Domestic Equity

At the start of the fiscal year, volatility in the equity markets increased. US equity markets rose in August 2022 until the US Federal Reserve (the Fed) chairman Jerome Powell gave hawkish comments at an economic policy symposium held in Jackson Hole, sparking a sharp selloff at month-end. The Fed reiterated that it would continue taking aggressive action to curb inflation, even though such measures could “bring pain to households and businesses,” and the Fed raised the benchmark federal funds rate by another 0.75% in September.¹ After a continued decline in September 2022, US equity markets rebounded in October and November, despite mixed data on the economy and corporate earnings. However, the Fed’s message of continued rate hikes until data shows inflation meaningfully declining sent markets lower in December. As energy prices declined, the rate of inflation slowed modestly in the fourth quarter of 2022. Corporate earnings generally met expectations, though companies provided cautious future guidance. With inflation still at multi-decade highs and little evidence of a slowing economy, the Fed raised its target rate by 0.75% in November and by 0.50% in December.¹

US equities managed to deliver gains in the first quarter of 2023 despite significant volatility and a banking crisis. A January rally gave way to a February selloff as higher-than-expected inflation, a tight labor market and solid economic growth indicated that the Fed’s monetary policy would remain tight for the foreseeable future, raising the risk of a deeper than expected recession. In March, the failure of two US regional banks, Silicon Valley Bank and Signature Bank, prompted steep losses in the banking sector. The subsequent takeover of Credit Suisse and ongoing fear that bank troubles would spread sent investors to safe-haven assets, sparking a bond rally, particularly among securities at the short end of the yield curve. With instability in the banking sector, the Fed raised the federal funds rate by only 0.25% in February of 2023 and again in March.¹ The Fed’s actions to stabilize the banking system in March sent markets higher, so equities were surprisingly resilient despite the turmoil.

The US economy and equity markets remained resilient in the second quarter of 2023, as milder inflation data and better-than-expected corporate earnings supported equities, with most major indexes posting gains for the quarter and with some big tech names providing optimistic future guidance. The Consumer Price Index (CPI) rose 4% as of May 31, 2023, the smallest 12-month increase in nearly two years.² The labor market maintained momentum in the second quarter with unemployment still at historic lows despite a slight uptick at the end of May. Facing persistently strong employment data, the Fed raised the federal funds rate by 0.25% at its May meeting, but investors got a long-awaited “pause” in rate hikes as the Fed left rates unchanged at its June meeting, sending equity

markets higher. However, the Fed raised rates another 0.25% in July, bringing the rate to its highest level since June 2006.¹ After two months of gains, equity markets declined in August as a resilient economy complicated the Fed’s efforts to tame inflation. While inflation has slowed from its peak in June 2022, the highest level since 1981, the CPI rose by 0.2% in July and the 12-month headline inflation rate rose to 3.2% from 3% in June.² At its annual Jackson Hole symposium in August 2023, Fed chair Jerome Powell remarked that while progress has been made, inflation is still too high, and the Fed intends “to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

Despite higher rates and increased market volatility, US stocks for the fiscal year had strong returns of 15.94%, as measured by the S&P 500 Index.³

 

1	Source: US Federal Reserve

2	Source: US Bureau of Labor Statistics

3	Source: Lipper Inc.

Fixed Income

The beginning of the fiscal year was headlined by the US Federal Reserve (the Fed) continuing its rapid tightening of monetary policy in an effort to combat inflation via higher interest rates while simultaneously engineering a soft landing to not push the economy into a recession. The Fed aggressively raised its federal funds rate at the beginning of the fiscal year: a 0.75% hike in November, its largest hike since 1994, a 0.50% hike in December and a 0.25% hike in January, to a target federal funds rate of 4.50% to 4.75%.¹

A January rally gave way to a February selloff as higher-than-expected inflation, a tight labor market and solid economic growth indicated that the Fed’s monetary policy would remain tight for the foreseeable future, raising the risk of a deeper than expected recession. In March, significant volatility plagued fixed income markets as the failure of two US regional banks, Silicon Valley Bank and Signature Bank, prompted steep losses in the banking sector. The subsequent takeover of Credit Suisse and ongoing fear that bank troubles would spread pushed overall corporate spread premiums wider over the fiscal year. However, issues did not seem to be systemic as policymakers responded swiftly which calmed markets. The Fed, aiming to further stabilize markets, continued course with their hawkish policy with two 0.25% hikes in March and May to a target federal funds rate of 5.00% to 5.25%. Markets stabilized due to milder inflation data and better-than-expected corporate earnings.

Through the second quarter of 2023, global economic growth remained resilient but bifurcated as emerging markets and Asian economies showed robust growth while developed western economies had sluggish yet positive growth. US labor markets maintained momentum with unemployment still at

historic lows despite a slight uptick at the end of May. Inflation generally eased in developed economies, largely driven by moderation in the goods component of inflation. However, core inflation remained more stubborn and led to developed central banks to continue tightening, showcased by another 0.25% hike by the Fed in July, bringing the target rate from 5.25% to 5.50%, its highest level since June 2006.¹ While rates remained elevated across all maturities on the yield curve, the two-year Treasury rates increased from 3.45% to 4.85% during the fiscal year, while 10-year Treasury rates increased from 3.53% to 4.48%.² At the end of the fiscal year, the yield curve remained inverted. Additionally, in August, US debt was downgraded by the Fitch credit rating agency from AAA to AA^† on the premise of expected fiscal deterioration over the next three years.³

We believe markets have priced in that the Fed is near the end or has finished its interest rate hiking cycle, with the expectations that the US is likely to avoid a substantial broad-based recession. We expect some weakness in the second half of the calendar year as policymakers accomplish a bumpy landing. We anticipate economic activity will remain relatively resilient. In the US, we believe rate hikes are ending and inflation will continue to fall significantly, albeit imperfectly. As we enter 2024, we expect a more positive growth outlook to unfold as the US economy recovers.

 

1	Source: Federal Reserve of Economic Data

2	Source: US Department of the Treasury

3	Source: Fitch Ratings

†

A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice.

As an index fund, the Invesco California AMT-Free Municipal Bond ETF (the “Fund”) is passively managed and seeks to track the investment results (before fees and expenses) of the ICE BofA California Long-Term Core Plus Municipal Securities Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the components of the Index.

Strictly in accordance with its guidelines and mandated procedures, ICE Data Indices, LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is composed of U.S. dollar-denominated, tax-exempt municipal debt publicly issued by California or any U.S. territory and their political subdivisions, in the U.S. domestic market. Such securities are exempt from the federal alternative minimum tax and are considered investment grade based on an average of ratings by S&P Global Ratings, a division of S&P Global Inc., Moody’s Investors Service, Inc. and Fitch Ratings Inc. To be eligible for inclusion in the Index, such securities must have a term of at least 15 years remaining to final maturity, a fixed coupon schedule, and a minimum amount outstanding of $25 million per maturity. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned 2.91%. On a net asset value (“NAV”) basis, the Fund returned 2.27%. During the same time period, the Index returned 2.69%. During the fiscal year, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to fees and operating expenses incurred by the Fund during the period.

During this same time period, the Bloomberg Municipal Bond 20 Year Index (the “Benchmark Index”) returned 2.15%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 5,800 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of municipal securities with maturities of 17 to 22 years.

Relative to the Benchmark Index, the Fund was most overweight in California bonds and most underweight in New York bonds during the fiscal year ended August 31, 2023. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s exposure to California bonds.

For the fiscal year ended August 31, 2023, California bonds contributed the most to the Fund’s return. There were no states that detracted from the Fund’s return during the period.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2023 included California

(State of) Health Facilities Financing Authority, 4.00% coupon, due 8/15/2050 (portfolio average weight of 1.98%), and Regents of the University of California Medical Center, 3.50% coupon, due 5/15/2054 (portfolio average weight of 1.90%). Positions that detracted most significantly from the Fund’s return for the fiscal year ended August 31, 2023 included San Diego Unified School District (Election of 2012), 5.00% coupon, due 7/1/2041 (portfolio average weight of 0.56%), and California (State of) Municipal Finance Authority, 4.00% coupon, due 3/1/2050 (portfolio average weight of 0.33%).

 

Revenue Type Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Ad Valorem Property Tax			24.20
Health, Hospital, Nursing Home Revenue			15.52
General Fund			10.90
College & University Revenue			8.91
Sales Tax Revenue			8.73
Port, Airport & Marina Revenue			6.19
Electric Power Revenue			6.15
Lease Revenue			3.98
Water Revenue			3.91
Sewer Revenue			3.10
Revenue Types Each Less Than 3%			5.80
Other Assets Less Liabilities			2.61

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-

The Blended—ICE BofA California Long-Term Core Plus Municipal Securities Index is comprised of the performance of the BofA Merrill Lynch California Insured Long-Term Core Municipal Securities Index, the Fund’s underlying index from Fund inception through the conversion date, May 29, 2009, followed by the performance of the BofA Merrill Lynch California Insured Long-Term Core Plus Municipal Securities Index, the Fund’s underlying index for the period May 29, 2009 until July 8, 2014, followed by the performance of the Index for the period July 8, 2014 through August 31, 2023.

 

-	Average Annualized and Cumulative Inception returns for the Fund and indices are based on the inception date of the Fund.

As an index fund, the Invesco CEF Income Composite ETF (the “Fund”) is passively managed and seeks to track the investment results (before fees and expenses) of the S-Network Composite Closed-End Fund Index^SM (the “Index”). The Fund generally will invest at least 90% of its total assets in the components of the Index. The Fund is a “fund of funds,” meaning that it invests its assets in the common shares of funds included in the Index rather than in individual securities (each, an “Underlying Fund” and collectively, the “Underlying Funds”).

S-Network Global Indexes, Inc. compiles, maintains and calculates the Index, which is designed to measure the overall performance of a universe of U.S.-listed closed-end funds that are organized under the laws of the United States and are principally engaged in asset management processes designed to produce taxable annual yield. Each Underlying Fund must have a stated objective to invest in taxable investment grade fixed-income securities, taxable high yield fixed-income securities or taxable options. The Index may include closed-end funds that are advised by an affiliate of Invesco Capital Management LLC, the Fund’s investment adviser. The Fund generally invests in each Underlying Fund in proportion to their weightings in the Index.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned 0.65%. On a net asset value (“NAV”) basis, the Fund returned 0.49%. During the same time period, the Index returned 0.43%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to income received from the securities lending program in which the Fund participates, which was partially offset by fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P 500^® Index (the “Benchmark Index”) returned 15.94%. The Benchmark Index is an unmanaged index weighted by market capitalization, which is based on the average performance of approximately 500 equity securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market.

Relative to the Benchmark Index, the Fund was most overweight in investment grade and high yield fixed-income closed-end funds during the fiscal year ended August 31, 2023. The majority of the Fund’s underperformance relative to the Benchmark Index can be attributed to the Fund’s fixed-income exposure, which generally underperformed the equity markets during the period.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2023 included Virtus Dividend, Interest & Premium Strategy Fund (portfolio average weight of 2.45%) followed by the BlackRock Innovation and Growth Term Trust (portfolio average weight of 3.78%). Positions

that detracted most significantly from the Fund’s return included Highland Opportunities and Income Fund (portfolio average weight of 1.78%), and First Trust Intermediate Duration Preferred & Income Fund (portfolio average weight of 1.89%).

 

Asset Class Breakdown* (% of the Fund’s Net Assets) as of August 31, 2023
Bonds			32.36
Option Income			29.86
Bonds/High Yield			20.61
Equities			7.83
Fixed Income			5.93
Domestic Equity			3.33
Money Market Funds Plus Other Assets Less Liabilities			0.08

 

*	Reflects exposure achieved through investments in underlying funds.

 

Top Ten Fund Holdings* (% of the Fund’s Net Assets) as of August 31, 2023
Security
Eaton Vance Tax-Managed Global Diversified Equity Income Fund			4.00
BlackRock Innovation and Growth Term Trust			3.78
BlackRock Health Sciences Term Trust			3.58
BlackRock ESG Capital Allocation Term Trust			3.01
BlackRock Science & Technology Term Trust			2.99
Virtus Dividend, Interest & Premium Strategy Fund			2.52
Nuveen Preferred & Income Securities Fund			2.51
BlackRock Corporate High Yield Fund, Inc.			2.17
Eaton Vance Tax-Managed Diversified Equity Income Fund			2.14
Eaton Vance Limited Duration Income Fund			1.87
Total			28.57

 

*	Excluding money market fund holdings.

Fund Inception: February 19, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 1.99% includes the unitary management fee of 0.50% and acquired fund fees and expenses of 1.49%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-	Average Annualized and Cumulative Inception returns for the Fund and indices are based on the inception date of the Fund.

Effective after the close of markets on August 25, 2023, the Invesco 1-30 Laddered Treasury ETF changed its name to Invesco Equal Weight 0-30 Year Treasury ETF (the “Fund”) and the underlying index changed from Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index (the “Previous Index”) to ICE 1-30 Year Laddered Maturity US Treasury Index (the “Index”). At that time, the Fund also changed its ticker symbol from PLW to GOVI and changed its investment objective and investment policies.

As an index fund, the Fund is passively managed and seeks to track the investment results (before fees and expenses) of the Index, and through August 25, 2023, the Previous Index. The Fund generally will invest at least 80% of its total assets in the securities that comprise the Index, and through August 25, 2023, the Previous Index.

Strictly in accordance with its guidelines and mandated procedures, ICE Data Indices, LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is designed to track the performance of up to 30 U.S. Treasury Notes or Bonds representing the annual February maturity ladder across the yield curve. Eligible securities must be U.S. dollar denominated sovereign debt publicly issued by the U.S. government in the U.S. domestic market. The Index is structured with 30 different annual maturity points, or “rungs,” which are equally weighted at each annual February rebalancing. Securities eligible for the Index must: (i) have a fixed coupon schedule; (ii) a minimum amount outstanding of $1 billion (excluding any amount held by the Federal Reserve’s System Open Market Account); and (iii) have at least 18 months to final maturity at the time of issuance. The Index Provider selects for each rung securities with February maturities, which, once selected, will remain in the Index, provided they continue to meet the eligibility criteria. If no February maturity is available for a given rung, then the next-closest maturing security is selected as long as it is within six months of the February target maturity.

The securities selected for each rung of the Index from 1 to 30 years are equally weighted. The weights of any rungs for which no securities are available are re-allocated equally to the securities of closest rungs on both sides of the ladder. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned (5.66)%. On a net asset value (“NAV”) basis, the Fund returned (6.07)%. During the same time period, the Blended – Invesco Equal Weight 0-30 Year Treasury ETF Index (a composite of the returns of the Previous Index through August 25, 2023, and of the Index for the remainder of the fiscal year, referred to herein as the “Blended Index”) returned (5.85)%. During the fiscal year, the Fund fully replicated the components of the Blended Index; therefore, the Fund’s performance, on a NAV basis, differed from the return of the

Blended Index primarily due to fees and operating expenses incurred by the Fund during the period.

During this same time period, the Bloomberg U.S. Treasury Index (the “Benchmark Index”) returned (2.07)%. The Benchmark Index is an unmanaged index weighted by market capitalization, which is based on the average performance of approximately 300 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the roughly 5-year average duration of the U.S. Treasury market.

Relative to the Benchmark Index, the Fund was most overweight in bonds with maturities of 11 years duration and most underweight in bonds with maturities of 8 years duration during the fiscal year ended August 31, 2023. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s overweight allocation to bonds with maturities greater than 5 months.

For the fiscal year ended August 31, 2023, bonds with maturities of 5 months contributed most significantly to the Fund’s return. Bonds with maturities of 10 years detracted most significantly from the Fund’s return, followed by bonds with maturities of 19 years.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2023 included U.S. Treasury Note, 2.75% coupon, due 2/15/2024 (portfolio average weight of 3.50%), and U.S. Treasury Bond, 7.63% coupon, due 2/15/2025 (portfolio average weight 3.40%). Positions that detracted most significantly from the Fund’s return for the fiscal year ended August 31, 2023 included U.S. Treasury Bond, 4.50% coupon, due 02/15/2036 (portfolio average weight of 6.71%) and U.S. Treasury Bond, 2.25% coupon, due 2/15/2052 (portfolio average weight 3.22%).

 

Duration Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Maturing in 0-5 Years			17.00
Maturing in 6-10 Years			20.31
Maturing in 11-15 Years			13.38
Maturing in 16-20 Years			16.56
Maturing in 21-25 Years			16.38
Maturing in 26-30 Years			16.20
Money Market Funds Plus Other Assets Less Liabilities			0.17

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 0.15% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-	The Custom Equal Weight 0-30 Year Treasury ETF Index is comprised of the performance of the Previous Index from Fund inception through the conversion date, August 25, 2023, followed by the performance of the Index for the period August 26, 2023 through August 31, 2023.

 

-	Average Annualized and Cumulative Inception returns for the Fund and indices are based on the inception date of the Fund.

Effective after the close of markets on August 25, 2023, the Invesco VRDO Tax-Free ETF changed its name to Invesco Floating Rate Municipal Income ETF (the “Fund”). As an index fund, the Fund is passively managed and seeks to track the investment results (before fees and expenses) of the ICE US Municipal AMT-Free VRDO Constrained Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the components of the Index.

Strictly in accordance with its guidelines and mandated procedures, ICE Data Indices, LLC (the “Index Provider”) compiles and calculates the Index, which is designed to track the performance of U.S. dollar denominated tax-exempt variable rate demand obligations (“VRDOs”) that are publicly issued by U.S. states and territories, and their political subdivisions, and that have interest rates that reset daily, weekly or monthly. Securities eligible for the Index must have at least one day remaining term to final maturity, at least $10 million amount outstanding, an investment grade rating (based on an average of ratings from Moody’s Investors Service, Inc., S&P Global Ratings, a division of S&P Global Inc., and Fitch Ratings, Inc). Securities whose interest is subject to the U.S. alternative minimum tax are excluded from the Index. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned 2.57%. On a net asset value (“NAV”) basis, the Fund returned 2.45%. During the same time period, the Index returned 2.04%. During the fiscal year, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to the positive effects of the sampling approach employed by the portfolio management team, which were partially offset by the fees and operating expenses incurred by the Fund and costs associated with portfolio rebalancing during the period.

During this same time period, the Bloomberg Municipal 1-Year Bond Index (the “Benchmark Index”) returned 1.83%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 7,700 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the market for municipal securities with no more than a 1-year duration.

Relative to the Benchmark Index, the Fund was most overweight in Florida bonds and most underweight in California bonds during the fiscal year ended August 31, 2023. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s allocation to California and New York bonds.

For the fiscal year ended August 31, 2023, New York bonds contributed most significantly to the Fund’s return, followed by

California bonds and Texas bonds, respectively. There were no states that detracted from the Fund’s return during the period.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2023, included Louisiana (State of) Offshore Terminal Authority, 3.50% coupon, due 9/1/2033 (portfolio average weight of 5.03%), and Houston (City of), TX, 4.08% coupon, due 5/15/2034 (portfolio average weight of 5.03%). There were no detracting positions for the fiscal year ended August 31, 2023.

 

Revenue Type Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Water Revenue			15.86
Local or GTD Housing			15.21
Port, Airport & Marina Revenue			12.71
Miscellaneous Revenue			9.34
Lease Revenue			7.05
Ad Valorem Property Tax			7.05
Electric Power Revenue			6.29
Health, Hospital, Nursing Home Revenue			5.79
Transit Revenue			4.03
Highway Tolls Revenue			3.77
College & University Revenue			3.02
Revenue Types Each Less Than 3%			5.91
Other Assets Less Liabilities			3.97

Fund Inception: November 15, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-	Average Annualized and Cumulative Inception returns for the Fund and indexes are based on the inception date of the Fund.

 

-

The Blended-ICE US Municipal AMT-Free VRDO Constrained Index is comprised of the performance of the Thomson Municipal Market Data VRDO Index, the Fund’s underlying index from Fund inception through the conversion date, August 5, 2010, followed by the performance of the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index, the Fund’s underlying index for the period August 5, 2010 through March 24, 2021, followed by the performance of the Index for the period March 24, 2021 through August 31, 2023.

As an index fund, the Invesco Fundamental High Yield^® Corporate Bond ETF (the “Fund”) is passively managed and seeks to track the investment results (before fees and expenses) of the RAFI^® Bonds U.S. High Yield 1-10 Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the components that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Research Affiliates, LLC (the “Index Provider”) or its agent compiles and calculates the Index, which is designed to measure the performance of U.S. dollar-denominated high yield corporate bonds that are SEC-registered securities, Rule 144A securities under the Securities Act of 1933 (the “Securities Act”), or Section 3(a)(2) securities under the Securities Act with registration rights (issued after July 31, 2013) and whose issuers are public companies domiciled in the United States. The Index selects and weights securities based on the Fundamental Index^® approach developed by the Index Provider that uses four fundamental factors of company size: book value of assets, gross sales, gross dividends and cash flow. Only non-convertible, non-exchangeable, non-zero, fixed coupon high-yield corporate bonds qualify for inclusion in the Index. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned 6.64%. On a net asset value (“NAV”) basis, the Fund returned 6.09%. During the same time period, the Index returned 6.33%. During the fiscal year, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to fees and operating expenses incurred by the Fund during the period.

During this same time period, the Bloomberg U.S. Corporate High Yield Index (the “Benchmark Index”) returned 7.16%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 2,100 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the broad-based U.S. high-yield corporate bond market.

Relative to the Benchmark Index, the Fund was most overweight in the consumer finance industry and most underweight in the media industry during the fiscal year ended August 31, 2023. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s security selection within the office REITs industry.

For the fiscal year ended August 31, 2023, the hotels, restaurants & leisure industry contributed most significantly to the Fund’s return, followed by the consumer finance and oil, gas & consumable fuels industries, respectively. The office REITs

industry detracted most significantly from the Fund’s return, followed by the food products industry.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2023, included Royal Caribbean Cruises Ltd., 3.70% coupon, due 3/15/2028, a hotels, restaurants & leisure company (portfolio average weight of 1.13%), and TransDigm, Inc., 5.50% coupon, due 11/15/2027, an aerospace & defense company (portfolio average weight of 1.44%). Positions that detracted most significantly from the Fund’s return for the fiscal year ended August 31, 2023, included MPT Operating Partnership LP / MPT Finance Corp., 5.00% coupon, due 10/15/2027, a health care REIT company (portfolio average weight of 0.40%), and MPT Operating Partnership LP / MPT Finance Corp., 3.50% coupon, due 3/15/2031, a health care REIT company (portfolio average weight of 0.41%).

 

Sector Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Consumer Discretionary			25.68
Industrials			13.42
Materials			9.93
Energy			9.50
Financials			8.94
Information Technology			8.02
Real Estate			6.35
Utilities			6.19
Health Care			5.63
Communication Services			3.76
Consumer Staples			0.99
Money Market Funds Plus Other Assets Less Liabilities			1.59
Credit Quality Rating (S&P)* (% of the Fund’s Net Assets) as of August 31, 2023
BBB			16.01
BB			72.15
B			9.25
Not Rated			1.00
Money Market Funds Plus Other Assets Less Liabilities			1.59

 

*

Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to C (lowest); ratings are subject to change without notice. “Non-Rated” indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Ratings Resources on the homepage.

Fund Inception: November 15, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 0.50% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-	Average Annualized and Cumulative Inception returns for the Fund and indices are based on the inception date of the Fund.

 

-

The Blended-RAFI® Bonds U.S. High Yield 1-10 Index is comprised of the performance of the Wells Fargo® High Yield Bond Index, the Fund’s previous index, from Fund inception through the conversion date, August 2, 2010, followed by the performance of the Index starting at the conversion date through August 31, 2023.

As an index fund, the Invesco Fundamental Investment Grade Corporate Bond ETF (the “Fund”) is passively managed and seeks to track the investment results (before fees and expenses) of the RAFI^® Bonds U.S. Investment Grade 1-10 Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the components that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Research Affiliates, LLC (the “Index Provider”) or its agent compiles and calculates the Index, which is designed to measure the performance of U.S. dollar-denominated investment grade corporate bonds that are SEC-registered securities, or Rule 144A securities under the Securities Act of 1933 (the “Securities Act”), or Section 3(a)(2) securities under the Securities Act with registration rights (issued after July 31, 2013) and whose issuers are public companies domiciled in the United States. The Index selects and weights securities based on the Fundamental Index^® approach developed by the Index Provider that uses four fundamental factors of company size: book value of assets, gross sales, gross dividends and cash flow. Only non-convertible, non-exchangeable, non-zero, fixed coupon investment grade corporate bonds qualify for inclusion in the Index. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned 1.46%. On a net asset value (“NAV”) basis, the Fund returned 1.20%. During the same time period, the Index returned 1.41%. During the fiscal year, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to the fees and operating expenses that the Fund incurred during the period.

During this same time period, the Bloomberg U.S. Corporate Index (the “Benchmark Index”) returned 0.90%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 7,300 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the broad-based U.S. corporate bond market.

Relative to the Benchmark Index, the Fund was most overweight in the insurance industry and most underweight in the banks industry during the fiscal year ended August 31, 2023. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s security selection within the insurance industry.

For the fiscal year ended August 31, 2023, the insurance industry contributed most significantly to the Fund’s return, followed by the oil, gas & consumable fuels and health care providers & services industries, respectively. The broadline retail industry detracted most significantly from the Fund’s return, followed by the real estate management & development and office REITs industries, respectively.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2023, included JPMorgan Chase & Co., 2.95% coupon, due 10/1/2026, a banks company (portfolio average weight of 1.09%), and Citigroup, Inc., 6.63% coupon, due 6/15/2032, a banks company (portfolio average weight of 0.42%). Positions that detracted most significantly from the Fund’s return for the fiscal year ended August 31, 2023, included U.S. Bancorp, 1.38% coupon, due 7/22/2030, a banks company (portfolio average weight of 0.22%), and Johnson & Johnson, 1.30% coupon, due 9/1/2030, a pharmaceuticals company (portfolio average weight of 0.29%).

 

Sector Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Financials			20.62
Health Care			11.22
Information Technology			11.15
Industrials			10.24
Consumer Staples			10.07
Consumer Discretionary			8.18
Utilities			6.99
Energy			5.84
Real Estate			5.28
Communication Services			5.12
Materials			4.30
Money Market Funds Plus Other Assets Less Liabilities			0.99
Credit Quality Rating (S&P)* (% of the Fund’s Net Assets) as of August 31, 2023
AAA			1.49
AA			8.13
A			33.52
BBB			55.87
Money Market Funds Plus Other Assets Less Liabilities			0.99

 

*

Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to C (lowest); ratings are subject to change without notice. “Non-Rated” indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Ratings Resources on the homepage.

 

Fund Inception: September 15, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 0.22% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-	Average Annualized and Cumulative Inception returns for the Fund and indices are based on the inception date of the Fund.

As an index fund, the Invesco National AMT-Free Municipal Bond ETF (the “Fund”) is passively managed and seeks to track the investment results (before fees and expenses) of the ICE BofA National Long-Term Core Plus Municipal Securities Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the components of the Index.

Strictly in accordance with its guidelines and mandated procedures, ICE Data Indices, LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is composed of U.S. dollar-denominated, tax-exempt municipal debt publicly issued by U.S. states and territories and their political subdivisions, in the U.S. domestic market. Such securities are exempt from the federal alternative minimum tax and are considered investment grade based on an average of ratings by S&P Global Ratings, a division of S&P Global Inc., Moody’s Investors Service, Inc. and Fitch Ratings Inc. To be eligible for inclusion in the Index, such securities must have a term of at least 15 years remaining to final maturity, a fixed coupon schedule, and a minimum amount outstanding of $25 million per maturity. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned 2.08%. On a net asset value (“NAV”) basis, the Fund returned 2.00%. During the same time period, the Index returned 2.26%. During the fiscal year, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Bloomberg Municipal Bond 20 Year Index (the “Benchmark Index”) returned 2.15%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 5,800 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of municipal securities with maturities of 17 to 22 years.

Relative to the Benchmark Index, the Fund was most overweight in New York bonds and most underweight in California bonds during the fiscal year ended August 31, 2023. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s security selection within Louisiana bonds.

For the fiscal year ended August 31, 2023, New York bonds contributed most significantly to the Fund’s return, followed by California bonds. Louisiana bonds detracted most significantly from the Fund’s return, followed by North Dakota bonds.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2023, included San Diego Unified School District (Election of 2012), 4.00% coupon, due

7/1/2050 (portfolio average weight of 0.60%), and Triborough Bridge & Tunnel Authority (MTA Bridges & Tunnels), 4.00% coupon, due 5/15/2057 (portfolio average weight of 0.40%). Positions that detracted most significantly from the Fund’s return included Massachusetts (Commonwealth of), 5.00% coupon, due 11/1/2048 (portfolio average weight of 0.82%), and Chicago (City of), IL Transit Authority, 5.00% coupon, due 12/1/2051 (portfolio average weight of 0.05%).

 

Revenue Type Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Ad Valorem Property Tax			16.74
Health, Hospital, Nursing Home Revenue			16.00
Water Revenue			8.52
College & University Revenue			8.43
Income Tax Revenue			7.85
Sales Tax Revenue			6.63
Highway Tolls Revenue			6.35
Lease Revenue			5.01
Miscellaneous Revenue			4.52
Electric Power Revenue			4.25
Port, Airport & Marina Revenue			3.57
Revenue Types Each Less Than 3%			11.00
Other Assets Less Liabilities			1.13

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-

The Blended-ICE BofA National Long-Term Core Plus Municipal Securities Index is comprised of the performance of the BofA Merrill Lynch National Insured Long-Term Core Municipal Securities Index, the Fund’s underlying index from Fund inception through the conversion date, May 29, 2009, followed by the performance of the BofA Merrill Lynch National Insured Long-Term Core Plus Municipal Securities Index, the Fund’s underlying index for the period May 29, 2009 through July 8, 2014, followed by the performance of the Index for the period July 8, 2014 through August 31, 2023.

 

-	Average Annualized and Cumulative Inception returns for the Fund and indices are based on the inception date of the Fund.

As an index fund, the Invesco New York AMT-Free Municipal Bond ETF (the “Fund”) is passively managed and seeks to track the investment results (before fees and expenses) of the ICE BofA New York Long-Term Core Plus Municipal Securities Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the components of the Index.

Strictly in accordance with its guidelines and mandated procedures, ICE Data Indices, LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is composed of U.S. dollar-denominated, tax-exempt municipal debt publicly issued by New York or any U.S. territory and their political subdivisions in the U.S. domestic market. Such securities are exempt from the federal alternative minimum tax and are considered investment grade based on an average of ratings by S&P Global Ratings, a division of S&P Global Inc., Moody’s Investors Service, Inc. and Fitch Ratings Inc. To be eligible for inclusion in the Index, such securities must have a term of at least 15 years remaining to final maturity, a fixed coupon schedule, and a minimum amount outstanding of $25 million per maturity. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned 1.88%. On a net asset value (“NAV”) basis, the Fund returned 2.15%. During the same time period, the Index returned 3.11%. During the fiscal year, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period, as well as costs associated with portfolio rebalancing, sampling, trading and the security selection within New York bonds.

During this same time period, the Bloomberg Municipal Bond 20 Year Index (the “Benchmark Index”) returned 2.15%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 5,800 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the market for municipal securities with maturities of 17 to 22 years.

Relative to the Benchmark Index, the Fund was most overweight in New York bonds and most underweight in California bonds during the fiscal year ended August 31, 2023.

For the fiscal year ended August 31, 2023, New York bonds were the only contributor to the Fund’s return. There were no states that detracted from the Fund’s return during the period.

Positions that contributed most significantly to the Fund’s return included New York (State of) Dormitory Authority, 4.00% coupon, due 2/15/2044 (portfolio average weight of 2.71%), and New

York (State of) Power Authority (Green Transmission), 4.00% coupon, due 11/15/2052 (portfolio average weight of 4.23%). Positions that detracted most significantly from the Fund’s return for the fiscal year ended August 31, 2023, included New York (City of), NY Transitional Finance Authority, 3.00% coupon, due 11/1/2047 (portfolio average weight of 1.70%), and New York (State of) Thruway Authority, 3.00% coupon, due 3/15/2049 (portfolio average weight of 0.85%).

 

Revenue Type Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Water Revenue			12.17
Electric Power Revenue			12.17
Income Tax Revenue			11.23
Miscellaneous Revenue			8.79
Highway Tolls Revenue			8.57
Lease Revenue			7.76
College & University Revenue			7.56
Health, Hospital, Nursing Home Revenue			6.83
Ad Valorem Property Tax			5.51
Hotel Occupancy Tax			4.43
Transit Revenue			3.75
Port, Airport & Marina Revenue			3.71
Revenue Types Each Less Than 3%			6.40
Other Assets Less Liabilities			1.12

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See the current prospectus for more information.

According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

Performance results for the indexes stated above are based upon a hypothetical investment in their respective constituent securities. The returns of an index do not represent Fund returns. An investor cannot invest directly in an index. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

Notes Regarding Indexes and Fund Performance History:

 

-

The Blended-ICE BofA New York Long-Term Core Plus Municipal Securities Index is comprised of the performance of the BofA Merrill Lynch New York Insured Long-Term Core Municipal Securities Index, the Fund’s underlying index from Fund inception through the conversion date, May 29, 2009, followed by the performance of the BofA Merrill Lynch New York Insured Long-Term Core Plus Municipal Securities Index, the Fund’s underlying index for the period May 29, 2009 through July 8, 2014, followed by the performance of the Index for the period July 8, 2014 through August 31, 2023.

 

-	Average Annualized and Cumulative Inception returns for the Fund and indexes are based on the inception date of the Fund.

As an index fund, the Invesco Preferred ETF (the “Fund”) is passively managed and seeks to track the investment results (before fees and expenses) of the ICE BofA Core Plus Fixed Rate Preferred Securities Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the components of the Index.

Strictly in accordance with its guidelines and mandated procedures, ICE Data Indices, LLC (the “Index Provider”) selects securities for the Index, which is a market capitalization-weighted index designed to measure the performance of the fixed rate U.S. dollar-denominated preferred securities market. The Index includes both traditional and other preferred securities. Unlisted preferred securities are excluded from the Index, but unlisted senior or subordinated debt-like securities are eligible for inclusion. The Index may include Rule 144A securities. Securities are selected for the Index using a rules-based methodology. Qualifying securities must be rated at least B3 (based on an average of ratings by Moody’s Investors Services, Inc. (“Moody’s”), S&P Global Ratings, a division of S&P Global Inc. (“S&P”) and Fitch Ratings, Inc. (“Fitch”)) and must have an investment grade country risk profile (based on an average of Moody’s, S&P and Fitch foreign currency long-term sovereign debt ratings). The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended August 31, 2023, on a market price basis, the Fund returned (3.56)%. On a net asset value (“NAV”) basis, the Fund returned (3.48)%. During the same time period, the Index returned (3.32)%. During the fiscal year, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to the fees and operating expenses incurred by the Fund and costs associated with portfolio rebalancing during the period, which were partially offset by the positive effects of the sampling approach employed by the portfolio management team.

During this same time period, the S&P U.S. Preferred Stock Index (the “Benchmark Index”) returned 0.58%. The Benchmark Index is an unmanaged index weighted by modified market capitalization, which is based on the average performance of approximately 300 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the preferred stock market, which includes convertible preferred stocks.

Relative to the Benchmark Index, the Fund was most overweight in the insurance industry and most underweight in the banks industry during the fiscal year ended August 31, 2023. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s security selection within the insurance industry.

For the fiscal year ended August 31, 2023, the insurance industry contributed most significantly to the Fund’s return, followed by the electric utilities industry. The banks industry detracted most significantly from the Fund’s return, followed by the diversified telecommunication services industry.

Positions that contributed most significantly to the Fund’s return included Reinsurance Group of America, Inc., 7.13%, an insurance company (portfolio average weight 0.75%), and AT&T, Inc., 4.75%, a diversified telecommunication services company (portfolio average weight 1.34%). Positions that detracted most significantly from the Fund’s return for the fiscal year ended August 31, 2023, included Qwest Corp., 6.50%, a diversified telecommunication services company (portfolio average weight 0.50%), and Qurate Retail, Inc., Pfd., 8.00%, a broadline retail company (portfolio average weight 0.06%).

 

Sector Breakdown (% of the Fund’s Net Assets) as of August 31, 2023
Financials			68.97
Utilities			10.71
Real Estate			7.87
Communication Services			6.96
Consumer Discretionary			3.07
Sector Types Each Less Than 3%			1.93
Money Market Funds Plus Other Assets Less Liabilities			0.49
Top Ten Fund Holdings* (% of the Fund’s Net Assets) as of August 31, 2023
Security
JPMorgan Chase & Co., Series EE, Pfd., 6.00%,			1.80
JPMorgan Chase & Co., Series DD, Pfd., 5.75%,			1.63
Wells Fargo & Co., Series Z, Pfd., 4.75%,			1.57
JPMorgan Chase & Co., Series MM, Pfd., 4.20%,			1.47
JPMorgan Chase & Co., Series LL, Pfd., 4.63%,			1.44
AT&T, Inc., Series C, Pfd., 4.75%,			1.35
Bank of America Corp., Series KK, Pfd., 5.38%,			1.28
Bank of America Corp., Series GG, Pfd., 6.00%,			1.28
AT&T, Inc., Pfd., 5.35%, 11/01/2066			1.20
Capital One Financial Corp., Series I, Pfd., 5.00%,			1.16
Total			14.18

 

*	Excluding money market fund holdings.