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Prospectus |
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May 24, 2019 |
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Invesco Exchange-Traded Fund Trust
II |
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REEM |
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Invesco Emerging Markets Revenue ETF |
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Cboe BZX Exchange, Inc. |
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REDV |
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Invesco Emerging Markets Ultra Dividend Revenue ETF |
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NYSE Arca, Inc. |
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ESGF |
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Invesco Global ESG Revenue ETF |
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NYSE Arca, Inc. |
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RGLB |
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Invesco Global Revenue ETF |
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Cboe BZX Exchange, Inc. |
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REFA |
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Invesco International Revenue ETF |
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Cboe BZX Exchange, Inc. |
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RIDV |
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Invesco International Ultra Dividend Revenue ETF |
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NYSE Arca, Inc. |
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OVOL |
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Invesco Russell 1000® Low Volatility
Factor ETF |
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Cboe BZX Exchange, Inc. |
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OMOM |
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Invesco Russell 1000® Momentum Factor
ETF |
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Cboe BZX Exchange, Inc. |
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OQAL |
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Invesco Russell 1000® Quality Factor
ETF |
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Cboe BZX Exchange, Inc. |
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OSIZ |
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Invesco Russell 1000® Size Factor
ETF |
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Cboe BZX Exchange, Inc. |
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OVLU |
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Invesco Russell 1000® Value Factor
ETF |
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Cboe BZX Exchange, Inc. |
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OYLD |
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Invesco Russell 1000® Yield Factor
ETF |
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Cboe BZX Exchange, Inc. |
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RWL |
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Invesco S&P 500 Revenue ETF |
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NYSE Arca, Inc. |
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RWW |
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Invesco S&P Financials Revenue ETF |
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NYSE Arca, Inc. |
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RWK |
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Invesco S&P MidCap 400 Revenue ETF |
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NYSE Arca, Inc. |
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RWJ |
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Invesco S&P SmallCap 600 Revenue ETF |
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NYSE Arca, Inc. |
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RDIV |
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Invesco S&P Ultra Dividend Revenue ETF |
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NYSE Arca, Inc. |
Beginning
on January 1, 2021, as permitted by regulations adopted by the Securities
and Exchange Commission, paper copies of the Funds’ shareholder reports will no
longer be sent by mail, unless you specifically request paper copies of the
reports from your financial intermediary, such as a broker-dealer or bank.
Instead, the reports will be made available on a website, and you will be
notified by mail each time a report is posted and provided with a website link
to access the report.
If
you already elected to receive shareholder reports electronically, you will not
be affected by this change and you need not take any action. If you hold
accounts through a financial intermediary, you may contact your financial
intermediary to enroll in electronic delivery. Please note that not all
financial intermediaries may offer this service.
You
may elect to receive all future reports in paper free of charge. If you hold
accounts through a financial intermediary, you can follow the instructions
included with this disclosure, if applicable, or contact your financial
intermediary to request that you continue to receive paper copies of your
shareholder reports. Please note that not all financial intermediaries may offer
this service.
Your
election to receive reports in paper will apply to all funds held with your
financial intermediary.
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
Table of Contents
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REEM |
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Invesco Emerging Markets Revenue
ETF |
Summary Information
Investment Objective
The Invesco Emerging Markets Revenue ETF (the “Fund”) seeks to
track the investment results (before fees and expenses) of the Invesco Revenue
Weighted Emerging Markets Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
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Annual Fund Operating Expenses |
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(expenses that you pay
each year as a percentage of the value of your investment) |
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Management Fees |
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0.46% |
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Other Expenses(1) |
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0.00% |
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Total Annual Fund Operating
Expenses |
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0.46% |
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(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
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1 Year |
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3 Years |
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5 Years |
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10 Years |
$47 |
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$148 |
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$258 |
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$579 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Emerging Markets
Revenue ETF (the “Predecessor Fund”) was 85% of the average value of its
portfolio, excluding the value of portfolio securities received or delivered as
a result of the Predecessor Fund’s in-kind creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index, as well as American
depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that
represent securities in the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, MSCI, Inc. (“MSCI” or the “Index Provider”) compiles, maintains, and
calculates the Underlying Index, which is constructed using a rules-based
methodology that re-weights the
constituent securities of the MSCI Emerging Markets Index (the “Parent Index”),
an index designed to represent the
performance of large- and mid-capitalization securities in emerging
market countries, according to the revenue earned by the companies in the Parent
Index, subject to a maximum 5% per company weighting.
The Fund does not purchase all of the securities in the Underlying
Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve
its investment objective.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the energy, financial services,
industrials and information technology sectors. The Fund’s portfolio holdings,
and the extent to which it concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
ADR and GDR Risk. ADRs are certificates that evidence
ownership of shares of a foreign issuer and are alternatives to purchasing
directly underlying foreign securities in their national markets and currencies.
GDRs are certificates issued by an international bank that generally are traded
and denominated in the currencies of countries other than the home country of
the issuer of the underlying shares. ADRs and GDRs may be subject to certain of
the risks associated with direct investments in the securities of foreign
companies, such as currency, political, economic and market risks, because their
values depend on the performance of the non-dollar denominated underlying foreign
securities. Moreover, ADRs and GDRs may not track the price of the underlying
foreign securities on which they are based, and their value may change
materially at times when U.S. markets are not open for trading.
GDRs can involve currency risk since, unlike ADRs, they may not be
U.S. dollar-denominated. Because the Fund’s net asset value (“NAV”) is
determined in U.S. dollars, the Fund’s NAV could decline if the currency of the
non-U.S. market in which the Fund
invests depreciates against the U.S. dollar, even if the value of the Fund’s
holdings, measured in the foreign currency, increases.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently,
there is no assurance that those APs will establish or maintain an
active trading market for the Shares. This risk may be heightened to the extent
that securities held by the Fund are traded outside a collateralized settlement
system. In that case, APs may be required to post collateral on certain trades
on an agency basis
(i.e., on behalf of other market participants), which only a
limited number of APs may be able to do. In addition, to the extent that APs
exit the business or are unable to proceed with processing creation and/or
redemption orders with respect to the Fund and no other AP is able to step
forward to create or redeem Creation Units (as defined below), this may result
in a significantly diminished trading market for Shares, which may be more
likely to trade at a premium or discount to the Fund’s NAV and to face trading
halts and/or delisting. This risk may be heightened for the Fund because it
invests in non-U.S. securities, which
may have lower trading volumes.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Currency Risk. Because the Fund’s NAV is determined in
U.S. dollars, the Fund’s NAV could decline if the currency of a non-U.S. market in which the Fund invests
depreciates against the U.S. dollar. Generally, an increase in the value of the
U.S. dollar against a foreign currency will reduce the value of a security
denominated in that foreign currency, thereby decreasing the Fund’s overall NAV.
Exchange rates may be volatile and may change quickly and unpredictably in
response to both global economic developments and economic conditions, causing
an adverse impact on the Fund. As a result, investors have the potential for
losses regardless of the length of time they intend to hold Shares.
Emerging Markets Investment Risk. Investments in the
securities of issuers in emerging market countries involve risks often not
associated with investments in the securities of issuers in developed countries.
Securities in emerging markets may be subject to greater price fluctuations than
securities in more developed markets. Fluctuations in the value of the U.S.
dollar relative to the values of other currencies may adversely affect
investments in emerging market securities, and emerging market securities may
have relatively low market liquidity, decreased publicly available information
about issuers, and inconsistent and potentially less stringent accounting,
auditing and financial reporting requirements and standards of practice
comparable to those applicable to domestic issuers. Emerging market securities
also are subject to the risks of expropriation, nationalization or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. Investments in emerging market securities also may be
subject to dividend withholding or confiscatory taxes, currency blockage and/or
transfer restrictions. Emerging markets usually are subject to greater market
volatility, lower trading volume, political and economic instability,
uncertainty regarding the existence of trading markets and more governmental
limitations on foreign
investment than are more developed markets. Securities law in many
emerging market countries is relatively new and unsettled. Therefore, laws
regarding foreign investment in emerging market securities, securities
regulation, title to securities, and shareholder rights may change quickly and
unpredictably. In addition, the enforcement of systems of taxation at federal,
regional and local levels in emerging market countries may be inconsistent and
subject to sudden change.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Foreign Market Risk. Because foreign securities in the
Fund’s portfolio trade on foreign exchanges at times when the U.S. markets are
not open for trading, the value of those securities may change materially at
times when the U.S. markets are not open for trading, regardless of whether
there is an active U.S. market for Shares. Conversely, Shares of the Fund may
trade on U.S. exchanges at times when foreign exchanges are not open for
trading. This, in either case, could lead to a difference between the U.S.
market value of the Shares and the underlying value of the Fund’s portfolio.
Foreign Investment Risk. Investments in the securities of
non-U.S. issuers involve risks beyond
those associated with investments in U.S. securities. Foreign securities may
have relatively low market liquidity, greater market volatility, decreased
publicly available information, and less reliable financial information about
issuers, and inconsistent and potentially less stringent accounting, auditing
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Foreign securities also are subject to the
risks of expropriation, nationalization, political instability or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. Investments in foreign securities also may be subject to
dividend withholding or confiscatory taxes, currency blockage and/or transfer
restrictions and higher transactional costs. As the Fund will invest in
securities denominated in foreign currencies, fluctuations in the value of the
U.S. dollar relative to the values of other currencies may adversely affect
investments in foreign securities and may negatively impact the Fund’s returns.
Geographic Concentration Risk. A natural or other
disaster could occur in a geographic region in which the Fund invests, which
could affect the economy or particular business operations of companies in that
specific geographic region and adversely impact the Fund’s investments in the
affected region.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up and down more dramatically. Additionally, the
announcement that a security has been added to a widely followed index or
benchmark may cause the price of that security to increase. Conversely, the
announcement that a security has been deleted from a widely followed index or
benchmark may cause the price of that security to decrease.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government regulation, world events and economic conditions
also affect these companies, particularly in the countries where companies are
located or do business. In addition, these companies are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources,
development of alternative energy sources, technological developments and labor
relations also could affect companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are
subject to extensive government regulation and, as a result, their
profitability may be affected by new regulations or regulatory interpretations.
Unstable interest rates can have a disproportionate effect on the financial
services sector and financial services companies whose securities the Fund may
purchase may themselves have concentrated portfolios, which makes them
vulnerable to economic conditions that affect that sector. Financial services
companies have also been affected by increased competition, which could
adversely affect the profitability or viability of such companies.
Industrials Sector Risk. Changes in government
regulation, world events and economic conditions may adversely affect companies
in the industrials sector. In addition, these companies are at risk for
environmental and product liability damage claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations could adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant
negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. The Fund’s use of a
representative sampling approach may cause the Fund not to be as well-correlated
with the return of the Underlying Index as would be the case if the Fund
purchased all of the securities in the Underlying Index in the proportions
represented in the Underlying Index. In addition, the performance of the Fund
and the Underlying Index may vary due to asset valuation differences and
differences between the Fund’s portfolio and the Underlying Index resulting from
legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain
operational risks associated with reliance on third party service
providers and data sources. NAV calculation may be impacted by operational risks
arising from factors such as failures in systems and technology. Such failures
may result in delays in the calculation of the Fund’s NAV and/or the inability
to calculate NAV over extended time periods. The Fund may be unable to recover
any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Sampling Risk. The Fund’s use of a
representative sampling approach may result in it holding a smaller number of
securities than are in the Underlying Index. As a result, an adverse development
to an issuer of securities that the Fund holds could result in a greater decline
in NAV than would be the case if the Fund held all of the securities in the
Underlying Index. To the extent the assets in the Fund are smaller, these risks
will be greater.
Small- and-Mid-Capitalization Company
Risk. Investing in securities of small- and mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies. These securities may have returns that
vary, sometimes significantly, from the overall securities market. Often small-
and mid-capitalization companies and
the industries in which they focus are still evolving and, as a result, they may
be more sensitive to changing market conditions.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
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Best Quarter |
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Worst Quarter |
2.35% (3rd Quarter 2018) |
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(9.57)% (2nd Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 7.68%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
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1 Year |
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Since Inception (07/11/17) |
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Return Before Taxes |
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(11.91 |
)% |
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(0.86 |
)% |
Return After Taxes on
Distributions |
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(12.48 |
)% |
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(1.60 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
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(6.49 |
)% |
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(0.63 |
)% |
Invesco Revenue Weighted Emerging
Markets Index (Net) (reflects reinvested dividends net of withholding
taxes but reflects no deduction for fees, expenses or other
taxes) |
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(11.62 |
)% |
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(0.81 |
)% |
MSCI Emerging Markets Index
(Net) (reflects reinvested dividends net of withholding taxes but
reflects no deduction for fees, expenses or other taxes) |
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(14.58 |
)% |
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(1.32 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
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Name |
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Title with
Adviser/Trust |
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Date Began Managing the Fund |
Peter Hubbard |
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Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May
2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 100,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
REDV |
|
Invesco Emerging Markets Ultra
Dividend Revenue ETF |
Summary Information
Investment Objective
The Invesco Emerging Markets Ultra Dividend Revenue ETF (the
“Fund”) seeks to track the investment results (before fees and expenses) of the
FTSE Custom Emerging Ultra Dividend Revenue Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.46% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.46% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. The Oppenheimer Emerging
Markets Ultra Dividend Revenue ETF (the “Predecessor Fund”) had not commenced
operations as of its most recent fiscal year end and portfolio turnover data
therefore is not available.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index, as well as American
depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that
represent securities in the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, FTSE Russell (“FTSE” or the “Index Provider”) compiles, maintains,
and calculates the Underlying Index, which is constructed using a rules-based
methodology that selects a subset of constituent securities of the FTSE Emerging
Index (the “Parent Index”), an index designed to represent the performance of
securities of the most liquid large- and mid-capitalization
companies in emerging market countries. The Underlying Index
includes the top 100 constituent securities of the Parent Index according to the
highest average of the 1-year trailing
dividend yields over the past two years, and then re-weights those securities according to the
revenue earned by those companies, subject to a maximum 5% per company
weighting and a maximum 10% variation on the Underlying Index’s allocation to a
single country versus the Parent Index. The Underlying Index thus contains a
subset of the securities included in the Parent Index, in different proportions.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of July 27, 2018,
the Underlying Index focused on the basic materials, communications services,
energy and financials sectors. The Fund’s portfolio holdings, and the extent to
which it concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
ADR and GDR Risk. ADRs are certificates that evidence
ownership of shares of a foreign issuer and are alternatives to purchasing
directly underlying foreign securities in their national markets and currencies.
GDRs are certificates issued by an international bank that generally are traded
and denominated in the currencies of countries other than the home country of
the issuer of the underlying shares. ADRs and GDRs may be subject to certain of
the risks associated with direct investments in the securities of foreign
companies, such as currency, political, economic and market risks, because their
values depend on the performance of the non-dollar denominated underlying foreign
securities. Moreover, ADRs and GDRs may not track the price of the underlying
foreign securities on which they are based, and their value may change
materially at times when U.S. markets are not open for trading.
GDRs can involve currency risk since, unlike ADRs, they may not be
U.S. dollar-denominated. Because the Fund’s net asset value (“NAV”) is
determined in U.S. dollars, the Fund’s NAV could decline if the currency of the
non-U.S. market in which the Fund
invests depreciates against the U.S. dollar, even if the value of the Fund’s
holdings, measured in the foreign currency, increases.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s NAV and
to face trading halts and/or delisting. This risk may be heightened for the Fund
because it invests in non-U.S.
securities, which may have lower trading volumes.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Currency Risk. Because the Fund’s NAV is determined in
U.S. dollars, the Fund’s NAV could decline if the currency of a non-U.S. market in which the Fund invests
depreciates against the U.S. dollar. Generally, an increase in the value of the
U.S. dollar against a foreign currency will reduce the value of a security
denominated in that foreign currency, thereby decreasing the Fund’s overall NAV.
Exchange rates may be volatile and may change quickly and unpredictably in
response to both global economic developments and economic conditions, causing
an adverse impact on the Fund. As a result, investors have the potential for
losses regardless of the length of time they intend to hold Shares.
Dividend-Paying Security Risk. Securities that pay high
dividends as a group can fall out of favor with the market, causing such
companies to underperform companies that do not pay high dividends. Also,
changes in the dividend policies of the companies in which the Fund invests and
the capital resources available for such companies’ dividend payments may
adversely affect the Fund.
Emerging Markets Investment Risk. Investments in the
securities of issuers in emerging market countries involve risks often not
associated with investments in the securities of issuers in developed countries.
Securities in emerging markets may be subject to greater price fluctuations than
securities in more developed markets. Fluctuations in the value of the U.S.
dollar relative to the values of other currencies may adversely affect
investments in emerging market securities, and emerging market securities may
have relatively low market liquidity, decreased
publicly available information about issuers, and inconsistent and
potentially less stringent accounting, auditing and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Emerging market securities also are subject to the risks of
expropriation, nationalization or other adverse political or economic
developments and the difficulty of enforcing obligations in other countries.
Investments in emerging market securities also may be subject to dividend
withholding or confiscatory taxes, currency blockage and/or transfer
restrictions. Emerging markets usually are subject to greater market volatility,
lower trading volume, political and economic instability, uncertainty regarding
the existence of trading markets and more governmental limitations on foreign
investment than are more developed markets. Securities law in many emerging
market countries is relatively new and unsettled. Therefore, laws regarding
foreign investment in emerging market securities, securities regulation, title
to securities, and shareholder rights may change quickly and unpredictably. In
addition, the enforcement of systems of taxation at federal, regional and local
levels in emerging market countries may be inconsistent and subject to sudden
change.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Eurozone Investment Risk. The Fund’s investments in the
Eurozone may be subject to a greater risk than investments in other geographic
regions. The global economic crisis that began in 2008 has caused severe
financial difficulties for many European Union (“EU”) countries, pushing some to
the brink of insolvency and causing others to experience recession, large public
debt, restructuring of government debt, credit rating downgrades and an overall
weakening of banking and financial sectors. Some of those countries have
depended on, and may continue to depend on, the assistance from others, such as
the European Central Bank, the International Monetary Fund, or other governments
and institutions, to address those issues. By adopting the euro as its currency,
members of the European Monetary Union (“EMU”) are subject to fiscal and
monetary controls that could limit to some degree the ability to implement their
own economic policies. Additionally, EMU member countries could voluntarily
abandon
the euro or involuntarily be forced out of the euro, including by
way of a partial or complete dissolution of the EMU. The effects of such
outcomes on the rest of the Eurozone and the global markets as a whole are
unpredictable, but are likely to be negative, and may adversely impact market
values of Eurozone and various other securities and currencies, cause
redenomination of certain securities into less valuable local currencies, and
result in more volatile and illiquid markets.
Foreign Market Risk. Because foreign securities in the
Fund’s portfolio trade on foreign exchanges at times when the U.S. markets are
not open for trading, the value of those securities may change materially at
times when the U.S. markets are not open for trading, regardless of whether
there is an active U.S. market for Shares. Conversely, Shares of the Fund may
trade on U.S. exchanges at times when foreign exchanges are not open for
trading. This, in either case, could lead to a difference between the U.S.
market value of the Shares and the underlying value of the Fund’s portfolio.
Foreign Investment Risk. Investments in the securities of
non-U.S. issuers involve risks beyond
those associated with investments in U.S. securities. Foreign securities may
have relatively low market liquidity, greater market volatility, decreased
publicly available information, and less reliable financial information about
issuers, and inconsistent and potentially less stringent accounting, auditing
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Foreign securities also are subject to the
risks of expropriation, nationalization, political instability or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. Investments in foreign securities also may be subject to
dividend withholding or confiscatory taxes, currency blockage and/or transfer
restrictions and higher transactional costs. As the Fund will invest in
securities denominated in foreign currencies, fluctuations in the value of the
U.S. dollar relative to the values of other currencies may adversely affect
investments in foreign securities and may negatively impact the Fund’s returns.
Geographic Concentration Risk. A natural or other
disaster could occur in a geographic region in which the Fund invests, which
could affect the economy or particular business operations of companies in that
specific geographic region and adversely impact the Fund’s investments in the
affected region.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up and down more dramatically. Additionally, the
announcement that a security has been added to a widely followed index or
benchmark may cause the price of that security to increase.
Conversely, the announcement that a security has been deleted from
a widely followed index or benchmark may cause the price of that security to
decrease.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Basic Materials Sector Risk. Changes in world events,
political, environmental and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations may adversely affect the companies engaged in the production and
distribution of basic materials.
Communication Services Sector Risk. The value of the
securities of communication services companies are particularly vulnerable to
rapid advancements in technology, the innovation of competitors, rapid product
obsolescence, and government regulation and competition, both domestically and
internationally. Additionally, fluctuating domestic and international demand,
shifting demographics and often unpredictable changes in consumer tastes can
drastically affect a communication services company’s profitability. While all
companies may be susceptible to network security breaches, certain companies in
the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their businesses.
Energy Sector Risk. Changes in worldwide energy
prices, exploration and production spending may adversely affect companies in
the energy sector. Changes in government regulation, world events and economic
conditions also affect these companies, particularly in the countries where
companies are located or do business. In addition, these companies are at risk
of civil liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources,
development of alternative energy sources, technological developments and labor
relations also could affect companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Mid-Capitalization
Company Risk. Investing in securities of mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies, and may have returns that vary, sometimes
significantly, from the overall securities market. Mid-capitalization companies tend to have
inexperienced management as well as limited product and market diversification
and financial resources. Often mid-capitalization companies and the
industries in which they focus are still evolving and, as a result, they may be
more sensitive to changing market conditions.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Performance
As of the date of this Prospectus, the Fund does not have a full
calendar year of performance history. The Fund is the successor to the
investment performance of the Predecessor Fund as a result of the reorganization
of the Predecessor Fund into the Fund, which was consummated after the close of
business on May 24, 2019. Accordingly, once the Fund has a full calendar
year of performance, the Fund will present total return information in this
section that, for periods ending on or prior to May 24, 2019, is that of
the Predecessor Fund. Updated performance information is available online at
www.invesco.com/ETFs.
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
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|
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|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on NYSE
Arca, Inc. and because the Shares will trade at market prices rather than NAV,
Shares may trade at prices greater than NAV (at a premium), at NAV, or less than
NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the
intermediary more knowledgeable about exchange-traded products,
such as the Fund, as well as for marketing, education or other initiatives
related to the sale or promotion of Fund shares. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson or financial adviser to recommend the Fund over another
investment. Ask your salesperson or financial adviser or visit your financial
intermediary’s web-site for more
information.
|
|
|
ESGF |
|
Invesco Global ESG
Revenue ETF |
Summary Information
Investment Objective
The Invesco Global ESG Revenue ETF (the “Fund”) seeks to track the
investment results (before fees and expenses) of the Invesco Revenue Weighted
Global ESG Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.45% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.45% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$46 |
|
$144 |
|
$252 |
|
$567 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Global ESG Revenue
ETF (the “Predecessor Fund”) was 73% of the average value of its portfolio,
excluding the value of portfolio securities received or delivered as a result of
the Predecessor Fund’s in-kind
creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index, as well as American
depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that
represent securities in the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, MSCI, Inc. (“MSCI” or the “Index Provider”) compiles, maintains, and
calculates the Underlying Index, which is constructed using a rules-based
methodology to select companies from within the MSCI All Country World Index
(the “Parent Index”), an index designed to measure the equity
market performance of developed and emerging markets, that have
strong environmental, social and governance (“ESG”) practices, as identified by
MSCI ESG Research, Inc., and then re-weight those companies according to the
revenue earned, subject to a maximum 5% per company weighting.
The Underlying Index is constructed by using a scoring system
established by MSCI ESG Research, Inc. to measure the strength of each pillar of
environmental, social, and governance practices for each company within the
Parent Index. Based on that scoring, the top half of companies with ESG score
are selected for inclusion in the Underlying Index, and those that are selected
are then re-weighted according to
revenue earned. Thus, the Underlying Index contains a subset of the securities
in the Parent Index, in different proportions.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the consumer discretionary, consumer
staples, financials, industrials and information technology sectors. The Fund’s
portfolio holdings, and the extent to which it concentrates, are likely to
change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
ADR and GDR Risk. ADRs are certificates that evidence
ownership of shares of a foreign issuer and are alternatives to purchasing
directly underlying foreign securities in their national markets and currencies.
GDRs are certificates issued by an international bank that generally are traded
and denominated in the currencies of countries other than the home country of
the issuer of the underlying shares. ADRs and GDRs may be subject to certain of
the risks associated with direct investments in the securities of foreign
companies, such as currency, political, economic and market risks, because their
values depend on the performance of the non-dollar denominated underlying foreign
securities. Moreover, ADRs and GDRs may not track the price of the underlying
foreign securities on which they are based, and their value may change
materially at times when U.S. markets are not open for trading.
GDRs can involve currency risk since, unlike ADRs, they may not be
U.S. dollar-denominated. Because the Fund’s net asset value (“NAV”) is
determined in U.S. dollars, the Fund’s NAV could
decline if the currency of the non-U.S. market in which the Fund invests
depreciates against the U.S. dollar, even if the value of the Fund’s holdings,
measured in the foreign currency, increases.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s NAV and
to face trading halts and/or delisting. This risk may be heightened for the Fund
because it invests in non-U.S.
securities, which may have lower trading volumes.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Currency Risk. Because the Fund’s NAV is determined in
U.S. dollars, the Fund’s NAV could decline if the currency of a non-U.S. market in which the Fund invests
depreciates against the U.S. dollar. Generally, an increase in the value of the
U.S. dollar against a foreign currency will reduce the value of a security
denominated in that foreign currency, thereby decreasing the Fund’s overall NAV.
Exchange rates may be volatile and may change quickly and unpredictably in
response to both global economic developments and economic conditions, causing
an adverse impact on the Fund. As a result, investors have the potential for
losses regardless of the length of time they intend to hold Shares.
Emerging Markets Investment Risk. Investments in the
securities of issuers in emerging market countries involve risks often not
associated with investments in the securities of issuers in developed countries.
Securities in emerging markets may be subject to greater price fluctuations than
securities in more developed markets. Fluctuations in the value of the U.S.
dollar relative to the values of other currencies may adversely affect
investments in emerging market securities, and emerging market securities may
have relatively low market liquidity, decreased publicly available information
about issuers, and inconsistent and
potentially less stringent accounting, auditing and financial
reporting requirements and standards of practice comparable to those applicable
to domestic issuers. Emerging market securities also are subject to the risks of
expropriation, nationalization or other adverse political or economic
developments and the difficulty of enforcing obligations in other countries.
Investments in emerging market securities also may be subject to dividend
withholding or confiscatory taxes, currency blockage and/or transfer
restrictions. Emerging markets usually are subject to greater market volatility,
lower trading volume, political and economic instability, uncertainty regarding
the existence of trading markets and more governmental limitations on foreign
investment than are more developed markets. Securities law in many emerging
market countries is relatively new and unsettled. Therefore, laws regarding
foreign investment in emerging market securities, securities regulation, title
to securities, and shareholder rights may change quickly and unpredictably. In
addition, the enforcement of systems of taxation at federal, regional and local
levels in emerging market countries may be inconsistent and subject to sudden
change.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
ESG Investing Strategy Risk. The stocks of companies with
favorable ESG practices may underperform the stock market as a whole. As a
result, the Fund may underperform other funds that do not screen companies based
on ESG practices. The criteria used to select companies for the Underlying Index
may result in the Fund investing in securities, industries or sectors that
underperform the market as a whole or underperform other funds screened for ESG
standards.
Geographic Concentration Risk. A natural or other
disaster could occur in a geographic region in which the Fund invests, which
could affect the economy or particular business operations of companies in that
specific geographic region and adversely impact the Fund’s investments in the
affected region.
Foreign Market Risk. Because foreign securities in the
Fund’s portfolio trade on foreign exchanges at times when the U.S.
markets are not open for trading, the value of those securities
may change materially at times when the U.S. markets are not open for trading,
regardless of whether there is an active U.S. market for Shares. Conversely,
Shares of the Fund may trade on U.S. exchanges at times when foreign exchanges
are not open for trading. This, in either case, could lead to a difference
between the U.S. market value of the Shares and the underlying value of the
Fund’s portfolio.
Foreign Investment Risk. Investments in the securities of
non-U.S. issuers involve risks beyond
those associated with investments in U.S. securities. Foreign securities may
have relatively low market liquidity, greater market volatility, decreased
publicly available information, and less reliable financial information about
issuers, and inconsistent and potentially less stringent accounting, auditing
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Foreign securities also are subject to the
risks of expropriation, nationalization, political instability or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. Investments in foreign securities also may be subject to
dividend withholding or confiscatory taxes, currency blockage and/or transfer
restrictions and higher transactional costs. As the Fund will invest in
securities denominated in foreign currencies, fluctuations in the value of the
U.S. dollar relative to the values of other currencies may adversely affect
investments in foreign securities and may negatively impact the Fund’s returns.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Consumer Discretionary Sector Risk. Companies
engaged in the consumer discretionary sector are affected by fluctuations in
supply and demand and changes in consumer preferences, social trends and
marketing campaigns. Changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls,
increased competition, depletion of resources and labor relations
also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the
worldwide economy, consumer spending, competition, demographics and consumer
preferences, exploration and production spending may adversely affect companies
in the consumer staples sector. Companies in this sector also are affected by
changes in government regulation, world events and economic conditions, as well
as natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Industrials Sector Risk. Changes in government
regulation, world events and economic conditions may adversely affect companies
in the industrials sector. In addition, these companies are at risk for
environmental and product liability damage claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations could adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market
as a whole and may perform differently from the value of the
market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition,
a third party investor, the Adviser or an affiliate of the
Adviser, an AP, a lead market maker, or another entity may invest in the Fund
and hold its investment for a limited period of time solely to facilitate
commencement of the Fund or to facilitate the Fund’s achieving a specified size
or scale. There can be no assurance that any large shareholder would not redeem
its investment, that the size of the Fund would be maintained at such levels or
that the Fund would continue to meet applicable listing requirements.
Redemptions by large shareholders could have a significant negative impact on
the Fund. Similarly, to the extent the Fund permits cash purchases, large
purchases of Shares may adversely affect the Fund’s performance to the extent
that the Fund is delayed in investing new cash and is required to maintain a
larger cash position than it ordinarily would. In addition, transactions by
large shareholders may account for a large percentage of the trading volume on
the Exchange and may, therefore, have a material upward or downward effect on
the market price of the Shares. To the extent the Fund permits redemptions in
cash, the Fund may hold a relatively large proportion of its assets in cash in
anticipation of large redemptions, diluting its investment returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human
error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or systems failures. The Fund and the investment
adviser seek to reduce these operational risks through controls and procedures.
However, these measures do not address every possible risk and may be inadequate
to address these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The bar chart and table provide an indication of the risks of
investing in the Fund by showing how the Fund’s total returns have varied from
year to year and by showing how the Fund’s average annual total returns compared
with a broad measure of market performance and an additional index with
characteristics relevant to the Fund. Although the information shown in the bar
chart and the table gives you some idea of the risks involved in investing in
the Fund, the Fund’s past performance (before and after taxes) is not
necessarily indicative of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Years
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
8.56% (1st Quarter 2017) |
|
(13.21)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 9.50%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (10/27/16) |
|
Return Before Taxes |
|
|
(12.81 |
)% |
|
|
5.01 |
% |
Return After Taxes on
Distributions |
|
|
(13.17 |
)% |
|
|
4.53 |
% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(6.98 |
)% |
|
|
3.98 |
% |
Invesco Revenue Weighted Global ESG
Index (Net) (reflects reinvested dividends net of withholding taxes but
reflects no deduction for fees, expenses or other taxes) |
|
|
(12.75 |
)% |
|
|
5.31 |
% |
MSCI All Country World Index
(Net) (reflects reinvested dividends net of withholding taxes but
reflects no deduction for fees, expenses or other taxes) |
|
|
(9.42 |
)% |
|
|
6.79 |
% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is
called a “Creation Unit”) or multiples thereof (“Creation Unit
Aggregations”), generally in exchange for the deposit or delivery of a basket of
securities. However, the Fund also reserves the right to permit or require
Creation Units to be issued in exchange for cash. Except when aggregated in
Creation Units, the Shares are not redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for
trading on NYSE Arca, Inc. and because the Shares will trade at
market prices rather than NAV, Shares may trade at prices greater than NAV (at a
premium), at NAV, or less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
RGLB |
|
Invesco Global Revenue
ETF |
Summary Information
Investment Objective
The Invesco Global Revenue ETF (the “Fund”) seeks to track the
investment results (before fees and expenses) of the Invesco Revenue Weighted
Global Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.43% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.43% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$44 |
|
$138 |
|
$241 |
|
$542 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Global Revenue ETF
(the “Predecessor Fund”) was 64% of the average value of its portfolio,
excluding the value of portfolio securities received or delivered as a result of
the Predecessor Fund’s in-kind
creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index, as well as American
depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that
represent securities in the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, MSCI, Inc. (“MSCI” or the “Index Provider”) compiles, maintains, and
calculates the Underlying Index, which is constructed using a rules-based
methodology that re-weights the MSCI
All Country World Index (the “Parent Index”), an index designed to measure the
equity market performance
of developed and emerging markets, according to the revenue
earned, subject to a maximum 5% per company weighting. Thus, the Underlying
Index contains the same securities as the Parent Index, but in different
proportions.
The Fund does not purchase all of the securities in the Underlying
Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve
its investment objective.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the consumer discretionary, consumer
staples, financials and industrials sectors. The Fund’s portfolio holdings, and
the extent to which it concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
ADR and GDR Risk. ADRs are certificates that evidence
ownership of shares of a foreign issuer and are alternatives to purchasing
directly underlying foreign securities in their national markets and currencies.
GDRs are certificates issued by an international bank that generally are traded
and denominated in the currencies of countries other than the home country of
the issuer of the underlying shares. ADRs and GDRs may be subject to certain of
the risks associated with direct investments in the securities of foreign
companies, such as currency, political, economic and market risks, because their
values depend on the performance of the non-dollar denominated underlying foreign
securities. Moreover, ADRs and GDRs may not track the price of the underlying
foreign securities on which they are based, and their value may change
materially at times when U.S. markets are not open for trading.
GDRs can involve currency risk since, unlike ADRs, they may not be
U.S. dollar-denominated. Because the Fund’s net asset value (“NAV”) is
determined in U.S. dollars, the Fund’s NAV could decline if the currency of the
non-U.S. market in which the Fund
invests depreciates against the U.S. dollar, even if the value of the Fund’s
holdings, measured in the foreign currency, increases.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently,
there is no assurance that those APs will establish or maintain an
active trading market for the Shares. This risk may be heightened to the extent
that securities held by the Fund are traded outside a collateralized settlement
system. In that case, APs may be required to post collateral on certain trades
on an agency basis (i.e., on behalf of other market participants), which only a
limited number of APs may be able to do. In addition, to the extent that APs
exit the business or are unable to proceed with processing creation and/or
redemption orders with respect to the Fund and no other AP is able to step
forward to create or redeem Creation Units (as defined below), this may result
in a significantly diminished trading market for Shares, which may be more
likely to trade at a premium or discount to the Fund’s NAV and to face trading
halts and/or delisting. This risk may be heightened for the Fund because it
invests in non-U.S. securities, which
may have lower trading volumes.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Currency Risk. Because the Fund’s NAV is determined in
U.S. dollars, the Fund’s NAV could decline if the currency of a non-U.S. market in which the Fund invests
depreciates against the U.S. dollar. Generally, an increase in the value of the
U.S. dollar against a foreign currency will reduce the value of a security
denominated in that foreign currency, thereby decreasing the Fund’s overall NAV.
Exchange rates may be volatile and may change quickly and unpredictably in
response to both global economic developments and economic conditions, causing
an adverse impact on the Fund. As a result, investors have the potential for
losses regardless of the length of time they intend to hold Shares.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Eurozone Investment Risk. The Fund’s investments in the
Eurozone may be subject to a greater risk than investments in other geographic
regions. The recent global economic crisis that began in 2008 has caused severe
financial difficulties for many European Union (“EU”) countries, pushing some to
the brink of insolvency and causing others to experience recession, large public
debt, restructuring of government debt, credit rating downgrades and an overall
weakening of banking and financial sectors. Some of those countries have
depended on, and may continue to depend on, the assistance from others, such as
the European Central Bank, the International Monetary Fund, or other governments
and institutions, to address those issues. By adopting the euro as its currency,
members of the European Monetary Union (“EMU”) are subject to fiscal and
monetary controls that could limit to some degree the ability to implement their
own economic policies. Additionally, EMU member countries could voluntarily
abandon the euro or involuntarily be forced out of the euro, including by way of
a partial or complete dissolution of the EMU. The effects of such outcomes on
the rest of the Eurozone and the global markets as a whole are unpredictable,
but are likely to be negative, and may adversely impact market values of
Eurozone and various other securities and currencies, cause redenomination of
certain securities into less valuable local currencies, and result in more
volatile and illiquid markets.
Foreign Market Risk. Because foreign securities in the
Fund’s portfolio trade on foreign exchanges at times when the U.S. markets are
not open for trading, the value of those securities may change materially at
times when the U.S. markets are not open for trading, regardless of whether
there is an active U.S. market for Shares. Conversely, Shares of the Fund may
trade on U.S. exchanges at times when foreign exchanges are not open for
trading. This, in either case, could lead to a difference between the U.S.
market value of the Shares and the underlying value of the Fund’s portfolio.
Foreign Investment Risk. Investments in the securities of
non-U.S. issuers involve risks beyond
those associated with investments in U.S. securities. Foreign securities may
have relatively low market liquidity, greater market volatility, decreased
publicly available information, and less reliable financial information about
issuers, and inconsistent and potentially less stringent accounting, auditing
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Foreign securities also are subject to the
risks of expropriation, nationalization, political instability or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. Investments in foreign securities also may be subject to
dividend withholding or confiscatory taxes, currency blockage and/or transfer
restrictions and higher transactional costs. As the Fund will invest in
securities denominated in foreign currencies, fluctuations in the value of the
U.S. dollar relative to the values of other currencies may adversely affect
investments in foreign securities and may negatively impact the Fund’s returns.
Geographic Concentration Risk. A natural or other
disaster could occur in a geographic region in which the Fund invests, which
could affect the economy or particular business operations of companies in that
specific geographic region and adversely impact the Fund’s investments in the
affected region.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up
and down more dramatically. Additionally, the announcement that a
security has been added to a widely followed index or benchmark may cause the
price of that security to increase. Conversely, the announcement that a security
has been deleted from a widely followed index or benchmark may cause the price
of that security to decrease.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Consumer Discretionary Sector Risk. Companies
engaged in the consumer discretionary sector are affected by fluctuations in
supply and demand and changes in consumer preferences, social trends and
marketing campaigns. Changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the
worldwide economy, consumer spending, competition, demographics and consumer
preferences, exploration and production spending may adversely affect companies
in the consumer staples sector. Companies in this sector also are affected by
changes in government regulation, world events and economic conditions, as well
as natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are
subject to extensive government regulation and, as a result, their
profitability may be affected by new regulations or regulatory interpretations.
Unstable interest rates can have a disproportionate effect on the financial
services sector and financial services companies whose securities the Fund may
purchase may themselves have concentrated portfolios, which makes them
vulnerable to economic conditions that affect that sector. Financial services
companies have also been affected by increased competition, which could
adversely affect the profitability or viability of such companies.
Industrials Sector Risk. Changes in government
regulation, world events and economic conditions may adversely affect companies
in the industrials sector. In addition, these companies are at risk for
environmental and product liability damage claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations could adversely affect the companies in this sector.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the
Fund may hold a relatively large proportion of its assets in cash
in anticipation of large redemptions, diluting its investment returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Mid-Capitalization
Company Risk. Investing in securities of mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies, and may have returns that vary, sometimes
significantly, from the overall securities market. Mid-capitalization companies tend to have
inexperienced management as well as limited product and market diversification
and financial resources. Often mid-capitalization companies and the
industries in which they focus are still evolving and, as a result, they may be
more sensitive to changing market conditions.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. The Fund’s use of a
representative sampling approach may cause the Fund not to be as well-correlated
with the return of the Underlying Index as would be the case if the Fund
purchased all of the securities in the Underlying Index in the proportions
represented in the Underlying Index. In addition, the performance of the Fund
and the Underlying Index may vary due to asset valuation differences and
differences between the Fund’s portfolio and the Underlying Index resulting from
legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Sampling Risk. The Fund’s use of a
representative sampling approach may result in it holding a smaller number of
securities than are in the Underlying Index. As a result, an adverse development
to an issuer of securities that the Fund holds could result in a greater decline
in NAV than would be the case if the Fund held all of the securities in the
Underlying Index. To the extent the assets in the Fund are smaller, these risks
will be greater.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
3.91% (3rd Quarter 2018) |
|
(12.50)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 8.93%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (07/11/17) |
|
Return Before Taxes |
|
|
(12.09 |
)% |
|
|
(1.17 |
)% |
Return After Taxes on
Distributions |
|
|
(12.45 |
)% |
|
|
(1.60 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(6.54 |
)% |
|
|
(0.70 |
)% |
Invesco Revenue Weighted Global Index
(Net) (reflects reinvested dividends net of withholding taxes but
reflects no deduction for fees, expenses or other taxes) |
|
|
(11.80 |
)% |
|
|
(0.90 |
)% |
MSCI All Country World Index
(Net) (reflects reinvested dividends net of withholding taxes but
reflects no deduction for fees, expenses or other taxes) |
|
|
(9.42 |
)% |
|
|
0.43 |
% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 100,000 Shares (each block of Shares is
called a “Creation Unit”) or multiples thereof (“Creation Unit
Aggregations”), generally in exchange for the deposit or delivery of a basket of
securities. However, the Fund also reserves the right to permit or require
Creation Units to be issued in exchange for cash. Except when aggregated in
Creation Units, the Shares are not redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
REFA |
|
Invesco International Revenue
ETF |
Summary Information
Investment Objective
The Invesco International Revenue ETF (the “Fund”) seeks to track
the investment results (before fees and expenses) of the Invesco Revenue
Weighted International Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.42% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.42% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$43 |
|
$135 |
|
$235 |
|
$530 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer International
Revenue ETF (the “Predecessor Fund”) was 29% of the average value of its
portfolio, excluding the value of portfolio securities received or delivered as
a result of the Predecessor Fund’s in-kind creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index, as well as American
depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that
represent securities in the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, MSCI, Inc. (“MSCI” or the “Index Provider”) compiles, maintains, and
calculates the Underlying Index, which is constructed using a rules-based
methodology that re-weights the
constituent securities of the MSCI EAFE Index (the “Parent Index”) according to
the revenue earned by the
companies in the Parent Index, subject to a maximum 5% per
company weighting. Thus, the Underlying Index contains the same securities as
the Parent Index, but in different proportions.
Since the Underlying Index will be constructed based on securities
in the Parent Index, it will primarily consist of securities from developed
markets around the world, excluding the United States and Canada. It may include
securities of foreign companies other than developed markets around the world
and companies of any market capitalization, including medium capitalization
companies. The Parent Index includes stocks from Europe, Australasia and the Far
East. Consistent with the attributes of the Parent Index, the Fund invests in
issuers that maintain their principal place of business or conduct their
business activities outside the U.S., issuers that have their securities traded
on non-U.S. exchanges or issuers that
have been formed under the laws of non-U.S. countries.
The Fund does not purchase all of the securities in the Underlying
Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve
its investment objective.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the consumer discretionary, financials and
industrials sectors. The Fund’s portfolio holdings, and the extent to which it
concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
ADR and GDR Risk. ADRs are certificates that evidence
ownership of shares of a foreign issuer and are alternatives to purchasing
directly underlying foreign securities in their national markets and currencies.
GDRs are certificates issued by an international bank that generally are traded
and denominated in the currencies of countries other than the home country of
the issuer of the underlying shares. ADRs and GDRs may be subject to certain of
the risks associated with direct investments in the securities of foreign
companies, such as currency, political, economic and market risks, because their
values depend on the performance of the non-dollar denominated underlying foreign
securities. Moreover, ADRs and GDRs may not track the price of the underlying
foreign securities on which they are based, and their value may change
materially at times when U.S. markets are not open for trading.
GDRs can involve currency risk since, unlike ADRs, they may not be
U.S. dollar-denominated. Because the Fund’s net asset value (“NAV”) is
determined in U.S. dollars, the Fund’s NAV could decline if the currency of the
non-U.S. market in which the Fund
invests depreciates against the U.S. dollar, even if the value of the Fund’s
holdings, measured in the foreign currency, increases.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s NAV and
to face trading halts and/or delisting. This risk may be heightened for the Fund
because it invests in non-U.S.
securities, which may have lower trading volumes.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Currency Risk. Because the Fund’s NAV is determined in
U.S. dollars, the Fund’s NAV could decline if the currency of a non-U.S. market in which the Fund invests
depreciates against the U.S. dollar. Generally, an increase in the value of the
U.S. dollar against a foreign currency will reduce the value of a security
denominated in that foreign currency, thereby decreasing the Fund’s overall NAV.
Exchange rates may be volatile and may change quickly and unpredictably in
response to both global economic developments and economic conditions, causing
an adverse impact on the Fund. As a result, investors have the potential for
losses regardless of the length of time they intend to hold Shares.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment
toward particular industries will become negative. The value of a
company’s common stock may fall solely because of factors, such as an increase
in production costs, that negatively impact other companies in the same region,
industry or sector of the market. A company’s common stock also may decline
significantly in price over a short period of time due to factors specific to
that company, including decisions made by its management or lower demand for the
company’s products or services. For example, an adverse event, such as an
unfavorable earnings report or the failure to make anticipated dividend
payments, may depress the value of common stock.
Eurozone Investment Risk. The Fund’s investments in the
Eurozone may be subject to a greater risk than investments in other geographic
regions. The recent global economic crisis that began in 2008 has caused severe
financial difficulties for many European Union (“EU”) countries, pushing some to
the brink of insolvency and causing others to experience recession, large public
debt, restructuring of government debt, credit rating downgrades and an overall
weakening of banking and financial sectors. Some of those countries have
depended on, and may continue to depend on, the assistance from others, such as
the European Central Bank, the International Monetary Fund, or other governments
and institutions, to address those issues. By adopting the euro as its currency,
members of the European Monetary Union (“EMU”) are subject to fiscal and
monetary controls that could limit to some degree the ability to implement their
own economic policies. Additionally, EMU member countries could voluntarily
abandon the euro or involuntarily be forced out of the euro, including by way of
a partial or complete dissolution of the EMU. The effects of such outcomes on
the rest of the Eurozone and the global markets as a whole are unpredictable,
but are likely to be negative, and may adversely impact market values of
Eurozone and various other securities and currencies, cause redenomination of
certain securities into less valuable local currencies, and result in more
volatile and illiquid markets.
Foreign Market Risk. Because foreign securities in the
Fund’s portfolio trade on foreign exchanges at times when the U.S. markets are
not open for trading, the value of those securities may change materially at
times when the U.S. markets are not open for trading, regardless of whether
there is an active U.S. market for Shares. Conversely, Shares of the Fund may
trade on U.S. exchanges at times when foreign exchanges are not open for
trading. This, in either case, could lead to a difference between the U.S.
market value of the Shares and the underlying value of the Fund’s portfolio.
Foreign Investment Risk. Investments in the securities of
non-U.S. issuers involve risks beyond
those associated with investments in U.S. securities. Foreign securities may
have relatively low market liquidity, greater market volatility, decreased
publicly available information, and less reliable financial information about
issuers, and inconsistent and potentially less stringent accounting, auditing
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Foreign securities also are subject to the
risks of expropriation, nationalization, political instability or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. Investments in foreign securities also may be
subject to dividend withholding or confiscatory taxes, currency
blockage and/or transfer restrictions and higher transactional costs. As the
Fund will invest in securities denominated in foreign currencies, fluctuations
in the value of the U.S. dollar relative to
the values of other currencies may adversely affect investments in
foreign securities and may negatively impact the Fund’s returns.
Geographic Concentration Risk. A natural or other
disaster could occur in a geographic region in which the Fund invests, which
could affect the economy or particular business operations of companies in that
specific geographic region and adversely impact the Fund’s investments in the
affected region.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up and down more dramatically. Additionally, the
announcement that a security has been added to a widely followed index or
benchmark may cause the price of that security to increase. Conversely, the
announcement that a security has been deleted from a widely followed index or
benchmark may cause the price of that security to decrease.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Consumer Discretionary Sector Risk. Companies
engaged in the consumer discretionary sector are affected by fluctuations in
supply and demand and changes in consumer preferences, social trends and
marketing campaigns. Changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations also may adversely affect these companies.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Industrials Sector Risk. Changes in government
regulation, world events and economic conditions may adversely affect companies
in the industrials sector. In addition, these companies are at risk for
environmental and product liability damage claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations could adversely affect the companies in this sector.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the
trading volume on the Exchange and may, therefore, have a material
upward or downward effect on the market price of the Shares. To the extent the
Fund permits redemptions in cash, the Fund may hold a relatively large
proportion of its assets in cash in anticipation of large redemptions, diluting
its investment returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Mid-Capitalization
Company Risk. Investing in securities of mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies, and may have returns that vary, sometimes
significantly, from the overall securities market. Mid-capitalization companies tend to have
inexperienced management as well as limited product and market diversification
and financial resources. Often mid-capitalization companies and the
industries in which they focus are still evolving and, as a result, they may be
more sensitive to changing market conditions.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. The Fund’s use of a
representative sampling approach may cause the Fund not to be as well-correlated
with the return of the Underlying Index as would be the case if the Fund
purchased all of the securities in the Underlying Index in the proportions
represented in the Underlying Index. In addition, the performance of the Fund
and the Underlying Index may vary due to asset valuation differences and
differences between the Fund’s portfolio and the Underlying Index resulting from
legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational
risks through controls and procedures. However, these measures do
not address every possible risk and may be inadequate to address these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Sampling Risk. The Fund’s use of a
representative sampling approach may result in it holding a smaller number of
securities than are in the Underlying Index. As a result, an adverse development
to an issuer of securities that the Fund holds could result in a greater decline
in NAV than would be the case if the Fund held all of the securities in the
Underlying Index. To the extent the assets in the Fund are smaller, these risks
will be greater.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
2.09% (3rd Quarter 2018) |
|
(13.38)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 7.81%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (07/11/17) |
|
Return Before Taxes |
|
|
(14.60 |
)% |
|
|
(3.17 |
)% |
Return After Taxes on
Distributions |
|
|
(14.94 |
)% |
|
|
(3.58 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(7.89 |
)% |
|
|
(2.14 |
)% |
Invesco Revenue Weighted International
Index (Net) (reflects reinvested dividends net of withholding
taxes but reflects no deduction for fees, expenses or other
taxes) |
|
|
(14.40 |
)% |
|
|
(2.94 |
)% |
MSCI EAFE® Index
(Net) (reflects reinvested dividends net of withholding taxes but
reflects no deduction for fees, expenses or other taxes) |
|
|
(13.79 |
)% |
|
|
(3.47 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May
2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 100,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
RIDV |
|
Invesco International Ultra
Dividend Revenue ETF |
Summary Information
Investment Objective
The Invesco International Ultra Dividend Revenue ETF (the “Fund”)
seeks to track the investment results (before fees and expenses) of the FTSE
Custom Developed ex US Ultra Dividend Revenue Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.42% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.42% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. The Oppenheimer
International Ultra Dividend Revenue ETF (the “Predecessor Fund”) had not
commenced operations as of its most recent fiscal year end and portfolio
turnover data therefore is not available.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index, as well as American
depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that
represent securities in the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, FTSE Russell (“FTSE” or the “Index Provider”) compiles, maintains,
and calculates the Underlying Index, which is constructed using a rules-based
methodology that starts with the FTSE Developed ex US Index (the “Parent
Index”), an index designed to represent the performance of large- and mid-cap securities from 24 developed market
countries, excluding the United States. From a universe of components of the
Parent Index, the Underlying Index (1) excludes the top
5% of securities within each country by yield, (2) excludes
the top 5% of securities within each sector by dividend payout ratio,
(3) selects the top 200 securities according to the highest average of the
1-year trailing dividend yields over
the past two years and (4) re-weights those securities
according to the revenue earned by those companies, subject to a maximum
5% per company weighting and a maximum 10% variation on the Underlying
Index’s allocation to a single country versus the Parent Index. The Underlying
Index thus contains a subset of the securities included in the Parent Index, in
different proportions.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of July 27, 2018,
the Underlying Index focused on the energy and financials sectors. The Fund’s
portfolio holdings, and the extent to which it concentrates, are likely to
change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
ADR and GDR Risk. ADRs are certificates that evidence
ownership of shares of a foreign issuer and are alternatives to purchasing
directly underlying foreign securities in their national markets and currencies.
GDRs are certificates issued by an international bank that generally are traded
and denominated in the currencies of countries other than the home country of
the issuer of the underlying shares. ADRs and GDRs may be subject to certain of
the risks associated with direct investments in the securities of foreign
companies, such as currency, political, economic and market risks, because their
values depend on the performance of the non-dollar denominated underlying foreign
securities. Moreover, ADRs and GDRs may not track the price of the underlying
foreign securities on which they are based, and their value may change
materially at times when U.S. markets are not open for trading.
GDRs can involve currency risk since, unlike ADRs, they may not be
U.S. dollar-denominated. Because the Fund’s net asset value (“NAV”) is
determined in U.S. dollars, the Fund’s NAV could decline if the currency of the
non-U.S. market in which the Fund
invests depreciates against the U.S. dollar, even if the value of the Fund’s
holdings, measured in the foreign currency, increases.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s NAV and
to face trading halts and/or delisting. This risk may be heightened for the Fund
because it invests in non-U.S.
securities, which may have lower trading volumes.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Currency Risk. Because the Fund’s NAV is determined in
U.S. dollars, the Fund’s NAV could decline if the currency of a non-U.S. market in which the Fund invests
depreciates against the U.S. dollar. Generally, an increase in the value of the
U.S. dollar against a foreign currency will reduce the value of a security
denominated in that foreign currency, thereby decreasing the Fund’s overall NAV.
Exchange rates may be volatile and may change quickly and unpredictably in
response to both global economic developments and economic conditions, causing
an adverse impact on the Fund. As a result, investors have the potential for
losses regardless of the length of time they intend to hold Shares.
Dividend-Paying Security Risk. Securities that pay high
dividends as a group can fall out of favor with the market, causing such
companies to underperform companies that do not pay high dividends. Also,
changes in the dividend policies of the companies in which the Fund invests and
the capital resources available for such companies’ dividend payments may
adversely affect the Fund.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds.
In addition, equity risk includes the risk that investor sentiment
toward particular industries will become negative. The value of a company’s
common stock may fall solely because of factors, such as an increase in
production costs, that negatively impact other companies in the same region,
industry or sector of the market. A company’s common stock also may decline
significantly in price over a short period of time due to factors specific to
that company, including decisions made by its management or lower demand for the
company’s products or services. For example, an adverse event, such as an
unfavorable earnings report or the failure to make anticipated dividend
payments, may depress the value of common stock.
Eurozone Investment Risk. The Fund’s investments in the
Eurozone may be subject to a greater risk than investments in other geographic
regions. The global economic crisis that began in 2008 has caused severe
financial difficulties for many European Union (“EU”) countries, pushing some to
the brink of insolvency and causing others to experience recession, large public
debt, restructuring of government debt, credit rating downgrades and an overall
weakening of banking and financial sectors. Some of those countries have
depended on, and may continue to depend on, the assistance from others, such as
the European Central Bank, the International Monetary Fund, or other governments
and institutions, to address those issues. By adopting the euro as its currency,
members of the European Monetary Union (“EMU”) are subject to fiscal and
monetary controls that could limit to some degree the ability to implement their
own economic policies. Additionally, EMU member countries could voluntarily
abandon the euro or involuntarily be forced out of the euro, including by way of
a partial or complete dissolution of the EMU. The effects of such outcomes on
the rest of the Eurozone and the global markets as a whole are unpredictable,
but are likely to be negative, and may adversely impact market values of
Eurozone and various other securities and currencies, cause redenomination of
certain securities into less valuable local currencies, and result in more
volatile and illiquid markets.
Foreign Market Risk. Because foreign securities in the
Fund’s portfolio trade on foreign exchanges at times when the U.S. markets are
not open for trading, the value of those securities may change materially at
times when the U.S. markets are not open for trading, regardless of whether
there is an active U.S. market for Shares. Conversely, Shares of the Fund may
trade on U.S. exchanges at times when foreign exchanges are not open for
trading. This, in either case, could lead to a difference between the U.S.
market value of the Shares and the underlying value of the Fund’s portfolio.
Foreign Investment Risk. Investments in the securities of
non-U.S. issuers involve risks beyond
those associated with investments in U.S. securities. Foreign securities may
have relatively low market liquidity, greater market volatility, decreased
publicly available information, and less reliable financial information about
issuers, and inconsistent and potentially less stringent accounting, auditing
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Foreign securities also are subject to the
risks of expropriation, nationalization, political instability or other adverse
political or economic developments and the difficulty of enforcing obligations
in other countries. Investments in foreign securities also may be
subject to dividend withholding or confiscatory taxes, currency blockage and/or
transfer restrictions and higher transactional costs. As the Fund will invest in
securities denominated in foreign currencies, fluctuations in the value of the
U.S. dollar relative to the values of other currencies may adversely affect
investments in foreign securities and may negatively impact the Fund’s returns.
Geographic Concentration Risk. A natural or other
disaster could occur in a geographic region in which the Fund invests, which
could affect the economy or particular business operations of companies in that
specific geographic region and adversely impact the Fund’s investments in the
affected region.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up and down more dramatically. Additionally, the
announcement that a security has been added to a widely followed index or
benchmark may cause the price of that security to increase. Conversely, the
announcement that a security has been deleted from a widely followed index or
benchmark may cause the price of that security to decrease.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Energy Sector Risk. Changes in worldwide energy
prices, exploration and production spending may adversely affect companies in
the energy sector. Changes in government regulation, world events and economic
conditions also affect these companies, particularly in the countries where
companies are located or do business. In addition, these companies are at risk
of civil liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Commodity price volatility, changes in
exchange rates, imposition of import controls, increased
competition, depletion of resources, development of alternative energy sources,
technological developments and labor relations also could affect companies in
this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Mid-Capitalization
Company Risk. Investing in securities of mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies, and may have returns that vary, sometimes
significantly, from the overall securities market. Mid-capitalization companies tend to have
inexperienced management as well as limited product and market diversification
and financial resources. Often mid-capitalization companies and the
industries in which they focus are still evolving and, as a result, they may be
more sensitive to changing market conditions.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as
failures in systems and technology. Such failures may result in
delays in the calculation of the Fund’s NAV and/or the inability to calculate
NAV over extended time periods. The Fund may be unable to recover any losses
associated with such failures.
Performance
As of the date of this Prospectus, the Fund does not have a full
calendar year of performance history. The Fund is the successor to the
investment performance of the Predecessor Fund as a result of the reorganization
of the Predecessor Fund into the Fund, which was consummated after the close of
business on May 24, 2019. Accordingly, once the Fund has a full calendar
year of performance, the Fund will present total return information in this
section that, for periods ending on or prior to May 24, 2019, is that of
the Predecessor Fund. Updated performance information is available online at
www.invesco.com/ETFs.
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on NYSE
Arca, Inc. and because the Shares will trade at market prices rather than NAV,
Shares may trade at prices greater than NAV (at a premium), at NAV, or less than
NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
OVOL |
|
Invesco Russell 1000® Low Volatility Factor
ETF |
Summary Information
Investment Objective
The Invesco Russell 1000® Low Volatility Factor
ETF (the “Fund”) seeks to track the investment results (before fees and
expenses) of the Russell 1000 Volatility Factor Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.19% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.19% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$19 |
|
$61 |
|
$107 |
|
$243 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Russell 1000® Low Volatility Factor ETF
(the “Predecessor Fund”) was 7% of the average value of its portfolio, excluding
the value of portfolio securities received or delivered as a result of the
Predecessor Fund’s in-kind creations
and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, Frank Russell Company (“Frank Russell” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that selects a subset of the equity securities
from the Russell 1000 Index (the “Parent Index”), which is comprised of the
1,000 largest-capitalization companies in the United States. To construct
the Underlying Index, each constituent in the Parent Index is
assigned a factor score based on the extent to which the constituent exhibits
lower volatility characteristics relative to the other constituents in the
Parent Index. A company’s volatility factor score is based on the standard
deviation of weekly total returns to a company’s stock price over the trailing
five years ending on the last business day of the prior month. An initial weight
for each security is determined from the product of the security’s factor score
and its weight in the Parent Index. These weights are adjusted to ensure that
each constituent and the Underlying Index as a whole satisfy certain constraints
with respect to factor exposure, diversification, liquidity, industry exposure,
maximum security and minimum security weights, as compared to the Parent Index.
Securities in the Parent Index are excluded from the Underlying Index if their
relevant factor characteristics fall below an algorithmically-determined
threshold, or if their adjusted weights fall below a certain de minimis amount.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the basic materials, communication
services, consumer discretionary, consumer staples, energy, financials,
healthcare, industrials, information technology, real estate securities and
utilities sectors. The Fund’s portfolio holdings, and the extent to which it
concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing
creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Index Construction Risk. A stock included in
the Underlying Index may not exhibit the factor trait or provide specific factor
exposure for which it was selected, and consequently, the Fund’s holdings may
not exhibit returns consistent with that factor trait.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund
invests, may include, but are not limited to, legislative or
regulatory changes, adverse market conditions and/or increased competition
within the industry or industry group. In addition, at times, such industry or
industry group may be out of favor and underperform other industries, industry
groups or the market as a whole.
Basic Materials Sector Risk. Changes in world
events, political, environmental and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations may adversely affect the companies engaged in the production and
distribution of basic materials.
Communication Services Sector Risk. The value of the
securities of communication services companies are particularly vulnerable to
rapid advancements in technology, the innovation of competitors, rapid product
obsolescence, and government regulation and competition, both domestically and
internationally. Additionally, fluctuating domestic and international demand,
shifting demographics and often unpredictable changes in consumer tastes can
drastically affect a communication services company’s profitability. While all
companies may be susceptible to network security breaches, certain companies in
the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their businesses.
Consumer Discretionary Sector Risk. Companies engaged in
the consumer discretionary sector are affected by fluctuations in supply and
demand and changes in consumer preferences, social trends and marketing
campaigns. Changes in consumer spending as a result of world events, political
and economic conditions, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending may adversely affect companies in the
consumer staples sector. Companies in this sector also are affected by changes
in government regulation, world events and economic conditions, as well as
natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government regulation, world events and economic conditions
also affect these companies, particularly in the countries where companies are
located or do business. In addition, these companies are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources, development of alternative energy sources, technological
developments and labor relations also could affect companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government regulation,
world events and economic conditions may adversely affect companies in the
industrials sector. In addition, these companies are at risk for environmental
and product liability damage claims. Also, commodity price volatility, changes
in exchange rates, imposition of import controls, increased competition,
depletion of resources, technological developments and labor relations could
adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Real Estate Securities Risk. Investing in securities of
real estate companies includes risks such as: fluctuations in the value of the
underlying properties; defaults by borrowers or tenants; market saturation;
changes in general and local economic conditions; decreases in market rates for
rents; changes in the availability, cost and terms of mortgage funds; increased
competition, property taxes, capital expenditures, or operating expenses; and
other economic, political or regulatory occurrences, including the impact of
changes in environmental laws, that may affect the real estate industry.
Utilities Sector Risk. Companies in the utilities sector
are subject to a variety of factors that may adversely affect their business or
operations, including high interest costs associated with capital construction
and improvement programs; difficulty in raising adequate capital in periods of
high inflation and unsettled capital markets; governmental regulation of rates
the issuer can charge to customers; costs associated with compliance with
environmental and other regulations; effects of economic slowdowns and surplus
capacity; increased competition; and potential losses resulting from a
developing deregulatory environment.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on the low
volatility factor. There can be no assurance that doing so will enhance the
Fund’s performance over time. It is expected that targeting exposure to the low
volatility factor will detract from performance in some market environments,
perhaps for extended periods. In such circumstances, the investment adviser will
not adjust a Fund’s investment process to target a different factor.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Low Volatility Risk. Although subject to the risks of
common stocks, low volatility stocks are seen as having a lower risk profile
than the overall markets. However, a portfolio comprised of low volatility
stocks may not produce investment exposure that has lower variability to changes
in such stocks’ price levels. Low volatility stocks are likely to underperform
the broader market during periods of rapidly rising stock prices. Although the
Underlying Index was created to seek lower volatility than the Parent Index,
there is no guarantee that this strategy will be successful.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions
to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
8.66% (3rd Quarter 2018) |
|
(10.46)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 12.92%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (11/08/17) |
|
Return Before Taxes |
|
|
(2.63 |
)% |
|
|
0.79 |
% |
Return After Taxes on
Distributions |
|
|
(3.11 |
)% |
|
|
0.27 |
% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(1.18 |
)% |
|
|
0.63 |
% |
Russell 1000® Volatility Factor
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(2.43 |
)% |
|
|
1.00 |
% |
Russell 1000® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(4.78 |
)% |
|
|
(1.30 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another
investment. Ask your salesperson or financial adviser or visit
your financial intermediary’s web-site
for more information.
|
|
|
OMOM |
|
Invesco Russell 1000® Momentum Factor
ETF |
Summary Information
Investment Objective
The Invesco Russell 1000® Momentum Factor ETF
(the “Fund”) seeks to track the investment results (before fees and expenses) of
the Russell 1000®
Momentum Factor Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.19% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.19% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$19 |
|
$61 |
|
$107 |
|
$243 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Russell 1000® Momentum Factor ETF (the
“Predecessor Fund”) was 22% of the average value of its portfolio, excluding the
value of portfolio securities received or delivered as a result of the
Predecessor Fund’s in-kind creations
and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, Frank Russell Company (“Frank Russell” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that selects a subset of the equity securities
from the Russell 1000 Index (the “Parent Index”), which is comprised of the
1,000 largest-capitalization companies in the United States. To construct
the Underlying Index, each constituent in the Parent Index is
assigned a factor score based on the extent to which the constituent exhibits
greater momentum characteristics relative to the other constituents in the
Parent Index. A company’s momentum factor score is based on historical total
return over the 11 months ending on the last business day of the prior month. An
initial weight for each security is determined from the product of the
security’s factor score and its weight in the Parent Index. These weights are
adjusted to ensure that each constituent and the Underlying Index as a whole
satisfy certain constraints with respect to industry exposure, maximum security
and minimum security weights, as compared to the Parent Index. Securities in the
Parent Index are excluded from the Underlying Index if their relevant factor
characteristics fall below an algorithmically-determined threshold, or if their
adjusted weights fall below a certain de minimis amount.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the basic materials, communication
services, consumer discretionary, consumer staples, energy, financials,
healthcare, industrials, information technology, real estate securities and
utilities sectors. The Fund’s portfolio holdings, and the extent to which it
concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and
no other AP is able to step forward to create or redeem Creation
Units (as defined below), this may result in a significantly diminished trading
market for Shares, which may be more likely to trade at a premium or discount to
the Fund’s net asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Index Construction Risk. A stock included in
the Underlying Index may not exhibit the factor trait or provide specific factor
exposure for which it was selected, and consequently, the Fund’s holdings may
not exhibit returns consistent with that factor trait.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or
regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Basic Materials Sector Risk. Changes in world
events, political, environmental and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations may adversely affect the companies engaged in the production and
distribution of basic materials.
Communication Services Sector Risk. The value of the
securities of communication services companies are particularly vulnerable to
rapid advancements in technology, the innovation of competitors, rapid product
obsolescence, and government regulation and competition, both domestically and
internationally. Additionally, fluctuating domestic and international demand,
shifting demographics and often unpredictable changes in consumer tastes can
drastically affect a communication services company’s profitability. While all
companies may be susceptible to network security breaches, certain companies in
the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their businesses.
Consumer Discretionary Sector Risk. Companies engaged in
the consumer discretionary sector are affected by fluctuations in supply and
demand and changes in consumer preferences, social trends and marketing
campaigns. Changes in consumer spending as a result of world events, political
and economic conditions, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending may adversely affect companies in the
consumer staples sector. Companies in this sector also are affected by changes
in government regulation, world events and economic conditions, as well as
natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government regulation, world events and economic conditions
also affect these companies, particularly in the countries where companies are
located or do business. In addition, these companies are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Commodity price volatility, changes in exchange rates,
imposition of import controls, increased
competition, depletion of resources, development of alternative
energy sources, technological developments and labor relations also could affect
companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government regulation,
world events and economic conditions may adversely affect companies in the
industrials sector. In addition, these companies are at risk for environmental
and product liability damage claims. Also, commodity price volatility, changes
in exchange rates, imposition of import controls, increased competition,
depletion of resources, technological developments and labor relations could
adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Real Estate Securities Risk. Investing in securities of
real estate companies includes risks such as: fluctuations in the value of the
underlying properties; defaults by borrowers or tenants; market saturation;
changes in general and local economic conditions; decreases in market rates for
rents; changes in the availability, cost and terms of mortgage funds; increased
competition, property taxes, capital expenditures, or operating expenses; and
other economic, political or regulatory occurrences, including the impact of
changes in environmental laws, that may affect the real estate industry.
Utilities Sector Risk. Companies in the utilities sector
are subject to a variety of factors that may adversely affect their
business or operations, including high interest costs associated
with capital construction and improvement programs; difficulty in raising
adequate capital in periods of high inflation and unsettled capital markets;
governmental regulation of rates the issuer can charge to customers; costs
associated with compliance with environmental and other regulations; effects of
economic slowdowns and surplus capacity; increased competition; and potential
losses resulting from a developing deregulatory environment.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on the momentum
factor. There can be no assurance that doing so will enhance the Fund’s
performance over time. It is expected that targeting exposure to the momentum
factor will detract from performance in some market environments, perhaps for
extended periods. In such circumstances, the investment adviser will not adjust
a Fund’s investment process to target a different factor.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Momentum Investing Risk. The momentum style of
investing is subject to the risk that the securities may be more volatile than
the market as a whole, or that the returns on securities that previously have
exhibited price momentum are less than returns on other styles of investing.
Momentum can turn quickly, and stocks that previously have exhibited high
momentum may not experience continued positive momentum. In addition, there may
be periods when the momentum style of investing is out of favor and therefore,
the investment performance of the Fund may suffer.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
8.26% (3rd Quarter 2018) |
|
(16.06)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 13.64%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (11/08/17) |
|
Return Before Taxes |
|
|
(4.56 |
)% |
|
|
(1.76 |
)% |
Return After Taxes on
Distributions |
|
|
(4.88 |
)% |
|
|
(2.11 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(2.43 |
)% |
|
|
(1.31 |
)% |
Russell 1000® Momentum Factor
Index (reflects no deduction for fees, expenses or other
taxes) |
|
|
(4.39 |
)% |
|
|
(1.57 |
)% |
Russell 1000® Index (reflects no
deduction for fees, expenses or other taxes) |
|
|
(4.78 |
)% |
|
|
(1.30 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
OQAL |
|
Invesco Russell 1000® Quality Factor
ETF |
Summary Information
Investment Objective
The Invesco Russell 1000® Quality Factor ETF (the
“Fund”) seeks to track the investment results (before fees and expenses) of the
Russell 1000 Quality Factor Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.19% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.19% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$19 |
|
$61 |
|
$107 |
|
$243 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Russell 1000® Quality Factor ETF (the
“Predecessor Fund”) was 22% of the average value of its portfolio, excluding the
value of portfolio securities received or delivered as a result of the
Predecessor Fund’s in-kind creations
and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, Frank Russell Company (“Frank Russell” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that selects a subset of the equity securities
from the Russell 1000 Index (the “Parent Index”), which is comprised of the
1,000 largest-capitalization companies in the United States. To construct
the Underlying Index, each constituent in the Parent Index is
assigned a factor score based on the extent to which the constituent exhibits
greater quality characteristics relative to the other constituents in the Parent
Index. A company’s quality factor score is based on an equally-weighted
composite of return on assets, change in asset turnover, accruals, and leverage,
calculated based on information reported in the company’s most recent annual
financial statement as of the last business day of the prior month. An initial
weight for each security is determined from the product of the security’s factor
score and its weight in the Parent Index. These weights are adjusted to ensure
that each constituent and the Underlying Index as a whole satisfy certain
constraints with respect to factor exposure, diversification, liquidity,
industry exposure, maximum security and minimum security weights, as compared to
the Parent Index. Securities in the Parent Index are excluded from the
Underlying Index if their relevant factor characteristics fall below an
algorithmically-determined threshold, or if their adjusted weights fall below a
certain de minimis amount.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the basic materials, communication
services, consumer discretionary, consumer staples, energy, financials,
healthcare, industrials, information technology, real estate securities and
utilities sectors. The Fund’s portfolio holdings, and the extent to which it
concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited
number of APs may be able to do. In addition, to the extent that
APs exit the business or are unable to proceed with processing creation and/or
redemption orders with respect to the Fund and no other AP is able to step
forward to create or redeem Creation Units (as defined below), this may result
in a significantly diminished trading market for Shares, which may be more
likely to trade at a premium or discount to the Fund’s net asset value (“NAV”)
and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Index Construction Risk. A stock included in
the Underlying Index may not exhibit the factor trait or provide specific factor
exposure for which it was selected, and consequently, the Fund’s holdings may
not exhibit returns consistent with that factor trait.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous
industries or industry groups. Such industry-based risks, any of
which may adversely affect the companies in which the Fund invests, may include,
but are not limited to, legislative or regulatory changes, adverse market
conditions and/or increased competition within the industry or industry group.
In addition, at times, such industry or industry group may be out of favor and
underperform other industries, industry groups or the market as a whole.
Basic Materials Sector Risk. Changes in world
events, political, environmental and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations may adversely affect the companies engaged in the production and
distribution of basic materials.
Communication Services Sector Risk. The value of the
securities of communication services companies are particularly vulnerable to
rapid advancements in technology, the innovation of competitors, rapid product
obsolescence, and government regulation and competition, both domestically and
internationally. Additionally, fluctuating domestic and international demand,
shifting demographics and often unpredictable changes in consumer tastes can
drastically affect a communication services company’s profitability. While all
companies may be susceptible to network security breaches, certain companies in
the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their businesses.
Consumer Discretionary Sector Risk. Companies engaged in
the consumer discretionary sector are affected by fluctuations in supply and
demand and changes in consumer preferences, social trends and marketing
campaigns. Changes in consumer spending as a result of world events, political
and economic conditions, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending may adversely affect companies in the
consumer staples sector. Companies in this sector also are affected by changes
in government regulation, world events and economic conditions, as well as
natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government regulation, world events and economic conditions
also affect these companies, particularly in the countries where companies are
located or do business. In addition, these companies are at risk of civil
liability from accidents resulting
in injury, loss of life or property, pollution or other
environmental damage claims and risk of loss from terrorism and natural
disasters. Commodity price volatility, changes in exchange rates, imposition of
import controls, increased competition, depletion of resources, development of
alternative energy sources, technological developments and labor relations also
could affect companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government regulation,
world events and economic conditions may adversely affect companies in the
industrials sector. In addition, these companies are at risk for environmental
and product liability damage claims. Also, commodity price volatility, changes
in exchange rates, imposition of import controls, increased competition,
depletion of resources, technological developments and labor relations could
adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Real Estate Securities Risk. Investing in securities of
real estate companies includes risks such as: fluctuations in the value of the
underlying properties; defaults by borrowers or tenants; market saturation;
changes in general and local economic conditions; decreases in market rates for
rents; changes in the availability, cost and terms of mortgage funds; increased
competition, property taxes, capital expenditures, or operating expenses; and
other economic, political or
regulatory occurrences, including the impact of changes in
environmental laws, that may affect the real estate industry.
Utilities Sector Risk. Companies in the utilities sector
are subject to a variety of factors that may adversely affect their business or
operations, including high interest costs associated with capital construction
and improvement programs; difficulty in raising adequate capital in periods of
high inflation and unsettled capital markets; governmental regulation of rates
the issuer can charge to customers; costs associated with compliance with
environmental and other regulations; effects of economic slowdowns and surplus
capacity; increased competition; and potential losses resulting from a
developing deregulatory environment.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on the quality
factor. There can be no assurance that doing so will enhance the Fund’s
performance over time. It is expected that targeting exposure to the quality
factor will detract from performance in some market environments, perhaps for
extended periods. In such circumstances, the investment adviser will not adjust
a Fund’s investment process to target a different factor.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption
in the creation/redemption process of the Fund. Any of these
factors may lead to the Shares trading at a premium or discount to the Fund’s
NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying
Index, and incurs costs in buying and selling securities,
especially when rebalancing the Fund’s securities holdings to reflect changes in
the composition of the Underlying Index. In addition, the performance of the
Fund and the Underlying Index may vary due to asset valuation differences and
differences between the Fund’s portfolio and the Underlying Index resulting from
legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Quality Securities Risk. Securities included in the
Underlying Index are deemed to be quality stocks pursuant to the Underlying
Index’s methodology, but there is no guarantee that the past
performance of these stocks will continue. Companies that issue
these stocks may experience lower than expected returns or may experience
negative growth, as well as increased leverage, resulting in lower than expected
or negative returns to Fund shareholders. Many factors can affect a stock’s
quality and performance, and the impact of these factors on a stock or its price
can be difficult to predict.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
7.47% (3rd Quarter 2018) |
|
(14.15)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 14.66%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (11/08/17) |
|
Return Before Taxes |
|
|
(2.87 |
)% |
|
|
0.15 |
% |
Return After Taxes on
Distributions |
|
|
(3.22 |
)% |
|
|
(0.22 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(1.42 |
)% |
|
|
0.14 |
% |
Russell 1000® Quality Factor
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(2.68 |
)% |
|
|
0.35 |
% |
Russell 1000® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(4.78 |
)% |
|
|
(1.30 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
OSIZ |
|
Invesco Russell 1000® Size Factor
ETF |
Summary Information
Investment Objective
The Invesco Russell 1000® Size Factor ETF (the
“Fund”) seeks to track the investment results (before fees and expenses) of the
Russell 1000 Size Factor Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.19% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.19% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$19 |
|
$61 |
|
$107 |
|
$243 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Russell 1000® Size Factor ETF (the
“Predecessor Fund”) was 18% of the average value of its portfolio, excluding the
value of portfolio securities received or delivered as a result of the
Predecessor Fund’s in-kind creations
and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, Frank Russell Company (“Frank Russell” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that selects a subset of the equity securities
from the Russell 1000 Index (the “Parent Index”), which is comprised of the
1,000 largest-capitalization companies in the United States. To construct
the Underlying Index, each constituent in the Parent Index is
assigned a factor score based on the extent to which the constituent exhibits
characteristics of smaller-capitalization companies relative to the other
constituents in the Parent Index. A company’s size factor score is based on
total market capitalization as of the last business day of the prior month. An
initial weight for each security is determined from the product of the
security’s factor score and its weight in the Parent Index. These weights are
adjusted to ensure that each constituent and the Underlying Index as a whole
satisfy certain constraints with respect to factor exposure, diversification,
liquidity, industry exposure, maximum security and minimum security weights, as
compared to the Parent Index. Securities in the Parent Index are excluded from
the Underlying Index if their relevant factor characteristics fall below an
algorithmically-determined threshold, or if their adjusted weights fall below a
certain de minimis amount.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the basic materials, communication
services, consumer discretionary, consumer staples, energy, financials,
healthcare, industrials, information technology, real estate securities and
utilities sectors. The Fund’s portfolio holdings, and the extent to which it
concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing
creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Construction Risk. A stock included in
the Underlying Index may not exhibit the factor trait or provide specific factor
exposure for which it was selected, and consequently, the Fund’s holdings may
not exhibit returns consistent with that factor trait.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small or medium
capitalization companies, which can drive prices up and down more dramatically.
Additionally, the announcement that a security has been added to a widely
followed index or benchmark may cause the price of that security to increase.
Conversely, the announcement that a security has been deleted from a widely
followed index or benchmark may cause the price of that security to decrease.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Basic Materials Sector Risk. Changes in world
events, political, environmental and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations may adversely affect the companies engaged in the production and
distribution of basic materials.
Communication Services Sector Risk. The value of the
securities of communication services companies are particularly vulnerable to
rapid advancements in technology, the innovation of competitors, rapid product
obsolescence, and government regulation and competition, both domestically and
internationally. Additionally, fluctuating domestic and international demand,
shifting demographics and often unpredictable changes in consumer tastes can
drastically affect a communication services company’s profitability. While all
companies may be susceptible to network security breaches, certain companies in
the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their businesses.
Consumer Discretionary Sector Risk. Companies engaged in
the consumer discretionary sector are affected by fluctuations in supply and
demand and changes in consumer preferences, social trends and marketing
campaigns. Changes in consumer spending as a result of world events, political
and economic conditions, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending may adversely affect companies in the
consumer staples sector. Companies in this sector also are affected by changes
in government regulation, world events and economic conditions, as well as
natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government regulation, world events and economic conditions
also affect these companies, particularly in the countries where companies are
located or do business. In addition, these companies are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources,
development of alternative energy sources, technological developments and labor
relations also could affect companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government regulation,
world events and economic conditions may adversely affect companies in the
industrials sector. In addition, these companies are at risk for environmental
and product liability damage claims. Also, commodity price volatility, changes
in exchange rates, imposition of import controls, increased competition,
depletion of resources, technological developments and labor relations could
adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Real Estate Securities Risk. Investing in securities of
real estate companies includes risks such as: fluctuations in the
value of the underlying properties; defaults by borrowers or
tenants; market saturation; changes in general and local economic conditions;
decreases in market rates for rents; changes in the availability, cost and terms
of mortgage funds; increased competition, property taxes, capital expenditures,
or operating expenses; and other economic, political or regulatory occurrences,
including the impact of changes in environmental laws, that may affect the real
estate industry.
Utilities Sector Risk. Companies in the utilities sector
are subject to a variety of factors that may adversely affect their business or
operations, including high interest costs associated with capital construction
and improvement programs; difficulty in raising adequate capital in periods of
high inflation and unsettled capital markets; governmental regulation of rates
the issuer can charge to customers; costs associated with compliance with
environmental and other regulations; effects of economic slowdowns and surplus
capacity; increased competition; and potential losses resulting from a
developing deregulatory environment.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on the size
factor. There can be no assurance that doing so will enhance the Fund’s
performance over time. It is expected that targeting exposure to the size factor
will detract from performance in some market environments, perhaps for extended
periods. In such circumstances, the investment adviser will not adjust a Fund’s
investment process to target a different factor.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline
in value of the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind
creation and redemption mechanism (described below) to minimize
realization of capital gains to the extent possible.
Small- and-Mid-Capitalization Company
Risk. Investing in securities of small- and mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies. These securities may have returns that
vary, sometimes significantly, from the overall securities market. Often small-
and mid-capitalization companies and
the industries in which they focus are still evolving and, as a result, they may
be more sensitive to changing market conditions.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
4.94% (3rd Quarter 2018) |
|
(16.09)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 16.24%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (11/08/17) |
|
Return Before Taxes |
|
|
(8.48 |
)% |
|
|
(3.78 |
)% |
Return After Taxes on
Distributions |
|
|
(8.92 |
)% |
|
|
(4.25 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(4.79 |
)% |
|
|
(2.91 |
)% |
Russell 1000® Size Factor
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(8.34 |
)% |
|
|
(3.62 |
)% |
Russell 1000® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(4.78 |
)% |
|
|
(1.30 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
OVLU |
|
Invesco Russell 1000® Value Factor
ETF |
Summary Information
Investment Objective
The Invesco Russell 1000® Value Factor ETF (the
“Fund”) seeks to track the investment results (before fees and expenses) of the
Russell 1000 Value Factor Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.19% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.19% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$19 |
|
$61 |
|
$107 |
|
$243 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer Russell 1000® Value Factor ETF (the
“Predecessor Fund”) was 25% of the average value of its portfolio, excluding the
value of portfolio securities received or delivered as a result of the
Predecessor Fund’s in-kind creations
and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, Frank Russell Company (“Frank Russell” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that selects a subset of the equity securities
from the Russell 1000 Index (the “Parent Index”), which is comprised of the
1,000 largest-capitalization companies in the United States. To construct
the Underlying Index, each constituent in the Parent Index is
assigned a factor score based on the extent to which the constituent exhibits
greater value characteristics relative to the other constituents in the Parent
Index. A company’s value factor score is based on an equally-weighted composite
of cash flow yield, earnings yield, and sales to price ratio, calculated based
on the company’s total market capitalization and information reported in the
company’s most recent annual financial statement as of the last business day of
the prior month. An initial weight for each security is determined from the
product of the security’s factor score and its weight in the Parent Index. These
weights are adjusted to ensure that each constituent and the Underlying Index as
a whole satisfy certain constraints with respect to factor exposure,
diversification, liquidity, industry exposure, maximum security and minimum
security weights, as compared to the Parent Index. Securities in the Parent
Index are excluded from the Underlying Index if their relevant factor
characteristics fall below an algorithmically-determined threshold, or if their
adjusted weights fall below a certain de minimis amount.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the basic materials, communication
services, consumer discretionary, consumer staples, energy, financials,
healthcare, industrials, information technology, real estate securities and
utilities sectors. The Fund’s portfolio holdings, and the extent to which it
concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited
number of APs may be able to do. In addition, to the extent that
APs exit the business or are unable to proceed with processing
creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Construction Risk. A stock included in
the Underlying Index may not exhibit the factor trait or provide specific factor
exposure for which it was selected, and consequently, the Fund’s holdings may
not exhibit returns consistent with that factor trait.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous
industries or industry groups. Such industry-based risks, any of
which may adversely affect the companies in which the Fund invests, may include,
but are not limited to, legislative or regulatory changes, adverse market
conditions and/or increased competition within the industry or industry group.
In addition, at times, such industry or industry group may be out of favor and
underperform other industries, industry groups or the market as a whole.
Basic Materials Sector Risk. Changes in world
events, political, environmental and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations may adversely affect the companies engaged in the production and
distribution of basic materials.
Communication Services Sector Risk. The value of the
securities of communication services companies are particularly vulnerable to
rapid advancements in technology, the innovation of competitors, rapid product
obsolescence, and government regulation and competition, both domestically and
internationally. Additionally, fluctuating domestic and international demand,
shifting demographics and often unpredictable changes in consumer tastes can
drastically affect a communication services company’s profitability. While all
companies may be susceptible to network security breaches, certain companies in
the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their businesses.
Consumer Discretionary Sector Risk. Companies engaged in
the consumer discretionary sector are affected by fluctuations in supply and
demand and changes in consumer preferences, social trends and marketing
campaigns. Changes in consumer spending as a result of world events, political
and economic conditions, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending may adversely affect companies in the
consumer staples sector. Companies in this sector also are affected by changes
in government regulation, world events and economic conditions, as well as
natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government regulation, world events and economic conditions
also affect these companies, particularly in the countries where companies are
located or do business. In addition, these companies are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other
environmental damage claims and risk of loss from terrorism and
natural disasters. Commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources,
development of alternative energy sources, technological developments and labor
relations also could affect companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government regulation,
world events and economic conditions may adversely affect companies in the
industrials sector. In addition, these companies are at risk for environmental
and product liability damage claims. Also, commodity price volatility, changes
in exchange rates, imposition of import controls, increased competition,
depletion of resources, technological developments and labor relations could
adversely affect the companies in this sector.
Information Technology Sector Risk. Factors such as
the failure to obtain, or delays in obtaining, financing or regulatory approval,
intense competition, product compatibility, consumer preferences, corporate
capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Real Estate Securities Risk. Investing in securities of
real estate companies includes risks such as: fluctuations in the value of the
underlying properties; defaults by borrowers or tenants; market saturation;
changes in general and local economic conditions; decreases in market rates for
rents; changes in the availability, cost and terms of mortgage funds; increased
competition, property taxes, capital expenditures, or operating expenses; and
other economic, political or regulatory occurrences, including the impact of
changes in environmental laws, that may affect the real estate industry.
Utilities Sector Risk. Companies in the utilities sector
are subject to a variety of factors that may adversely affect their business or
operations, including high interest costs associated with capital construction
and improvement programs; difficulty in raising adequate capital in periods of
high inflation and unsettled capital markets; governmental regulation of rates
the issuer can charge to customers; costs associated with compliance with
environmental and other regulations; effects of economic slowdowns and surplus
capacity; increased competition; and potential losses resulting from a
developing deregulatory environment.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on the value
factor. There can be no assurance that doing so will enhance the Fund’s
performance over time. It is expected that targeting exposure to the value
factor will detract from performance in some market environments, perhaps for
extended periods. In such circumstances, the investment adviser will not adjust
a Fund’s investment process to target a different factor.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Value Securities Risk. Value securities are
subject to the risk that valuations never improve or that the returns on value
securities are less than returns on other styles of investing or the overall
stock market. Thus, the value of the Fund’s investments will vary and at times
may be lower or higher than that of other types of investments.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
5.66% (3rd Quarter 2018) |
|
(12.66)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 11.42%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (11/08/17) |
|
Return Before Taxes |
|
|
(8.25 |
)% |
|
|
(2.79 |
)% |
Return After Taxes on
Distributions |
|
|
(8.73 |
)% |
|
|
(3.29 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(4.50 |
)% |
|
|
(2.07 |
)% |
Russell 1000® Value Factor
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(8.09 |
)% |
|
|
(2.61 |
)% |
Russell 1000® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(4.78 |
)% |
|
|
(1.30 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
OYLD |
|
Invesco Russell 1000® Yield Factor
ETF |
Summary Information
Investment Objective
The Invesco Russell 1000® Yield Factor ETF (the
“Fund”) seeks to track the investment results (before fees and expenses) of the
Russell 1000 Yield Factor Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.19% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.19% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$19 |
|
$61 |
|
$107 |
|
$243 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal yearthe portfolio turnover rate of the Oppenheimer Russell 1000® Yield Factor ETF (the
“Predecessor Fund”) was 10% of the average value of its portfolio, excluding the
value of portfolio securities received or delivered as a result of the
Predecessor Fund’s in-kind creations
and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, Frank Russell Company (“Frank Russell” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that selects a subset of the equity securities
from the Russell 1000 Index (the “Parent Index”), which is comprised of the
1,000 largest-capitalization companies in the United States. To construct
the Underlying Index, each constituent in the Parent Index is
assigned a factor score based on the extent to which the constituent exhibits
greater yield characteristics relative to the other constituents in the Parent
Index. A company’s yield factor score is based on the 12-month trailing dividend yield as of the
last business day of the prior month. An initial weight for each security is
determined from the product of the security’s factor score and its weight in the
Parent Index. These weights are adjusted to ensure that each constituent and the
Underlying Index as a whole satisfy certain constraints with respect to factor
exposure, diversification, liquidity, industry exposure, maximum security and
minimum security weights, as compared to the Parent Index. Securities in the
Parent Index are excluded from the Underlying Index if their relevant factor
characteristics fall below an algorithmically-determined threshold, or if their
adjusted weights fall below a certain de minimis amount.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the basic materials, communication
services, consumer discretionary, consumer staples, energy, financials,
healthcare, industrials, information technology, real estate securities and
utilities sectors. The Fund’s portfolio holdings, and the extent to which it
concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and
no other AP is able to step forward to create or redeem Creation
Units (as defined below), this may result in a significantly diminished trading
market for Shares, which may be more likely to trade at a premium or discount to
the Fund’s net asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Dividend-Paying Security Risk. Securities that pay high
dividends as a group can fall out of favor with the market, causing such
companies to underperform companies that do not pay high dividends. Also,
changes in the dividend policies of the companies in which the Fund invests and
the capital resources available for such companies’ dividend payments may
adversely affect the Fund.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Construction Risk. A stock included in
the Underlying Index may not exhibit the factor trait or provide specific factor
exposure for which it was selected, and consequently, the Fund’s holdings may
not exhibit returns consistent with that factor trait.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying
Index concentrates in the securities of issuers in a particular
industry or industry group, the Fund will also concentrate its investments to
approximately the same extent. By concentrating its investments in an industry
or industry group, the Fund may face more risks than if it were diversified
broadly over numerous industries or industry groups. Such industry-based risks,
any of which may adversely affect the companies in which the Fund invests, may
include, but are not limited to, legislative or regulatory changes, adverse
market conditions and/or increased competition within the industry or industry
group. In addition, at times, such industry or industry group may be out of
favor and underperform other industries, industry groups or the market as a
whole.
Basic Materials Sector Risk. Changes in world
events, political, environmental and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations may adversely affect the companies engaged in the production and
distribution of basic materials.
Communication Services Sector Risk. The value of the
securities of communication services companies are particularly vulnerable to
rapid advancements in technology, the innovation of competitors, rapid product
obsolescence, and government regulation and competition, both domestically and
internationally. Additionally, fluctuating domestic and international demand,
shifting demographics and often unpredictable changes in consumer tastes can
drastically affect a communication services company’s profitability. While all
companies may be susceptible to network security breaches, certain companies in
the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their businesses.
Consumer Discretionary Sector Risk. Companies engaged in
the consumer discretionary sector are affected by fluctuations in supply and
demand and changes in consumer preferences, social trends and marketing
campaigns. Changes in consumer spending as a result of world events, political
and economic conditions, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending may adversely affect companies in the
consumer staples sector. Companies in this sector also are affected by changes
in government regulation, world events and economic conditions, as well as
natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government
regulation, world events and economic conditions also affect these
companies, particularly in the countries where companies are located or do
business. In addition, these companies are at risk of civil liability from
accidents resulting in injury, loss of life or property, pollution or other
environmental damage claims and risk of loss from terrorism and natural
disasters. Commodity price volatility, changes in exchange rates, imposition of
import controls, increased competition, depletion of resources, development of
alternative energy sources, technological developments and labor relations also
could affect companies in this sector.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government regulation,
world events and economic conditions may adversely affect companies in the
industrials sector. In addition, these companies are at risk for environmental
and product liability damage claims. Also, commodity price volatility, changes
in exchange rates, imposition of import controls, increased competition,
depletion of resources, technological developments and labor relations could
adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Real Estate Securities Risk. Investing in securities of
real estate companies includes risks such as: fluctuations in the value of the
underlying properties; defaults by borrowers or tenants; market saturation;
changes in general and local economic conditions; decreases in market rates for
rents;
changes in the availability, cost and terms of mortgage funds;
increased competition, property taxes, capital expenditures, or operating
expenses; and other economic, political or regulatory occurrences, including the
impact of changes in environmental laws, that may affect the real estate
industry.
Utilities Sector Risk. Companies in the utilities sector
are subject to a variety of factors that may adversely affect their business or
operations, including high interest costs associated with capital construction
and improvement programs; difficulty in raising adequate capital in periods of
high inflation and unsettled capital markets; governmental regulation of rates
the issuer can charge to customers; costs associated with compliance with
environmental and other regulations; effects of economic slowdowns and surplus
capacity; increased competition; and potential losses resulting from a
developing deregulatory environment.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on the yield
factor. There can be no assurance that doing so will enhance the Fund’s
performance over time. It is expected that targeting exposure to the yield
factor will detract from performance in some market environments, perhaps for
extended periods. In such circumstances, the investment adviser will not adjust
a Fund’s investment process to target a different factor.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The table provides an indication of the risks of investing in the
Fund by showing how the Fund’s average annual total returns compared with a
broad measure of market performance and an additional index with characteristics
relevant to the Fund. Although the information shown in the bar chart and the
table gives you some idea of the risks involved in investing in the Fund, the
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Year
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
5.75% (3rd Quarter 2018) |
|
(8.99)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 11.59%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
Since Inception (11/08/17) |
|
Return Before Taxes |
|
|
(5.06 |
)% |
|
|
(1.10 |
)% |
Return After Taxes on
Distributions |
|
|
(5.77 |
)% |
|
|
(1.86 |
)% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(2.44 |
)% |
|
|
(0.80 |
)% |
Russell 1000® Yield Factor
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(4.93 |
)% |
|
|
(0.94 |
)% |
Russell 1000® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(4.78 |
)% |
|
|
(1.30 |
)% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on Cboe
BZX Exchange, Inc. and because the Shares will trade at market prices rather
than NAV, Shares may trade at prices greater than NAV (at a premium), at NAV, or
less than NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
RWL |
|
Invesco S&P 500
Revenue ETF |
Summary Information
Investment Objective
The Invesco S&P 500 Revenue ETF (the “Fund”) seeks to track
the investment results (before fees and expenses) of the S&P 500® Revenue-Weighted Index (the
“Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.39% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.39% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$40 |
|
$125 |
|
$219 |
|
$493 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer S&P 500 Revenue
ETF (the “Predecessor Fund”) was 15% of the average value of its portfolio,
excluding the value of portfolio securities received or delivered as a result of
the Predecessor Fund’s in-kind
creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, S&P Dow Jones Indices (“S&P DJI” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that re-weights the constituent securities of the
S&P 500® Index
(“the “Parent Index”) according to the revenue earned by the companies in the
Parent Index, subject to a maximum 5% per
company weighting. The Underlying Index thus contains the same
securities as the Parent Index, but in different proportions.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the consumer discretionary, consumer
staples, financials, healthcare, industrials, and information technology
sectors. The Fund’s portfolio holdings, and the extent to which it concentrates,
are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Consumer Discretionary Sector Risk. Companies
engaged in the consumer discretionary sector are affected by fluctuations in
supply and demand and changes in consumer preferences, social trends and
marketing campaigns. Changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations also may adversely affect these companies.
Consumer Staples Sector Risk. Changes in the
worldwide economy, consumer spending, competition, demographics and consumer
preferences, exploration and production spending may adversely affect companies
in the consumer
staples sector. Companies in this sector also are affected by
changes in government regulation, world events and economic conditions, as well
as natural and man-made disasters and
political, social or labor unrest that affect production and distribution of
consumer staple products.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios, which makes them vulnerable to economic conditions that
affect that sector. Financial services companies have also been affected by
increased competition, which could adversely affect the profitability or
viability of such companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government
regulation, world events and economic conditions may adversely affect companies
in the industrials sector. In addition, these companies are at risk for
environmental and product liability damage claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations could adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The bar chart and table provide an indication of the risks of
investing in the Fund by showing how the Fund’s total returns have varied from
year to year and by showing how the Fund’s average annual total returns compared
with a broad measure of market performance and an additional index with
characteristics relevant to the Fund. Although the information shown in the bar
chart and the table gives you some idea of the risks involved in investing in
the Fund, the Fund’s past performance (before and after taxes) is not
necessarily indicative of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Years
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
18.95% (2nd Quarter 2009) |
|
(15.87)% (3rd Quarter 2011) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 11.51%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return Before Taxes |
|
|
(7.57 |
)% |
|
|
6.85 |
% |
|
|
13.21 |
% |
Return After Taxes on
Distributions |
|
|
(7.97 |
)% |
|
|
6.41 |
% |
|
|
12.82 |
% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(4.16 |
)% |
|
|
5.34 |
% |
|
|
11.07 |
% |
S&P 500® Revenue-Weighted
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(7.24 |
)% |
|
|
7.27 |
% |
|
|
13.73 |
% |
S&P 500® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(4.38 |
)% |
|
|
8.49 |
% |
|
|
13.12 |
% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit
Aggregations”), generally in exchange for the deposit or delivery
of a basket of securities. However, the Fund also reserves the
right to permit or require Creation Units to be issued in exchange
for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on NYSE
Arca, Inc. and because the Shares will trade at market prices rather than NAV,
Shares may trade at prices greater than NAV (at a premium), at NAV, or less than
NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
RWW |
|
Invesco S&P Financials
Revenue ETF |
Summary Information
Investment Objective
The Invesco S&P Financials Revenue ETF (the “Fund”) seeks to
track the investment results (before fees and expenses) of the S&P 500® Financials Sector
Revenue-Weighted Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.45% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.45% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$46 |
|
$144 |
|
$252 |
|
$567 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer S&P Financials
Revenue ETF (the “Predecessor Fund”) was 8% of the average value of its
portfolio, excluding the value of portfolio securities received or delivered as
a result of the Predecessor Fund’s in-kind creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, S&P Dow Jones Indices LLC (“S&P DJI” or the “Index
Provider”) compiles, maintains, and calculates the Underlying Index, which is
constructed using a rules-based methodology that re-weights the constituent securities of the
S&P 500® Financials Index (the
“Parent Index”) according to the revenue earned by the companies in the Parent
Index. The Underlying Index thus
contains the same securities as the Parent Index, but in different
proportions. The Parent Index includes securities of companies in the S&P
500® Index that are
classified in the financials sector. Such companies include those involved in
activities such as: banking; mortgage finance; consumer finance; specialized
finance; investment banking and brokerage; asset management and custody;
corporate lending; insurance; financial investment; and real estate, including
real estate investment trusts.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the financials sector. The Fund’s
portfolio holdings, and the extent to which it concentrates, are likely to
change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances
that the Underlying Index’s calculation methodology or sources of
information will provide an accurate assessment of included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Financials Sector Risk. The Fund may be
susceptible to adverse economic or regulatory occurrences affecting the
financial services sector. Financial services companies are subject to extensive
government regulation and, as a result, their profitability may be affected by
new regulations or regulatory interpretations. Unstable interest rates can have
a disproportionate effect on the financial services sector and financial
services companies whose securities the Fund may purchase may themselves have
concentrated portfolios,
which makes them vulnerable to economic conditions that affect
that sector. Financial services companies have also been affected by increased
competition, which could adversely affect the profitability or viability of such
companies.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the
Fund incurs operating expenses not applicable to the Underlying
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Underlying Index. In addition, the performance of the Fund and the
Underlying Index may vary due to asset valuation differences and differences
between the Fund’s portfolio and the Underlying Index resulting from legal
restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The bar chart and table provide an indication of the risks of
investing in the Fund by showing how the Fund’s total returns have varied from
year to year and by showing how the Fund’s average annual total returns compared
with a broad measure of market performance and an additional index with
characteristics relevant to the Fund. Although the information shown in the bar
chart and the table gives you some idea of the risks involved in investing in
the Fund, the Fund’s past performance (before and after taxes) is not
necessarily indicative of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Years
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
39.63% (2nd Quarter 2009) |
|
(26.62)% (1st Quarter 2009) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 9.25%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return Before Taxes |
|
|
(14.71 |
)% |
|
|
6.42 |
% |
|
|
11.50 |
% |
Return After Taxes on
Distributions |
|
|
(15.02 |
)% |
|
|
6.08 |
% |
|
|
11.22 |
% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(8.44 |
)% |
|
|
5.00 |
% |
|
|
9.56 |
% |
S&P 500® Financials Sector
Revenue-Weighted Index (reflects no deduction for fees, expenses or
taxes) |
|
|
(14.41 |
)% |
|
|
6.89 |
% |
|
|
12.05 |
% |
S&P 500® Financials
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(13.03 |
)% |
|
|
8.16 |
% |
|
|
10.92 |
% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on NYSE
Arca, Inc. and because the Shares will trade at market prices rather than NAV,
Shares may trade at prices greater than NAV (at a premium), at NAV, or less than
NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
RWK |
|
Invesco S&P MidCap 400
Revenue ETF |
Summary Information
Investment Objective
The Invesco S&P MidCap 400 Revenue ETF (the “Fund”) seeks to
track the investment results (before fees and expenses) of the S&P MidCap
400® Revenue-Weighted
Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.39% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.39% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$40 |
|
$125 |
|
$219 |
|
$493 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer S&P MidCap 400
Revenue ETF (the “Predecessor Fund”) was 34% of the average value of its
portfolio, excluding the value of portfolio securities received or delivered as
a result of the Predecessor Fund’s in-kind creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index
Strictly in accordance with its guidelines and mandated
procedures, S&P Dow Jones Indices (“S&P DJI” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that re-weights the constituent securities of the
S&P MidCap 400® Index (the “Parent
Index”), an index comprised of common stocks of 400 mid-cap companies that generally represents
the
mid-cap universe of the
U.S. equity market, according to the revenue earned by the companies in the
Parent Index, subject to a maximum 5% per company weighting. The Underlying
Index thus contains the same securities as the Parent Index, but in different
proportions.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the consumer discretionary, industrials
and information technology sectors. The Fund’s portfolio holdings, and the
extent to which it concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the value of
equity securities, including common stocks, may fall due to both changes in
general economic conditions that impact the market as a whole, as well as
factors that directly relate to a specific company or its industry. Such general
economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up and down more dramatically. Additionally, the
announcement that a security has been added to a widely followed index or
benchmark may cause the price of that security to increase. Conversely, the
announcement that a security has been deleted from a widely followed index or
benchmark may cause the price of that security to decrease.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Consumer Discretionary Sector Risk. Companies
engaged in the consumer discretionary sector are affected by fluctuations in
supply and demand and changes in consumer preferences, social trends and
marketing campaigns. Changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations also may adversely affect these companies.
Industrials Sector Risk. Changes in government
regulation, world events and economic conditions may adversely affect companies
in the industrials sector. In addition, these companies are at risk for
environmental and product liability damage claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations could adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s achieving a specified size or scale. There can be no assurance that
any large shareholder would not redeem its investment, that the size of the Fund
would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is
delayed in investing new cash and is required to maintain a larger
cash position than it ordinarily would. In addition, transactions by large
shareholders may account for a large percentage of the trading volume on the
Exchange and may, therefore, have a material upward or downward effect on the
market price of the Shares. To the extent the Fund permits redemptions in cash,
the Fund may hold a relatively large proportion of its assets in cash in
anticipation of large redemptions, diluting its investment returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Mid-Capitalization
Company Risk. Investing in securities of mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies, and may have returns that vary, sometimes
significantly, from the overall securities market. Mid-capitalization companies tend to have
inexperienced management as well as limited product and market diversification
and financial resources. Often mid-capitalization companies and the
industries in which they focus are still evolving and, as a result, they may be
more sensitive to changing market conditions.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures
do not address every possible risk and may be inadequate to
address these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The bar chart and table provide an indication of the risks of
investing in the Fund by showing how the Fund’s total returns have varied from
year to year and by showing how the Fund’s average annual total returns compared
with a broad measure of market performance and an additional index with
characteristics relevant to the Fund. Although the information shown in the bar
chart and the table gives you some idea of the risks involved in investing in
the Fund, the Fund’s past performance (before and after taxes) is not
necessarily indicative of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Years
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
26.71% (2nd Quarter 2009) |
|
(21.42)% (3rd Quarter 2011) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 15.93%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return Before Taxes |
|
|
(14.49 |
)% |
|
|
3.89 |
% |
|
|
13.77 |
% |
Return After Taxes on
Distributions |
|
|
(14.71 |
)% |
|
|
3.64 |
% |
|
|
13.48 |
% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(8.39 |
)% |
|
|
3.02 |
% |
|
|
11.60 |
% |
S&P MidCap 400® Revenue-Weighted
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(14.21 |
)% |
|
|
4.39 |
% |
|
|
14.44 |
% |
S&P MidCap 400® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(11.08 |
)% |
|
|
6.03 |
% |
|
|
13.68 |
% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit
Aggregations”), generally in exchange for the deposit or delivery
of a basket of securities. However, the Fund also reserves the right to permit
or require Creation Units to be issued in exchange for cash. Except when
aggregated in Creation Units, the Shares are not redeemable securities of the
Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on NYSE
Arca, Inc. and because the Shares will trade at market prices rather than NAV,
Shares may trade at prices greater than NAV (at a premium), at NAV, or less than
NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its
related companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
RWJ |
|
Invesco S&P SmallCap 600
Revenue ETF |
Summary Information
Investment Objective
The Invesco S&P SmallCap 600 Revenue ETF (the “Fund”) seeks to
track the investment results (before fees and expenses) of the S&P SmallCap
600® Revenue-Weighted
Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.39% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.39% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$40 |
|
$125 |
|
$219 |
|
$493 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer S&P SmallCap 600
Revenue ETF (the “Predecessor Fund”) was 38% of the average value of its
portfolio, excluding the value of portfolio securities received or delivered as
a result of the Predecessor Fund’s in-kind creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, S&P Dow Jones Indices (“S&P DJI” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that re-weights the constituent securities of the
S&P SmallCap 600® Index (the “Parent
Index”), an index comprised of common stocks of 600 small-cap companies that generally represents
the
small-cap universe of the
U.S. equity market, according to the revenue earned by the companies in the
Parent Index, subject to a maximum 5% per company weighting. The Underlying
Index thus contains the same securities as the Parent Index, but in different
proportions.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the consumer discretionary, healthcare,
industrials and information technology sectors. The Fund’s portfolio holdings,
and the extent to which it concentrates, are likely to change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including information
that may be based on assumptions and estimates. Neither the Fund nor the
investment adviser can offer assurances that the Underlying Index’s calculation
methodology or sources of information will provide an accurate assessment of
included issuers.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up and down more dramatically. Additionally, the
announcement that a security has been added to a widely followed index or
benchmark may cause the price of that security to increase. Conversely, the
announcement that a security has been deleted from a widely followed index or
benchmark may cause the price of that security to decrease.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole.
Consumer Discretionary Sector Risk. Companies
engaged in the consumer discretionary sector are affected by
fluctuations in supply and demand and changes in consumer
preferences, social trends and marketing campaigns. Changes in consumer spending
as a result of world events, political and economic conditions, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources and labor relations also may adversely
affect these companies.
Healthcare Sector Risk. Factors such as
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products, services and facilities,
pricing pressure, an increased emphasis on outpatient services, limited number
of products, industry innovation, costs associated with obtaining and protecting
patents, product liability and other claims, changes in technologies and other
market developments can affect companies in the healthcare sector.
Industrials Sector Risk. Changes in government
regulation, world events and economic conditions may adversely affect companies
in the industrials sector. In addition, these companies are at risk for
environmental and product liability damage claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations could adversely affect the companies in this sector.
Information Technology Sector Risk. Factors
such as the failure to obtain, or delays in obtaining, financing or regulatory
approval, intense competition, product compatibility, consumer preferences,
corporate capital expenditure, rapid obsolescence, competition from alternative
technologies, and research and development of new products may significantly
affect the market value of securities of issuers in the information technology
sector.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Large Shareholder Risk. Certain shareholders, including
other funds advised by the Adviser or an affiliate of the Adviser, may from time
to time own a substantial amount of Shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or
another entity may invest in the Fund and hold its investment for a limited
period of time solely to facilitate commencement of the Fund or to facilitate
the Fund’s
achieving a specified size or scale. There can be no assurance
that any large shareholder would not redeem its investment, that the size of the
Fund would be maintained at such levels or that the Fund would continue to meet
applicable listing requirements. Redemptions by large shareholders could have a
significant negative impact on the Fund. Similarly, to the extent the Fund
permits cash purchases, large purchases of Shares may adversely affect the
Fund’s performance to the extent that the Fund is delayed in investing new cash
and is required to maintain a larger cash position than it ordinarily would. In
addition, transactions by large shareholders may account for a large percentage
of the trading volume on the Exchange and may, therefore, have a material upward
or downward effect on the market price of the Shares. To the extent the Fund
permits redemptions in cash, the Fund may hold a relatively large proportion of
its assets in cash in anticipation of large redemptions, diluting its investment
returns.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to
calculate its NAV. Therefore, the Fund is subject to certain
operational risks associated with reliance on third party service providers and
data sources. NAV calculation may be impacted by operational risks arising from
factors such as failures in systems and technology. Such failures may result in
delays in the calculation of the Fund’s NAV and/or the inability to calculate
NAV over extended time periods. The Fund may be unable to recover any losses
associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Small Capitalization Company Risk. Investing in
securities of small capitalization companies involves greater risk than
customarily is associated with investing in larger, more established companies.
These companies’ securities may be more volatile and less liquid than those of
more established companies. These securities may have returns that vary,
sometimes significantly, from the overall securities market. Often small
capitalization companies and the industries in which they focus are still
evolving and, as a result, they may be more sensitive to changing market
conditions.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The bar chart and table provide an indication of the risks of
investing in the Fund by showing how the Fund’s total returns have varied from
year to year and by showing how the Fund’s average annual total returns compared
with a broad measure of market performance and an additional index with
characteristics relevant to the Fund. Although the information shown in the bar
chart and the table gives you some idea of the risks involved in investing in
the Fund, the Fund’s past performance (before and after taxes) is not
necessarily indicative of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Years
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
36.55% (2nd Quarter 2009) |
|
(23.29)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 14.25%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
5 Years |
|
|
10 Years |
|
Return Before Taxes |
|
|
(16.87 |
)% |
|
|
2.14 |
% |
|
|
13.50 |
% |
Return After Taxes on
Distributions |
|
|
(17.11 |
)% |
|
|
1.94 |
% |
|
|
13.31 |
% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(9.76 |
)% |
|
|
1.66 |
% |
|
|
11.39 |
% |
S&P SmallCap 600® Revenue-Weighted
Index (reflects no deduction for fees, expenses or taxes) |
|
|
(16.79 |
)% |
|
|
2.59 |
% |
|
|
14.13 |
% |
S&P SmallCap 600® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(8.48 |
)% |
|
|
6.34 |
% |
|
|
13.61 |
% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is
called a “Creation Unit”) or multiples thereof (“Creation Unit
Aggregations”), generally in exchange for the deposit or delivery of a basket of
securities. However, the Fund also reserves the right to permit or require
Creation Units to be issued in exchange for cash. Except when aggregated in
Creation Units, the Shares are not redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on NYSE
Arca, Inc. and because the Shares will trade at market prices rather than NAV,
Shares may trade at prices greater than NAV (at a premium), at NAV, or less than
NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
|
|
|
RDIV |
|
Invesco S&P Ultra Dividend
Revenue ETF |
Summary Information
Investment Objective
The Invesco S&P Ultra Dividend Revenue ETF (the “Fund”) seeks
to track the investment results (before fees and expenses) of the S&P
900® Dividend
Revenue-Weighted Index (the “Underlying Index”).
Fund Fees and Expenses
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund (“Shares”). Investors may pay brokerage
commissions on their purchases and sales of Shares, which are not reflected in
the table or the example below.
|
|
|
|
|
Annual Fund Operating Expenses |
|
(expenses that you pay
each year as a percentage of the value of your investment) |
|
|
|
Management Fees |
|
|
0.39% |
|
Other Expenses(1) |
|
|
0.00% |
|
Total Annual Fund Operating
Expenses |
|
|
0.39% |
|
(1) |
“Other Expenses” are based on estimated
amounts for the current fiscal year. |
Example
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds.
This example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. This example does not
include the brokerage commissions that investors may pay to buy and sell Shares.
Although your actual costs may be higher or lower, your costs, based on these
assumptions, would be:
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$40 |
|
$125 |
|
$219 |
|
$493 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate will cause the Fund to incur additional transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in the Total Annual Fund Operating Expenses
or in the example, may affect the Fund’s performance. During the most recent
fiscal year, the portfolio turnover rate of the Oppenheimer S&P Ultra
Dividend Revenue ETF (the “Predecessor Fund”) was 75% of the average value of
its portfolio, excluding the value of portfolio securities received or delivered
as a result of the Predecessor Fund’s in-kind creations and redemptions.
Principal Investment Strategies
The Fund generally will invest at least 90% of its total assets in
the securities that comprise the Underlying Index.
Strictly in accordance with its guidelines and mandated
procedures, S&P Dow Jones Indices (“S&P DJI” or the “Index Provider”)
compiles, maintains, and calculates the Underlying Index, which is constructed
using a rules-based methodology that selects components from the S&P 900® Index (the “Parent
Index”), which combines the S&P 500® Index and S&P
MidCap® 400 Index to
form an investable benchmark for the
large- and mid-cap
universe of the U.S. equity market. From the Parent Index, the Index Provider
(1) excludes the top 5% of securities by dividend yield, (2) excludes
the top 5% of securities within each sector by dividend payout ratio,
(3) selects the top sixty securities by dividend yield and (4) re-weights those securities
according to the revenue earned by the companies, subject to a maximum
5% per company weighting. The Underlying Index thus contains a subset of
the securities in the Parent Index, in different proportions.
The Fund generally invests in all of the securities comprising the
Underlying Index in proportion to their weightings in the Underlying Index.
The Fund is “non-diversified” and therefore is not
required to meet certain diversification requirements under the Investment
Company Act of 1940, as amended (the “1940 Act”).
Concentration Policy. The Fund will concentrate its
investments (i.e., invest more than 25% of the value of its net assets) in
securities of issuers in any one industry or group of industries only to the
extent that the Underlying Index reflects a concentration in that industry or
group of industries. The Fund will not otherwise concentrate its investments in
securities of issuers in any one industry or group of industries. Historically,
the Underlying Index has focused on certain sectors. As of October 26,
2018, the Underlying Index focused on the consumer discretionary, communication
services, energy, real estate securities and utilities sectors. The Fund’s
portfolio holdings, and the extent to which it concentrates, are likely to
change over time.
Principal Risks of Investing in the Fund
The following summarizes the principal risks of the Fund.
The Shares will change in value, and you could lose money by
investing in the Fund. The Fund may not achieve its investment objective.
Authorized Participant Concentration Risk. Only
authorized participants (“APs”) may engage in creation or redemption
transactions directly with the Fund. The Fund has a limited number of
institutions that may act as APs, and such APs have no obligation to submit
creation or redemption orders. Consequently, there is no assurance that those
APs will establish or maintain an active trading market for the Shares. This
risk may be heightened to the extent that securities held by the Fund are traded
outside a collateralized settlement system. In that case, APs may be required to
post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to the Fund and no
other AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to the Fund’s net
asset value (“NAV”) and to face trading halts and/or delisting.
Calculation Methodology Risk. The Underlying Index
relies on various sources of information to assess the criteria of issuers
included in the Underlying Index (or its Parent Index), including
information that may be based on assumptions and estimates.
Neither the Fund nor the investment adviser can offer assurances that the
Underlying Index’s calculation methodology or sources of information will
provide an accurate assessment of included issuers.
Dividend-Paying Security Risk. Securities that pay high
dividends as a group can fall out of favor with the market, causing such
companies to underperform companies that do not pay high dividends. Also,
changes in the dividend policies of the companies in which the Fund invests and
the capital resources available for such companies’ dividend payments may
adversely affect the Fund.
Equity Risk. Equity risk is the risk that the
value of equity securities, including common stocks, may fall due to both
changes in general economic conditions that impact the market as a whole, as
well as factors that directly relate to a specific company or its industry. Such
general economic conditions include changes in interest rates, periods of market
turbulence or instability, or general and prolonged periods of economic decline
and cyclical change. It is possible that a drop in the stock market may depress
the price of most or all of the common stocks that the Fund holds. In addition,
equity risk includes the risk that investor sentiment toward particular
industries will become negative. The value of a company’s common stock may fall
solely because of factors, such as an increase in production costs, that
negatively impact other companies in the same region, industry or sector of the
market. A company’s common stock also may decline significantly in price over a
short period of time due to factors specific to that company, including
decisions made by its management or lower demand for the company’s products or
services. For example, an adverse event, such as an unfavorable earnings report
or the failure to make anticipated dividend payments, may depress the value of
common stock.
Increased Volatility Risk. Increased volatility may result
from increased cash flows to the Fund and other market participants that
continuously or systematically buy large holdings of small and medium
capitalization companies (including those trading as ADRs, GDRs, EDRs and Global
Shares), which can drive prices up and down more dramatically. Additionally, the
announcement that a security has been added to a widely followed index or
benchmark may cause the price of that security to increase. Conversely, the
announcement that a security has been deleted from a widely followed index or
benchmark may cause the price of that security to decrease.
Index Risk. Unlike many investment companies,
the Fund does not utilize an investing strategy that seeks returns in excess of
its Underlying Index. Therefore, it would not necessarily buy or sell a security
unless that security is added or removed, respectively, from the Underlying
Index, even if that security generally is underperforming.
Industry Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its
investments to approximately the same extent. By concentrating its
investments in an industry or industry group, the Fund may face more risks than
if it were diversified broadly over numerous industries or industry groups. Such
industry-based risks, any of which may adversely affect the companies in which
the Fund invests, may include, but are not limited to, legislative or regulatory
changes, adverse market conditions and/or increased competition within the
industry or industry group. In addition, at times, such industry or industry
group may be out of favor and underperform other industries, industry groups or
the market as a whole.
Communication Services Sector Risk. The companies in the
communication services sector may be subject to legislative or regulatory
changes, adverse market conditions, and/or increased competition. The value of
the securities of communication services companies are particularly vulnerable
to rapid advancements in technology, the innovation of competitors, rapid
product obsolescence, and government regulation and competition, both
domestically and internationally. Additionally, fluctuating domestic and
international demand, shifting demographics and often unpredictable changes in
consumer tastes can drastically affect a communication services company’s
profitability. While all companies may be susceptible to network security
breaches, certain companies in the communication services sector may be
particular targets of hacking and potential theft of proprietary or consumer
information or disruptions in service, which could have a material adverse
effect on their businesses.
Consumer Discretionary Sector Risk. Companies
engaged in the consumer discretionary sector are affected by fluctuations in
supply and demand and changes in consumer preferences, social trends and
marketing campaigns. Changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations also may adversely affect these companies.
Energy Sector Risk. Changes in worldwide energy prices,
exploration and production spending may adversely affect companies in the energy
sector. Changes in government regulation, world events and economic conditions
also affect these companies, particularly in the countries where companies are
located or do business. In addition, these companies are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources,
development of alternative energy sources, technological developments and labor
relations also could affect companies in this sector.
Real Estate Securities Risk. Investing in
securities of real estate companies includes risks such as: fluctuations in the
value of the underlying properties; defaults by borrowers or tenants; market
saturation; changes in general and local
economic conditions; decreases in market rates for rents; changes
in the availability, cost and terms of mortgage funds; increased competition,
property taxes, capital expenditures, or operating expenses; and other economic,
political or regulatory occurrences, including the impact of changes in
environmental laws, that may affect the real estate industry.
Utilities Sector Risk. Companies in the
utilities sector are subject to a variety of factors that may adversely affect
their business or operations, including high interest costs associated with
capital construction and improvement programs; difficulty in raising adequate
capital in periods of high inflation and unsettled capital markets; governmental
regulation of rates the issuer can charge to customers; costs associated with
compliance with environmental and other regulations; effects of economic
slowdowns and surplus capacity; increased competition; and potential losses
resulting from a developing deregulatory environment.
Investment Approach Risk. The Underlying Index, and
thus the Fund, seeks to provide exposure to investments based on a specific
selection criteria and a revenue weighting approach. There can be no assurance
that the selection criteria and weighting approach will enhance the Fund’s
performance over time. It is expected that exposure to such investment criteria
and weighting will detract from performance in some market environments, perhaps
for extended periods. In such circumstances, the Fund’s investment adviser will
not adjust the Fund’s investment process to target different criteria or
weighting processes.
Issuer-Specific Changes Risk. The value of an individual
security or particular type of security may be more volatile than the market as
a whole and may perform differently from the value of the market as a whole.
Market Risk. Securities in the Underlying Index are
subject to market fluctuations. You should anticipate that the value of the
Shares will decline, more or less, in correlation with any decline in value of
the securities in the Underlying Index.
Market Trading Risk. The Fund faces numerous
market trading risks, including the potential lack of an active market for the
Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. Any of these factors may lead to the
Shares trading at a premium or discount to the Fund’s NAV.
Mid-Capitalization
Company Risk. Investing in securities of mid-capitalization companies involves greater
risk than customarily is associated with investing in larger, more established
companies. These companies’ securities may be more volatile and less liquid than
those of more established companies, and may have returns that vary, sometimes
significantly, from the overall securities market. Mid-capitalization companies tend to have
inexperienced management as well as limited product and market diversification
and financial resources. Often mid-capitalization companies and the
industries in which they focus are still evolving and, as a result, they may be
more sensitive to changing market conditions.
Non-Correlation
Risk. The Fund’s return may not match the return of the Underlying
Index for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index, and incurs costs in buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Underlying Index. In addition, the
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Non-Diversified Fund
Risk. Because the Fund is non-diversified and can invest a greater
portion of its assets in securities of individual issuers than a diversified
fund, changes in the market value of a single investment could cause greater
fluctuations in Share price than would occur in a diversified fund. This may
increase the Fund’s volatility and cause the performance of a relatively small
number of issuers to have a greater impact on the Fund’s performance.
Operational Risk. The Fund is exposed to operational risks
arising from a number of factors, including, but not limited to, human error,
processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and
technology or systems failures. The Fund and the investment adviser seek to
reduce these operational risks through controls and procedures. However, these
measures do not address every possible risk and may be inadequate to address
these risks.
Risks Relating to Calculation of NAV. The Fund relies on
various third parties and other informative sources to calculate its NAV.
Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk. The Fund may engage in
frequent trading of its portfolio securities in connection with the rebalancing
or adjustment of the Underlying Index. A portfolio turnover rate of 200%, for
example, is equivalent to the Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for the Fund. While a high
portfolio turnover rate can result in an increase in taxable capital gains
distributions to the Fund’s shareholders, the Fund will seek to utilize the
in-kind creation and redemption
mechanism (described below) to minimize realization of capital gains to the
extent possible.
Performance
The bar chart below shows how the Fund has performed. The table
below the bar chart shows the Fund’s average annual total returns (before and
after taxes). The bar chart and table provide an indication of the risks of
investing in the Fund by showing how the Fund’s total returns have varied from
year to year and by
showing how the Fund’s average annual total returns compared with
a broad measure of market performance and an additional index with
characteristics relevant to the Fund. Although the information shown in the bar
chart and the table gives you some idea of the risks involved in investing in
the Fund, the Fund’s past performance (before and after taxes) is not
necessarily indicative of how the Fund will perform in the future.
The Fund is the successor to the investment performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund, which was consummated after the close of business on May 24,
2019. Accordingly, the performance shown below for periods ending on or prior to
May 24, 2019 is that of the Predecessor Fund. Updated performance
information is available online at www.invesco.com/ETFs.
Annual Total Returns—Calendar Years
|
|
|
|
|
Best Quarter |
|
Worst Quarter |
10.22% (2nd Quarter 2018) |
|
(12.22)% (4th Quarter 2018) |
The Fund’s year-to-date total return for the three months ended
March 31, 2019 was 13.82%.
Average Annual Total Returns for the Periods Ended
December 31, 2018
After-tax returns in the
table below are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend
on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to
investors who hold Shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
5 Years |
|
|
Since Inception (09/30/13) |
|
Return Before Taxes |
|
|
(4.47 |
)% |
|
|
9.53 |
% |
|
|
10.07 |
% |
Return After Taxes on
Distributions |
|
|
(5.40 |
)% |
|
|
8.46 |
% |
|
|
9.00 |
% |
Return After Taxes on Distributions and Sale of Fund
Shares |
|
|
(1.97 |
)% |
|
|
7.40 |
% |
|
|
7.85 |
% |
S&P 900® Dividend
Revenue-Weighted Index (reflects no deduction for fees, expenses or
taxes) |
|
|
(4.13 |
)% |
|
|
10.27 |
% |
|
|
10.81 |
% |
S&P 900® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
(4.86 |
)% |
|
|
8.32 |
% |
|
|
9.94 |
% |
Management of the Fund
Investment Adviser. Invesco Capital Management
LLC.
Portfolio Managers. The following individuals
are responsible jointly and primarily for the day-to-day management of the Fund’s
portfolio:
|
|
|
|
|
|
|
|
Name |
|
Title with
Adviser/Trust |
|
Date Began Managing
the Fund |
Peter Hubbard |
|
Director of Portfolio Management of
the Adviser and Vice President of the Trust |
|
May 2019 |
Michael Jeanette |
|
Senior Portfolio Manager of the
Adviser |
|
May 2019 |
Tony Seisser |
|
Portfolio Manager of the
Adviser |
|
May 2019 |
Purchase and Sale of Shares
The Fund will issue and redeem Shares at NAV only with APs and
only in large blocks of 50,000 Shares (each block of Shares is called a
“Creation Unit”) or multiples thereof (“Creation Unit Aggregations”), generally
in exchange for the deposit or delivery of a basket of securities. However, the
Fund also reserves the right to permit or require Creation Units to be issued in
exchange for cash. Except when aggregated in Creation Units, the Shares are not
redeemable securities of the Fund.
Individual Shares may be purchased and sold only on a national
securities exchange through brokers. Shares will be listed for trading on NYSE
Arca, Inc. and because the Shares will trade at market prices rather than NAV,
Shares may trade at prices greater than NAV (at a premium), at NAV, or less than
NAV (at a discount).
Tax Information
The Fund’s distributions generally are taxed as ordinary income,
capital gains or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a
401(k) plan or an individual retirement account, in which case your
distributions may be taxed as ordinary income when withdrawn from such account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other
financial intermediary (such as a bank), the Fund’s distributor or its related
companies may pay the intermediary for certain Fund-related activities,
including those that are designed to make the intermediary more knowledgeable
about exchange-traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to
recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s web-site for more information.
Additional Information About the Funds’
Strategies and Risks
Principal Investment Strategies
Each Fund generally will invest at least 90% of its total assets
in components of its respective Underlying Index. Each Fund operates as an index
fund and will not be actively managed. Each Fund uses an “indexing” investment
approach to seek to track the investment results, before fees and expenses, of
its Underlying Index. The Adviser seeks correlation over time of 0.95 or better
between a Fund’s performance and the performance of its Underlying Index; a
figure of 1.00 would represent perfect correlation. Another means of evaluating
the relationship between the returns of a Fund and its Underlying Index is to
assess the “tracking error” between the two. Tracking error means the variation
between a Fund’s annual return and the return of its Underlying Index, expressed
in terms of standard deviation. Each Fund seeks to have a tracking error of less
than 5%, measured on a monthly basis over a one-year period by taking the standard
deviation of the difference in the Fund’s returns versus its Underlying Index’s
returns. Because each Fund uses an indexing approach to try to achieve its
investment objective, each Fund does not take temporary defensive positions
during periods of adverse market, economic or other conditions.
Each Fund (except for, at times, Invesco Emerging Markets Revenue
ETF, Invesco Global Revenue ETF, and Invesco International Revenue ETF) employs
a “full replication” methodology in seeking to track its Underlying Index,
meaning that it generally will invest in all of the securities comprising its
Underlying Index in proportion to their weightings in the Underlying Index.
However, under various circumstances, it may not be possible or practicable to
purchase all of those securities in those same weightings. In those
circumstances, a Fund may purchase a sample of securities in its Underlying
Index. A “sampling” methodology means that the Adviser uses quantitative
analysis to select securities from an Underlying Index universe to obtain a
representative sample of securities that have, in the aggregate, investment
characteristics similar to the Underlying Index in terms of key risk factors,
performance attributes and other characteristics. These include industry
weightings, market capitalization, return variability, earnings valuation, yield
and other financial characteristics of securities. When employing a sampling
methodology, the Adviser bases the quantity of holdings in a Fund on a number of
factors, including asset size of the Fund, and generally expects the Fund to
hold less than the total number of securities in its Underlying Index. However,
the Adviser reserves the right to invest a Fund in as many securities as it
believes necessary to achieve the Fund’s investment objective.
Because of the practical difficulties and expense of purchasing
all of the securities in its Underlying Index, at times, each of Invesco
Emerging Markets Revenue ETF, Invesco Global Revenue ETF, and Invesco
International Revenue ETF utilizes a “sampling” methodology to seek to achieve
its investment objective.
There also may be instances in which the Adviser may choose to
(i) overweight a security in an Underlying Index, (ii) purchase
securities not contained in an Underlying Index that the Adviser
believes are appropriate to substitute for certain securities in
the Underlying Index, or (iii) utilize various combinations of other
available investment techniques in seeking to track an Underlying Index.
Each Fund may sell securities included in an Underlying Index in
anticipation of their removal from the Underlying Index, or purchase securities
not included in an Underlying Index in anticipation of their addition to the
Underlying Index.
Additional information about the construction of each Fund’s
Underlying Index is set forth below in alphabetical order by index name.
General Underlying Index Information
Each of the FTSE Custom Developed ex US Ultra Dividend Revenue
Index, FTSE Custom Emerging Ultra Dividend Revenue Index, Invesco Revenue
Weighted Emerging Markets Index, Invesco Revenue Weighted Global ESG Index,
Invesco Revenue Weighted Global Index, Invesco Revenue Weighted International
Index, S&P 500®
Financials Sector Revenue-Weighted Index, S&P 500® Revenue-Weighted Index,
S&P MidCap 400®
Revenue- Weighted Index, S&P SmallCap 600® Revenue-Weighted Index and
S&P 900® Dividend
Revenue-Weighted Index employs a “revenue weighting methodology.” The revenue
weighting methodology weights each constituent member of the respective
Underlying Index using each constituent security’s 1-year trailing revenue as of the previous
quarter as the numerator, and the cumulative revenues of all companies in the
Underlying Index as the denominator, subject to certain asset diversification
requirements implemented on the last day of each calendar quarter, as necessary,
to allow the Funds to qualify as regulated investment companies under the
Internal Revenue Code of 1986, as amended. Most traditional securities indexes
and index funds determine the proportion, or “weighting,” of each constituent
security based on each security’s market capitalization (that is, its stock
price multiplied by the number of outstanding shares). This means that the
securities of companies with larger market capitalizations will generally be
more heavily weighted in a traditional index. By re-weighting traditional
capitalization-weighted securities indexes according to revenue, it may be
possible for a revenue-weighted index to outperform the capitalization-weighted
index over time.
FTSE Custom Emerging Ultra Dividend Revenue Index (Invesco
Emerging Markets Ultra Dividend Revenue ETF) and FTSE Custom Developed ex US
Ultra Dividend Revenue Index (Invesco International Ultra Dividend Revenue ETF)
The FTSE Emerging Index, the FTSE Custom Emerging Ultra Dividend
Revenue Index’s parent index, includes large- and mid-cap securities from advanced and
secondary emerging markets, classified in accordance with FTSE’s transparent
Country Classification Review Process. The FTSE Emerging Index measures the
performance of the most liquid companies in the emerging markets. As of
June 28, 2018, the FTSE Custom Emerging Ultra Dividend Revenue Index was
comprised of 100 securities.
The FTSE Developed ex US Index, the FTSE Custom Developed ex US
Ultra Dividend Revenue Index’s parent Index, includes large- and mid-cap securities representing 24 developed
market
countries, excluding the United States. As of June 28, 2018,
the FTSE Custom Developed ex US Ultra Dividend Revenue Index was comprised of
200 securities.
Each Underlying Index is rebalanced and re-weighted quarterly. Apart from scheduled
rebalances, the Index Provider or its agents may carry out additional ad hoc
rebalances to an Underlying Index in order, for example, to reflect corporate
actions or spin-offs.
The Funds are rebalanced and re-weighted in accordance with their
respective Underlying Index.
Invesco Revenue Weighted Emerging Markets Index (Invesco
Emerging Markets Revenue ETF)
The MSCI Emerging Markets Index, the Invesco Revenue Weighted
Emerging Markets Index’s parent index, is a comprehensive, rules-based index
designed to represent the performance of large- and mid-capitalization securities in emerging
market countries.
The Invesco Revenue Weighted Emerging Markets Index is constructed
by re-weighting the constituent
securities of the MSCI Emerging Markets Index according to the revenue earned by
the companies in the MSCI Emerging Markets Index, subject to a maximum
5% per company weighting. As of August 31, 2018, the Invesco Revenue
Weighted Emerging Markets Index was comprised of 1,132 securities.
The Underlying Index is rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
The Fund is rebalanced and re-weighted in accordance with the Underlying
Index.
Invesco Revenue Weighted Global ESG Index and Invesco
Revenue Weighted Global Index
The MSCI All Country World Index, the parent index of the Invesco
Revenue Weighted Global ESG Index and the Invesco Revenue Weighted Global Index,
is a free float-adjusted market capitalization weighted index designed to
measure the equity market performance of developed and emerging markets. The
Invesco Revenue Weighted Global ESG Index and the Invesco Revenue Weighted
Global Index are rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
The Funds are rebalanced and re-weighted in accordance with their
respective Underlying Index.
Invesco Revenue Weighted Global ESG Index (Invesco Global
ESG Revenue ETF)
The Invesco Revenue Weighted Global ESG Index is constructed by
using a scoring system established by MSCI ESG Research, Inc. to measure the
strength of each pillar of environmental, social, and governance practices for
each company within the MSCI All Country World Index.
Based on that scoring, the top half of securities with ESG scores
are selected for inclusion in the Underlying Index, and those that are selected
are then re-weighted according to
revenue earned,
subject to a maximum 5% per company weighting. Thus, the
Underlying Index contains a subset of the securities in the MSCI All Country
World Index, in different proportions. As of August 31, 2018, the Invesco
Revenue Weighted Global ESG Index was comprised of 1,278 securities.
MSCI ESG Research, Inc. uses a variety of criteria to determine a
company’s ESG score, which may change from time to time. The environmental
criteria includes, but is not limited, to climate change (carbon emissions,
energy efficiency, product carbon footprint, financing environmental impact,
climate change vulnerability), natural resources (water stress, biodiversity and
land use, raw material sourcing), pollution and waste (toxic emissions and
waste, packaging material and waste, electronic waste), and environmental
opportunities (opportunities in clean technology, green building and renewable
energy). The social criteria includes, but is not limited to, human capital
(labor management, human capital development, health and safety, supply chain
labor standards), product liability (product safety and quality, privacy and
data security, chemical safety, responsible investment, financial product
safety, health and demographic risk), and social opportunities (access to
communications, healthcare and finance, opportunities in nutrition and health).
The governance criteria includes, but is not limited to, corporate governance
(board, pay, ownership, accounting) and corporate behavior (business ethics,
corruption and instability, anti-competitive practices strategies, financial
instability).
Invesco Revenue Weighted Global Index (Invesco Global
Revenue ETF)
The Invesco Revenue Weighted Global Index is constructed by re-weighting the constituent securities of
the MSCI All Country World Index according to the revenue earned by the
companies in the MSCI All Country World Index, subject to a maximum 5% per
company weighting. As of August 31, 2018, the Invesco Revenue Weighted
Global Index was comprised of 2,772 securities.
Invesco Revenue Weighted International Index (Invesco
International Revenue ETF)
The MSCI EAFE® Index, Invesco Revenue
Weighted International Index’s parent index, is a comprehensive, rules-based
index designed to represent the performance of large- and mid-cap securities of developed market
countries around the world, excluding the United States and Canada.
The Invesco Revenue Weighted International Index is constructed by
re-weighting the constituent securities
of the MSCI EAFE® Index
according to the revenue earned by the companies in the MSCI EAFE Index, subject
to a maximum 5% per company weighting. As of August 31, 2018, the
Invesco Revenue Weighted International Index was comprised of 923 securities.
The Underlying Index is rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
The Fund is rebalanced and re-weighted in accordance with the Underlying
Index.
Russell 1000 Momentum Factor Index (Invesco Russell 1000® Momentum Factor ETF),
Russell 1000 Quality Factor Index (Invesco Russell 1000® Quality Factor ETF),
Russell 1000 Size Factor Index (Invesco Russell 1000® Size Factor ETF),
Russell 1000 Value Factor Index (Invesco Russell 1000® Value Factor ETF), Russell
1000 Volatility Factor Index (Invesco Russell 1000® Low Volatility Factor
ETF), Russell 1000 Yield Factor Index (Invesco Russell 1000® Yield Factor ETF)
The Underlying Indexes are calculated and maintained by Frank
Russell Company (the “Index Provider” or “Russell”). Each Underlying Index
represents a subset of the Russell 1000 Index, and constituents of the Russell
1000 Index are eligible for inclusion in an Underlying Index.
The Underlying Indexes are single factor indexes and are part of
the FTSE Global Factor Index Series, a suite of benchmark indexes designed to
represent the performance of securities based on a specific factor, such as low
volatility, momentum, quality, size, value and yield. Single factor indexes seek
increased exposure to stocks within a starting universe that possess specific
factor characteristics (i.e., momentum), thereby creating an index comprising
stocks demonstrating such a factor. Each Underlying Index consists of securities
of companies in the Russell 1000 Index selected based on one of the following
investment style factors: low volatility, momentum, quality, size, value and
yield. To construct an Underlying Index, Russell generates factor scores for
each security in the Russell 1000 Index based on one of the following criteria:
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Value. A company’s value
factor score is based on an equally-weighted composite of cash flow yield,
earnings yield, and sales to price ratio, calculated based on the
company’s total market capitalization and information reported in the
company’s most recent annual financial statement as of the last business
day of the prior month. |
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Momentum. A company’s
momentum factor score is based on historical total return over the 11
months ending on the last business day of the prior month.
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Quality. A company’s quality
factor score is based on an equally-weighted composite of return on
assets, change in asset turnover, accruals, and leverage, calculated based
on information reported in the company’s most recent annual financial
statement as of the last business day of the prior month.
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Low Volatility. A company’s
volatility factor score is based on the standard deviation of weekly total
returns to a company’s stock price over the trailing five years ending on
the last business day of the prior month. |
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Size. A company’s size
factor score is based on total market capitalization as of the last
business day of the prior month. |
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Yield. A company’s yield
factor score is based on the 12-month trailing
dividend yield as of the last business day of the prior month.
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During the calculation process, certain values that fall outside a
fixed range are set to the minimum or maximum of the range, in order to
standardize the resulting factor scores. Each security’s
factor score is multiplied by the security’s weight in the Russell
1000 Index, and the resulting weights generate a broad factor index. Except with
respect to the Russell 1000 Momentum Factor Index, the broad factor index is
then narrowed by a single security at a time to increase factor exposure,
subject to the following restrictions, which seek to ensure that the overall
diversification, liquidity, and factor exposure of the Underlying Index remain
within a certain range relative to the Russell 1000 Index:
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Diversification. The
“effective” number of securities is at least two-thirds the “effective” number of
securities in the Parent Index. For example, an index holding three
securities, one of which is weighted very heavily while the other two have
very low weights, includes only one “effective” security.
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Liquidity. The average
security weight is less than or equal to two-and-a-half times the
average security weight of the Russell 1000 Index.
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Factor Exposure. The factor
exposure is less than or equal to twice the factor exposure of the Russell
1000 Index. |
The resulting narrow factor index (or, in the case of the Russell
1000 Momentum Factor Index, the broad factor index) is then constrained to
ensure that exposure to particular industries remains within approximately 20%
of such exposure in the Russell 1000 Index. In addition, a security weight’s is
capped at no more than twenty times the security’s weight in the Russell 1000
Index. Any security weights that are less than a certain de minimis amount are
set to zero, and therefore excluded. The remaining security weights constitute
the constituents of an Underlying Index. Each Underlying Index is not required
to hold a pre-determined minimum number
of securities.
As of August 31, 2018:
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The Russell 1000 Momentum
Factor Index was comprised of 602 securities. |
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The Russell 1000 Quality
Factor Index was comprised of 423 securities. |
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The Russell 1000 Size Factor
Index was comprised of 639 securities. |
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The Russell 1000 Value
Factor Index was comprised of 243 securities. |
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The Russell 1000 Volatility
Factor Index was comprised of 294 securities. |
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The Russell 1000 Yield
Factor Index was comprised of 244 securities. |
Each Underlying Index (except the Russell 1000 Momentum Factor
Index, which is rebalanced and re-weighted semi-annually in June and
December after the close of business on the third Friday of the month) is
rebalanced and re-weighted annually in
June after the close of business on the third Friday of the month. Apart from
scheduled rebalances, the Index Provider or its agents may carry out additional
ad hoc rebalances to an Underlying Index in order, for example, to reflect
corporate actions or spin-offs.
The Funds are rebalanced and re-weighted in accordance with their
respective Underlying Index.
S&P 500 Financials Sector Revenue-Weighted Index
(Invesco Financials Sector Revenue ETF)
The S&P 500® Financials Index, the
S&P 500 Financials Sector Revenue-Weighted Index’s parent index, is
comprised of large-cap companies that
S&P Dow Jones Indices LLC deems to be part of the financials sector of the
United States economy, using the Global Industry Classification Standard. The
S&P 500® Financials Index is
itself a subset of the S&P 500® Index, a broad-based
index comprised of a representative sample of common stocks of 500 leading
companies in leading industries of the United States economy selected by S&P
Dow Jones Indices LLC. The S&P 500® Financials Index
includes companies within the S&P 500® Index that are involved
in activities such as: banking; mortgage finance; consumer finance; specialized
finance; investment banking and brokerage; asset management and custody;
corporate lending; insurance; financial investment; and real estate, including
real estate investment trusts (“REITs”).
The S&P 500 Financials Sector Revenue-Weighted Index is
constructed by re-weighting the
constituent securities of the S&P 500® Financials Index
according to the revenue earned by the companies in the S&P 500® Financials Index. As of
August 31, 2018, the S&P 500 Financials Sector Revenue-Weighted Index
was comprised of 68 securities.
The Underlying Index is rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
The Fund is rebalanced and re-weighted in accordance with the Underlying
Index.
S&P 500 Revenue-Weighted Index (Invesco S&P 500
Revenue ETF)
The S&P 500® Index is the S&P
500 Revenue-Weighted Index’s parent index.
The S&P 500 Revenue-Weighted Index is constructed by re-weighting the constituent securities of
the S&P 500® Index according to the
revenue earned by the companies in the S&P 500® Index, subject to a
maximum 5% per company weighting. As of August 31, 2018, the S&P
500 Revenue-Weighted Index was comprised of 502 securities.
The Underlying Index is rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
The Fund is rebalanced and re-weighted in accordance with the Underlying
Index.
S&P MidCap 400 Revenue-Weighted Index (Invesco S&P
MidCap 400 Revenue ETF)
The S&P MidCap 400® Index, the S&P
MidCap 400 Revenue-Weighted Index’s parent index, is comprised of common stocks
of 400 mid-cap companies selected by
S&P Dow Jones Indices LLC.
The S&P MidCap 400 Revenue-Weighted Index is constructed by
re-weighting the constituent securities
of the S&P MidCap 400® Index according to the
revenue earned by the companies in the S&P MidCap 400® Index, subject to a
maximum 5% per company weighting. As of August 31, 2018, the S&P
MidCap 400 Revenue-Weighted Index was comprised of 393 securities.
The Underlying Index is rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
The Fund is rebalanced and re-weighted in accordance with the Underlying
Index.
S&P SmallCap 600 Revenue-Weighted Index (Invesco S&P
SmallCap 600 Revenue ETF)
The S&P SmallCap 600® Index, the S&P
SmallCap 600 Revenue-Weighted Index’s parent index, is comprised of common
stocks of 600 small-cap companies
selected by S&P Dow Jones Indices LLC.
The S&P SmallCap 600 Revenue-Weighted Index is constructed by
re-weighting the constituent securities
of the S&P SmallCap 600® Index according to the
revenue earned by the companies in the S&P SmallCap 600® Index, subject to a
maximum 5% per company weighting. As of August 31, 2018, the S&P
SmallCap 600 Revenue-Weighted Index was comprised of 592 securities.
The Underlying Index is rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
S&P 900 Dividend Revenue-Weighted Index (Invesco S&P
Ultra Dividend Revenue ETF)
The S&P 900® Index, the S&P 900
Dividend Revenue-Weighted Index’s parent index, combines the S&P 500® Index and S&P
MidCap® 400 Index to
form an investable benchmark for the large- and mid-cap universe of the U.S. equity market.
The S&P 900 Dividend Revenue-Weighted Index is constructed by
re-weighting the constituent securities
of the S&P 900® Index according to the
revenue earned by the companies in the S&P 900® Index, subject to a
maximum 5% per company weighting. As of August 31, 2018, the S&P
900 Dividend Revenue-Weighted Index was comprised of 59 securities.
The Underlying Index is rebalanced and re-weighted quarterly. From time to time,
other adjustments may be made to the Underlying Index, subject to the policies
of the Index Provider.
The Fund is rebalanced and re-weighted in accordance with the Underlying
Index.
Principal Risks of Investing in the Funds
The following provides additional information regarding certain of
the principal risks identified under “Principal Risks of Investing in the Fund”
in each Fund’s “Summary Information” section.
ADR and GDR Risk
ADRs are certificates that evidence ownership of shares of a
foreign issuer and are alternatives to purchasing directly the underlying
foreign securities in their national markets and
currencies. GDRs are certificates issued by an international bank
that generally are traded and denominated in the currencies of countries other
than the home country of the issuer of the underlying shares. ADRs and GDRs may
be subject to certain of the risks associated with direct investments in the
securities of foreign companies, such as currency, political, economic and
market risks, because their values depend on the performance of the non-dollar denominated underlying foreign
securities. Moreover, ADRs and GDRs may not track the price of the underlying
foreign securities on which they are based, and their value may change
materially at times when U.S. markets are not open for trading.
Certain countries may limit the ability to convert ADRs into the
underlying foreign securities and vice versa, which may cause the securities of
the foreign company to trade at a discount or premium to the market price of the
related ADR. ADRs may be purchased through “sponsored” or “unsponsored”
facilities. A sponsored facility is established jointly by a depositary and the
issuer of the underlying security. A depositary may establish an unsponsored
facility without participation by the issuer of the deposited security.
Unsponsored receipts may involve higher expenses and may be less liquid. Holders
of unsponsored ADRs generally bear all the costs of such facilities, and the
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts in
respect of the deposited securities.
GDRs can involve currency risk since, unlike ADRs, they may not be
U.S. dollar-denominated. Because a Fund’s NAV is determined in U.S. dollars, the
Fund’s NAV could decline if the currency of the non-U.S. market in which the Fund invests
depreciates against the U.S. dollar, even if the value of the Fund’s holdings,
measured in the foreign currency, increases.
Authorized Participant Concentration Risk
Only APs may engage in creation or redemption transactions
directly with a Fund. Each Fund has a limited number of institutions that may
act as APs, and such APs have no obligation to submit creation or redemption
orders. Consequently, there is no assurance that those APs will establish or
maintain an active trading market for the Shares. This risk may be heightened to
the extent that securities held by a Fund are traded outside a collateralized
settlement system. In that case, APs may be required to post collateral on
certain trades on an agency basis (i.e., on behalf of other market
participants), which only a limited number of APs may be able to do. In
addition, to the extent that APs exit the business or are unable to proceed with
processing creation and/or redemption orders with respect to a Fund and no other
AP is able to step forward to create or redeem Creation Units (as defined
below), this may result in a significantly diminished trading market for Shares,
which may be more likely to trade at a premium or discount to a Fund’s NAV and
to face trading halts and/or delisting. This risk may be heightened for a Fund
that invests in non-U.S. securities,
which may have lower trading volumes.
Calculation Methodology Risk
Each Underlying Index relies on various sources of information to
assess the criteria of issuers included in the Underlying Index (or its
respective Parent Index), including information that may be
based on assumptions and estimates. Neither a Fund nor the Adviser
can offer assurances that an Underlying Index’s calculation methodology or
sources of information will provide an accurate assessment of included issuers.
Currency Risk
Certain Funds will invest in non-U.S. dollar denominated equity securities
of foreign issuers. Because each Fund’s NAV is determined in U.S. dollars, a
Fund’s NAV could decline if the currency of the non-U.S. market in which the Fund invests
depreciates against the U.S. dollar, even if the value of the Fund’s holdings,
measured in the foreign currency, increases. Generally, an increase in the value
of the U.S. dollar against a foreign currency will reduce the value of a
security denominated in that foreign currency, thereby decreasing the Fund’s
overall NAV. In addition, fluctuations in the exchange values of currencies
could affect the economy or particular business operations of companies in a
geographic region in which the Fund invests, causing an adverse impact on the
Fund. As a result, investors have the potential for losses regardless of the
length of time they intend to hold Shares.
Much of the income that Funds receive will be in foreign
currencies. However, those Funds will compute and distribute their income in
U.S. dollars, and the computation of income will be made on the date that the
Funds earn the income at the foreign exchange rates in effect on that date.
Therefore, if the values of the relevant foreign currencies fall relative to the
U.S. dollar between the earning of the income and the time at which those Funds
convert the foreign currencies to U.S. dollars, the Funds may be required to
liquidate securities in order to make distributions if the Funds have
insufficient cash in U.S. dollars to meet distribution requirements.
Furthermore, a Fund may incur costs in connection with conversions
between U.S. dollars and foreign currencies. Foreign exchange dealers realize a
profit based on the difference between the prices at which they are buying and
selling various currencies. Thus, a dealer normally will offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of exchange should
the Fund desire immediately to resell that currency to the dealer. Such Funds
will conduct their foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through entering into forwards, futures or options contracts to
purchase or sell foreign currencies.
Dividend Paying Security Risk
As a group, securities that pay high dividends can fall out of
favor with the market, causing such companies to underperform companies that do
not pay high dividends. Also, changes in the dividend policies of the companies
in which a Fund invests and the capital resources available for such companies’
dividend payments may affect the Fund. In addition, the value of dividend-paying
common stocks can decline when interest rates rise, as fixed-income investments
become more attractive to investors.
Equity Risk
Equity risk is the risk that the value of equity securities,
including common stocks, will fall. The value of an equity security may fall due
to changes in general economic conditions that impact the market as a whole and
that are relatively unrelated to an issuer or its industry. These conditions
include changes in interest rates, specific periods of overall market turbulence
or instability, or general and prolonged periods of economic decline and
cyclical change. An issuer’s common stock in particular may be especially
sensitive to, and more adversely affected by, these general movements in the
stock market; it is possible that a drop in the stock market may depress the
price of most or all of the common stocks that a Fund holds.
In addition, equity risk includes the risk that investor sentiment
toward, and perceptions regarding, particular industries or economic sectors
will become negative. Price changes of equity securities may occur in a
particular region, industry, or sector of the market, and as a result, the value
of an issuer’s common stock may fall solely because of factors, such as
increases in production costs, that negatively impact other companies in the
same industry or in a number of different industries.
Equity risk also includes the financial risks of a specific
company, including that the value of the company’s securities may fall as a
result of factors directly relating to that company, such as decisions made by
its management or lower demand for the company’s products or services. In
particular, the common stock of a company may decline significantly in price
over short periods of time. For example, an adverse event, such as an
unfavorable earnings report, may depress the value of common stock; similarly,
the common stock of an issuer may decline in price if the issuer fails to make
anticipated dividend payments because, among other reasons, the issuer
experiences a decline in its financial condition.
Eurozone Investment Risk
The European Union (EU) is an economic and political union of most
western European countries and a growing number of eastern European countries,
collectively known as “member states.” One of the key mandates of the EU is the
establishment and administration of a common single market, consisting of, among
other things, a single currency and a common trade policy. In order to pursue
this goal, member states established the Economic and Monetary Union (EMU),
which sets out different stages and commitments that member states need to
follow to achieve greater economic and monetary policy coordination, including
the adoption of a single currency, the euro. Many member states have adopted the
euro as their currency and, as a result, are subject to the monetary policies of
the European Central Bank (ECB).
The global economic crisis that began in 2008 has caused severe
financial difficulties for many EU member states, pushing some to the brink of
insolvency and causing others to experience recession, large public debt,
restructuring of government debt, credit rating downgrades and an overall
weakening of banking and financial sectors. Some of those countries have
depended on, and may continue to depend on, the assistance from others such as
the ECB, the International Monetary Fund (“IMF”), or other
governments and institutions to address those issues. Failure by one or more EU
member states to implement reforms or attain a certain performance level imposed
as a condition of assistance, or
an insufficient level of assistance, could deepen or prolong the
economic downturn, which could have a significant adverse effect on the value of
investments in those and other European countries. By adopting the euro as its
currency, members of the EMU are subject to fiscal and monetary controls that
could limit to some degree the ability to implement their own economic policies.
Additionally, EMU member states could voluntarily abandon the euro or
involuntarily be forced out of the euro, including by way of a partial or
complete dissolution of the monetary union. The effects of such outcomes on the
rest of the Eurozone and the global markets as a whole are unpredictable, but
are likely to be negative, and may adversely impact market values of Eurozone
and various other securities and currencies, cause redenomination of certain
securities into less valuable local currencies, and result in more volatile and
illiquid markets. Under such circumstances, investments denominated in euros or
replacement currencies may be difficult to value, the ability to operate an
investment strategy in connection with euro-denominated securities may be
significantly impaired and the value of euro-denominated investments may decline
significantly and unpredictably. Additionally, Britain’s intended departure from
the EU, known as “Brexit,” may have significant political and financial
consequences for Eurozone markets, including greater market volatility and
illiquidity, currency fluctuations, deterioration in economic activity, a
decrease in business confidence and an increased likelihood of a recession in
the United Kingdom (“UK”). Uncertainty relating to the withdrawal procedures and
timeline may have adverse effects on asset valuations and the renegotiation of
current trade agreements, as well as an increase in financial regulation of UK
banks. While the full impact of Brexit is unknown, market disruption in the EU
and globally may have a negative effect on the value of a Fund’s investments.
Additionally, the risks related to Brexit could be more pronounced if one or
more additional member states seek to leave the EU.
ESG Investing Strategy Risk
The stocks of companies with favorable ESG practices may
underperform the stock market as a whole. As a result, the Invesco Global ESG
Revenue ETF may underperform other funds that do not screen companies based on
ESG practices. The criteria used to select companies for the Underlying Index
may result in the Fund investing in securities, industries or sectors that
underperform the market as a whole or underperform other funds screened for ESG
standards.
Foreign Market Risk
Because foreign securities in a Fund’s portfolio trade on foreign
exchanges at times when the U.S. markets are not open for trading, the value of
those securities may change materially at times when the U.S. markets are not
open for trading, regardless of whether there is an active U.S. market for
Shares. Conversely, Shares of a Fund may trade on U.S. exchanges at times when
foreign exchanges are not open for trading. This, in either case, could lead to
a difference between the U.S. market value of the Shares and the underlying
value of a Fund’s portfolio.
Foreign and Emerging Markets Investment Risk
Investments in foreign securities involve risks that are beyond
those associated with investments in U.S. securities, and investments in
securities of issuers in emerging market countries involve risks not often
associated with investments in securities of issuers in developed countries.
Fluctuations in the value of the U.S. dollar relative to the values of other
currencies may adversely affect investments in foreign and emerging market
securities, and foreign and emerging market securities may have relatively low
market liquidity, decreased publicly available information about issuers, and
inconsistent and potentially less stringent accounting, auditing and financial
reporting requirements and standards of practice comparable to those applicable
to issuers in developed countries.
Foreign and emerging market securities also are subject to the
risks of expropriation, nationalization or other adverse political or economic
developments and the difficulty of enforcing obligations in other countries.
Investments in foreign and emerging market securities also may be subject to
dividend withholding or confiscatory taxes, currency blockage and/or transfer
restrictions and higher transactional costs. Emerging markets are subject to
greater market volatility, lower trading volume, political and economic
instability, uncertainty regarding the existence of trading markets and more
governmental limitations on foreign investment than more developed markets. In
addition, securities in emerging markets may be subject to greater price
fluctuations than securities in more developed markets. Securities law in many
emerging market countries is relatively new and unsettled. Therefore, laws
regarding foreign investment in emerging market securities, securities
regulation, title to securities, and shareholder rights may change quickly and
unpredictably. In addition, the enforcement of systems of taxation at federal,
regional and local levels in emerging market countries may be inconsistent and
subject to sudden change. Each country has different laws specific to that
country that impact investment, which may increase the risks to which investors
are subject. Country-specific rules or legislation addressing investment-related
transactions may inhibit or prevent certain transactions from transpiring in a
particular country.
Furthermore, foreign exchanges and broker-dealers generally are
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Differences in clearance and settlement procedures in foreign
markets may cause delays in settlement of a Fund’s trades effected in those
markets and could result in losses to a Fund due to subsequent declines in the
value of the securities subject to the trades. Depositary receipts also involve
substantially identical risks to those associated with investments in foreign
securities. Additionally, the issuers of certain depositary receipts,
particularly unsponsored or unregistered depositary receipts, have no obligation
to distribute shareholder communications to the holders of such receipts or to
pass through to them any voting rights with respect to the deposited securities.
Geographic Concentration Risk
Funds that are less diversified across geographic regions or
countries are generally riskier than more geographically diversified
funds. The economies and financial markets of certain regions,
including the Middle East and Africa, can be interdependent and may all decline
at the same time. A natural or other disaster could occur in the geographic
region in which a Fund invests, which could affect the economy or particular
business operations of companies in that geographic region and adversely impact
a Fund’s investments in the affected region.
Increased Volatility Risk
Increased volatility risk is associated with increased volatility
in the price of small and medium capitalization companies (including those
trading as ADRs, GDRs, EDRs and Global Shares). The announcement that a security
has been added to a widely followed index or benchmark may cause the price of
that security to increase. Conversely, the announcement that a security has been
deleted from a widely followed index or benchmark may cause the price of that
security to decrease. To the extent that an index or benchmark’s methodology is
rules-based and transparent, any price increase or decrease generally would be
expected to be smaller than the increase or decrease resulting from a change to
a non-transparent index or benchmark
(because the transparency of the index or benchmark likely would provide the
market with more notice of such change). Because it is impossible to predict
when and how market participants will react to announced changes in the
constituent securities of a Fund’s Parent Index (and its Underlying Index), the
Funds cannot predict when and how these changes will impact the market price and
NAV of a Fund.
Index Construction Risk
A stock included in an Underlying Index may not exhibit the factor
trait or provide specific factor exposure for which it was selected, and
consequently, a Fund’s holdings may not exhibit returns consistent with that
factor trait.
Index Risk
Unlike many investment companies that are “actively managed,” the
Funds are “passive” investors and therefore do not utilize investing strategies
that seek returns in excess of their respective Underlying Index. Therefore, the
Funds would not necessarily buy or sell a security unless that security is added
or removed, respectively, from its respective Underlying Index, even if that
stock security generally is underperforming. If a specific security is removed
from an Underlying Index, a Fund may be forced to sell shares of the security at
an inopportune time or for a price lower than the security’s current market
value. An Underlying Index may not contain the appropriate mix of securities for
any particular economic cycle. Unlike with an actively managed fund, the Adviser
does not use techniques or defensive strategies designed to lessen the impact of
periods of market volatility or market decline. This means that, based on
certain market and economic conditions, certain Funds’ performance could be
lower than other types of mutual funds that actively manage their portfolio
assets to take advantage of market opportunities.
Industry Concentration Risk
In following its methodology, an Underlying Index from time to
time may be concentrated to a significant degree in securities of issuers
operating in a single industry or industry group. To the extent that its
Underlying Index concentrates in the securities of
issuers in a particular industry or industry group, a Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, a Fund may face
more risks than if it were diversified broadly over numerous industries or
groups of industries. Such industry-based risks, any of which may adversely
affect the companies in which a Fund invests, may include, but are not limited
to legislative or regulatory changes, adverse market conditions and/or increased
competition within the industry or industry group. In addition, at times, such
industry or industry group may be out of favor and underperform other
industries, industry groups or the market as a whole. Information about the
Funds’ exposure to a particular industry or industry group is available in the
Funds’ Annual and Semi-Annual Reports to Shareholders, as well as on required
forms filed with the SEC.
Basic Materials Sector Risk
Companies engaged in the production and distribution of basic
materials may be adversely affected by changes in world events, political and
economic conditions, energy conservation, environmental policies, commodity
price volatility, changes in exchange rates, increased competition and the
imposition of import controls. Production of industrial materials may exceed
demand as a result of market imbalances or economic downturns, leading to poor
investment returns. In addition, issuers in the basic materials sector are at
risk for environmental damage and product liability claims and may be adversely
affected by depletion of resources, technical progress, labor relations and
government regulations.
Communication Services Sector Risk
The value of the securities of communication services companies
are particularly vulnerable to rapid advancements in technology, the innovation
of competitors, rapid product obsolescence, and government regulation and
competition, both domestically and internationally. Additionally, fluctuating
domestic and international demand, shifting demographics and often unpredictable
changes in consumer tastes can drastically affect a communication services
company’s profitability. While all companies may be susceptible to network
security breaches, certain companies in the communication services sector may be
particular targets of hacking and potential theft of proprietary or consumer
information or disruptions in service, which could have a material adverse
effect on their businesses.
Consumer Discretionary Sector Risk
Companies engaged in the consumer discretionary sector are
affected by fluctuations in supply and demand and changes in consumer
demographics and preferences. The success of consumer product manufacturers and
retailers is tied closely to the performance of domestic and international
economies. Moreover, changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
interest and exchange rates, imposition of import controls, increased
competition, depletion of resources and labor relations also may adversely
affect these companies. Companies in the consumer discretionary sector
depend heavily on disposable household income and consumer
spending, and may be strongly affected by social trends and marketing campaigns.
These companies may be subject to severe competition, which may have an adverse
impact on their profitability.
Consumer Staples Sector Risk
Changes in the worldwide economy, consumer spending, competition,
demographics and consumer preferences, exploration and production spending may
adversely affect companies, as well as natural and man-made disasters and political, social or
labor unrest, in the consumer staples sector. Companies in this sector also are
affected by changes in government regulation, world events and economic
conditions.
Energy Sector Risk
Companies in the energy sector are subject to extensive government
regulation, including contractual fixed pricing, which may increase the cost of
business and limit these companies’ earnings. A significant portion of their
revenues may depend on a relatively small number of customers, including
governmental entities and utilities. As a result, governmental budget
constraints may have a material adverse effect on the stock prices of companies
in this industry.
Energy companies may do business with companies in countries other
than the United States. Such companies often operate in countries with less
stringent regulatory regimes and countries that have a history of expropriation
and/or nationalization, among other adverse policies. In addition, these
companies are at risk of civil liability from accidents resulting in injury,
loss of life or property, pollution or other environmental damage claims and
risk of loss from terrorism and natural disasters. The energy sector is
cyclical, and commodity price volatility, changes in exchange rates, imposition
of import controls, increased competition, depletion of resources, development
of alternative energy sources, technological developments and labor relations
also could affect companies in this sector. Recent global economic events have
created greater volatility in the energy sector, including substantial declines
in the price of oil. Such events may create wide fluctuations in the value of
companies in this sector, which may affect the value of the Shares.
Financials Sector Risk
Financial services companies are subject to extensive government
regulation and, as a result, their profitability may be affected by new
regulations or regulatory interpretations. Unstable interest rates can have a
disproportionate effect on the financial services sector, and financial services
companies whose securities a Fund may purchase may themselves have concentrated
portfolios, which makes them vulnerable to economic conditions that affect that
sector. Financial services companies have also been affected by increased
competition, which could adversely affect the profitability or viability of such
companies. In addition, the financial services sector is undergoing numerous
changes, including continuing
consolidations, development of new products and structures and
changes to its regulatory framework. Increased government involvement in
financial institutions, including measures such as taking ownership positions in
such institutions, could result in a dilution in the value of the shares held by
shareholders in such institutions.
Moreover, Global economies and financial markets are becoming
increasingly interconnected, which increases the possibilities that conditions
in one country or region may adversely affect issuers in another country or
region, which may adversely affect securities held by a Fund. These
circumstances have also decreased liquidity in some markets and may continue to
do so. The recent deterioration of the credit markets has caused an adverse
impact on a broad range of financial markets, thereby causing certain financial
services companies to incur large losses. Certain financial services companies
have experienced decline in the valuation of their assets and even ceased
operations.
Regulatory changes, including the Dodd-Frank Wall Street Reform
and Consumer Protection Act (the “Dodd-Frank Act”) and the introduction of new
international capital and liquidity requirements under the Basel III Accords
(“Basel III”), may cause lending activity within the financial services sector
to be constrained for several years as Basel III rules phase in and rules and
regulations are promulgated and interpreted under the Dodd-Frank Act. These
market conditions may continue or deteriorate further and may add significantly
to the risk of short-term volatility within the sector.
Healthcare Sector Risk
Factors that may affect the profitability of companies in the
healthcare sector include extensive government regulation, restrictions on
government reimbursement for medical expenses, rising costs of medical products,
services and facilities, pricing pressure, an increased emphasis on outpatient
services, limited number of products and product obsolescence due to industry
innovation, changes in technologies and other market developments. A major
source of revenue for the healthcare industry is payments from the Medicare and
Medicaid programs. As a result, the industry is sensitive to legislative changes
and reductions in governmental spending for such programs. Companies in the
healthcare sector depend heavily on patent protection. The process of obtaining
patent approval can be long and costly, and the expiration of patents may
adversely affect the profitability of the companies. Healthcare companies also
are subject to extensive litigation based on product liability and similar
claims. Additional factors also may adversely affect healthcare companies, and
state or local healthcare reform measures. Many new products are subject to
regulatory approval and the process of obtaining such approval can be long and
costly. Healthcare companies also are subject to competitive forces that may
make raising prices difficult and, at times, may result in price discounting. In
addition, companies in the healthcare sector may be thinly capitalized and
therefore may be susceptible to product obsolescence
Industrials Sector Risk
Changes in government regulation, world events and economic
conditions may adversely affect the companies in the industrials sector. In
addition, these companies are at risk for environmental damage claims.
Industrial companies also may be adversely affected by commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources, technological developments, labor relations
and changes in the supply of and demand for their specific products or services
or for industrials sector products in general.
Information Technology Sector Risk
Companies in the technology sector may be adversely affected by
the failure to obtain, or delays in obtaining, financing or regulatory approval,
intense competition, both domestically and internationally, product
compatibility, consumer preferences, corporate capital expenditure, rapid
obsolescence and competition for the services of qualified personnel. Companies
in the technology sector also face competition or potential competition with
numerous alternative technologies. In addition, the highly competitive
technology sector may cause the prices for these products and services to
decline in the future.
Technology companies may have limited product lines, markets,
financial resources or personnel. Companies in the information technology sector
are heavily dependent on patent and intellectual property rights. The loss or
impairment of these rights may adversely affect the profitability of these
companies.
The technology sector is subject to rapid and significant changes
in technology that are evidenced by the increasing pace of technological
upgrades, evolving industry standards, ongoing improvements in the capacity and
quality of digital technology, shorter development cycles for new products and
enhancements, developments in emerging wireless transmission technologies and
changes in customer requirements and preferences. The success of sector
participants depends substantially on the timely and successful introduction of
new products.
Real Estate Securities Risk
Investing in securities of real estate companies includes risks
such as: fluctuations in the value of the underlying properties; defaults by
borrowers or tenants; market saturation; changes in general and local economic
conditions; decreases in market rates for rents; changes in the availability,
cost and terms of mortgage funds; increased competition, property taxes, capital
expenditures, or operating expenses; and other economic, political or regulatory
occurrences, including the impact of changes in environmental laws, that may
affect the real estate industry.
The value or price of real estate company securities may drop
because of, among other adverse events, the failure of borrowers to repay their
loans and the inability to obtain financing either on favorable terms or at all.
If real estate
properties do not generate sufficient income to meet operating
expenses, including, where applicable, debt service, ground lease payments,
tenant improvements, third-party leasing commissions and other capital
expenditures, the income and ability (or perceived ability) of a real estate
company to make payments of interest and principal on their loans will be
adversely affected, which, as a result, may adversely affect a Fund. Many real
estate companies utilize leverage, which increases investment risk and could
adversely affect a company’s operations and market value in periods of rising
interest rates.
Utilities Sector Risk
The risks inherent in the utilities sector include a variety of
factors that may adversely affect the business or operations of utilities
companies, including high interest costs associated with capital construction
and improvement programs; difficulty in raising adequate capital on reasonable
terms in periods of high inflation and unsettled capital markets; governmental
regulation of rates that the issuer can charge to customers; costs associated
with compliance with, and adjusting to changes to, environmental and other
regulations; effects of economic slowdowns and surplus capacity; and increased
competition from other providers of utility services. Utilities companies may
also be adversely affected by increased costs associated with the reduced
availability of certain types of fuel, occasionally reduced availability and
high costs of natural gas for resale, and the effects of energy conservation
policies; effects of a national energy policy and lengthy delays, increased
costs and other problems associated with the design, construction, licensing,
regulation and operation of nuclear facilities for electric generation, which
may include the problems associated with the use of radioactive materials and
the disposal of radioactive wastes.
Technological innovations may render existing plants, equipment or
products obsolete, and companies may experience difficulty in obtaining
regulatory approval of new technologies; a lack of compatibility of
telecommunications equipment; and may be affected by the potential impact of
terrorist activities on the utility industry and its customers, as well as the
impact of natural or man-made
disasters. Any such event could have serious consequences for the general
population of the affected area and may adversely impact a Fund’s portfolio
securities performance. Issuers in the utilities sector also may be subject to
regulation by various governmental authorities and may be affected by the
imposition of special tariffs and changes in tax laws, regulatory policies and
accounting standards. Deregulation is subjecting utilities companies to greater
competition and may adversely affect profitability. As deregulation allows
utilities to diversify outside of their original geographic regions and their
traditional lines of business, utilities companies may engage in riskier
ventures. There is no assurance that regulatory authorities will, in the future,
grant rate increases, or that such increases will be adequate to permit the
payment of dividends on stocks issued by a utilities company.
Investment Approach Risk
Each Underlying Index, and thus the respective Fund, seeks to
provide exposure to investments based on a specific criteria and weighting
approach. There can be no assurance that the selection criteria and weighting
approach will enhance a Fund’s performance over time. It is expected that
exposure to such investment criteria and weighting will detract from performance
in some market environments, perhaps for extended periods. In such
circumstances, the Adviser will not adjust a Fund’s investment process to target
different criteria or weighting processes.
Issuer-Specific Changes Risk
The performance of a Fund depends on the performance of individual
securities to which the Fund has exposure. The value of an individual security
or particular type of security may be more volatile than the market as a whole
and may perform worse than the market as a whole, causing the value of its
securities to decline. Poor performance may be caused by poor management
decisions, competitive pressures, changes in technology, expiration of patent
protection, disruptions in supply, labor problems or shortages, corporate
restructurings, fraudulent disclosures or other factors. Issuers may, in times
of distress or at their own discretion, decide to reduce or eliminate dividends,
which may also cause their stock prices to decline.
Large Shareholder Risk
Certain large shareholders, including other funds advised by the
investment adviser or an affiliate of the investment adviser, may from time to
time own a substantial amount of a Fund’s shares. In addition, a third party
investor, the investment adviser or an affiliate of the investment adviser, an
authorized participant, a lead market maker, or another entity may invest in a
Fund and hold its investment for a limited period of time solely to facilitate
commencement of the Fund or to facilitate the Fund’s achieving a specified size
or scale. There can be no assurance that any large shareholder would not redeem
its investment. Dispositions of a large number of Shares by these shareholders
may adversely affect a Fund’s liquidity and net assets to the extent such
transactions are executed directly with the Fund in the form of redemptions
through an authorized participant, rather than executed in the secondary market.
These redemptions may also force a Fund to sell portfolio securities when it
might not otherwise do so, which may negatively impact the Fund’s NAV and
increase the Fund’s brokerage costs. Further, such sales may accelerate the
realization of taxable income and/or gains to shareholders, or a Fund may be
required to sell its more liquid Fund investments to meet a large redemption, in
which case the Fund’s remaining assets may be less liquid, more volatile, and
more difficult to price. To the extent a Fund permits cash purchases, large
purchases of Shares may adversely affect the Fund’s performance to the extent
that the Fund is delayed in investing new cash and is required to maintain a
larger cash position than it ordinarily would. To the extent these large
shareholders transact in shares on the secondary market, such transactions may
account for a large percentage of the trading volume on a Fund’s listing
exchange and may, therefore, have a material upward or downward effect on the
market price of the Shares. To the extent a Fund permits redemptions in cash,
the Fund may hold a relatively large proportion of its assets in cash in
anticipation of large redemptions, diluting its investment returns.
Low-Volatility Risk
Although subject to the risks of common stocks, low volatility
stocks are seen as having a lower risk profile than the overall markets.
However, a portfolio comprised of low volatility stocks may not produce
investment exposure that has lower variability to changes in such stocks’ price
levels. Low volatility stocks are likely to underperform the broader market
during periods of rapidly rising stock prices. There is no guarantee that a
strategy seeking lower volatility will be successful.
Market Risk
The securities in each Underlying Index are subject to market
fluctuations, and a Fund could lose money due to short-term market movements and
over longer periods during market downturns. You should anticipate that the
value of the Shares will decline, more or less, in correlation with any decline
in value of the securities in the respective Underlying Index. The value of a
security may decline due to general market conditions, economic trends or events
that are not specifically related to the issuer of the security or due to
factors that affect a particular industry or group of industries. During a
general downturn in the securities markets, multiple asset classes may be
negatively affected.
Market Trading Risk
Each Fund faces numerous market trading risks, including losses
from trading in secondary markets, periods of high volatility and disruption in
the creation/redemption process of the Fund. Although the Shares of each Fund
are listed for trading on a securities exchange, there can be no assurance that
an active trading market for the Shares will develop or be maintained by market
makers or APs, that the Shares will continue to trade on any such exchange or
that the Shares will continue to meet the requirements for listing on an
exchange. Any of these factors, among others, may lead to the Shares trading at
a premium or discount to a Fund’s NAV. As a result, an investor could lose money
over short or long periods. Further, a Fund may experience low trading volume
and wide bid/ask spreads. Bid/ask spreads vary over time based on trading volume
and market liquidity (including for the underlying securities held by a Fund),
and are generally lower if Shares have more trading volume and market liquidity
and higher if Shares have little trading volume and market liquidity.
Additionally, in stressed market conditions, the market for the Shares may
become less liquid in response to deteriorating liquidity in the markets for a
Fund’s portfolio holdings, which may cause a variance in the market price of the
Shares and their underlying value.
Momentum Investing Risk
In general, momentum is the tendency of an investment to exhibit
persistence in its relative performance; a “momentum” style of investing
emphasizes investing in securities that have had better recent performance
compared to other securities, on the theory that these securities will continue
to increase in value.
Momentum investing is subject to the risk that the securities may
be more volatile than the market as a whole. High momentum may also be a sign
that the securities’ prices have peaked, and therefore the returns on securities
that previously have exhibited price momentum may be less than returns on other
styles of
investing. Momentum can turn quickly, and stocks that previously
have exhibited high momentum may not experience continued positive momentum. A
Fund may experience significant losses if momentum stops, reverses or otherwise
behaves differently than predicted. In addition, there may be periods when the
momentum style of investing is out of favor and therefore, the investment
performance of a Fund may suffer.
Non-Correlation
Risk
A Fund’s return may not match the return of its Underlying Index
(that is, it may experience tracking error) for a number of reasons. For
example, a Fund incurs operating expenses not applicable to its Underlying Index
and incurs costs in buying and selling securities, especially when rebalancing
the Fund’s securities holdings to reflect changes in the composition of its
Underlying Index. If a Fund has recently commenced operations or otherwise has a
relatively small amount of assets, such transaction costs could have a
proportionally greater impact on the Fund. Additionally, if a Fund used a
sampling approach, it may result in returns that are not as well-correlated with
the return of its Underlying Index as would be the case if the Fund purchased
all of the components of its Underlying Index in the proportions represented in
the Underlying Index.
The performance of each Fund and its Underlying Index may vary due
to asset valuation differences and differences between the Fund’s portfolio and
the Underlying Index resulting from legal restrictions, costs or liquidity
constraints. Additionally, a Fund that issues or redeems Creation Units
principally for cash will incur higher costs in buying and selling securities
than if it issued and redeemed Creation Units principally in-kind. A Fund may fair value certain of the
securities it holds. To the extent a Fund calculates its NAV based on fair value
prices, the Fund’s ability to track its Underlying Index may be adversely
affected. Since an Underlying Index is not subject to the tax diversification
requirements to which the Funds must adhere, a Fund may be required to deviate
its investments from the securities contained in, and relative weightings of,
its Underlying Index. A Fund may not invest in certain securities included in
its Underlying Index due to liquidity constraints. Liquidity constraints also
may delay a Fund’s purchase or sale of securities included in its Underlying
Index. For tax efficiency purposes, a Fund may sell certain securities to
realize losses, causing it to deviate from its respective Underlying Index.
The Adviser may not fully invest a Fund at times, either as a
result of cash flows into the Fund, to retain a reserve of cash to meet
redemptions and expenses, or because of low assets (particularly when a Fund is
new and has operated for only a short period).
The investment activities of one or more of the Adviser’s
affiliates, including other subsidiaries of the Adviser’s parent company,
Invesco Ltd., for their proprietary accounts and for client accounts also may
adversely impact a Fund’s ability to track its Underlying Index. For example, in
regulated industries, certain emerging or international markets and under
corporate and regulatory ownership definitions, there may be limits on the
aggregate amount of investment by affiliated investors that may not be exceeded,
or that may not be exceeded without the grant of a license or other regulatory
or corporate consent, or, if exceeded, may cause the Adviser, the Fund or other
client accounts to suffer
disadvantages or business restrictions. As a result, a Fund may be
restricted in its ability to acquire particular securities due to positions held
by the Adviser’s affiliates.
Non-Diversified
Fund Risk
Funds that are considered non-diversified can invest a greater portion
of their assets in securities of individual issuers than a diversified fund. For
such Funds, changes in the market value of a single investment could cause
greater fluctuations in the Share price of those Funds than would occur in a
diversified fund. This may increase a Fund’s volatility and cause the
performance of a relatively small number of issuers to have a greater impact on
the Fund’s performance.
Operational Risk
The Funds are exposed to operational risks arising from a number
of factors, including, but not limited to, human error, processing and
communication errors, errors of the Fund’s service providers, counterparties or
other third-parties, failed or inadequate processes and technology or systems
failures. The Fund and the investment adviser seek to reduce these operational
risks through controls and procedures. However, these measures do not address
every possible risk and may be inadequate to address these risks.
Risks Relating to Calculation of NAV. The Fund
relies on various third parties and other informative sources to calculate its
NAV. Therefore, the Fund is subject to certain operational risks associated with
reliance on third party service providers and data sources. NAV calculation may
be impacted by operational risks arising from factors such as failures in
systems and technology. Such failures may result in delays in the calculation of
the Fund’s NAV and/or the inability to calculate NAV over extended time periods.
The Fund may be unable to recover any losses associated with such failures.
Portfolio Turnover Risk
To the extent that a Fund’s Underlying Index rebalances
frequently, a Fund may engage in frequent trading of its portfolio securities in
connection with the rebalancing or adjustment of its Underlying Index. This may
result in a high portfolio turnover rate. A portfolio turnover rate of 200%, for
example, is equivalent to a Fund buying and selling all of its securities two
times during the course of a year. A high portfolio turnover rate (such as 100%
or more) could result in high brokerage costs for a Fund. A high portfolio
turnover rate also can result in an increase in taxable capital gains
distributions to a Fund’s shareholders and an increased likelihood that the
capital gains will be taxable at ordinary rates.
Quality Securities Risk
Companies that issue stocks deemed to be quality stocks may
experience lower than expected returns or may experience negative growth, as
well as increased leverage, resulting in lower than expected or negative returns
to Fund shareholders. Many factors can affect a stock’s quality and performance,
and the impact of these factors on a stock or its price can be difficult to
predict. There is no guarantee that the past performance of these stocks will
continue.
Small- and Mid-Capitalization Company Risk
Securities of small- and mid-capitalization companies may be more
volatile and thinly traded (that is, less liquid) than those of more established
companies. These securities may have returns that vary, sometimes significantly,
from the overall securities market. Often small- and mid-capitalization companies and the
industries in which they focus are still evolving and, as a result, they may be
more sensitive to changing market conditions. In addition, small- and mid-capitalization companies are typically
less financially stable than larger, more established companies, and they may
depend on a small number of essential personnel, making them more vulnerable to
loss of personnel. Smaller capitalization companies also normally have less
diverse product lines than large-capitalization companies and are more
susceptible to adverse developments concerning their products. As such, small-
and mid-capitalization companies
typically are more likely to be adversely affected than large-capitalization
companies by changes in earning results, business prospects, investor
expectations or poor economic or market conditions.
Value Securities Risk
A value style of investing focuses on undervalued companies with
characteristics for improved valuations. Value securities are subject to the
risk that valuations never improve or that the returns on value securities are
less than returns on other styles of investing or the overall stock market.
Thus, the value of a Fund’s investments will vary and at times may be lower or
higher than that of other types of investments. Historically, value investments
have performed best during periods of economic recovery. Therefore, the value
investing style may over time go in and out of favor. Value stocks also may
decline in price, even though in theory they are already underpriced.
Non-Principal
Investment Strategies
Each Fund, after investing at least 90% of its total assets in
components that comprise its respective Underlying Index, may invest its
remaining assets in securities (including other funds) not included in its
Underlying Index and in money market instruments, including other funds,
including affiliated funds, that invest exclusively in money market instruments
(subject to applicable limitations under the 1940 Act or exemptions therefrom),
or repurchase agreements, convertible securities and structured notes (notes on
which the amount of principal repayment and interest payments is based on the
movement of one or more specified factors, such as the movement of a particular
security or securities index) and in futures contracts, options, options on
futures contracts and swaps. Convertible securities, structured notes, futures
contracts, options, options on futures contracts and swaps may be used by a Fund
in seeking performance that corresponds to its respective Underlying Index and
to manage cash flows. The Adviser anticipates that it may take approximately two
business days (a business day is any day that the New York Stock Exchange
(“NYSE”) is open) for the Underlying Index to fully reflect the additions to,
and deletions from, each Fund’s Underlying Index to fully settle in the
portfolio composition of that Fund.
In accordance with 1940 Act rules, each of Invesco Emerging
Markets Revenue ETF, Invesco Emerging Markets Ultra Dividend
Revenue ETF, Invesco S&P Financials Revenue ETF, Invesco
S&P MidCap 400 Revenue ETF, and Invesco S&P SmallCap 600 Revenue ETF has
adopted a policy to invest at least 80% of the value of its net assets (plus the
amount of any borrowings for investment purposes) in certain types of securities
(e.g., securities of a certain size, such as small-, mid- or large-cap equity securities) or in securities
of companies in a particular economic sector or region (e.g., securities of
companies in the financials sector or in emerging markets) that is suggested by
such Fund’s name (for each such Fund, an “80% investment policy”). Each Fund
with an 80% investment policy considers the securities suggested by its name to
be those securities that comprise its respective Underlying Index. Therefore,
each such Fund anticipates meeting its 80% investment policy because it already
is required to invest at least 90% of its total assets in securities that
comprise its respective Underlying Index, in accordance with the terms of
Invesco Exchange-Traded Fund Trust II’s (the “Trust”) exemptive relief.
Each 80% investment policy constitutes a non-fundamental policy that the Board of
Trustees (the “Board”) of the Trust may change at any time without shareholder
approval upon 60 days’ written notice to shareholders.
Each Fund’s investment objective also constitutes a non-fundamental policy that the Board of the
Trust may change at any time without shareholder approval upon 60 days written
notice to shareholders. The complete list of fundamental and non-fundamental policies of the Funds is set
forth in the Trust’s Statement of Additional Information (“SAI”) under the
section “Investment Restrictions.”
Borrowing Money
Each Fund may borrow money to the extent permitted by (i) the
1940 Act, (ii) the rules and regulations promulgated by the SEC under the
1940 Act, or (iii) an exemption or other relief applicable to the Fund from
the provisions of the 1940 Act.
Securities Lending
Each Fund may lend its portfolio securities to brokers, dealers,
and other financial institutions. In connection with such loans, each such Fund
receives liquid collateral equal to at least 102% (105% for international
securities) of the value of the loaned portfolio securities. This collateral is
marked-to-market on a daily basis.
Additional Risks of Investing in the Funds
The following provides additional risk information regarding
investing in the Funds.
Convertible Securities Risk
A convertible security generally is a preferred stock that may be
converted within a specified period of time into common stock. Convertible
securities nevertheless remain subject to the risks of both debt securities and
equity securities. As with other equity securities, the value of a convertible
security tends to increase as the price of the underlying stock goes up, and to
decrease as the price of the underlying stock goes down. Declining common stock
values therefore also may cause the value of a Fund’s investments to decline.
Like a debt security, a convertible security provides a
fixed income stream and also tends to decrease in value when
interest rates rise. Moreover, many convertible securities have credit ratings
that are below investment grade( such securities are commonly known as “junk
bonds”), are subject to the same risks as lower-rated debt securities and are
considered speculative.
Cybersecurity Risk
The Funds, like all companies, may be susceptible to operational
and information security risks. Cybersecurity failures or breaches of the Funds
or their service providers or the issuers of securities in which the Funds
invest, have the ability to cause disruptions and impact business operations,
potentially resulting in financial losses, the inability of Fund shareholders to
transact business, violations of applicable privacy and other laws, regulatory
fines, penalties, reputational damage, reimbursement or other compensation
costs, and/or additional compliance costs. The Funds and their shareholders
could be negatively impacted as a result.
Derivatives Risk
The Funds may invest in derivatives, such as futures and options.
Derivatives are financial instruments that derive their value from an underlying
asset, such as a security, index or exchange rate. Derivatives may be riskier
than other types of investments and may be more volatile and less liquid than
other securities.
Derivatives may be used to create synthetic exposure to an
underlying asset or to hedge a portfolio risk. If a Fund uses derivatives to
“hedge” a portfolio risk, the change in value of a derivative may not correlate
as expected with the underlying asset being hedged, and it is possible that the
hedge therefore may not succeed. In addition, given their complexity,
derivatives may be difficult to value.
Derivatives are subject to a number of risks including credit
risk, interest rate risk, and market risk. Credit risk refers to the possibility
that a counterparty will be unable and/or unwilling to perform under the
agreement. Interest rate risk refers to fluctuations in the value of an asset
resulting from changes in the general level of interest rates. Over-the-counter derivatives are also
subject to counterparty risk (sometimes referred to as “default risk”), which is
the risk that the other party to the contract will not fulfill its contractual
obligations.
Derivatives may be especially sensitive to changes in economic and
market conditions, and their use may give rise to a form of leverage. Leverage
may cause the portfolios of the Funds to be more volatile than if the portfolio
had not been leveraged because leverage can exaggerate the effect of any
increase or decrease in the value of securities held by a Fund. For some
derivatives, such leverage could result in losses that exceed the original
amount invested in the derivative.
Index Provider Risk
Each Fund seeks to track the investment results, before fees and
expenses, of its respective Underlying Index, as published by an Index Provider.
There is no assurance that an Index Provider will compile an Underlying Index
accurately, or that an Underlying Index will be determined, composed or
calculated accurately. While each Index Provider gives descriptions of what an
Underlying Index is designed to achieve, the Index Provider
generally does not provide any warranty or accept any liability in
relation to the quality, accuracy or completeness of data in such indexes, and
it generally does not guarantee that an Underlying Index will be in line with
its methodology. Errors made by an Index Provider with respect to the quality,
accuracy and completeness of the data within an Underlying Index may occur from
time to time and may not be identified and corrected by the Index Provider for a
period of time, if at all. Therefore, gains, losses or costs associated with an
Index Provider’s errors will generally be borne by a Fund and its shareholders.
Index Rebalancing Risk
Because each Fund seeks to track the investment results, before
fees and expenses, of its Underlying Index, the Fund may sell securities at
inopportune times or for prices other than at current market values or may hold
onto the securities in unfavorable market conditions. In addition, a Fund may
elect not to sell such securities on the day that they are removed from its
Underlying Index, due to market conditions or otherwise. Due to these factors,
the variation between a Fund’s annual return and the return of its Underlying
Index may increase significantly.
Apart from scheduled rebalances, an Index Provider may carry out
additional ad hoc rebalances to an Underlying Index, for example, to correct an
error in the selection of constituents. When a Fund in turn rebalances its
portfolio, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne by the Fund and its shareholders. Unscheduled
rebalances also expose a Fund to additional tracking error risk. Therefore,
errors and additional ad hoc rebalances carried out by an Index Provider may
increase a Fund’s costs and market exposure.
Licensing, Custody and Settlement Risk
Approval of governmental authorities may be required prior to
investing in the securities of companies based in certain foreign countries.
Delays in obtaining such an approval would delay investments in the particular
country, and, as a consequence, a Fund may not be able to invest in all of the
securities included in its Underlying Index while an approval is pending. Rules
adopted under the 1940 Act permit a Fund to maintain its foreign securities and
cash in the custody of certain eligible non-U.S. banks and securities depositories.
Certain banks in foreign countries that are eligible foreign sub-custodians may be recently organized or
otherwise lack extensive operating experience. In addition, in certain countries
there may be legal restrictions or limitations on the ability of a Fund to
recover assets held in custody by a foreign sub-custodian in the event of the bankruptcy
of the sub-custodian. Settlement
systems in emerging markets may be less organized than in developed markets.
Thus, there may be a risk that settlement may be delayed and that cash or
securities of a Fund may be in jeopardy because of failures of or defects in the
systems. Under the laws of certain countries in which the Funds invest, the
Funds may be required to release local shares before receiving cash payment or
may be required to make cash payment prior to receiving local shares.
Money Market Funds Risk
Money market funds are subject to management fees and other
expenses, and a Fund’s investments in money market funds will
cause it to bear proportionately the costs incurred by the money
market funds’ operations while simultaneously paying its own management fees and
expenses. An investment in a money market fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency; it is
possible to lose money by investing in a money market fund. To the
extent that a Fund invests in money market funds, the Fund will be subject to
the same risks that investors experience when investing in money market funds.
These risks may include the impact of significant fluctuations in assets as a
result of the cash sweep program or purchase and redemption activity in those
funds.
Money market funds are open-end registered investment companies that
historically have traded at a stable $1.00 per share price. However, under
recent amendments to money market fund regulations under the 1940 Act, money
market funds that do not meet the definition of a “retail money market fund” or
“government money market fund” are required to transact at a floating NAV per
share (i.e., in a manner similar to how all other non-money market mutual funds transact),
instead of at a $1.00 stable share price. Those rule amendments also permit
money market funds to impose liquidity fees and redemption gates for use in
times of market stress. If a Fund invested in a money market fund with a
floating NAV, the impact on the trading and value of the money market instrument
as a result of the rule amendments may negatively affect the Fund’s return
potential.
Repurchase Agreements Risk
Repurchase agreements are agreements pursuant to which a Fund
acquires securities from a third party with the understanding that the seller
will repurchase them at a fixed price on an agreed date. Repurchase agreements
may be characterized as loans secured by the underlying securities. If the
seller of securities under a repurchase agreement defaults on its obligation to
repurchase the underlying securities, as a result of its bankruptcy or
otherwise, a Fund will seek to dispose of such securities, which action could
involve costs or delays. If the seller becomes insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws, a
Fund’s ability to dispose of the underlying securities may be restricted. If the
seller fails to repurchase the securities, a Fund may suffer a loss to the
extent proceeds from the sale of the underlying securities are less than the
repurchase prices.
Risks of Futures and Options
Each Fund may enter into U.S. futures contracts, options and
options on futures contracts to simulate full investment in its Underlying
Index, or to manage cash flows. The Funds will not use futures or options for
speculative purposes. Each Fund intends to use futures and options contracts to
limit its risk exposure to levels comparable to direct investment in securities.
An option gives a holder the right to buy or sell a specific
security or an index at a specified price within a specified period of time. An
option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in the underlying futures contract at a
specified price at any time prior to the expiration date of the option. Options
can offer large amounts of leverage, which may result in a Fund’s NAV being more
sensitive to changes in the value of the related instrument. The
purchase of put or call options could be based upon predictions as to
anticipated trends; such predictions could prove to be incorrect resulting in
loss of part or all of the premium paid. The risk of trading uncovered call
options in some strategies (e.g., selling uncovered stock index futures
contracts) potentially is unlimited.
Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific instrument or
index at a specified future time and at a specified price. Because futures
contracts project price levels in the future, market circumstances may cause a
discrepancy between the price of the stock index future and the movement in the
Underlying Index. In the event of adverse price movements, a Fund would remain
required to make daily cash payments to maintain its required margin. There is
no assurance that a liquid secondary market will exist for any particular
futures contract at any particular time. The risk of loss in trading futures
contracts or potentially is unlimited.
Each Fund must segregate liquid assets or take other appropriate
measures to “cover” open positions in futures contracts. For futures contracts
that do not cash settle, each Fund must segregate liquid assets equal to the
full notional value of the futures contracts while the positions are open. For
futures contracts that do cash settle, each Fund is permitted to set aside
liquid assets in an amount equal to the Fund’s daily marked-to-market net obligations
(i.e., the Fund’s daily net liability) under the futures contract, if any,
rather than their full notional value.
Risks of Swap Agreements
A Fund may enter into swap transactions, including total return
swaps, to simulate full investment in its Underlying Index or to manage cash
flows. A swap is an agreement involving the exchange by a Fund with another
party of their respective commitments to pay or receive payments at specified
dates on the basis of a specified amount. In a total return swap transaction,
one party agrees to pay the other party an amount equal to the total return on a
defined underlying asset or a non-asset
reference during a specified period of time. The underlying asset might be a
security or basket of securities, and the non-asset reference could be a securities
index. In return, the other party would make periodic payments based on a fixed
or variable interest rate or on the total return from a different underlying
asset or non-asset reference. The
payments of the two parties could be made on a net basis.
Swaps are highly specialized instruments that require investment
techniques and risk analyses different from those associated with stocks, bonds,
and other traditional instruments. The use of swap agreements entails certain
risks that may be different from, or possibly greater than, the risks associated
with investing directly in the reference instrument that underlies the swap
agreement. Such risks include including leverage risk, liquidity risk and
counterparty risk.
Swap agreements may have a leverage component, and therefore
adverse changes in the value or level of the reference instrument, such as an
underlying asset, can result in gains or losses that are
substantially greater than the amount invested in the swap itself.
Certain swaps, such as total return swaps, have the potential for unlimited
loss, regardless of the size of the initial investment.
Counterparty risk is the risk that the other party in a swap
agreement might default on a contract or fail to perform by not paying amounts
due. In that event, a Fund will have contractual remedies pursuant to the
agreements related to the transaction. However, such remedies may be subject to
bankruptcy and insolvency laws that could affect a Fund’s rights as a creditor
(e.g., the Fund may not receive the net amount of payments that it contractually
is entitled to receive). A Fund could experience lengthy delays in recovering
its assets and may not receive any recovery at all. Further, there is a risk
that no suitable counterparties will be willing to enter into, or continue to
enter into, transactions with a Fund, which may cause the Fund to experience
difficulty in purchasing or selling these instruments in a timely manner.
A Fund will earmark or segregate assets in the form of cash and
cash equivalents in an amount equal to the aggregate market value of the swaps
of which it is the seller, marked-to-market on a daily basis.
Securities Lending Risk
Securities lending involves a risk of loss because the borrower
may fail to return the securities in a timely manner or at all. If a Fund that
lent its securities were unable to recover the securities loaned, it may sell
the collateral and purchase a replacement security in the market. Lending
securities entails a risk of loss to a Fund if and to the extent that the market
value of the loaned securities increases and the collateral is not increased
accordingly.
Any cash received as collateral for loaned securities will be
invested in an affiliated money market fund. This investment is subject to
market appreciation or depreciation and a Fund will bear any loss on the
investment of its cash collateral.
Shares May Trade at Prices Different than NAV
The NAV of the Shares generally will fluctuate with changes in the
market value of each Fund’s holdings. The market prices of Shares generally will
fluctuate in accordance with changes in NAV, as well as the relative supply of
and demand for Shares on the exchange on which a Fund trades. The Adviser cannot
predict whether the Shares will trade below, at or above the Fund’s NAV. Price
differences may be due largely to the fact that supply and demand forces at work
in the secondary trading market for the Shares will be related, but not
identical, to the same forces influencing the prices of the securities of each
Fund’s Underlying Index trading individually or in the aggregate at any point in
time. In addition, disruptions to creations and redemptions or the existence of
extreme market volatility may result in trading prices that differ significantly
from NAV. If a shareholder purchases at a time when the market price is at a
premium to the NAV or sells at a time when the market price is at a discount to
the NAV, the shareholder may sustain losses.
Structured Notes Risk
Investments in structured notes involve risks including interest
rate risk, credit risk and market risk. Interest rate risk refers to
fluctuations in the value of a note resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of notes tend to go down. Credit risk refers to the possibility
that the issuer of a note will be unable and /or unwilling to make timely
interest payments and/or repay the principal on its debt. Depending on the
factors used, changes in interest rates and movement of such factors may cause
significant price fluctuations. Structured notes may be less liquid than other
types of securities and more volatile than the reference factor underlying the
note. This means that a Fund may lose money if the issuer of the note defaults,
as the Fund may not be able to readily close out its investment in such notes
without incurring losses.
Trading Issues Risk
Investors buying or selling Shares in the secondary market may pay
brokerage commissions or other charges, which may be a significant proportional
cost for investors seeking to buy or sell relatively small amounts of Shares.
Moreover, trading in Shares on the Cboe BZX Exchange, Inc. or NYSE Arca, Inc.
(each, an “Exchange” and together, the “Exchanges”), as applicable, may be
halted due to market conditions or for reasons that, in the view of the relevant
Exchange, make trading in Shares inadvisable. In addition, trading in Shares on
an Exchange is subject to trading halts caused by extraordinary market
volatility pursuant to the Exchange’s “circuit breaker” rules. There can be no
assurance that the requirements of an Exchange necessary to maintain the listing
of each Fund will continue to be met or will remain unchanged. Foreign exchanges
may be open on days when Shares are not priced, and therefore, the value of the
securities in a Fund’s portfolio may change on days when shareholders will not
be able to purchase or sell Shares.
Tax-Advantaged Structure of ETFs
Unlike interests in conventional mutual funds, which typically are
bought and sold only at closing NAVs, Shares are traded throughout the day in
the secondary market on a national securities exchange on an intra-day basis, and are created and redeemed
principally in-kind in Creation Units
at each day’s next calculated NAV. These in-kind arrangements are designed to protect
shareholders from the adverse effects on a Fund’s portfolio that could arise
from frequent cash creation and redemption transactions. In a conventional
mutual fund, redemptions can have an adverse tax impact on taxable shareholders
because the mutual funds may need to sell portfolio securities to obtain cash to
meet such redemptions. These sales may generate taxable gains that must be
distributed to the shareholders of the mutual fund, whereas the Shares’ in-kind redemption mechanism generally will
not lead to such taxable events for a Fund or its shareholders.
Each Fund may recognize gains as a result of rebalancing its
securities holdings to reflect changes in the securities included in the Fund’s
Underlying Index. Each Fund also may be required to distribute any such gains to
its shareholders to avoid adverse federal income tax consequences. For
information concerning the tax consequences of distributions, see the section
entitled “Dividends, Other Distributions and Taxes” in this Prospectus.
Portfolio Holdings
A description of the Trust’s policies and procedures with respect
to the disclosure of the Funds’ portfolio holdings is available in the Funds’
SAI, which is available at www.invesco.com/ETFs.
Management of the Funds
Invesco Capital Management LLC (“the Adviser”) is a registered
investment adviser with its offices at 3500 Lacey Road, Suite 700, Downers
Grove, Illinois 60515. The Adviser serves as the investment adviser to the
Trust, Invesco Exchange-Traded Fund Trust, Invesco India Exchange-Traded Fund
Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively
Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded
Self-Indexed Fund Trust, a family of ETFs, with combined assets under management
of $102.3 billion as of December 31, 2018.
As the Funds’ investment adviser, the Adviser has overall
responsibility for selecting and continuously monitoring each Fund’s
investments, managing each Fund’s business affairs and providing certain
clerical, bookkeeping and other administrative services for the Trust.
Portfolio Managers
The Adviser uses a team of portfolio managers, investment
strategists and other investment specialists in managing the Funds. This team
approach brings together many disciplines and leverages the Adviser’s extensive
resources.
Peter Hubbard, Vice President of the Trust, oversees all research,
portfolio management and trading operations of the Funds. In this capacity,
Mr. Hubbard oversees a team of portfolio managers (collectively, with
Mr. Hubbard, the “Portfolio Managers”) who are responsible for the day-to-day management of the Funds. In
managing the Funds, Mr. Hubbard receives management assistance from Michael
Jeanette and Tony Seisser. Each Portfolio Manager is responsible for various
functions related to portfolio management, including investing cash flows,
coordinating with other team members to focus on certain asset classes,
implementing investment strategy and researching and reviewing investment
strategy. Each Portfolio Manager has limitations on his authority for risk
management and compliance purposes that the Adviser believes to be appropriate.
Peter Hubbard, Director of Portfolio Management of the Adviser,
has been one of the Portfolio Managers primarily responsible for the day-to-day management of each Fund
since May 2019. Mr. Hubbard has been a portfolio manager at the Adviser
since June 2007 and has been associated with the Adviser since 2005.
Michael Jeanette, Senior Portfolio Manager of the Adviser, has
been one of the Portfolio Managers primarily responsible for the day-to-day management of each Fund
since May 2019. He has been associated with the Adviser since 2008.
Tony Seisser, Portfolio Manager of the Adviser, has been one of
the Portfolio Managers primarily responsible for the day-to-day management of each Fund
since May 2019. He has been associated with the Adviser since 2013.
The Funds’ SAI provides additional information about the Portfolio
Managers’ compensation structure, other accounts that the Portfolio Managers
manage and the Portfolio Managers’ ownership of Shares.
Advisory Fees
Pursuant to an investment advisory agreement between the Adviser
and the Trust (the “Investment Advisory Agreement”), each Fund pays the Adviser
an annual unitary management fee equal to a percentage of its average daily net
assets set forth in the chart below:
|
|
|
|
|
Fund |
|
Management Fee |
Invesco Emerging Markets Revenue
ETF |
|
0.46% |
Invesco Emerging Markets Ultra Dividend
Revenue ETF |
|
0.46% |
Invesco Global ESG Revenue
ETF |
|
0.45% |
Invesco Global Revenue ETF |
|
0.43% |
Invesco International Revenue
ETF |
|
0.42% |
Invesco International Ultra Dividend
Revenue ETF |
|
0.42% |
Invesco Russell 1000® Low Volatility
Factor ETF |
|
0.19% |
Invesco Russell 1000® Momentum Factor
ETF |
|
0.19% |
Invesco Russell 1000® Quality Factor
ETF |
|
0.19% |
Invesco Russell 1000® Size Factor
ETF |
|
0.19% |
Invesco Russell 1000® Value Factor
ETF |
|
0.19% |
Invesco Russell 1000® Yield Factor
ETF |
|
0.19% |
Invesco S&P 500 Revenue
ETF |
|
0.39% |
Invesco S&P Financials Revenue
ETF |
|
0.45% |
Invesco S&P MidCap 400 Revenue
ETF |
|
0.39% |
Invesco S&P SmallCap 600 Revenue
ETF |
|
0.39% |
Invesco S&P Ultra Dividend Revenue
ETF |
|
0.39% |
Out of each Fund’s unitary management fee, the Adviser pays
substantially all expenses of the Fund, including the cost of transfer agency,
custody, fund administration, legal, audit and other services, except for
advisory fees, distribution fees, if any, brokerage expenses, taxes, interest,
litigation expenses, Acquired Fund Fees and Expenses, if any, and other
extraordinary expenses.
The Adviser has agreed to waive a portion of its unitary
management fee to the extent necessary to prevent each Fund’s operating expenses
(excluding distribution fees, if any, brokerage expenses, taxes, interest,
litigation expenses, acquired fund fees and expenses, if any, and other
extraordinary expenses) from exceeding the management fee for at least two years
following each Fund’s acquisition of its corresponding Predecessor Fund.
The Funds may invest in money market funds that are managed by
affiliates of the Adviser. The indirect portion of the management fee that a
Fund incurs through such investments is in addition to the Adviser’s unitary
management fee. Therefore, the Adviser has contractually agreed to waive the
management fees that it receives in an amount equal to the indirect management
fees that a Fund incurs through its investments in affiliated money market funds
for at least two years following each Fund’s acquisition of its corresponding
Predecessor Fund. There is no guarantee that the Adviser will extend the waiver
of these fees past that date.
A discussion regarding the basis for the Board’s approval of the
Trust’s investment advisory agreement with respect to each Fund will be
available in the Fund’s next Annual or Semi-Annual Report to shareholders.
How to Buy and Sell Shares
Each Fund issues or redeems its Shares at NAV per Share only in
Creation Units or Creation Unit Aggregations.
Most investors will buy and sell Shares in secondary market
transactions through brokers. Shares of each Fund are listed for trading on the
secondary market on an Exchange. Shares can be bought and sold throughout the
trading day like other publicly traded shares. There is no minimum investment.
Although Shares generally are purchased and sold in “round lots” of 100 Shares,
brokerage firms typically permit investors to purchase or sell Shares in smaller
“odd-lots,” at no per share price
differential. When buying or selling Shares through a broker, you will incur
customary brokerage commissions and charges, and you may pay some or all of the
spread between the bid and the offered price in the secondary market on each leg
of a round trip (purchase and sale) transaction. Shares of the Funds trade under
the following symbols on the following Exchanges:
|
|
|
|
|
|
|
|
Fund |
|
Symbol |
|
Exchange |
Invesco Emerging Markets Revenue
ETF |
|
REEM |
|
Cboe BZX Exchange, Inc. |
Invesco Emerging Markets Ultra Dividend
Revenue ETF |
|
REDV |
|
NYSE Arca, Inc. |
Invesco Global ESG Revenue
ETF |
|
ESGF |
|
NYSE Arca, Inc. |
Invesco Global Revenue ETF |
|
RGLB |
|
Cboe BZX Exchange, Inc. |
Invesco International Revenue
ETF |
|
REFA |
|
Cboe BZX Exchange, Inc. |
Invesco International Ultra Dividend
Revenue ETF |
|
RIDV |
|
NYSE Arca, Inc. |
Invesco Russell 1000® Low Volatility
Factor ETF |
|
OVOL |
|
Cboe BZX Exchange, Inc. |
Invesco Russell 1000® Momentum Factor
ETF |
|
OMOM |
|
Cboe BZX Exchange, Inc. |
Invesco Russell 1000® Quality Factor
ETF |
|
OQAL |
|
Cboe BZX Exchange, Inc. |
Invesco Russell 1000® Size Factor
ETF |
|
OSIZ |
|
Cboe BZX Exchange, Inc. |
Invesco Russell 1000® Value Factor
ETF |
|
OVLU |
|
Cboe BZX Exchange, Inc. |
Invesco Russell 1000® Yield Factor
ETF |
|
OYLD |
|
Cboe BZX Exchange, Inc. |
Invesco S&P 500 Revenue
ETF |
|
RWL |
|
NYSE Arca, Inc. |
Invesco S&P Financials Revenue
ETF |
|
RWW |
|
NYSE Arca, Inc. |
Invesco S&P MidCap 400 Revenue
ETF |
|
RWK |
|
NYSE Arca, Inc. |
Invesco S&P SmallCap 600 Revenue
ETF |
|
RWJ |
|
NYSE Arca, Inc. |
Invesco S&P Ultra Dividend Revenue
ETF |
|
RDIV |
|
NYSE Arca,
Inc. |
Share prices are reported in dollars and cents per Share.
APs may acquire Shares directly from each Fund, and APs may tender
their Shares for redemption directly to each Fund, at NAV per Share only in
Creation Units or Creation Unit Aggregations, and in accordance with the
procedures described in the SAI.
Under normal circumstances, a Fund will pay out redemption
proceeds to a redeeming AP within two days after the AP’s
redemption request is received, in accordance with the process set
forth in the Funds’ SAI and in the agreement between the AP and the Funds’
distributor. However, each Fund reserves the right, including under stressed
market conditions, to take up to seven days after the receipt of a redemption
request (as discussed above) to pay an AP, all as permitted by the 1940 Act.
Funds that track underlying indexes composed of foreign securities may pay out
redemption proceeds up to 14 days after the receipt of a redemption request,
consistent with the Trust’s SEC exemptive relief.
Each Fund anticipates regularly meeting redemption requests
primarily through in-kind redemptions.
However, each Fund reserves the right to pay redemption proceeds to an AP in
cash, consistent with the Trust’s exemptive relief. Cash used for redemptions
will be raised from the sale of portfolio assets or may come from existing
holdings of cash or cash equivalents.
Each Fund may liquidate and terminate at any time without
shareholder approval.
Book Entry
Shares are held in book-entry form, which means that no stock
certificates are issued. The Depository Trust Company (“DTC”) or its nominee is
the record owner of all outstanding Shares and is recognized as the owner of all
Shares for all purposes.
Investors owning Shares are beneficial owners as shown on the
records of DTC or its participants. DTC serves as the securities depository for
all Shares. Participants in DTC include securities brokers and dealers, banks,
trust companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
Shares, you are not entitled to receive physical delivery of stock certificates
or to have Shares registered in your name, and you are not considered a
registered owner of Shares. Therefore, to exercise any right as an owner of
Shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other securities that you
hold in book entry or “street name” form.
Share Trading Prices
The trading prices of the Shares of each Fund on the relevant
Exchange may differ from the Fund’s daily NAV. Market forces of supply and
demand, economic conditions and other factors may affect the trading prices of
Shares.
The approximate value of Shares of each Fund, an amount
representing on a per share basis the sum of the current market price of the
securities accepted by such Fund, and an estimated
cash component will be disseminated every 15 seconds throughout
the trading day through the facilities of the Consolidated Tape Association.
With respect to Funds that invest in securities of foreign issuers traded on
foreign exchanges, as the respective international local markets close, the
market value of the Deposit Securities will continue to be updated for foreign
exchange rates for the remainder of the U.S. trading day at the prescribed 15
second intervals. This approximate value should not be viewed as a “real-time”
update of the NAV per Share of a Fund because the approximate value will not be
calculated in the same
manner as the NAV, which is computed once a day, generally at the
end of the business day. The Funds are not involved in, or responsible for, the
calculation or dissemination of the approximate value of the Shares, and the
Funds do not make any warranty as to the accuracy of the approximate value.
Frequent Purchases and Redemptions of Shares
Shares of the Funds may be purchased and redeemed directly from
the Funds only in Creation Units by APs. The vast majority of trading in Shares
of the Funds occurs on the secondary market and does not involve a Fund
directly. In-kind purchases and
redemptions of Creation Units by APs and cash trades on the secondary market are
unlikely to cause many of the harmful effects of frequent purchases and/or
redemptions of Shares of a Fund. Cash purchases or redemptions of Creation
Units, however, can result in increased tracking error, disruption of portfolio
management, dilution to a Fund and increased transaction costs, which could
negatively impact a Fund’s ability to achieve its investment objective and may
lead to the realization of capital gains. These consequences may increase as the
frequency of cash purchases and redemptions of Creation Units by APs increases.
However, direct trading by APs is critical to ensuring that Shares trade at or
close to NAV.
To minimize these potential consequences of frequent purchases and
redemptions of Shares, each Fund imposes transaction fees on purchases and
redemptions of Creation Units to cover the custodial and other costs the Funds
incur in effecting trades. In addition, the Adviser monitors trades by APs for
patterns of abusive trading and the Funds reserve the right to not accept orders
from APs that the Adviser has determined may be disruptive to the management of
the Funds or otherwise are not in the best interests of the Funds. For these
reasons, the Board has not adopted policies and procedures with respect to
frequent purchases and redemptions of Shares of the Funds.
Dividends, Other Distributions and Taxes
Dividends and Other Distributions
Ordinarily, dividends from net investment income, if any, are
declared and paid quarterly by each Fund. Each Fund also intends to distribute
its net realized capital gains, if any, to shareholders annually. Dividends and
other distributions may be declared and paid more frequently to comply with the
distribution requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended, and to avoid a federal excise tax imposed on regulated investment
companies.
Distributions in cash may be reinvested automatically in
additional whole Shares only if the broker through whom you purchased Shares
makes such option available.
Taxes
Each Fund intends to qualify each year as a regulated investment
company (“RIC”) and, as such, will not be subject to entity-level tax on the
income and gain it distributes. If you are a taxable investor, dividends and
distributions you receive generally are taxable to you whether you reinvest
distributions in additional Shares or take them in cash. Every year, you will be
sent
information showing the amount of dividends and distributions you
received during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below
where relevant:
Fund Tax Basics
|
• |
|
A Fund earns income
generally in the form of dividends or interest on its investments. This
income, less expenses incurred in the operation of a Fund, constitutes the
Fund’s net investment income from which dividends may be paid to
shareholders. If you are a taxable investor, distributions of net
investment income generally are taxable to you as ordinary income.
|
|
• |
|
Distributions of net
short-term capital gains are taxable to you as ordinary income. A fund
with a high portfolio turnover rate (a measure of how frequently assets
within a fund are bought and sold) is more likely to generate short-term
capital gains than a fund with a low portfolio turnover rate.
|
|
• |
|
Distributions of net
long-term capital gains are taxable to you as long-term capital gains no
matter how long you have owned your Shares. |
|
• |
|
A portion of income
dividends paid by a Fund may be reported as qualified dividend income
eligible for taxation by individual shareholders at long-term capital gain
rates, provided certain holding period requirements are met. These reduced
rates generally are available for dividends derived from a Fund’s
investment in stocks of domestic corporations and qualified foreign
corporations. |
|
• |
|
The use of derivatives by a
Fund may cause the Fund to realize higher amounts of ordinary income or
short-term capital gain, distributions from which are taxable to
individual shareholders at ordinary income tax rates rather than at the
more favorable tax rates for long-term capital gain.
|
|
• |
|
Distributions declared to
shareholders with a record date in December—if paid to you by the end of
January—are taxable for federal income tax purposes as if received in
December. |
|
• |
|
Any long-term or short-term
capital gains realized on the sale of your Shares will be subject to
federal income tax. |
|
• |
|
A shareholder’s cost basis
information will be provided on the sale of any of the shareholder’s
Shares, subject to certain exceptions for exempt recipients. Please
contact the broker (or other nominee) that holds your Shares with respect
to reporting of cost basis and available elections for your account.
|
|
• |
|
At the time you purchase
your Shares, a Fund’s NAV may reflect undistributed income or
undistributed capital gains. A subsequent distribution to you of such
amounts, although constituting a return of your investment, would be
taxable. Buying Shares in a Fund just before it declares an income
dividend or capital gains distribution is sometimes known as “buying a
dividend.” In addition, a Fund’s NAV may, at any time, reflect net
unrealized appreciation, which may result in future taxable distributions
to you. |
|
• |
|
By law, if you do not
provide a Fund with your proper taxpayer identification number and certain
required certifications, you may be subject to backup withholding on any
distributions of income, capital gains, or proceeds from the sale of your
Shares. A Fund also must withhold if the IRS instructs it to do so. When
withholding is required, the amount will be 24% of any distributions or
proceeds paid. |
|
• |
|
An additional 3.8% Medicare
tax is imposed on certain net investment income (including ordinary
dividends and capital gain distributions received from a Fund and net
gains from redemptions or other taxable dispositions of Shares) of U.S.
individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross
income” (in the case of an estate or trust) exceeds a threshold amount.
This Medicare tax, if applicable, is reported by you on, and paid with,
your federal income tax return. |
|
• |
|
You will not be required to
include the portion of dividends paid by a Fund derived from interest on
U.S. government obligations in your gross income for purposes of personal
and, in some cases, corporate income taxes in many state and local tax
jurisdictions. The percentage of dividends that constitutes dividends
derived from interest on federal obligations will be determined annually.
This percentage may differ from the actual percentage of interest received
by a Fund on federal obligations for the particular days on which you hold
shares. |
|
• |
|
Fund distributions and gains
from sale of Shares generally are subject to state and local income taxes.
|
|
• |
|
If a Fund qualifies to pass
through the tax benefits from foreign taxes it pays on its investments,
and elects to do so, then any foreign taxes it pays on these investments
may be passed through to you as a foreign tax credit. You will then be
required to include your pro-rata
share of these taxes in gross income, even though not actually received by
you, and will be entitled either to deduct your share of these taxes in
computing your taxable income, or to claim a foreign tax credit for these
taxes against your U.S. federal income tax. |
|
• |
|
Foreign investors should be
aware that U.S. withholding, special certification requirements to avoid
U.S. backup withholding and claim any treaty benefits, and estate taxes
may apply to an investment in a Fund. |
|
• |
|
Under the Foreign Account Tax Compliance
Act (FATCA), a 30% withholding tax is imposed on income dividends made by
a Fund to certain foreign entities, referred to as foreign financial
institutions or non-financial
foreign entities. After December 31, 2018, FATCA withholding also
would have applied to certain capital gain distributions, return of
capital distributions and the proceeds arising from the sale of Shares;
however, based on proposed regulations recently issued by the IRS on which
a Fund may rely, such withholding is no longer required unless final
regulations provide |
|
|
otherwise (which is not expected). A Fund may disclose the
information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or other
parties as necessary to comply with FATCA or similar laws. Withholding
also may be required if a foreign entity that is a shareholder of a Fund
fails to provide the Fund with appropriate certifications or other
documentation concerning its status under FATCA.
|
Taxes on Purchase and Redemption of Creation Units
An AP that exchanges securities for a Creation Unit generally will
recognize a capital gain or loss equal to the difference between the market
value of the Creation Units at the time of exchange (plus any cash received by
an AP as part of the issue) and the sum of the AP’s aggregate basis in the
securities surrendered plus any cash component paid. Similarly, an AP that
redeems a Creation Unit in exchange for securities generally will recognize a
capital gain or loss equal to the difference between the AP’s basis in the
Creation Units (plus any cash paid by the AP as part of the redemption) and the
aggregate market value of the securities received (plus any cash received by the
AP as part of the redemption). The IRS, however, may assert that a loss realized
upon an exchange of securities for a Creation Unit, or of a Creation Unit for
securities, cannot be deducted currently under the rules governing “wash sales,”
or on the ground that there has been no significant change in the AP’s economic
position. An AP exchanging securities should consult its own tax advisors with
respect to whether wash sale rules apply and when a loss otherwise might not be
deductible, assuming that such creation units are held as a capital asset.
Any capital gain or loss realized on a redemption of a Creation
Unit generally is treated as long-term capital gain or loss if Shares have been
held for more than one year and as short-term capital gain or loss if Shares
have been held for one year or less.
If you purchase or redeem one or more Creation Units, you will be
sent a confirmation statement showing how many Shares you purchased or sold and
at what price.
Foreign Income Taxes
Certain foreign governments levy withholding or other taxes on
dividend and interest income. A Fund also may be subject to foreign income taxes
with respect to other income. Although in some countries a portion of these
taxes may be recoverable, the non-recovered portion of foreign withholding
taxes will reduce the income received from investments in such countries.
A Fund may elect to pass its credits for foreign income taxes,
subject to certain limitations, through to its shareholders for a taxable year
if more than 50% of its assets at the close of the year, by value, consists of
stock and securities of foreign corporations. If a Fund makes this election,
each shareholder will be treated as having paid a proportionate share of the
Fund’s foreign income taxes, but the shareholder must include an equal amount in
gross income.
The foregoing discussion summarizes some of the more important
possible consequences under current federal, state and local tax law of an
investment in the Funds. It is not a
substitute for personal tax advice. You also may be subject to
state, local, and/or foreign tax on a Fund’s distributions and sales and/or
redemptions of Shares. Consult your personal tax advisor(s) about the potential
tax consequences of an investment in Shares under all applicable tax laws.
Distributor
Invesco Distributors, Inc. (the “Distributor”) serves as the
distributor of Creation Units for each Fund on an agency basis. The Distributor
does not maintain a secondary market in Shares. The Distributor is an affiliate
of the Adviser.
Net Asset Value
The Bank of New York Mellon (“BNYM”) calculates each Fund’s NAV at
the close of regular trading (normally 4:00 p.m., Eastern time) every day the
NYSE is open. The NAV for each Fund will be calculated and disseminated daily on
each day that the NYSE is open. NAV is calculated by deducting all of a Fund’s
liabilities from the total value of its assets and dividing the result by the
number of Shares outstanding, rounding to the nearest cent. Generally, the
portfolio securities are recorded in the NAV no later than trade date plus one
day. All valuations are subject to review by the Trust’s Board or its delegate.
In determining NAV, expenses are accrued and applied daily, and
securities and other assets for which market quotations are readily available
are valued at market value. Securities listed or traded on an exchange (except
convertible securities) generally are valued at the last sales price or official
closing price that day as of the close of the exchange where the security is
primarily traded. Investment companies are valued using such company’s NAV per
share, unless the shares are exchange-traded, in which case they will be valued
at the last sale or official closing price on the exchanges on which they
primarily trade. Deposits, other obligations of U.S. and non-U.S. banks and financial institutions,
and cash equivalents are valued at their daily account value. Debt obligations
(including convertible securities) and securities not listed on an exchange
normally are valued on the basis of prices provided by independent pricing
services. Pricing services generally value debt securities assuming orderly
transactions of institutional round lot size, but a Fund may hold or transact in
the same securities in smaller, odd lot sizes. Odd lots often trade at lower
prices than institutional round lots. Options generally are valued at the
closing price (and, if no closing price is available, at the mean of the last
bid/ask quotations), generally from the exchange where such instruments
principally trade. Futures contracts generally are valued based on quotations
from a pricing vendor or market makers. Swaps generally are valued using pricing
provided from independent pricing services.
Certain securities may not be listed on an exchange; typically,
those securities are bought and sold by institutional investors in individually
negotiated private transactions. Such securities, as well as listed securities
whose market price is not readily available or have become unreliable, will be
valued using pricing provided from independent pricing services or by another
method that the
Adviser, in its judgment, believes will better reflect the
security’s fair value in accordance with the Trust’s valuation policies and
procedures approved by the Board.
Even when market quotations are available for portfolio
securities, they may be stale or unreliable because the security is not traded
frequently, trading on the security ceased before the close of the trading
market or issuer specific events occurred after the security ceased trading or
because of the passage of time between the close of the market on which the
security trades and the close of the NYSE and when each Fund calculates its NAV.
Events that may cause the last market quotation to be unreliable include a
merger or insolvency, events which affect a geographical area or an industry
segment, such as political events or natural disasters, or market events, such
as a significant movement in the U.S. market. Where market quotations are not
readily available, including where the Adviser determines that the closing price
of the security is unreliable, the Adviser will value the security at fair value
in good faith using procedures approved by the Board. Fair value pricing
involves subjective judgments and it is possible that a fair value determination
for a security is materially different than the value that could be realized
upon the sale of the security. In addition, fair value pricing could result in a
difference between the prices used to calculate a Fund’s NAV and the prices used
by the Fund’s Underlying Index. This may adversely affect a Fund’s ability to
track its Underlying Index. With respect to securities that primarily are listed
on foreign exchanges, the value of a Fund’s portfolio securities may change on
days when you are not able to purchase or sell your Shares.
Fund Service Providers
BNYM, 240 Greenwich Street, New York, New York 10286, is the
administrator, custodian, and fund accounting and transfer agent for each Fund.
Stradley Ronon Stevens & Young, LLP, 191 North Wacker
Drive, Suite 1601, Chicago, Illinois 60606, and 1250 Connecticut Avenue, N.W.,
Suite 500, Washington, D.C. 20036, serves as legal counsel to the Trust.
PricewaterhouseCoopers LLP, One North Wacker Drive, Chicago,
Illinois 60606, serves as the Funds’ independent registered public accounting
firm. PricewaterhouseCoopers LLP is responsible for auditing the annual
financial statements of each Fund and performs other related audit services.
Cohen & Company, Ltd., located at 1350 Euclid Avenue, Suite 800,
Cleveland, Ohio 44115, served as the independent registered public accounting
firm for the Predecessor Funds.
Financial Highlights
The Funds are new and have no performance history as of the date
of this Prospectus. Financial information for the Funds therefore is not
available.
Each Fund has adopted the financial and performance history of its
respective Predecessor Fund as a result of a reorganization. The financial
highlights tables below are intended to help you understand each Predecessor
Fund’s financial performance for the past five fiscal years, or if shorter, for
the period since a Predecessor Fund’s inception and the six-month period ended December 31,
2018. Certain information reflects financial results for a single Predecessor
Fund share. The total returns in each table represent the rate that an investor
would have earned (or lost) on an investment in a Predecessor Fund (assuming
reinvestment of all dividends and other distributions). The information for the
six-month period ended
December 31, 2018, was unaudited. The information for the fiscal years or
periods ended June 30, 2014 and 2015 was audited by the Predecessor Funds’
previous independent registered public accounting firm. The information for the
fiscal years ended June 30, 2016, 2017 and 2018, has been derived from financial
statements that have been audited by Cohen & Company, Ltd., the
Predecessor Funds’ independent registered public accounting firm, whose report,
along with the Predecessor Funds’ financial statements, are included in the
Predecessor Funds’ Annual Report for the fiscal year or period ended
June 30, 2018. The Predecessor Funds’ Annual Reports and Semi-Annual
Reports are available upon request.
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Emerging Markets Revenue ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For the Period July 11, 20171 Through June 30,
2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
25.33 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.43 |
|
|
|
0.62 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(1.44 |
) |
|
|
0.15 |
|
Total gain (loss) from investment operations |
|
|
(1.01 |
) |
|
|
0.77 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.68 |
) |
|
|
(0.36 |
) |
Realized gains |
|
|
(0.05 |
) |
|
|
(0.08 |
) |
Total distributions |
|
|
(0.73 |
) |
|
|
(0.44 |
) |
Net asset value, end of period |
|
$ |
23.59 |
|
|
$ |
25.33 |
|
Total Return at Net Asset Value3 |
|
|
(4.09 |
)% |
|
|
2.95 |
% |
Total Return at Market Value3 |
|
|
(4.06 |
)% |
|
|
3.31 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
11,794 |
|
|
$ |
12,664 |
|
Average Net Assets (000’s omitted) |
|
|
12,320 |
|
|
|
13,702 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.46 |
%4 |
|
|
0.46 |
%4 |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.46 |
%4 |
|
|
0.61 |
%4 |
Net investment income, net of waivers and
reimbursements |
|
|
3.48 |
%4 |
|
|
2.32 |
%4 |
Portfolio turnover rate5 |
|
|
24.54 |
% |
|
|
85.00 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. The total return would have been lower if certain expenses had
not been reimbursed/waived by the Adviser. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
Oppenheimer Emerging Markets Ultra Dividend Revenue
ETF |
|
For the Period August 07,
20181
Through December 31,
2018 (Unaudited) |
|
Per Share Operating Performance: |
|
|
|
|
Net asset value, beginning of period |
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.39 |
|
Net realized and unrealized loss on
investments |
|
|
(2.50 |
) |
Total loss from investment operations |
|
|
(2.11 |
) |
Less Distributions from: |
|
|
|
|
Net investment income |
|
|
(0.43 |
) |
Net asset value, end of period |
|
$ |
22.46 |
|
Total Return at Net Asset Value3 |
|
|
(8.42 |
)% |
Total Return at Market Value3 |
|
|
(7.97 |
)% |
Ratios/Supplemental Data: |
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
2,246 |
|
Average Net Assets (000’s omitted) |
|
|
2,322 |
|
Ratio to average net assets of: |
|
|
|
|
Expenses |
|
|
0.46 |
%4 |
Net investment income |
|
|
4.26 |
%4 |
Portfolio turnover rate5 |
|
|
47.55 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
|
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
Oppenheimer Global ESG Revenue ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
Year Ended June 30, 2018 |
|
|
For the Period October 31, 20161 Through June
30, 2017 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period/year |
|
$ |
29.62 |
|
|
$ |
28.14 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.28 |
|
|
|
0.71 |
|
|
|
0.38 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(3.14 |
) |
|
|
1.71 |
|
|
|
2.97 |
|
Total gain (loss) from investment operations |
|
|
(2.86 |
) |
|
|
2.42 |
|
|
|
3.35 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.33 |
) |
|
|
(0.83 |
) |
|
|
(0.21 |
) |
Realized gains |
|
|
— |
|
|
|
(0.11 |
) |
|
|
— |
|
Total distributions |
|
|
(0.33 |
) |
|
|
(0.94 |
) |
|
|
(0.21 |
) |
Net asset value, end of period/year |
|
$ |
26.43 |
|
|
$ |
29.62 |
|
|
$ |
28.14 |
|
Total Return at Net Asset Value3 |
|
|
(9.74 |
)% |
|
|
8.62 |
% |
|
|
13.49 |
% |
Total Return at Market Value3 |
|
|
(10.44 |
)% |
|
|
7.58 |
% |
|
|
14.97 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period/year (000’s omitted) |
|
$ |
21,140 |
|
|
$ |
22,214 |
|
|
$ |
19,697 |
|
Average Net Assets (000’s omitted) |
|
|
23,074 |
|
|
|
22,530 |
|
|
|
18,443 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.45 |
%4 |
|
|
0.45 |
% |
|
|
0.45 |
%4 |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.45 |
%4 |
|
|
0.58 |
% |
|
|
1.18 |
%4 |
Net investment income, net of waivers and
reimbursements |
|
|
1.88 |
%4 |
|
|
2.32 |
% |
|
|
2.15 |
%4 |
Portfolio turnover rate5 |
|
|
11.53 |
% |
|
|
73.22 |
% |
|
|
78.36 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
The total return would have been lower if certain expenses had not been
reimbursed/waived by the Adviser. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Global Revenue ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For
the Period July 11,
20171
Through
June 30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
26.47 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.29 |
|
|
|
0.65 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(2.67 |
) |
|
|
1.38 |
|
Total gain (loss) from investment operations |
|
|
(2.38 |
) |
|
|
2.03 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.36 |
) |
|
|
(0.56 |
) |
Net asset value, end of period |
|
$ |
23.73 |
|
|
$ |
26.47 |
|
Total Return at Net Asset Value3 |
|
|
(9.09 |
)% |
|
|
8.10 |
%4 |
Total Return at Market Value3 |
|
|
(8.74 |
)% |
|
|
7.95 |
%4 |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
11,865 |
|
|
$ |
13,237 |
|
Average Net Assets (000’s omitted) |
|
|
13,065 |
|
|
|
13,587 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.43 |
%5 |
|
|
0.43 |
%5 |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.43 |
%5 |
|
|
0.58 |
%5 |
Net investment income, net of waivers and
reimbursements |
|
|
2.19 |
%5 |
|
|
2.47 |
%5 |
Portfolio turnover rate6 |
|
|
11.31 |
% |
|
|
64.33 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. The total return would have been lower if certain expenses had
not been reimbursed/waived by the Adviser. |
4. |
Total Return at Net Asset Value and Total
Return at Market Value include payments by affiliate, without which Total
Return at Net Asset Value and Total Return at Market Value would have been
lower. Such payments positively impacted Total Return at Net Asset Value
by 0.16% and Total Return at Market Value by 0.15 %. (Unaudited)
|
5. |
Annualized for periods less than one full
year. |
6. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer International Revenue ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For
the Period July 11,
20171
Through
June 30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
26.25 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.23 |
|
|
|
0.78 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(3.25 |
) |
|
|
1.19 |
|
Total gain (loss) from investment operations |
|
|
(3.02 |
) |
|
|
1.97 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.28 |
) |
|
|
(0.72 |
) |
Net asset value, end of period |
|
$ |
22.95 |
|
|
$ |
26.25 |
|
Total Return at Net Asset Value3 |
|
|
(11.54 |
)% |
|
|
7.83 |
%4 |
Total Return at Market Value3 |
|
|
(11.88 |
)% |
|
|
7.79 |
%4 |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
11,477 |
|
|
$ |
13,123 |
|
Average Net Assets (000’s omitted) |
|
|
12,699 |
|
|
|
13,617 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.42 |
%5 |
|
|
0.42 |
%5 |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.42 |
%5 |
|
|
0.57 |
%5 |
Net investment income, net of waivers and
reimbursements |
|
|
1.79 |
%5 |
|
|
2.94 |
%5 |
Portfolio turnover rate6 |
|
|
6.60 |
% |
|
|
28.56 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. The total return would have been lower if certain expenses had
not been reimbursed/waived by the Adviser. |
4. |
Total Return at Net Asset Value and Total
Return at Market Value include payments by affiliate, without which Total
Return at Net Asset Value and Total Return at Market Value would have been
lower. Such payments positively impacted Total Return at Net Asset Value
by 0.20% and Total Return at Market Value by 0.18 %. (Unaudited)
|
5. |
Annualized for periods less than one full
year. |
6. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout the period presented.
|
|
|
|
|
Oppenheimer International Ultra Dividend Revenue
ETF |
|
For the Period August 07, 20181 Through December 31,
2018 (Unaudited) |
|
Per Share Operating Performance: |
|
|
|
|
Net asset value, beginning of period |
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.29 |
|
Net realized and unrealized loss on
investments |
|
|
(3.43 |
) |
Total loss from investment operations |
|
|
(3.14 |
) |
Less Distributions from: |
|
|
|
|
Net investment income |
|
|
(0.29 |
) |
Net asset value, end of period |
|
$ |
21.57 |
|
Total Return at Net Asset Value3 |
|
|
(12.61 |
)% |
Total Return at Market Value3 |
|
|
(12.30 |
)% |
Ratios/Supplemental Data: |
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
2,157 |
|
Average Net Assets (000’s omitted) |
|
|
2,361 |
|
Ratio to average net assets of: |
|
|
|
|
Expenses |
|
|
0.42 |
%4 |
Net investment income |
|
|
3.12 |
%4 |
Portfolio turnover rate5 |
|
|
31.89 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
|
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Russell 1000® Low Volatility Factor
ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For the Period November 08, 20171 Through June
30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
25.60 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.29 |
|
|
|
0.35 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(0.97 |
) |
|
|
0.58 |
|
Total gain (loss) from investment operations |
|
|
(0.68 |
) |
|
|
0.93 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.31 |
) |
|
|
(0.33 |
) |
Net asset value, end of period |
|
$ |
24.61 |
|
|
$ |
25.60 |
|
Total Return at Net Asset Value3 |
|
|
(2.68 |
)% |
|
|
3.69 |
% |
Total Return at Market Value3 |
|
|
(2.63 |
)% |
|
|
3.79 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
4,923 |
|
|
$ |
5,119 |
|
Average Net Assets (000’s omitted) |
|
|
5,332 |
|
|
|
5,152 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses |
|
|
0.19 |
%4 |
|
|
0.19 |
%4 |
Net investment income |
|
|
2.14 |
%4 |
|
|
2.16 |
%4 |
Portfolio turnover rate5 |
|
|
1.60 |
% |
|
|
6.68 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Russell 1000® Momentum Factor
ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For the Period
November 08,
20171
Through
June 30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
26.72 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.20 |
|
|
|
0.25 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(2.62 |
) |
|
|
1.70 |
|
Total gain (loss) from investment operations |
|
|
(2.42 |
) |
|
|
1.95 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.21 |
) |
|
|
(0.23 |
) |
Net asset value, end of period |
|
$ |
24.09 |
|
|
$ |
26.72 |
|
Total Return at Net Asset Value3 |
|
|
(9.13 |
)% |
|
|
7.81 |
% |
Total Return at Market Value3 |
|
|
(9.04 |
)% |
|
|
7.94 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
4,817 |
|
|
$ |
5,344 |
|
Average Net Assets (000’s omitted) |
|
|
5,430 |
|
|
|
5,268 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses |
|
|
0.19 |
%4 |
|
|
0.19 |
%4 |
Net investment income |
|
|
1.47 |
%4 |
|
|
1.48 |
%4 |
Portfolio turnover rate5 |
|
|
19.29 |
% |
|
|
22.11 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Russell 1000® Quality Factor
ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For the Period November 08, 20171 Through June
30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
26.89 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.21 |
|
|
|
0.26 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(2.28 |
) |
|
|
1.88 |
|
Total gain (loss) from investment operations |
|
|
(2.07 |
) |
|
|
2.14 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.22 |
) |
|
|
(0.25 |
) |
Net asset value, end of period |
|
$ |
24.60 |
|
|
$ |
26.89 |
|
Total Return at Net Asset Value3 |
|
|
(7.72 |
)% |
|
|
8.57 |
% |
Total Return at Market Value3 |
|
|
(7.69 |
)% |
|
|
8.68 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
4,921 |
|
|
$ |
5,378 |
|
Average Net Assets (000’s omitted) |
|
|
5,459 |
|
|
|
5,257 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses |
|
|
0.19 |
%4 |
|
|
0.19 |
%4 |
Net investment income |
|
|
1.54 |
%4 |
|
|
1.56 |
%4 |
Portfolio turnover rate5 |
|
|
1.13 |
% |
|
|
22.05 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Russell 1000® Size Factor
ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For the Period November
08, 20171 Through
June 30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
26.95 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.21 |
|
|
|
0.25 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(3.41 |
) |
|
|
1.92 |
|
Total gain (loss) from investment operations |
|
|
(3.20 |
) |
|
|
2.17 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.25 |
) |
|
|
(0.22 |
) |
Realized gains |
|
|
(0.05 |
) |
|
|
— |
|
Total distributions |
|
|
(0.30 |
) |
|
|
(0.22 |
) |
Net asset value, end of period |
|
$ |
23.45 |
|
|
$ |
26.95 |
|
Total Return at Net Asset Value3 |
|
|
(11.96 |
)% |
|
|
8.68 |
% |
Total Return at Market Value3 |
|
|
(12.02 |
)% |
|
|
8.71 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
4,690 |
|
|
$ |
5,391 |
|
Average Net Assets (000’s omitted) |
|
|
5,355 |
|
|
|
5,261 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses |
|
|
0.19 |
%4 |
|
|
0.19 |
%4 |
Net investment income |
|
|
1.55 |
%4 |
|
|
1.48 |
%4 |
Portfolio turnover rate5 |
|
|
2.40 |
% |
|
|
18.35 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Russell 1000® Value Factor
ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For the Period November 08, 20171
Through
June 30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
25.92 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.31 |
|
|
|
0.34 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(2.29 |
) |
|
|
0.90 |
|
Total gain (loss) from investment operations |
|
|
(1.98 |
) |
|
|
1.24 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.33 |
) |
|
|
(0.32 |
) |
Net asset value, end of period |
|
$ |
23.61 |
|
|
$ |
25.92 |
|
Total Return at Net Asset Value3 |
|
|
(7.72 |
)% |
|
|
4.92 |
% |
Total Return at Market Value3 |
|
|
(7.73 |
)% |
|
|
4.80 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
4,722 |
|
|
$ |
5,184 |
|
Average Net Assets (000’s omitted) |
|
|
5,264 |
|
|
|
5,257 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses |
|
|
0.19 |
%4 |
|
|
0.19 |
%4 |
Net investment income |
|
|
2.32 |
%4 |
|
|
2.00 |
%4 |
Portfolio turnover rate5 |
|
|
0.95 |
% |
|
|
24.50 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
Oppenheimer Russell 1000® Yield Factor
ETF |
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
For the Period November 08, 20171
Through
June 30, 2018 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
25.19 |
|
|
$ |
25.00 |
|
Net investment income2 |
|
|
0.43 |
|
|
|
0.50 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(1.36 |
) |
|
|
0.15 |
|
Total gain (loss) from investment operations |
|
|
(0.93 |
) |
|
|
0.65 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.47 |
) |
|
|
(0.46 |
) |
Net asset value, end of period |
|
$ |
23.79 |
|
|
$ |
25.19 |
|
Total Return at Net Asset Value3 |
|
|
(3.75 |
)% |
|
|
2.59 |
% |
Total Return at Market Value3 |
|
|
(4.06 |
)% |
|
|
2.87 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
4,758 |
|
|
$ |
5,038 |
|
Average Net Assets (000’s omitted) |
|
|
5,158 |
|
|
|
5,102 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
Expenses |
|
|
0.19 |
%4 |
|
|
0.19 |
%4 |
Net investment income |
|
|
3.28 |
%4 |
|
|
3.10 |
%4 |
Portfolio turnover rate5 |
|
|
1.68 |
% |
|
|
10.14 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the Cboe
BZX Exchange, and may be greater or less than net asset value, depending
on the 4 p.m. mean of the bid and offer prices for a share of the Fund.
Total return calculated for a period of less than one year is not
annualized. |
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
December 31, 2018
(Unaudited) |
|
|
Year Ended June 30, |
|
Oppenheimer S&P 500 Revenue ETF |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
50.69 |
|
|
$ |
46.43 |
|
|
$ |
40.74 |
|
|
$ |
40.91 |
|
|
$ |
38.56 |
|
|
$ |
31.38 |
|
Net investment income1 |
|
|
0.49 |
|
|
|
0.90 |
|
|
|
0.83 |
|
|
|
0.76 |
|
|
|
0.68 |
|
|
|
0.59 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(4.15 |
) |
|
|
4.41 |
|
|
|
5.60 |
|
|
|
(0.14 |
) |
|
|
2.35 |
|
|
|
7.13 |
|
Total gain (loss) from investment operations |
|
|
(3.66 |
) |
|
|
5.31 |
|
|
|
6.43 |
|
|
|
0.62 |
|
|
|
3.03 |
|
|
|
7.72 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.52 |
) |
|
|
(1.05 |
) |
|
|
(0.74 |
) |
|
|
(0.76 |
) |
|
|
(0.64 |
) |
|
|
(0.54 |
) |
Realized gains |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.03 |
) |
|
|
(0.04 |
) |
|
|
— |
|
Total distributions |
|
|
(0.52 |
) |
|
|
(1.05 |
) |
|
|
(0.74 |
) |
|
|
(0.79 |
) |
|
|
(0.68 |
) |
|
|
(0.54 |
) |
Net asset value, end of period |
|
$ |
46.51 |
|
|
$ |
50.69 |
|
|
$ |
46.43 |
|
|
$ |
40.74 |
|
|
$ |
40.91 |
|
|
$ |
38.56 |
|
Total Return at Net Asset Value2 |
|
|
(7.26 |
)% |
|
|
11.49 |
% |
|
|
15.96 |
% |
|
|
1.55 |
% |
|
|
7.91 |
% |
|
|
24.84 |
% |
Total Return at Market Value2 |
|
|
(7.29 |
)% |
|
|
11.46 |
% |
|
|
15.98 |
% |
|
|
1.61 |
% |
|
|
7.85 |
% |
|
|
25.10 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
907,104 |
|
|
$ |
917,494 |
|
|
$ |
689,504 |
|
|
$ |
366,679 |
|
|
$ |
343,682 |
|
|
$ |
242,970 |
|
Average Net Assets (000’s omitted) |
|
|
983,905 |
|
|
|
847,268 |
|
|
|
499,579 |
|
|
|
331,701 |
|
|
|
296,609 |
|
|
|
201,920 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.39 |
%3 |
|
|
0.39 |
% |
|
|
0.42 |
% |
|
|
0.49 |
% |
|
|
0.49 |
% |
|
|
0.49 |
% |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.39 |
%3 |
|
|
0.41 |
% |
|
|
0.52 |
% |
|
|
0.62 |
% |
|
|
0.61 |
% |
|
|
0.68 |
% |
Net investment income, net of waivers and
reimbursements |
|
|
1.88 |
%3 |
|
|
1.81 |
% |
|
|
1.89 |
% |
|
|
1.92 |
% |
|
|
1.70 |
% |
|
|
1.66 |
% |
Portfolio turnover rate4 |
|
|
9.40 |
% |
|
|
14.96 |
% |
|
|
15.22 |
% |
|
|
14.13 |
% |
|
|
18.79 |
% |
|
|
11.98 |
% |
1. |
Based on average daily shares outstanding.
|
2. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
The total return would have been lower if certain expenses had not been
reimbursed/waived by the Adviser. |
3. |
Annualized for periods less than one full
year. |
4. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
Year Ended June 30, |
|
Oppenheimer S&P Financials Revenue ETF |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
64.14 |
|
|
$ |
61.27 |
|
|
$ |
45.61 |
|
|
$ |
50.02 |
|
|
$ |
46.54 |
|
|
$ |
39.35 |
|
Net investment income1 |
|
|
0.52 |
|
|
|
0.90 |
|
|
|
0.70 |
|
|
|
0.66 |
|
|
|
0.54 |
|
|
|
0.45 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(6.32 |
) |
|
|
2.95 |
|
|
|
15.65 |
|
|
|
(4.38 |
) |
|
|
3.44 |
|
|
|
7.17 |
|
Total gain (loss) from investment operations |
|
|
(5.80 |
) |
|
|
3.85 |
|
|
|
16.35 |
|
|
|
(3.72 |
) |
|
|
3.98 |
|
|
|
7.62 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.57 |
) |
|
|
(0.98 |
) |
|
|
(0.69 |
) |
|
|
(0.69 |
) |
|
|
(0.50 |
) |
|
|
(0.43 |
) |
Net asset value, end of period |
|
$ |
57.77 |
|
|
$ |
64.14 |
|
|
$ |
61.27 |
|
|
$ |
45.61 |
|
|
$ |
50.02 |
|
|
$ |
46.54 |
|
Total Return at Net Asset Value2 |
|
|
(9.10 |
)% |
|
|
6.24 |
% |
|
|
36.14 |
% |
|
|
(7.49 |
)% |
|
|
8.57 |
% |
|
|
19.44 |
% |
Total Return at Market Value2 |
|
|
(9.17 |
)% |
|
|
6.27 |
% |
|
|
36.20 |
% |
|
|
(7.58 |
)% |
|
|
8.66 |
% |
|
|
19.32 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
43,324 |
|
|
$ |
54,521 |
|
|
$ |
33,699 |
|
|
$ |
20,524 |
|
|
$ |
32,513 |
|
|
$ |
32,577 |
|
Average Net Assets (000’s omitted) |
|
|
54,118 |
|
|
|
45,851 |
|
|
|
26,491 |
|
|
|
25,009 |
|
|
|
33,925 |
|
|
|
31,390 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.45 |
%3 |
|
|
0.46 |
% |
|
|
0.49 |
% |
|
|
0.49 |
% |
|
|
0.49 |
% |
|
|
0.49 |
% |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.45 |
%3 |
|
|
0.49 |
% |
|
|
0.81 |
% |
|
|
0.91 |
% |
|
|
0.77 |
% |
|
|
0.80 |
% |
Net investment income, net of waivers and
reimbursements |
|
|
1.57 |
%3 |
|
|
1.35 |
% |
|
|
1.28 |
% |
|
|
1.40 |
% |
|
|
1.11 |
% |
|
|
1.03 |
% |
Portfolio turnover rate4 |
|
|
5.21 |
% |
|
|
7.97 |
% |
|
|
17.70 |
% |
|
|
20.42 |
% |
|
|
12.79 |
% |
|
|
13.27 |
% |
1. |
Based on average daily shares outstanding.
|
2. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
The total return would have been lower if certain expenses had not been
reimbursed/waived by the Adviser. |
3. |
Annualized for periods less than one full
year. |
4. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
Year Ended June 30, |
|
Oppenheimer S&P MidCap 400 Revenue ETF |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
61.05 |
|
|
$ |
56.31 |
|
|
$ |
47.74 |
|
|
$ |
49.39 |
|
|
$ |
47.75 |
|
|
$ |
38.00 |
|
Net investment income1 |
|
|
0.33 |
|
|
|
0.63 |
|
|
|
0.56 |
|
|
|
0.44 |
|
|
|
0.41 |
|
|
|
0.34 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(9.74 |
) |
|
|
4.70 |
|
|
|
8.68 |
|
|
|
(1.63 |
) |
|
|
1.79 |
|
|
|
9.97 |
|
Total gain (loss) from investment operations |
|
|
(9.41 |
) |
|
|
5.33 |
|
|
|
9.24 |
|
|
|
(1.19 |
) |
|
|
2.20 |
|
|
|
10.31 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.37 |
) |
|
|
(0.59 |
) |
|
|
(0.67 |
) |
|
|
(0.46 |
) |
|
|
(0.39 |
) |
|
|
(0.34 |
) |
Realized gains |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.17 |
) |
|
|
(0.22 |
) |
Total distributions |
|
|
(0.37 |
) |
|
|
(0.59 |
) |
|
|
(0.67 |
) |
|
|
(0.46 |
) |
|
|
(0.56 |
) |
|
|
(0.56 |
) |
Net asset value, end of period |
|
$ |
51.27 |
|
|
$ |
61.05 |
|
|
$ |
56.31 |
|
|
$ |
47.74 |
|
|
$ |
49.39 |
|
|
$ |
47.75 |
|
Total Return at Net Asset Value2 |
|
|
(15.46 |
)% |
|
|
9.48 |
% |
|
|
19.46 |
% |
|
|
(2.39 |
)% |
|
|
4.63 |
% |
|
|
27.28 |
% |
Total Return at Market Value2 |
|
|
(15.47 |
)% |
|
|
9.40 |
% |
|
|
19.45 |
% |
|
|
(2.38 |
)% |
|
|
5.05 |
% |
|
|
27.14 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
315,389 |
|
|
$ |
378,611 |
|
|
$ |
329,502 |
|
|
$ |
186,252 |
|
|
$ |
242,092 |
|
|
$ |
205,404 |
|
Average Net Assets (000’s omitted) |
|
|
369,893 |
|
|
|
363,353 |
|
|
|
250,624 |
|
|
|
210,021 |
|
|
|
223,753 |
|
|
|
167,424 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.39 |
%3 |
|
|
0.39 |
% |
|
|
0.43 |
% |
|
|
0.54 |
% |
|
|
0.54 |
% |
|
|
0.54 |
% |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.39 |
%3 |
|
|
0.42 |
% |
|
|
0.56 |
% |
|
|
0.72 |
% |
|
|
0.68 |
% |
|
|
0.73 |
% |
Net investment income, net of waivers and
reimbursements |
|
|
1.11 |
%3 |
|
|
1.08 |
% |
|
|
1.05 |
% |
|
|
0.94 |
% |
|
|
0.84 |
% |
|
|
0.78 |
% |
Portfolio turnover rate4 |
|
|
16.93 |
% |
|
|
33.78 |
% |
|
|
46.40 |
% |
|
|
22.23 |
% |
|
|
13.93 |
% |
|
|
24.19 |
% |
1. |
Based on average daily shares outstanding.
|
2. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
The total return would have been lower if certain expenses had not been
reimbursed/waived by the Adviser. |
3. |
Annualized for periods less than one full
year. |
4. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
Year Ended June 30, |
|
Oppenheimer S&P SmallCap 600 Revenue
ETF |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$ |
73.21 |
|
|
$ |
66.03 |
|
|
$ |
55.06 |
|
|
$ |
58.05 |
|
|
$ |
56.25 |
|
|
$ |
43.82 |
|
Net investment income1 |
|
|
0.45 |
|
|
|
0.69 |
|
|
|
0.55 |
|
|
|
0.36 |
|
|
|
0.39 |
|
|
|
0.26 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(15.68 |
) |
|
|
7.24 |
|
|
|
10.85 |
|
|
|
(2.97 |
) |
|
|
1.89 |
|
|
|
12.81 |
|
Total gain (loss) from investment operations |
|
|
(15.23 |
) |
|
|
7.93 |
|
|
|
11.40 |
|
|
|
(2.61 |
) |
|
|
2.28 |
|
|
|
13.07 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.54 |
) |
|
|
(0.75 |
) |
|
|
(0.43 |
) |
|
|
(0.38 |
) |
|
|
(0.38 |
) |
|
|
(0.52 |
) |
Realized gains |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.10 |
) |
|
|
(0.12 |
) |
Total distributions |
|
|
(0.54 |
) |
|
|
(0.75 |
) |
|
|
(0.43 |
) |
|
|
(0.38 |
) |
|
|
(0.48 |
) |
|
|
(0.64 |
) |
Net asset value, end of period |
|
$ |
57.44 |
|
|
$ |
73.21 |
|
|
$ |
66.03 |
|
|
$ |
55.06 |
|
|
$ |
58.05 |
|
|
$ |
56.25 |
|
Total Return at Net Asset Value2 |
|
|
(20.89 |
)% |
|
|
12.07 |
%3 |
|
|
20.75 |
% |
|
|
(4.46 |
)% |
|
|
4.06 |
% |
|
|
30.03 |
% |
Total Return at Market Value2 |
|
|
(21.00 |
)% |
|
|
12.10 |
%3 |
|
|
20.76 |
% |
|
|
(4.51 |
)% |
|
|
4.24 |
% |
|
|
30.38 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000’s omitted) |
|
$ |
396,388 |
|
|
$ |
508,897 |
|
|
$ |
554,751 |
|
|
$ |
297,421 |
|
|
$ |
374,516 |
|
|
$ |
292,584 |
|
Average Net Assets (000’s omitted) |
|
|
503,650 |
|
|
|
511,312 |
|
|
|
427,452 |
|
|
|
317,271 |
|
|
|
322,714 |
|
|
|
232,088 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.39 |
%4 |
|
|
0.39 |
% |
|
|
0.43 |
% |
|
|
0.54 |
% |
|
|
0.54 |
% |
|
|
0.54 |
% |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.39 |
%4 |
|
|
0.42 |
% |
|
|
0.54 |
% |
|
|
0.68 |
% |
|
|
0.67 |
% |
|
|
0.72 |
% |
Net investment income, net of waivers and
reimbursements |
|
|
1.25 |
%4 |
|
|
1.01 |
% |
|
|
0.86 |
% |
|
|
0.68 |
% |
|
|
0.69 |
% |
|
|
0.51 |
% |
Portfolio turnover rate5 |
|
|
19.80 |
% |
|
|
38.28 |
% |
|
|
46.33 |
% |
|
|
44.07 |
% |
|
|
21.21 |
% |
|
|
10.69 |
% |
1. |
Based on average daily shares outstanding.
|
2. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
The total return would have been lower if certain expenses had not been
reimbursed/waived by the Adviser. |
3. |
Total Return at Net Asset Value and Total
Return at Market Value include payments by affiliate, without which Total
Return at Net Asset Value and Total Return at Market Value would have been
lower. Such payments positively impacted Total Return at Net Asset Value
by 0.10% and Total Return at Market Value by 0.09%. (Unaudited)
|
4. |
Annualized for periods less than one full
year. |
5. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
For a share outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2018
(Unaudited) |
|
|
Year Ended June 30, |
|
|
For the Period October 1, 20131 Through June 30, 2014 |
|
Oppenheimer S&P Ultra Dividend Revenue
ETF |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
Per Share Operating Performance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period/year |
|
$ |
38.19 |
|
|
$ |
33.82 |
|
|
$ |
31.52 |
|
|
$ |
28.81 |
|
|
$ |
28.72 |
|
|
$ |
24.87 |
|
Net investment income2 |
|
|
0.77 |
|
|
|
1.73 |
|
|
|
1.50 |
|
|
|
1.21 |
|
|
|
1.20 |
|
|
|
0.91 |
|
Net realized and unrealized gain (loss) on
investments |
|
|
(4.69 |
) |
|
|
4.56 |
|
|
|
1.96 |
|
|
|
2.66 |
|
|
|
0.03 |
3 |
|
|
3.39 |
|
Total gain (loss) from investment operations |
|
|
(3.92 |
) |
|
|
6.29 |
|
|
|
3.46 |
|
|
|
3.87 |
|
|
|
1.23 |
|
|
|
4.30 |
|
Less Distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
(0.74 |
) |
|
|
(1.92 |
) |
|
|
(1.14 |
) |
|
|
(1.16 |
) |
|
|
(1.11 |
) |
|
|
(0.45 |
) |
Realized gains |
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
Total distributions |
|
|
(0.74 |
) |
|
|
(1.92 |
) |
|
|
(1.16 |
) |
|
|
(1.16 |
) |
|
|
(1.14 |
) |
|
|
(0.45 |
) |
Net asset value, end of
period/year |
|
$ |
33.53 |
|
|
$ |
38.19 |
|
|
$ |
33.82 |
|
|
$ |
31.52 |
|
|
$ |
28.81 |
|
|
$ |
28.72 |
|
Total Return at Net Asset Value4 |
|
|
(10.39 |
)%5 |
|
|
19.13 |
% |
|
|
11.10 |
% |
|
|
13.91 |
% |
|
|
4.30 |
% |
|
|
17.46 |
% |
Total Return at Market Value4 |
|
|
(10.52 |
)%5 |
|
|
19.12 |
% |
|
|
11.18 |
% |
|
|
13.90 |
% |
|
|
4.19 |
% |
|
|
17.58 |
% |
Ratios/Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period/year (000’s omitted) |
|
$ |
1,195,224 |
|
|
$ |
610,987 |
|
|
$ |
510,630 |
|
|
$ |
110,330 |
|
|
$ |
66,254 |
|
|
$ |
22,976 |
|
Average Net Assets (000’s omitted) |
|
|
950,542 |
|
|
|
521,622 |
|
|
|
333,853 |
|
|
|
67,190 |
|
|
|
47,799 |
|
|
|
10,504 |
|
Ratio to average net assets of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses, net of expense waivers and
reimbursements |
|
|
0.39 |
%6 |
|
|
0.39 |
% |
|
|
0.41 |
% |
|
|
0.49 |
% |
|
|
0.49 |
% |
|
|
0.49 |
%6 |
Expenses, prior to expense waivers and
reimbursements |
|
|
0.39 |
%6 |
|
|
0.41 |
% |
|
|
0.52 |
% |
|
|
0.75 |
% |
|
|
0.72 |
% |
|
|
1.18 |
%6 |
Net investment income, net of waivers and
reimbursements |
|
|
4.08 |
%6 |
|
|
4.90 |
% |
|
|
4.48 |
% |
|
|
4.19 |
% |
|
|
4.06 |
% |
|
|
4.57 |
%6 |
Portfolio turnover rate7 |
|
|
74.72 |
% |
|
|
74.45 |
% |
|
|
80.57 |
% |
|
|
208.25 |
% |
|
|
51.83 |
% |
|
|
37.43 |
% |
1. |
Commencement of operations.
|
2. |
Based on average daily shares outstanding.
|
3. |
The amount shown for a share outstanding
throughout the period may not correlate with the Statements of Operations
for the period due to timing of sales and repurchase of creation unit Fund
shares in relation to income earned and/or fluctuating value of the
investments of the Fund. |
4. |
Net asset value total return is calculated
assuming an initial investment made at the net asset value at the
beginning of the period, reinvestment of all dividends and distributions
at net asset value during the period and redemption on the last day of the
period at net asset value. Market value total return is calculated
assuming an initial investment made at the market value at the beginning
of the period, reinvestment of all dividends, and distributions at market
value during the period, and sale at the market value on the last day of
the period. Market value is determined by trading that occurs on the NYSE
Arca, and may be greater or less than net asset value, depending on the 4
p.m. mean of the bid and offer prices for a share of the Fund. Total
return calculated for a period of less than one year is not annualized.
The total return would have been lower if certain expenses had not been
reimbursed/waived by the Adviser. |
5. |
Total Return at Net Asset Value and Total
Return at Market Value include payments by affiliate, without which Total
Return at Net Asset Value and Total Return at Market Value would have been
lower. Such payments positively impacted Total Return at Net Asset Value
by 0.02% and Total Return at Market Value by 0.02 %. (Unaudited)
|
6. |
Annualized for periods less than one full
year. |
7. |
Portfolio turnover rate is not annualized
and excludes the value of portfolio securities received or delivered as a
result of in-kind creations or redemptions of the Fund’s capital shares.
|
Index Providers
No entity that creates, compiles, sponsors or maintains the
Underlying Indexes is or will be an affiliated person, as defined in
Section 2(a)(3) of the 1940 Act, or an affiliated person of an affiliated
person, of the Trust, the Adviser, the Distributor or a promoter of the Funds.
Neither the Adviser nor any affiliate of the Adviser has any
rights to influence the selection of the securities in the Underlying Indexes.
Each Underlying Index is calculated and maintained by its
respective Index Provider. The Adviser has entered into a license agreement with
each Index Provider. Each Fund is entitled to use its Underlying Index pursuant
to a sublicensing agreement with the Adviser.
Set forth below is a list of each Fund and its Underlying Index:
|
|
|
|
|
Fund |
|
Underlying Index |
Invesco Emerging Markets Revenue
ETF |
|
Invesco Revenue Weighted Emerging
Markets Index |
Invesco Emerging Markets Ultra Dividend
Revenue ETF |
|
FTSE Custom Emerging Ultra Dividend
Revenue Index |
Invesco Global ESG Revenue
ETF |
|
Invesco Revenue Weighted Global ESG
Index |
Invesco Global Revenue ETF |
|
Invesco Revenue Weighted Global
Index |
Invesco International Revenue
ETF |
|
Invesco Revenue Weighted
International Index |
Invesco International Ultra Dividend
Revenue ETF |
|
FTSE Custom Developed ex US Ultra
Dividend Revenue Index |
Invesco Russell 1000® Low Volatility
Factor ETF |
|
Russell 1000 Volatility Factor
Index |
Invesco Russell 1000® Momentum Factor
ETF |
|
Russell 1000 Momentum Factor
Index |
Invesco Russell 1000® Quality Factor
ETF |
|
Russell 1000 Quality Factor
Index |
Invesco Russell 1000® Size Factor
ETF |
|
Russell 1000 Size Factor
Index |
Invesco Russell 1000® Value Factor
ETF |
|
Russell 1000 Value Factor
Index |
Invesco Russell 1000® Yield Factor
ETF |
|
Russell 1000 Yield Factor
Index |
Invesco S&P 500 Revenue
ETF |
|
S&P 500 Revenue-Weighted
Index |
Invesco S&P Financials Revenue
ETF |
|
S&P 500 Financials Sector
Revenue-Weighted Index |
Invesco S&P MidCap 400 Revenue
ETF |
|
S&P MidCap 400 Revenue- Weighted
Index |
Invesco S&P SmallCap 600 Revenue
ETF |
|
S&P SmallCap 600 Revenue-
Weighted Index |
Invesco S&P Ultra Dividend Revenue
ETF |
|
S&P 900 Dividend Revenue-
Weighted Index |
Disclaimers
Frank Russell Company. Each of the Russell 1000
Volatility Factor Index, Russell 1000 Momentum Factor Index, Russell 1000
Quality Factor Index, Russell 1000 Size Factor Index, Russell 1000 Value Factor
Index, and Russell 1000 Yield Factor Index (each, an
“Index”) is a trademark of Frank Russell Company (“Russell”) and
has been licensed for use by the Adviser and its corresponding Licensed Fund
(defined below). The Invesco Russell 1000® Low Volatility Factor
ETF, Invesco Russell 1000® Momentum Factor ETF,
Invesco Russell 1000® Quality Factor ETF,
Invesco Russell 1000® Size Factor ETF,
Invesco Russell 1000® Value Factor ETF and
Invesco Russell 1000® Yield Factor ETF (each,
a “Licensed Fund”) are not in any way sponsored, endorsed, sold or promoted by
Russell or the London Stock Exchange Group companies (“LSEG”) (together the
“Licensor Parties”) and none of the Licensor Parties make any claim, prediction,
warranty or representation whatsoever, expressly or impliedly, either as to
(i) the results to be obtained from the use of an Index (upon which the
applicable Licensed Fund is based), (ii) the figure at which an Index is
said to stand at any particular time on any particular day or otherwise, or
(iii) the suitability of an Index for the purpose to which it is being put
in connection with the applicable Licensed Fund. None of the Licensor Parties
have provided or will provide any financial or investment advice or
recommendation in relation to an Index to the Adviser or to its clients. Each
Index is calculated by Russell or its agent. None of the Licensor Parties shall
be (a) liable (whether in negligence or otherwise) to any person for any
error in an Index or (b) under any obligation to advise any person of any
error therein.
MSCI INC. THE INVESCO EMERGING MARKETS REVENUE ETF, INVESCO
GLOBAL REVENUE ETF, AND INVESCO INTERNATIONAL REVENUE ETF (IN THIS SUB-SECTION, THE “FUNDS”) ARE NOT SPONSORED,
ENDORSED, SOLD OR PROMOTED BY MSCI INC. (“MSCI”), ANY OF ITS AFFILIATES, ANY OF
ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED IN, OR RELATED TO,
COMPILING, COMPUTING OR CREATING ANY MSCI INDEX (COLLECTIVELY, THE “MSCI
PARTIES”). THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE
MSCI INDEX NAMES ARE SERVICE MARK(S) OF MSCI OR ITS AFFILIATES AND HAVE BEEN
LICENSED FOR USE FOR CERTAIN PURPOSES BY THE ADVISER. NONE OF THE MSCI PARTIES
MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE ISSUER OR
OWNERS OF THESE FUNDS OR ANY OTHER PERSON OR ENTITY REGARDING THE ADVISABILITY
OF INVESTING IN FUNDS GENERALLY OR IN THESE FUNDS PARTICULARLY OR THE ABILITY OF
ANY MSCI INDEX TO TRACK CORRESPONDING STOCK MARKET PERFORMANCE. MSCI OR ITS
AFFILIATES ARE THE LICENSORS OF CERTAIN TRADEMARKS, SERVICE MARKS AND TRADE
NAMES AND OF THE MSCI INDEXES WHICH ARE DETERMINED, COMPOSED AND CALCULATED BY
MSCI WITHOUT REGARD TO THESE FUNDS OR THE ISSUER OR OWNERS OF THESE FUNDS OR ANY
OTHER PERSON OR ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO TAKE THE
NEEDS OF THE ISSUER OR OWNERS OF THESE FUNDS OR ANY OTHER PERSON OR ENTITY INTO
CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE MSCI INDEXES. NONE OF
THE MSCI PARTIES IS RESPONSIBLE FOR OR HAS PARTICIPATED IN THE
DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THESE FUNDS TO BE
ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY OR THE
CONSIDERATION INTO WHICH THESE FUNDS ARE REDEEMABLE. FURTHER, NONE OF THE MSCI
PARTIES HAS ANY
OBLIGATION OR LIABILITY TO THE ISSUER OR OWNERS OF THESE FUNDS OR
ANY OTHER PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR
OFFERING OF THESE FUNDS.
ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE
IN THE CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS
RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE ORIGINALITY,
ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN.
NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE ISSUER OF THE FUNDS, OWNERS OF THE FUNDS, OR ANY OTHER
PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN.
NONE OF THE MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR
INTERRUPTIONS OF OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA INCLUDED
THEREIN. FURTHER, NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR IMPLIED
WARRANTIES OF ANY KIND, AND THE MSCI PARTIES HEREBY EXPRESSLY DISCLAIM ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO EACH MSCI INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY FOR ANY
DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS) EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
No purchaser, seller or holder of this security, product or fund,
or any other person or entity, should use or refer to any MSCI trade name,
trademark or service mark to sponsor, endorse, market or promote this security
without first contacting MSCI to determine whether MSCI’s permission is
required. Under no circumstances may any person or entity claim any affiliation
with MSCI without the prior written permission of MSCI.
MSCI INC. (Invesco Global ESG Revenue ETF). THIS FUND
IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI INC. (“MSCI”), ANY OF ITS
AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED
IN, OR RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI INDEX
(COLLECTIVELY, THE “MSCI PARTIES”). THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY
OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE MARK(S) OF MSCI OR ITS
AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY THE MANAGER.
NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, TO THE ISSUER OR OWNERS OF THIS FUND OR ANY OTHER PERSON OR ENTITY
REGARDING THE ADVISABILITY OF INVESTING IN FUNDS GENERALLY OR IN THIS FUND
PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK
MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN
TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE
DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THIS FUND OR THE
ISSUER OR OWNERS OF THIS FUND OR ANY OTHER
PERSON OR ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO
TAKE THE NEEDS OF THE ISSUER OR OWNERS OF THIS FUND OR ANY OTHER PERSON OR
ENTITY INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE MSCI
INDEXES. NONE OF THE MSCI PARTIES IS RESPONSIBLE FOR OR HAS PARTICIPATED IN THE
DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THIS FUND TO BE
ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY OR THE
CONSIDERATION INTO WHICH THIS FUND IS REDEEMABLE. FURTHER, NONE OF THE MSCI
PARTIES HAS ANY OBLIGATION OR LIABILITY TO THE ISSUER OR OWNERS OF THIS FUND OR
ANY OTHER PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR
OFFERING OF THIS FUND.
ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE
IN THE CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS
RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE ORIGINALITY,
ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN.
NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE ISSUER OF THE FUND, OWNERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN.
NONE OF THE MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR
INTERRUPTIONS OF OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA INCLUDED
THEREIN. FURTHER, NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR IMPLIED
WARRANTIES OF ANY KIND, AND THE MSCI PARTIES HEREBY EXPRESSLY DISCLAIM ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO EACH MSCI INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY FOR ANY
DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES
(INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
No purchaser, seller or holder of this security, product or fund,
or any other person or entity, should use or refer to any MSCI trade name,
trademark or service mark to sponsor, endorse, market or promote this security
without first contacting MSCI to determine whether MSCI’s permission is
required. Under no circumstances may any person or entity claim any affiliation
with MSCI without the prior written permission of MSCI.
FTSE International Limited. The Invesco Emerging Markets
Ultra Dividend Revenue ETF and the Invesco International Ultra Dividend Revenue
ETF (in this sub-section, the “Funds”)
are not in any way connected to or sponsored, endorsed, sold or promoted by the
London Stock Exchange Group plc and its group undertakings (collectively, the
“LSE Group”). FTSE Russell is a trading name of certain of the LSE Group
companies.
All rights in the FTSE Custom Emerging Ultra Dividend Revenue
Index and the FTSE Custom Developed ex US Ultra Dividend Revenue Index (the
“Indexes”) vest in the relevant LSE Group company which owns the Indexes.
“FTSE®” is a trade mark
of the
relevant LSE Group company and is/are used by any other LSE Group
company under license.
The Indexes are calculated by or on behalf of FTSE International
Limited or its affiliate, agent or partner. The LSE Group does not accept any
liability whatsoever to any person arising out of (a) the use of, reliance
on or any error in the Indexes or (b) investment in or operation of the
Funds. The LSE Group makes no claim, prediction, warranty or representation
either as to the results to be obtained from the Funds or the suitability of the
Indexes for the purpose to which it is being put by the Adviser.
S&P Dow Jones Indices LLC. The Underlying
Indexes for the Invesco S&P 500 Revenue ETF, Invesco S&P MidCap 400
Revenue ETF, Invesco S&P SmallCap 600 Revenue ETF, Invesco S&P
Financials Revenue ETF and Invesco S&P Ultra Dividend Revenue ETF are
products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and have
been licensed for use by the Adviser. Standard & Poor’s® and S&P® are registered
trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and
Dow Jones® is a
registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The
trademarks have been licensed to SPDJI and have been sublicensed for use for
certain purposes by the Adviser.
The Funds are not sponsored, endorsed, sold or promoted by SPDJI,
Dow Jones, S&P, or any of their respective affiliates (collectively,
“S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any
representation or warranty, express or implied, to the owners of the Funds or
any member of the public regarding the advisability of investing in securities
generally or in the Funds particularly or the ability of the Underlying Indexes
to track general market performance. S&P Dow Jones Indices’ only
relationship to the Adviser with respect to the Underlying Indexes is the
licensing of the Index and certain trademarks, service marks and/or trade names
of S&P Dow Jones Indices and/or its licensors. The Underlying Indexes are
determined, composed and calculated by S&P Dow Jones Indices without regard
to the Adviser or the Funds. S&P Dow Jones Indices has no obligation to take
the needs of the Adviser or the owners of the Funds into consideration in
determining, composing or calculating the Underlying Indexes. S&P Dow Jones
Indices is not responsible for and has not participated in the determination of
the prices, and amount of the Funds or the timing of the issuance or sale of the
Funds or in the determination or calculation of the equation by which the Funds
are to be converted into cash, surrendered or redeemed, as the case may be.
S&P Dow Jones Indices has no obligation or liability in connection with the
administration, marketing or trading of the Funds. There is no assurance that
investment products based on the Underlying Indexes will accurately track index
performance or provide positive investment returns. S&P Dow Jones Indices
LLC is not an investment advisor. Inclusion of a security within an index is not
a recommendation by S&P Dow Jones Indices to buy, sell, or hold such
security, nor is it considered to be investment advice.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY,
ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE UNDERLYING INDEX OR ANY DATA
RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED
TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH
RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES
OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES
INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS
TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF THE FUNDS, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE UNDERLYING INDEXES OR WITH RESPECT TO ANY
DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO,
LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT
LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY
AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE ADVISER,
OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
The Adviser does not guarantee the accuracy and/or the
completeness of each Underlying Index or any data included therein and the
Adviser shall have no liability for any errors, omissions, restatements, re-calculations, or interruptions therein.
The Adviser makes no warranty, express or implied, as to results to be obtained
by the Funds, owners of the Shares or any other person or entity from the use of
the Underlying Indexes or any data included therein. The Adviser makes no
express or implied warranties, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose with respect to the
Underlying Indexes or any data included therein. Without limiting any of the
foregoing, in no event shall the Adviser have any liability for any special,
punitive, direct, indirect or consequential damages (including lost profits)
arising out of matters relating to the use of the Underlying Indexes even if
notified of the possibility of such damages.
Premium/Discount Information
Information on the daily NAV per Share for each Fund, once
available, can be found at www.invesco.com/ETFs. Additionally, information
regarding how often the Shares of each Fund traded on its respective Exchange at
a price above (at a premium) or below (at a discount) the NAV of the Fund during
the prior calendar year and subsequent quarters, when available, can be found at
www.invesco.com/ETFs.
Other Information
Section 12(d)(1) of the 1940 Act restricts investments by
investment companies (and companies relying on Section 3(c)(1) or 3(c)(7)
of the 1940 Act) in the securities of other investment companies. However,
registered investment companies are
permitted to invest in a Fund beyond the limits set forth in
Section 12(d)(1) subject to certain terms and conditions set forth in an
SEC exemptive order issued to the Trust, including that such investment
companies enter into a participant agreement with the Trust on behalf of the
Fund prior to exceeding the limits imposed by Section 12(d)(1).
Additionally, each Fund is permitted to invest in other registered investment
companies beyond the limits set forth in Section 12(d)(1) subject to
certain terms and conditions set forth in another exemptive order that the SEC
has issued to the Trust. If a Fund relies on this exemptive relief, however,
other investment companies may not invest in that Fund beyond the statutory
provisions of Section 12(d)(1).
Continuous Offering
The method by which Creation Unit Aggregations of Shares are
created and traded may raise certain issues under applicable securities laws.
Because new Creation Unit Aggregations of Shares are issued and sold by the
Funds on an ongoing basis, a “distribution,” as such term is used in the
Securities Act of 1933, as amended (the “Securities Act”), may occur at any
point. Broker-dealers and other persons are cautioned that some activities on
their part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the prospectus delivery requirement and
liability provisions of the Securities Act.
For example, a broker-dealer firm or its client may be deemed a
statutory underwriter if it takes Creation Unit Aggregations after placing an
order with the Distributor, breaks them down into constituent Shares and sells
such Shares directly to customers, or if it chooses to couple the creation of a
supply of new Shares with an active selling effort involving solicitation of
secondary market demand for Shares. A determination of whether one is an
underwriter for purposes of the Securities Act must take into account all the
facts and circumstances pertaining to the activities of the broker-dealer or its
client in the particular case, and the examples mentioned above should not be
considered a complete description of all the activities that could lead to a
characterization as an underwriter.
Broker-dealer firms also should note that dealers who are not
“underwriters” but are effecting transactions in Shares, whether or not
participating in the distribution of Shares, generally are required to deliver a
prospectus. This is because the prospectus delivery exemption in
Section 4(a)(3)(C) of the Securities Act is not available in respect of
such transactions as a result of Section 24(d) of the 1940 Act. As a
result, broker-dealer firms should note that dealers who are not “underwriters”
but are participating in a distribution (as contrasted with engaging in ordinary
secondary market transactions), and thus dealing with the Shares that are part
of an overallotment within the meaning of Section 4(a)(3)(C) of the
Securities Act, will be unable to take advantage of the prospectus delivery
exemption provided by Section 4(a)(3) of the Securities Act. For delivery
of prospectuses to exchange members, the prospectus delivery mechanism of
Rule 153 under the Securities Act only is available with respect to
transactions on a national exchange.
Delivery of Shareholder Documents—Householding
Householding is an option available to certain investors of the
Funds. Householding is a method of delivery, based on the preference of the
individual investor, in which a single copy of certain shareholder documents can
be delivered to investors who share the same address, even if their accounts are
registered under different names. Householding for the Funds is available
through certain broker-dealers. If you are interested in enrolling in
householding and receiving a single copy of the Prospectus and other shareholder
documents, please contact your broker-dealer. If you currently are enrolled in
householding and wish to change your householding status, please contact your
broker-dealer.
For More Information
For more detailed information on the Trust, the Funds and the
Shares, you may request a copy of the Funds’ SAI. The SAI provides detailed
information about the Funds and is incorporated by reference into this
Prospectus. This means that the SAI legally is a part of this Prospectus.
Additional information about the Funds’ investments also will appear in the
Funds’ Annual and Semi-Annual Reports to Shareholders, when available. In the
Funds’ Annual Reports, you will find a discussion of the market conditions and
investment strategies that significantly affected each Fund’s performance during
its most recent fiscal year. If you have questions about the Funds or Shares or
you wish to obtain the SAI, Annual Report and/or Semi-Annual Report, when
available, free of charge, or to make shareholder inquiries, please:
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Call: |
Invesco Distributors, Inc. at 1-800-983-0903 Monday
through Friday |
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8:00 a.m. to 5:00 p.m. Central Time
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Write: |
Invesco Exchange-Traded Fund Trust II
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c/o Invesco Distributors, Inc.
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11 Greenway Plaza, Suite 1000
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Houston, Texas 77046-1173
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Visit: |
www.invesco.com/ETFs
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Reports and other information about the Funds are available on the
EDGAR Database on the SEC’s Internet site at www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following e-mail
address: [email protected].
No person is authorized to give any information or to make any
representations about a Fund and its Shares not contained in this Prospectus,
and you should not rely on any other information. Read and keep this Prospectus
for future reference.
Dealers effecting transactions in the Shares, whether or not
participating in this distribution, generally are required to deliver a
Prospectus. This is in addition to any obligation of dealers to deliver a
Prospectus when acting as underwriters.
The Trust’s registration number under the 1940 Act is 811-21977.
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Invesco
Exchange-Traded Fund Trust II
3500
Lacey Road, Suite 700
Downers
Grove, IL 60515 |
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O-TRST2-PRO-1 |
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www.invesco.com
800.983.0903
@InvescoUS |