Invesco India Nifty India Defence Index Fund - Reg (G)

The Scheme will follow a passive investment strategy and will invest in companies which are constituents of Nifty India Defence Index in the same weights as in the Index with an endeavor to track the benchmark index with as low tracking error as possible. The Scheme may also invest in money market instruments to meet liquidity and expense requirements. The Scheme may, for a temporary period, take exposure to derivatives of the index or its constituent stocks when equity shares are unavailable, insufficient or for rebalancing in case of corporate actions and when it makes economic benefit for the Scheme. Tracking Error The Tracking Error based on past one year rolling data shall not exceed 2%. In case the tracking error of the Scheme exceeds 2% due to unavoidable circumstances in the nature of force majeure which are beyond the control of the AMC, then the same will be brought to the notice of the Trustees with the corrective action by the AMC. Risk Control The Scheme aims to track the Underlying Index. The index will be tracked on a regular basis and changes to the constituents or their weights, if any, will be replicated in the underlying portfolio, with the purpose of minimizing tracking errors. The Scheme, being a passive investment, carries lesser risk as compared to active fund management. The portfolio would follow the index and therefore the level of stock concentration in the portfolio and its volatility would be the same as that of the index, subject to tracking errors. Thus, there would be no additional element of volatility or stock concentration on account of fund manager decisions. The fund manager would endeavor to keep cash levels at a minimum to control tracking errors. The Risk Mitigation strategy revolves around reducing the tracking error to the least possible through regular rebalancing of the portfolio, taking into account the change in weights of stocks in the Underlying Index as well as the incremental inflows into / redemptions from the Scheme. While these measures are expected to largely mitigate the above risks, there can be no assurance that these risks would be completely eliminated. Investment in Derivatives The Scheme may invest in various derivative instruments which are permissible under the applicable Regulations and shall also 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). For detailed derivative strategies, please refer to SAI.