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Invesco Annual Report to Shareholders

 

August 31, 2022

    

QQMG  Invesco ESG NASDAQ 100 ETF

 

QQJG   Invesco ESG NASDAQ Next Gen 100 ETF

 

QQQM  Invesco NASDAQ 100 ETF

 

QQQJ   Invesco NASDAQ Next Gen 100 ETF


 

Table of Contents

 

The Market Environment      3  
Management’s Discussion of Fund Performance      4  
Liquidity Risk Management Program      15  
Schedules of Investments   

Invesco ESG NASDAQ 100 ETF (QQMG)

     16  

Invesco ESG NASDAQ Next Gen 100 ETF (QQJG)

     18  

Invesco NASDAQ 100 ETF (QQQM)

     20  

Invesco NASDAQ Next Gen 100 ETF (QQQJ)

     22  
Statements of Assets and Liabilities      24  
Statements of Operations      25  
Statements of Changes in Net Assets      26  
Financial Highlights      27  
Notes to Financial Statements      31  
Report of Independent Registered Public Accounting Firm      41  
Fund Expenses      42  
Tax Information      43  
Trustees and Officers      44  
Approval of Investment Advisory and Sub-Advisory Contracts      54  

 

 

  2  

 


 

The Market Environment

 

 

 

Domestic Equity

The fiscal year began with increasing volatility and the US stock market saw a selloff through most of September due to increasing concerns of inflation resulting from a spike in oil prices and supply chain shortages causing rising costs. Despite the Consumer Price Index (CPI) increasing monthly from June through September 2021,1 the US Federal Reserve (the Fed) declined to raise interest rates at its September 2021 Federal Open Market Committee meeting.

Equity markets saw continued volatility in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic-related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil rose to nearly $85 per barrel in October,2 causing higher gas prices for consumers, and pushing energy stocks higher. The CPI reported for November increased 0.8%, resulting in a 6.8% increase over the prior 12 months, the highest since 1982.1 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron variant reporting milder symptoms, stocks rallied at the 2021 year-end.

Equity markets declined in the first quarter of 2022 amid volatility sparked by Russia’s invasion of Ukraine, rising commodity prices, rampant global inflation and the Fed’s shift toward tighter monetary policy. Russia’s invasion exacerbated inflationary pressures, disrupting already strained supply chains and increasing shortages of oil, gas and raw materials. The price of oil rose sharply, with crude prices reaching their highest price per barrel since 2008.2 The CPI rose by another 7.9% for the 12 months ended February 2022 reaching a 40 year high.1 To combat inflation, the Fed raised the federal funds rate by a one-quarter percentage point in March.

As the war in Ukraine continued and corporate earnings in high-profile names, like Netflix, reported slowing growth and profits, the equity markets sold off for much of April 2022. The downward direction of the equity markets continued for much of the second quarter of 2022 amid record inflation, rising interest rates and an increasing likelihood of a US recession. Driven by higher food and energy prices, the CPI rose by yet another 8.6% for the 12 months ended May 2022 reaching a 40 year high.1 Oil prices peaked near $122 per barrel in early June, resulting in skyrocketing gasoline prices; the national average price reached a record high above $5 per gallon in early June.2 To tame inflation, the Fed raised the benchmark federal funds rate three more times, by 0.50% in May, by 0.75% in June and another 0.75% in July, which were the largest increases in nearly 30 years.3 US equity markets rose in July and much of August until Fed

chairman Jerome Powell’s hawkish comments at Jackson Hole, Wyoming, an economic policy symposium, sparked a sharp selloff at month end. Due to declining energy prices, the CPI rose by 8.5% for the 12 months ending July,1 down slightly from June, but still at multi-decade highs and far above the Fed’s 2% annual inflation target. As a result, the Fed indicated that it would continue taking aggressive action to curb inflation, though such measures could “bring pain to households and businesses.” The remarks deflated investor optimism that the Fed would pause rate hikes in the second half of 2022 and increased the likelihood of a US recession. In this environment, US stocks had negative double-digit returns of (11.23)% for the fiscal year ended August 31, 2022, measured by the S&P 500 Index.4

 

1 

Source: US Bureau of Labor Statistics

2 

Source: Bloomberg LP

3 

Source: US Federal Reserve

4 

Source: Lipper Inc.

 

 

  3  

 


 

 

QQMG    Management’s Discussion of Fund Performance
   Invesco ESG NASDAQ 100 ETF (QQMG)

 

As an index fund, the Invesco ESG NASDAQ 100 ETF (the “Fund”) seeks to track the investment results (before fees and expenses) of the Nasdaq-100® ESG Index (the “Index”). The Fund generally will invest at least 90% of its total assets in the securities that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Nasdaq, Inc. (“Nasdaq” or the “Index Provider”) compiles, maintains and calculates the Index, which is designed to measure the performance of companies included in the Nasdaq-100® Index (the “Parent Index”) that also meet the Index Provider’s environmental, social and governance (“ESG”) criteria. The Parent Index includes securities of 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market LLC based on market capitalization. Security types generally eligible for inclusion in the Parent Index are common stocks and tracking stocks of companies located in the United States, as well as American depositary receipts (“ADRs”) that represent securities of non-U.S. issuers.

The Parent Index reflects companies from all major sectors, except for companies that are classified as “financials” according to the Industry Classification Benchmark. Companies organized as real estate investment trusts (“REITs”) are not eligible for inclusion in the Parent Index.

Companies that are included in the Parent Index are evaluated for inclusion in the Index on the basis of the Index Provider’s ESG criteria, which considers a company’s (i) business activities, (ii) business controversy levels and ESG risk ratings, and (iii) adherence to the principles of the United Nations Global Compact.

The Index employs negative screens to exclude securities of companies with business activities that do not meet the eligibility criteria for the Index. Such screens rely on information from Sustainalytics, a globally-recognized independent provider of ESG research, ratings, and data. Companies’ business activities are distinguished between categories with absolute prohibitions (which do not allow any involvement by a company in a certain business activity) and categories that permit a de minimis amount of a certain business activity (generally, permitting a company to derive less than 5% of its revenues from, or to own less than 10% of another company that engages in, such activity). The Fund generally will invest in all of the securities comprising the Index in proportion to their weightings in the Index.

During the fiscal period from the Fund’s inception (October 27, 2021, the first day of trading on the exchange) through August 31, 2022, on a market price basis, the Fund returned (20.54)%. On a net asset value (“NAV”) basis, the Fund returned (20.63)%. During the same time period, the Index returned (20.50)%. During the fiscal period, 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 the fees and expenses that the Fund incurred during the period.

During this same time period, the Nasdaq Composite® Total Return Index (the “Benchmark Index”) returned (21.92)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 3,400 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparisons are a useful measure for investors as broad representations of the overall U.S. stock market.

Relative to the Benchmark Index, the majority of the Fund’s outperformance during the period can be attributed to the Fund’s underweight allocation to and security selection within the consumer discretionary sector.

For the fiscal period ended August 31, 2022, no sector contributed to the Fund’s return. The information technology sector detracted most significantly from the Fund’s return during the period, followed by the communication services and consumer discretionary sectors, respectively.

Positions that contributed most significantly to the Fund’s return for the fiscal period ended August 31, 2022, included Apple, Inc., an information technology company (portfolio average weight of 13.90%) and T-Mobile US, Inc., a communication services company (portfolio average weight of 1.11%). Positions that detracted most significantly from the Fund’s return during the period included Microsoft Corp., an information technology company (portfolio average weight of 13.76%) and NVIDIA Corp., an information technology company (portfolio average weight of 5.23%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of August 31, 2022
 
Information Technology      61.18  
Communication Services      13.37  
Consumer Discretionary      11.29  
Consumer Staples      6.23  
Health Care      5.63  
Industrials      2.24  
Money Market Funds Plus Other Assets Less Liabilities      0.06  

 

 

  4  

 


 

Invesco ESG NASDAQ 100 ETF (QQMG) (continued)

 

Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of August 31, 2022
 
Security   
Apple, Inc.      15.31  
Microsoft Corp.      13.94  
NVIDIA Corp.      4.14  
Amazon.com, Inc.      3.61  
Alphabet, Inc., Class C      3.07  
Alphabet, Inc., Class A      2.92  
Tesla, Inc.      2.81  
PepsiCo, Inc.      2.71  
Cisco Systems, Inc.      2.48  
Adobe, Inc.      2.30  
Total      53.29  

 

*

Excluding money market fund holdings.

Growth of a $10,000 Investment Since Inception

 

LOGO

Fund Performance History as of August 31, 2022

 

    Fund Inception  
Index   Cumulative  
Nasdaq-100® ESG Index     (20.50 )% 
Nasdaq Composite® Total Return Index     (21.92
Fund  
NAV Return     (20.63
Market Price Return     (20.54

 

 

  5  

 


 

Invesco ESG NASDAQ 100 ETF (QQMG) (continued)

 

Fund Inception: October 27, 2021

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, 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 0.20% 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:

 

-

Cumulative Inception returns for the Fund, Index and Benchmark Indexes are based on the inception date of the Fund.

 

 

  6  

 


 

 

QQJG    Management’s Discussion of Fund Performance
   Invesco ESG NASDAQ Next Gen 100 ETF (QQJG)

 

As an index fund, the Invesco ESG NASDAQ Next Gen 100 ETF (the “Fund”) seeks to track the investment results (before fees and expenses) of the Nasdaq Next Generation 100 ESG Index® (the “Index”). The Fund generally will invest at least 90% of its total assets in the securities that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Nasdaq, Inc. (“Nasdaq” or the “Index Provider”) compiles, maintains and calculates the Index, which is designed to measure the performance of companies included in the Nasdaq Next Generation 100 Index® (the “Parent Index”) that also meet the Index Provider’s environmental, social and governance (“ESG”) criteria. The Parent Index is comprised of securities of the next generation of Nasdaq-listed non-financial companies; that is, the largest 100 Nasdaq-listed companies outside of the Nasdaq-100 Index® (the “Nasdaq-100”) based on market capitalization.

To be eligible for inclusion in the Parent Index, a security must meet the existing eligibility criteria of the Nasdaq-100, an index that measures the performance of 100 of the largest domestic and international nonfinancial companies by market capitalization on The Nasdaq Stock Market LLC. Securities meeting the Nasdaq-100 eligibility criteria are ranked by market capitalization, with the largest 100 securities not currently in the Nasdaq-100 selected for inclusion in the Parent Index. Security types generally eligible for inclusion in the Parent Index are common stocks and tracking stocks of companies located in the United States, as well as American depositary receipts (“ADRs”) that represent securities of non-U.S. issuers. The Parent Index reflects companies from all major sectors, except for companies that are classified as “financials” according to the Industry Classification Benchmark. Companies organized as real estate investment trusts (“REITs”) are not eligible for inclusion in the Parent Index.

Companies that are included in the Parent Index are evaluated for inclusion in the Index on the basis of the Index Provider’s ESG criteria, which considers a company’s (i) business activities, (ii) business controversy levels and ESG risk ratings, and (iii) adherence to the principles of the United Nations Global Compact.

The Index employs negative screens to exclude securities of companies with business activities that do not meet the eligibility criteria for the Index. Such screens rely on information from Sustainalytics, a globally-recognized independent provider of ESG research, ratings, and data. Companies’ business activities are distinguished between categories with absolute prohibitions (which do not allow any involvement by a company in a certain business activity) and categories that permit a de minimis amount of a certain business activity (generally, permitting a company to derive less than 5% of its revenues from, or to own less than 10% of another company that engages in, such activity). The Fund generally will invest in all of the securities comprising the Index in proportion to their weightings in the Index.

During the fiscal period from the Fund’s inception (October 27, 2021, the first day of trading on the exchange) through August 31, 2022, on a market price basis, the Fund returned (23.05)%. On a net asset value (“NAV”) basis, the Fund returned (23.10)%. During the same time period, the Index returned (22.96)%. During the fiscal period, the Fund fully replicated the components of the Index; the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to the fees and expenses that the Fund incurred during the period.

During this same time period, the Nasdaq Composite® Total Return Index (the “Benchmark Index”) returned (21.92)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 3,400 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparisons are a useful measure for investors as broad representations of the overall U.S. stock market.

Relative to the Benchmark Index, the majority of the Fund’s underperformance during the period can be attributed to security selection within the information technology and communication services sectors, respectively.

For the fiscal period ended August 31, 2022, no sector contributed to the Fund’s return. The information technology sector detracted most significantly from the Fund’s return during the period, followed by the communication services and health care sectors, respectively.

Positions that contributed most significantly to the Fund’s return for the fiscal period ended August 31, 2022, included Enphase Energy, Inc., an information technology company (portfolio average weight of 1.19%) and ON Semiconductor Corp., an information technology company (portfolio average weight of 1.47%). Positions that detracted most significantly from the Fund’s return during the period included Zebra Technologies Corp., Class A, an information technology company (portfolio average weight of 2.46%) and Roku, Inc., Class A, a communication services company (portfolio average weight of 0.77%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of August 31, 2022
 
Information Technology      43.68  
Health Care      16.28  
Consumer Discretionary      13.83  
Communication Services      13.16  
Industrials      8.96  
Sector Types Each Less Than 3%      4.02  
Money Market Funds Plus Other Assets Less Liabilities      0.07  

 

 

  7  

 


 

Invesco ESG NASDAQ Next Gen 100 ETF (QQJG) (continued)

 

Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of August 31, 2022
 
Security   
CDW Corp.      3.29  
Coca-Cola Europacific Partners PLC      2.67  
Tractor Supply Co.      2.51  
Ulta Beauty, Inc.      2.41  
Take-Two Interactive Software, Inc.      2.39  
ICON PLC      2.29  
J.B. Hunt Transport Services, Inc.      2.17  
Zebra Technologies Corp., Class A      1.99  
Trimble, Inc.      1.99  
Enphase Energy, Inc.      1.97  
Total      23.68  

 

*

Excluding money market fund holdings.

Growth of a $10,000 Investment Since Inception

 

LOGO

Fund Performance History as of August 31, 2022

 

    Fund Inception  
Index   Cumulative  
Nasdaq Next Generation 100 ESG Index®     (22.96 )% 
Nasdaq Composite® Total Return Index     (21.92
Fund  
NAV Return     (23.10
Market Price Return     (23.05

 

 

  8  

 


 

Invesco ESG NASDAQ Next Gen 100 ETF (QQJG) (continued)

 

Fund Inception: October 27, 2021

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, 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 0.20% 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:

 

-

Cumulative Inception returns for the Fund, Index and Benchmark Indexes are based on the inception date of the Fund.

 

 

  9  

 


 

 

QQQM    Management’s Discussion of Fund Performance
   Invesco NASDAQ 100 ETF (QQQM)

 

As an index fund, the Invesco NASDAQ 100 ETF (the “Fund”) seeks to track the investment results (before fees and expenses) of the NASDAQ-100 Index® (the “Index”). The Fund generally will invest at least 90% of its total assets in the securities that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Nasdaq, Inc. (“Nasdaq” or the “Index Provider”) compiles, maintains and calculates the Index, which includes securities of 100 of the largest domestic and international nonfinancial companies listed on The Nasdaq Stock Market LLC based on market capitalization. Security types generally eligible for inclusion in the Index are common stocks, ordinary shares and tracking stocks, as well as American depositary receipts (“ADRs”) that represent securities of non-U.S. issuers. Companies organized as real estate investment trusts (“REITs”) are not eligible for inclusion in the Index.

The Index reflects companies from all major sectors, except for companies that are classified as “financials” according to the Industry Classification Benchmark. The Index weights its component securities using a “modified market capitalization-weighted” methodology, which is a hybrid between equal weighting and conventional capitalization weighting. Under this methodology, no component security may exceed 24% of the weight of the Index. The Fund generally will invest in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended August 31, 2022, on a market price basis, the Fund returned (20.61)%. On a net asset value (“NAV”) basis, the Fund returned (20.72)%. During the same time period, the Index returned (20.63)%. During the fiscal period, the Fund fully replicated the components of the Index; the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to the fees and expenses that the Fund incurred during the period, which were partially offset by income generated by the securities lending program in which the Fund participates.

During this same time period, the Nasdaq Composite® Total Return Index returned (21.99)% and the Russell 3000® Index returned (13.28)% (each, a “Benchmark Index” and, collectively the “Benchmark Indices”). The Benchmark Indices are unmanaged indices weighted by market capitalization and based on the average performance of approximately 3,400 securities and 3,000 securities, respectively. These Benchmark Indices were selected for their recognition in the marketplace, and their performance comparisons are a useful measure for investors as broad representations of the overall U.S. stock market.

Relative to the Nasdaq Composite® Total Return Index, the majority of the Fund’s outperformance during the period can be attributed to the Fund’s underweight allocation to and security selection within the health care sector.

Relative to the Russell 3000® Index, the majority of the Fund’s underperformance during the period can be attributed to the Fund’s overweight allocation to and security selection within the communication services sector.

For the fiscal year ended August 31, 2022, the consumer staples sector contributed most significantly to the Fund’s return, followed by the utilities sector. The information technology sector detracted most significantly from the Fund’s return during the period, followed by the communication services and consumer discretionary sectors, respectively.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2022, included Tesla, Inc., a consumer discretionary company (portfolio average weight of 4.52%) and PepsiCo, Inc., a consumer staples company (portfolio average weight of 1.77%). Positions that detracted most significantly from the Fund’s return during the period included Meta Platforms, Inc., Class A, a communication services company (portfolio average weight of 3.58%) and Amazon.com, Inc., a consumer discretionary company (portfolio average weight of 7.03%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of August 31, 2022
 
Information Technology      49.92  
Consumer Discretionary      16.41  
Communication Services      16.22  
Consumer Staples      6.47  
Health Care      5.96  
Industrials      3.42  
Utilities      1.43  
Money Market Funds Plus Other Assets Less Liabilities      0.17  
Top Ten Fund Holdings*

(% of the Fund’s Net Assets)
as of August 31, 2022
 
Security   
Apple, Inc.      13.54  
Microsoft Corp.      10.41  
Amazon.com, Inc.      6.86  
Tesla, Inc.      4.56  
Alphabet, Inc., Class C      3.65  
Alphabet, Inc., Class A      3.47  
Meta Platforms, Inc., Class A      2.98  
NVIDIA Corp.      2.83  
PepsiCo, Inc.      2.10  
Costco Wholesale Corp.      2.04  
Total      52.44  

 

*

Excluding money market fund holdings.

 

 

  10  

 


 

Invesco NASDAQ 100 ETF (QQQM) (continued)

 

Growth of a $10,000 Investment Since Inception

 

LOGO

Fund Performance History as of August 31, 2022

 

    1 Year           Fund Inception  
Index   Average
Annualized
    Cumulative  
NASDAQ-100® Index     (20.63 )%        1.59     3.02
Nasdaq Composite® Total Return Index     (21.99       0.50       0.95  
Russell 3000® Index     (13.28       7.20       13.97  
Fund        
NAV Return     (20.72       1.46       2.76  
Market Price Return     (20.61       1.47       2.79  

 

Fund Inception: October 13, 2020

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:

 

-

Average Annualized and Cumulative Inception returns for the Fund, Index and Benchmark Indexes are based on the inception date of the Fund.

 

 

  11  

 


 

 

QQQJ    Management’s Discussion of Fund Performance
   Invesco NASDAQ Next Gen 100 ETF (QQQJ)

 

As an index fund, the Invesco NASDAQ Next Gen 100 ETF (the “Fund”) seeks to track the investment results (before fees and expenses) of the NASDAQ Next Generation 100 Index® (the “Index”). The Fund generally will invest at least 90% of its total assets in the securities that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Nasdaq, Inc. (“Nasdaq” or the “Index Provider”) compiles, maintains and calculates the Index, which is comprised of securities of the next generation of Nasdaq-listed non-financial companies; that is, the largest 100 Nasdaq-listed companies outside of the NASDAQ-100 Index® (the “NASDAQ-100”) based on market capitalization.

To be eligible for inclusion in the Index, a security must meet the existing eligibility criteria of the NASDAQ-100, an index that measures the performance of 100 of the largest domestic and international nonfinancial companies by market capitalization on The Nasdaq Stock Market LLC. Securities meeting the NASDAQ-100 eligibility criteria are ranked by market capitalization, with approximately the largest 100 securities not currently in the NASDAQ-100 selected for inclusion in the Index.

Security types generally eligible for inclusion in the Index are common stocks, ordinary shares and tracking stocks, as well as American depositary receipts (“ADRs”) that represent securities of non-U.S. issuers. The Index may include companies from all major sectors, except for companies that are classified as “financials” according to the Industry Classification Benchmark. The Index may include Nasdaq-listed securities of both U.S. and foreign companies, including foreign companies located in emerging market countries. Companies organized as real estate investment trusts (“REITs”) are not eligible for inclusion in the Index.

The Index weights its component securities using a “modified market capitalization-weighted” methodology, which is a hybrid between equal weighting and conventional capitalization weighting. Under this methodology, no issuer may exceed 4% of the weight of the Index. The Fund generally will invest in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended August 31, 2022, on a market price basis, the Fund returned (27.93)%. On a net asset value (“NAV”) basis, the Fund returned (28.06)%. During the same time period, the Index returned (27.96)%. 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 the fees and expenses that the Fund incurred during the period.

During this same time period, the Nasdaq Composite® Total Return Index returned (21.99)% and the Russell 3000® Index returned (13.28)% (each, a “Benchmark Index” and, collectively the “Benchmark Indices”). The Benchmark Indices are unmanaged

indices weighted by market capitalization and based on the average performance of approximately 3,400 securities and 3,000 securities, respectively. These Benchmark Indices were selected for their recognition in the marketplace, and their performance comparisons are a useful measure for investors as broad representations of the overall U.S. stock market.

Relative to the Nasdaq Composite® Total Return Index, the majority of the Fund’s underperformance during the period can be attributed to security selection within the information technology and communication services sectors, respectively.

Relative to the Russell 3000® Index, the majority of the Fund’s underperformance during the period can be attributed to security selection within the health care and communication services sectors, respectively.

For the fiscal year ended August 31, 2022, the energy sector contributed most significantly to the Fund’s return, followed by the materials and utilities sectors, respectively. The information technology sector detracted most significantly from the Fund’s return during the period, followed by the communication services and health care sectors, respectively.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended August 31, 2022, included Enphase Energy, Inc., an information technology company (portfolio average weight of 1.79%) and ON Semiconductor Corp., an information technology company (portfolio average weight of 1.72%). Positions that detracted most significantly from the Fund’s return during the period included Roku, Inc., Class A, a communication services company (portfolio average weight of 1.29%) and Yandex N.V., Class A, a communication services company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of August 31, 2022
 
Information Technology      38.74  
Health Care      19.91  
Consumer Discretionary      12.80  
Communication Services      11.80  
Industrials      9.58  
Sector Types Each Less Than 3%      7.12  
Money Market Funds Plus Other Assets Less Liabilities      0.05  

 

 

  12  

 


 

Invesco NASDAQ Next Gen 100 ETF (QQQJ) (continued)

 

Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of August 31, 2022
 
Security   
Enphase Energy, Inc.      3.15  
ON Semiconductor Corp.      2.44  
Trade Desk, Inc. (The), Class A      2.26  
CoStar Group, Inc.      2.25  
Alnylam Pharmaceuticals, Inc.      2.04  
Diamondback Energy, Inc.      1.93  
CDW Corp.      1.88  
Coca-Cola Europacific Partners PLC      1.83  
MongoDB, Inc.      1.79  
Ulta Beauty, Inc.      1.78  
Total      21.35  

 

*

Excluding money market fund holdings.

Growth of a $10,000 Investment Since Inception

 

LOGO

Fund Performance History as of August 31, 2022

 

    1 Year           Fund Inception  
Index   Average
Annualized
    Cumulative  
NASDAQ Next Generation 100 Index®     (27.96 )%        (3.19 )%      (5.92 )% 
Nasdaq Composite® Total Return Index     (21.99       0.50       0.95  
Russell 3000® Index     (13.28       7.20       13.97  
Fund        
NAV Return     (28.06       (3.34     (6.20
Market Price Return     (27.93       (3.44     (6.37

 

 

  13  

 


 

Invesco NASDAQ Next Gen 100 ETF (QQQJ) (continued)

 

Fund Inception: October 13, 2020

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:

 

-

Average Annualized and Cumulative Inception returns for the Fund, Index and Benchmark Indexes are based on the inception date of the Fund.

 

 

  14  

 


 

 

Liquidity Risk Management Program

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), the Funds have adopted and implemented a liquidity risk management program (the “Program”). The Program is reasonably designed to assess and manage the Funds’ liquidity risk, which is the risk that the Funds could not meet redemption requests without significant dilution of remaining investors’ interests in the Funds. The Board of Trustees of the Funds (the “Board”) has appointed Invesco Capital Management LLC (“Invesco”), the Funds’ investment adviser, as the Program’s administrator, and Invesco has delegated oversight of the Program to the Liquidity Risk Management Committee (the “Committee”), which is composed of senior representatives from relevant business groups at Invesco and its affiliates.

As required by the Liquidity Rule, the Program includes policies and procedures providing for an assessment, no less frequently than annually, of the Funds’ liquidity risk that takes into account, as relevant to the Funds’ liquidity risk: (1) each Fund’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Funds during both normal and reasonably foreseeable stressed conditions; (3) each Fund’s holdings of cash and cash equivalents and any borrowing arrangements; (4) the relationship between the Funds’ portfolio liquidity and the way in which, and the prices and spreads at which, Fund shares trade, including the efficiency of the arbitrage function and the level of active participation by market participants, including authorized participants; and (5) the effect of the composition of baskets on the overall liquidity of each Fund’s portfolio. The Liquidity Rule also requires the classification of each Fund’s investments into categories that reflect the assessment of their relative liquidity under current market conditions. Each Fund classifies its investments into one of four categories defined in the Liquidity Rule: “Highly Liquid,” “Moderately Liquid,” “Less Liquid,” and “Illiquid.” Funds that are not invested primarily in “Highly Liquid Investments” that are assets (cash or investments that are reasonably expected to be convertible into cash within three business days without significantly changing the market value of the investment) are required to establish a “Highly Liquid Investment Minimum” (“HLIM”), which is the minimum percentage of net assets that must be invested in Highly Liquid Investments. Funds with HLIMs have procedures for addressing HLIM shortfalls, including reporting to the Board and the SEC (on a non-public basis) as required by the Program and the Liquidity Rule. In addition, a Fund may not acquire an investment if, immediately after the acquisition, over 15% of such Fund’s net assets would consist of “Illiquid Investments” that are assets (an investment that cannot reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment). The Liquidity Rule and the Program also require reporting to the Board and the SEC (on a non-public basis) if a Fund’s holdings of Illiquid Investments exceed 15% of such Fund’s assets.

At a meeting held on March 15, 2022, the Committee presented a report to the Board that addressed the operation of the Program and assessed the Program’s adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2021 through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Funds and the overall market. The Report noted that there were no material changes to the Program during the Program Reporting Period.

The Report stated, in relevant part, that during the Program Reporting Period:

 

 

The Program, as adopted and implemented, remained reasonably designed to assess and manage the Funds’ liquidity risk and was operated effectively to achieve that goal;

 

 

Each Fund’s investment strategy remained appropriate for an open-end fund;

 

 

Each Fund was able to meet requests for redemption without significant dilution of remaining investors’ interests in the Fund;

 

 

The Funds did not breach the 15% limit on Illiquid Investments; and

 

 

The Funds primarily held Highly Liquid Investments and therefore have not adopted an HLIM.

 

    15    

 

 

 

 


 

Invesco ESG NASDAQ 100 ETF (QQMG)

August 31, 2022

Schedule of Investments(a)

 

       Shares     Value  

Common Stocks & Other Equity Interests-99.94%

 

Communication Services-13.37%

 

Activision Blizzard, Inc.

     769      $ 60,359  

Alphabet, Inc., Class A(b)

     2,688       290,895  

Alphabet, Inc., Class C(b)

     2,800       305,620  

Baidu, Inc., ADR (China)(b)

     197       28,362  

Charter Communications, Inc., Class A(b)

     108       44,564  

Comcast Corp., Class A

     3,236       117,111  

Electronic Arts, Inc.

     391       49,606  

Match Group, Inc.(b)

     274       15,489  

Meta Platforms, Inc., Class A(b)

     738       120,242  

NetEase, Inc., ADR (China)

     214       18,941  

Netflix, Inc.(b)

     508       113,569  

Sirius XM Holdings, Inc.(c)

     4,284       26,090  

T-Mobile US, Inc.(b)

     974       140,217  
    

 

 

 
         1,331,065  
    

 

 

 

Consumer Discretionary-11.29%

 

Airbnb, Inc., Class A(b)

     265       29,977  

Amazon.com, Inc.(b)

     2,833       359,139  

Booking Holdings, Inc.(b)

     34       63,778  

Dollar Tree, Inc.(b)

     264       35,820  

eBay, Inc.

     605       26,699  

JD.com, Inc., ADR (China)(c)

     293       18,603  

Lucid Group, Inc.(b)(c)

     718       11,014  

lululemon athletica, inc.(b)

     138       41,394  

Marriott International, Inc., Class A

     280       43,047  

MercadoLibre, Inc. (Brazil)(b)

     43       36,780  

O’Reilly Automotive, Inc.(b)

     84       58,558  

Pinduoduo, Inc., ADR (China)(b)

     226       16,114  

Ross Stores, Inc.

     396       34,163  

Starbucks Corp.

     821       69,021  

Tesla, Inc.(b)

     1,014       279,469  
    

 

 

 
       1,123,576  
    

 

 

 

Consumer Staples-6.23%

 

Costco Wholesale Corp.

     328       171,249  

Keurig Dr Pepper, Inc.

     1,224       46,659  

Kraft Heinz Co. (The)

     265       9,911  

Mondelez International, Inc., Class A

     1,063       65,757  

Monster Beverage Corp.(b)

     293       26,027  

PepsiCo, Inc.

     1,569       270,292  

Walgreens Boots Alliance, Inc.

     881       30,888  
    

 

 

 
       620,783  
    

 

 

 

Health Care-5.63%

 

Align Technology, Inc.(b)

     77       18,765  

Amgen, Inc.

     479       115,104  

AstraZeneca PLC, ADR (United Kingdom)

     471       29,381  

Biogen, Inc.(b)

     131       25,595  

DexCom, Inc.(b)

     281       23,101  

Gilead Sciences, Inc.

     1,060       67,278  

IDEXX Laboratories, Inc.(b)

     77       26,767  

Illumina, Inc.(b)

     215       43,352  

Intuitive Surgical, Inc.(b)

     275       56,578  

Moderna, Inc.(b)

     182       24,073  

Regeneron Pharmaceuticals, Inc.(b)

     99       57,525  

Seagen, Inc.(b)

     109       16,818  

Vertex Pharmaceuticals, Inc.(b)

     201       56,634  
    

 

 

 
       560,971  
    

 

 

 
       Shares     Value  

Industrials-2.24%

 

Cintas Corp.

     90      $ 36,615  

Copart, Inc.(b)

     245       29,314  

CSX Corp.

     2,026       64,123  

Fastenal Co.

     369       18,572  

Old Dominion Freight Line, Inc.

     110       29,855  

PACCAR, Inc.

     192       16,802  

Verisk Analytics, Inc.

     149       27,887  
    

 

 

 
            223,168  
    

 

 

 

Information Technology-61.18%

 

Adobe, Inc.(b)

     614       229,292  

Advanced Micro Devices, Inc.(b)

     1,532       130,021  

ANSYS, Inc.(b)

     110       27,313  

Apple, Inc.

     9,693       1,523,933  

Applied Materials, Inc.

     1,167       109,780  

ASML Holding N.V., New York Shares (Netherlands)

     114       55,853  

Atlassian Corp. PLC, Class A(b)

     143       35,415  

Autodesk, Inc.(b)

     246       49,628  

Automatic Data Processing, Inc.

     513       125,382  

Broadcom, Inc.

     339       169,198  

Cadence Design Systems, Inc.(b)

     350       60,820  

Cisco Systems, Inc.

     5,519       246,810  

Cognizant Technology Solutions Corp., Class A

     560       35,375  

Crowdstrike Holdings, Inc., Class A(b)

     224       40,905  

Datadog, Inc., Class A(b)

     248       26,028  

DocuSign, Inc.(b)

     202       11,760  

Fiserv, Inc.(b)

     661       66,887  

Fortinet, Inc.(b)

     790       38,465  

Intel Corp.

     4,501       143,672  

Intuit, Inc.

     317       136,874  

KLA Corp.

     163       56,093  

Lam Research Corp.

     172       75,321  

Marvell Technology, Inc.

     797       37,316  

Microchip Technology, Inc.

     236       15,399  

Micron Technology, Inc.

     1,188       67,158  

Microsoft Corp.

     5,307       1,387,621  

NVIDIA Corp.

     2,730       412,066  

NXP Semiconductors N.V. (China)

     228       37,524  

Okta, Inc.(b)

     165       15,081  

Palo Alto Networks, Inc.(b)

     121       67,374  

Paychex, Inc.

     382       47,116  

PayPal Holdings, Inc.(b)

     1,289       120,444  

QUALCOMM, Inc.

     1,237       163,618  

Skyworks Solutions, Inc.

     54       5,322  

Splunk, Inc.(b)

     168       15,125  

Synopsys, Inc.(b)

     192       66,436  

Texas Instruments, Inc.

     858       141,750  

VeriSign, Inc.(b)

     96       17,493  

Workday, Inc., Class A(b)

     253       41,634  

Zoom Video Communications, Inc., Class A(b)

     248       19,939  

Zscaler, Inc.(b)(c)

     110       17,516  
    

 

 

 
       6,090,757  
    

 

 

 

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.94%
(Cost $12,336,255)

 

    9,950,320  
    

 

 

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    16    

 

 

 

 


 

Invesco ESG NASDAQ 100 ETF (QQMG)–(continued)

August 31, 2022

    

 

       Shares     Value  
Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds-0.74%

 

Invesco Private Government Fund,
2.29%(d)(e)(f)

     20,569      $ 20,569  

Invesco Private Prime Fund, 2.37%(d)(e)(f)

     52,886       52,891  
    

 

 

 

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $73,460)

 

    73,460  
    

 

 

 

TOTAL INVESTMENTS IN SECURITIES-100.68%
(Cost $12,409,715)

 

    10,023,780  

OTHER ASSETS LESS LIABILITIES-(0.68)%

       (67,829
    

 

 

 

NET ASSETS-100.00%

     $ 9,955,951  
    

 

 

 

Investment Abbreviations:

ADR-American Depositary Receipt

Notes to Schedule of Investments:

(a) 

Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

(b) 

Non-income producing security.

(c) 

All or a portion of this security was out on loan at August 31, 2022.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended August 31, 2022.

 

     Value
August 31,  2021
   Purchases
at Cost
   Proceeds
from  Sales
  Change  in
Unrealized
Appreciation
   Realized
Gain
(Loss)
  Value
August 31,  2022
   Dividend
Income
Investments in Affiliated Money Market Funds:                                 
Invesco Government & Agency Portfolio, Institutional Class      $ -      $ 94,726      $ (94,726 )     $ -      $ -     $ -      $ 28
Investments Purchased with Cash Collateral from Securities on Loan:                                 
Invesco Private Government Fund        -        350,152        (329,583 )       -        -       20,569        123 *
Invesco Private Prime Fund        -        781,546        (728,641 )       -        (14 )       52,891        337 *
    

 

 

      

 

 

      

 

 

     

 

 

      

 

 

     

 

 

      

 

 

 
Total      $ -      $ 1,226,424      $ (1,152,950 )     $ -      $ (14 )     $ 73,460      $ 488
    

 

 

      

 

 

      

 

 

     

 

 

      

 

 

     

 

 

      

 

 

 

 

*

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statements of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of August 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2I.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    17    

 

 

 

 


 

Invesco ESG NASDAQ Next Gen 100 ETF (QQJG)

August 31, 2022

Schedule of Investments(a)

 

       Shares     Value  

Common Stocks & Other Equity Interests-99.93%

 

Communication Services-13.16%

 

 

Bilibili, Inc., ADR (China)(b)(c)

     187      $ 4,668  

DISH Network Corp., Class A(b)(c)

     697       12,093  

Fox Corp., Class A

     1,055       36,060  

Fox Corp., Class B

     829       26,213  

IAC, Inc.(b)

     185       11,890  

Liberty Broadband Corp., Class C(b)

     318       32,341  

Liberty Global PLC, Class A
(United Kingdom)(b)

     372       7,514  

Liberty Global PLC, Class C
(United Kingdom)(b)

     673            14,342  

Liberty Media Corp.-Liberty Formula One, Class C(b)

     611       38,908  

News Corp., Class A

     1,457       24,652  

News Corp., Class B

     739       12,740  

Paramount Global, Class B

     1,944       45,470  

Roku, Inc., Class A(b)

     158       10,744  

Take-Two Interactive Software, Inc.(b)

     550       67,408  

ZoomInfo Technologies, Inc., Class A(b)

     569       25,844  
    

 

 

 
       370,887  
    

 

 

 

Consumer Discretionary-13.83%

 

 

Etsy, Inc.(b)

     293       30,944  

Expedia Group, Inc.(b)

     288       29,563  

Hasbro, Inc.

     539       42,484  

Li Auto, Inc., ADR (China)(b)

     728       20,945  

LKQ Corp.

     1,001       53,273  

Pool Corp.

     141       47,826  

Tractor Supply Co.

     383       70,912  

Trip.com Group Ltd., ADR (China)(b)

     1,013       26,054  

Ulta Beauty, Inc.(b)

     162       68,019  
    

 

 

 
       390,020  
    

 

 

 

Consumer Staples-2.67%

 

 

Coca-Cola Europacific Partners PLC (United Kingdom)

     1,530       75,230  
    

 

 

 

Health Care-16.28%

 

 

10X Genomics, Inc., Class A(b)(c)

     212       6,994  

Alnylam Pharmaceuticals, Inc.(b)

     164       33,894  

BeiGene Ltd., ADR (China)(b)(c)

     84       14,419  

BioMarin Pharmaceutical, Inc.(b)

     337       30,060  

Bio-Techne Corp.

     113       37,495  

Bruker Corp.

     373       20,888  

DENTSPLY SIRONA, Inc.

     677       22,185  

Guardant Health, Inc.(b)

     185       9,261  

Hologic, Inc.(b)

     372       25,132  

Horizon Therapeutics PLC(b)

     145       8,586  

ICON PLC(b)

     308       64,628  

Incyte Corp.(b)

     468       32,961  

Insulet Corp.(b)

     131       33,467  

Masimo Corp.(b)

     53       7,785  

Novavax, Inc.(b)(c)

     60       1,982  

Repligen Corp.(b)

     191       41,900  

Royalty Pharma PLC, Class A

     601       25,128  

Sanofi, ADR (France)

     668       27,408  

Viatris, Inc.

     1,553       14,831  
    

 

 

 
       459,004  
    

 

 

 

Industrials-8.96%

 

 

American Airlines Group, Inc.(b)

     912       11,847  

C.H. Robinson Worldwide, Inc.

     335       38,240  
       Shares     Value  

Industrials-(continued)

 

 

CoStar Group, Inc.(b)

     689      $ 47,982  

Expeditors International of Washington, Inc.

     520       53,503  

J.B. Hunt Transport Services, Inc.

     351       61,081  

Lyft, Inc., Class A(b)(c)

     698       10,281  

Sunrun, Inc.(b)(c)

     457       15,095  

United Airlines Holdings, Inc.(b)

     419       14,669  
    

 

 

 
       252,698  
    

 

 

 

Information Technology-43.68%

 

 

Affirm Holdings, Inc.(b)(c)

     475       11,129  

Akamai Technologies, Inc.(b)

     426       38,459  

Bentley Systems, Inc., Class B

     853       31,365  

CDW Corp.

     544       92,861  

Check Point Software Technologies Ltd.
(Israel)(b)

     283       34,028  

Cognex Corp.

     570       24,003  

Coupa Software, Inc.(b)(c)

     204       11,914  

Enphase Energy, Inc.(b)

     194       55,569  

Entegris, Inc.

     306       29,033  

F5, Inc.(b)

     164       25,758  

First Solar, Inc.(b)

     299       38,137  

Jack Henry & Associates, Inc.

     234       44,975  

Logitech International S.A., Class R (Switzerland)

     588       29,559  

Manhattan Associates, Inc.(b)

     167       23,590  

Monday.com Ltd.(b)

     124       14,099  

MongoDB, Inc.(b)

     166       53,595  

Monolithic Power Systems, Inc.

     116       52,569  

NetApp, Inc.

     710       51,212  

NortonLifeLock, Inc.

     1,873       42,311  

ON Semiconductor Corp.(b)

     785       53,985  

Open Text Corp. (Canada)

     803       25,278  

Paylocity Holding Corp.(b)

     133       32,053  

PTC, Inc.(b)

     316       36,305  

Qorvo, Inc.(b)

     151       13,557  

Seagate Technology Holdings PLC

     761       50,957  

SolarEdge Technologies, Inc.(b)(c)

     114       31,461  

SS&C Technologies Holdings, Inc.

     590       32,898  

Teradyne, Inc.

     444       37,580  

Trade Desk, Inc. (The), Class A(b)

     839       52,605  

Trimble, Inc.(b)

     887       56,103  

Western Digital Corp.(b)

     1,142       48,261  

Zebra Technologies Corp., Class A(b)

     186       56,105  
    

 

 

 
       1,231,314  
    

 

 

 

Materials-0.40%

 

 

Steel Dynamics, Inc.

     140       11,301  
    

 

 

 

Real Estate-0.95%

 

 

Opendoor Technologies, Inc.(b)

     2,407       10,423  

Zillow Group, Inc., Class A(b)(c)

     122       4,075  

Zillow Group, Inc., Class C(b)(c)

     368       12,313  
    

 

 

 
       26,811  
    

 

 

 

Total Common Stocks & Other Equity Interests
(Cost $3,435,290)

 

    2,817,265  
    

 

 

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    18    

 

 

 

 


 

Invesco ESG NASDAQ Next Gen 100 ETF (QQJG)–(continued)

August 31, 2022

    

 

       Shares     Value  

Money Market Funds-0.01%

 

Invesco Government & Agency Portfolio, Institutional Class, 2.22%(d)(e)
(Cost $279)

     279      $ 279  
    

 

 

 

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.94%
(Cost $3,435,569)

       2,817,544  
    

 

 

 
Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds-4.86%

 

Invesco Private Government Fund, 2.29%(d)(e)(f)

     38,307       38,307  
       Shares      Value  

Money Market Funds-(continued)

 

Invesco Private Prime Fund, 2.37%(d)(e)(f)

     98,494      $ 98,504  
     

 

 

 

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $136,808)

 

     136,811  
     

 

 

 

TOTAL INVESTMENTS IN SECURITIES-104.80%
(Cost $3,572,377)

 

     2,954,355  

OTHER ASSETS LESS LIABILITIES-(4.80)%

 

     (135,196
     

 

 

 

NET ASSETS-100.00%

 

   $ 2,819,159  
     

 

 

 

Investment Abbreviations:

ADR-American Depositary Receipt

Notes to Schedule of Investments:

(a) 

Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

(b) 

Non-income producing security.

(c) 

All or a portion of this security was out on loan at August 31, 2022.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended August 31, 2022.

 

     Value
August 31,  2021
   Purchases
at Cost
   Proceeds
from  Sales
  Change  in
Unrealized
Appreciation
   Realized
Gain
   Value
August 31,  2022
   Dividend
Income
Investments in Affiliated Money Market Funds:                                  
Invesco Government & Agency Portfolio, Institutional Class      $ -      $ 40,685      $ (40,406 )     $ -      $ -      $ 279      $ 5
Investments Purchased with Cash Collateral from Securities on Loan:                                  
Invesco Private Government Fund        -        434,534        (396,227 )       -        -        38,307        177 *
Invesco Private Prime Fund        -        856,535        (758,058 )       3        24        98,504        482 *
    

 

 

      

 

 

      

 

 

     

 

 

      

 

 

      

 

 

      

 

 

 
Total      $ -      $ 1,331,754      $ (1,194,691 )     $ 3      $ 24      $ 137,090      $ 664
    

 

 

      

 

 

      

 

 

     

 

 

      

 

 

      

 

 

      

 

 

 

 

*

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statements of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of August 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2I.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    19    

 

 

 

 


 

Invesco NASDAQ 100 ETF (QQQM)

August 31, 2022

Schedule of Investments(a)

 

          Shares         Value  

Common Stocks & Other Equity Interests-99.83%

 

Communication Services-16.22%

 

Activision Blizzard, Inc.

     339,242      $ 26,627,105  

Alphabet, Inc., Class A(b)

     1,574,760        170,420,527  

Alphabet, Inc., Class C(b)

     1,641,268        179,144,402  

Baidu, Inc., ADR (China)(b)

     93,478        13,458,028  

Charter Communications, Inc., Class A(b)

     72,674        29,987,473  

Comcast Corp., Class A

     1,939,703        70,197,851  

Electronic Arts, Inc.

     121,170        15,372,838  

Match Group, Inc.(b)

     123,883        7,003,106  

Meta Platforms, Inc., Class A(b)

     898,113        146,329,551  

NetEase, Inc., ADR (China)

     78,975        6,990,077  

Netflix, Inc.(b)

     192,573        43,051,620  

Sirius XM Holdings, Inc.(c)

     1,707,879        10,400,983  

T-Mobile US, Inc.(b)

     543,748        78,277,962  
     

 

 

 
           797,261,523  
     

 

 

 

Consumer Discretionary-16.41%

 

Airbnb, Inc., Class A(b)

     166,132        18,792,852  

Amazon.com, Inc.(b)

     2,661,021        337,337,632  

Booking Holdings, Inc.(b)

     17,363        32,569,689  

Dollar Tree, Inc.(b)(c)

     97,171        13,184,161  

eBay, Inc.

     242,991        10,723,193  

JD.com, Inc., ADR (China)(c)

     219,818        13,956,245  

Lucid Group, Inc.(b)(c)

     723,463        11,097,922  

lululemon athletica, inc.(b)

     53,066        15,917,677  

Marriott International, Inc., Class A

     142,272        21,872,897  

MercadoLibre, Inc. (Brazil)(b)

     21,558        18,439,851  

O’Reilly Automotive, Inc.(b)

     28,425        19,815,636  

Pinduoduo, Inc., ADR (China)(b)(c)

     192,187        13,702,933  

Ross Stores, Inc.

     152,335        13,141,941  

Starbucks Corp.

     497,816        41,851,391  

Tesla, Inc.(b)

     813,027        224,078,372  
     

 

 

 
        806,482,392  
     

 

 

 

Consumer Staples-6.47%

 

Costco Wholesale Corp.

     192,190        100,342,399  

Keurig Dr Pepper, Inc.

     615,343        23,456,875  

Kraft Heinz Co. (The)

     531,044        19,861,046  

Mondelez International, Inc., Class A

     600,192        37,127,877  

Monster Beverage Corp.(b)

     230,077        20,437,740  

PepsiCo, Inc.

     599,739        103,317,038  

Walgreens Boots Alliance, Inc.

     374,834        13,141,680  
     

 

 

 
        317,684,655  
     

 

 

 

Health Care-5.96%

 

Align Technology, Inc.(b)

     34,465        8,399,121  

Amgen, Inc.

     231,731        55,684,959  

AstraZeneca PLC, ADR (United Kingdom)(c)

     250,842        15,647,524  

Biogen, Inc.(b)

     63,592        12,424,605  

DexCom, Inc.(b)

     170,507        14,017,381  

Gilead Sciences, Inc.

     544,014        34,528,569  

IDEXX Laboratories, Inc.(b)

     36,365        12,641,201  

Illumina, Inc.(b)

     68,113        13,734,305  

Intuitive Surgical, Inc.(b)

     155,729        32,039,684  

Moderna, Inc.(b)

     172,427        22,806,919  

Regeneron Pharmaceuticals, Inc.(b)

     47,032        27,328,414  

Seagen, Inc.(b)

     79,859        12,321,445  

Vertex Pharmaceuticals, Inc.(b)

     111,091        31,301,000  
     

 

 

 
        292,875,127  
     

 

 

 
          Shares         Value  

Industrials-3.42%

 

Cintas Corp.

     44,319      $ 18,030,742  

Copart, Inc.(b)

     103,223        12,350,632  

CSX Corp.

     943,153        29,850,792  

Fastenal Co.(c)

     250,011        12,583,054  

Honeywell International, Inc.

     295,353        55,925,090  

Old Dominion Freight Line, Inc.

     48,978        13,293,119  

PACCAR, Inc.

     150,980        13,212,260  

Verisk Analytics, Inc.(c)

     68,406        12,802,867  
     

 

 

 
        168,048,556  
     

 

 

 

Information Technology-49.92%

 

Adobe, Inc.(b)

     204,777        76,471,923  

Advanced Micro Devices, Inc.(b)

     702,998        59,663,440  

Analog Devices, Inc.

     225,842        34,221,838  

ANSYS, Inc.(b)

     37,455        9,300,077  

Apple, Inc.

     4,233,041        665,518,706  

Applied Materials, Inc.

     377,720        35,532,120  

ASML Holding N.V., New York Shares (Netherlands)(c)

     36,970        18,113,082  

Atlassian Corp. PLC, Class A(b)(c)

     62,327        15,435,905  

Autodesk, Inc.(b)

     94,602        19,085,008  

Automatic Data Processing, Inc.

     180,991        44,236,010  

Broadcom, Inc.

     176,902        88,293,557  

Cadence Design Systems, Inc.(b)

     119,660        20,793,318  

Cisco Systems, Inc.

     1,796,588        80,343,415  

Cognizant Technology Solutions Corp., Class A

     226,342        14,298,024  

Crowdstrike Holdings, Inc., Class A(b)(c)

     92,448        16,881,929  

Datadog, Inc., Class A(b)

     122,975        12,906,226  

DocuSign, Inc.(b)

     86,903        5,059,493  

Fiserv, Inc.(b)

     280,286        28,362,140  

Fortinet, Inc.(b)

     347,981        16,943,195  

Intel Corp.

     1,774,431        56,639,838  

Intuit, Inc.

     122,598        52,935,365  

KLA Corp.

     64,609        22,233,895  

Lam Research Corp.

     60,135        26,333,718  

Marvell Technology, Inc.

     368,525        17,254,341  

Microchip Technology, Inc.

     240,409        15,686,687  

Micron Technology, Inc.

     484,269        27,375,727  

Microsoft Corp.

     1,955,887        511,405,774  

NVIDIA Corp.

     920,395        138,924,421  

NXP Semiconductors N.V. (China)

     114,209        18,796,517  

Okta, Inc.(b)(c)

     65,162        5,955,807  

Palo Alto Networks, Inc.(b)(c)

     43,336        24,129,918  

Paychex, Inc.

     156,482        19,300,490  

PayPal Holdings, Inc.(b)

     502,517        46,955,189  

QUALCOMM, Inc.

     486,097        64,296,050  

Skyworks Solutions, Inc.

     69,531        6,852,280  

Splunk, Inc.(b)(c)

     69,521        6,258,976  

Synopsys, Inc.(b)

     66,604        23,046,316  

Texas Instruments, Inc.

     399,939        66,073,922  

VeriSign, Inc.(b)

     47,587        8,671,303  

Workday, Inc., Class A(b)

     86,573        14,246,453  

Zoom Video Communications, Inc., Class A(b)(c)

     108,980        8,761,992  

Zscaler, Inc.(b)(c)

     61,001        9,713,799  
     

 

 

 
        2,453,308,184  
     

 

 

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    20    

 

 

 

 


 

Invesco NASDAQ 100 ETF (QQQM)–(continued)

August 31, 2022

    

 

          Shares         Value  

Utilities-1.43%

 

American Electric Power Co., Inc.

     222,924      $ 22,336,985  

Constellation Energy Corp.

     141,363        11,533,807  

Exelon Corp.

     425,569        18,686,735  

Xcel Energy, Inc.

     236,181        17,536,439  
     

 

 

 
        70,093,966  
     

 

 

 

Total Common Stocks & Other Equity Interests
(Cost $5,925,975,224)

 

     4,905,754,403  
     

 

 

 

Money Market Funds-0.08%

 

Invesco Government & Agency Portfolio, Institutional Class,
2.22%(d)(e)
(Cost $3,899,314)

     3,899,314        3,899,314  
     

 

 

 

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.91%
(Cost $5,929,874,538)

 

     4,909,653,717  
     

 

 

 
          Shares         Value  
Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds-1.52%

 

Invesco Private Government Fund, 2.29%(d)(e)(f)

     20,827,857      $ 20,827,857  

Invesco Private Prime Fund,
2.37%(d)(e)(f)

     53,551,992        53,557,349  
     

 

 

 

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $74,382,068)

 

     74,385,206  
     

 

 

 

TOTAL INVESTMENTS IN SECURITIES-101.43%
(Cost $6,004,256,606)

 

     4,984,038,923  

OTHER ASSETS LESS LIABILITIES-(1.43)%

 

     (70,025,694
     

 

 

 

NET ASSETS-100.00%

 

   $ 4,914,013,229  
     

 

 

 

Investment Abbreviations:

ADR-American Depositary Receipt

Notes to Schedule of Investments:

(a) 

Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

(b) 

Non-income producing security.

(c) 

All or a portion of this security was out on loan at August 31, 2022.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended August 31, 2022.

 

    Value
August 31,  2021
    Purchases
at Cost
    Proceeds
from  Sales
    Change  in
Unrealized
Appreciation
    Realized
Gain
(Loss)
    Value
August 31,  2022
    Dividend
Income
 
Investments in Affiliated Money Market Funds:                          
Invesco Government & Agency Portfolio, Institutional Class              $ -                $ 30,973,889     $ (27,074,575              $ -                $ -       $ 3,899,314       $ 11,052  
Investments Purchased with Cash Collateral from Securities on Loan:                          
Invesco Private Government Fund       3,570,028         602,273,000       (585,015,171       -         -         20,827,857         187,252
Invesco Private Prime Fund       8,330,066         1,348,879,281       (1,303,603,514       3,138         (51,622       53,557,349         534,101
   

 

 

     

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Total     $ 11,900,094       $ 1,982,126,170     $ (1,915,693,260     $ 3,138       $ (51,622     $ 78,284,520       $ 732,405  
   

 

 

     

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

*

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statements of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of August 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2I.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    21    

 

 

 

 


 

Invesco NASDAQ Next Gen 100 ETF (QQQJ)

August 31, 2022

Schedule of Investments(a)

 

         Shares       Value  

Common Stocks & Other Equity Interests-99.95%

 

Communication Services-11.80%

 

Bilibili, Inc., ADR (China)(b)(c)

     101,450      $      2,532,192  

DISH Network Corp., Class A(b)(c)

     190,407       3,303,561  

Fox Corp., Class A

     203,551       6,957,373  

Fox Corp., Class B

     160,056       5,060,971  

IAC, Inc.(b)(c)

     54,913       3,529,259  

Liberty Broadband Corp., Class C(b)

     89,905       9,143,338  

Liberty Global PLC, Class A (United Kingdom)(b)

     114,388       2,310,638  

Liberty Global PLC, Class C (United Kingdom)(b)(c)

     206,815       4,407,228  

Liberty Media Corp.-Liberty Formula One, Class C(b)(c)

     134,419       8,559,802  

News Corp., Class A

     253,708       4,292,739  

News Corp., Class B(c)

     128,830       2,221,029  

Paramount Global, Class B(c)

     397,323       9,293,385  

Playtika Holding Corp.(b)

     269,331       2,836,055  

Roku, Inc., Class A(b)(c)

     78,274       5,322,632  

Take-Two Interactive Software, Inc.(b)

     105,780       12,964,397  

ZoomInfo Technologies, Inc., Class A(b)

     264,242       12,001,872  
    

 

 

 
       94,736,471  
    

 

 

 

Consumer Discretionary-12.80%

 

Caesars Entertainment, Inc.(b)(c)

     140,003       6,036,929  

DraftKings, Inc., Class A(b)(c)

     272,938       4,383,384  

Etsy, Inc.(b)(c)

     83,011       8,766,792  

Expedia Group, Inc.(b)

     98,981       10,160,400  

Hasbro, Inc.

     91,069       7,178,058  

Li Auto, Inc., ADR (China)(b)(c)

     276,039       7,941,642  

LKQ Corp.

     184,713       9,830,426  

PENN Entertainment, Inc.(b)(c)

     108,928       3,401,821  

Pool Corp.

     26,288       8,916,627  

Tractor Supply Co.

     73,058       13,526,689  

Trip.com Group Ltd., ADR (China)(b)

     326,521       8,398,120  

Ulta Beauty, Inc.(b)

     34,003       14,276,840  
    

 

 

 
       102,817,728  
    

 

 

 

Consumer Staples-1.83%

 

Coca-Cola Europacific Partners PLC (United Kingdom)(c)

     299,256       14,714,417  
    

 

 

 

Energy-1.93%

 

Diamondback Energy, Inc.

     116,261       15,495,266  
    

 

 

 

Health Care-19.91%

 

10X Genomics, Inc., Class A(b)(c)

     61,339       2,023,574  

Alnylam Pharmaceuticals, Inc.(b)

     79,164       16,360,824  

BeiGene Ltd., ADR (China)(b)(c)

     32,121       5,513,891  

BioMarin Pharmaceutical, Inc.(b)

     121,302       10,820,138  

BioNTech SE, ADR (Germany)

     57,545       8,323,309  

Bio-Techne Corp.

     25,621       8,501,304  

Bruker Corp.

     97,478       5,458,768  

DENTSPLY SIRONA, Inc.

     140,716       4,611,263  

Guardant Health, Inc.(b)(c)

     66,555       3,331,743  

Hologic, Inc.(b)

     163,499       11,045,992  

Horizon Therapeutics PLC(b)

     150,140       8,889,789  

ICON PLC(b)(c)

     53,314       11,186,877  

Incyte Corp.(b)

     144,653       10,187,911  

Insulet Corp.(b)

     45,284       11,568,704  

Masimo Corp.(b)

     36,253       5,325,203  
         Shares       Value  

Health Care-(continued)

 

Novavax, Inc.(b)(c)

     51,023      $ 1,685,800  

Repligen Corp.(b)(c)

     36,206       7,942,510  

Royalty Pharma PLC, Class A

     285,309       11,928,769  

Sanofi, ADR (France)

     185,933       7,628,831  

Viatris, Inc.

     791,754       7,561,251  
    

 

 

 
        159,896,451  
    

 

 

 

Industrials-9.58%

 

American Airlines Group, Inc.(b)(c)

     424,183       5,510,137  

Axon Enterprise, Inc.(b)(c)

     46,383       5,411,968  

C.H. Robinson Worldwide, Inc.

     83,108       9,486,778  

CoStar Group, Inc.(b)

     259,459       18,068,725  

Expeditors International of Washington, Inc.

     109,553       11,271,908  

J.B. Hunt Transport Services, Inc.

     68,672       11,950,302  

Lyft, Inc., Class A(b)(c)

     221,651       3,264,919  

Sunrun, Inc.(b)(c)

     137,228       4,532,641  

United Airlines Holdings, Inc.(b)

     213,379       7,470,399  
    

 

 

 
       76,967,777  
    

 

 

 

Information Technology-38.74%

 

Affirm Holdings, Inc.(b)(c)

     147,765       3,462,134  

Akamai Technologies, Inc.(b)

     105,166       9,494,387  

AppLovin Corp., Class A(b)(c)

     195,529       4,815,879  

Bentley Systems, Inc., Class B(c)

     180,198       6,625,880  

CDW Corp.

     88,522       15,110,705  

Check Point Software Technologies Ltd. (Israel)(b)

     83,665       10,059,880  

Cognex Corp.

     113,465       4,778,011  

Coupa Software, Inc.(b)(c)

     49,324       2,880,522  

Enphase Energy, Inc.(b)

     88,412       25,324,733  

Entegris, Inc.

     88,751       8,420,695  

F5, Inc.(b)

     39,497       6,203,399  

First Solar, Inc.(b)

     69,862       8,910,898  

Jack Henry & Associates, Inc.

     47,578       9,144,492  

Logitech International S.A., Class R (Switzerland)(c)

     107,556       5,406,840  

Manhattan Associates, Inc.(b)

     41,212       5,821,607  

Monday.com Ltd.(b)

     29,340       3,335,958  

MongoDB, Inc.(b)(c)

     44,443       14,348,867  

Monolithic Power Systems, Inc.

     30,596       13,865,495  

NetApp, Inc.

     145,331       10,482,725  

NortonLifeLock, Inc.

     378,827       8,557,702  

ON Semiconductor Corp.(b)

     284,469       19,562,933  

Open Text Corp. (Canada)

     176,658       5,561,194  

Paylocity Holding Corp.(b)

     36,003       8,676,723  

PTC, Inc.(b)

     76,386       8,775,988  

Qorvo, Inc.(b)

     69,252       6,217,445  

Seagate Technology Holdings PLC(c)

     143,520       9,610,099  

SolarEdge Technologies, Inc.(b)(c)

     36,318       10,022,678  

SS&C Technologies Holdings, Inc.

     166,400       9,278,464  

Teradyne, Inc.

     105,077       8,893,717  

Trade Desk, Inc. (The), Class A(b)(c)

     289,539       18,154,095  

Trimble, Inc.(b)

     163,905       10,366,991  

Western Digital Corp.(b)

     204,526       8,643,269  

Zebra Technologies Corp., Class A(b)

     34,287       10,342,331  
    

 

 

 
       311,156,736  
    

 

 

 

Materials-1.24%

 

Steel Dynamics, Inc.

     123,230       9,947,126  
    

 

 

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    22    

 

 

 

 


 

Invesco NASDAQ Next Gen 100 ETF (QQQJ)–(continued)

August 31, 2022

    

 

         Shares        Value  

Real Estate-0.87%

 

Opendoor Technologies, Inc.(b)(c)

     408,011      $ 1,766,688  

Zillow Group, Inc., Class A(b)(c)

     39,265        1,311,451  

Zillow Group, Inc., Class C(b)(c)

     117,542        3,932,955  
     

 

 

 
        7,011,094  
     

 

 

 

Utilities-1.25%

 

Alliant Energy Corp.

     163,792        9,997,864  
     

 

 

 

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.95%
(Cost $1,029,803,925)

 

     802,740,930  
     

 

 

 
Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds-14.36%

 

  

Invesco Private Government Fund,
2.29%(d)(e)(f)

     29,805,913        29,805,913  
         Shares        Value  

Money Market Funds-(continued)

 

Invesco Private Prime Fund, 2.37%(d)(e)(f)

     85,551,489      $ 85,560,046  
     

 

 

 

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $115,357,775)

 

     115,365,959  
     

 

 

 

TOTAL INVESTMENTS IN SECURITIES-114.31%
(Cost $1,145,161,700)

 

     918,106,889  

OTHER ASSETS LESS LIABILITIES-(14.31)%

 

     (114,936,666
     

 

 

 

NET ASSETS-100.00%

 

   $ 803,170,223  
     

 

 

 

Investment Abbreviations:

ADR-American Depositary Receipt

Notes to Schedule of Investments:

(a) 

Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

(b) 

Non-income producing security.

(c) 

All or a portion of this security was out on loan at August 31, 2022.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended August 31, 2022.

 

    Value
August 31,  2021
    Purchases
at Cost
    Proceeds
from  Sales
    Change  in
Unrealized
Appreciation
    Realized
Gain
(Loss)
    Value
August 31,  2022
    Dividend
Income
 
Investments in Affiliated Money Market Funds:                          
Invesco Government & Agency Portfolio, Institutional Class     $ 595,896       $ 31,234,607     $ (31,830,503 )          $ -                $ -       $ -       $ 2,510  
Investments Purchased with Cash Collateral from Securities on Loan:                          
Invesco Private Government Fund       14,361,365         330,812,254       (315,367,706       -         -         29,805,913         219,365
Invesco Private Prime Fund       33,532,835         695,563,485       (643,520,056       8,184         (24,402       85,560,046         624,469
   

 

 

     

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Total     $ 48,490,096       $ 1,057,610,346     $ (990,718,265     $ 8,184       $ (24,402     $ 115,365,959       $ 846,344  
   

 

 

     

 

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

*

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statements of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of August 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2I.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    23    

 

 

 

 


 

Statements of Assets and Liabilities

August 31, 2022

 

    Invesco ESG
NASDAQ  100
ETF (QQMG)
    Invesco ESG
NASDAQ Next  Gen
100 ETF (QQJG)
    Invesco NASDAQ
100 ETF (QQQM)
    Invesco NASDAQ
Next Gen 100
ETF (QQQJ)
 

Assets:

                       

Unaffiliated investments in securities, at value(a)

    $ 9,950,320                  $ 2,817,265                  $ 4,905,754,403         $ 802,740,930    

Affiliated investments in securities, at value

      73,460           137,090           78,284,520           115,365,959    

Cash

      -           -           6,486           -    

Receivable for:

                       

Dividends

      8,898           2,021           4,753,380           515,414    

Securities lending

      338           13           200,316           15,505    

Investments sold

      -           -           1,227,688           16,420,344    

Fund shares sold

      -           -           28,451,726           -    

Foreign tax reclaims

      -           -           -           54,253    
   

 

 

       

 

 

       

 

 

       

 

 

   

Total assets

      10,033,016           2,956,389           5,018,678,519           935,112,405    
   

 

 

       

 

 

       

 

 

       

 

 

   

Liabilities:

                       

Due to custodian

      1,786           -           -           20,319    

Payable for:

                       

Investments purchased

      -           -           28,371,226           -    

Collateral upon return of securities loaned

      73,460           136,808           74,382,068           115,357,775    

Fund shares repurchased

      -           -           1,231,273           16,451,967    

Accrued unitary management fees

      1,819           422           680,723           112,121    
   

 

 

       

 

 

       

 

 

       

 

 

   

Total liabilities

      77,065           137,230           104,665,290           131,942,182    
   

 

 

       

 

 

       

 

 

       

 

 

   

Net Assets

    $ 9,955,951         $ 2,819,159         $ 4,914,013,229         $ 803,170,223    
   

 

 

       

 

 

       

 

 

       

 

 

   

Net assets consist of:

                       

Shares of beneficial interest

    $ 12,522,169         $ 3,543,055         $ 5,970,846,156         $ 1,140,455,749    

Distributable earnings (loss)

      (2,566,218         (723,896         (1,056,832,927         (337,285,526  
   

 

 

       

 

 

       

 

 

       

 

 

   

Net Assets

    $ 9,955,951         $ 2,819,159         $ 4,914,013,229         $ 803,170,223    
   

 

 

       

 

 

       

 

 

       

 

 

   

Shares outstanding (unlimited amount authorized, $0.01 par value)

      500,001           150,001           39,910,001           32,420,001    

Net asset value

    $ 19.91         $ 18.79         $ 123.13         $ 24.77    
   

 

 

       

 

 

       

 

 

       

 

 

   

Market price

    $ 19.94         $ 18.81         $ 123.29         $ 24.80    
   

 

 

       

 

 

       

 

 

       

 

 

   

Unaffiliated investments in securities, at cost

    $ 12,336,255         $ 3,435,290         $ 5,925,975,224         $ 1,029,803,925    
   

 

 

       

 

 

       

 

 

       

 

 

   

Affiliated investments in securities, at cost

    $ 73,460         $ 137,087         $ 78,281,382         $ 115,357,775    
   

 

 

       

 

 

       

 

 

       

 

 

   

(a) Includes securities on loan with an aggregate value of:

    $ 72,329         $ 134,637         $ 72,316,669         $ 112,254,390    
   

 

 

       

 

 

       

 

 

       

 

 

   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    24    

 

 

 

 


 

Statements of Operations

For the year ended August 31, 2022

 

    Invesco ESG
NASDAQ  100
ETF (QQMG)(a)
    Invesco ESG
NASDAQ Next  Gen
100 ETF (QQJG)(a)
    Invesco NASDAQ
100 ETF (QQQM)
    Invesco NASDAQ
Next Gen 100
ETF (QQQJ)
 

Investment income:

                       

Unaffiliated dividend income

    $ 69,247                  $ 13,468                  $ 30,252,465         $ 6,548,774    

Affiliated dividend income

      28           5           11,052           2,510    

Securities lending income, net

      1,270           88           1,180,453           162,771    

Foreign withholding tax

      (176         (278         (52,098         (111,738  
   

 

 

       

 

 

       

 

 

       

 

 

   

Total investment income

      70,369           13,283           31,391,872           6,602,317    
   

 

 

       

 

 

       

 

 

       

 

 

   

Expenses:

                       

Unitary management fees

      15,830           3,702           5,495,446           1,531,558    

Tax expenses

      8           -           1,361           -    
   

 

 

       

 

 

       

 

 

       

 

 

   

Total expenses

      15,838           3,702           5,496,807           1,531,558    
   

 

 

       

 

 

       

 

 

       

 

 

   

Less: Waivers

      (2         -           (827         (175  
   

 

 

       

 

 

       

 

 

       

 

 

   

Net expenses

      15,836           3,702           5,495,980           1,531,383    
   

 

 

       

 

 

       

 

 

       

 

 

   

Net investment income

      54,533           9,581           25,895,892           5,070,934    
   

 

 

       

 

 

       

 

 

       

 

 

   

Realized and unrealized gain (loss) from:

                       

Net realized gain (loss) from:

                       

Unaffiliated investment securities

      (195,339         (108,332         (44,389,332         (113,681,481  

Affiliated investment securities

      (14         24           (51,622         (24,402  

In-kind redemptions

      -           -           217,260,762           85,022,318    
   

 

 

       

 

 

       

 

 

       

 

 

   

Net realized gain (loss)

      (195,353         (108,308         172,819,808           (28,683,565  
   

 

 

       

 

 

       

 

 

       

 

 

   

Change in net unrealized appreciation (depreciation) of:

                       

Unaffiliated investment securities

      (2,385,935         (618,025         (1,216,192,306         (322,092,629  

Affiliated investment securities

      -           3           3,138           8,184    
   

 

 

       

 

 

       

 

 

       

 

 

   

Change in net unrealized appreciation (depreciation)

      (2,385,935         (618,022         (1,216,189,168         (322,084,445  
   

 

 

       

 

 

       

 

 

       

 

 

   

Net realized and unrealized gain (loss)

      (2,581,288         (726,330         (1,043,369,360         (350,768,010  
   

 

 

       

 

 

       

 

 

       

 

 

   

Net increase (decrease) in net assets resulting from operations

    $ (2,526,755       $ (716,749       $ (1,017,473,468       $ (345,697,076  
   

 

 

       

 

 

       

 

 

       

 

 

   

 

(a) 

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    25    

 

 

 

 


 

Statements of Changes in Net Assets

For the years ended August 31, 2022 and 2021

 

    Invesco ESG
NASDAQ  100
ETF (QQMG)
    Invesco ESG
NASDAQ Next  Gen
100 ETF (QQJG)
    Invesco NASDAQ
100 ETF (QQQM)
    Invesco NASDAQ
Next Gen 100
ETF (QQQJ)
 
    2022(a)     2022(a)     2022     2021(b)     2022     2021(b)  

Operations:

               

Net investment income

  $ 54,533              $ 9,581              $ 25,895,892     $ 3,973,590     $ 5,070,934     $ 2,711,840  

Net realized gain (loss)

    (195,353       (108,308       172,819,808       25,379,518       (28,683,565     48,684,121  

Change in net unrealized appreciation (depreciation)

    (2,385,935       (618,022       (1,216,189,168     195,971,485       (322,084,445     95,029,634  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (2,526,755       (716,749       (1,017,473,468     225,324,593       (345,697,076     146,425,595  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Distributions to Shareholders from:

               

Distributable earnings

    (39,471       (7,146       (17,757,319     (2,671,477     (11,397,622     (2,373,270
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Shareholder Transactions:

               

Proceeds from shares sold

    12,522,177         3,543,054         5,971,651,618       1,850,201,568       450,411,017       1,352,687,957  

Value of shares repurchased

    -         -         (1,831,569,039     (263,693,247     (499,347,837     (287,538,541
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from share transactions

    12,522,177         3,543,054         4,140,082,579       1,586,508,321       (48,936,820     1,065,149,416  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets

    9,955,951         2,819,159         3,104,851,792       1,809,161,437       (406,031,518     1,209,201,741  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Net assets:

               

Beginning of period

    -         -         1,809,161,437       -       1,209,201,741       -  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

End of period

  $ 9,955,951       $ 2,819,159       $ 4,914,013,229     $ 1,809,161,437     $ 803,170,223     $ 1,209,201,741  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Changes in Shares Outstanding:

               

Shares sold

    500,001         150,001         41,870,000       13,620,001       14,550,000       43,840,001  

Shares repurchased

    -         -         (13,550,000     (2,030,000     (16,890,000     (9,080,000

Shares outstanding, beginning of period

    -         -         11,590,001       -       34,760,001       -  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding, end of period

    500,001         150,001         39,910,001       11,590,001       32,420,001       34,760,001  
 

 

 

     

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

(b) 

For the period October 12, 2020 (commencement of investment operations) through August 31, 2021.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    26    

 

 

 

 


 

Financial Highlights

Invesco ESG NASDAQ 100 ETF (QQMG)

 

    For the Period
October  25, 2021(a)
Through
August 31,
2022
 

Per Share Operating Performance:

     

Net asset value at beginning of period

                 $ 25.00        
   

 

 

   

Net investment income(b)

      0.13    

Net realized and unrealized gain (loss) on investments

      (5.13  
   

 

 

   

Total from investment operations

      (5.00  
   

 

 

   

Distributions to shareholders from:

     

Net investment income

      (0.09  
   

 

 

   

Net asset value at end of period

    $ 19.91    
   

 

 

   

Market price at end of period(c)

    $ 19.94    
   

 

 

   

Net Asset Value Total Return(d)

      (20.03 )%(e)   

Market Price Total Return(d)

      (19.91 )%(e)   

Ratios/Supplemental Data:

     

Net assets at end of period (000’s omitted)

    $ 9,956    

Ratio to average net assets of:

     

Expenses

      0.20 %(f)   

Net investment income

      0.69 %(f)   

Portfolio turnover rate(g)

      10  

 

(a) 

Commencement of investment operations.

(b) 

Based on average shares outstanding.

(c) 

The mean between the last bid and ask prices.

(d) 

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 at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.

(e) 

The net asset value total return from Fund Inception (October 27, 2021, the first day of trading on the exchange) to August 31, 2022 was (20.63)%. The market price total return from Fund Inception to August 31, 2022 was (20.54)%.

(f) 

Annualized.

(g) 

Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

    27    

 

 

 

 


 

Financial Highlights–(continued)

 

Invesco ESG NASDAQ Next Gen 100 ETF (QQJG)

 

    For the Period
October  25, 2021(a)
Through
August 31,
2022
 

Per Share Operating Performance:

     

Net asset value at beginning of period

                 $ 25.00    
   

 

 

   

Net investment income(b)

      0.09    

Net realized and unrealized gain (loss) on investments

      (6.23  
   

 

 

   

Total from investment operations

      (6.14  
   

 

 

   

Distributions to shareholders from:

     

Net investment income

      (0.07  
   

 

 

   

Net asset value at end of period

    $ 18.79    
   

 

 

   

Market price at end of period(c)

    $ 18.81    
   

 

 

   

Net Asset Value Total Return(d)

      (24.57 )%(e)   

Market Price Total Return(d)

      (24.49 )%(e)   

Ratios/Supplemental Data:

     

Net assets at end of period (000’s omitted)

    $ 2,819    

Ratio to average net assets of:

     

Expenses

      0.20 %(f)   

Net investment income

      0.52 %(f)   

Portfolio turnover rate(g)

      46  

 

(a) 

Commencement of investment operations.

(b) 

Based on average shares outstanding.

(c) 

The mean between the last bid and ask prices.

(d) 

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 at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.

(e) 

The net asset value total return from Fund Inception (October 27, 2021, the first day of trading on the exchange) to August 31, 2022 was (23.10)%. The market price total return from Fund Inception to August 31, 2022 was (23.05)%.

(f) 

Annualized.

(g) 

Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

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Financial Highlights–(continued)

 

Invesco NASDAQ 100 ETF (QQQM)

 

     Year Ended August  31,
2022
              For the Period
October  12, 2020(a)
Through
August 31,
2021
 

Per Share Operating Performance:

                 

Net asset value at beginning of period

               $ 156.10                               $ 120.98    
     

 

 

           

 

 

   

Net investment income(b)

        0.98               0.74    

Net realized and unrealized gain (loss) on investments

        (33.24             34.93    
     

 

 

           

 

 

   

Total from investment operations

        (32.26             35.67    
     

 

 

           

 

 

   

Distributions to shareholders from:

                 

Net investment income

        (0.71             (0.55  
     

 

 

           

 

 

   

Net asset value at end of period

      $ 123.13             $ 156.10    
     

 

 

           

 

 

   

Market price at end of period(c)

      $ 123.29             $ 156.11    
     

 

 

           

 

 

   

Net Asset Value Total Return(d)

        (20.72 )%              29.56 %(e)   

Market Price Total Return(d)

        (20.61 )%              29.57 %(e)   

Ratios/Supplemental Data:

                 

Net assets at end of period (000’s omitted)

      $ 4,914,013             $ 1,809,161    

Ratio to average net assets of:

                 

Expenses

        0.15             0.15 %(f)   

Net investment income

        0.71             0.61 %(f)   

Portfolio turnover rate(g)

        6             5  

 

(a) 

Commencement of investment operations.

(b) 

Based on average shares outstanding.

(c) 

The mean between the last bid and ask prices.

(d) 

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 at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.

(e) 

The net asset value total return from Fund Inception (October 13, 2020, the first day of trading on the exchange) to August 31, 2021 was 29.61%. The market price total return from Fund Inception to August 31, 2021 was 29.48%.

(f) 

Annualized.

(g) 

Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

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Financial Highlights–(continued)

 

Invesco NASDAQ Next Gen 100 ETF (QQQJ)

 

     Year Ended August  31,
2022
              For the Period
October  12, 2020(a)
Through
August 31,
2021
 

Per Share Operating Performance:

                 

Net asset value at beginning of period

                     $ 34.79                                 $ 26.71    
     

 

 

           

 

 

   

Net investment income(b)

        0.15               0.10    

Net realized and unrealized gain (loss) on investments

        (9.85             8.06    
     

 

 

           

 

 

   

Total from investment operations

        (9.70             8.16    
     

 

 

           

 

 

   

Distributions to shareholders from:

                 

Net investment income

        (0.11             (0.08  

Net realized gains

        (0.21             -    
     

 

 

           

 

 

   

Total distributions

        (0.32             (0.08  
     

 

 

           

 

 

   

Net asset value at end of period

      $ 24.77             $ 34.79    
     

 

 

           

 

 

   

Market price at end of period(c)

      $ 24.80             $ 34.77    
     

 

 

           

 

 

   

Net Asset Value Total Return(d)

        (28.06 )%              30.58 %(e)   

Market Price Total Return(d)

        (27.93 )%              30.51 %(e)   

Ratios/Supplemental Data:

                 

Net assets at end of period (000’s omitted)

      $ 803,170             $ 1,209,202    

Ratio to average net assets of:

                 

Expenses

        0.15             0.15 %(f)   

Net investment income

        0.50             0.35 %(f)   

Portfolio turnover rate(g)

        45             29  

 

(a) 

Commencement of investment operations.

(b) 

Based on average shares outstanding.

(c) 

The mean between the last bid and ask prices.

(d) 

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 at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.

(e) 

The net asset value total return from Fund Inception (October 13, 2020, the first day of trading on the exchange) to August 31, 2021 was 30.39%. The market price total return from Fund Inception to August 31, 2021 was 29.93%.

(f) 

Annualized.

(g) 

Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

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Notes to Financial Statements

Invesco Exchange-Traded Fund Trust II

August 31, 2022

NOTE 1–Organization

Invesco Exchange-Traded Fund Trust II (the “Trust”) was organized as a Massachusetts business trust and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). This report includes the following portfolios:

 

Full Name

  

Short Name

Invesco ESG NASDAQ 100 ETF (QQMG)    “ESG NASDAQ 100 ETF”
Invesco ESG NASDAQ Next Gen 100 ETF (QQJG)    “ESG NASDAQ Next Gen 100 ETF”
Invesco NASDAQ 100 ETF (QQQM)    “NASDAQ 100 ETF”
Invesco NASDAQ Next Gen 100 ETF (QQQJ)    “NASDAQ Next Gen 100 ETF”

Each portfolio (each, a “Fund”, and collectively, the “Funds”) represents a separate series of the Trust. The shares of the Funds are referred to herein as “Shares” or “Fund’s Shares.” Each Fund’s Shares are listed and traded on The Nasdaq Stock Market LLC.

The market price of each Share may differ to some degree from a Fund’s net asset value (“NAV”). Unlike conventional mutual funds, each Fund issues and redeems Shares on a continuous basis, at NAV, only in a large specified number of Shares, each called a “Creation Unit.” Creation Units are issued and redeemed principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”). Except when aggregated in Creation Units by Authorized Participants, the Shares are not individually redeemable securities of the Funds.

The investment objective of each Fund is to seek to track the investment results (before fees and expenses) of its respective index listed below (each, an “Underlying Index”).

 

Fund

  

Underlying Index

ESG NASDAQ 100 ETF    Nasdaq-100® ESG Index
ESG NASDAQ Next Gen 100 ETF    Nasdaq Next Generation 100 ESG Index®
NASDAQ 100 ETF    NASDAQ-100 Index®
NASDAQ Next Gen 100 ETF    NASDAQ Next Generation 100 Index®

NOTE 2–Significant Accounting Policies

The following is a summary of the significant accounting policies followed by the Funds in preparation of their financial statements.

Each Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services–Investment Companies.

A.

Security Valuation - Securities, including restricted securities, are valued according to the following policies:

A security listed or traded on an exchange is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded or, lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter (“OTC”) market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day NAV per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value. Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller,

 

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odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Capital Management LLC (the “Adviser”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the New York Stock Exchange (“NYSE”), closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith in accordance with Board-approved policies and related Adviser procedures (“Valuation Procedures”). Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American depositary receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, the potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value exchange-traded equity securities. The mean between the last bid and asked prices may be used to value debt obligations, including corporate loans, and unlisted equity securities.

Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

Each Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

The price a Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, a Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

B.

Investment Transactions and Investment Income - Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Interest income is recorded on an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of

 

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withholding tax, if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by a Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

The Funds may periodically participate in litigation related to each Fund’s investments. As such, the Funds may receive proceeds from litigation settlements. Any proceeds received are included in the Statements of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statements of Operations and the Statements of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of each Fund’s NAV and, accordingly, they reduce each Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statements of Operations and the Statements of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between each Fund and the Adviser.

C.

Country Determination - For the purposes of presentation in the Schedules of Investments, the Adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include whether each Fund’s Underlying Index has made a country determination and may include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D.

Dividends and Distributions to Shareholders - Each Fund declares and pays dividends from net investment income, if any, to its shareholders quarterly and records such dividends on the ex-dividend date. Generally, each Fund distributes net realized taxable capital gains, if any, annually in cash and records them on the ex-dividend date. Such distributions on a tax basis are determined in conformity with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America (“GAAP”). Distributions in excess of tax basis earnings and profits, if any, are reported in such Fund’s financial statements as a tax return of capital at fiscal year-end.

E.

Federal Income Taxes - Each Fund intends to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute substantially all of the Fund’s taxable earnings to its shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized gains) that is distributed to the shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

Each Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed each Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing book and tax treatments for in-kind transactions, losses deferred due to wash sales, and passive foreign investment company adjustments, if any.

The Funds file U.S. federal tax returns and tax returns in certain other jurisdictions. Generally, a Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses - Each Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for distribution fees, if any, brokerage expenses, taxes, interest, acquired fund fees and expenses, if any, litigation expenses and other extraordinary expenses, including proxy expenses (except for such proxies related to: (i) changes to the Investment Advisory Agreement, (ii) the election of any Board member who is an “interested person” of the Trust, or (iii) any other matters that directly benefit the Adviser).

Expenses of the Trust that are excluded from a Fund’s unitary management fee and are directly identifiable to a specific Fund are applied to that Fund. Expenses of the Trust that are excluded from a Fund’s unitary management fee and are not readily identifiable to a specific Fund are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative net assets of each Fund.

To the extent a Fund invests in other investment companies, the expenses shown in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the investment companies in which it invests. The effects of such investment companies’ expenses are included in the realized and unrealized gain or loss on the investments in the investment companies.

G.

Accounting Estimates - The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements, including estimates

 

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  and assumptions related to taxation. Actual results could differ from these estimates. In addition, the Funds monitor for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H.

Indemnifications - Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Each Board member who is not an “interested person” (as defined in the 1940 Act) of the Trust (each, an “Independent Trustee”) is also indemnified against certain liabilities arising out of the performance of their duties to the Trust pursuant to an Indemnification Agreement between such trustee and the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending - Each Fund may participate in securities lending and may loan portfolio securities having a market value up to one-third of each Fund’s total assets. Such loans are secured by cash collateral equal to no less than 102% (105% for international securities) of the market value of the loaned securities determined daily by the securities lending provider. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedules of Investments. Each Fund bears the risk of loss with respect to the investment of collateral. It is the policy of these Funds to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, each Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to each Fund if, and to the extent that, the market value of the securities loaned were to increase, and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or each Fund. Upon termination, the borrower will return to each Fund the securities loaned and each Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. Each Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to each Fund. Some of these losses may be indemnified by the lending agent. Each Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. For Funds that participated in securities lending, dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Securities lending income on the Statements of Operations. The aggregate value of securities out on loan, if any, is shown on the Statements of Assets and Liabilities.

On September 14, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (“Invesco”), an affiliate of the Adviser, to serve as an affiliated securities lending agent for each Fund participating in the securities lending program. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. Prior to September 14, 2021, BNYM served as the sole securities lending agent for each Fund under the securities lending program. To the extent a Fund utilizes Invesco as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the period September 14, 2021 through August 31, 2022, each Fund had affiliated securities lending transactions with Invesco. Fees paid to Invesco for securities lending agent services, which are included in Securities lending income on the Statements of Operations, were incurred by each Fund as listed below:

 

     Amount  

ESG NASDAQ 100 ETF*

   $ 50  

ESG NASDAQ Next Gen 100 ETF*

     6  

NASDAQ 100 ETF

     89,231  

NASDAQ Next Gen 100 ETF

     9,268  

 

*

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

 

J.

Foreign Currency Translations - Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. Each Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from

 

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  investments in the Statements of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on a Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period-end, resulting from changes in exchange rates.

Each Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which a Fund invests.

K.

Other Risks

ADR Risk. The Funds may invest in American depositary receipts (“ADRs”). ADRs are certificates that evidence ownership of shares of a foreign issuer and are alternatives to purchasing the underlying foreign securities directly in their national markets and currencies. ADRs 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 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.

Authorized Participant Concentration Risk. Only authorized participants (“APs”) may engage in creation or redemption transactions directly with each 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 APs will establish or maintain an active trading market for the Shares. This risk may be heightened to the extent that securities held by each 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 creation and/or redemption orders with respect to each Fund and no other AP is able to step forward to create or redeem Creation Units, this may result in a significantly diminished trading market for Fund Shares, and Shares may be more likely to trade at a premium or discount to a Fund’s NAV and to face trading halts and/or delisting. Investments in non-U.S. securities, which may have lower trading volumes or could experience extended market closures or trading halts, may increase this risk.

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 each Fund holds. In addition, equity risk includes the risk that investor sentiment toward one or more industries will become negative, resulting in those investors exiting their investments in those industries, which could cause a reduction in the value of companies in those industries more broadly. 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 Risk. Because ESG NASDAQ 100 ETF and ESG NASDAQ Next Gen 100 ETF evaluate ESG factors to assess and exclude certain investments for non-financial reasons, such Funds may forego some market opportunities available to funds that do not use these factors. The securities of companies that score favorably under a Fund’s ESG scoring methodology may underperform similar companies that do not score as well or may underperform the stock market as a whole. As a result, ESG NASDAQ 100 ETF and ESG NASDAQ Next Gen 100 ETF may underperform funds that do not screen or score companies based on ESG factors or funds that use a different ESG methodology. Information used by a Fund to evaluate such factors may not be readily available, complete or accurate, which could negatively impact the Fund’s ability to apply its methodology, which in turn could negatively impact the Fund’s performance. In addition, a Fund’s assessment of a company, based on the company’s level of involvement in a particular industry or the company’s ESG score, may differ from that of other funds or an investor. As a result, the companies deemed eligible for inclusion in a Fund’s portfolio may not reflect the beliefs or values of any particular investor and may not be deemed to exhibit positive or favorable ESG characteristics if different metrics were used to evaluate them.

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, including recordkeeping standards, comparable to those applicable to domestic issuers. Foreign securities are also 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

 

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taxes, currency blockage and/or transfer restrictions and higher transactional costs. If a Fund invests 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, each Fund does not utilize an investing strategy that seeks returns in excess of its Underlying Index. Therefore, a Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its Underlying Index, even if that security generally is underperforming. Additionally, each Fund rebalances its portfolio in accordance with its Underlying Index, and, therefore, any changes to the Underlying Index’s rebalance schedule will result in corresponding changes to each Fund’s rebalance schedule.

Industry Concentration Risk. In following its methodology, each Fund’s 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 each Underlying Index concentrates in the securities of issuers in a particular industry or industry group, the corresponding Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or industry group, each 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 each Fund invests, may include, but are not limited to, the following: general economic conditions or cyclical market patterns that could negatively affect supply and demand in a particular industry; competition for resources, adverse labor relations, political or world events; obsolescence of technologies; and increased competition or new product introductions that may affect the profitability or viability of companies in an industry. In addition, at times, such industry or industry group may be out of favor and underperform other industries or 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. Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to each 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 and 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. Mid-capitalization companies tend to have less experienced management as well as limited product and market diversification and financial resources compared to larger capitalization companies. 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. Each Fund’s return may not match the return of its corresponding Underlying Index for a number of reasons. For example, each 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 its corresponding Underlying Index. In addition, the performance of each Fund and its corresponding Underlying Index may vary due to asset valuation differences and differences between each Fund’s portfolio and its corresponding Underlying Index resulting from legal restrictions, costs or liquidity constraints.

Non-Diversified Fund Risk. Because each 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 a Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on a Fund’s performance.

COVID-19 Risk. The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Funds’ performance.

NOTE 3–Investment Advisory Agreement and Other Agreements

The Trust has entered into an Investment Advisory Agreement with the Adviser on behalf of each Fund, pursuant to which the Adviser has overall responsibility for the selection and ongoing monitoring of the Funds’ investments, managing the Funds’ business affairs and providing certain clerical, bookkeeping and other administrative services.

Pursuant to the Investment Advisory Agreement, each Fund accrues daily and pays monthly to the Adviser an annual unitary management fee. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for distribution fees, if any, brokerage expenses, taxes, interest, acquired fund fees and expenses, if any, litigation expenses and other extraordinary expenses, including proxy expenses (except for such proxies related to: (i) changes to the Investment Advisory Agreement, (ii) the

 

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election of any Board member who is an “interested person” of the Trust, or (iii) any other matters that directly benefit the Adviser). The unitary management fee is paid by each Fund to the Adviser at the following annual rates:

 

     Unitary Management Fees
(as a % of average daily net assets)
ESG NASDAQ 100 ETF    0.20%
ESG NASDAQ Next Gen 100 ETF    0.20%
NASDAQ 100 ETF    0.15%
NASDAQ Next Gen 100 ETF    0.15%

Through at least August 31, 2024, the Adviser has contractually agreed to waive the management fee payable by each Fund in an amount equal to the lesser of: (i) 100% of the net advisory fees earned by the Adviser or an affiliate of the Adviser that are attributable to the Fund’s investments in money market funds that are managed by affiliates of the Adviser and other funds (including ETFs) managed by the Adviser or affiliates of the Adviser or (ii) the management fee available to be waived. These waivers do not apply to a Fund’s investment of cash collateral received for securities lending. There is no guarantee that the Adviser will extend the waiver of these fees past that date.

For the fiscal year ended August 31, 2022, the Adviser waived fees for each Fund in the following amounts:

 

ESG NASDAQ 100 ETF*    $ 2  
ESG NASDAQ Next Gen 100 ETF*      -  
NASDAQ 100 ETF      827  
NASDAQ Next Gen 100 ETF      175  

 

*

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

The Trust has entered into a Distribution Agreement with Invesco Distributors, Inc. (the “Distributor”), which serves as the distributor of Creation Units for each Fund. The Distributor does not maintain a secondary market in the Shares. The Funds are not charged any fees pursuant to the Distribution Agreement. The Distributor is an affiliate of the Adviser.

The Adviser has entered into licensing agreements on behalf of each Fund with Nasdaq, Inc. (the, “Licensor”).

Each Underlying Index name trademark is owned by the Licensor. These trademarks have been licensed to the Adviser for use by the Funds. Each Fund is entitled to use its Underlying Index pursuant to the Trust’s sub-licensing agreement with the Adviser. The Funds are not sponsored, endorsed, sold or promoted by the Licensor, and the Licensor makes no representation regarding the advisability of investing in any of the Funds.

The Trust has entered into service agreements whereby BNYM, a wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as the administrator, custodian, fund accountant and transfer agent for each Fund.

For the fiscal year ended August 31, 2022, the following Funds incurred brokerage commissions with Invesco Capital Markets, Inc. (“ICMI”), an affiliate of the Adviser and Distributor, for portfolio transactions executed on behalf of the Funds, as listed below:

 

ESG NASDAQ 100 ETF*    $ 20  
ESG NASDAQ Next Gen 100 ETF*      156  
NASDAQ 100 ETF      123  
NASDAQ Next Gen 100 ETF      33,415  

 

*

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

Portfolio transactions with ICMI that have not settled at period-end, if any, are shown in the Statements of Assets and Liabilities under the receivable caption Investments sold - affiliated broker and/or payable caption Investments purchased - affiliated broker.

NOTE 4–Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

Level 1 –   Prices are determined using quoted prices in an active market for identical assets.
Level 2 –   Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.

 

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Level 3 –   Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Adviser’s assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of August 31, 2022. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

     Level 1    Level 2    Level 3    Total

ESG NASDAQ 100 ETF

                   

Investments in Securities

                   

Common Stocks & Other Equity Interests

     $ 9,950,320      $ -      $ -      $ 9,950,320

Money Market Funds

       -        73,460        -        73,460
    

 

 

      

 

 

      

 

 

      

 

 

 

Total Investments

     $ 9,950,320      $ 73,460      $ -      $ 10,023,780
    

 

 

      

 

 

      

 

 

      

 

 

 

ESG NASDAQ Next Gen 100 ETF

                   

Investments in Securities

                   

Common Stocks & Other Equity Interests

     $ 2,817,265      $ -      $ -      $ 2,817,265

Money Market Funds

       279        136,811        -        137,090
    

 

 

      

 

 

      

 

 

      

 

 

 

Total Investments

     $ 2,817,544      $ 136,811      $ -      $ 2,954,355
    

 

 

      

 

 

      

 

 

      

 

 

 

NASDAQ 100 ETF

                   

Investments in Securities

                   

Common Stocks & Other Equity Interests

     $ 4,905,754,403      $ -      $ -      $ 4,905,754,403

Money Market Funds

       3,899,314        74,385,206        -        78,284,520
    

 

 

      

 

 

      

 

 

      

 

 

 

Total Investments

     $ 4,909,653,717      $ 74,385,206      $ -      $ 4,984,038,923
    

 

 

      

 

 

      

 

 

      

 

 

 

NASDAQ Next Gen 100 ETF

                   

Investments in Securities

                   

Common Stocks & Other Equity Interests

     $ 802,740,930      $ -      $ -      $ 802,740,930

Money Market Funds

       -        115,365,959        -        115,365,959
    

 

 

      

 

 

      

 

 

      

 

 

 

Total Investments

     $ 802,740,930      $ 115,365,959      $ -      $ 918,106,889
    

 

 

      

 

 

      

 

 

      

 

 

 

NOTE 5–Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended August 31, 2022 and 2021:

 

     2022      2021  
     Ordinary      Ordinary  
     Income*      Income*  

ESG NASDAQ 100 ETF**

   $ 39,471      $ -  

ESG NASDAQ Next Gen 100 ETF**

     7,146        -  

NASDAQ 100 ETF

     17,757,319        2,671,477  

NASDAQ Next Gen 100 ETF

     11,397,622        2,373,270  

 

*

Includes short-term capital gain distributions, if any.

**

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

Tax Components of Net Assets at Fiscal Year-End:

 

     Undistributed
Ordinary
Income
     Net
Unrealized
Appreciation
(Depreciation)-
Investments
    Capital Loss
Carryforwards
    Shares of
Beneficial
Interest
     Total
Net Assets
 

ESG NASDAQ 100 ETF

   $ 15,070      $ (2,386,365   $ (194,923   $ 12,522,169      $ 9,955,951  

ESG NASDAQ Next Gen 100 ETF

     3,431        (631,823     (95,504     3,543,055        2,819,159  

NASDAQ 100 ETF

     9,442,047        (1,024,388,141     (41,886,833     5,970,846,156        4,914,013,229  

NASDAQ Next Gen 100 ETF

     1,724,167        (231,482,187     (107,527,506     1,140,455,749        803,170,223  

 

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Capital loss carryforwards are calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforwards actually available for the Funds to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Funds have capital loss carryforwards as of August 31, 2022, as follows:

 

     No expiration         
     Short-Term      Long-Term      Total  
ESG NASDAQ 100 ETF    $ 194,923      $ -      $ 194,923  
ESG NASDAQ Next Gen 100 ETF      95,504        -        95,504  
NASDAQ 100 ETF      38,924,872        2,961,961        41,886,833  
NASDAQ Next Gen 100 ETF      85,555,206        21,972,300        107,527,506  

NOTE 6–Investment Transactions

For the fiscal year ended August 31, 2022, the cost of securities purchased and the proceeds from sales of securities (other than short-term securities, U.S. Government obligations, money market funds and in-kind transactions, if any) were as follows:

 

                                           
     Purchases      Sales  
ESG NASDAQ 100 ETF*    $ 5,964,899      $ 939,079  
ESG NASDAQ Next Gen 100 ETF*      3,533,387        1,030,109  
NASDAQ 100 ETF         223,081,512           215,876,628  
NASDAQ Next Gen 100 ETF      454,260,842        455,562,608  

 

*

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

For the fiscal year ended August 31, 2022, in-kind transactions associated with creations and redemptions were as follows:

 

                                           
     In-kind
Purchases
     In-kind
Sales
 
ESG NASDAQ 100 ETF*    $ 7,505,749      $ -  
ESG NASDAQ Next Gen 100 ETF*      1,040,334        -  
NASDAQ 100 ETF      5,964,953,448        1,831,296,492  
NASDAQ Next Gen 100 ETF      449,859,535        503,395,154  

 

*

For the period October 25, 2021 (commencement of investment operations) through August 31, 2022.

Gains (losses) on in-kind transactions are generally not considered taxable gains (losses) for federal income tax purposes.

As of August 31, 2022, the aggregate cost of investments, including any derivatives, on a tax basis includes adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end:

 

                              Net               
    Gross            Gross            Unrealized               
    Unrealized            Unrealized            Appreciation               
   

Appreciation

          

(Depreciation)

          

(Depreciation)

           Cost  
ESG NASDAQ 100 ETF   $ 94,122        $ (2,480,487      $ (2,386,365      $ 12,410,145  
ESG NASDAQ Next Gen 100 ETF     48,866          (680,689        (631,823        3,586,178  
NASDAQ 100 ETF     27,452,410          (1,051,840,551        (1,024,388,141        6,008,427,064  
NASDAQ Next Gen 100 ETF     43,078,027          (274,560,214        (231,482,187        1,149,589,076  

NOTE 7–Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of in-kind transactions and excise taxes, amounts were reclassified between undistributed net investment income (loss), undistributed net realized gain (loss) and Shares of beneficial interest. These reclassifications had no effect on the net assets of each Fund. For the fiscal year ended August 31, 2022, the reclassifications were as follows:

 

    Undistributed Net       Undistributed Net       Shares of
   

Investment Income (Loss)

     

Realized Gain (Loss)

     

Beneficial Interest

ESG NASDAQ 100 ETF

  $       8            $                     -             $                  (8)  

ESG NASDAQ Next Gen 100 ETF

        -                       (1)                       1

NASDAQ 100 ETF

  1,361     (216,783,588)     216,782,227

NASDAQ Next Gen 100 ETF

    (887)       (82,986,327)       82,987,214

 

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NOTE 8–Trustees’ and Officer’s Fees

Trustees’ and Officer’s Fees include amounts accrued by the Funds to pay remuneration to the Independent Trustees and an Officer of the Trust. The Adviser, as a result of each Fund’s unitary management fee, pays for such compensation for the Funds. The Trustee who is an “interested person” of the Trust does not receive any Trustees’ fees.

The Trust has adopted a deferred compensation plan (the “Plan”). Under the Plan, each Independent Trustee who has executed a Deferred Fee Agreement (a “Participating Trustee”) may defer receipt of all or a portion of their compensation (“Deferral Fees”). Such Deferral Fees are deemed to be invested in select Invesco ETFs. The Deferral Fees payable to a Participating Trustee are valued as of the date such Deferral Fees would have been paid to the Participating Trustee. The value increases with contributions or with increases in the value of the Shares selected, and the value decreases with distributions or with declines in the value of the Shares selected. Obligations under the Plan represent unsecured claims against the general assets of the Funds.

NOTE 9–Capital

Shares are issued and redeemed by each Fund only in Creation Units consisting of a specified number of Shares as set forth in each Fund’s prospectus. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Funds. Such transactions are principally permitted in exchange for Deposit Securities, with a balancing cash component to equate the transaction to the NAV per Share of a Fund on the transaction date. However, for all Funds, cash in an amount equivalent to the value of certain securities may be substituted, generally when the securities are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances.

To the extent that the Funds permit transactions in exchange for Deposit Securities, each Fund may issue Shares in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 105% of the market value of the missing Deposit Securities. In accordance with the Trust’s Participant Agreement, Creation Units will be issued to an Authorized Participant, notwithstanding the fact that the corresponding Deposit Securities have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by the Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked-to-market daily) at least equal to 105%, which the Adviser may change from time to time, of the value of the missing Deposit Securities.

Certain transaction fees may be charged by the Funds for creations and redemptions, which are treated as increases in capital.

Transactions in each Fund’s Shares are disclosed in detail in the Statements of Changes in Net Assets.

 

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Invesco Exchange-Traded Fund Trust II and Shareholders of Invesco ESG NASDAQ 100 ETF, Invesco ESG NASDAQ Next Gen 100 ETF, Invesco NASDAQ 100 ETF and Invesco NASDAQ Next Gen 100 ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of each of the funds listed in the table below (four of the funds constituting Invesco Exchange-Traded Fund Trust II, hereafter referred to as the “Funds”) as of August 31, 2022, the related statements of operations and of changes in net assets for each of the periods indicated in the table below, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2022, the results of each of their operations and the changes in each of their net assets for each of the periods indicated in the table below, and each of the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.

 

Fund Name

Invesco ESG NASDAQ 100 ETF (1)

Invesco ESG NASDAQ Next Gen 100 ETF (1)

Invesco NASDAQ 100 ETF (2)

Invesco NASDAQ Next Gen 100 ETF (2)

(1) Statement of operations and statement of changes in net assets for the period October 25, 2021 (commencement of investment operations) through August 31, 2022

(2) Statement of operations for the year ended August 31, 2022 and statement of changes in net assets for the year ended August 31, 2022 and for the period October 12, 2020 (commencement of investment operations) through August 31, 2021

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2022, by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Chicago, Illinois

October 27, 2022

We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.

 

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Calculating your ongoing Fund expenses

Example

As a shareholder of a Fund of the Invesco Exchange-Traded Fund Trust II, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest, acquired fund fees and expenses, if any, litigation expenses and other extraordinary expenses, including proxy expenses (except for such proxies related to: (i) changes to the Investment Advisory Agreement, (ii) the election of any Board member who is an “interested person” of the Trust, or (iii) any other matters that directly benefit the Adviser). The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2022 through August 31, 2022.

Actual Expenses

The first line in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line in the following table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annualized rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as sales charges and brokerage commissions. Therefore, the second line in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs and indirect expenses were included, your costs would have been higher.

 

     Beginning
Account Value
March 1, 2022
     Ending
Account Value
August 31, 2022
     Annualized
Expense Ratio
Based on the
Six-Month Period
    Expenses Paid
During the
Six-Month Period(1)
 

Invesco ESG NASDAQ 100 ETF (QQMG)

          

Actual

     $1,000.00        $   858.10         0.20%       $0.94      

Hypothetical (5% return before expenses)

       1,000.00          1,024.20        0.20           1.02      

Invesco ESG NASDAQ Next Gen 100 ETF (QQJG)

          

Actual

       1,000.00             862.30        0.20           0.94      

Hypothetical (5% return before expenses)

       1,000.00          1,024.20        0.20           1.02      

Invesco NASDAQ 100 ETF (QQQM)

          

Actual

       1,000.00             865.20        0.15           0.71      

Hypothetical (5% return before expenses)

       1,000.00          1,024.45        0.15           0.77      

Invesco NASDAQ Next Gen 100 ETF (QQQJ)

          

Actual

       1,000.00            852.80        0.15           0.70      

Hypothetical (5% return before expenses)

       1,000.00          1,024.45        0.15           0.77      

 

(1) 

Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended August 31, 2022. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expense ratios based on the annualized data in the Financial Highlights.

 

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Tax Information

Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

Each Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2022:

 

     Qualified
Business
Income*
  Qualified
Dividend
Income*
  Corporate
Dividends
Received
Deduction*
  U.S.
Treasury
Obligations*
  Business
Interest
Income*
  Qualified
Short
Term
Gains

Invesco ESG NASDAQ 100 ETF

       0 %           100 %           100 %           0 %             0 %           $ -

Invesco ESG NASDAQ Next Gen 100 ETF

       0 %       100 %       92 %       0 %       0 %       -

Invesco NASDAQ 100 ETF

       0 %       100 %       100 %       0 %       0 %       -

Invesco NASDAQ Next Gen 100 ETF

       0 %       52 %       44 %       0 %       0 %       7,578,994

* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

    43    

 

 

 

 


 

Trustees and Officers

The Independent Trustees of the Trust, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex (as defined below) overseen by each Independent Trustee and the other directorships, if any, held by each Independent Trustee are shown below:

As of August 31, 2022

 

Name, Address and Year of
Birth of Independent Trustees
  

Position(s)
Held

with Trust

  

Term of
Office

and

Length of
Time
Served*

  

Principal

Occupation(s) During

the Past 5 Years

  

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

  

Other

Directorships

Held by

Independent

Trustees During

the Past 5 Years

Ronn R. Bagge–1958

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Vice Chair of the Board; Chair of the Nominating and Governance Committee and Trustee    Vice Chair since 2018; Chair of the Nominating and Governance Committee and Trustee since 2007    Founder and Principal, YQA Capital Management LLC (1998-Present); formerly, Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).    230    Chair (since 2021) and member (since 2017) of the Joint Investment Committee, Mission Aviation Fellowship and MAF Foundation; Trustee, Mission Aviation Fellowship (2017-Present).

Todd J. Barre–1957

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2010    Assistant Professor of Business, Trinity Christian College (2010-2016); formerly, Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.    230    None.

 

*

This is the date the Independent Trustee began serving the Trust. Each Independent Trustee serves an indefinite term, until his or her successor is elected.

**

Fund Complex includes all open- and closed-end funds (including all of their portfolios) advised by the Adviser and any affiliated person of the Adviser.

 

    44    

 

 

 

 


 

Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of
Birth of Independent Trustees
  

Position(s)
Held

with Trust

  

Term of
Office

and

Length of
Time
Served*

  

Principal

Occupation(s) During

the Past 5 Years

  

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

  

Other

Directorships

Held by

Independent

Trustees During

the Past 5 Years

Edmund P. Giambastiani,

Jr.–1948

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2019    President, Giambastiani Group LLC (national security and energy consulting) (2007-Present); Director, First Eagle Alternative Credit LLC (2020-Present); Advisory Board Member, Massachusetts Institute of Technology Lincoln Laboratory (federally-funded research development) (2010-Present); Defense Advisory Board Member, Lawrence Livermore National Laboratory (2013-Present); formerly, Director, The Boeing Company (2009-2021); Trustee, MITRE Corporation (federally funded research development) (2008-2020); Director, THL Credit, Inc. (alternative credit investment manager) (2016-2020); Chair (2015-2016), Lead Director (2011-2015) and Director (2008-2011), Monster Worldwide, Inc. (career services); United States Navy, career nuclear submarine officer (1970-2007); Seventh Vice Chair of the Joint Chiefs of Staff (2005-2007); first NATO Supreme Allied Commander Transformation (2003-2005); Commander, U.S. Joint Forces Command (2002-2005).    230    Trustee, U.S. Naval Academy Foundation Athletic & Scholarship Program (2010- Present); formerly, Trustee, certain funds of the Oppenheimer Funds complex (2013-2019); Advisory Board Member, Maxwell School of Citizenship and Public Affairs of Syracuse University (2012-2016).

 

*

This is the date the Independent Trustee began serving the Trust. Each Independent Trustee serves an indefinite term, until his or her successor is elected.

**

Fund Complex includes all open- and closed-end funds (including all of their portfolios) advised by the Adviser and any affiliated person of the Adviser.

 

    45    

 

 

 

 


 

Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of
Birth of Independent Trustees
  

Position(s)
Held

with Trust

  

Term of
Office

and

Length of
Time
Served*

  

Principal

Occupation(s) During

the Past 5 Years

  

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

  

Other

Directorships

Held by

Independent

Trustees During

the Past 5 Years

Victoria J. Herget–1951

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2019    Formerly, Managing Director (1993-2001), Principal (1985-1993), Vice President (1978-1985) and Assistant Vice President (1973-1978), Zurich Scudder Investments (investment adviser) (and its predecessor firms).    230    Trustee (2000-Present) and Chair (2010-2017), Newberry Library; Trustee, Chikaming Open Lands (2014-Present); formerly, Trustee, Mather LifeWays (2001-2021); Trustee, certain funds in the Oppenheimer Funds complex (2012-2019); Board Chair (2008-2015) and Director (2004-2018), United Educators Insurance Company; Independent Director, First American Funds (2003-2011); Trustee (1992-2007), Chair of the Board of Trustees (1999-2007), Investment Committee Chair (1994-1999) and Investment Committee member (2007-2010), Wellesley College; Trustee, BoardSource (2006-2009); Trustee, Chicago City Day School (1994-2005).

 

*

This is the date the Independent Trustee began serving the Trust. Each Independent Trustee serves an indefinite term, until his or her successor is elected.

**

Fund Complex includes all open- and closed-end funds (including all of their portfolios) advised by the Adviser and any affiliated person of the Adviser.

 

    46    

 

 

 

 


 

Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of
Birth of Independent Trustees
  

Position(s)
Held

with Trust

  

Term of
Office

and

Length of
Time
Served*

  

Principal

Occupation(s) During

the Past 5 Years

  

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

  

Other

Directorships

Held by

Independent

Trustees During

the Past 5 Years

Marc M. Kole–1960

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Chair of the Audit Committee and Trustee    Chair of the Audit Committee since 2008; Trustee since 2007    Formerly, Managing Director of Finance (2020-2021) and Senior Director of Finance (2015-2020), By The Hand Club for Kids (not-for-profit); Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Regional Chief Financial Officer, United Healthcare (2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).    230    Formerly, Treasurer (2018-2021), Finance Committee Member (2015-2021) and Audit Committee Member (2015), Thornapple Evangelical Covenant Church; Board and Finance Committee Member (2009-2017) and Treasurer (2010-2015, 2017), NorthPointe Christian Schools.

Yung Bong Lim–1964

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Chair of the Investment Oversight Committee and Trustee    Chair of the Investment Oversight Committee since 2014; Trustee since 2013    Managing Partner, RDG Funds LLC (real estate) (2008-Present); formerly, Managing Director, Citadel LLC (1999-2007).    230    Board Director, Beacon Power Services, Corp. (2019-Present); formerly, Advisory Board Member, Performance Trust Capital Partners, LLC (2008-2020).

 

*

This is the date the Independent Trustee began serving the Trust. Each Independent Trustee serves an indefinite term, until his or her successor is elected.

**

Fund Complex includes all open- and closed-end funds (including all of their portfolios) advised by the Adviser and any affiliated person of the Adviser.

 

    47    

 

 

 

 


 

Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of
Birth of Independent Trustees
  

Position(s)
Held

with Trust

  

Term of
Office

and

Length of
Time
Served*

  

Principal

Occupation(s) During

the Past 5 Years

  

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

  

Other

Directorships

Held by

Independent

Trustees During

the Past 5 Years

Joanne Pace–1958

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2019    Formerly, Senior Advisor, SECOR Asset Management, LP (2010-2011); Managing Director and Chief Operating Officer, Morgan Stanley Investment Management (2006-2010); Partner and Chief Operating Officer, FrontPoint Partners, LLC (alternative investments) (2005-2006); Managing Director (2003-2005), Global Head of Human Resources and member of Executive Board and Operating Committee (2004-2005), Global Head of Operations and Product Control (2003-2004), Credit Suisse (investment banking); Managing Director (1997-2003), Controller and Principal Accounting Officer (1999-2003), Chief Financial Officer (temporary assignment) for the Oversight Committee, Long Term Capital Management (1998-1999), Morgan Stanley.    230    Board Director, Horizon Blue Cross Blue Shield of New Jersey (2012- Present); Governing Council Member (2016-Present) and Chair of Education Committee (2017-2021), Independent Directors Council (IDC); Council Member, New York-Presbyterian Hospital’s Leadership Council on Children’s and Women’s Health (2012-Present); formerly, Advisory Board Director, The Alberleen Group LLC (2012-2021); Board Member, 100 Women in Finance (2015-2020); Trustee, certain funds in the Oppenheimer Funds complex (2012-2019); Lead Independent Director and Chair of the Audit and Nominating Committee of The Global Chartist Fund, LLC, Oppenheimer Asset Management (2011-2012); Board Director, Managed Funds Association (2008-2010); Board Director (2007-2010) and Investment Committee Chair (2008-2010), Morgan Stanley Foundation.

 

*

This is the date the Independent Trustee began serving the Trust. Each Independent Trustee serves an indefinite term, until his or her successor is elected.

**

Fund Complex includes all open- and closed-end funds (including all of their portfolios) advised by the Adviser and any affiliated person of the Adviser.

 

    48    

 

 

 

 


 

Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of
Birth of Independent Trustees
  

Position(s)
Held

with Trust

  

Term of
Office

and

Length of
Time
Served*

  

Principal

Occupation(s) During

the Past 5 Years

  

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

  

Other

Directorships

Held by

Independent

Trustees During

the Past 5 Years

Gary R. Wicker–1961

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2013    Senior Vice President of Global Finance and Chief Financial Officer, RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (a division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005- 2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider); Senior Audit Manager (1994-1997), PricewaterhouseCoopers LLP.    230    Board Member and Treasurer, Our Daily Bread Ministries Canada (2015- Present); Board and Finance Committee Member, West Michigan Youth For Christ (2010- Present).

Donald H. Wilson–1959

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Chair of the Board and Trustee    Chair since 2012; Trustee since 2007    Chair, President and Chief Executive Officer, McHenry Bancorp Inc. and McHenry Savings Bank (subsidiary) (2018-Present); formerly, Chair and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-2017); President and Chief Executive Officer, Stone Pillar Investments, Ltd. (advisory services to the financial sector) (2016-2018); Chair, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank–Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).    230    Director, Penfield Children’s Center (2004-Present); Board Chair, Gracebridge Alliance, Inc. (2015-Present).

 

*

This is the date the Independent Trustee began serving the Trust. Each Independent Trustee serves an indefinite term, until his or her successor is elected.

**

Fund Complex includes all open- and closed-end funds (including all of their portfolios) advised by the Adviser and any affiliated person of the Adviser.

 

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Trustees and Officers–(continued)

    

    

    

    

 

The Interested Trustee and the executive officers of the Trust, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex overseen by the Interested Trustee and the other directorships, if any, held by the Interested Trustee are shown below:

 

Name, Address and Year of Birth
of Interested Trustee
  

Position(s)
Held

with Trust

  

Term of
Office

and

Length of
Time
Served*

  

Principal

Occupation(s) During

the Past 5 Years

  

Number of
Portfolios

in Fund
Complex**
Overseen by
Interested

Trustee

  

Other

Directorships

Held by

Interested

Trustee During

the Past 5 Years

Anna Paglia–1974

Invesco Capital Management LLC

3500 Lacey Road Suite 700

Downers Grove, IL 60515

   Trustee, President and Principal Executive Officer    Trustee since 2022, President and Principal Executive Officer since 2020    President and Principal Executive Officer (2020-Present) and Trustee (2022-Present), Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, 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; Managing Director and Global Head of ETFs and Indexed Strategies, Chief Executive Officer and Principal Executive Officer, Invesco Capital Management LLC (2020-Present); Chief Executive Officer, Manager and Principal Executive Officer, Invesco Specialized Products, LLC (2020-Present); Vice President, Invesco Indexing LLC (2020-Present); formerly, Secretary, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust (2011-2020), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-2020) and Invesco Exchange-Traded Self-Indexed Fund Trust (2015-2020); Head of Legal (2010-2020) and Secretary (2015-2020), Invesco Capital Management LLC; Manager and Assistant Secretary, Invesco Indexing LLC (2017-2020); Head of Legal and Secretary, Invesco Specialized Products, LLC (2018-2020); Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); and Associate Counsel at Barclays Global Investors Ltd. (2004-2006).    230    None

 

*

This is the date the Interested Trustee began serving the Trust. The Interested Trustee serves an indefinite term, until his successor is elected.

**

Fund Complex includes all open- and closed-end funds (including all of their portfolios) advised by the Adviser and any affiliated person of the Adviser.

 

    50    

 

 

 

 


 

Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of Birth
of Executive Officers
  

Position(s)
Held

with Trust

   Length of
Time
Served*
  

Principal

Occupation(s) During

the Past 5 Years

Adrien Deberghes–1967

Invesco Capital Management LLC

11 Greenway Plaza, Suite 1000 Houston, TX 77046

   Vice President    Since 2020    Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, 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 (2020-Present); Head of the Fund Office of the CFO, Fund Administration and Vice President, Invesco Advisers, Inc. (2020-Present); Principal Financial Officer, Treasurer and Vice President, The Invesco Funds (2020-Present); formerly, Senior Vice President and Treasurer, Fidelity Investments (2008-2020).

Kelli Gallegos–1970

Invesco Capital Management LLC

11 Greenway Plaza, Suite 1000

Houston, TX 77046

   Vice President and Treasurer    Since 2018    Vice President, Invesco Advisers, Inc. (2020-Present); Principal Financial and Accounting Officer- Pooled Investments, Invesco Specialized Products, LLC (2018-Present); Vice President and Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, 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 (2018-Present); Principal Financial and Accounting Officer-Pooled Investments, Invesco Capital Management LLC (2018-Present); Vice President and Assistant Treasurer (2008-Present), The Invesco Funds; formerly, Principal Financial Officer (2016-2020) and Assistant Vice President (2008-2016), The Invesco Funds; Assistant Treasurer, Invesco Specialized Products, LLC (2018); Assistant Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust (2012-2018), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-2018) and Invesco Exchange-Traded Self-Indexed Fund Trust (2016-2018); and Assistant Treasurer, Invesco Capital Management LLC (2013-2018).

Adam Henkel–1980

Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Secretary    Since 2020    Head of Legal and Secretary, Invesco Capital Management LLC and Invesco Specialized Products, LLC (2020-present); Secretary, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, 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 (2020-Present); Assistant Secretary, Invesco Capital Markets, Inc. (2020-Present); Assistant Secretary, The Invesco Funds (2014-Present); Manager and Assistant Secretary, Invesco Indexing LLC (2020-Present); Assistant Secretary, Invesco Investment Advisers LLC (2020-Present); formerly, Assistant Secretary of Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-2020); Chief Compliance Officer of Invesco Capital Management LLC (2017); Chief Compliance Officer of Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2017); Senior Counsel, Invesco, Ltd. (2013-2020); Assistant Secretary, Invesco Specialized Products, LLC (2018-2020).

 

*

This is the date each Officer began serving the Trust in their current position. Each Officer serves an indefinite term, until his or her successor is elected.

 

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Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of Birth
of Executive Officers
  

Position(s)
Held

with Trust

   Length of
Time
Served*
  

Principal

Occupation(s) During

the Past 5 Years

Peter Hubbard–1981

Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Vice President    Since 2009    Vice President, Invesco Specialized Products, LLC (2018-Present); Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust (2009-Present), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present) and Invesco Exchange-Traded Self-Indexed Fund Trust (2016-Present); Vice President and Director of Portfolio Management, Invesco Capital Management LLC (2010-Present); and Vice President, Invesco Advisers, Inc. (2020-Present); formerly, Vice President of Portfolio Management, Invesco Capital Management LLC (2008-2010); Portfolio Manager, Invesco Capital Management LLC (2007-2008); Research Analyst, Invesco Capital Management LLC (2005-2007); Research Analyst and Trader, Ritchie Capital, a hedge fund operator (2003-2005).

Sheri Morris–1964

Invesco Capital Management LLC

11 Greenway Plaza, Suite 1000

Houston, TX 77046

   Vice President    Since 2012    Head of Global Fund Services, Invesco Ltd. (2019-Present); Vice President, OppenheimerFunds, Inc. (2019-Present); President and Principal Executive Officer, The Invesco Funds (2016-Present); Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2020-Present); Director, Invesco Trust Company (2022-Present) and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust (2012-Present), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present) and Invesco Exchange-Traded Self-Indexed Fund Trust (2016-Present); formerly, Treasurer (2008-2020), Vice President and Principal Financial Officer, The Invesco Funds (2008-2016); Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange- Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Treasurer, Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Vice President, Invesco Advisers, Inc. (2009-2020).

Rudolf E. Reitmann–1971

Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Vice President    Since 2013    Head of Global Exchange Traded Funds Services, Invesco Specialized Products, LLC (2018-Present); Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust (2013-Present), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present) and Invesco Exchange-Traded Self-Indexed Fund Trust (2016-Present); Head of Global Exchange Traded Funds Services, Invesco Capital Management LLC (2013-Present); Vice President, Invesco Capital Markets, Inc. (2018-Present).

 

*

This is the date each Officer began serving the Trust in their current position. Each Officer serves an indefinite term, until his or her successor is elected.

 

    52    

 

 

 

 


 

Trustees and Officers–(continued)

    

    

    

    

 

Name, Address and Year of Birth
of Executive Officers
  

Position(s)
Held

with Trust

   Length of
Time
Served*
  

Principal

Occupation(s) During

the Past 5 Years

Melanie Zimdars–1976

Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Chief Compliance Officer    Since 2017    Chief Compliance Officer, Invesco Specialized Products, LLC (2018-Present); Chief Compliance Officer, Invesco Capital Management LLC (2017-Present); Chief Compliance Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, 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 (2017-Present); formerly, Vice President and Deputy Chief Compliance Officer, ALPS Holding, Inc. (2009-2017); Mutual Fund Treasurer/ Chief Financial Officer, Wasatch Advisors, Inc. (2005-2008); Compliance Officer, U.S. Bancorp Fund Services, LLC (2001-2005).

 

*

This is the date each Officer began serving the Trust in their current position. Each Officer serves an indefinite term, until his or her successor is elected.

Availability of Additional Information About the Trustees

The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request at (800) 983-0903.

 

    53    

 

 

 

 


 

Approval of Investment Advisory and Sub-Advisory Contracts

At a meeting held on April 6, 2022, the Board of Trustees of the Invesco Exchange-Traded Fund Trust II (the “Trust”), including the Independent Trustees, approved the continuation of the Investment Advisory Agreement between Invesco Capital Management LLC (the “Adviser”) and the Trust for the following 74 series (each, a “Fund” and collectively, the “Funds”):

 

Invesco 1-30 Laddered Treasury ETF

Invesco California AMT-Free Municipal Bond ETF

Invesco CEF Income Composite ETF

Invesco China Technology ETF

Invesco DWA Developed Markets Momentum ETF

Invesco DWA Emerging Markets Momentum ETF

Invesco DWA SmallCap Momentum ETF

Invesco Emerging Markets Sovereign Debt ETF

Invesco FTSE International Low Beta Equal Weight ETF

Invesco FTSE RAFI Developed Markets ex-U.S. ETF

Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid ETF

Invesco FTSE RAFI Emerging Markets ETF

Invesco Fundamental High Yield® Corporate Bond ETF

Invesco Fundamental Investment Grade Corporate Bond ETF

Invesco Global Clean Energy ETF

Invesco Global Short Term High Yield Bond ETF

Invesco Global Water ETF

Invesco International BuyBack Achievers™ ETF

Invesco International Corporate Bond ETF

Invesco KBW Bank ETF

Invesco KBW High Dividend Yield Financial ETF

Invesco KBW Premium Yield Equity REIT ETF

Invesco KBW Property & Casualty Insurance ETF

Invesco KBW Regional Banking ETF

Invesco MSCI Green Building ETF

Invesco NASDAQ 100 ETF

Invesco NASDAQ Next Gen 100 ETF

Invesco National AMT-Free Municipal Bond ETF

Invesco New York AMT-Free Municipal Bond ETF

Invesco Preferred ETF

Invesco PureBetaSM 0-5 Yr US TIPS ETF

Invesco PureBetaSM FTSE Developed ex-North America ETF

Invesco PureBetaSM FTSE Emerging Markets ETF

Invesco PureBetaSM MSCI USA ETF

Invesco PureBetaSM MSCI USA Small Cap ETF

Invesco PureBetaSM US Aggregate Bond ETF

Invesco Russell 1000 Enhanced Equal Weight ETF

Invesco Russell 1000 Equal Weight ETF

Invesco Russell 1000 Low Beta Equal Weight ETF

Invesco S&P 500® Enhanced Value ETF

Invesco S&P 500® ex-Rate Sensitive Low Volatility ETF

Invesco S&P 500® High Beta ETF

Invesco S&P 500® High Dividend Low Volatility ETF

Invesco S&P 500® Low Volatility ETF

Invesco S&P 500 Minimum Variance ETF

Invesco S&P 500® Momentum ETF

Invesco S&P 500 Revenue ETF

Invesco S&P Emerging Markets Low Volatility ETF

Invesco S&P Emerging Markets Momentum ETF

Invesco S&P International Developed High Dividend Low Volatility ETF

Invesco S&P International Developed Low Volatility ETF

Invesco S&P International Developed Momentum ETF

Invesco S&P International Developed Quality ETF

Invesco S&P MidCap 400 Revenue ETF

Invesco S&P MidCap Low Volatility ETF

Invesco S&P SmallCap 600 Revenue ETF

Invesco S&P SmallCap Consumer Discretionary ETF

Invesco S&P SmallCap Consumer Staples ETF

Invesco S&P SmallCap Energy ETF

Invesco S&P SmallCap Financials ETF

Invesco S&P SmallCap Health Care ETF

Invesco S&P SmallCap High Dividend Low Volatility ETF

Invesco S&P SmallCap Industrials ETF

Invesco S&P SmallCap Information Technology ETF

Invesco S&P SmallCap Low Volatility ETF

Invesco S&P SmallCap Materials ETF

Invesco S&P SmallCap Quality ETF

Invesco S&P SmallCap Utilities & Communication Services ETF

Invesco S&P Ultra Dividend Revenue ETF

Invesco Senior Loan ETF

Invesco Taxable Municipal Bond ETF

Invesco Treasury Collateral ETF

Invesco Variable Rate Preferred ETF

Invesco VRDO Tax-Free ETF

 

Also at the April 6, 2022 meeting, the Board of Trustees of the Trust, including the Independent Trustees, approved the continuation of the Investment Sub-Advisory Agreement between the Adviser and the following seven affiliated sub-advisers for each of Invesco Senior Loan ETF and Invesco Treasury Collateral ETF (the “Sub-Advisory Agreement”): Invesco Advisers, Inc.; Invesco Asset Management Deutschland, GmbH; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Hong Kong Limited; Invesco Senior Secured Management, Inc.; and Invesco Canada Ltd. (each, a “Sub-Adviser” and collectively, the “Sub-Advisers”).

Investment Advisory Agreement

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the fees paid by the Funds and comparisons to amounts paid by other

 

    54    

 

 

 

 


 

Approval of Investment Advisory and Sub-Advisory Contracts–(continued)

    

    

    

    

 

comparable registered investment companies, (iv) the costs of services provided and estimated profits realized by the Adviser, (v) the extent to which economies of scale may be realized as a Fund grows and whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders and (vi) any further benefits realized by the Adviser or its affiliates from the Adviser’s relationship with the Funds.

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser’s services, the Trustees reviewed information concerning the functions performed by the Adviser for the Funds, information describing the Adviser’s current organization and staffing, including operational support provided by the Adviser’s parent organization, Invesco Ltd. (“Invesco”), and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser’s execution and/or oversight of execution of portfolio transactions on behalf of the Funds. The Trustees also reviewed information on the performance of the Funds and their underlying indexes for the one-year, three-year, five-year, ten-year and since-inception periods ended December 31, 2021, as applicable, including reports for each of those periods on the correlation and tracking error between each Fund’s performance and the performance of its underlying index, as well as the Adviser’s analysis of the tracking error and correlation between certain Funds and their underlying indexes. In reviewing the tracking error reports, the Trustees considered information provided by Invesco’s independent performance and risk management group with respect to general expected tracking error ranges. The Trustees also considered that certain Funds were created in connection with the purchases by Invesco of the exchange-traded funds (“ETFs”) businesses of Guggenheim Capital LLC (“Guggenheim”) on April 6, 2018 or May 18, 2018 and Massachusetts Mutual Life Insurance Company (“Oppenheimer”) on May 24, 2019 (each, a “Transaction”), and that each such Fund’s performance prior to the closing of the applicable Transaction is that of its predecessor Guggenheim ETF or Oppenheimer ETF. The Trustees noted that, for each applicable period, the correlation for each Fund, other than the one-year and since-inception periods for Invesco VRDO Tax-Free ETF and the one-year period for Invesco Treasury Collateral ETF, was within the targeted range set forth in the Trust’s registration statement. The Trustees reviewed the reasons provided by the Adviser for Invesco VRDO Tax-Free ETF’s and Invesco Treasury Collateral ETF’s level of correlation to their respective underlying indexes. The Trustees noted that, for each applicable period, the tracking error for all Funds was within the targeted range set forth in the Trust’s registration statement. The Trustees concluded that each Fund’s correlation to its underlying index and the tracking error for each Fund were within an acceptable range given that Fund’s particular circumstances.

The Trustees considered the services provided by the Adviser in its oversight of the Funds’ administrator, custodian and transfer agent, and its oversight of the Sub-Advisers for Invesco Senior Loan ETF and Invesco Treasury Collateral ETF. They noted the significant amount of time, effort and resources that had been devoted to this oversight function.

Based on their review, the Trustees concluded that the nature, extent and quality of services provided by the Adviser to the Funds under the Investment Advisory Agreement were appropriate and reasonable.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund’s net expense ratio and unitary advisory fee. The Trustees noted that the annual advisory fee charged to each Fund, as set forth below, is a unitary advisory fee and that the Adviser pays all other operating expenses of each Fund, including the fees payable to the Sub-Advisers for Invesco Senior Loan ETF and Invesco Treasury Collateral ETF, except that each Fund pays its brokerage expenses, taxes, interest (including, for Invesco Senior Loan ETF, interest expenses associated with any draws on its line of credit), acquired fund fees and expenses, if any, litigation expenses, costs incurred in connection with proxies (except certain proxies) and other extraordinary expenses:

 

   

0.04% of the Fund’s average daily net assets for Invesco PureBetaSM MSCI USA ETF;

 

   

0.05% of the Fund’s average daily net assets for Invesco PureBetaSM US Aggregate Bond ETF;

 

   

0.06% of the Fund’s average daily net assets for Invesco PureBetaSM MSCI USA Small Cap ETF;

 

   

0.07% of the Fund’s average daily net assets for Invesco PureBetaSM 0-5 Yr US TIPS ETF and Invesco PureBetaSM FTSE Developed ex-North America ETF;

 

   

0.08% of the Fund’s average daily net assets for Invesco Treasury Collateral ETF;

 

   

0.10% of the Fund’s average daily net assets for Invesco S&P 500 Minimum Variance ETF;

 

   

0.13% of the Fund’s average daily net assets for Invesco S&P 500 Enhanced Value ETF and Invesco S&P 500 Momentum ETF;

 

    55    

 

 

 

 


 

Approval of Investment Advisory and Sub-Advisory Contracts–(continued)

    

    

    

    

 

   

0.14% of the Fund’s average daily net assets for Invesco PureBetaSM FTSE Emerging Markets ETF;

 

   

0.15% of the Fund’s average daily net assets for Invesco NASDAQ 100 ETF and Invesco NASDAQ Next Gen 100 ETF;

 

   

0.20% of the Fund’s average daily net assets for Invesco Russell 1000 Equal Weight ETF;

 

   

0.22% of the Fund’s average daily net assets for Invesco Fundamental Investment Grade Corporate Bond ETF;

 

   

0.25% of the Fund’s average daily net assets for Invesco 1-30 Laddered Treasury ETF, Invesco S&P 500® ex-Rate Sensitive Low Volatility ETF, Invesco S&P 500® High Beta ETF, Invesco S&P 500® Low Volatility ETF, Invesco S&P International Developed Low Volatility ETF, Invesco S&P International Developed Momentum ETF, Invesco S&P MidCap Low Volatility ETF, Invesco S&P SmallCap Low Volatility ETF and Invesco VRDO Tax-Free ETF;

 

   

0.28% of the Fund’s average daily net assets for Invesco California AMT-Free Municipal Bond ETF, Invesco National AMT-Free Municipal Bond ETF, Invesco New York AMT-Free Municipal Bond ETF and Invesco Taxable Municipal Bond ETF;

 

   

0.29% of the Fund’s average daily net assets for Invesco Russell 1000 Enhanced Equal Weight ETF, Invesco S&P Emerging Markets Momentum ETF, Invesco S&P Emerging Markets Low Volatility ETF, Invesco S&P International Developed Quality ETF, Invesco S&P SmallCap Consumer Discretionary ETF, Invesco S&P SmallCap Consumer Staples ETF, Invesco S&P SmallCap Energy ETF, Invesco S&P SmallCap Financials ETF, Invesco S&P SmallCap Health Care ETF, Invesco S&P SmallCap Industrials ETF, Invesco S&P SmallCap Information Technology ETF, Invesco S&P SmallCap Materials ETF, Invesco S&P SmallCap Quality ETF and Invesco S&P SmallCap Utilities & Communication Services ETF;

 

   

0.30% of the Fund’s average daily net assets for Invesco S&P 500® High Dividend Low Volatility ETF, Invesco S&P SmallCap High Dividend Low Volatility ETF and Invesco S&P International Developed High Dividend Low Volatility ETF;

 

   

0.35% of the Fund’s average daily net assets for Invesco Global Short Term High Yield Bond ETF, Invesco KBW Bank ETF, Invesco KBW High Dividend Yield Financial ETF, Invesco KBW Premium Yield Equity REIT ETF, Invesco KBW Property & Casualty Insurance ETF, Invesco KBW Regional Banking ETF and Invesco Russell 1000 Low Beta Equal Weight ETF;

 

   

0.39% of the Fund’s average daily net assets for Invesco MSCI Green Building ETF, Invesco S&P 500 Revenue ETF, Invesco S&P MidCap 400 Revenue ETF, Invesco S&P SmallCap 600 Revenue ETF and Invesco S&P Ultra Dividend Revenue ETF;

 

   

0.45% of the Fund’s daily net assets for Invesco FTSE International Low Beta Equal Weight ETF and Invesco FTSE RAFI Developed Markets ex-U.S. ETF;

 

   

0.49% of the Fund’s daily net assets for Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid ETF and Invesco FTSE RAFI Emerging Markets ETF;

 

   

0.50% of the Fund’s daily net assets for Invesco CEF Income Composite ETF, Invesco Emerging Markets Sovereign Debt ETF, Invesco Fundamental High Yield® Corporate Bond ETF, Invesco International Corporate Bond ETF, Invesco Preferred ETF and Invesco Variable Rate Preferred ETF;

 

   

0.55% of the Fund’s daily net assets for Invesco International BuyBack AchieversTM ETF;

 

   

0.60% of the Fund’s daily net assets for Invesco DWA SmallCap Momentum ETF;

 

   

0.65% of the Fund’s daily net assets for Invesco Senior Loan ETF;

 

   

0.70% of the Fund’s daily net assets for Invesco China Technology ETF;

 

   

0.75% of the Fund’s daily net assets for Invesco Global Clean Energy ETF and Invesco Global Water ETF;

 

   

0.80% of the Fund’s daily net assets for Invesco DWA Developed Markets Momentum ETF; and

 

   

0.90% of the Fund’s daily net assets for Invesco DWA Emerging Markets Momentum ETF.

The Trustees compared each Fund’s net expense ratio to information compiled by the Adviser from Lipper Inc. (“Lipper”) databases on the net expense ratios of comparable ETFs, open-end (non-ETF) index funds and open-end (non-ETF) actively-managed funds, as applicable. The Trustees noted that the net expense ratios for certain Funds were equal to or lower than the median net expense ratios of their ETF and open-end index peer funds, as applicable, as illustrated in the table below. The Trustees also noted that the net expense ratios for all of the Funds were lower than the median net expense ratios of their

 

    56    

 

 

 

 


 

Approval of Investment Advisory and Sub-Advisory Contracts–(continued)

    

    

    

    

 

open-end actively-managed peer funds. The Trustees noted that a portion of each Fund’s operating expenses was attributable to a sub-license fee payable out of the unitary advisory fee charged to that Fund.

 

                                                                                            
     Equal    Equal to/Lower      Lower than
     to/Lower    than Open-End      Open-End
     than ETF    Index Fund      Active Fund
Invesco Fund    Peer Median    Peer Median*      Peer Median

Invesco 1-30 Laddered Treasury ETF

         X

Invesco California AMT-Free Municipal Bond ETF

        N/A      X

Invesco CEF Income Composite ETF

   X      N/A      X

Invesco China Technology ETF

        N/A      X

Invesco DWA Developed Markets Momentum ETF

         X

Invesco DWA Emerging Markets Momentum ETF

         X

Invesco DWA SmallCap Momentum ETF

         X

Invesco Emerging Markets Sovereign Debt ETF

         X

Invesco FTSE International Low Beta Equal Weight ETF

   X          X      X

Invesco FTSE RAFI Developed Markets ex-U.S. ETF

         X

Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid ETF

            X      X

Invesco FTSE RAFI Emerging Markets ETF

   X       X

Invesco Fundamental High Yield® Corporate Bond ETF

            X      X

Invesco Fundamental Investment Grade Corporate Bond ETF

         X

Invesco Global Clean Energy ETF

            X      X

Invesco Global Short Term High Yield Bond ETF

   X      N/A      X

Invesco Global Water ETF

            X      X

Invesco International BuyBack AchieversTM ETF

         X

Invesco International Corporate Bond ETF

         X

Invesco KBW Bank ETF

   X       X

Invesco KBW High Dividend Yield Financial ETF

   X       X

Invesco KBW Premium Yield Equity REIT ETF

   X       X

Invesco KBW Property & Casualty Insurance ETF

   X       X

Invesco KBW Regional Banking ETF

   X       X

Invesco MSCI Green Building ETF

            X      X

Invesco NASDAQ 100 ETF

   X       X

Invesco NASDAQ Next Gen 100 ETF

   X       X

Invesco National AMT-Free Municipal Bond ETF

         X

Invesco New York AMT-Free Municipal Bond ETF

        N/A      X

Invesco Preferred ETF

        N/A      X

Invesco PureBetaSM 0-5 Yr US TIPS ETF

   X       X

Invesco PureBetaSM FTSE Developed ex-North America ETF

   X          X      X

Invesco PureBetaSM FTSE Emerging Markets ETF

   X          X      X

Invesco PureBetaSM MSCI USA ETF

   X          X      X

Invesco PureBetaSM MSCI USA Small Cap ETF

   X          X      X

Invesco PureBetaSM US Aggregate Bond ETF

   X          X      X

Invesco Russell 1000 Enhanced Equal Weight ETF

         X

Invesco Russell 1000 Equal Weight ETF

   X       X

Invesco Russell 1000 Low Beta Equal Weight ETF

         X

Invesco S&P 500 Enhanced Value ETF

   X          X      X

Invesco S&P 500® ex-Rate Sensitive Low Volatility ETF

   X       X

Invesco S&P 500® High Beta ETF

   X       X

Invesco S&P 500® High Dividend Low Volatility ETF

   X          X      X

 

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Approval of Investment Advisory and Sub-Advisory Contracts–(continued)

    

    

    

    

 

                                                                                            
     Equal    Equal to/Lower    Lower than
     to/Lower    than Open-End    Open-End
     than ETF    Index Fund    Active Fund
Invesco Fund    Peer Median    Peer Median*    Peer Median

Invesco S&P 500® Low Volatility ETF

   X       X

Invesco S&P 500 Minimum Variance ETF

   X        X    X

Invesco S&P 500 Momentum ETF

   X        X    X

Invesco S&P 500 Revenue ETF

         X

Invesco S&P Emerging Markets Low Volatility ETF

   X       X

Invesco S&P Emerging Markets Momentum ETF

   X       X

Invesco S&P International Developed High Dividend Low Volatility ETF

   X        X    X

Invesco S&P International Developed Low Volatility ETF

   X       X

Invesco S&P International Developed Momentum ETF

   X    N/A    X

Invesco S&P International Developed Quality ETF

   X    N/A    X

Invesco S&P MidCap 400 Revenue ETF

         X

Invesco S&P MidCap Low Volatility ETF

   X        X    X

Invesco S&P SmallCap 600 Revenue ETF

          X    X

Invesco S&P SmallCap Consumer Discretionary ETF

   X       X

Invesco S&P SmallCap Consumer Staples ETF

   X       X

Invesco S&P SmallCap Energy ETF

   X       X

Invesco S&P SmallCap Financials ETF

   X       X

Invesco S&P SmallCap Health Care ETF

   X       X

Invesco S&P SmallCap High Dividend Low Volatility ETF

   X        X    X

Invesco S&P SmallCap Industrials ETF

   X       X

Invesco S&P SmallCap Information Technology ETF

   X       X

Invesco S&P SmallCap Low Volatility ETF

   X        X    X

Invesco S&P SmallCap Materials ETF

   X       X

Invesco S&P SmallCap Quality ETF

   X        X    X

Invesco S&P SmallCap Utilities & Communication Services ETF

   X        X    X

Invesco S&P Ultra Dividend Revenue ETF

          X    X

Invesco Senior Loan ETF

   X    N/A    X

Invesco Taxable Municipal Bond ETF

      N/A    X

Invesco Treasury Collateral ETF

   X       X

Invesco Variable Rate Preferred ETF

          X    X

Invesco VRDO Tax-Free ETF

      N/A    X

 

*

The information provided by the Adviser indicated that certain Funds did not have any comparable open-end index fund peers. Those Funds have been designated in this column with an “N/A” for not available.

In response to questions from the Independent Trustees, the Adviser provided supplemental information regarding each of Invesco 1-30 Laddered Treasury ETF, Invesco California AMT-Free Municipal Bond ETF, Invesco DWA Developed Markets Momentum ETF, Invesco Global Clean Energy ETF, Invesco International Corporate Bond ETF, Invesco National AMT-Free Municipal Bond ETF, Invesco New York AMT-Free Municipal Bond ETF and Invesco VRDO Tax-Free ETF’s advisory fees and total expenses and the Lipper peer data. The Adviser explained its view that the advisory fees and total expenses for these Funds are competitive and generally in line with other comparable funds in the marketplace, particularly in light of the level and nature of services provided and the investment management style of the Adviser. The Trustees also considered the Adviser’s statements regarding its pricing philosophy and the differing pricing philosophy of certain of the peers.

The Trustees noted information, including fee information, provided by the Adviser regarding other investment products to which it provides investment advisory services, including products that have investment strategies comparable to certain of the Funds. The Trustees considered the Adviser’s explanation of the differences between the services provided to the Funds and to the other investment products it advises, noting the Adviser’s statement that the management and oversight of the Funds requires substantially more labor and expense.

 

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Approval of Investment Advisory and Sub-Advisory Contracts–(continued)

    

    

    

    

 

Based on all of the information provided, the Board concluded that each Fund’s unitary advisory fee was reasonable and appropriate in light of the services provided, the nature of the indexes, the distinguishing factors of the Funds, and the administrative, operational and management oversight costs for the Adviser.

In conjunction with their review of the unitary advisory fees, the Trustees considered information provided by the Adviser on the revenues received by the Adviser under the Investment Advisory Agreement for the Funds. The Trustees reviewed information provided by the Adviser on its overall profitability, as well as the estimated profitability to the Adviser from its relationship to each Fund. The Trustees concluded that the overall and estimated profitability to the Adviser was not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale may be realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund’s asset size and unitary advisory fee. The Trustees noted that any reduction in fixed costs associated with the management of the Funds would be enjoyed by the Adviser, but a unitary advisory fee provides a level of certainty in expenses for the Funds. The Trustees considered whether the unitary advisory fee rate for each Fund was reasonable in relation to the asset size of that Fund and concluded that the unitary advisory fee was reasonable and appropriate.

Fall-out Benefits. The Trustees considered that the Adviser identified no additional benefits it receives from its relationship with the Funds, and noted that the Adviser does not have any soft-dollar arrangements. The Trustees also considered benefits received by affiliates of the Adviser that may be directly or indirectly attributed to the Adviser’s relationship with the Funds, including brokerage fees, advisory fees for money market cash management vehicles and fees as the Funds’ direct securities lending agent. The Trustees also considered that Invesco Distributors, Inc., an affiliate of the Adviser, serves as each Fund’s distributor and is paid a distribution fee by the Adviser. The Board concluded that each Fund’s unitary advisory fee was reasonable, taking into account any ancillary benefits received by affiliates of the Adviser.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund. No single factor was determinative in the Board’s analysis.

Investment Sub-Advisory Agreement

As noted above, the Board of Trustees of the Trust, including the Independent Trustees, approved the continuation of the Sub-Advisory Agreement for each of Invesco Senior Loan ETF and Invesco Treasury Collateral ETF at a meeting held on April 6, 2022. The review process followed by the Board is described in detail above. In connection with the review of the Sub-Advisory Agreement, the Board considered the factors described below, among others.

Nature, Extent and Quality of Services. The Trustees considered the nature, extent and quality of services provided to Invesco Senior Loan ETF and Invesco Treasury Collateral ETF under the Sub-Advisory Agreement. The Board reviewed the qualifications and background of each Sub-Adviser, the services provided or to be provided by each Sub-Adviser, the investment approach of the Sub-Adviser whose investment personnel manage Invesco Senior Loan ETF’s and Invesco Treasury Collateral ETF’s assets, the experience and skills of the investment personnel responsible for the day-to-day management of the Funds, and the resources made available to such personnel.

Based on their review, the Trustees concluded that the nature, extent and quality of services provided by the Sub-Advisers to Invesco Senior Loan ETF and Invesco Treasury Collateral ETF under the Sub-Advisory Agreement were appropriate and reasonable.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser and the Sub-Advisers on the sub-advisory fee rates under the Sub-Advisory Agreement. The Trustees noted that the sub-advisory fees charged by the Sub-Advisers under the Sub-Advisory Agreement are consistent with the compensation structure used throughout Invesco when Invesco’s affiliates provide sub-advisory services for funds managed by other Invesco affiliates. The Board considered how the sub-advisory fees relate to the overall advisory fee for each of Invesco Senior Loan ETF and Invesco Treasury Collateral ETF and noted that the Adviser compensates the Sub-Advisers from its fee.

 

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Approval of Investment Advisory and Sub-Advisory Contracts–(continued)

    

    

    

    

 

The Trustees also reviewed the financial statements provided by Invesco Senior Secured Management, Inc., in connection with the March 15 and April 6, 2022 Board meetings, and Invesco Advisers, Inc., in connection with the April 6, 2022 meeting, and noted the net income generated by each firm. The Trustees noted that the Adviser compensates the Sub-Advisers from its fee and that the Adviser provided profitability information with respect to Invesco Senior Loan ETF and Invesco Treasury Collateral ETF.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. As part of their review of the Investment Advisory Agreement for Invesco Senior Loan ETF and Invesco Treasury Collateral ETF, the Trustees considered the extent to which economies of scale may be realized as the Funds grow and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees considered whether the sub-advisory fee rates for Invesco Senior Loan ETF and Invesco Treasury Collateral ETF were reasonable in relation to the asset size of the Funds and concluded that the flat sub-advisory fee rates were reasonable and appropriate.

Fall-out Benefits. The Trustees noted that Invesco Advisers, Inc. receives management fees from money market funds into which the Funds’ and other Invesco ETFs’ excess cash and securities lending collateral may be invested, and that the Adviser waives its fees with respect to each Fund in an amount equal to the fees received by Invesco Advisers, Inc. on the Fund’s excess cash invested in the money market funds. The Trustees also noted the fees received by Invesco Advisers, Inc. in its capacity as the direct securities lending agent for the Invesco ETFs. The Trustees noted that the Sub-Advisers had not identified any further benefits that they derived from their relationships with Invesco Senior Loan ETF and Invesco Treasury Collateral ETF, and that the Sub-Advisers generally do not use or generate soft-dollars with respect to the Funds. The Board concluded that the sub-advisory fee with respect to each Fund was reasonable, taking into account any ancillary benefits received by the Sub-Advisers.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Sub-Advisory Agreement for Invesco Senior Loan ETF and Invesco Treasury Collateral ETF. No single factor was determinative in the Board’s analysis.

 

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Proxy Voting Policies and Procedures

A description of the Trust’s proxy voting policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available, without charge and upon request, by calling (800) 983-0903. This information is also available on the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov.

Information regarding how each Fund voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is available, without charge and upon request, by (i) calling (800) 983-0903; or (ii) accessing the Trust’s Form N-PX on the Commission’s website at www.sec.gov.

Quarterly Portfolios

The Trust files its complete schedule of portfolio holdings for the Funds with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Forms N-PORT are available on the Commission’s website at www.sec.gov.

Frequency Distribution of Discounts and Premiums

A table showing the number of days the market price of each Fund’s shares was greater than the Fund’s net asset value, and the number of days it was less than the Fund’s net asset value (i.e., premium or discount) for the most recently completed calendar year, and the calendar quarters since that year end (or the life of the Fund, if shorter) may be found at the Fund’s website at www.invesco.com/ETFs.


 

 

 

 

 

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