Axis Nifty Capital Markets Index Fund

SCHEME INFORMATION DOCUMENT SO - 1 Axis Nifty Capital Markets Index Fund (An Open-Ended Index Fund tracking Nifty Capital Markets TRI) SO - 3 This product is suitable for investors who are Scheme Risk-o-meter Benchmark Risk-o-meter seeking*: • Long term wealth creation solution • An index fund that invests in constituents of Nifty Capital Markets Index and aims to achieve returns of the stated total return index, subject to tracking error. Nifty Capital Markets TRI *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. (The product labelling assigned during the New Fund Offer is based on internal assessment of the Scheme Characteristics or model portfolio and the same may vary post NFO when actual investments are made) Offer of Units of Rs. 10 each during the New Fund Offer and Continuous offer for Units at NAV based prices: New Fund Offer Opens on : New Fund Offer Closes on : Scheme re-opens on or before : Within five Business Days from the date of allotment Name of Mutual Fund : Axis Mutual Fund Name of Asset Management : Axis Asset Management Company Ltd. Company Name of Trustee Company : Axis Mutual Fund Trustee Ltd Addresses, Website of the entities : One Lodha Place, 22nd & 23rd Floor, Senapati Bapat Marg, Lower Parel, Mumbai, Maharashtra, Pin Code – 400013 www.axismf.com Name of the Sponsor : Axis Bank Ltd. 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, along with a Due Diligence Certificate from the AMC. 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. The investors are advised to refer to the Statement of Additional Information (SAI) for details of Axis Mutual Fund, Standard Risk Factors, Special Considerations, Tax and Legal issues and general information on www.axismf.com. 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 (Section I and II) should be read in conjunction with the SAI and not in isolation. 1 Axis Nifty Capital Markets Index FundThis Scheme Information Document is dated _______. Index Disclaimer: The Axis Nifty Capital Markets 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 Capital Markets 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 Capital Markets 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 Capital Markets 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 do not guarantee the accuracy and/or the completeness of the Nifty Capital Markets 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 Capital Markets 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. 2 Axis Nifty Capital Markets Index FundTABLE OF CONTENTS Part I. HIGHLIGHTS/SUMMARY OF THE SCHEME .......................................................................... 5 DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY ........................................................ 11 Part II. INFORMATION ABOUT THE SCHEME ............................................................................... 12 A. HOW WILL THE SCHEME ALLOCATE ITS ASSETS? ............................................................ 12 B. WHERE WILL THE SCHEME INVEST?................................................................................... 14 C. WHAT ARE THE INVESTMENT STRATEGIES? ....................................................................... 14 D. HOW WILL THE SCHEME BENCHMARK ITS PERFORMANCE? .......................................... 19 E. WHO MANAGES THE SCHEME? ........................................................................................ 19 F. HOW IS THE SCHEME DIFFERENT FROM EXISTING SCHEMES OF THE MUTUAL FUND? .. 20 H. ADDITIONAL SCHEME RELATED DISCLOSURES ............................................................... 20 Part III. OTHER DETAILS .................................................................................................................. 21 A. COMPUTATION OF NAV ................................................................................................... 21 B. NEW FUND OFFER (NFO) EXPENSES ................................................................................. 22 C. ANNUAL SCHEME RECURRING EXPENSES ....................................................................... 22 D. LOAD STRUCTURE .............................................................................................................. 25 E. REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME .............................................. 26 Section II ........................................................................................................................................ 27 I. Introduction ....................................................................................................................... 27 A. Definitions/interpretation ................................................................................................. 27 B. Risk factors ........................................................................................................................ 27 C. Risk mitigation strategies ................................................................................................. 30 RISK CONTROL ............................................................................................................................... 30 II. Information about the scheme: ...................................................................................... 31 A. Where will the scheme invest – ...................................................................................... 31 The scheme would invest in stocks comprising the underlying index. The Fund may also invest in Debt Instruments, Money Market Instruments in compliance with Regulations to meet liquidity and expense requirements. ................................. Error! Bookmark not defined. B. What are the investment restrictions? ............................................................................ 35 C. Fundamental Attributes ................................................................................................... 40 D. Index methodology - Disclosures regarding the index, index eligibility criteria, methodology, index service provider, index constituents, impact cost of the constituents. 41 • Index reconstitution will be done on a semi-annual basis in the month of June and December based on six months data ending May and November respectivelyError! Bookmark not defined. • Stocks that do not qualify the eligibility criteria mentioned above will be compulsorily excluded from the index and replaced with non-member eligible stocksError! Bookmark not defined. • Top 25 ranked stocks on the basis of Quality score are compulsorily included in the index, whereas existing stocks in the index whose rank goes beyond 75 are compulsorily excluded from the index ....................................... Error! Bookmark not defined. • Apart from the scheduled semi-annual review, additional ad-hoc reconstitution and rebalancing of the index may be initiated in case any of the index constituents undergoes suspension or delisting or scheme of arrangementError! Bookmark not defined. • 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. Error! Bookmark not defined. E. Principles of incentive structure for market makers (for ETFs) – Not Applicable ...... 42 F. Floors and ceiling within a range of 5% of the intended allocation against each sub class of asset, as per clause 13.6.2 of SEBI master circular for mutual funds . (only for close ended debt schemes) – Not Applicable ........................................................................ 42 G. Other Scheme Specific Disclosures: .............................................................................. 42 3 Axis Nifty Capital Markets Index FundIII. Other Details ..................................................................................................................... 52 A. In case of Fund of Funds Scheme, Details of Benchmark, Investment Objective, Investment Strategy, TER, AUM, Year wise performance, Top 10 Holding/ link to Top 10 holding of the underlying fund should be provided – Not Applicable .................................. 52 B. Periodic Disclosures ......................................................................................................... 52 C. Transparency/NAV Disclosure ....................................................................................... 54 D. Transaction charges and stamp duty- .......................................................................... 54 E. Associate Transactions- Please refer to Statement of Additional Information (SAI)54 F. Taxation- ........................................................................................................................... 54 G. Rights of Unitholders- Please refer to SAI for details. ................................................... 59 H. List of official points of acceptance: For Details of official points of acceptance, please refer our website https://www.axismf.com/statutory-disclosures ............................ 59 I. Penalties, Pending Litigation or Proceedings, Findings of Inspections or Investigations For Which Action May Have Been Taken Or Is In The Process Of Being Taken By Any Regulatory Authority ........................................................................................... 59 For details, please refer our website: https://www.axismf.com/statutory-disclosures ........ 59 4 Axis Nifty Capital Markets Index FundSECTION I Part I. HIGHLIGHTS/SUMMARY OF THE SCHEME Sr. Title Description No. I. Name of the scheme Axis Nifty Capital Markets Index Fund (‘The Scheme’) II. Category of the Index Fund Scheme III. Scheme type An Open-Ended Index Fund tracking Nifty Capital Markets TRI IV. Scheme code SO - 7 V. Investment objective To provide returns before expenses that correspond to the performance of Nifty Capital Markets TRI subject to tracking error. SO - 5 There is no assurance that the investment objective of the scheme will be achieved. VI. Liquidity/listing details The Scheme offers Units for Subscription and Redemption at NAV based prices 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. VII. Benchmark (Total Benchmark: Nifty Capital Markets TRI Return Index) Justifications of Benchmark: The scheme aims to provide returns before expenses that closely correspond to the Nifty Capital Markets 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. VIII. NAV disclosure First NAV of the Scheme: within a period of 5 Business days from the date of allotment. Subsequently, by 11.00 p.m. on every Business Day on AMC (www.axismf.com) and AMFI website. Further Details in Section II. IX. Applicable timelines Timeline for 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 5 Axis Nifty Capital Markets Index Fundrepurchase proceeds within prescribed timelines. Dispatch of IDCW: Not Applicable X. Plans and Options Plans Plans/Options and sub options under the 1. Axis Nifty Capital Markets Index Fund – Regular Plan Scheme 2. Axis Nifty Capital Markets 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. XI. Load Structure Entry Load: Not Applicable Para 10.4 of SEBI Master Circular on Mutual Funds as amended from time to time has decided that there shall be no entry load for all Mutual Fund schemes. SO - 48 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 For more details on Load Structure, please refer paragraph “Load Structure”. XII. Minimum Application 1. During NFO: Amount/switch in Rs. 100 and in multiples of Re. 1/- thereafter 2. 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. 6 Axis Nifty Capital Markets Index FundXIII. Minimum Additional Rs. 100 and in multiples of Re. 1/- thereafter Purchase Amount XIV. Minimum Redemption/ There will be no minimum redemption criterion. switch out amount XV. New Fund Offer Period NFO opens on: NFO closes on: The New Fund Offer shall be kept open for a minimum of 3 working days. SO - 34 The AMC/Trustee reserves the right to extend the closing date of the New Fund Offer Period, subject to the condition that the New Fund Offer shall be not kept open for a minimum of 3 working days and maximum 15 days. Any changes in the NFO dates shall be announced by way of an addendum on the website of the AMC. XVI. New Fund Offer Price Rs. 10/- per Unit XVII. Segregated portfolio/ The Scheme has the provision for segregated portfolio. For details side pocketing kindly refer SAI. SO - 54 disclosure XVIII Swing pricing disclosure The Scheme does not have provision for swing pricing. SO - 55 XIX. Stock lending/short The Scheme may engage in stock lending subject to percentage selling as specified in asset allocation, for details, kindly refer SAI. The Scheme shall not engage in short selling. For details, kindly refer SAI. XX. How to Apply "Investors can undertake transactions in the Schemes of Axis Mutual Fund either through physical, online / electronic mode or any other mode as may be prescribed from time to time. SO - 35 Physical Transactions For making application for subscription / redemption / switches, 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. For further details of online / electronic mode please refer SAI." XXI. 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. 7 Axis Nifty Capital Markets Index FundInvestor 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 For any grievances with respect to transactions through BSE StAR and / or NSE MFSS, the investors / Unit Holders should approach either the stock broker or the investor grievance cell of the respective stock exchange. XXII Specific attribute of the Not Applicable scheme XXIII Special product/facility A. During NFO: available for NFO and on ongoing basis 1. Systematic Investment Plan 2. Systematic Transfer Plan 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 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) 8 Axis Nifty Capital Markets Index Fund4. SWITCHING OPTIONS 1) Inter – Scheme Switching option 2) Intra –Scheme Switching option 5. Online Schedule Transaction Facility The details pertaining to Frequency / Minimum installments / Minimum amount of SIP / SWP / STP are as follows: 1. Systematic Investment Plan Investors shall have an option of choosing any date of the Month from 1st to 28th or last date of the Month as his SIP date. Minimum amount and minimum installments for Daily, Weekly, monthly and yearly frequency under SIP Facility is as follows Frequency under Minimum Minimum SIP amount SIP Facility Installments Daily 6 Installments Rs. 100/- and in multiple of Re. 1/- Weekly 6 Installments Rs. 100/- and in multiple of Re. 1/- Monthly 6 Installments Rs. 100/- and in multiple of Re. 1/- Yearly 3 Installments Rs. 12,000/- and in multiple of Re. 1/- 2. Systematic Transfer Plan Investors can opt for the Systematic Transfer Plan by investing a lumpsum amount in one scheme of the fund and providing a standing instruction to transfer sums at following intervals into any other scheme (as may be permitted by the Scheme Information Document of the respective schemes) of Axis Mutual Fund. Minimum Minimum STP Cycle Date Amount (in Installmen Frequency Rs.) t Daily Monday To Friday 1,000/- 6 Weekly Monday To Friday 1,000/- 6 Fortnightly Alternate 1,000/- 6 Wednesday Monthly 1st, 7th, 10th, 15th or 1,000/- 6 25th Quarterly 1st, 7th, 10th, 15th or 3,000/- 2 25th 3. Systematic Withdrawal Plan There are five options available under SWP viz. Weekly option, Monthly option, quarterly option, Half Yearly and Yearly option. The details of which are given below: Weekly Monthl Quarterl Half Yearl Option y y Option Yearly y Option Option Optio n 9 Axis Nifty Capital Markets Index FundMinimum value Rs. 1,000/- of SWP Additional Re.1 amount in multiples of Dates of SWP Any 1/5/10/15/25* Installment Busine ss Day Minimum No. of Five Six Four Four Two SWP * In the event that such a day is a holiday, the withdrawals would be affected on the next business day. For further details of special products / facilities / Modes of Transactions, kindly refer SAI. XXIV Weblink • TER for last 6 months / Daily TER: . Not applicable as the Scheme is a new scheme • Scheme factsheet: Not applicable as the Scheme is a new scheme INTERPRETATION For all purposes of this Scheme Information Document, except as otherwise expressly provided or unless the context otherwise requires: • all references to the masculine shall include the feminine and all references, to the singular shall include the plural and vice-versa. • all references to "dollars" or "$" refer to United States Dollars and "Rs" refer to Indian Rupees. A "crore" means "ten million" and a "lakh" means a "hundred thousand". • all references to timings relate to Indian Standard Time (IST). • References to a day are to a calendar day including a non-Business Day. • All reference to SEBI Master Circular would refer to SEBI Master Circular for Mutual Funds dated June 27, 2024 as amended from time to time. 10 Axis Nifty Capital Markets Index FundDUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY SO - 56 It is confirmed that: (i) The Scheme Information Document submitted to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time. (ii) All legal requirements connected with the launching of the Scheme as also the guidelines, instructions, etc., issued by the Government and any other competent authority in this behalf, have been duly complied with. (iii) The disclosures made in the Scheme Information Document are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the Scheme. (iv) The intermediaries named in the Scheme Information Document and Statement of Additional Information are registered with SEBI and their registration is valid, as on date. (v) The contents of the Scheme Information Document including figures, data, yields etc. have been checked and are factually correct (vi) A confirmation that the AMC has complied with the compliance checklist applicable for Scheme Information Documents and other than cited deviations/ that there are no deviations from the regulations (vii) 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. (viii) The Trustees have ensured that the Scheme approved by them is a new product offered by Axis Mutual Fund and is not a minor modification of any existing scheme/fund/product. Date: _________ Name: Darshan Kapadia Place: Mumbai Designation: Compliance Officer 11 Axis Nifty Capital Markets Index FundPart II. INFORMATION ABOUT THE SCHEME A. HOW WILL THE SCHEME ALLOCATE ITS ASSETS? Under normal circumstances, the asset allocation pattern will be: Indicative allocations Instruments (% of total assets) Minimum Maximum Securities covered under Nifty Capital Markets Index* 95 100 Money Market Instruments^ and units of debt & liquid 0 5 mutual fund schemes *The net assets of the scheme will be invested in stocks constituting the Nifty Capital Markets 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. ^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. SO – 13 & 21 The Scheme may take an exposure to equity derivatives of constituents of the underlying index upto 15% of the Net assets of the Scheme. Such exposure to equity derivatives of constituents of the underlying Index would be taken for a short duration when securities of the Index are unavailable, insufficient, for rebalancing at the time of change in the constituents of Index or in case of corporate actions. 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, the AMC may invest funds as part of the total assets in Tri-Party Repos in Government Securities. 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. The scheme shall dispose the security not forming part of the underlying index within 7 days from the date of listing. Similarly, unlisted securities received in the event of corporate action will be disposed by the Fund Manager in line with the investment objective of the Scheme. The cumulative gross exposure through equity, debt and money market instruments 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. SO – 14 & 17 The Scheme shall not invest in Overseas securities/ADR/GDR, Securitized debt, REIT / 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 12 Axis Nifty Capital Markets Index FundThe Scheme may invest up to 5% of the net assets of the Scheme in units of debt and liquid mutual fund schemes of Axis AMC or of other mutual funds. 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 25% weight in the index. • The weightage of the top three constituents of the index, cumulatively 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. SO – 19 & 20 Indicative Table (Actual instrument/percentages may vary subject to applicable SEBI circulars) Sr. No. Type of Instrument Percentage of exposure Circular references 1. Derivatives for non- There is no separate limit for Para 7.5 and Para 12.25 hedging purposes derivatives for non-hedging of SEBI Master Circular purposes. Please refer above para for Mutual Funds for exposure in derivatives 2. Securities Lending The Scheme shall adhere to the Para 12.11 of SEBI Master and borrowing following limits to engage in Stock Circular for Mutual Lending. Funds as amended 1. Not more than 20% of the from time to time. 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/ intermediary (as may be applicable). 3. Tri party Repo Allocation may be made to TREPS - from any amounts that are pending deployment or on account of any adverse market situation. 4. Mutual Fund Units The Scheme may invest up to 5% Clause 4 of of the net assets of the Scheme in Seventh Schedule units of debt and liquid mutual of SEBI (MF) fund schemes of Axis AMC or of Regulations, 1996 other mutual funds. 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. SO - 18 The Scheme shall not invest in following instruments: Sr. No. Type of Instrument 13 Axis Nifty Capital Markets Index Fund1 Securitized Debt 2 Overseas Securities 3 REITS and InVITS 4 Credit default swaps 5 Debt Instruments with special features AT1 and AT2 Bonds 6 Repo and Reverse repo in corporate debt securities 7 Debt instruments having Credit Enhancement /Structured Obligations 8 The Scheme shall not undertake short selling 9 Unrated Debt Securities Timelines for deployment of funds collected in New Fund Offer (NFO) as per 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. B. WHERE WILL THE SCHEME INVEST? Following is list of all instruments in which the scheme will invest: • Equity and Equity Related Instruments covered under Nifty Capital Markets Index • Derivatives • Debt Instruments & Money Market Instruments • Units of debt and liquid Mutual Fund schemes • Short Term Deposits The Scheme shall invest in any other instruments as may be permitted by SEBI/RBI from time to time in line with the investment objective of the Scheme. Kindly refer detailed definitions and applicable regulations/guidelines for each instruments given in the Section II. C. WHAT ARE THE INVESTMENT STRATEGIES? The Scheme follows a passive investment strategy. SO - 13 14 Axis Nifty Capital Markets Index FundThe Scheme would invest in stocks comprising the underlying index and shall track the underlying index. The Scheme may also invest in debt and money market instruments, 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 market, 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. These include but are not limited to futures (both stock and Index) and options (stock and Index). 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 hedge stock / 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); • Cost of hedge can be higher than adverse impact of market movements; • An exposure to derivatives in excess of the hedging requirements can lead to losses; • 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: Futures In case the Nifty 50 near month future contract is trading at say, Rs. 17,500, and the fund manager has a view that it will depreciate going forward; the Scheme can initiate a sale transaction of Nifty futures at Rs. 17,500 without holding a portfolio of equity stocks or any other underlying long equity position. Once the price falls to Rs. 17,000 after say, 20 days, the Scheme can initiate a square-up transaction by buying the said futures and book a profit of Rs. 500. Correspondingly, if the fund manager has a positive view he can initiate a long position in the index / stock futures without an underlying cash/ cash equivalent subject to the extant regulations. There are futures based on stock indices as mentioned above as also futures based on individual stocks. The profitability of index /stock future as compared to an individual security will inter-alia depends upon: • The carrying cost, • The interest available on surplus funds, and 15 Axis Nifty Capital Markets Index Fund• The transaction cost. Example of a typical future trade and the associated costs Index Actual Purchase Particulars Future of Stocks Index at the beginning of the month 17,500 17,500 Price of 1 month future 17,650 A. Execution cost: Carry and other index future costs 150 B. Brokerage cost: Assumed at 35.30 43.75 0.2% of Index Future 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) (8%*17650*85%*30 0 98.65 days/365) Total Cost (A+B-C) 87 38.75 Some strategies that employ stock /index futures and their objectives: (a) Use of derivatives for portfolio rebalancing and efficient portfolio management: In case the Scheme holds the stock of a company “A” at say Rs. 100 while in the futures market it trades at a discount to the spot price say at Rs. 98, then the Scheme may sell the stock and buy the futures. On the date of expiry of the stock future, the Scheme may reverse the transactions (i.e. buying at spot & selling futures) and earn a risk-free Rs. 2 (2% absolute) on its holdings without any dilution of the view of the fund manager on the underlying stock. Further, the Scheme can still benefit from any movement of the price in the upward direction, i.e. if on the date of expiry of the futures, the stock trades at Rs. 110 which would be the price of the futures too, the Scheme will have a benefit of Rs 10 whereby the Scheme gets the 10% upside movement together with the 2% benefit on the arbitrage and thus getting a total return of 12%. The corresponding return in case of holding the stock would have been 10%. Note: The same strategy can be replicated with a basket of Nifty- 50 stocks (Synthetic Nifty) and the Nifty future index. (2) Buying spot and selling future: Where the stock of a company “A” is trading in the spot market at Rs. 100 while it trades at Rs. 102 in the futures market, and in case the scheme has a long position in the futures of that company, then the Scheme may buy the stock at spot and sell in the futures market to switch exposure to cash equity. Risk: On the date of expiry, when the arbitrage 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 arbitrage strategy gets unwound at different prices. (b) Buying/ Selling Stock/Index future: Where the stock of a company “A” is trading in the spot market at Rs. 100 while it trades at Rs. 102 in the futures market, then the Scheme may buy the stock at spot and sell in the futures market thereby earning Rs. 2. Buying the stock in cash market and selling the futures results into a hedge where the Scheme has locked in a spread and is not affected by the price movement of cash market and futures market. The arbitrage position can be continued till expiry of the future contracts when there is a convergence between the cash market and the futures market. This convergence enables the Scheme to generate the arbitrage return locked in earlier. Risk: On the date of expiry, when the arbitrage is to be unwound, it is not necessary for the stock price 16 Axis Nifty Capital Markets Index Fundand 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 arbitrage strategy gets unwound at different prices. Option Contracts (Stock and Index) 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. Options are used to manage risk or as an investment to generate income. The price at which underlying security is contracted to be purchased or sold is called the Strike Price. Options that can be exercised on or before the expiration date are called American Options while, Options that can be exercised only on the expiration date are called European Options. Options Risk / Return Pay-off Table Stock / Index Options Buy Call Sell Call Buy Put Sell Put 1 View on underlying Positive Negative Negative Positive 2 Premium Pay Receive Pay Receive 3 Risk Potential Limited to Unlimited Limited to Unlimited premium paid premium paid 4 Return Potential Unlimited Premium Unlimited Premium Received Received 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. Put 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. 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. Index Options / Stock Options Index options / Stock options are termed to be an efficient way of buying / selling an index/stock compared to buying / selling a portfolio of physical shares representing an index for ease of execution and settlement. The participation can be done by buying / selling either Index futures or by buying a call/put option. The risks are also different when index /stock futures are bought/sold vis-a-vis index/ stocks options as in case of an index 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 how one can gain using Index call / put option. These same principles of profit / loss in an Index option apply in totality to that for a stock option. Call Option Suppose an investor buys a Call option on 1 lot of Nifty 50 (Lot Size: 50 units) • Nifty index (European option). • Nifty 1 Lot Size: 50 units 17 Axis Nifty Capital Markets Index Fund• 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 index moves up over the strike price or remains below the strike price. Case 1- The index goes up • An investor sells the Nifty Option described above before expiry: Suppose the Nifty 50 Index 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 Nifty call option as the option now is In the Money. His gains are as follows: • Nifty 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 Nifty (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 Nifty Option at expiry Suppose the Nifty index 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 Nifty call option as the option now is ‘in The Money’. His gains are as follows: • Nifty 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 Nifty index 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 Nifty 50. • Nifty 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 index moves over the strike price or moves below the strike price. Let us analyze these scenarios. Case 1 - The index goes down • An investor sells the Nifty Option before expiry: Suppose the Nifty 50 Index moves down to 17,400 in the spot market and the premium has moved to Rs. 80 and there are 15 days more left for the expiry. The investor decides to reverse his position in the market by selling his 1 Nifty Put Option as the option now is In The Money. His gains are as follows: 18 Axis Nifty Capital Markets Index Fund• Nifty Spot: 17,400 • Premium paid: Rs.30 • Net Gain: Rs.80 - Rs.30 = Rs.50 per unit • Total gain on 1 lot of Nifty (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 Nifty Option at expiry (It is an European Option) Suppose the Nifty index 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 Nifty Put Option as the option now is In The Money. His gains are as follows: • Nifty 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 Nifty 50 index 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. • Nifty 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). For details pertaining to Risk Controls and Risk Mitigation refer Point no. C Part I of Section II of the Scheme Information Document. Investment in derivatives are subject to certain risks, details of which are enumerated under section ‘Risks associated with investments in derivatives’. 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. For details pertaining to Risk Controls and Risk Mitigation refer Point no. C Part I of Section II of the Scheme Information Document. D. HOW WILL THE SCHEME BENCHMARK ITS PERFORMANCE? For details refer Point no. VII – Part I - Section I of the Scheme Information Document. E. WHO MANAGES THE SCHEME? SO - 33 Name of Age and Experience of Names of other schemes under his/her Fund Qualification the Fund management Manager Manager Mr. Karthik Age: 42 years Total number Axis Arbitrage Fund Kumar Qualifications: of years of Axis Quant Fund (Managing • M.B.A – experience: Axis NIFTY 50 Index Fund since Krannert 16 years, his Axis NIFTY Next 50 Index Fund Inception) School of last 10 years’ 19 Axis Nifty Capital Markets Index FundManagement, experience Axis NIFTY Bank ETF Purdue are as follows: Axis Nifty Smallcap 50 Index Fund University, USA • Axis Asset Axis Nifty Midcap 50 Index Fund • C.F.A (USA) Management Axis NIFTY IT ETF • B.E Company Axis NIFTY Healthcare ETF (Mechanical) Limited Axis Multi Factor Passive FoF – Sardar Patel June 2019 – Till Axis BSE SENSEX ETF College of date Axis BSE Sensex Index Fund Engg, • SilverTree Axis NIFTY 100 Index Fund Mumbai Hong Kong Axis NIFTY 50 ETF University April 2017 – Axis NIFTY India Consumption ETF May 2019 Axis Nifty IT Index Fund • Asiya Axis NIFTY Bank Index Fund Investment, Axis Nifty 500 Index Fund Hong Kong Axis Nifty500 Value 50 Index Fund Sept 2008 – Axis Income Plus Arbitrage Active FOF Feb 2017 Axis Momentum Fund Axis Nifty500 Momentum 50 Index Fund Axis Nifty500 Value 50 ETF Axis Nifty500 Quality 50 Index Fund F. HOW IS THE SCHEME DIFFERENT FROM EXISTING SCHEMES OF THE MUTUAL FUND? Axis Nifty Capital Markets Index Fund, an Open-Ended Index Fund tracking Nifty Capital Markets TRI is a new scheme offered by Axis Mutual Fund and is not a minor modification of any other existing scheme/product of Axis Mutual Fund. Differentiation is as follows: a. Reference list of existing equity Index Funds of Axis Mutual Fund are as follows: Sr. No. Name of the scheme(s) 1 Axis Nifty 100 Index Fund 2 Axis Nifty 50 Index Fund 3 Axis Nifty Next 50 Index Fund 4 Axis Nifty Smallcap 50 Index Fund 5 Axis Nifty Midcap 50 Index Fund 6 Axis Nifty IT Index Fund 7 Axis BSE Sensex Index Fund 8 Axis Nifty Bank Index Fund 9 Axis Nifty 500 Index Fund 10 Axis Nifty500 Value 50 Index Fund 11 Axis Nifty500 Momentum 50 Index Fund 12 Axis Nifty500 Quality 50 Index Fund b. For detailed comparative table on ‘How the Scheme is different from existing schemes of Axis Mutual Fund’, please refer our website: https://www.axismf.com/statutory-disclosures G. HOW HAS THE SCHEME PERFORMED? This Scheme being a new scheme, it does not have any performance track record. H. ADDITIONAL SCHEME RELATED DISCLOSURES i.Scheme’s portfolio holdings (top 10 holdings by issuer and fund allocation towards various sectors): - Not applicable as the scheme is a new Scheme. ii. Disclosure of name and exposure to Top 7 issuers, stocks, groups and sectors as a percentage of NAV of the scheme in case of debt and equity ETFs/index funds through a functional website link that contains detailed description – Not applicable as the scheme is a new Scheme. 20 Axis Nifty Capital Markets Index Fundiii. Functional website link for Portfolio Disclosure - Fortnightly / Monthly/ Half Yearly: Not applicable as the scheme is a new Scheme. iv. Portfolio turnover ratio for the one-year period - Not applicable as the scheme is a new Scheme. v. Aggregate investment in the Scheme by Concerned scheme’s Fund Manager(s): Sr. C ategory Of Persons Net Value Market Value (in Rs.)* No. Units as on__ NAV (Rs. per unit) Axis Nifty Capital Not applicable as the scheme is a new Scheme. 1 Markets Index Fund– Fund Manager(s) For any other disclosure w.r.t investments by key personnel and AMC directors including regulatory provisions in this regard kindly refer SAI. vi. Investments of AMC in the Scheme – SO - 59 Subject to the applicable Regulations, the AMC may invest either directly or indirectly, in the Scheme during New Fund offer period or Ongoing Offer Period. However, the AMC shall not charge any investment management fee on such investments in the Scheme. Further, in terms of requirement of the Regulations, the AMC shall invest such amounts in Scheme, based on the risks associated with the Scheme, as may be specified by the SEBI from time to time. Please refer the AMC website https://www.axismf.com/statutory-disclosures for detailed AMC Investments in Scheme(s) of Axis Mutual Fund The above disclosers are not applicable as the Scheme is a new Scheme. Part III. OTHER DETAILS A.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 Fair Value + Current Assets including - Current Liabilities of Scheme’s Accrued Income and Provisions NAV (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 different Plan. The NAVs of the Growth Option and the IDCW Option under each of the Plans will be different after the declaration of the first IDCW. The AMC will calculate and disclose the first NAV of the Scheme within a period of 5 business days from the date of allotment. Subsequently, the NAVs will be calculated and disclosed on all the Business Days. Illustration of Computation of NAV: SO - 43 21 Axis Nifty Capital Markets Index FundThe computation of NAV per unit using various components is explained as follows: Particulars Amount in Rs Market or Fair Value of Scheme’s Investments .... (A) 10,00,00,000.00 Add: Current Assets including Accrued Income ...(B) 75,34,345.00 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. 10.4534 per unit (rounded off to four decimals) The Mutual Fund will ensure that the Redemption Price will not be lower than 95% of the Applicable NAV. For other details such as policies w.r.t computation of NAV, rounding off procedure in case of delay in disclosure of NAV etc. refer to SAI B. NEW FUND OFFER (NFO) EXPENSES These expenses are incurred for the purpose of various activities related to the NFO like sales and distribution fees paid marketing and advertising, registrar expenses, printing and stationery, bank charges etc. C. ANNUAL SCHEME RECURRING EXPENSES These are the fees and expenses for operating the scheme. These expenses include but are not limited to Investment Management and Advisory Fee charged by the AMC, Registrar and Transfer Agents’ fee, marketing and selling costs etc. as given in the table below: 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 Mutual Fund. 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 Cost of fund transfer from location to location Cost of providing account statements and redemption cheques and warrants Costs of statutory Advertisements Cost towards investor education & awareness (at least 1 bps) SO - 44 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 52(6)(b) Upto 1.00% Additional expenses under regulation 52(6A)(c) Upto 0.05% Additional expenses for gross new inflows from specified cities under Regulation Upto 0.30% SO - 47 52(6A)(b)# *Any other expenses which are directly attributable to the Scheme, may be charged with the 22 Axis Nifty Capital Markets Index Fundapproval of the Trustee within the overall limits as specified in the Regulations except those expenses which are specifically prohibited. 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: In 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 for gross new inflows from specified cities expenses not exceeding of 0.30 per cent of daily net assets, if the new inflows from such cities as specified by SEBI/AMFI from time to time are at least - (i) 30 per cent of gross new inflows in the Scheme, or; (ii) 15 per cent of the average assets under management (year to date) of the Scheme, whichever is higher: Provided that if inflows from such cities is less than the higher of sub-clause (i) or sub-clause (ii), such expenses on daily net assets of the Scheme shall be charged on proportionate basis. Provided further that, expenses charged under this clause shall be utilised for distribution expenses incurred for bringing inflows from such cities. Provided further that amount incurred as expense on account of inflows from such cities shall be credited back to the Scheme in case the said inflows are redeemed within a period of one year from the date of investment. 23 Axis Nifty Capital Markets Index FundProvided further that, additional TER can be charged based on inflows only from retail investors from B30 cities in terms of Para 10.1 of SEBI master circular for Mutual Fund. For this purpose inflows of amount upto Rs 2,00,000/- per transaction, by individual investors shall be considered as inflows from “retail investor”. #Note: Pursuant to SEBI letter dated February 24, 2023 read with AMFI communication dated March 02, 2023, w.e.f March 01, 2023 no additional expense shall be charged on the new inflows received on or after March 01, 2023 from specified cities as per Regulation 52 (6A) (b) till any further guidance is received from SEBI in this regard. (b) 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; (c) GST payable on investment and advisory service fees (‘AMC fees’) charged by Axis Asset Management Company Limited; (d) 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 of at least 1 basis points on daily net assets of respective Scheme. 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 website (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: Impact of Expense Ratio on Scheme's return: 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 and transaction charges, if any) under the Growth Option, the impact of expenses charged will be as under: 24 Axis Nifty Capital Markets Index FundSr. Particulars Regular Direct No.1 Plan Plan A. Amount invested at the beginning of the year (Rs.) 10,000 10,000 B. Returns before expenses (Rs.) 1,500 1,500 C. Expenses other than the expenses mentioned in ‘D’ below 50 50 (Rs.) D. Marketing & Selling expense incl. agent commission (Rs.) 150 0 E. Returns after expenses at the end of the year (Rs.) [B – (C + D)] 1300 1450 Returns after expenses at the end of the year (in %) [(E/A) – 1] 13% 14.5% Note(s): 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 the 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. D. LOAD STRUCTURE Load is an amount which is paid by the Investor to redeem the Units from the Scheme. This amount is used by the AMC to pay commission to the distributors and to take care of other marketing and selling expenses. Load amounts are variable and are subject to change from time to time. For the current applicable structure, investors may refer to the website of the AMC (www.axismf.com) or may call at contact number 8108622211 (Chargeable) from 9.00 am to 6.30 pm (Monday to Saturday) or can contact his distributor. Para 10.4 of SEBI Master Circular for Mutual Funds as amended from time to time has decided that there shall be no entry Load for all Mutual Fund Schemes. SO - 48 Type of Load Load chargeable (as %age of NAV) Exit Load For details refer Point no. XI of Part – I of Section I of the Scheme Information Document. 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. For switches within the Scheme from Regular to Direct Plan or vice versa, no exit load shall be charged. 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. 25 Axis Nifty Capital Markets Index FundAt 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). E. REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME The Scheme shall have a minimum of 20 Investors and no single Investor shall account for more than 25% of the corpus of the Scheme. However, if such limit is breached during the NFO of the Scheme, the Fund will endeavour to ensure that within a period of three months or the end of the succeeding calendar quarter from the close of the NFO of the Scheme, whichever is earlier, the Scheme complies with these two conditions. In case the Scheme does not have a minimum of 20 Investors in the stipulated period, the provisions of Regulation 39(2)(c) of the SEBI (MF) Regulations would become applicable automatically without any reference from SEBI and accordingly the Scheme shall be wound up and the units would be redeemed at Applicable NAV. The two conditions mentioned above shall also be complied within each subsequent calendar quarter thereafter, on an average basis, as specified by SEBI. If there is a breach of the 25% limit by any Investor over the quarter, a rebalancing period of one month would be allowed and thereafter the investor who is in breach of the rule shall be given 15 days’ notice to redeem his exposure over the 25% limit. Failure on the part of the said Investor to redeem his exposure over the 25% limit within the aforesaid 15 days would lead to automatic Redemption by the Mutual Fund at the Applicable NAV on the 15th day of the notice period. The Fund shall adhere to the requirements prescribed by SEBI from time to time in this regard. 26 Axis Nifty Capital Markets Index FundSection II I. Introduction A. Definitions/interpretation For details refer website of Axis Mutual Fund: https://www.axismf.com/statutory-disclosures B. Risk factors SO - 8 Scheme Specific Risk Factors Risks associated with Passive investments strategy The Scheme will be a passively managed scheme providing exposure to constituents of Nifty Capital Markets 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. Tracking Error Risk: SO - 10 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. 7. 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 Capital Markets Index The Nifty Capital Markets Index consists of maximum 20 companies from its parent Nifty 500 index. 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. 27 Axis Nifty Capital Markets Index FundGiven 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 Scheme, 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, allotment 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 28 Axis Nifty Capital Markets Index Fundthe 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 leverage 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 Risks Associated with Interest Rate Futures Although hedging with interest rate futures allows investors to reduce interest rate risk, it generally cannot completely eliminate risk. All hedges generally contain some residual, or basis, risk. Moreover, hedging also introduces some other risks. Some of those risks are credit risk, marking to market risk, and managerial risk. Basis risk: The risk that remains after an investor hedges his portfolio is called basis risk. An investor who hedges his portfolio with interest rate futures bears basis risk because, when interest rates change, the change in the price of the futures contract does not perfectly offset the change in the price of the asset being hedged. Fixed income asset prices can change for reasons other than changes in interest rates. As a result, the basis risk in a hedge will be relatively high when factors other than interest rates are an important source of the changes in the price of the asset being hedged. For example, an asset's price will fall if the issuer's credit rating falls or if the asset is relatively illiquid and a 29 Axis Nifty Capital Markets Index Fundlarge amount is sold. Since these factors would not affect the prices of interest rate futures, such as Treasury bond futures, interest rate futures cannot offset price changes caused by such factors. In fact, that is why Treasury bond futures proved to be a less effective hedging instrument for the corporate bond than for the Treasury bond portfolio. Credit risk: Individuals do not have to be concerned about the opposite party defaulting on a futures contract because every futures exchange has a clearing organization that is a party to every futures contract in order to guarantee the integrity of the contract. That is, the clearing house is the seller in every contract bought and the buyer in every contract sold. But the risk remains that an investor will end up with an un- hedged open futures position if there is a default on the asset being hedged. For example, suppose an investor in corporate bonds hedges his portfolio against changes in interest rates by selling interest rate futures. If interest rates fall, the prices of the bond and futures will rise. Since futures were sold, the investor would suffer losses on the futures, but those losses would be offset by the gains on the bonds. If the bond issuer defaults, though, the investor would have the losses on his futures position but no gains to offset the losses. C. Risk mitigation strategies SO - 9 RISK CONTROL 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 Capital Markets TRI as closely as possible 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. Risk control would include managing risk in order to keep it in line with the investment objective of the Scheme. The AMC has incorporated adequate safeguards to manage risk in the portfolio construction process. The risk control process involves identifying & measuring the risk through various Risk Measurement Tools. Further, the AMC has implemented the Bloomberg Portfolio Management System as Front Office System (FOS) for managing risk. The system has inbuilt feature which enables the Fund Manager calculate various risk ratios and analyze the same. 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 given 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. 30 Axis Nifty Capital Markets Index FundRisk 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. 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 hedging, portfolio 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. II. Information about the scheme: A. Where will the scheme invest – SO - 29 The corpus of the Scheme will be invested in Equity & Equity related instruments forming part of the constituents of the underlying index. The scheme will track Nifty Capital Markets TRI and is a passively managed scheme. In case of any change in the index due to corporate actions or 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 Debt Instruments, and Money Market Instruments in compliance with Regulations to meet liquidity and expense requirements. 31 Axis Nifty Capital Markets Index FundEquity 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 Nifty Capital Markets TRI, however it may be entitled to and receive Equity Related instruments of such entities by way of corporate action. 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 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 bought and sold before maturity. Treasury Bill (T-Bills) Treasury Bills are issued by the Government of India to meet their short term borrowing requirements. T-Bills 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. 32 Axis Nifty Capital Markets Index FundTri-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. 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 conformity with the investment objective of the Scheme and 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. Debt and Money Markets in India The Indian debt market is today one of the largest in Asia and includes securities issued by the Government (Central & State Governments), public sector undertakings, other government bodies, financial institutions, banks and corporates. Government and public sector enterprises are the predominant borrowers in the markets. The major players in the Indian debt markets today are banks, financial institutions, mutual funds, insurance companies, primary dealers, trusts, pension funds and corporates. The Indian debt market is the largest segment of the Indian financial markets. The debt market comprises broadly two segments, viz. Government Securities market or G-Sec market and corporate debt market. The latter is further classified as market for PSU bonds and private sector bonds. The Government Securities (G-Secs) market, consists of G-Sec outstanding of Rs. 81,94,730.225 cr as on May 09, 2022(State Govt securities - Rs 42,19,393.100 cr, (as on Mar’22) Source: CCIL), is the oldest and the largest component (50% share in market cap) of the Indian debt market in terms of market capitalization, outstanding securities and trading volumes. The G-Secs market plays a vital role in the Indian economy as it provides the benchmark for determining the level of interest rates in the country through the yields on the Government Securities which are referred to as the risk-free rate of return in any economy. Over the years, there have been new products introduced by the RBI like zero coupon bonds, floating rate bonds, inflation indexed bonds, etc. 33 Axis Nifty Capital Markets Index FundThe corporate bond market, in the sense of private corporate sector raising debt through public issuance in capital market, is only an insignificant part of the Indian Debt Market. A large part of the issuance in the non-Government debt market is currently on private placement basis. The money markets in India essentially consist of the call money market (i.e. market for overnight and term money between banks and institutions), repo transactions (temporary sale with an agreement to buy back the securities at a future date at a specified price), commercial papers (CPs, short term unsecured promissory notes, generally issued by corporates), certificate of deposits (CDs, issued by banks) and Treasury Bills (issued by RBI). In a predominantly institutional market, the key money market players are banks, financial institutions, insurance companies, mutual funds, primary dealers and corporates. In money market, activity levels of the Government and nongovernment debt vary from time to time. Instruments that comprise a major portion of money market activity include but not limited to: • Overnight Call • Tri Party Repo • Repo/Reverse Repo Agreement • Treasury Bills • Government securities with a residual maturity of < 1 year. • Commercial Paper • Certificate of Deposit Apart from these, there are some other options available for short tenure investments that include MIBOR linked debentures with periodic exit options and other such instruments. Though not strictly classified as Money Market Instruments, PSU / DFI / Corporate paper with a residual maturity of < 1 year, are actively traded and offer a viable investment option. The market has evolved in past 2-3 years in terms of risk premia attached to different class of issuers. Bank CDs have clearly emerged as popular asset class with increased acceptability in secondary market. PSU banks trade the tightest on the back of comfort from majority government holding. Highly rated manufacturing companies also command premium on account of limited supply. However, there has been increased activity in papers issued by private/foreign banks/NBFCs/companies in high-growth sector due to higher yields offered by them. Even though companies across these sectors might have been rated on a same scale, the difference in the yield onsssss the papers for similar maturities reflects the perception of their respective credit profiles. The following table gives approximate yields prevailing on September 30, 2025 on some of the instruments and further illustrates this point. Instrument Current Yield range (%) Tri-party Repo 5.40/5.45 Repo 5.40/5.45 3M T-bill 5.40/5.45 1Y T-bill 5.55/5.60 10Y G-sec 6.50/6.55 3m PSU Bank CD 5.85/5.90 3m Manufacturing co. CP 5.90/5.95 1Y PSU Bank CD 6.30/6.35 1Y NBFC CP 6.75/6.85 1Y Manufacturing co. CP 6.45/6.50 5Y AAA Institutional Bond 6.90/6.95 10Y AAA Institutional Bond 7.15/7.20 Source: Bloomberg These yields are indicative and do not indicate yields that may be obtained in future as interest rates keep changing consequent to changes in macro-economic conditions and RBI policy. The price and yield on various debt instruments fluctuate from time to time depending upon the macro economic 34 Axis Nifty Capital Markets Index Fundsituation, inflation rate, overall liquidity position, foreign exchange scenario etc. Also, the price and yield vary according to maturity profile, credit risk etc. B. What are the investment restrictions? Pursuant to Regulations, specifically the Seventh Schedule and amendments thereto, the following investment restrictions are currently applicable to the 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. 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. All 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 Debt and Money market instruments 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 35 Axis Nifty Capital Markets Index Fundunderlying 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. 7. 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 amended from time to time. SO - 30 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. iv. 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. 36 Axis Nifty Capital Markets Index Fund12. 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. b. 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: a. 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). b. This position limits shall be applicable on the combined position in all derivative contracts on an underlying stock at a Stock Exchange. c. 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. 37 Axis Nifty Capital Markets Index Fund15. 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. • Weight of the stock in the index is derived by multiplying the square root of the free float market cap with the quality score of that stock. • 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 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. No. Particulars 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: Hedging positions are the derivative positions that reduce possible losses on an existing position in securities and till the existing position remains. 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. Any derivative instrument used to hedge has the same underlying security as the existing position being hedged. 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 by 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 38 Axis Nifty Capital Markets Index Fundlimit of 10% shall not be applicable 17. The Scheme shall participate in repos in corporate debt securities as per the guidelines issued by SEBI and/ or RBI from time to time and the guidelines framed by the Board of Directors of Trustee Company and the Asset Management Company, from time to time. At present the following conditions and norms shall apply to repo in corporate debt securities: (i) The gross exposure of the Scheme to repo transactions in corporate debt securities shall not be more than 10% of the net assets of the Scheme. (ii) The cumulative gross exposure through repo transactions in corporate debt securities along with equity, debt and derivatives shall not exceed 100% of the net assets of the Scheme. (iii) The Scheme shall participate in repo transactions only in AA and above rated corporate debt securities. (iv) The Scheme shall borrow through repo transactions only if the tenor of the transaction does not exceed a period of six months. (v) The Trustee and the Asset Management Company have framed guidelines interalia considering the following aspects: i. Category of counterparty ii. Credit rating of counterparty iii. Tenor of collateral iv. Applicable haircuts (vi) Counterparty selection & credit rating The counterparty must be an acceptable counterparty for debt transactions. The Mutual Fund follows a counterparty empanelment process for fixed income transactions and the same shall be used for selection of counterparties for corporate bond repos. All repo transactions in corporate bonds will be governed by a repo agreement as specified by FIMMDA and / or other specified authorities. (vii) Collateral tenor & quality The exposure limit/investment restrictions prescribed under the Seventh Schedule of the Regulations and circulars issued there under (wherever applicable) shall be applicable to repo transactions in corporate bonds. The Scheme shall further follow guidelines framed by Trustee and the AMC from time to time. (viii) Applicable haircuts Currently mutual funds are permitted to carry out repo transactions in government securities without any haircuts. The Reserve Bank of India has notified a minimum haircut based on rating of the corporate bond and other securities. In addition, the Fixed Income and Money Market Dealers Association (FIMMDA) would maintain a rating-haircut matrix on an ongoing basis. The Scheme shall further follow guidelines framed by Trustee and the AMC from time to time. The haircuts seek to protect the lender of funds from the event of the counterparty failing to honor the repurchase leg of the repo. In such a circumstance, the Fund would suffer a loss if the value of the collateral depreciates by more than the haircut. The fall in the value of the collateral could be on account of higher yields and/ or deterioration of credit quality. As the typical tenor of repos is short (typically overnight), the haircuts represent a relatively high degree of safety in relation to the interest rate risk on the collateral. The risk of collateral depreciation based on historical volatility is given in the table below: Bond Tenor (yrs) 1 3 5 10 Price Volatility (%) (annualized) 0.6 1.2 1.7 3.4 Repo Tenor Number of standard deviations needed to lose 10% 1 day 258 136 94 48 7 days 98 52 36 18 In the above table, the price volatility of a 10-year bond is about 3.4% annualized. That is a 10% price move represents nearly a 3-sigma event on an annualized basis. For overnight tenors, this represents a 48-sigma event (for comparison a 6-sigma event occurs about once in a million observations). It is apparent that the haircuts stipulated by RBI are more than sufficient to mitigate interest rate risk. Credit event risk remains (the collateral could default during the tenor of the repo). This risk is to be mitigated by 39 Axis Nifty Capital Markets Index Fundensuring that the collateral is acceptable from a credit point of view. 18. 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. 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. SO - 19 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. C. Fundamental Attributes SO - 60 Following are the Fundamental Attributes of the scheme, in terms of Para 1.14 of SEBI Master Circular for Mutual Funds .: (i) Type of a scheme An Open-Ended Index Fund tracking Nifty Capital Markets TRI (ii) Investment Objective Main Objective: To provide returns before expenses that correspond to the performance of Nifty Capital Markets TRI subject to tracking error. There is no assurance that the investment objective of the scheme will be achieved. Investment Pattern: Please refer to Section – I Part – II A. ‘How will the Scheme Allocate its Assets?’. o (iii) Terms of Issue Liquidity provisions such as listing, Repurchase, Redemption. ‘(Please refer to relevant provisions on o listing, repurchase, redemption in Section II - Part II - Point G ‘Other Details’). Aggregate fees and expenses charged to the Scheme (please refer to Section I – Part III C “Annual o Scheme Recurring Expenses”). Any safety or guarantee net provided. – Not applicable for the Scheme o 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: • SEBI has reviewed and provided its comments on the proposal • A written communication about the proposed change is sent to each Unitholder and an 40 Axis Nifty Capital Markets Index Fundadvertisement 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 • The Unitholders are given an option for a period of at least 30 calendar days to exit at the prevailing Net Asset Value without any exit load. D. Index methodology - Disclosures regarding the index, index eligibility criteria, methodology, index service provider, index constituents, impact cost of the constituents. ABOUT THE INDEX: Nifty Capital Markets Index aims to track the performance of stocks from the Nifty 500 index, which represents the capital market theme. The largest 20 stocks from eligible basic industries are selected based on 6-month average free-float market capitalization. The weight of each stock in the index is based on its free-float market capitalization. Methodology • All constituents from Nifty 500 index at the time of review are eligible for inclusion in the index • Stocks forming part of the eligible basic industries shall be eligible to be included from the universe at the time of review. • Basic eligible industries: Asset Management Company, Exchange and Data Platform, Stockbroking & Allied, Depositories, Clearing Houses and Other Intermediaries, Financial Products Distributor, Ratings Other Capital Market related Services. • The index comprises a maximum of 20 stocks. • Weights of constituents of Nifty Capital Markets are capped at 20% (maximum capping limit). • Weight of each stock is based on its free-float market capitalization. Reconstitution and rebalancing • The Index is reconstituted semi-annually (March & September) and rebalanced quarterly. • Companies will be included if free-float market capitalization is at least 1.5 times the free-float market capitalization of the smallest index constituent. • Apart from the scheduled semi-annual review, additional ad-hoc reconstitution and rebalancing of the index may be initiated in case any of the index constituents undergoes suspension or 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. Nifty Capital Markets Index Constituents as on 25th Sep 2025: SECURITY_NAME WEIGHTAGE Impact Cost 360 ONE WAM LTD. 7.2% 0.05 ADITYA BIRLA SUN LIFE AMC LTD. 1.9% 0.06 ANAND RATHI WEALTH LTD. 3.4% 0.06 ANGEL ONE LTD. 4.1% 0.03 BSE LTD. 16.2% 0.03 COMPUTER AGE MANAGEMENT 5.9% 0.02 SERVICES LTD. CENTRAL DEPOSITORY SERVICES 8.5% 0.03 (INDIA) LTD. HDFC ASSET MANAGEMENT 18.6% 0.02 41 Axis Nifty Capital Markets Index FundCOMPANY LTD. INDIAN ENERGY EXCHANGE LTD. 3.4% 0.04 KFIN TECHNOLOGIES LTD. 3.9% 0.04 MULTI COMMODITY EXCHANGE 13.0% 0.03 OF INDIA LTD. MOTILAL OSWAL FINANCIAL 4.4% 0.04 SERVICES LTD. NIPPON LIFE INDIA ASSET 4.8% 0.04 MANAGEMENT LTD. NUVAMA WEALTH MANAGEMENT 2.9% 0.05 LTD. UTI ASSET MANAGEMENT 1.8% 0.05 COMPANY LTD. Total 100% - https://nsearchives.nseindia.com/content/indices/Method_NIFTY_Equity_Indices.pdf E. Principles of incentive structure for market makers (for ETFs) – Not Applicable F. Floors and ceiling within a range of 5% of the intended allocation against each sub class of asset, as per clause 13.6.2 of SEBI master circular for mutual funds . (only for close ended debt schemes) – Not Applicable G. Other Scheme Specific Disclosures: Listing and Listing transfer of units The Scheme is an open ended scheme under which Sale and Repurchase will 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. For more details refer to the SAI. Dematerialization Investors shall have an option to receive allotment of Mutual Fund units in their 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. Investors desirous of having the Units of the Scheme in dematerialized form should SO - 58 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 42 Axis Nifty Capital Markets Index FundParticipants. 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 as per settlement calendar. 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. Minimum Target Rs. 5 crore 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. Maximum Not Applicable Amount to be raised (if any) Allotment • Full allotment will be made to all valid applications received during the New (Detailed Fund Offer Period. Allotment of Units, shall be completed not later than 5 procedure) business days after the close of the New Fund Offer Period. • On acceptance of the application for subscription, an allotment confirmation (During NFO) 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. Refund (During NFO): 43 Axis Nifty Capital Markets Index FundFund 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 instruments will be dispatched 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. During 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 the 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. Who can invest The following persons (subject to, wherever relevant, purchase of units of mutual funds, being permitted under respective constitutions, and relevant statutory This is an regulations) are eligible and may apply for Subscription to the units of the Scheme: indicative list and 1. Resident adult individuals either singly or jointly (not exceeding three) or on investors shall an Anyone or Survivor basis; consult their 2. Hindu Undivided Family (HUF) through Karta; financial advisor 3. Minor (as the first and the sole holder only) through a natural guardian (i.e. to ascertain father or mother, as the case may be) or a court appointed legal guardian. whether the There shall not be any joint holding with minor investments; scheme is 4. Partnership Firms; Suitable to their 5. Limited liability partnership firms; 6. Proprietorship in the name of the sole proprietor; risk profile. 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 necessary approvals as "Public Securities" as required) 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; 11. 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; 44 Axis Nifty Capital Markets Index Fund15. Provident/ Pension/ Gratuity Fund to the extent they are permitted; Other schemes of Axis Mutual Fund or any other mutual fund subject to the conditions and limits prescribed by SEBI Regulations; 16. Schemes of Alternative Investment Funds; 17. The Trustee, AMC or Sponsor or their associates may subscribe to Units under the Scheme; 18. Such other person as maybe decided by the AMC from time to time. Subject to SEBI (Mutual Funds) Regulations, 1996, any application for subscription of units may be rejected if the application is found to be incomplete or due to unavailability of underlying security Who cannot 1. Any individual who is a foreign national or any other entity that is not an Indian invest 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 b. FPIs 5. Such other persons as may be specified by AMC from time to time. These investors need to submit a physical transaction request along with such documents as may be prescribed by the AMC/ the Trustee/ the Fund 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. How to Apply Investors can undertake transactions in the Schemes of Axis Mutual Fund either and other details through physical, online / electronic mode or any other mode as may be (where can you prescribed from time to time. submit the filled up applications Physical Transactions including For making application for subscription / redemption / switches, application form purchase/redem and Key Information Memorandum may be obtained from / submitted to the ption switches be Official Points of Acceptance (OPAs) of AMC or downloaded from the website of submitted. ) AMC viz. www.axismf.com. SO - 35 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. For name, address and contact no. of Registrar and Transfer Agent (R&T), email id of R&T, website address of R&T, official points of acceptance, collecting banker details etc. refer back cover page. 45 Axis Nifty Capital Markets Index FundPlease note it is mandatory for unitholders to mention their bank account numbers in their applications/requests for redemption. Please refer to the SAI and Application form for the instructions." The policy Units once redeemed will be extinguished and will not be reissued. regarding reissue of repurchased units, including the maximum extent, the manner of reissue, the entity (the scheme or the AMC) involved in the same. Restrictions, if Pledge/Lien of Units any, on the right The Unit under the Scheme may be offered as security by way of a pledge / to lien/charge in favour of scheduled banks, financial institutions, non-banking finance freely retain or companies (NBFCs), or any other person. The AMC and / or the ISC will note and dispose of units record such Pledged/liened Units. The AMC shall mark a pledge/lien only upon being offered. 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 to 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 / switch- out 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: 46 Axis Nifty Capital Markets Index Funda) 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 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. Also refer to the paragraph ‘Suspension of Purchase and Redemption of Units’ in the Statement of Additional Information. Cut off timing for Subscriptions/Purchases including Switch - ins: subscriptions/ The following cut-off timings shall be observed by the Mutual Fund in respect of redemptions/ purchase of units of the Scheme and the following NAVs shall be applied for such switches purchase: This is the time 1. where the application is received upto 3.00 pm on a Business day and funds before which are available for utilization before the cut-off time – the closing NAV of the your application Business day shall be applicable; 2. where the application is received after 3.00 pm on a Business day and funds (complete in all are available for utilization on the same day or before the cut-off time of the respects) should next Business Day - the closing NAV of the next Business Day shall be applicable; reach the 3. irrespective of the time of receipt of application, where the funds are not official points of available for utilization before the cut-off time - the closing NAV of Business day acceptance. on which the funds are available for utilization shall be applicable. 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. 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 47 Axis Nifty Capital Markets Index FundRepurchase 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. Ongoing price for At the Applicable NAV subscription (purchase) Para 10.4 of SEBI Master Circular on Mutual Funds as amended from time to time has /switch-in (from decided that there shall be no entry Load for all Mutual Fund Schemes. Hence, no other entry load is levied for subscription transactions by the Scheme. schemes/plans of the mutual fund) Methodology of calculating subscription price: by investors. Subscription Price = Applicable NAV*(1+Entry Load, if any) Example: If the Applicable NAV is Rs. 10, Entry Load is NIL then the subscription price This is the price will be: you need to pay = Rs. 10* (1+NIL) for = Rs. 10 purchase/switch- in. Ongoing price for At the Applicable NAV subject to prevailing Exit Load. redemption (sale) /switch outs (to other Ongoing price for redemption /Switch out (to other Schemes/Plans of the Mutual schemes/plans of Fund) is price which a Unit holder will receive for redemption/Switch-outs. During the the Mutual Fund) continuous offer of the Scheme, the Unit holder can redeem the Units at Applicable by investors. NAV, subject to payment of Exit Load, if any. It will be calculated as follows: This is the price you Methodology of calculating repurchase price: will receive for redemptions/switcRedemption Price = Applicable NAV*(1-Exit Load, if any) h outs. Example: If the Applicable NAV is Rs. 10, Exit Load is 2% then redemption price will be: =Rs. 10* (1-0.02) = Rs. 9.80 - 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 95% of the Applicable NAV. The Purchase Price shall be at applicable NAV. Minimum amount Refer Section I – Part I for Minimum amount for purchase/redemption/switches. for purchase / Minimum Redemption Amount/Switch Out redemption / switches There will be no minimum redemption criterion. The Redemption / Switch-out would be permitted to the extent of credit balance in the Unit holder’s account of the Plan(s) / Option(s) of the Scheme (subject to completion of Lock-in period or 48 Axis Nifty Capital Markets Index Fundrelease of pledge / lien or other encumbrances). The Redemption / Switch-out request can be made by specifying the rupee amount or by specifying the number of Units of the respective Plan(s) / Option(s) to be redeemed. In case a Redemption / Switch-out request received is for both, a specified rupee amount and a specified number of Units of the respective Plan(s)/ Option(s), the specified number of Units will be considered the definitive request. In case the value / number of available units held in the Unit holder’s folio / account under the Plan / Option of the Scheme is less than the amount / number of units specified in the redemption / switch-out request, then the transaction shall be treated as an all units redemption and the entire balance of available Units in the folio / account of the Unit holder shall be redeemed. In case of Units held in dematerialized mode, the Unit Holder can give a request for Redemption only in number of Units which can be fractional units also. Depository participants of registered Depositories can process only redemption request of units held in demat mode. The AMC/ Trustee reserves the right to change/ modify the terms of minimum redemption amount/switch-out. Accounts The AMC shall send an allotment confirmation specifying the units allotted by way Statements 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 statement form). SO - 61 The AMC shall dispatch a Consolidated Account Statement (CAS) detailing all the transactions across all mutual funds (including transaction charges paid to the distributor) 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 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. Redemption The redemption or repurchase proceeds shall be dispatched to the unitholders within three working days from the date of redemption or repurchase. For list of exceptional circumstances refer para 14.1.3 of SEBI Master Circular for Mutual Funds . 49 Axis Nifty Capital Markets Index FundFor detailed procedure on how to redeem, kindly refer SAI. Bank Mandate It is mandatory for investors to mention investor’s bank account details on the form. Applications without this information are liable to be rejected. The Mutual Fund / AMC reserves the right to hold redemption proceeds in case requisite bank details SO - 62 are not submitted. Delay in payment The Asset Management Company shall be liable to pay interest to the unitholders of redemption / at rate as specified vide clause 14.2 of SEBI Master Circular for Mutual Funds by repurchase SEBI for the period of such delay. proceeds The AMC shall 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 Redemption / Repurchase proceeds are not made within three (3) working Days of the date of Redemption / Repurchase. 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. Unclaimed As per Para 14.3 of SEBI Master Circular on Mutual Funds as amended from time to Redemption time, the unclaimed Redemption shall be deployed by the Fund in money market Amount instruments and such other instruments/securities as maybe permitted from time to time. The investment management fee charged by the AMC for managing such unclaimed amounts shall not exceed 50 basis points. The circular also specifies that SO - 53 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 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. Disclosure w.r.t Following is the process for investments made in the name of a Minor through a investment by Guardian: - 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 SO - 37 account of the minor with parent or legal guardian. • 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. 50 Axis Nifty Capital Markets Index FundTracking Error & Tracking Error Tracking Tracking error is a measure of the difference in returns from the Scheme and the Difference returns from the index. It is computed as the standard deviation of the difference between the daily returns of the underlying benchmark and the NAV of the Scheme on an annualized basis. Tracking error could be the result of a variety of factors including but not limited to: • Delay in the purchase or sale of stocks within the benchmark due to: Illiquidity in the stock o Delay in realization of sale proceeds o • The Scheme may buy or sell the stocks comprising the index at different points of time during the trading session at the then prevailing prices which may not correspond to its closing prices. • The potential for trades to fail, which may result in the Scheme not having acquired the stocks at a price necessary to track the benchmark price. • The holding of a cash position and accrued income prior to distribution of income and payment of accrued expenses. • Disinvestments to meet redemptions, recurring expenses etc. • Execution of large buy / sell orders • Transaction cost and recurring expenses • Delay in realization of Unit holders’ funds • Levy of margins by exchanges • Events like the constituent stocks becoming illiquid in the cash market, the exchange changing the constituents, a large dividend going ex but lag in its receipts, etc. tend to increase the tracking error. The Scheme will endeavor to minimize the tracking error by: • Rebalancing of the portfolio. • Setting off of incremental subscriptions against redemptions. • Use of derivatives for portfolio rebalancing and efficient portfolio management 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. In case of unavoidable circumstances in the nature of force majeure which are beyond the control of the AMCs, the tracking error may exceed 2%, and the same shall be brought to the notice of Trustees with corrective actions taken by the AMC, if any. Under normal circumstances, such tracking errors are not expected to exceed 2% p.a. for daily 12 month rolling return. However, in case of events like, dividend received from underlying securities, rights issue from underlying securities and market volatility during rebalancing of the portfolio following the rebalancing of the underlying index, etc. or in abnormal market circumstances, the tracking error may exceed the above limits. There can be no assurance or guarantee that the Scheme will achieve any particular level of tracking error relative to performance of the Index. 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. 51 Axis Nifty Capital Markets Index FundPortfolio In terms of para 3.4 of SEBI Master Circular for Mutual Funds which specifies the concentration portfolio concentration norms as follows, shall be complied with respect to the norms underlying Index: • The index has a minimum of 10 stocks as its constituents. • No single stock in the index shall have more than 25% weight in the index. • The weightage of the top three constituents of the index, cumulatively 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. The benchmark shall be in compliance of the aforesaid norms. Any other Nil disclosure in terms of Consolidated Checklist on Standard Observations III. Other Details A. In case of Fund of Funds Scheme, Details of Benchmark, Investment Objective, Investment Strategy, TER, AUM, Year wise performance, Top 10 Holding/ link to Top 10 holding of the underlying fund should be provided – Not Applicable B. Periodic Disclosures Monthly and Half The AMC will disclose the portfolio of the Scheme (alongwith ISIN) as on the last yearly Disclosures: day of the month/ half year on the website of the Mutual Fund and AMFI within 10 Portfolio / days from the close of each month/ half year (i.e. 31st March and 30th September) Financial Results respectively in a user-friendly and downloadable spreadsheet format. Further, AMC shall publish an advertisement, in an all India edition of one national English daily newspaper and in one Hindi newspaper, every half year disclosing the hosting of the half-yearly statement of its schemes portfolio on the website of the Mutual Fund and AMFI and the modes through which unitholder can submit a request for a physical or electronic copy of the statement of scheme portfolios. The AMC will also provide a dashboard, in a comparable, downloadable (spreadsheet) and machine readable format, providing performance and key disclosures like Scheme’s AUM, investment objective, expense ratios, portfolio details, scheme’s past performance etc, on website. For details, please refer our website: https://www.axismf.com/statutory-disclosures Half Yearly Results The Mutual Fund shall within one month from the close of each half year, that is on 31st March and on 30th September, host a soft copy of its unaudited financial results on the website of the AMC and AMFI. The mutual fund shall publish an advertisement disclosing the hosting of such financial results on their website, in at least one English daily newspaper having nationwide circulation and in a newspaper having wide circulation published in the language of the region where the Head Office of the Mutual Fund is situated. The unaudited financial results will also be displayed on the website of the AMC and AMFI. For details, please refer our website: https://www.axismf.com/statutory-disclosures 52 Axis Nifty Capital Markets Index FundAnnual Report The Scheme annual report or an abridged summary thereof shall be mailed (emailed, where e mail id is provided unless otherwise required)) to all Unit holders not later than four months (or such other period as may be specified 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 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 Risk-o-meter The AMC shall review Risk-o-meters on a monthly basis based on evaluation of risk level of Scheme’s month end portfolio. Any change in risk-o-meter of the scheme or its benchmark shall be communicated by way of Notice cum Addendum and by way of an e-mail or SMS to unitholders of that particular scheme. Investors may also refer to the website/portfolio disclosure for the latest Risk-o-meter of the SO - 38 Scheme. Scheme Summary The AMC has provided on its website Scheme Summary Document which is a Document standalone scheme document for all the Schemes which contains all the details of the Scheme viz. Scheme features, Fund Manager details, investment details, investment objective, expense ratios, portfolio details, etc. For details, please refer our website: https://www.axismf.com/statutory-disclosures Tracking Error and Tracking Error – Tracking Tracking Error is defined as the standard deviation of the difference between daily Difference returns of the underlying index and the NAV of the Scheme. The AMC shall disclose the tracking error for the Scheme based on past one year rolling data, on a daily basis, on its own website and AMFI. SO - 39 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 years, 5 years, 10 years and since the date of allotment of units. Disclosure Norms The Scheme shall disclose the following on monthly basis: as per para 3.6.8 I. Name and exposure to top 7 issuers and stocks respectively as a SEBI Master percentage of NAV of the scheme Circular for II. Name and exposure to top 7groups as a percentage of NAV of the mutual fund scheme. III. Name and exposure to top 4 sectors as a percentage of NAV of the scheme. Change in constituents of the index, if any, shall be disclosed on the AMC 53 Axis Nifty Capital Markets Index Fundwebsite (i.e. www.axismf.com/) on the day of change. C. Transparency/NAV Disclosure SO – 41 & 42 The AMC will calculate and disclose the first NAV of the Scheme within a period of 5 Business days from the date of allotment under the NFO. Subsequently, the AMC will calculate and disclose the NAVs on all Business Days. The AMC shall update the NAVs on its website (www.axismf.com) and of the Association of Mutual Funds in India - AMFI (www.amfiindia.com) before 11.00 p.m. on every Business Day. If the NAVs are not available before the commencement of Business Hours on the following day due to any reason, the Mutual Fund shall issue a press release giving reasons and explaining when the Mutual Fund would be able to publish the NAV. Information regarding NAV can be obtained by the Unit holders / Investors by calling or visiting the nearest ISC. D. Transaction charges and stamp duty- Transaction Charges: Not Applicable 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 (including IDCW reinvestment) to the unitholders would be reduced to that extent. E. Associate Transactions- Please refer to Statement of Additional Information (SAI) F. Taxation- 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. Taxation of Equity- Oriented Mutual Taxability in the hands of Individuals / Non-corporates Funds (Rates / Corporates applicable for the Particulars Resident Non-Resident Financial Year 2025- 26) Tax on distributed Taxed in the hands of Taxed in the hands of income unitholders at applicable unitholders at the rate of The information is rate under the provisions of 20% u/s 115A/ 115AD of provided for general the Income-tax Act, 1961 the Act (plus applicable information only. (Act) surcharge and health However, in view of and education cess) the individual nature (Refer Note 3) of the implications, Capital Gains each investor is advised to consult his or her own tax 54 Axis Nifty Capital Markets Index Fundadvisors / authorised Long Term Capital 12.5% (plus applicable 12.5% (plus applicable dealers with respect Gains: surcharge and health and surcharge and health to the specific education cess) without and education cess) (Held for a period of amount of tax and indexation without indexation more than 12 Months) other implications (Refer Note 7) (Refer Note 7) arising out of his or her participation in Short Term Capital 20% (plus applicable 20% (plus applicable the schemes. Gains surcharge and health and surcharge and health 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: a) 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 is 5% of the amount by more than Rs 2,50,000* but which the total income is less than or equal to exceeds Rs 2,50,000* Rs 5,00,000 Where such total income is Rs 12,500 plus 20% of the more than Rs 5,00,000* but amount by which the is less than or equal to total income exceeds Rs 10,00,000 Rs 5,00,000* Where such total income is Rs 1,12,500 plus 30% of the more than Rs 10,00,000 amount by which the total income exceeds Rs 10,00,000 55 Axis Nifty Capital Markets Index FundCo-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 is Rs 1,000 plus 20% of the more than Rs 10,000 but is amount by which the less than or equal to total income exceeds Rs 20,000 Rs 10,000 Where 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 56 Axis Nifty Capital Markets Index FundDomestic 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 4,00,000 Rs 8,00,000 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 amount Rs 16,00,000 but is less than or equal to by which the total income Rs 20,00,000 exceeds Rs 16,00,000 Where such total income is more than Rs 2,00,000 plus 25% of the amount Rs 20,00,000 but is less than or equal to by which the total income Rs 24,00,000 exceeds Rs 20,00,000 Where such total income is more than Rs Rs 3,00,000 plus 30% of the amount 24,00,000 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 57 Axis Nifty Capital Markets Index Fundfrom 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 dividend 25% 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 (dividend 15% 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 Surcharge 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 58 Axis Nifty Capital Markets Index Fundchargeable 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 G. Rights of Unitholders- Please refer to SAI for details. H. List of official points of acceptance: For Details of official points of acceptance, please refer our website https://www.axismf.com/statutory-disclosures I. Penalties, Pending Litigation or Proceedings, Findings of Inspections or Investigations For Which Action May Have Been Taken Or Is In The Process Of Being Taken By Any Regulatory Authority SO - 49 For details, please refer our website: https://www.axismf.com/statutory-disclosures The Scheme under this Scheme Information Document was approved by the Trustee Company on _____. 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 Limited Sd/- Gop Kumar Bhaskaran Managing Director & Chief Executive Officer Date: __________ Axis Asset Management Company Limited (Investment Manager to Axis Mutual Fund) One Lodha Place, 22nd & 23rd Floor, Senapati Bapat Marg, Lower Parel, Mumbai, Maharashtra, Pin Code – 400013 TEL 022 6311 1001 and contact number 8108622211(Chargeable) EMAIL customerservice@axismf.com WEB www.axismf.com 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. 59 Axis Nifty Capital Markets Index Fund