Secs, T-Bills and other money market instruments) 11 Unlisted debt instrument 12 Bespoke or complex debt products 13 The Scheme shall not undertake Inter scheme transactions For details, refer Annexure 1. XI. Fund manager details Name: Mr. Karthik Kumar Managing since: Inception Total experience: 18 Years SO – 33 9XII. Annual Scheme Maximum total expense ratio (TER) permissible under Regulation Recurring Expenses 52 (6)(b) - Upto 1.00%. For detailed disclosure, kindly refer SAI. XIII. Transaction charges and Transaction charges: Not Applicable stamp duty Stamp Duty: Pursuant to Notification No. S.O. 1226(E) and G.S.R. 226(E) dated March 30, 2020 issued by Department of Revenue, Ministry of Finance, Government of India, read with Part I of Chapter IV of Notification dated February 21, 2019 issued by Legislative Department, Ministry of Law and Justice, Government of India on the Finance Act, 2019, stamp duty @0.005% of the transaction value would be levied on applicable mutual fund transactions. Accordingly, pursuant to levy of stamp duty, the number of units allotted on purchase transactions to the unitholders would be reduced to that extent. XIV. Information available Liquidity / listing details through weblink Detailed disclosure on Computation of NAV Applicable timelines for dispatch of redemption proceeds etc Breakup of Annual Scheme Recurring expenses Definitions Applicable risk factors Detailed disclosures regarding the index, index eligibility criteria, methodology, index service provider, index constituents, impact cost of the constituents/ underlying fund in case of fund of funds List of official points of acceptance www.axismf.com Penalties, Pending Litigation or Proceedings, Findings of Inspections or Investigations Investor services Portfolio Disclosure Detailed comparative table of the existing schemes of AMC Scheme performance Periodic Disclosures Any disclosure in terms of Consolidated Checklist on Standard Observations: - What are the investment restrictions? - What are the Investment Strategies? 10- Disclosure Detailed - Who manages the scheme - Where will the Scheme Invest? - on Risk-o-meter and Benchmark Risk-o-meter - Disclosure on Scheme Summary Document (SSD) - Disclosure on Tracking Error and Tracking Difference - Fundamental Attributes Scheme specific disclosures Scheme Factsheet How to Apply Investors can undertake transactions in the Schemes of Axis (Where can Mutual Fund either through physical, online / electronic mode applications for or any other mode as may be prescribed from time to time. subscription/redemption/ switches be submitted) Physical Transactions For making application for subscription / redemption / switches, SO – 35 application form and Key Information Memorandum may be obtained from / submitted to the Official Points of Acceptance (OPAs) of AMC or downloaded from the website of AMC viz. www.axismf.com. Online / Electronic Transactions Investors can undertake transactions via electronic mode through various online facilities offered by Axis AMC / other platforms specified by AMC from time to time. Further, during the NFO, Investors may also apply through Applications Supported by Blocked Amount (ASBA) process during the NFO period of the Scheme by filling in the ASBA form and submitting the same to their respective banks, which in turn will block the amount in the account as per the authority contained in ASBA form, and undertake other tasks as per the procedure specified therein. For complete details and ASBA process, refer SAI. Please refer to the SAI and Application form for the instructions. Specific attribute of the scheme (such as lock in/ Not Applicable duration in case of target maturity scheme/close ended schemes etc.) (as applicable) Special product/facility A. During NFO: available during the 1. Systematic Investment Plan 11NFO and on ongoing 2. Systematic Transfer Plan basis 3. Smart Switch Smart switch is allowed only as Lumpsum Transactions in eligible liquid / overnight schemes. Currently, Axis Overnight Fund will act as Source Scheme(s). Investments would be allowed only under Growth Option of these Schemes. 4. Switching Option During the NFO period (Switch request will be accepted upto 3.00 p.m. till the last day of the NFO), the Unit holders will be able to invest in the NFO under the Scheme by switching part or all of their Unit holdings held in the respective option(s) /plan(s) of the existing scheme(s) established by the Mutual Fund. 5. Online Schedule Transaction Facility For detailed terms on the above and for other available special products / facilities / Modes of Transactions, kindly refer SAI. B. On ongoing basis The facilities offered under the Scheme are as follows: 1. Systematic Investments 1) Systematic Investment Plan (SIP) 2) Atmanirbhar SIP 3) FLEX - Systematic Investment Plan (“FLEX SIP”) 4) Systematic Investment Plan (SIP) Switch Facility 5) Systematic Investment Plan (SIP) Top-Up Facility 6) Systematic Investment Plan (SIP) Pause/unpause facility 2. Systematic Transfers 1) Systematic Transfer Plan (STP) 2) Capital Appreciation Systematic Transfer Plan (“CAPSTP”) 3) FLEX - Systematic Transfer Plan (“FLEX STP”) 3. Systematic Withdrawal Plan (SWP) 4. SWITCHING OPTIONS 1) Inter – Scheme Switching option 2) Intra –Scheme Switching option 5. Online Schedule Transaction Facility Segregated The Scheme has provision for segregated portfolio. portfolio/side pocketing For Details, kindly refer SAI. disclosure SO – 54 Stock lending The Scheme may engage in stock lending subject to disclosure as specified in asset allocation. For Details, kindly refer SAI. 12The Scheme under this Scheme Information Document was approved by the Trustee Company on January 15, 2026. The Trustee has ensured that the Scheme is a new product offered by Axis Mutual Fund and is not a minor modification of its existing schemes. Notwithstanding anything contained in this Scheme Information Document, the provisions of the SEBI (Mutual Funds) Regulations, 1996 and the guidelines there under shall be applicable. SO - 64 For and on behalf of Axis Asset Management Company Sd/- Gop Kumar Bhaskaran Managing Director & Chief Executive Officer Date: ______________ 13Annexure 1 Equity derivatives of underlying securities forming part of the index may also be available as an investment option in case the underlying security is not available for purchase. Calculation of cumulative gross exposure The cumulative gross exposure through equity, Money Market Instruments^ and units of debt & liquid mutual fund schemes and equity derivative position should not exceed 100% of the net assets of the Scheme in accordance with Para 12.24 of Master Circular of Mutual Fund as amended from time to time. Cash or cash equivalents with residual maturity of less than 91 days shall be treated as not creating any exposure. SEBI vide letter dated November 3, 2021 has clarified that Cash Equivalent shall consist of Government Securities, T-Bills and Repo on Government Securities having residual maturity of less than 91 days. The Scheme may take exposure through equity derivative transactions in the manner and up to the limit as specified under the Asset Allocation Pattern. Numerical example of risk involved Concepts and Examples of derivatives: The few risks of using derivative strategies could be on account of: • Illiquidity. • Potential mis - pricing of the Futures/Options. • Lack of opportunity. • Inability of derivatives to correlate perfectly with the underlying (Indices, Assets, Exchange Rates). • Cost of hedges can be higher than adverse impact of market movements. • An exposure to derivatives in excess of the hedging requirements can lead to losses. • Exposure to derivatives can also limit the profits from a genuine investment transaction. 14• The prices which are seen on the screen need not be the same at which execution will take place. Numerical Illustration: Suppose an investor buys a Call option on Nifty 50 Index. • Lot Size: 50 units • Spot Price: 17,500 • Strike Price: 17,550 (Out-of-the-Money Call) • Premium Paid: Rs. 100 per unit • Total Premium Paid: Rs. 5,000 (50 × 100) Outcome If the Nifty 50 index rises to 17,700 at expiry, the option becomes In-the-Money. • Intrinsic Value: 17,700 − 17,550 = Rs. 150 per unit • Net Gain per unit: 150 − 100 = Rs. 50 • Total Gain: Rs. 2,500 (50 × 50) If the Nifty 50 remains at or below 17,550, the option expires worthless and the investor loses only the premium paid, i.e., Rs. 5,000. Risk: The options buyer's risk is limited to the premium paid. However, the gains of an options writer are limited to the premiums earned. The exchange may impose restrictions on exercise of options and may also restrict the exercise of options at certain times in specified circumstances and this could impact the value of the portfolio. The writer of a call option bears a risk of loss if the value of the underlying asset increases above the exercise price. The Scheme bears a risk that it may not be able to correctly forecast future market trends or the value of assets, indices or other financial or economic factors in establishing derivative positions for the Scheme. Disclosure relating to extent and manner of The Scheme may take an exposure to equity participation in derivatives to be provided derivatives of constituents of the underlying index upto 15% of the Net assets of the Scheme. Investment in equity derivatives of underlying 15securities forming part of the index shall be undertaken in case the underlying security is not available for purchase, in sufficient or for rebalancing in cases of events such as corporate action, etc. Such investment in derivatives shall be for short term and defensive considerations. The Scheme may use derivatives for such purposes as may be permitted by the Regulations, based on the opportunities available and subject to guidelines issued by SEBI from time to time. 16Axis Nifty India Defence Index Fund Annexure 2 Liquidity/listing The Scheme offers Units for Subscription and Redemption at NAV based prices details on all Business Days on an ongoing basis commencing not later than 5 business days from the date of allotment under the NFO. Under normal circumstances the AMC shall dispatch the redemption proceeds within three (3) working days from date of receipt of request from the Unit holder. The AMC shall adhere to guidelines published by AMFI /SEBI for exceptional circumstances under which the scheme is unable to transfer redemption or repurchase proceeds within prescribed timelines. NAV disclosure 1. Disclosure Timings: • The AMC will calculate and disclose the first NAV of the Scheme SO – 41, 42 & within a period of 5 business days from the date of allotment under 43 the NFO. • Subsequently, by 11.00 p.m. on every Business Day on AMC (www.axismf.com) and AMFI website. 2. Illustration of Computation of NAV: The computation of NAV per unit using various components is explained as follows: Particulars Amount in Rs Market or Fair Value of Scheme’s 10,00,00,000.00 Investments (A) Add: Current Assets including Accrued 75,34,345.00 Income (B) Less: Current Liabilities and Provisions. (C) (30,00,000.00) Net Assets (A+B-C) 10,45,34,345.00 No. of Units outstanding under Scheme on the Valuation Day: 100,00,000 The NAV per unit will be computed as follows: 10,45,34,345.34 / 100,00,000 = Rs. 10.45 per unit (rounded off to two decimals) SO – 48 The Mutual Fund will ensure that the Redemption Price will not be lower than 97% of the Applicable NAV. 3. Methodology for calculation of sale and re-purchase price: At the Applicable NAV subject to prevailing Exit Load. Ongoing price for redemption /Switch out (to other Schemes/Plans of the Mutual Fund) is price which a Unit holder will receive for redemption/Switch- outs. During the continuous offer of the Scheme, the Unit holder can redeem the Units at Applicable NAV, subject to payment of Exit Load, if any. Methodology of calculating repurchase price: 1Redemption Price = Applicable NAV*(1-Exit Load, if any) Example: If the Applicable NAV is Rs. 10, Exit Load is 1% then redemption price will be: = Rs. 10* (1-0.01) = Rs. 9.99 Investors/Unit holders should note that the AMC/Trustee has right to modify existing Load structure and to introduce Loads subject to a maximum limits prescribed under the SEBI Regulations. Any change in Load structure will be effective on prospective basis and will not affect the existing Unit holder in any manner. However, the Mutual Fund will ensure that the Redemption Price will not be lower than 97% of the Applicable NAV. The Purchase Price shall be at applicable NAV. Applicable Timeline for timelines Dispatch of redemption proceeds: Under normal circumstances the AMC shall dispatch the redemption proceeds within three (3) working days from the date of receipt of request from the Unit holder. The AMC shall adhere to guidelines published by AMFI /SEBI for exceptional circumstances under which the scheme is unable to transfer redemption or repurchase proceeds within prescribed timelines. Dispatch of IDCW: Not Applicable Breakup of These are the fees and expenses for operating the Scheme. These expenses Annual Scheme include Investment Management and Advisory Fee charged by the AMC, Registrar and Transfer Agents’ fee, marketing and selling costs etc. as given in Recurring the table below: expenses The AMC has estimated that following expenses will be charged to the Scheme as expenses as permitted under Regulation 52 of SEBI (MF) Regulations. For the actual current expenses being charged, the Investor should refer to the website of the AMC. Expense Head % of daily Net Assets Investment Management and Advisory fees Upto 1.00 % Trustee fee Audit fees Custodian fees RTA fees Marketing & Selling expense incl. agent commission Cost related to investor communications 2Cost of fund transfer from location to location Cost of providing account statements and redemption cheques and warrants Costs of statutory Advertisements SO - 44 Cost towards investor education & awareness@ Brokerage & transaction cost over and above 12 bps and 5 bps for cash & derivative market trades respectively Goods & Service Tax (GST) on expenses other than investment and advisory fees Other Expenses* Maximum total expense ratio (TER) permissible under Regulation Upto 1.00% 52(6)(b) Additional expenses under regulation 52(6A)(c) Upto 0.05% *Any other expenses which are directly attributable to the Scheme, may be charged with the approval of the Trustee within the overall limits as specified in the Regulations except those expenses which are specifically prohibited. @5% of total TER charged to the direct plan, subject to maximum of 0.5 bps of AUM All fees and expenses charged in a Direct Plan (in percentage terms) under various heads including the investment and advisory fee shall not exceed the fees and expenses charged under such heads in Regular Plan. Direct Plan shall have a lower expense ratio excluding distribution expenses, commission, etc. and no commission for distribution of Units will be paid/ charged under Direct Plan. The expenses towards Investment Management and Advisory Fees under Regulation 52(2) and the various sub-heads of recurring expenses mentioned under Regulation 52(4) of SEBI (MF) Regulations can be apportioned under various expense heads/ sub heads without any sub limit, as permitted under the applicable regulations. Thus, there shall be no internal sub-limits within the expense ratio for expense heads mentioned under Regulation 52 (2) and (4) respectively. Further, the additional expenses under Regulation 52(6A)(c) may be incurred either towards investment & advisory fees and/or towards other expense heads as stated above. These estimates have been made in good faith as per the information available with the Investment Manager and are subject to change inter-se or in total subject to prevailing Regulations. The AMC will charge the Scheme such actual expenses incurred, subject to the statutory limit prescribed in the Regulations and amendments thereto. The recurring expenses of the Scheme (including the Investment Management and Advisory Fees) shall be as per the limits prescribed under the SEBI (MF) Regulations. It is as follows: 3In case of an index fund scheme, the total expense ratio of the Scheme including the investment and advisory fees shall not exceed 1.00 per cent of the daily net assets. The total expenses of the Scheme including the investment management and advisory fee shall not exceed the limit stated in Regulation 52(6) of the SEBI (MF) Regulations. The AMC will charge the Scheme such actual expenses incurred, subject to the statutory limit prescribed in the Regulations. Expenses charged to the Scheme: A. In addition to the limits as specified in Regulation 52(6) of SEBI (MF) Regulations or the Total Recurring Expenses (Total Expense Limit) as specified above, the following costs or expenses may be charged to the Scheme namely- (a) Additional expenses under regulation 52(6A)(c) Additional expenses, incurred towards different heads mentioned under Regulations 52(2) and 52(4), not exceeding 0.05 per cent of daily net assets of the Scheme; (b) GST payable on investment and advisory service fees (‘AMC fees’) charged by Axis Asset Management Company Limited; (c) Brokerage and transaction cost incurred for the purpose of execution shall be charged to the schemes as provided under Regulation 52 (6A) (a) upto 12 bps and 5 bps for cash market & derivative transactions respectively. Any payment towards brokerage & transaction costs, over and above the said 12 bps and 5 bps for cash market & derivative transactions respectively within the maximum limit of Total Expense Ratio (TER) as prescribed under Regulation 52 of the Regulations B. Within the Total Expense Limit chargeable to the Scheme, following will be charged to the Scheme: (a) GST on other than investment and advisory fees, if any shall be borne by the Scheme. (b) Investor education and awareness initiative fees shall be 5% of total TER charged to direct plans, subject to maximum of 0.5 bps of AUM. C. AMC fees charged by Axis AMC to the Scheme will be within the Total Expense Limit as prescribed by SEBI (MF) Regulations, with no sub-limit on said AMC fees. The mutual fund would update the notice of change in base TER on its 4website (www.axismf.com) atleast three working days prior to the effective date of the change. Investors can refer ‘Total Expense Ratio of Mutual Fund Schemes’ section on https://www.axismf.com/total-expense-ratio for Total Expense Ratio (TER) details. All scheme related expenses including commission paid to distributors, by whatever name it may be called and in whatever manner it may be paid, shall necessarily paid from the scheme only within the regulatory limits and not from the books of AMC, its associate, sponsor, trustees or any other entity through any route in terms of SEBI circulars and clarification issued thereon. Expenses over and above the prescribed limit shall be charged / borne in accordance with the Regulations prevailing from time to time. SO - 45 Illustration of impact of expense ratio on scheme’s returns Expense ratio, normally expressed as a percentage of Average Assets under Management, is calculated by dividing the permissible expenses under the Regulations by the average net assets. To further illustrate in rupee terms the above, for the Scheme under reference, suppose an Investor invested Rs. 10,000/- (after deduction of stamp duty) under the Growth Option, the impact of expenses charged will be as under: . Illustration: Sr. Particulars Regular Direct No.1 Plan Plan A. Amount invested at the 10,000 10,000 beginning of the year (Rs.) B. Returns before expenses (Rs.) 1,500 1,500 C. Expenses other than the 50 50 expenses mentioned in ‘D’ below (Rs.) D. Marketing & Selling expense 150 0 incl. agent commission (Rs.) E. Returns after expenses at the 1300 1450 end of the year (Rs.) [B – (C + D)] Returns after expenses at the 13% 14.5% end of the year (in %) [(E/A) – 1] Please Note: ● The purpose of the above illustration is purely to explain the impact of expense ratio charged to the Plan(s) under the Scheme and should not be construed as providing any kind of investment advice or guarantee of returns on investments. ● It is assumed that the expenses charged are evenly distributed throughout 5the year. ● The expenses of the Direct Plan of the Scheme will be lower to the extent of the distribution expenses/ commission ●Any tax impact has not been considered in the above example, in view of the individual nature of the tax implications. Each investor is advised to seek appropriate advice. • TER for last 6 months: Not applicable as the Scheme is a new scheme. • Scheme factsheet: Not applicable as the Scheme is a new scheme. Definitions For details refer website of Axis Mutual Fund: https://www.axismf.com/statutory-disclosures. Risk factors Scheme Specific Risk Factors SO – 8 Risks associated with Passive investments strategy The Scheme will be a passively managed scheme providing exposure to constituents of Nifty India Defence Index and tracking its performance, before expenses. The Scheme performance may be affected by a general decline in the Indian markets relating to its underlying Index. The Scheme invests in the underlying Index regardless of its investment merit. SO - 10 Tracking Error Risk: The Fund Manager would not be able to invest the entire corpus exactly in the same proportion as in the underlying index due to certain factors such as delay in purchase or non-availability of underlying securities forming part of the index, the fees and expenses of the Scheme, corporate actions, cash balance, changes to the underlying index and regulatory restrictions, which may result in Tracking Error with the underlying index of the Scheme. The Scheme’s returns may therefore deviate from its underlying index. “Tracking Error” is defined as the standard deviation of the difference between daily returns of the underlying index and the NAV of the Scheme. There can be no assurance or guarantee that the Scheme will achieve any particular level of Tracking Error relative to the performance of the underlying Index. Tracking Error may arise due to the following reasons: 1. Delay in purchase or non-availability of underlying securities forming part of the index. 2. Delay in liquidation of securities which have been removed by the Index. 3. Expenditure incurred by the Fund. 4. Available funds may not be invested at all times as the Scheme may keep a portion of the funds in cash to meet Redemptions, or corporate actions or otherwise. 5. Securities trading may halt temporarily due to circuit filters. 6. Corporate actions such as debenture or warrant conversion, rights issuances, mergers, change in constituents etc. 67. Rounding-off of the quantity of securities/shares in the underlying index. 8. Interest received on debt portion or stock dividend payout. 9. Index providers undertake a periodical review of the securities/scrips that comprise the underlying index and may either drop or include new securities/scrips. In such an event, the Fund will try to reallocate its portfolio, but the available investment/ reinvestment opportunity may not permit absolute mirroring immediately. SEBI Regulations (if any) may impose restrictions on the investment and/or divestment activities of the Scheme. Such restrictions are typically outside the control of the AMC and may cause or exacerbate the Tracking Error. Tracking difference: Tracking difference i.e. the annualized difference of daily returns between the index and the NAV of the Scheme shall be disclosed on the website of the AMC and AMFI, on a monthly basis, for tenures 1 year, 3 year, 5 year, 10 year and since the date of allotment of units. Risk pertaining to Nifty India Defence Index • Nifty India Defence Index which aims to track the performance of portfolio of stocks that broadly represent the Defence theme. From the Nifty Total Market index, stocks forming part of eligible basic industries or those which obtain at least 10% of revenues from the defence industry are eligible to be included in the index and are chosen based on 6 month average free- float market capitalization. Equities are volatile in nature and are subject to price fluctuations on a daily basis. The volatility in the value of the equity instruments is due to various micro and macroeconomic factors affecting the securities markets. This may have an adverse impact on individual securities /sector and consequently on the NAV of Scheme. • Given the index may constitute mid and small cap stocks, it is a possibility that fund manager may take some time to purchase/sell some stocks because of liquidity issues or trading restrictions. This may lead to a temporary mismatch between the scheme’s portfolio and the benchmark index. Risks associated with investments in Equity and Equity related securities • Equity and equity related securities are volatile and prone to price fluctuations on a daily basis. The liquidity of investments made in the Scheme may be restricted by trading volumes and settlement periods. Settlement periods may be extended significantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases, due to settlement problems, could cause the Scheme to miss certain investment opportunities. Similarly, the inability to sell securities held in the Scheme portfolio would result at times, in potential losses to the 7Scheme, should there be a subsequent decline in the value of securities held in the Scheme portfolio. Also, the value of the Scheme investments may be affected by interest rates, currency exchange rates, changes in law/policies of the government, taxation laws and political, economic or other developments which may have an adverse bearing on individual Securities, a specific sector or all sectors. • Investments in equity and equity related securities involve a degree of risk and investors should not invest in the equity Schemes unless they can afford to take the risk of losing their investment. Risks associated with investments in Fixed Income Securities Interest-Rate Risk: Fixed income securities such as government bonds, corporate bonds, and money market instruments run price-risk or interest-rate risk. Generally, when interest rates rise, prices of existing fixed income securities fall and when interest rates drop, such prices increase. The extent of fall or rise in the prices depends upon the coupon and maturity of the security. It also depends upon the yield level at which the security is being traded. Re-investment Risk: Investments in fixed income securities carry re-investment risk as interest rates prevailing on the coupon payment or maturity dates may differ from the original coupon of the bond. Liquidity Risk: The liquidity of a bond may change, depending on market conditions leading to changes in the liquidity premium attached to the price of the bond. At the time of selling the security, the security can become illiquid, leading to loss in value of the portfolio. Credit Risk: This is the risk associated with the issuer of a debenture/bond or a money market instrument defaulting on coupon payments or in paying back the principal amount on maturity. Even when there is no default, the price of a security may change with expected changes in the credit rating of the issuer. It is to be noted here that a Government Security is a sovereign security and is the safest. Corporate bonds carry a higher amount of credit risk than Government securities. Within corporate bonds also there are different levels of safety and a bond rated higher by a particular rating agency is safer than a bond rated lower by the same rating agency. Settlement Risk: Fixed income securities run the risk of settlement which can adversely affect the ability of the fund house to swiftly execute trading strategies which can lead to adverse movements in NAV Risks associated with Segregated Portfolio: 1. Investor holding units of segregated portfolio may not be able to liquidate their holding till the time recovery of money from the issuer. 2. Security comprises of segregated portfolio may not realise any value. 3. Listing of units of segregated portfolio on recognised stock exchange does not necessarily guarantee their liquidity. There may not be active trading of units in the stock market. Further trading price of units on the stock market may be significantly lower than the prevailing NAV. Risks associated with transaction in Units through stock exchange(s): In respect of transaction in Units of the Scheme through BSE and / or NSE, 8allotment and redemption of Units on any Business Day will depend upon the order processing / settlement by BSE and / or NSE and their respective clearing corporations on which the Fund has no control. Risks associated with Securities lending: Securities Lending is lending of securities through an approved intermediary to a borrower under an agreement for a specified period with the condition that the borrower will return equivalent securities of the same type or class at the end of the specified period along with the corporate benefits accruing on the securities borrowed. The risks in lending portfolio securities, as with other extensions of credit, consist of the failure of another party, to comply with the terms of the agreement entered into between the lenders of securities i.e. any scheme and the approved intermediary/counterparty. Such failure to comply can result in the possible loss of rights in the collateral put up by the borrower of the securities, the inability of the approved intermediary/counterparty to return the securities deposited by the lender and the possible loss of any corporate benefits accruing to the lender from the securities deposited with the approved intermediary. The Scheme may not be able to sell such lent securities and this can lead to temporary illiquidity. Risks associated with investments in derivatives: • The Scheme may invest in derivative products in accordance with and to the extent permitted under the Regulations. Derivative products are specialized instruments that require investment techniques and risk analysis different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but of the derivative itself. • The derivatives market in India is nascent and does not have the volumes that may be seen in other developed markets, which may result in volatility to the values. • Investment in derivatives also requires the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. Even a small price movement in the underlying security could have an impact on their value and consequently, on the NAV of the Units of the Scheme. • The Scheme may face execution risk, whereby the rates seen on the screen may not be the rate at which the ultimate execution of the derivative transaction takes place. • Investments in stock futures face the same risk as the investments in a portfolio of shares representing an index. The extent of loss is similar to that of underlying stocks. • The Scheme bears a risk that it may not be able to correctly forecast future market trends or the value of assets, indices or other financial or economic factors in establishing derivative positions for the Scheme. • The risk of loss in trading futures contracts can be substantial, because of the low margin deposits required, the extremely high degree of 9leverage involved in futures pricing and the potential high volatility of the futures markets. • Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices. • Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manager to identify such opportunities. Identification and execution of the strategies to be pursued by the fund manager involve uncertainty and decision of fund manager may not always be profitable. No assurance can be given that the fund manager will be able to identify or execute such strategies • The risks associated with the use of derivatives are different from or possibly greater than, the risks associated with investing directly in securities and other traditional investments. SO - 28 Risk associated with Investments in REITs: Price Risk: REITs are volatile and prone to price fluctuations on a daily basis owing to market movements. The extent of fall or rise in the prices is a fluctuation in general market conditions, factors and forces affecting capital market, Real Estate, level of interest rates, trading volumes, settlement periods and transfer procedures. Interest Rate Risk: REITs run interest rate risk. Generally, when interest rates rise, prices of units fall and when interest rates drop, such prices increase. Credit Risk: In simple terms this risk means that the issuer of the instrument may default on interest payment or even in paying back the principal amount. REITs are likely to have volatile cash flows as the repayment dates would not necessarily be pre scheduled. Liquidity Risk: This refers to the ease with which REITs units can be sold. There is no assurance that an active secondary market will develop or be maintained. Hence there would be time when trading in the units could be infrequent. The subsequent valuation of illiquid units may reflect a discount from the market price of comparable securities for which a liquid market exists. Reinvestment Risk: Investments in REITs may carry reinvestment risk as there could be repatriation of funds by the Trusts in form of buyback of units or dividend pay-outs, etc. Consequently, the proceeds may get invested in assets providing lower returns. Risk of lower than expected distributions: The distributions by the REIT will be 10based on the net cash flows available for distribution. The amount of cash available for distribution principally depends upon the amount of cash that the REIT receives as dividends or the interest and principal payments from portfolio assets. The above are some of the common risks associated with investments in REITs. There can be no assurance that investment objectives will be achieved, or that there will be no loss of capital. Investment results may vary substantially on a monthly, quarterly or annual basis. SO - 9 Risk Mitigations: Risk Control & Risk Mitigation: Risk is an inherent part of the investment function. Effective Risk Management is critical to Fund Management for achieving financial soundness. Investments by the Scheme shall be made as per the investment objectives of the Scheme and provisions of the Regulations. The Scheme aims to track the Nifty India Defence Index before expenses. The index is tracked on a regular basis and changes to the constituents or their weights, if any, are replicated in the Scheme portfolio with the purpose of minimizing tracking error. Investments in equity securities and money market securities carry various risks such as inability to sell securities, trading volumes and settlement periods, interest rate risk, liquidity risk, default risk, reinvestment risk etc. Whilst such risks cannot be eliminated, they may be mitigated by diversification. In order to mitigate the various risks, the portfolio of the Scheme will be constructed in accordance with the investment restriction specified under the Regulations which would help in mitigating certain risks relating to investments in securities market. The AMC has incorporated adequate safeguards to manage risk in the portfolio construction process. Risk control would involve managing risk in order to keep it in line with the investment objective of the Scheme. Risk control measures with respect to investment Equity instruments: Market Risk: Equity and Equity related securities by nature are volatile and prone to price fluctuations on a daily basis due to both macro and micro factors. Mitigation - Market risk is a risk which is inherent to an equity scheme. The scheme will try to reduce the market risk by undertaking active portfolio management as per the investment objective. Liquidity risk: The liquidity of investments made in the Scheme may be restricted by trading volumes and settlement periods. Mitigation- As such the liquidity of stocks that the scheme invests into could be relatively low. The scheme will try to maintain a proper asset-liability match to ensure redemption / Maturity payments are made on time. Tracking error risk: The performance of the Scheme may not commensurate with the performance of the benchmark index on any given day or over any 11given period. Such variation, referred to as tracking error may impact the performance of the Scheme. Mitigation: The Investment Manager would monitor the tracking error of the Scheme on an ongoing basis and would seek to minimize tracking error to the maximum extent possible. Risk control measures with respect to Debt & Money Market Instruments Market Risk / Interest Rate Risk: Changes in interest rates may affect the Scheme’s Net Asset Value as the prices of securities generally increase as interest rates decline and generally decrease as interest rates rise. The price movement up and down in fixed income securities will lead to possible movements in the NAV. Mitigation - In a rising interest rates scenario the scheme may increase its investment in money market securities whereas if the interest rates are expected to fall the allocation to debt securities with longer maturity may be increased thereby mitigating risk to that extent. Liquidity or Marketability Risk: This refers to the ease with which a security can be sold at or near to its valuation yield-to-maturity (YTM). Mitigation- The scheme may invest in government securities, corporate bonds and money market instruments. While the liquidity risk for government securities, money market instruments and short maturity corporate bonds may be low, it may be high in case of medium to long maturity corporate bonds. Credit risk or default risk: It refers to the risk that an issuer of a fixed income security may default (i.e., will be unable to make timely principal and interest payments on the security). Normally, the value of a fixed income security will fluctuate depending upon the changes in the perceived level of credit risk as well as any actual event of default. The greater the credit risk, the greater the yield required for someone to be compensated for the increased risk. Mitigation– Apart from the basic examination, management’s past track record will also be studied. In order to assess financial risk a detailed assessment of the issuer’s financial statements will be undertaken to review its ability to undergo stress on cash flows and asset quality. A detailed evaluation of accounting policies, off-balance sheet exposures, notes, auditors’ comments and disclosure standards will also be made to assess the overall financial risk of the potential borrower. In case of securitized debt instruments, the Scheme will ensure that these instruments are sufficiently backed by assets. Risk control with respect to derivatives: As and when the Scheme trades in the derivatives market there are risk factors and issues concerning the use of derivatives since derivative products are specialized instruments that require investment techniques and risk analysis different from those associated with stocks and bonds. The Scheme may invest in derivative for the purpose of 12portfolio balancing and other purposes as may be permitted under the Regulations. Mitigation- Exposure with respect to derivatives shall be in line with regulatory limits and the limits specified in the SID. All equity derivatives trade will be done only on the exchange with guaranteed settlement. Risk control with respect to investment in REITs Market Risk: REITs are volatile and prone to price fluctuations on a daily basis owing to market movements. Investors may note that AMC/Fund Manager’s investment decisions may not always be profitable, as actual market movements may be at variance with the anticipated trends. The NAV of the Scheme is vulnerable to movements in the prices of securities invested by the scheme, due to various market related factors like changes in the general market conditions, factors and forces affecting capital market, level of interest rates, trading volumes, Real Estate, settlement periods and transfer procedures. Mitigation- The scheme will undertake active portfolio management as per the investment objective to reduce the market risk. Reinvestment Risk: Investments in REITs may carry reinvestment risk as there could be repatriation of funds by the Trusts in form of buyback of units or dividend pay-outs, etc. Consequently, the proceeds may get invested in assets providing lower returns. Mitigation- The reinvestment risk will be limited as the proceeds are not expected to be a large portion of the portfolio value. The Investment Manager also relies on their own research as well as third party research. The analysis will focus, amongst others, on the predictability and strength of cash flows, value of assets, capital structure, business prospects, policy environment, strength of management, responsiveness to business conditions, etc. Concentration Risk: Securities / Instruments of REITs run concentration risk as currently there very few issuers of REITs in India for investment in REITs. Mitigation- The scheme will undertake to diversify its allocation in REITs which are held as a part of the overall diversified portfolio. Interest Rate Risk: Securities / Instruments of REITs run interest rate risk. Generally, when interest rates rise, prices of units fall and when interest rates drop, such prices increase. Mitigation- In a rising interest rates scenario the Fund Manager may choose to invest in money market securities / debt securities with shorter maturity / floating rate bonds instead of REITs and thereby mitigating risk to that extent. 13Index About The Index methodology/ Details of Nifty India Defence Index which aims to track the performance of portfolio underlying fund of stocks that broadly represent the Defence theme. in case of Fund of Funds Eligibility Criteria: From the Nifty Total Market index, stocks forming part of eligible basic industries or those which obtain at least 10% of revenues from the defence industry are eligible to be included in the index and are chosen based on 6 month average free-float market capitalization. Index Link - https://www.niftyindices.com/indices/equity/thematic- indices/nifty-india-defence Methodology Snapshot • Stocks forming part/going to form part of Nifty Total Market index are considered as eligible universe for stock selection. • Within the Nifty Total Market index, stocks forming part of the basic industries given below or stocks which are present in the Society of Indian Defence Manufacturers (SIDM) member list as of the review date and obtain at least 10% of revenues from the defence segment are eligible to be included in the index. The list of basic industries and eligible SIDM members identified so far may evolve and hence change in the future due to changes in the SIDM member list or market dynamics. • Minimum number of stocks within the index is 10 and maximum number of stocks is 30. • In case, the number of eligible stocks within the Nifty Total Market index falls below 10, then deficit number of stocks shall be selected from the universe of stocks ranked within top 1000, top 1100, top 1200 and so on, based on both average daily turnover and average daily full market capitalisation based on previous six months period data used for index rebalancing of Nifty Total Market Index. • Stock weights are determined based on their average daily free float market capitalization based on previous six months period data. • Stock weights of index constituents are capped at 20% each on a quarterly basis in March, June, September and December • For capping purpose, the weight of the DVR and its parent stock would be derived in the following way: (1)Aggregate the Free Float Market Capitalization of the DVR security and its parent (2)The weight of the combined entity will be split into the weight of the parent security and the DVR security in the proportion of the Free Float Market Capitalization of the parent and DVR. Reconstitution and rebalancing 14• The Index is reconstituted semi-annually (March & September). • In case the number of stocks in the eligible universe exceeds 30, companies will be included if free-float market capitalisation is at least 1.5 times the free-float market capitalization of the smallest index constituent in respective index. • Apart from the scheduled review, additional ad-hoc reconstitution and rebalancing of the index will be initiated in case any of the index constituents ceases to form part of Nifty 50 due to suspension, delisting or scheme of arrangement • Further, on a quarterly basis, indices will be screened for compliance with the portfolio concentration norms for ETFs/ Index Funds announced by SEBI on January 10, 2019. In case of non-compliance of any of the stated norms, suitable corrective measures such as replacement of ineligible stock, re- alignment of constituent weights will be undertaken depending upon the nature of non-compliance to ensure the compliance of norms. For detailed index methodology please refer to the index methodology document at www.niftyindices.com Nifty India Defence Index Constituents as on 30th Nov 2025: Company Name Weights (%) Impact Cost Bharat Electronics Ltd. 20.6 0.02 Hindustan Aeronautics Ltd. 19.2 0.02 Bharat Forge Ltd. 13.3 0.03 Solar Industries India Ltd. 11.3 0.03 Mazagoan Dock Shipbuilders Ltd. 7.1 0.02 Cochin Shipyard Ltd. 4.9 0.02 Bharat Dynamics Ltd. 4.9 0.03 Data Patterns (India) Ltd. 3.1 0.04 Garden Reach Shipbuilders & Engineers Ltd. 2.9 0.03 Astra Microwave Products Ltd. 2.8 0.06 BEML Ltd. 2.4 0.03 Zen Technologies Ltd. 2.2 0.05 MTAR Technologies Ltd. 1.9 0.05 Dynamatic Technologies Ltd. 1.3 0.09 Paras Defence and Space Technologies Ltd. 0.9 0.05 Cyient DLM Ltd. 0.6 0.09 Mishra Dhatu Nigam Ltd. 0.6 0.05 Unimech Aerospace and Manufacturing Ltd. 0.2 0.42 List of official F or Details of official points of acceptance, please refer our website:- points of https://www.axismf.com/statutory-disclosures. acceptance: 15Penalties, https://www.axismf.com/cms/sites/default/files/Statutory/Extract%20- Pending %20Litigations%20.pdf Litigation or Proceedings, SO - 48 Findings of Inspections or Investigations For which action may have been taken or is in the process of being taken by any Regulatory Authority Investor services Contact details for general service requests and complaints: Investors can lodge any service request or complaints or enquire about NAVs, Unit Holdings, IDCW, etc by calling the Investor line of the AMC at contact number 8108622211 (chargeable) from 9.00 am to 6.00 pm (Monday to Saturday) or (022) 6311 1001 (at local call rate for enquiring at AMC ISC’s) or email – customerservice@axismf.com. The service representatives may require personal information of the Investor for verification of his / her identity in order to protect confidentiality of information. The AMC will at all times endeavour to handle transactions efficiently and to resolve any investor grievances promptly. Investor Relations Officer: Mr. C P Sivakumar Nair Address : Axis Asset Management Company Ltd. One Lodha Place, 22nd & 23rd Floor, Senapati Bapat Marg, Lower Parel, Mumbai, Maharashtra, Pin Code – 400013 Phone no.: (022) 6311 1205 Portfolio The AMC will disclose the portfolio of the Scheme (alongwith ISIN) as on the last Disclosure day of the quarter on the website of the Mutual Fund and AMFI within 10 days from the close of each quarter in a user-friendly and downloadable spreadsheet format. PORTFOLIO TURNOVER The Scheme is an open-ended scheme. It is expected that there would be a number of subscriptions and redemptions on a daily basis. Consequently, it is difficult to estimate with any reasonable measure of accuracy, the likely turnover in the portfolio. There may be an increase in transaction cost such as brokerage paid, if trading is done frequently. However, the cost would be negligible as 16compared to the total expenses of the Scheme. Frequent trading may increase the profits which will offset the increase in costs. The fund manager will endeavor to optimize portfolio turnover to maximize gains and minimize risks keeping in mind the cost associated with it. However, it is difficult to estimate with reasonable accuracy, the likely turnover in the portfolio of the Scheme. The Scheme has no specific target relating to portfolio turnover Portfolio turnover ratio for the half-year period ended _____: Currently, not Applicable since this is a new scheme. Detailed For detailed comparative table on ‘How the Scheme is different from existing comparative schemes of Axis Mutual Fund’, please refer our website : table of the https://www.axismf.com/statutory-disclosures existing schemes of AMC Scheme Currently, not applicable as this is a new scheme performance Periodic Annual Report: Disclosures such The Scheme annual report or an abridged summary thereof shall be mailed as Half yearly (emailed, where e mail id is provided unless otherwise required)) to all Unit disclosures, half holders not later than four months (or such other period as may be specified yearly results, by SEBI from time to time) from the date of closure of the relevant accounting year (i.e. 31st March each year) and full annual report shall be available for annual report inspection at the Head Office of the Mutual Fund and a copy shall be made available to the Unit holders on request on payment of nominal fees, if any. Scheme wise annual report shall also be displayed on the website of the Mutual Fund (www.axismf.com) and on the website of Association of Mutual Funds in India (www.amfiindia.com). Unitholders whose email addresses are not registered with the Mutual Fund may ‘opt-in’ to receive a physical copy of the annual report or an abridged summary thereof. Further, AMC shall provide a physical copy of the abridged summary of the Annual Report, without charging any cost, on a specific request received from a unitholder. AMC shall also publish an advertisement every year, in an all India edition of one national English daily newspaper and in one Hindi newspaper, disclosing the hosting of the scheme wise annual report on the website of the Mutual Fund and AMFI and the modes through which a unitholder can submit a request for a physical or electronic copy of the annual report or abridged summary thereof. For details, please refer our website: https://www.axismf.com/statutory- disclosures Scheme For details, please refer our website: https://www.axismf.com/downloads 17factsheet Scheme specific Refer Note 1: disclosures 18Note 1: Scheme specific disclosures: 1. P ortfolio Timelines for deployment of funds collected in New Fund Offer (NFO) as per rebalancing asset allocation of the scheme. In terms of SEBI circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/23 dated February 27, 2025, the AMC shall deploy the funds garnered in an NFO within 30 business days from the date of allotment of units. If the AMC is not able to deploy the funds in 30 business days, the AMC shall adhere to the requirements as laid down in the aforesaid SEBI circular. SO – 22, 23, 24 Portfolio rebalancing due to short term defensive considerations: Portfolio allocation may deviate from the asset allocation for a short-term period due to defensive considerations as per para 1.14.1.2 of SEBI Master circular as amended from time to time or on account of inflows in and outflows from the Scheme due to the nature of accounting, involuntary corporate action, etc. Defensive considerations may be determined by the fund manager and/or AMC from time to time. In case of deviations on account of exogenous factors, the fund manager will endeavor to rebalance the scheme within 7 calendar days from the date of such deviation. Portfolio rebalancing on account of change in constituents of underlying Index: As per Para 3.6.7 of Master Circular for Mutual Funds as amended from time to time, for rebalancing the portfolio by the Scheme, following norms shall apply: a. In case of change in constituents of the index due to periodic review, the portfolio of the Scheme shall be rebalanced within 7 calendar days. b. Any transactions undertaken in the scheme portfolio of ETF/ Index Fund in order to meet the redemption and subscription obligations shall be done while ensuring that post such transactions replication of the portfolio with the index is maintained at all points of time. 2. D isclosure Sr. No. Category of persons Net Value Market Value (in w.r.t – Rs) investments Units NAV (Rs. per by key unit) personnel and 1. Axis Nifty India Not applicable AMC directors Defence Index Fund including For any other disclosure w.r.t investments by key personnel and AMC directors regulatory including regulatory provisions in this regard kindly refer SAI. provisions 3. I nvestments of AMC in the Scheme Not Applicable since the Scheme is an Index Fund. SO - 59 However, the AMC may at its discretion invest in the scheme during the New 19Fund Offer. The AMC shall not be entitled to charge any fees on such investments may be disclosed. 4. T axation Equity-Oriented Mutual Funds (Rates applicable for the Financial Year 2025- 26) This document primarily covers taxation of units of equity oriented mutual funds (Refer Note 2). The information is provided for general information only. However, in view of the individual nature of the implications, each investor is advised to consult his or her own tax advisors / authorised dealers with respect to the specific amount of tax and other implications arising out of his or her participation in the schemes. Taxability in the hands of Individuals / Non- corporates / Corporates Particulars Resident Non-Resident Tax on distributed Taxed in the hands of Taxed in the hands of income unitholders at applicable unitholders at the rate rate under the provisions of 20% u/s 115A/ 115AD of the Income-tax Act, of the Act (plus 1961 (Act) applicable surcharge and health and (Refer Note 3) education cess) Capital Gains Long Term Capital 12.5% (plus applicable 12.5% (plus applicable Gains: surcharge and health surcharge and health and education cess) and education cess) (Held for a period of without indexation without indexation more than 12 Months) (Refer Note 7) (Refer Note 7) Short Term Capital 20% (plus applicable 20% (plus applicable Gains surcharge and health surcharge and health and education cess) and education cess) (Held for a period of 12 months or less) Notes – 1. Axis Mutual Fund is a Mutual Fund registered with the Securities & Exchange Board of India and hence the entire income of the Mutual Fund will be exempt from income tax in accordance with the provisions of section 10(23D) of the Act. 2. An equity-oriented fund has been defined as: 20a) In case where the fund invests a minimum of 90% of the total proceeds in units of another fund, which is traded on recognized stock exchange, and such other fund also invests a minimum of 90% of its total proceeds in the equity shares of domestic companies listed on a recognized stock exchange; and b) In any other case, a minimum of 65% of the total proceeds of such fund is invested in the equity shares of domestic companies listed on a recognized stock exchange. Provided that the percentage of equity shareholding or unit held in respect of the fund, as the case may be, shall be computed with reference to the annual average of the monthly averages of the opening and closing figures. 3. Applicable rates for individual, corporates and non-corporates are as under: Particulars Income slab Rate of tax Individual/ Hindu Where total income for a Nil Undivided Family tax year (April to March) is (HUF)/ AOP/ BOI# less than or equal to Rs 2,50,000* (the basic exemption limit) Where such total income 5% of the amount by is more than Rs 2,50,000* which the total income but is less than or equal to exceeds Rs 2,50,000* Rs 5,00,000 Where such total income Rs 12,500 plus 20% of the is more than Rs 5,00,000* amount by which the but is less than or equal to total income exceeds Rs 10,00,000 Rs 5,00,000* Where such total income Rs 1,12,500 plus 30% of is more than Rs 10,00,000 the amount by which the total income exceeds Rs 10,00,000 Co-operative society Where total income for a 10% of the total income tax year (April to March) is less than or equal to Rs 10,000 Where such total income Rs 1,000 plus 20% of the is more than Rs 10,000 but amount by which the is less than or equal to total income exceeds Rs 20,000 Rs 10,000 21Where the total income Rs 3,000 plus 30% of the exceeds Rs 20,000 amount by which the total income exceeds Rs 20,000 Co-operative society 22% availing concessional tax rate benefit (subject to prescribed conditions) under section 115BAD of the Act Co-operative society 15% availing concessional tax rate benefit (subject to prescribed conditions) under section 115BAE of the Act Domestic Corporate 30% (where the total turnover or gross receipts of such company for financial year 2023-24 exceeds Rs 400 crores)/ Partnership firm/ LLP/ Local authority/ FPIs Domestic company, 25% where the total turnover or gross receipts of such company for financial year 2023-24 does not exceed Rs 400 crores Domestic company 22% availing concessional tax rate benefit (subject to prescribed conditions) under section 115BAA of the Act 22Domestic company 15% engaged solely in the business of manufacture/ production and availing concessional tax rate benefit (subject to prescribed conditions) under section 115BAB of the Act AOP/ BOI 30% or such higher rate of tax applicable to the individual members of the AOP/ BOI Foreign Corporates 35% FPIs 30% *In case of resident individuals of age 60 years or more, but less than 80 years, the basic exemption limit is Rs 3,00,000. Income between Rs 3,00,000 and Rs 500,000 will be taxable at the rate of 5%. In case of resident individuals of age 80 years or more, the basic exemption limit is Rs 5.00,000. Income exceeding Rs 5,00,000 but less than or equal to Rs 10,00,000 will be taxable at the rate of 20%. #Section 115BAC of the Act provides individuals and HUFs to pay tax in respect of their total income at the following rates (default regime): Income slab Tax rate Where total income for a tax year (April to Nil March) is less than or equal to Rs 4,00,000 (the basic exemption limit) Where such total income is more than Rs 5% of the amount by which the 4,00,000 but is less than or equal to total income exceeds Rs 8,00,000 Rs 4,00,000 Where such total income is more than Rs 20,000 plus 10% of the amount Rs 8,00,000 but is less than or equal to by which the total income Rs 12,00,000 exceeds Rs 8,00,000 Where such total income is more than Rs 60,000 plus 15% of the amount Rs 12,00,000 but is less than or equal to by which the total income Rs 16,00,000 exceeds Rs 12,00,000 Where such total income is more than Rs 1,20,000 plus 20% of the Rs 16,00,000 but is less than or equal to amount by which the total Rs 20,00,000 income exceeds Rs 16,00,000 23Where such total income is more than Rs 2,00,000 plus 25% of the Rs 20,00,000 but is less than or equal to amount by which the total Rs 24,00,000 income exceeds Rs 20,00,000 Where such total income is more than Rs Rs 3,00,000 plus 30% of the 24,00,000 amount by which the total income exceeds Rs 24,00,000 Further, Finance Bill 2025 has proposed to enhance the threshold of total income for claiming the rebate under concessional tax regime (i.e. default regime) in case of resident individual from Rs 7,00,000 to Rs 12,00,000 and increased the limit of rebate from Rs 25,000 to Rs 60,000. However, the said rebate is not available on incomes chargeable to tax at special rates (for eg. capital gains under section 111A, 112 etc.). 4. Surcharge at the following rate to be levied in case of individual / HUF / non-corporate non-firm unit holders for equity oriented mutual fund: Income Individual /HUF / non-corporate non-firm unit holders (a) Above Rs 50 lakh upto 1 crore (including dividend 10% income and capital gains income under section 111A, 112 and 112A of the Act) (b) Above Rs 1 crore upto Rs 2 crores (including dividend 15% income and capital gains income under section 111A and 112A of the Act) (c) Above Rs 2 crores upto Rs 5 crores [excluding 25% dividend income (dividend received from domestic companies only) and capital gains income under section 111A, 112 and 112A of the Act) (d) Above Rs 5 crores [excluding dividend income 37%* (dividend received from domestic companies only) and capital gains income under section 111A, 112 and 112A of the Act) (e) Above Rs 2 crores [including dividend income 15% (dividend received from domestic companies only) and capital gains income under section 111A, 112 and 112A of the Act)] but not covered in point (c) and (d) above *Surcharge rate shall not exceed 25% in case of individual and HUF pays tax under section 115BAC of the Act. 5. Surcharge rates for Companies/ firm Total Income Rate of Rate of 24Surcharge Surcharge for for Foreign Domestic Companies companies* Above Rs 1 crore upto Rs 7% 2% 10 crores Above Rs 10 crores 12% 5% *Surcharge rate shall be 10% in case resident companies opting taxation under section 115BAA and section 115BAB of the Act on any income earned. In case of firm with total income exceeding Rs 1 crore, surcharge rate shall be 12%. 6. Health and Education cess at 4% on aggregate of base tax and surcharge. 7. As per section 112A of the Act, long-term capital gains, exceeding Rs 1,25,000, arising from transfer of equity oriented mutual funds, shall be chargeable at the rate of 12.5%% (plus applicable surcharge and health and education cess). 8. The Scheme will attract securities transaction tax (STT) at 0.001% on the redemption value. 9. Withholding of Taxation by Mutual Fund will as per applicable withholding tax rate. 10. All the above non-resident investors may also claim the tax treaty benefits available, if any. For further details on taxation please refer to the clause on Taxation in the SAI. 5. A ssociate For detailed disclosure, kindly refer SAI Transactions 6. L isting and Listing transfer of The Scheme is an open ended scheme under which Sale and Repurchase will units be made on a continuous basis and therefore listing on stock exchanges is not envisaged. However, the Trustee reserves the right to list the Units as and when considered necessary in the interest of Unit holders of the Fund. Transferability of units: Units, unless otherwise restricted or prohibited, shall be freely transferable by act of parties or by operation of law. Transfer of units will be subject to submission of valid documents and fulfillment of the eligibility requirements by the unitholder/investor as stated under AMFI best Practice guideline No.135/BP/ 116 /2024-25 dated August 14, 2024 and AMC internal processes, if any. 25For more details refer to the SAI. 7. D ematerializa Investors shall have an option to receive allotment of Mutual Fund units in their tion of units demat account while subscribing to the Scheme in terms of the guidelines/ procedural requirements as laid by the Depositories (NSDL/CDSL) from time to time. SO – 58 Investors desirous of having the Units of the Scheme in dematerialized form should contact the ISCs of the AMC/Registrar. Where units are held by investor in dematerialized form, the demat statement issued by the Depository Participant would be deemed adequate compliance with the requirements in respect of dispatch of statements of account. In case investors desire to convert their existing physical units (represented by statement of account) into dematerialized form or vice versa, the request for conversion of units held in physical form into Demat (electronic) form or vice versa should be submitted along with a Demat/Remat Request Form to their Depository Participants. In case the units are desired to be held by investor in dematerialized form, the KYC performed by Depository Participant shall be considered compliance of the applicable SEBI norms. Further, demat option shall also be available for SIP transactions. Units will be allotted based on the applicable NAV as per Scheme Information Document and will be credited to investors Demat Account on weekly basis on realization of funds. Units held in Demat form are freely transferable in accordance with the provisions of SEBI (Depositories and Participants) Regulations, as may be amended from time to time. Transfer can be made only in favour of transferees who are capable of holding units and having a Demat Account. The delivery instructions for transfer of units will have to be lodged with the Depository Participant in requisite form as may be required from time to time and transfer will be affected in accordance with such rules / regulations as may be in force governing transfer of securities in dematerialized mode. For details, Investors may contact any of the Investor Service Centres of the AMC. 8. M inimum ₹5 Crore Target amount This is the minimum amount required to operate the scheme and if this is not collected during the NFO period, then all the investors would be refunded the amount invested without any return. However, if AMC fails to refund the amount within 5 business days from date of closure of NFO, interest as specified by SEBI (currently 15% p.a.) will be paid to the investors from the expiry of 5 business days from the date of closure of the NFO. 9. M aximum Not Applicable Amount to be raised (if any) 2610. D ividend Not Applicable Policy (IDCW ) 11. A llotment • Full allotment will be made to all valid applications received during the (Detailed New Fund Offer Period. Allotment of Units, shall be completed not later procedure) than 5 business days after the close of the New Fund Offer Period. • On acceptance of the application for subscription, an allotment (During NFO) confirmation specifying the number of units allotted by way of e-mail and/or SMS within 5 business days from the date of receipt of transaction request/allotment will be sent to the Unit Holders registered e-mail address and/or mobile number. • In case of Unit Holders holding units in the dematerialized mode, the Fund will not send the account statement to the Unit Holders. The statement provided by the Depository Participant will be equivalent to the account statement. • For those Unit holders who have provided an e-mail address, the AMC will send the account statement by e-mail. • Unit holders will be required to download and print the documents after receiving e-mail from the Mutual Fund. Should the Unit holder experience any difficulty in accessing the electronically delivered documents, the Unit holder shall promptly advise the Mutual Fund to enable the Mutual Fund to make the delivery through alternate means. It is deemed that the Unit holder is aware of all security risks including possible third party interception of the documents and contents of the documents becoming known to third parties. • The Unit holder may request for a physical account statement by writing/calling the AMC/ISC/Registrar. In case of specific request received from the Unit Holders, the AMC/Fund will provide the Account Statement to the Investors within 5 business days from the receipt of such request. • In cases where the email does not reach the Unit holder, the Fund / its Registrar & Transfer Agents will not be responsible, but the Unit holder can request for fresh statement. The Unit holder shall from time to time intimate the Fund / its Registrar & Transfer Agent about any changes in his e-mail address. 12. R efund During NFO: Fund will refund the application money to applicants whose applications are found to be incomplete, invalid or have been rejected for any other reason whatsoever. Refund will be transferred within 5 business days of the closure of NFO period. In the event of delay beyond 5 business days, the AMC shall be liable to pay interest at 15% per annum or such other rate of interest as maybe prescribed from time to time. Ongoing Offer period: The AMC will refund the subscription money to applicants whose applications are found to be incomplete, invalid or have been rejected for any other reason whatsoever in accordance with the AMFI best practice guidelines in the matter. The AMC will endeavor to refund such amounts within 5 business days from 27the date of purchase transactions as per the timestamp / applicable NAV, where the application form / online transaction is received along with the payment and the funds have been realized. Where the subscription amount and the application/ online transaction are received separately, the period of 5 business days shall be reckoned from the later of the date of identifying the remitter details, based on the credit provided by the Bank or receipt and time stamping of application/ online transaction. In the event of delay beyond 5 business days, the AMC in line with AMFI best practice guidelines on the matter, will pay interest at 15% per annum or such other rate of interest as may be prescribed from time to time. 13. W ho can invest The following persons (subject to, wherever relevant, purchase of units of mutual funds, being permitted under respective constitutions, and relevant This is an statutory regulations) are eligible and may apply for Subscription to the units indicative list of the Scheme: and investors 1. Resident adult individuals either singly or jointly (not exceeding three) or shall consult on an Anyone or Survivor basis; their financial advisor to 2. Hindu Undivided Family (HUF) through Karta; ascertain whether the 3 . Minor (as the first and the sole holder only) through a natural guardian scheme is (i.e. father or mother, as the case may be) or a court appointed legal Suitable to their guardian. There shall not be any joint holding with minor investments; risk profile. 4. Partnership Firms; 5. Limited liability partnership firms; 6. Proprietorship in the name of the sole proprietor; 7. Companies, Bodies Corporate, Public Sector Undertakings (PSUs.), Association of Persons (AOP) or Bodies of Individuals (BOI) and societies registered under the Societies Registration Act, 1860(so long as the purchase of Units is permitted under the respective constitutions); 8. Banks (including Co-operative Banks and Regional Rural Banks) and Financial Institutions; 9. Religious and Charitable Trusts, Wakfs or endowments of private trusts (subject to receipt of requisite approvals wherever applicable) and Private trusts authorised to invest in mutual fund schemes under their trust deeds; 10. Non-Resident Indians (NRIs) / Persons of Indian origin (PIOs) )/ Overseas Citizens of India (OCI)residing abroad on repatriation basis or on non- repatriation basis; 2811. Foreign Portfolio Investor (FPI) registered with SEBI on repatriation basis. These investments shall be subject to the conditions prescribed by SEBI, RBI, Income Tax authorities and the AMC, from time to time; 12. Army, Air Force, Navy and other para-military units and bodies created by such institutions; 13. Scientific and Industrial Research Organisations; 14. Multilateral Funding Agencies / Bodies Corporate incorporated outside India with the permission of Government of India / RBI; 15. Provident/ Pension/ Gratuity Fund to the extent they are permitted; 16. Other schemes of Axis Mutual Fund or any other mutual fund subject to the conditions and limits prescribed by SEBI Regulations; 17. Schemes of Alternative Investment Funds; 18. The Trustee, AMC or Sponsor or their associates may subscribe to Units under the Scheme; 19. Such other category of person(s) permitted to make investments and as may be specified by the AMC / Trustee from time to time. Subject to SEBI (Mutual Funds) Regulations, 1996, any application for subscription of units may be accepted or rejected in the sole and absolute discretion of the AMC/ Trustee company. The AMC/ Trustee company may also reject any application for subscription of units if the application is invalid, incomplete, or if the AMC/ Trustee company for any other reason does not believe that it would be in the interest of the scheme or its unitholders to accept such an application. 14. W ho cannot 1. Any individual who is a foreign national or any other entity that is not an invest Indian resident under the Foreign Exchange Management Act, 1999 (FEMA Act) except where registered with SEBI as a FPI or otherwise explicitly permitted under FEMA Act/ by RBI/ by any other applicable authority. 2. Pursuant to RBI A.P. (DIR Series) circular no. 14 dated September 16, 2003, Overseas Corporate Bodies (OCBs) cannot invest in Mutual Funds. 3. NRIs residing in Non-Compliant Countries and Territories (NCCTs) as determined by the Financial Action Task Force (FATF), from time to time. 4. U.S. Persons and Residents of Canada as defined under the applicable laws of U.S. and Canada except the following: a. subscriptions received by way of lump sum / switches / systematic transactions received from Non-resident Indians (NRIs) /Persons of Indian origin (PIO) / Overseas Citizen of India (OCI) who at the time of such investment, are present in India and 29b. FPIs 5. Such other persons as may be specified by AMC from time to time. The AMC reserves the right to put the transaction requests on hold/reject the transaction request/reverse allotted units, as the case may be, as and when identified by the AMC, which are not in compliance with the terms and conditions notified in this regard. The Trustee / the AMC /the Fund reserve the right to change/ modify the above provisions at a later date. 15. T he policy Units once redeemed will be extinguished and will not be reissued. regarding reissue of The Scheme does not propose to reissue redeemed units. The number of Units repurchased held by the Unit holder in his Beneficiary (Demat) account will stand reduced units, including by the number of Units redeemed. the maximum extent, the manner of reissue, the entity (the scheme or the AMC) involved in the same. 16. R estrictions, if Pledge/Lien of Units any, on the The Unit under the Scheme may be offered as security by way of a pledge / right to lien/charge in favour of scheduled banks, financial institutions, non-banking freely retain or finance companies (NBFCs), or any other person. The AMC and / or the ISC dispose of units will note and record such Pledged/liened Units. The AMC shall mark a being offered. pledge/lien only upon receiving the duly completed form and documents as it may require. Disbursement of such loans will be at the entire discretion of the bank / financial institution / NBFC or any other person concerned and the Mutual Fund assumes no responsibility thereof. The Pledger/ lienor will not be able to redeem/Switch-out Units that are pledged/liened until the entity to which the Units are pledged/liened provides written authorisation to the Mutual Fund that the pledge / lien charge may be removed. As long as Units are pledged/liened, the Pledgee/lienee will have complete authority to redeem / Switch-out such Units. IDCW declared on Units under lien/pledge will be paid / re-invested to the credit of the Unit Holder and not the lien holder unless specified otherwise in the lien letter. If there are subsisting credit facilities secured by a duly created pledge/lien, the nominee(s) or legal heirs / legal representative(s) shall be required to obtain a due discharge certificate from the creditors at the time of transmission of units. For NRIs, the Scheme may mark a lien on Units in case documents which need 30to be submitted are not given in addition to the application form and before the submission of the redemption / Switch-out request. The Units held in demat mode can be pledged/ liened as per the provisions of Depositories Act and Depositories Rules and Regulations. However, the AMC reserves the right to change operational guidelines for pledge/ lien on Units from time to time. Suspension/Restriction on Redemption of Units of the Scheme Subject to the approval of the Boards of the AMC and of the Trustee and subject also to necessary communication of the same to SEBI, the redemption of / switchout of Units of Scheme, may be temporarily suspended/ restricted. In accordance with Para 1.12 of SEBI Master Circular on Mutual Funds as amended from time to time and subject to prevailing regulations, restriction on/suspension of redemptions / switch-out of Units of the Scheme, may be imposed when there are circumstances leading to systemic crisis or event that severely constricts market liquidity or the efficient functioning of markets such as: a) Liquidity issues: when market at large becomes illiquid affecting almost all securities rather than any issuer specific security; b) Market failures, exchange closures: when markets are affected by unexpected events which impact the functioning of exchanges or the regular course of transactions. Such unexpected events could also be related to political, economic, military, monetary or other emergencies; c) Operational issues: when exceptional circumstances are caused by force majeure, unpredictable operational problems and technical failures (e.g. a black out). Restriction on / suspension of redemption of Units of the Scheme may be imposed for a specified period of time not exceeding 10 working days in any 90 days period. When restriction on / suspension of redemption of Units of the Scheme is imposed, the following procedure shall be applied i. No redemption / switch-out requests upto Rs. 2 lakhs shall be subject to such restriction. ii. Where redemption / switch-out requests are above Rs. 2 lakhs, the AMC shall redeem the first Rs. 2 lakhs without such restriction and remaining part over and above Rs. 2 lakhs shall be subject to such restriction. In addition to the above, the AMC / Trustee may restrict / suspend redemptions / switch-out of Units of the Scheme(s) pursuant to direction/ approval of SEBI. In case of any of the above eventualities, the general time limits for processing requests for redemption of Units will not be applicable. 31Also refer to the paragraph ‘Suspension of Purchase and Redemption of Units’ in the Statement of Additional Information. 17. C ut off timing Subscriptions/Purchases including Switch - ins: for The following cut-off timings shall be observed by the Mutual Fund in respect subscriptions/ of purchase of units of the Scheme and the following NAVs shall be applied redemptions/ switches for such purchase: 1. where the application is received upto 3.00 pm on a Business day and This is the time funds are available for utilization before the cut-off time – the closing NAV before which of the Business day shall be applicable; your 2. where the application is received after 3.00 pm on a Business day and application funds are available for utilization on the same day or before the cut-off (complete in time of the next Business Day - the closing NAV of the next Business Day all respects) shall be applicable; should reach 3. irrespective of the time of receipt of application, where the funds are not the official available for utilization before the cut-off time - the closing NAV of Business points of day on which the funds are available for utilization shall be applicable. acceptance. For determining the applicable NAV for allotment of units in respect of purchase / switch in the Scheme, it shall be ensured that: i. Application is received before the applicable cut-off time. ii. Funds for the entire amount of subscription/purchase as per the application are credited to the bank account of the Scheme before the cut-off time. iii. The funds are available for utilization before the cut-off time. i. The aforesaid provisions shall also be applicable to systematic transactions like Systematic Investment Plan, Systematic Transfer Plan, etc offered by scheme. Redemptions including Switch - outs: The following cut-off timings shall be observed by the Mutual Fund in respect of Repurchase of units: a. where the application received upto 3.00 pm – closing NAV of the day of receipt of application; and b. an application received after 3.00 pm – closing NAV of the next Business Day. The above mentioned cut off timing shall also be applicable to transactions through the online trading platform. In case of Transaction through Stock Exchange Infrastructure, the Date of Acceptance will be reckoned as per the date & time; the transaction is entered in stock exchange’s infrastructure for which a system generated confirmation slip will be issued to the investor. 3218. M inimum There is no minimum balance requirement. balance to be SO – 36 maintained and consequenc es of non- maintenance 19. A ccounts The AMC shall send an allotment confirmation specifying the units allotted by Statements way of email and/or SMS within 5 working days of receipt of valid application/transaction to the Unit holders registered e-mail address and/ or mobile number (whether units are held in demat mode or in account SO - 61 statement form). The AMC/RTA shall dispatch a Consolidated Account Statement (CAS) detailing all the transactions across all mutual funds and holding at the end of the month shall be sent to the Unit holders in whose folio(s) transaction(s) have taken place during the month by mail or email on or before 15th of the succeeding month. For investor having demat account, the depositories shall dispatch a monthly consolidated statement with details across all schemes of mutual funds and securities held in dematerialized form across demat accounts and dispatch the same to investors who have opted for delivery via electronic mode (e- CAS) by the 12th day from the month end and to investors who have opted for delivery via physical mode by the 15th day from the month end. For folios where there are no transactions during the half – year, the AMC/RTA shall dispatch a half – yearly CAS at the end of every six months (i.e. September/March) on or before the 21st day of the succeeding month for holdings across all mutual funds at the end of the half-year. For folios where there are no transactions during the half – year , the depositories shall dispatch a consolidated statement (for investors having a demat account) i.e. half-yearly CAS at the end of every six months (i.e. September/ March) to investors that have opted for e-CAS on or before the 18th day of April and October and to investors who have opted for delivery via physical mode by the 21st day of April and October to all investors providing the prescribed details across all schemes of mutual funds and securities held in dematerialized form across demat accounts, if applicable For further details, refer SAI. 20. D ividend/ Currently. no IDCW will be declared under the Scheme. IDCW 21. R edemption The redemption or repurchase proceeds shall be dispatched to the unitholders within three working days from the date of redemption or repurchase. 33For list of exceptional circumstances refer para 14.1.3 of SEBI Master Circular for Mutual Funds Investors may kindly note that Units can be redeemed with the fund house only in Creation Unit Size / above a specified threshold. For detailed procedure on how to redeem, kindly refer SAI 22. B ank It is mandatory for investors to mention bank account details on the form. Mandate Applications without this information are liable to be rejected. The Mutual Fund SO - 62 / AMC reserve the right to hold redemption proceeds in case requisite bank details are not submitted. 23. D elay in The Asset Management Company shall be liable to pay interest to the payment of unitholders at rate as specified vide clause 14.2 of SEBI Master Circular for redemption/ Mutual Funds by SEBI for the period of such delay. repurchase proceeds/divi The AMC shall be liable to pay interest to the Unit holders at 15% or such other rate as may be prescribed by SEBI from time to time, in case the proceeds are dend not made within three (3) working Days of the date of redemption/ maturity. However, the AMC will not be liable to pay any interest or compensation or any amount otherwise, in case the AMC / Trustee is required to obtain from the Investor / Unit holders verification of identity or such other details relating to Subscription for Units under any applicable law or as may be requested by a Regulatory Agency or any government authority, which may result in delay in processing the application. 24.U nclaimed As per Para 14.3 of SEBI Master Circular on Mutual Funds as amended from Redemption and time to time, the unclaimed Redemption and IDCW amounts shall be Income deployed by the Fund in money market instruments and such other Distribution cum instruments/securities as may be permitted from time to time. The investment Capital management fee charged by the AMC for managing such unclaimed Withdrawal amounts shall not exceed 50 basis points. The circular also specifies that Amount investors who claim these amounts during a period of three years from the due date shall be paid at the prevailing NAV. Thus, after a period of three years, this amount can be transferred to a pool account and the investors SO - 53 can claim the said amounts at the NAV prevailing at the end of the third year. In terms of the circular, the onus is on the AMC to make a continuous effort to remind investors through letters to take their unclaimed amounts. The details of such unclaimed amounts shall be disclosed in the annual report sent to the Unit Holders. Further, according to Para 14.3 of SEBI Master Circular on Mutual Funds as amended from time to time the unclaimed Redemption amounts may be deployed in separate plan of Overnight scheme/Liquid scheme/Money market mutual fund scheme floated by Mutual Funds specifically for deployment of the unclaimed Redemption amounts. For further details, refer SAI 3425. D isclosure Following is the process for investments made in the name of a Minor through w.r.t a Guardian: - investment by minors • Payment for investment by any mode shall be accepted from the bank account of the minor, parent or legal guardian of the minor, or from a joint account of the minor with parent or legal guardian. SO – 37 • Mutual Fund will send an intimation to Unit holders advising the minor (on attaining majority) to submit an application form along with prescribed documents to change the status of the account from ‘minor’ to ‘major’. • All transactions / standing instructions / systematic transactions etc. will be suspended i.e. the Folio will be frozen for operation by the guardian from the date of beneficiary child completing 18 years of age, till the status of the minor is changed to major. Upon the minor attaining the status of major, the minor in whose name the investment was made, shall be required to provide all the KYC details, updated bank account details including cancelled original cheque leaf of the new bank account. • No investments (lumpsum/SIP/ switch in/ STP in etc.) in the scheme would be allowed once the minor attains majority i.e. 18 years of age till the status of the minor is changed to major. 26. P rinciples of Not Applicable incentive structure for market makers (for ETFs) 27. W hat are the Pursuant to Regulations, specifically the Seventh Schedule and amendments investment thereto, the following investment restrictions are currently applicable to the restrictions? Scheme: 1. The Mutual Fund under all its Scheme(s) shall not own more than ten per cent of any company’s paid up capital carrying voting rights or ten per cent of units of REITs issued by a single issuer. Provided, investment in the asset management company or the trustee company of a mutual fund shall be governed by clause (a), of sub- regulation (1), of regulation 7B. 2. No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity shares or equity related instruments of any company: Provided that, the limit of 10 per cent shall not be applicable for investments in case of index fund or exchange traded fund or sector or industry specific scheme Investments by index funds shall be in accordance with the weightage of the scrips in the specific index. 35All investments by a mutual fund scheme in equity shares and equity related instruments shall only be made provided such securities are listed or to be listed. 3. The Scheme shall not invest in unlisted debt instruments including commercial papers, except Government Securities and other money market instruments: Provided further that the Scheme shall comply with the norms under this clause within the time and in the manner as may be specified by the Board. Provided further that the norms for investments by the Scheme in unrated debt instruments shall be as specified by the Board from time to time. Further the investments by the Scheme shall be in compliance with Para 12.3 of Master Circular for Mutual Funds as amended by SEBI from time to time. Note: According to the Asset Allocation of the Scheme, the indicative allocation of the Scheme to Money Market Instruments and units of debt & liquid mutual fund schemes shall be in the range of 0% to 5% of the net assets of the Scheme, subject to conditions specified. 4. The Scheme may invest in other schemes of the Mutual Fund or any other mutual fund without charging any fees, provided the aggregate inter- scheme investment made by all the schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the Net Asset Value of the Fund. 5. The Scheme shall not make any investment in: a) any unlisted security of an associate or group company of the sponsor; or b) any security issued by way of private placement by an associate or group company of the sponsor; or c) the listed securities of group companies of the sponsor which is in excess of 25% of the net assets except for investments by equity-oriented exchange traded funds (ETFs) and Index Funds Provided that, Equity oriented ETFs and Index Funds, based on widely tracked and non-bespoke indices, can make investments in accordance with the weightage of the constituents of the underlying index. However, such investments shall be subject to an overall cap of 35% of net asset value of the scheme, in the group companies of the sponsor. 6. The Mutual Fund shall get the securities purchased transferred in the name of the Fund on account of the concerned Scheme, wherever investments are intended to be of a long-term nature. 367. Transfer of investments from one scheme to another scheme in the same Mutual Fund is permitted provided: a. such transfers are done at the prevailing market price for quoted instruments on spot basis (spot basis shall have the same meaning as specified by a Stock Exchange for spot transactions); and b. the securities so transferred shall be in conformity with the investment objective of the Scheme to which such transfer has been made. Further, inter scheme transfers shall be in accordance with the guidelines issued by Para 12.30 of Master Circular for Mutual Funds as SO - 30 amended from time to time. 8. The Mutual Fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relevant securities and in all cases of sale, deliver the securities. Provided that the Mutual Fund may engage in securities lending and borrowing specified by SEBI. Provided further that the Mutual Fund may enter into derivatives transactions in a recognized stock exchange, subject to the framework specified by SEBI. Provided further that sale of government security already contracted for purchase shall be permitted in accordance with the guidelines issued by the Reserve Bank of India in this regard. 9. The Scheme shall not make any investment in any fund of funds scheme. 10. Pending deployment of the funds of the Scheme in securities in terms of the investment objective of the Scheme, the AMC may park the funds of the Scheme in short term deposits of scheduled commercial banks, subject to the guidelines issued Para 12.16 of Master Circular for Mutual Funds and as amended from time to time: The Scheme will comply with the following guidelines/restrictions for parking of funds in short term deposits: i. “Short Term” for such parking of funds by the Scheme shall be treated as a period not exceeding 91 days. Such short-term deposits shall be held in the name of the Scheme. ii. The Scheme shall not park more than 15% of the net assets in short term deposit(s) of all the scheduled commercial banks put together. However, such limit may be raised to 20% with prior approval of the Trustee. iii. Parking of funds in short term deposits of associate and sponsor scheduled commercial banks together shall not exceed 20% of total deployment by the Mutual Fund in short term deposits. 37iv. The Scheme shall not park more than 10% of the net assets in short term deposit(s), with any one scheduled commercial bank including its subsidiaries. v. The Scheme shall not park funds in short term deposit of a bank which has invested in that Scheme. Further Trustees/ AMCs shall also ensure that the bank in which the Scheme has STD do not invest in the said scheme until the Scheme has STD with such bank. vi. The AMC will not charge any investment management and advisory fees for funds parked in short term deposits of scheduled commercial banks. However, the above provisions will not apply to term deposits placed as margins for trading in cash market. 11. The Scheme shall not advance any loans. 12. The Scheme shall not borrow except to meet temporary liquidity needs of the Scheme for the purpose of repurchase/redemption of Units or payment of interest to the Unit holders. Provided that the Scheme shall not borrow more than 20% of the net assets of the individual Scheme and the duration of the borrowing shall not exceed a period of 6 month. The Scheme will comply with the other Regulations applicable to the investments of Mutual Funds from time to time. 13. The Scheme will comply with the following restrictions for trading in exchange traded derivatives, as specified by SEBI vide its circulars issued from time to time: a) Position limit for the Mutual Fund in equity index options contracts a. Rs. 500 crores or 15% of the total open interest of the market in index options, whichever is higher, per stock exchange. b. This limit would be applicable on open positions in all options contracts on a particular underlying index. b) Position limit for the Mutual Fund in equity index futures contracts: a. The Mutual Fund position limit in all index futures contracts on a particular underlying index shall be Rs.500 crores or 15% of the total open interest of the market in index futures, whichever is higher, per stock exchange. b. This limit would be applicable on open positions in all futures contracts on a particular underlying index. c) Additional position limit for hedging In addition to the position limits at point (i) and (ii) above, the Mutual Fund may take exposure in equity index derivatives subject to the following limits: a. Short positions in index derivatives (short futures, short calls and long puts) shall not exceed (in notional value) the Mutual Fund’s holding of stocks. 38b. Long positions in index derivatives (long futures, long calls and short puts) shall not exceed (in notional value) the Mutual Fund’s holding of cash, government securities, Treasury Bills and similar instruments. d) Position limit for Mutual Fund for stock based derivative contracts The Mutual Fund position limit in a derivative contract on a particular underlying stock, i.e. stock option contracts and stock futures contracts, is defined in the following manner:- a. The combined futures and options position limit shall be 20% of the applicable Market Wide Position Limit (MWPL). e) Position limit for each scheme of a Mutual Fund The scheme-wise position limit / disclosure requirements shall be: i. For stock option and stock futures contracts, the gross open position across all derivative contracts on a particular underlying stock of a scheme of a Mutual Fund shall not exceed the higher of 1% of the free float market capitalization (in terms of number of shares) or 5% of the open interest in the derivative contract on a particular underlying stock (in terms of number of contracts). ii. This position limits shall be applicable on the combined position in all derivative contracts on an underlying stock at a Stock Exchange. iii. For index based contracts, Mutual Funds shall disclose the total open interest held by its scheme or all schemes put together in a particular underlying index, if such open interest equals to or exceeds 15% of the open interest of all derivative contracts on that underlying index. 14. The Mutual Fund/AMC shall make investment out of the NFO proceeds only on or after the closure of the NFO period. The Mutual Fund/ AMC can however deploy the NFO proceeds in TREPS before the closure of NFO period. However, AMCs shall not charge any investment management and advisory fees on funds deployed in TREPS during the NFO period. The appreciation received from investment in TREPS shall be passed on to investors. Further, in case the minimum subscription amount is not garnered by the scheme during the NFO period, the interest earned upon investment of NFO proceeds in TREPS shall be returned to investors, in proportion of their investments, along-with the refund of the subscription amount. 15. In terms of Para 3.4 of Master Circular for Mutual Funds which specifies the portfolio concentration norms as follows, shall be complied with respect to the underlying Index: • The index has a minimum of 10 stocks as its constituents. • No single stock in the index shall have more than 35% weight in the index. • The weightage of the top three constituents of the index, cumulatively shall not be more than 65% of the Index. 39• The individual constituent of the index shall have a trading frequency greater than or equal to 80% and an average impact cost of 1% or less over the previous six months. The benchmark shall be in compliance of the aforesaid norms. 16. Para 12.25 of its master circular for Mutual Fund as amended from time to time has prescribed the following investment restrictions w.r.t. investment in derivatives: S. Particulars No. 1 The cumulative gross exposure through equity, debt, derivative positions, and repo transactions, other permitted securities/assets and such other securities/assets as may be permitted by the Board from time to time should not exceed 100% of the net assets of the Scheme. Cash or cash equivalents with residual maturity of less than 91 days shall be treated as not creating any exposure. 2 The Scheme shall not write options or purchase instruments with embedded written options. 3 The total exposure related to option premium paid shall not exceed 20% of the net assets of the Scheme. 4 Exposure due to hedging positions may not be included in the above mentioned limits subject to the following: a. Hedging positions are the derivative positions that reduce possible losses on an existing position in securities and till the existing position remains. b. Hedging positions cannot be taken for existing derivative positions. Exposure due to such positions shall have to be added and treated under limits mentioned in Point 1. c. Any derivative instrument used to hedge has the same underlying security as the existing position being hedged. d. The quantity of underlying associated with the derivative position taken for hedging purposes does not exceed the quantity of the existing position against which hedge has been taken. 5 Exposure due to derivative positions taken for hedging purposes in excess of the underlying position against which the hedging position has been taken, shall be treated under the limits mentioned in point 1. 6 Each position taken in derivatives shall have an associated exposure as defined under. Exposure is the maximum possible loss that may occur on a position. However, certain derivative positions may theoretically have unlimited possible loss. Exposure in derivative positions shall be computed as follows: Position Exposure Long Future Futures Price * Lot Size * Number of Contracts Short Future Futures Price * Lot Size * Number of Contracts Option bought Option Premium Paid * Lot Size * Number of Contracts. 7 (a) Mutual Funds may enter into plain vanilla Interest Rate Swaps (IRS) for hedging purposes. The value of the notional principal in such cases must not exceed the value of respective existing assets being hedged 40by the scheme. (b) In case of participation in IRS is through over the counter transactions, the counter party has to be an entity recognized as a market maker by RBI and exposure to a single counterparty in such transactions should not exceed 10% of the net assets of the scheme. However, if mutual funds are transacting in IRS through an electronic trading platform offered by the Clearing Corporation of India Ltd. (CCIL) and CCIL is the central counterparty for such transactions guaranteeing settlement, the single counterparty limit of 10% shall not be applicable 17. Investment in Partly Paid Debenture, if undertaken, will be subject to a cap on maximum investment of Mutual Fund Scheme at 5% of the AUM of the scheme. However, once the Partly Paid Debentures are fully paid up, the cap on maximum investment of Mutual Fund Scheme at 5% of the AUM of the scheme will not apply. The limits specified for debt and money market instruments are subject to the Asset Allocation of the Scheme. The Scheme will comply with the other Regulations applicable to the investments of Mutual Funds from time to time. Any transactions undertaken in the scheme portfolio in order to meet the redemption and subscription obligations shall be done while ensuring that post such transactions replication of the portfolio with the index is maintained at all points of time. All the investment restrictions will be applicable at the time of making investments. SO - 19 Apart from the investment restrictions prescribed under SEBI (MF) Regulations, the fund may follow any internal norms vis-à-vis limiting exposure to a particular scrip or sector, etc. The AMC/Trustee may alter these above stated restrictions from time to time to the extent the Regulations change, so as to permit the Scheme to make its investments in the full spectrum of permitted investments for mutual funds to achieve its respective investment objective. 28.W hat are the The scheme follows a passive investment strategy. Investment Strategies? The Scheme would invest in stocks comprising the underlying index and shall track the underlying index. The Scheme may also invest in Money Market SO – 27 Instruments and units of debt & liquid mutual fund schemes, in compliance with Regulations to meet liquidity and expense requirements. The Scheme aims to invest in stocks forming part of the underlying Index in the same ratio as per the index to the extent possible and to that extent follow a passive investment strategy, except to the extent of meeting liquidity and expense requirements. Events like the constituent stocks becoming illiquid in the cash 41market, the index provider changing the constituents, a large dividend going ex but lag in its receipts, etc. tend to increase the tracking error. DERIVATIVES STRATEGY The Scheme may invest in various derivative instruments which are permissible under the applicable regulations. Such investments shall be subject to the investment objective and strategy of the Scheme and the internal limits if any, as laid down from time to time. Investment in equity derivatives of underlying securities shall be undertaken in instances of portfolio rebalancing or unavailability of the securities, in cases of events such as corporate action, etc. for short term and defensive considerations. These include but are not limited to stock futures and stock options. Derivatives are financial contracts of pre-determined fixed duration, like stock futures/options, whose values are derived from the value of an underlying primary financial instrument such as: interest rates, exchange rates, commodities, and equities. Derivatives can be either exchange traded or can be over the counter (OTC). Exchange traded derivatives are listed and traded on stock exchanges whereas OTC derivative transactions are generally structured between two counterparties. The objectives of the various strategies include earning option premium / portfolio against market gyrations. The risks associated with derivatives are similar to those associated with underlying investments. The additional risks of using derivative strategies could be on account of: • Illiquidity; • Potential mis - pricing of the Futures/Options; • Lack of opportunity; • Inability of derivatives to correlate perfectly with the underlying (Indices, Assets, Exchange Rates); • An exposure to derivatives can also limit the profits from a genuine investment transaction; • The prices which are seen on the screen need not be the same at which execution will take place. For detailed risks associated with use of derivatives, please refer paragraph “Scheme Specific Risk Factors”. Exchange traded derivatives Contracts in stocks and indices in India are currently cash settled at the time of maturity. Derivatives allowed for mutual funds are only exchange traded and not OTC. Concepts and Examples of derivatives which may be used by the fund manager: According to regulations, investment in equity derivatives of underlying 42securities shall be allowed in instances of portfolio rebalancing or unavailability of the securities. Derivative Contract on underlying securities- There are derivative contracts based on individual securities. The profitability of stock derivative as compared to individual security will inter-alia depend upon: • The carrying cost, • The interest available on surplus funds, and • The transaction cost. Example of a typical future trade and the associated costs: Actual Stock Purchas Particulars Future e of Stock Stock at the beginning of the month 17,500 17,500 Price of 1 month stock future 17,650 A. Execution cost: Carry and other stock future 150 costs B. Brokerage cost: Assumed at - 35 43.75 0.2% for stock futures and 0.25% for spot Stocks C. Gains on surplus fund: (Assumed 8% p.a. return on 85% of the money left after paying 15% margin) 100 (8%*17650*85%*30 days/365) Total Cost (A+B-C) 85 43.75 Risk: On the date of expiry, when the trade is to be unwound, it is not necessary for the stock price and its future contract to coincide. There could be a discrepancy in their prices even a minute before the market closes. Thus, there is a possibility that the trade will get unwound at different prices. Option Contracts (Stock Options) An Option gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed-upon price during a certain period of time or on a specific date. Option contracts are of following two types - Call and Put. Call Option: A call option gives the buyer, the right to buy specified quantity of the underlying asset at the set strike price on or before expiration date and the seller (writer) of call option however, has the obligation to sell the underlying asset if the buyer of the call option decides to exercise the option to buy. 43Put Option: A put option gives the buyer the right to sell specified quantity of the underlying asset at the set strike price on or before expiration date and the seller (writer) of put option however, has the obligation to buy the underlying asset if the buyer of the put option decides to exercise his option to sell. Options Risk / Return Pay-off Table Stock Options Buy Call Sell Buy Put Sell Put Call 1 Premium Pay Receiv Pay Receive e 2 Risk Potential Limited to Unlimit Limited to Unlimited premium ed premium paid paid 3 Return Potential Unlimited Premiu Unlimited Premium m Received Receiv ed Risk: The options buyer's risk is limited to the premium paid. However, the gains of an options writer are limited to the premiums earned. The exchange may impose restrictions on exercise of options and may also restrict the exercise of options at certain times in specified circumstances, and this could impact on the value of the portfolio. The writer of a call option bears a risk of loss if the value of the underlying asset increases above the exercise price. The Scheme bears a risk that it may not be able to correctly forecast future market trends or the value of assets, indices or other financial or economic factors in establishing derivative positions for the Scheme. The risks are also different when stock futures are bought/sold vis-a-vis stocks options as in the case of a stock future there is a mark to market variation and the risk is much higher as compared to buying an option, where the risk is limited to the extent of premium paid. The illustration below explains call / put option for individual securities. Call Option Suppose an investor buys a Call option on 1 lot of Stock XYZ (Lot Size: 50 units) • Stock XYZ Option (European option). • Stock XYZ 1 Lot Size: 50 units • Spot Price (S): 17,500 • Strike Price (x): 17,550 (Out-of-Money Call Option) • Premium: 100 Total Amount paid by the investor as premium [50*100] =5,000 There are two possibilities i.e. either the stock moves up over the strike price or remains below the strike price. Case 1- The stock goes up 44• An investor sells the Stock XYZ Option described above before expiry: Suppose the Stock XYZ moves up to 17,600 in the spot market and the premium has moved to Rs 200 and there are 15 days more left for the expiry. The investor decides to reverse his position in the market by selling his 1 Stock XYZ call option as the option now is In the Money. His gains are as follows: • Stock XYZ Spot: 17,600 • Current Premium: Rs.200 • Premium paid: Rs.100 • Net Gain: Rs.200- Rs.100 = Rs.100 per unit • Total gain on 1 lot of Stock XYZ (50 units) = Rs. 5,000 (50*100) In this case the premium of Rs.200 has an intrinsic value of Rs.100 per unit and the remaining Rs.100 is the time value of the option. • An investor exercises the Stock XYZ Option at expiry : Suppose the Stock XYZ moves up to 17,700 in the spot market on the expiry day and the investor decides to reverse his position in the market by exercising the Stock XYZ call option as the option now is ‘in The Money’. His gains are as follows: • Stock XYZ Spot: 17,700 • Premium paid: Rs.100 • Exercise Price: 17,550 • Receivable on exercise: 17,700-17,550 = 150 • Total Gain: Rs. 2,500 {(150-100) *50} In this case the realised gain is only the intrinsic value, which is Rs.50, and there is no time value. Case 2 - The Stock XYZ moves to any level below 17,550 Then the investor does not gain anything but on the other hand his loss is limited to the premium paid: Net Loss is Rs. 5,000 (Loss is capped to the extent of Premium Paid) (Rs 100 Premium paid*Lot Size: 50 units). Put Option Suppose an investor buys a Put option on 1 lot of Stock XYZ. • Stock XYZ 1 Lot Size: 50 units • Spot Price (S): 17,500 • Strike Price (x): 17,450 (Out-of-Money Put Option) • Premium: 30 • Total Amount paid by the investor as premium [50*30] = Rs. 1,500 There are two possibilities i.e. either the Stock XYZ moves over the strike price or moves below the strike price. Let us analyze these scenarios. Case 1 - The Stock XYZ goes down • An investor sells the Stock XYZ Option before expiry: Suppose the Stock XYZ moves down to 17,400 in the spot market and the 45premium has moved to Rs. 80 and there are 15 days more left until the expiry. The investor decides to reverse his position in the market by selling his 1 Stock XYZ Put Option as the option now is In The Money. His gains are as follows: • Stock XYZ Spot: 17,400 • Premium paid: Rs.30 • Net Gain: Rs.80 - Rs.30 = Rs.50 per unit • Total gain on 1 lot of Stock XYZ (50 units) = Rs. 2,500 (50*50) In this case the premium of Rs.80 has an intrinsic value of Rs.50 per unit and the remaining Rs.30 is the time value of the option. •An investor exercises the Stock XYZ Option at expiry (It is an European Option): Suppose the Stock XYZ moves down to 17,400 in the spot market on the expiry day and the investor decides to reverse his position in the market by exercising the Stock XYZ Put Option as the option now is In The Money. His gains are as follows: • Stock XYZ Spot: 17,400 • Premium paid: Rs.30 • Exercise Price: 17,450 • Gain on exercise: 17,450-17,400 = 50 • Total Gain: Rs. 1,000 {(50-30)*50} In this case the realised amount is only the intrinsic value, which is Rs.50, and there is no time value in this case. Case 2 - If the Stock XYZ stays over the strike price which is 17,450, in the spot market then the investor does not gain anything but on the other hand his loss is limited to the premium paid. • Stock XYZ Spot: >17,450 • Net Loss Rs.1,500 (Loss is caped to the extent of Premium Paid) (Rs 30 Premium paid*Lot Size: 50 units). Investment in derivatives are subject to certain risks, details of which are enumerated under section ‘Risks associated with investments in derivatives’. For details of risk factors relating to use of Derivatives, the investors are advised to refer to Scheme Specific Risk Factors. 29.W here will the The corpus of the Scheme will be invested in Equity & Equity related Scheme Invest? instruments forming part of the constituents of the underlying index. The scheme will track Nifty India Defence TRI and is a passively managed scheme. In case of any change in the index due to corporate actions or SO – 29 change in the constituents of the underlying index the relevant investment decision will be determined considering the composition of the index. The scheme would invest in stocks comprising the underlying index. The Fund may also invest in Money Market Instruments and units of debt & liquid mutual 46fund schemes in compliance with Regulations to meet liquidity and expense requirements. Equity Instruments 1. Equity share is a security that represents ownership interest in a company. 2. Equity Related Instruments are securities which give the holder of the security right to receive Equity Shares on pre agreed terms. It includes convertible bonds, convertible debentures, equity warrants, convertible preference shares, etc. The Scheme shall invest in Equity shares of constituents of Nifty500 Momentum 50 Index, however it may be entitled to and receive Equity Related instruments of such entities by way of corporate action. Equity related instruments also include Real Estate Investment Trust (REITs). REIT is a trust which holds real estate assets which is managed by an investment manager. The unitholders in the trust have proportional interest in the underlying holdings of the trust. 3. Equity Derivatives are financial instruments, generally traded on an exchange, the price of which is directly dependent upon (i.e., “derived from”) the value of equity shares or equity indices. Derivatives involve the trading of rights or obligations based on the underlying, but do not directly transfer property. The Scheme will take exposure to equity derivatives through stock futures/options and index futures and options of constituents of the underlying index. Futures: Futures are exchange-traded contracts to sell or buy financial instruments for future delivery at an agreed price. There is an agreement to buy or sell a specified quantity of financial instrument on a designated future date at a price agreed upon by the buyer and seller at the time of entering into a contract. A futures contract involves an obligation on both the parties to fulfill the terms of the contract. SEBI has permitted futures contracts on indices and individual stocks with maturity of 1 month, 2 months and 3 months on a rolling basis. The futures contracts are settled on last Thursday (or immediately preceding trading day if Thursday is a trading holiday) of each month. The final settlement price is the closing price of the underlying stock(s)/index. Debt & Money Market Instruments Certificate of Deposit (CD) Certificate of Deposit is a negotiable money market instrument issued by scheduled commercial banks and select all-India Financial Institutions that have been permitted by the RBI to raise short term resources. The maturity period of CDs issued by the Banks is between 7 days to one year, whereas, in case of FIs, maturity is one year to 3 years from the date of issue. Commercial Paper (CP) Commercial Paper is an unsecured negotiable money market instrument issued in the form of a promissory note, generally issued by the corporates, primary dealers and all India Financial Institutions as an alternative source of short term borrowings. CP is traded in secondary market and can be freely 47bought and sold before maturity. Treasury Bill (T-Bills) Treasury Bills are issued by the Government of India to meet their short term borrowing requirements. TBills are issued for maturities of 14 days, 91 days, 182 days and 364 days. The Scheme may also invest in Cash Management Bill (CMB) issued by the Government of India to meet their short term borrowing requirements. CMB are generally issued for maturities of less than 91 days. Commercial Usance Bills Bill (bills of exchange/promissory notes of public sector and private sector corporate entities) Rediscounting, usance bills and commercial bills. Repos Repo (Repurchase Agreement) or Reverse Repo is a transaction in which two parties agree to sell and purchase the same security with an agreement to purchase or sell the same security at a mutually decided future date and price. The transaction results in collateralized borrowing or lending of funds. Presently in India, corporate debt securities, Government Securities, State Government Securities and T-Bills are eligible for Repo/Reverse Repo. Tri-party repo means a repo contract where a third entity (apart from the borrower and lender), called a Tri-Party Agent, acts as an intermediary between the two parties to the repo to facilitate services like collateral selection, payment and settlement, custody and management during the life of the transaction. The Scheme may undertake repo or reverse repo transactions in accordance with the directions issued by RBI and SEBI from time to time. Such investment shall be made subject to the guidelines which may be prescribed by the Board of Directors of the Asset Management Company and Trustee Company. The Scheme may invest in securities created and issued by the Central and State Governments as may be permitted by RBI, securities guaranteed by the Central and State Governments (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills). State Government securities (popularly known as State Development Loans or SDLs) are issued by the respective State Government in co-ordination with the RBI. Non-Convertible Debentures Non-convertible debentures are securities issued by companies / institutions promoted / owned by the Central or State Governments and statutory bodies which may or may not carry a Central/State Government guarantee, Public and private sector banks, all India Financial Institutions and Private Sector Companies. These instruments may have fixed or floating rate coupon. These instruments may be secured or unsecured against the assets of the Company 48and generally issued to meet the short term and long term fund requirements. The Scheme may also invest in the non-convertible part of convertible debt securities. Units of debt and liquid mutual fund schemes The scheme may invest in units of debt and liquid mutual fund schemes of Axis AMC or of other mutual funds in terms of the prevailing SEBI (MF) Regulations. Provided that such investment will be within the limits specified under SEBI (MF) Regulations and will be done for cash management purposes. Short Term Deposits Pending deployment of funds as per the investment objective of the Scheme, the funds may be parked in short term deposits of the Scheduled Commercial Banks, subject to guidelines and limits issued by Para 12.16 of Master Circular for Mutual Funds. The securities / instruments mentioned above and such other securities the Scheme is permitted to invest in could be listed, unlisted, privately placed, secured, unsecured, rated and of any maturity. The securities may be acquired through initial public offering (IPOs), secondary market, private placement, rights offers, negotiated deals, etc. Further investments in debentures, bonds and other fixed income securities will be in instruments which have been assigned investment grade rating by the Credit Rating Agency. The Fund Manager may invest in any other security as maybe permitted from time to time and which are in line with the investment objectives of the Scheme. 30.D isclosure on The AMC shall review Risk-o-meters on a monthly basis based on evaluation Risk-o-meter of risk level of Scheme’s month end portfolio. Any change in risk-o-meter of and Benchmark the scheme or its benchmark shall be communicated by way of Notice cum Risk-o-meter: Addendum and by way of an e-mail or SMS to unitholders of that particular SO – 38s cheme. Investors may also refer to the website/portfolio disclosure for the latest Risk-o-meter of the Scheme. 31.D isclosure on The AMC has provided on its website Scheme Summary Document which is Scheme a standalone scheme document for all the Schemes which contains all the Summary details of the Scheme viz. Scheme features, Fund Manager details, Document (SSD) investment details, investment objective, expense ratios, portfolio details, etc. https://www.axismf.com/statutory-disclosures SO – 38 32.D isclosure on Tracking Error - The tracking error based on past one year rolling data, on a Tracking Error daily basis shall be disclosed on the website of AMC (www.axismf.com) and and Tracking of the Association of Mutual Funds in India - AMFI (www.amfiindia.com). Difference Tracking Difference - the Scheme shall also disclose the tracking difference SO – 39 i.e. the annualized difference of daily returns between the underlying Index and the NAV of the Index Fund shall also be disclosed on the website of the AMC and AMFI, on a monthly basis, for tenures 1 year, 3 year, 5 year, 10 year and since the date of allotment of units. 4933.F u ndamental Following are the Fundamental Attributes of the scheme, in terms of Regulation Attributes 18 (15A) of the SEBI (MF) Regulations: SO – 60 i. Type of a scheme An Open-Ended Index Fund tracking Nifty India Defence TRI. ii. Investment Objective Main Objective: To provide returns before expenses that correspond to the performance of Nifty India Defence TRI subject to tracking error. There is no assurance that the investment objective of the Scheme will be achieved. SO - 5 Investment Pattern: Please refer to Section – I Part – II A ‘How will the Scheme Allocates its Asset?’ iii. Terms of Issue o Liquidity provisions such as listing, Repurchase, Redemption. ‘(Please refer to relevant provisions on listing, repurchase, redemption in Section II - Part II - Point G ‘Other Details’). o Aggregate fees and expenses charged to the Scheme (please refer to Section I – Part III C “Annual Scheme Recurring Expenses”). o Any safety or guarantee net provided. – Not applicable for the Scheme In accordance with Regulation 18(15A) of the SEBI (MF) Regulations and Regulation 25(26) of the SEBI (MF) Regulations, read with clause 1.14.1.4 and 17.10 of SEBI Master Circular for Mutual Funds, the Trustees and AMC shall ensure that no change in the fundamental attributes of the Scheme(s) and the Plan(s) / Option(s) thereunder or the trust or fee and expenses payable or any other change which would modify the Scheme(s) and the Plan(s) / Option(s) thereunder and affect the interests of Unitholders is carried out unless: iv. SEBI has reviewed and provided its comment on the proposal v. a written communication about the proposed change is sent to each unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; and vi. The Unitholders are given an option for a period of atleast 30 calendar days to exit at the prevailing Net Asset Value without any exit load SO - 60 The Sponsor-Axis Bank Ltd, is not liable or responsible for any loss or shortfall resulting from the operation of the scheme Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. 50