Prospectus
February
28,
2023
Invesco
Exchange-Traded Fund Trust II
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Invesco
Global Short Term High Yield Bond ETF |
NYSE
Arca, Inc. |
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
The Invesco Global
Short Term High Yield Bond ETF (the “Fund”) seeks to track the investment
results (before fees and expenses) of the DB Global Short Maturity High Yield
Bond Index (the “Underlying Index”).
This table
describes the fees and expenses that you may pay if you buy, hold, and sell
shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and example
below.
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Management
Fees |
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Other
Expenses |
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Total
Annual Fund Operating Expenses |
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The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then sell
all of your Shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. This example does not include brokerage commissions that
investors may pay to buy and sell Shares. Although your actual costs may be
higher or lower, your costs, based on these assumptions, would
be:
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1
Year |
3
Years |
5
Years |
10
Years |
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$ |
$ |
$ |
$ |
The Fund generally
will invest at least 80% of its total assets in the components that comprise the
Underlying Index. Strictly in accordance with its guidelines and mandated
procedures, Deutsche Bank Securities Inc. (“DB” or the “Index Provider”)
compiles and maintains the Underlying Index, which is composed of U.S. dollar
denominated,
publicly issued,
institutionally traded short-term bonds that are rated below investment grade.
The Underlying Index is composed of bonds issued by corporations, as well as
sovereign or quasi-government entities, that: (i) are denominated in U.S.
dollars; (ii) are rated below “investment grade” (i.e., have a “composite
rating” from DB of between “C” and “BB+” (both inclusive); (iii) have not been
marked as defaulted by any rating agency; (iv) have generally three years or
less to maturity; (v) have a minimum amount outstanding of at least $250
million; and (vi) have a fixed coupon.
Eligible
bonds must be rated by at least one of S&P Global Ratings (“S&P”),
Moody’s Investors Service, Inc. (“Moody’s”) or Fitch Ratings Inc. (“Fitch”). DB
converts all available ratings for each bond into a numerical score, and then
calculates an average score for each bond from those available ratings that
corresponds to DB’s “composite rating” system.
As
of December 31, 2022, the
Underlying Index was comprised of 541
constituents.
The
Fund does not purchase all of the securities in the Underlying Index; instead, the
Fund utilizes a “sampling” methodology to seek to achieve its investment
objective.
The following
summarizes the principal risks of investing in the Fund.
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, military conflict, acts of terrorism,
economic crisis or
other events could result in increased premiums or discounts to the Fund’s net
asset value (“NAV”).
Index
Risk.
Unlike many investment companies, the Fund does not utilize an investing
strategy that seeks returns in excess of the Underlying Index. Therefore, the
Fund would not necessarily buy or sell a security unless that security is added
or removed, respectively, from the Underlying Index, even if that security
generally is underperforming. Additionally, the Fund rebalances its portfolio in
accordance with the Underlying Index, and, therefore, any changes to the
Underlying Index’s rebalance schedule will result in corresponding changes to
the Fund’s rebalance schedule.
Short-Term
Bond Risk. The Fund will
invest in bonds with a short term (i.e., three years or less) until maturity.
The amount of time until a fixed-income security matures can lead to various
risks, including changes in interest rates over the life of a bond. Short-term
fixed-income securities generally provide lower returns than longer-term
fixed-income securities. The average maturity of the Fund’s investments will
affect the volatility of the Fund’s share price.
Non-Investment
Grade Securities Risk. Non-investment
grade securities (commonly known as “junk bonds” or “high yield bonds”) and
unrated securities of comparable credit quality are considered speculative and
are subject to the increased risk of an issuer’s inability to meet principal and
interest payment obligations. These securities may be subject to greater price
volatility due to such factors as specific corporate developments, interest rate
sensitivity, negative perceptions of the non-investment grade securities markets
generally, real or perceived adverse economic and competitive industry
conditions and less secondary market liquidity. If the issuer of non-investment
grade securities defaults, the Fund may incur additional expenses to seek
recovery.
Fixed-Income
Securities Risk. Fixed-income
securities are subject to interest rate risk and credit risk. Interest rate risk
refers to fluctuations in the value of a fixed-income security resulting from
changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most fixed-income securities go down. When
the general level of interest rates goes down, the prices of most fixed-income
securities go up. Fixed-income securities with longer maturities typically are
more sensitive to changes in interest rates, making them more volatile than
securities with shorter maturities. Credit risk refers to the possibility that
the issuer of a security will be unable and/or unwilling to make timely interest
payments and/or repay the principal on its debt. Debt instruments are subject to
varying degrees of credit risk, which may be reflected in credit ratings.
1
There is a
possibility that the credit rating of a fixed-income security may be downgraded
after purchase, which may occur quickly and without advance warning following
sudden market downturns or unexpected developments involving an issuer, and
which may adversely affect the liquidity and value of the security.
Foreign
Fixed-Income Investment Risk. Investments in
fixed-income securities of non-U.S. issuers are subject to the same risks as
other debt securities, notably credit risk, market risk, interest rate risk and
liquidity risk, while also facing risks beyond those associated with investments
in U.S. securities. For example, 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 also are subject to the risks of expropriation, nationalization,
political instability or other adverse political or economic developments and
the difficulty of enforcing obligations in other countries. Investments in
foreign securities also may be subject to dividend withholding or confiscatory
taxes, currency blockage and/or transfer restrictions and higher transactional
costs.
Changing
Fixed-Income
Market Conditions Risk. Increases
in
the
federal funds and equivalent foreign interest rates or other changes to monetary
policy or regulatory actions may expose fixed-income markets to heightened
volatility and reduced liquidity for certain fixed-income investments,
particularly those with longer maturities. It is difficult to predict the impact
of interest rate changes on various markets. In addition, decreases in
fixed-income dealer market-making capacity may also potentially lead to
heightened volatility and reduced liquidity in the fixed-income markets. As a
result, the value of the Fund's investments and share price may
decline.
Changes in central
bank policies could also result in higher than normal redemptions by APs (as
defined herein), which could potentially increase the Fund’s portfolio turnover
rate and transaction costs.
Industry
Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
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.
Geographic
Concentration Risk.
The
Fund may from time to time have a substantial amount of its assets invested in
securities of issuers located in a single country or a limited number of
countries. Adverse economic, political or social conditions in those countries
may therefore have a significant negative impact on the Fund’s investment
performance. For example, a natural or other disaster could occur in a country
or geographic region in which the Fund invests, which could affect the economy
or particular business operations of companies in that specific country or
geographic region and adversely impact the Fund’s investments in the affected
region.
Sovereign
and Quasi-Sovereign Debt Risk. Investments in
sovereign or quasi-sovereign debt securities involve special risks. Sovereign
debt includes securities issued by or guaranteed by a foreign sovereign
government, and quasi-sovereign debt includes securities issued by or guaranteed
by an entity affiliated with or backed by a sovereign government. The
governmental authority that controls the repayment of the
debt may be
unwilling or unable to repay the principal and/or interest when due in
accordance with the terms of such securities due to the extent of its foreign
reserves; the availability of sufficient foreign exchange on the date a payment
is due; the relative size of the debt service burden to the economy as a whole;
or the government debtor’s policy towards the International Monetary Fund and
the political constraints to which a government debtor may be subject. If an
issuer of sovereign debt defaults on payments of principal and/or interest, the
Fund may have limited legal recourse against the issuer and/or guarantor. In
certain cases, remedies must be pursued in the courts of the defaulting party
itself, and the Fund’s ability to obtain recourse may be limited. Similar to
other issuers, changes to the financial condition or credit rating of a
government may cause the value of a sovereign debt obligation to decline.
Quasi-sovereign debt obligations are typically less liquid and less standardized
than sovereign debt obligations.
Restricted
Securities Risk. The Fund may invest
in restricted securities, including those that may be resold only in accordance
with Regulation S under the Securities Act of 1933 (the “Securities Act”), as
amended. Regulation S securities are securities of U.S. and non-U.S. issuers
initially offered and sold outside the United States without registration with
the SEC. Accordingly, the liquidity of the market for specific Regulation S
securities may vary. Delay or difficulty in selling such securities may result
in a loss to the Fund.
Call
Risk.
If interest rates fall, it is possible that issuers of callable securities with
high interest coupons will “call” (or prepay) their bonds before their maturity
date. If an issuer exercises such a call during a period of declining interest
rates, the Fund may have to replace such called security with a lower yielding
security. If that were to happen, the Fund’s net investment income could
fall.
Reinvestment
Risk.
Reinvestment risk is the risk that the Fund will not be able to reinvest income
or principal at the same return it is currently earning. Reinvestment risk is
greater during periods of declining interest rates, as prepayments often occur
faster. It is related to call risk, since issuers of callable securities with
high interest coupons may call their bonds before their maturity date. This may
require the Fund to reinvest the proceeds at an earlier date, and it may be able
to do so only at lower yields, thereby reducing its return.
Liquidity
Risk.
Liquidity risk exists when a particular investment is difficult to purchase or
sell. If the Fund invests in illiquid securities or current portfolio securities
become illiquid, it may reduce the returns of the Fund because the Fund may be
unable to sell the illiquid securities at an advantageous time or
price.
Issuer-Specific
Changes Risk. The value of an
individual security or particular type of security may be more volatile than the
market as a whole and may perform differently from the value of the market as a
whole.
Valuation
Risk.
Financial information related to securities of non-U.S. issuers may be less
reliable than information related to securities of U.S. issuers, which may make
it difficult to obtain a current price for a non-U.S. security held by the Fund.
In certain circumstances, market quotations may not be readily available for
some Fund securities, and those securities may be fair valued. The value
established for a security through fair valuation may be different from what
would be produced if the security had been valued using market quotations. Fund
securities that are valued using techniques other than market quotations,
including “fair valued” securities, may be subject to greater fluctuations in
their value from one day to the next than would be the case if market quotations
were used. In addition, there is no assurance that the Fund could sell a
portfolio security for the value established for it at any time, and it is
possible that the Fund would incur a loss because a security is sold at a
discount to its established value.
Valuation
Time Risk. Because foreign
exchanges may be open on days when the Fund does not price its Shares, the value
of the non-U.S. securities in the Fund’s portfolio may change on days when you
will not be able to purchase or sell your Shares. As a result, trading spreads
and the resulting premium or discount on the Shares may widen, and, therefore,
2
increase the
difference between the market price of the Shares and the NAV of such
Shares.
Sampling
Risk.
The Fund's use of a representative sampling approach may result in it holding a
smaller number of securities than are in the Underlying Index. As a result, an
adverse development with respect to an issuer of securities held by the Fund
could result in a greater decline in NAV than would be the case if the Fund held
all of the securities in the Underlying Index. To the extent the assets in the
Fund are smaller, these risks will be greater.
Non-Correlation
Risk.
The Fund's return may not match the return of the Underlying Index for a number
of reasons. For example, the Fund incurs operating expenses not applicable to
the Underlying Index, and incurs costs in buying and selling securities,
especially when rebalancing the Fund's securities holdings to reflect changes in
the composition of the Underlying Index. The Fund’s use of a representative
sampling approach may cause the Fund not to be as well-correlated with the
return of the Underlying Index as would be the case if the Fund purchased all of
the securities in the Underlying Index in the proportions represented in the
Underlying Index. In addition, the performance of the Fund and the Underlying
Index may vary due to asset valuation differences and differences between the
Fund's portfolio and the Underlying Index resulting from legal restrictions,
costs or liquidity constraints.
Authorized
Participant Concentration Risk. Only authorized
participants (“APs”) may engage in creation or redemption transactions directly
with the Fund. The Fund has a limited number of institutions that may act as APs
and such APs have no obligation to submit creation or redemption orders.
Consequently, there is no assurance that APs will establish or maintain an
active trading market for the Shares. This risk may be heightened to the extent
that securities held by the Fund are traded outside a collateralized settlement
system. In that case, APs may be required to post collateral on certain trades
on an agency basis (i.e., on behalf of other market participants), which only a
limited number of APs may be able to do. In addition, to the extent that APs
exit the business or are unable to proceed with creation and/or redemption
orders with respect to the Fund and no other AP is able to step forward to
create or redeem Creation Units (as defined below), this may result in a
significantly diminished trading market for Shares, and Shares may be more
likely to trade at a premium or discount to the 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 the
risk that APs may not be able to effectively create or redeem Creation Units or
the risk that the Shares may be halted and/or delisted.
Market
Trading Risk. The Fund faces
numerous market trading risks, including the potential lack of an active market
for the Shares, losses from trading in secondary markets, and disruption in the
creation/redemption process of the Fund. In stressed market conditions, the
market for Shares may become less liquid in response to deteriorating liquidity
in the markets for the Fund’s portfolio holdings, which may cause a variance in
the market price of Shares and their underlying NAV. In addition, an exchange or
market may issue trading halts on specific securities or financial instruments.
As a result, the ability to trade certain securities or financial instruments
may be restricted, which may disrupt the Fund’s creation/redemption process,
potentially affect the price at which Shares trade in the secondary market,
and/or result in the Fund being unable to trade certain securities or financial
instruments at all. In these circumstances, the Fund may be unable to rebalance
its portfolio, may be unable to accurately price its investments and/or may
incur substantial trading losses. Any of these factors may lead to the Shares
trading at a premium or discount to the Fund's
NAV.
Operational
Risk.
The Fund is exposed to operational risks arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund and
its investment adviser, Invesco Capital Management LLC (the “Adviser”), seek to
reduce these operational
risks through
controls and procedures. However, these measures do not address every possible
risk and may be inadequate to address these risks.
Shares
May Trade at Prices Different than NAV. Shares trade on a
stock exchange at prices at, above or below the Fund’s most recent NAV. The
Fund’s NAV is calculated at the end of each business day and fluctuates with
changes in the market value of the Fund’s holdings. The trading price of the
Shares fluctuates continuously throughout trading hours on the exchange, based
on both the relative market supply of, and demand for, the Shares and the
underlying value of the Fund’s portfolio holdings. As a result, the trading
prices of the Shares may deviate from the Fund’s NAV. ANY OF THESE FACTORS,
AMONG OTHERS, MAY LEAD TO THE SHARES TRADING AT A PREMIUM OR DISCOUNT TO
NAV.
The bar chart below
shows how the Fund has performed. The table below the bar chart shows the Fund’s
average annual total returns (before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by showing
how the Fund’s total returns have varied from year to year and by showing how
the Fund’s average annual total returns compared with a broad measure of market
performance and an additional index with characteristics relevant to the
Fund.
Although the
information shown in the bar chart and the table gives you some idea of the
risks involved in investing in the Fund, the Fund’s past performance (before and
after taxes) is not necessarily indicative of how the Fund will perform in the
future.
Updated
performance information is available online at www.invesco.com/ETFs .
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Period
Ended |
Returns |
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Average Annual Total Returns (for the periods ended December 31, 2022)
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Inception
Date |
1
Year |
5
Years |
Since
Inception |
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Return
Before Taxes |
- |
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Return
After Taxes on Distributions |
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- |
- |
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Return
After Taxes on Distributions and Sale of
Fund
Shares |
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DB
Global Short Maturity High Yield Bond Index (reflects
no deduction for fees, expenses or
taxes) |
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ICE
BofA 0-5 Year U.S. High Yield Constrained
Index
(reflects no deduction for fees, expenses
or
taxes) |
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Management
of the Fund
Investment
Adviser. Invesco Capital
Management LLC (the “Adviser”).
3
Portfolio
Managers
The following
individuals are responsible jointly and primarily for the day-to-day management
of the Fund’s portfolio:
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Name |
Title
with Adviser/Trust |
Date
Began
Managing
the
Fund |
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Peter
Hubbard |
Head of
Equities and Director of
Portfolio
Management of the
Adviser;
Vice President of the Trust |
June
2013 |
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Richard
Ose |
Senior
Portfolio Manager of the
Adviser |
June
2013 |
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Gary
Jones |
Portfolio
Manager of the Adviser |
June
2013 |
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Gregory
Meisenger |
Portfolio
Manager of the Adviser |
February
2020 |
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Purchase
and Sale of Shares
The Fund issues and
redeems Shares at NAV only with APs and only in large blocks of 50,000 Shares
(each block of Shares is called a “Creation Unit”) or multiples thereof
(“Creation Unit Aggregations”), generally in exchange for the deposit or
delivery of a basket of securities. However, the Fund also reserves the right to
permit or require Creation Units to be issued in exchange for cash. Except when
aggregated in Creation Units, the Shares are not redeemable securities of the
Fund.
Individual
Shares may only be bought and sold in the secondary market (i.e., on a
national securities exchange) through a broker or dealer at a market price.
Because the Shares trade at market prices rather than NAV, Shares may trade at a
price greater than NAV (at a premium), at NAV, or less than NAV (at a discount).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares (bid) and the lowest price a
seller is willing to accept for Shares (ask) when buying or selling shares in
the secondary market (the “bid-ask spread”).
Recent
information, including information on the Fund’s NAV, market price, premiums and
discounts, and bid-ask spreads, is available online at
www.invesco.com/ETFs.
Tax
Information
The Fund’s
distributions generally are taxed as ordinary income, capital gains or some
combination of both, unless you are investing through a tax-advantaged
arrangement, such as a 401(k) plan or an individual retirement account, in which
case your distributions may be taxed as ordinary income when withdrawn from such
account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase the
Fund through a broker-dealer or other financial intermediary (such as a bank),
the Fund’s distributor or its related companies may pay the intermediary for
certain Fund-related activities, including those that are designed to make the
intermediary more knowledgeable about exchange-traded products, such as the
Fund, as well as for marketing, education or other initiatives related to the
sale or promotion of Shares. These payments may create a conflict of interest by
influencing the broker-dealer or other intermediary and your salesperson or
financial adviser to recommend the Fund over another investment. Ask your
salesperson or financial adviser or visit your financial intermediary’s website
for more information.
Additional Information About the Fund’s Strategies and Risks
Principal
Investment Strategies
The Fund generally
will invest at least 80% of its total assets in securities
that
comprise the Underlying Index. The Fund operates as an index fund and is not
actively managed, meaning that it does
not
seek to outperform the
Underlying Index.
Rather,
the
Fund seeks to generally track the performance of the Underlying
Index
as
closely as possible
(i.e.,
it
seeks to
obtain
a high degree of correlation with the Underlying Index and to minimize “tracking
error” between the two). Tracking error means the variation between the Fund's
annual return and the return of the Underlying Index. Because the Underlying
Index is a financial calculation based on a grouping of financial instruments,
while the Fund is an actual investment portfolio, the Fund may experience
tracking error for a number of reasons when tracking the performance of the
Underlying Index. For example, the Fund incurs operating expenses and
transaction costs not applicable to the Underlying Index.
As an
index fund, the Fund does not take temporary defensive positions during periods
of adverse market, economic or other conditions.
The
Fund, because of the practical difficulties and expense of purchasing all of
the securities in the Underlying Index, does not purchase all of the securities
in the Underlying Index; instead, the Fund utilizes a sampling methodology to
seek to achieve its investment objective. A “sampling” methodology means that
the Adviser uses a quantitative analysis to select securities from the
Underlying Index universe to obtain a representative sample of securities that
have, in the aggregate, investment characteristics similar to the Underlying
Index in terms of key risk factors, performance attributes and other
characteristics. These include duration, maturity, credit quality, yield and
coupon. When employing a sampling methodology, the Adviser bases the quantity of
holdings in the Fund on a number of factors, including asset size of the Fund,
and generally expects the Fund to hold less than the total number of securities
in the Underlying Index. However, the Adviser reserves the right to invest the
Fund in as many securities as it believes necessary to achieve the Fund's
investment objective.
At
times,
the
Fund may utilize one or more additional investment techniques in seeking to
track the Underlying Index.
Such
techniques may include: (i) overweighting or underweighting a component security
in the Fund’s portfolio compared to its weight in the Underlying Index, (ii)
purchasing securities not contained in the Underlying Index that the Adviser
believes are appropriate to substitute for certain securities in the Underlying
Index, (iii) selling securities included in the Underlying Index in anticipation
of their removal from the Underlying Index, or (iv) purchasing securities not
included in the Underlying Index in anticipation of their addition to the
Underlying Index.
Additional
information about the construction of the Underlying Index is
set forth below.
DB
Global Short Maturity High Yield Bond Index
The Underlying
Index is designed to track the performance of a select group of short-term, U.S.
dollar-denominated, publicly issued,
institutionally
traded high yield debt issued by U.S. and foreign corporations, as well as by
sovereign or quasi-government entities. Rule 144A securities under the
Securities Act of 1933, as amended (the “Securities Act”), private placements,
municipal bonds, Brady bonds, restructured bonds and covered, senior secured and
subordinate notes are excluded from the Underlying Index.
To
be eligible for inclusion in the Underlying Index, a bond must: (i) be
denominated in U.S.
dollars; (ii) be rated by at least one of S&P, Moody’s or Fitch; (iii) be
rated below “investment grade” (i.e., have a “composite rating” from DB of
between “C” and “BB+” (both inclusive); (iv) have not been marked as defaulted
by any rating agency; (v) have three months to three years to maturity (except
that any bond included in the Underlying Index for the previous rebalancing
period and with less than three months remaining at rebalancing will be kept in
the Underlying Index until maturity); (vi) have a minimum amount outstanding of
at least $250 million; and (vii) have a fixed coupon.
The
Index Provider calculates the cumulative weight of bonds issued by each country. The
Index Provider weights the constituents equally on an annual basis in February
such that the cumulative weight of bonds from any one country does not exceed
40% of the weight of the Underlying Index,
4
and the remaining
weight is equally distributed to all remaining bonds in the Underlying Index.
The Index Provider also rebalances the Underlying Index quarterly on the last
business day of the month in February, May, August and November. If a bond
reaches maturity, defaults or no longer meets the Underlying Index’s eligibility
criteria, the Index Provider will remove it from the Underlying Index, but will
keep the redemption value of that bond in the Underlying Index as cash until the
end of each month. The Fund is rebalanced in accordance with the Underlying
Index.
Valuation
data regarding the Underlying Index is available via the DB website at
http://index.db.com and Bloomberg, L.P.
Principal
Risks of Investing in the Fund
The following
provides additional information regarding certain of the principal risks
identified under “Principal Risks of Investing in the Fund” in the Fund's
“Summary Information” section. Any of the following risks may impact the Fund’s
NAV which could result in the Fund trading at a premium or discount to
NAV.
Market
Risk.
Securities in the Underlying Index are subject to market fluctuations, and the
Fund could lose money due to short-term market movements and over longer periods
during market downturns. You should anticipate that the value of the Shares will
decline, more or less, in correlation with any decline in value of the
securities in the Underlying Index. The value of a security may decline due to
general market conditions, economic trends or events that are not specifically
related to the issuer of the security or due to factors that affect a particular
industry or group of industries. During a general downturn in the securities
markets, multiple asset classes may be negatively affected. Additionally,
natural or environmental disasters, widespread disease or other public health
issues, war, military conflict, acts of terrorism,
economic crisis or
other events could result in increased premiums or discounts to the Fund’s
NAV.
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 health care
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 Fund’s performance.
Market
Disruption Risks Related to Russia-Ukraine Conflict.
Following Russia’s
invasion of Ukraine in late February 2022, various countries, including the
United States, as well as North Atlantic Treaty Organization (“NATO”) member
countries and the European Union, issued broad-ranging economic sanctions
against Russia. The war in Ukraine (and the potential for further sanctions in
response to Russia’s continued military activity) may escalate. These and other
corresponding events, have had, and could continue to have, severe negative
effects on regional and global economic and financial markets, including
increased volatility, reduced liquidity, and overall uncertainty. The negative
impacts may be particularly acute in certain sectors including, but not limited
to, energy and financials. Russia may take additional countermeasures or
retaliatory actions (including cyberattacks), which could exacerbate negative
consequences on global financial markets. The duration of the conflict and
corresponding sanctions and related events cannot be predicted. The foregoing
may result in a negative impact on Fund performance and the value of an
investment in the Fund, even beyond any direct investment exposure the Fund may
have to Russian issuers or the adjoining geographic regions.
Index
Risk.
Unlike many investment companies that are “actively managed,” the Fund is a
“passive” investor and therefore does not utilize an investing strategy that
seeks returns in excess of the Underlying Index. Therefore, the Fund would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. If a specific security is removed from the Underlying Index,
the Fund may be forced to sell such security at an inopportune time or for a
price lower than the security’s current market value. The Underlying Index may
not contain the appropriate mix of securities for any particular economic cycle.
Additionally, the Fund rebalances its portfolio in accordance with the
Underlying Index, and, therefore, any changes to the Underlying Index’s
rebalance schedule will result in corresponding changes to the Fund’s rebalance
schedule. Further, unlike with an actively managed fund, the Adviser does not
use techniques or defensive strategies designed to lessen the impact of periods
of market volatility or market decline. This means that, based on certain market
and economic conditions, the Fund’s performance could be lower than other types
of funds with investment advisers that actively manage their portfolio assets to
take advantage of market opportunities or defend against market
events.
Short-Term
Bond Risk. The Fund may
invest in bonds with a short term (i.e., three years or less) until maturity.
The amount of time until a fixed-income security matures can lead to various
risks, including changes in interest rates over the life of a bond. Short-term
fixed-income securities generally provide lower returns than longer-term
fixed-income securities. The average maturity of the Fund’s investments will
affect the volatility of the Fund’s share price.
Non-Investment
Grade Securities Risk. The risk of
investing in non-investment grade securities is a form of credit risk.
Securities that are rated non-investment grade
(commonly known as
“junk bonds” or “high yield bonds”) and unrated securities of comparable credit
quality are regarded as having predominantly speculative characteristics with
respect to the capacity to pay interest and repay principal. Non-investment
grade securities may be more susceptible to real or perceived adverse economic
and competitive industry conditions than higher grade securities. The prices of
non-investment grade securities have been found to be less sensitive to interest
rate changes than more highly rated investments, but more sensitive to adverse
economic downturns or individual corporate developments. Yields on
non-investment grade securities will fluctuate. If the issuer of non-investment
grade securities defaults, the Fund may incur additional expenses to seek
recovery. The secondary markets in which non-investment grade securities are
traded may be less liquid than the market for higher grade securities. Less
liquidity in the secondary trading markets could adversely affect the price at
which the Fund could sell a particular non-investment grade security when
necessary to meet liquidity needs or in response to a specific economic event,
such as a deterioration in the creditworthiness of the issuer, and could
adversely affect and cause large fluctuations in the NAV of the Shares. Adverse
publicity and investor perceptions may decrease the values and liquidity of
non-investment grade securities.
Fixed-Income
Securities Risk. The Fund invests
in fixed-income securities, which are subject to interest rate risk and credit
risk. Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. Fixed-income securities with
longer maturities typically are more sensitive to changes in interest rates,
making them more volatile than securities with shorter maturities. Credit risk
refers to the possibility that the issuer of a security will be unable and/or
unwilling to make timely interest payments and/or repay the principal on its
debt. Debt instruments are subject to varying degrees of credit risk, which may
be reflected in credit ratings. There is a possibility that the credit rating of
a fixed-income security may be downgraded after purchase, which may occur
5
quickly and without
advance warning following sudden market downturns or unexpected developments
involving an issuer, and which may adversely affect the liquidity and value of
the security. Securities issued by the U.S. Government historically have been
subject to limited credit risk; however, the actual or threatened failure of the
U.S. Government to pay its obligations will increase credit risks and securities
issued by U.S. Government agencies are not necessarily backed by the full faith
and credit of the U.S. Government. Due to recent events in the fixed-income
markets, including the Federal Reserve Board (“FRB”)
ending
its quantitative easing program, the Fund is subject to heightened interest rate
risk as a result of a rise in interest rates. In addition, the Fund is subject
to the risk that interest rates may exhibit increased volatility, which could
cause the Fund’s NAV to fluctuate more. A decrease in fixed-income market maker
capacity may act to decrease liquidity in the fixed-income markets and act to
further increase volatility, affecting the Fund’s returns.
Foreign
Fixed-Income Investment Risk. Investments in
fixed-income securities of non-U.S. issuers are subject to the same risks as
other debt securities, notably credit risk, market risk, interest rate risk and
liquidity risk, while also facing risks beyond those associated with investments
in U.S. securities including, among others, greater market volatility, the
availability of less reliable financial information, higher transactional costs,
taxation by foreign governments, decreased market liquidity and political
instability. Foreign issuers are often subject to less stringent requirements
regarding accounting, auditing, financial reporting and record keeping than are
U.S. issuers, and therefore, not all material information regarding these
issuers will be available. Securities exchanges or foreign governments may adopt
rules or regulations that may negatively impact the Fund’s ability to invest in
foreign securities or may prevent the Fund from repatriating its
investments.
Changing
Fixed-Income
Market Conditions Risk.
Increases in
the
federal funds and
equivalent foreign interest rates or other changes to monetary policy or
regulatory actions may expose fixed-income markets to heightened volatility and
reduced liquidity for certain fixed-income investments, particularly those with
longer maturities. It is difficult to predict the impact of interest rate
changes on various markets. In addition, decreases in fixed-income dealer
market-making capacity may also potentially lead to heightened volatility and
reduced liquidity in the fixed-income markets. As a result, the value of the
Fund's investments and share price may decline. Changes in central bank policies
could also result in higher than normal redemptions by APs (as defined herein),
which could potentially increase the Fund's portfolio turnover rate and
transaction costs and potentially lower the Fund’s performance
returns.
Industry
Concentration Risk. In following its
methodology, the Underlying Index from time to time may be concentrated to a
significant degree in securities of issuers operating in a single industry or
industry group. To the extent that the Underlying Index concentrates in the
securities of issuers in a particular industry or industry group, the Fund will
also concentrate its investments to approximately the same extent. By
concentrating its investments in an industry or industry group, the Fund may
face more risks than if it were diversified broadly over numerous industries or
industry groups. Such industry-based risks, any of which may adversely affect
the companies in which the Fund invests, may include, but are not limited to,
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. Information about the Fund’s exposure
to a particular industry or industry group is available in the Fund’s Annual and
Semi-Annual Reports to Shareholders, as well as on required forms filed with the
SEC.
Geographic
Concentration Risk. Funds that are
less diversified across geographic regions or countries are generally riskier
than more geographically diversified funds. The economies and financial markets
of
certain regions can
be interdependent and may all decline at the same time. A natural or other
disaster could occur in a country or geographic region in which the Fund
invests, which could affect the economy or particular business operations of
companies in that specific country or geographic region and adversely impact the
Fund's investments in the affected region. The Schedule of Investments included
in the Fund’s annual and semi-annual reports identifies the countries in which
the Fund had invested and the level of investment, as of the date of the
reports.
Sovereign
and Quasi-Sovereign Debt Risk. Investments in
sovereign or quasi-sovereign debt securities involve special risks. Sovereign
debt includes securities issued by or guaranteed by a foreign sovereign
government, and quasi-sovereign debt includes securities issued by or guaranteed
by an entity affiliated with or backed by a sovereign government. The
governmental authority that controls the repayment of the debt may be unwilling
or unable to repay the principal and/or interest when due in accordance with the
terms of such securities due to the extent of its foreign reserves; the
availability of sufficient foreign exchange on the date a payment is due; the
relative size of the debt service burden to the economy as a whole; or the
government debtor’s policy towards the International Monetary Fund and the
political constraints to which a government debtor may be subject. If an issuer
of sovereign debt defaults on payments of principal and/or interest, the Fund
may have limited legal recourse against the issuer and/or guarantor. In certain
cases, remedies must be pursued in the courts of the defaulting party itself,
and the Fund’s ability to obtain recourse may be limited. Similar to other
issuers, changes to the financial condition or credit rating of a government may
cause the value of a sovereign debt obligation to decline. Quasi-sovereign debt
obligations are typically less liquid and less standardized than sovereign debt
obligations.
Certain
issuers of sovereign debt may be dependent on disbursements from foreign
governments, multilateral agencies and others abroad to reduce principal and
interest arrearages on their debt. Such disbursements may be conditioned upon a
debtor's implementation of economic reforms and/or economic performance and the
timely service of such debtor's obligations. A failure on the part of the debtor
to implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties' commitments to lend funds to the government debtor, which may impair
the debtor's ability to service its debts on a timely basis. If the Fund is a
holder of government debt, it may be requested to participate in the
rescheduling of such debt and to extend further loans to government
debtors.
Restricted
Securities Risk. The Fund may invest
in restricted securities, including those that may be resold only in accordance
with Regulation S under the Securities Act. Regulation S securities are
securities of U.S. and non-U.S. issuers initially offered and sold outside the
United States without registration with the SEC. Accordingly, the liquidity of
the market for specific Regulation S securities may vary. Delay or difficulty in
selling such securities may result in a loss to the Fund.
Call
Risk.
If
interest rates fall, it is possible that issuers of callable securities with
high interest coupons will “call” (or prepay) their bonds before their maturity
date. If an issuer exercises such a call during a period of declining interest
rates, the Fund may have to replace such called security with a lower yielding
security. If that were to happen, the Fund’s net investment income could
fall.
Reinvestment
Risk.
Reinvestment risk is the risk that the Fund will not be able to reinvest income
or principal at the same return it is currently earning. Reinvestment risk is
greater during periods of declining interest rates, as prepayments often occur
faster. This may require the Fund to reinvest the proceeds at an earlier date,
and it may be able to do so only at lower yields, thereby reducing its
return.
Liquidity
Risk.
Liquidity risk exists when a particular investment is difficult to purchase or
sell. If the Fund invests in illiquid securities or current portfolio securities
become illiquid, it may reduce the returns of the Fund because the Fund may be
unable to sell the illiquid securities at an advantageous time or price. In the
event that the Fund voluntarily or
6
involuntarily
liquidates portfolio assets during periods of infrequent trading, it may not
receive full value for those assets.
Issuer-Specific
Changes Risk. The performance of
the Fund depends on the performance of individual securities to which the Fund
has exposure. The value of an individual security or particular type of security
may be more volatile than the market as a whole and may perform worse than the
market as a whole, causing the value of its securities to decline. Poor
performance may be caused by poor management decisions, competitive pressures,
changes in technology, expiration of patent protection, disruptions in supply,
labor problems or shortages, corporate restructurings, fraudulent disclosures or
other factors. Issuers may, in times of distress or at their own discretion,
decide to reduce or eliminate dividends, which may also cause their stock prices
to decline.
Valuation
Risk.
Financial information related to securities of non-U.S. issuers may be less
reliable than information related to securities of U.S. issuers, which may make
it difficult to obtain a current price for a non-U.S. security held by the Fund.
In certain circumstances, market quotations may not be readily available for
some securities, and those securities may be fair valued. The value established
for a security through fair valuation may be different from what would be
produced if the security had been valued using market quotations. Fund
securities that are valued using techniques other than market quotations,
including “fair valued” securities, may be subject to greater fluctuations in
their value from one day to the next than would be the case if market quotations
were used. In addition, there is no assurance that the Fund could sell a
portfolio security for the value established for it at any time, and it is
possible that the Fund would incur a loss because a security is sold at a
discount to its established value.
Valuation
Time Risk. Because foreign
exchanges may be open on days when the Fund does not price its Shares, the value
of the non-U.S. securities in the Fund’s portfolio may change on days when you
will not be able to purchase or sell your Shares. As a result, trading spreads
and the resulting premium or discount on the Shares may widen, and, therefore,
increase the difference between the market price of the Shares and the NAV of
such Shares.
Sampling
Risk.
The Fund’s use of a representative sampling approach could result in the Fund
holding a smaller number of securities than are in the Underlying Index. As a
result, an adverse development to an issuer of securities that the Fund holds
could result in a greater decline in NAV than would be the case if the Fund held
all of the securities in the Underlying Index. To the extent the assets in the
Fund are smaller, these risks will be greater. In addition, by sampling the
securities in the Underlying Index, the Fund faces the risk that the securities
selected for the Fund, in the aggregate, will not provide investment performance
matching that of the Underlying Index, thereby increasing tracking
error.
Non-Correlation
Risk. The Fund’s returns
may not match the returns of the Underlying Index (that is, it may experience
tracking error) for a number of reasons. For example, the Fund incurs operating
expenses not applicable to the Underlying Index and incurs costs in buying and
selling securities, especially when rebalancing the Fund’s securities holdings
to reflect changes in the composition of the Underlying Index. To the extent
that the Fund has recently commenced operations and/or otherwise has a
relatively small amount of assets, such transaction costs could have a
proportionally greater impact on the Fund. Additionally, if the Fund uses a
sampling approach, it may result in returns for the Fund that are not as
well-correlated with the return of the Underlying Index as would be the case if
the Fund purchased all of the securities in the Underlying Index in the
proportions represented in the Underlying Index.
The
performance of the Fund and the Underlying Index may vary due to asset valuation
differences and differences between the Fund’s portfolio and the Underlying
Index resulting from legal restrictions, costs or liquidity constraints.
Additionally, if the Fund issues or redeems Creation Units principally for cash,
it will incur higher costs in buying or selling securities than if it issued and
redeemed Creation Units principally in-kind, which may contribute to tracking
error. The Fund may fair value certain of the securities
it holds. To the
extent the Fund calculates its NAV based on fair value prices, the Fund’s
ability to track the Underlying Index may be adversely affected. Since the
Underlying Index is not subject to the tax diversification requirements to which
the Fund must adhere, the Fund may be required to deviate its investments from
the securities contained in, and relative weightings of, the Underlying Index.
The Fund may not invest in certain securities included in the Underlying Index
due to liquidity constraints. Liquidity constraints also may delay the Fund’s
purchase or sale of securities included in the Underlying Index. For tax
efficiency purposes, the Fund may sell certain securities to realize losses,
causing it to deviate from the Underlying Index.
The
Fund generally attempts to remain fully invested in the constituents
of the
Underlying Index. However, the Adviser may not fully invest the Fund’s assets at
times, either as a result of cash flows into the Fund, to retain a reserve of
cash to meet redemptions and expenses, or because of low assets.
The
investment activities of one or more of the Adviser’s affiliates, including other
subsidiaries of the Adviser’s parent company, Invesco Ltd., for their
proprietary accounts and for client accounts also may adversely impact the
Fund’s ability to track the Underlying Index. For example, in regulated
industries, certain emerging or international markets and under corporate and
regulatory ownership definitions, there may be limits on the aggregate amount of
investment by affiliated investors that may not be exceeded, or that may not be
exceeded without the grant of a license or other regulatory or corporate
consent, or, if exceeded, may cause the Adviser, the Fund or other client
accounts to suffer disadvantages or business restrictions. As a result, the Fund
may be restricted in its ability to acquire particular securities due to
positions held by the Fund and the Adviser’s affiliates.
Authorized
Participant Concentration Risk. Only APs may
engage in creation or redemption transactions directly with the Fund. The Fund
has a limited number of institutions that may act as APs, and such APs have no
obligation to submit creation or redemption orders. Consequently, there is no
assurance that APs will establish or maintain an active trading market for the
Shares. The risk may be heightened to the extent that securities held by the
Fund are traded outside a collateralized settlement system. In that case, APs
may be required to post collateral on certain trades on an agency basis (i.e.,
on behalf of other market participants), which only a limited number of APs may
be able to do. In addition, to the extent that APs exit the business or are
unable to proceed with creation and/or redemption orders with respect to the
Fund and no other AP is able to step forward to create or redeem Creation Units,
this may result in a significantly diminished trading market for Shares, and
Shares may be more likely to trade at a premium or discount to 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 the risk that APs may not be able to effectively
create or redeem Creation Units or the risk that the Shares may be halted and/or
delisted.
Market
Trading Risk. The Fund faces
numerous market trading risks, including losses from trading in secondary
markets, periods of high volatility and disruption in the creation/redemption
process of the Fund. Although Shares are listed for trading on a securities
exchange, there can be no assurance that an active trading market for Shares
will develop or be maintained by market makers or APs, that Shares will continue
to trade on any such exchange or that Shares will continue to meet the
requirements for listing on an exchange. Any of these factors, among others, may
lead to the Shares trading at a premium or discount to the Fund’s NAV. As a
result, an investor could lose money over short or long periods. Further, the
Fund may experience low trading volume and wide bid/ask spreads. Bid/ask spreads
vary over time based on trading volume and market liquidity (including for the
underlying securities held by the Fund), and are generally lower if Shares have
more trading volume and market liquidity and higher if Shares have little
trading volume and market liquidity.
7
In
stressed market conditions, the market for Shares may become less liquid in response
to deteriorating liquidity in the markets for the Fund’s portfolio holdings,
which may cause a variance in the market price of Shares and their underlying
NAV. In addition, an exchange or market may issue trading halts on specific
securities or financial instruments. As a result, the ability to trade certain
securities or financial instruments may be restricted, which may disrupt the
Fund’s creation/redemption process, potentially affect the price at which Shares
trade in the secondary market, and/or result in the Fund being unable to trade
certain securities or financial instruments at all. In these circumstances, the
Fund may be unable to rebalance its portfolio, may be unable to accurately price
its investments and/or may incur substantial trading losses.
Operational
Risk.
The Fund is exposed to operational risks arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund and
the Adviser seek to reduce these operational risks through controls and
procedures. However, these measures do not address every possible risk and may
be inadequate to address these risks.
Shares
May Trade at Prices Different than NAV. Shares trade on a
stock exchange at prices at, above or below the Fund’s most recent NAV. The
Fund’s NAV is calculated at the end of each business day and fluctuates with
changes in the market value of the Fund’s holdings. The trading price of the
Shares fluctuates continuously throughout trading hours on the exchange, based
on both the relative market supply of, and demand for, the Shares and the
underlying value of the Fund’s portfolio holdings. As a result, the trading
prices of the Shares may deviate from the Fund’s NAV. ANY OF THESE FACTORS,
AMONG OTHERS, MAY LEAD TO THE SHARES TRADING AT A PREMIUM OR DISCOUNT TO NAV.
The Adviser cannot predict whether the Shares will trade below, at or above the
Fund’s NAV. Exchange prices are not expected to correlate exactly with the
Fund’s NAV due to timing reasons, supply and demand imbalances and other
factors. In addition, disruptions to creations and redemptions, including
disruptions at market makers, APs, or other market participants, or periods of
significant market volatility or stress, may result in trading prices for the
Shares that differ significantly from the value of the Fund’s underlying
holdings, with the result that investors may pay significantly more or receive
significantly less than the underlying value of the Shares bought or sold. This
can be reflected as a spread between the bid and ask prices for the Fund quoted
during the day or a premium or discount in the closing price from the Fund’s
NAV. Additionally, APs may be less willing to create or redeem the Shares if
there is a lack of an active market for such Shares or the Fund’s underlying
investments, which may contribute to the Shares trading at a premium or
discount.
Non-Principal
Investment Strategies
The Fund, after
investing at least 80% of its total assets in the components that comprise the
Underlying Index, may invest its remaining assets in securities (including other
funds) not included in the Underlying Index, and in money market instruments,
including repurchase agreements and other funds, including affiliated funds,
that invest exclusively in money market instruments (subject to applicable
limitations under the Investment Company Act of 1940,
as
amended (the “1940 Act”), or exemptions therefrom), convertible securities,
structured notes (notes on which the amount of principal repayment and interest
payments is based on the movement of one or more specified factors, such as the
movement of a particular security or securities index) and in futures contracts,
options and options on futures contracts. The Fund may use futures contracts,
options, options on futures contracts, convertible securities and structured
notes to seek performance that corresponds to the Underlying Index, and to
manage cash flows.
The
Adviser anticipates that it may take approximately two business days (a business
day is any day that the New York Stock Exchange (“NYSE”)
is open) for
additions to and deletions from the Underlying Index to fully settle in the
portfolio composition of the Fund.
In
accordance with 1940 Act rules, the Fund has adopted a policy to invest, under
normal circumstances, at least 80% of the value of its net assets, plus the
amount of any borrowing for investment purposes, in the particular types of
securities, and/or in securities of companies operating in the particular
industries, economic sectors, countries or geographical regions, that are
suggested by the Fund’s name (the “80% investment policy”). The Fund considers
the securities suggested by its name to be those components that comprise the
Underlying Index. Therefore, the Fund anticipates meeting its 80% investment
policy because it already generally invests at least 80% of its total assets in
the components that comprise the Underlying Index, in accordance with its
principal investment strategies.
The
Fund’s investment objective and the 80% investment policy are non-fundamental
policies that the Board of Trustees (the “Board”) of the Invesco Exchange-Traded
Fund Trust II (the “Trust”) may change without shareholder approval upon 60
days’ prior written notice to shareholders.
The
fundamental and non-fundamental policies of the Fund are set forth in the Fund’s
Statement of Additional Information (“SAI”) under the section “Investment
Restrictions.”
Borrowing
Money
The Fund may borrow
money up to the limits set forth in the Fund’s SAI under the section “Investment
Restrictions.”
Securities
Lending
The Fund may lend
its portfolio securities to brokers, dealers, and other financial institutions.
In connection with such loans, the Fund receives liquid collateral equal to at
least 102% (105% for international securities) of the value of the loaned
portfolio securities. This collateral is marked-to-market on a daily
basis.
Additional
Risks of Investing in the Fund
The Fund may also
be subject to certain other non-principal risks associated with its investments
and investment strategies. The following provides additional non-principal risk
information regarding investing in the Fund.
Cash
Transaction Risk. The Fund
generally expects to make in-kind redemptions to avoid being taxed at the fund
level on gains on the distributed portfolio securities. However, from time to
time, the Fund reserves the right to effect redemptions for cash, rather than
in-kind. In such circumstances, the Fund may be required to sell portfolio
securities to obtain the cash needed to distribute redemption proceeds.
Therefore, the Fund may recognize a capital gain on these sales that might not
have been incurred if the Fund had made a redemption in-kind. This may decrease
the tax efficiency of the Fund compared to utilizing an in-kind redemption
process.
Convertible
Securities Risk. A convertible
security generally is a preferred stock that may be converted within a specified
period of time into common stock. Convertible securities nevertheless remain
subject to the risks of both debt securities and equity securities. As with
other equity securities, the value of a convertible security tends to increase
as the price of the underlying stock goes up, and to decrease as the price of
the underlying stock goes down. Declining common stock values therefore also may
cause the value of the Fund’s investments to decline. Like a debt security, a
convertible security provides a fixed-income stream and also tends to decrease
in value when interest rates rise. Moreover, many convertible securities have
credit ratings that are below investment grade and are subject to the same risks
as lower-rated debt securities, which are considered to have more speculative
characteristics and greater susceptibility to default or decline in market value
than investment grade (or higher-rated) securities.
Cybersecurity
Risk.
With
the increased use of technologies such as the Internet to conduct business, the
Fund, like all companies, may be susceptible to operational,
information
security and related risks. Cybersecurity incidents involving the Fund and its
service providers
8
(including,
without limitation,
the Adviser,
fund
accountant,
custodian,
transfer agent and
financial
intermediaries)
have the ability to cause disruptions and impact business operations,
potentially resulting in financial losses, impediments to trading, the inability
of Fund shareholders to transact business, violations of applicable privacy and
other laws, regulatory fines, penalties, reputational damage, reimbursement or
other compensation costs, and/or additional compliance costs. Similar adverse
consequences could result from cybersecurity incidents affecting issuers of
securities in which the Fund invests, counterparties with which the Fund
engages, governmental and other regulatory authorities, exchanges and other
financial market operators, banks, brokers, dealers, insurance companies, other
financial institutions and other parties. The Fund and its shareholders could be
negatively impacted as a result.
Derivatives
Risk.
The Fund may invest in derivatives, such as futures contracts, options, and
options on futures contracts, as applicable. Derivatives are financial
instruments that derive their value from an underlying asset, such as a
security, index or exchange rate. Their use is a highly specialized activity
that involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. Derivatives may be riskier than
other types of investments and may be more volatile, less tax efficient and less
liquid than other securities.
Derivatives
may be used to create synthetic exposure to an underlying asset or to hedge a
portfolio risk. If the Fund uses derivatives to “hedge” a portfolio risk, the
change in value of a derivative may not correlate as expected with the
underlying asset being hedged, and it is possible that the hedge therefore may
not succeed. In addition, given their complexity, derivatives may be difficult
to value.
Derivatives
are subject to a number of risks including credit risk, interest rate risk,
and market risk. Credit risk refers to the possibility that a counterparty will
be unable and/or unwilling to perform under the agreement. Interest rate risk
refers to fluctuations in the value of an asset resulting from changes in the
general level of interest rates. Over-the-counter derivatives are also subject
to counterparty risk (sometimes referred to as “default risk”), which is the
risk that the other party to the contract will not fulfill its contractual
obligations.
Derivatives
may be especially sensitive to changes in economic and market conditions,
and their use may give rise to a form of leverage. Leverage may cause the
portfolio of the Fund to be more volatile than if the portfolio had not been
leveraged because leverage can exaggerate the effect of any increase or decrease
in the value of securities and other instruments held by the Fund. For some
derivatives, such leverage could result in losses that exceed the original
amount invested in the derivative. The Fund’s use of derivatives may be limited
by the requirements for taxation of the Fund as a regulated investment company,
as well as by regulatory changes.
Index
Provider Risk. The Fund seeks to
track the investment results, before fees and expenses, of the Underlying Index,
as published by the Index Provider. There is no assurance that the Index
Provider will compile the Underlying Index accurately, or that the Underlying
Index will be determined, composed or calculated accurately. While the Index
Provider gives descriptions of what the Underlying Index is designed to achieve,
the Index Provider generally does not provide any warranty or accept any
liability in relation to the quality, accuracy or completeness of data in the
Underlying Index, and it generally does not guarantee that the Underlying Index
will be in line with its methodology. Errors made by the Index Provider with
respect to the quality, accuracy and completeness of the data within the
Underlying Index may occur from time to time and may not be identified and
corrected by the Index Provider for a period of time, if at all. Therefore,
gains, losses or costs associated with Index Provider errors will generally be
borne by the Fund and its shareholders.
Index
Rebalancing Risk. Pursuant to the
methodology that the Index Provider uses to calculate and maintain the
Underlying Index, a security may be removed from the Underlying Index in the
event that it does not comply with the eligibility requirements of the
Underlying Index. As a result, the
Fund may be forced
to sell securities at inopportune times or for prices other than at current
market values or may elect not to sell such securities on the day that they are
removed from the Underlying Index, due to market conditions or otherwise. Due to
these factors, the variation between the Fund’s annual return and the return of
the Underlying Index may increase significantly.
Apart
from scheduled rebalances, the Index Provider may carry out additional ad hoc
rebalances to the Underlying Index, for example, to correct an error in the
selection of index constituents. When the Fund in turn rebalances its portfolio,
any transaction costs and market exposure arising from such portfolio
rebalancing will be borne by the Fund and its shareholders. Unscheduled
rebalances also expose the Fund to additional tracking error risk. Therefore,
errors and additional ad hoc rebalances carried out by the Index Provider may
increase the Fund’s costs and market exposure.
Large
Shareholder Risk. Certain
shareholders, including a third party investor, the Adviser or an affiliate of
the Adviser, an AP, a lead market maker, or another entity, may from time to
time own a substantial amount of Shares or may invest in the Fund and hold its
investment for a limited period of time solely to facilitate the commencement of
the Fund or to facilitate the Fund achieving a specified size or scale. There
can be no assurance that any large shareholder would not redeem its investment.
Dispositions of a large number of Shares by these shareholders may adversely
affect the Fund’s liquidity and net assets to the extent such transactions are
executed directly with the Fund in the form of redemptions through an AP, rather
than executed in the secondary market. These redemptions may also force the Fund
to sell portfolio securities when it might not otherwise do so, which may
negatively impact the Fund’s NAV and increase the Fund’s brokerage costs.
Further, such sales may accelerate the realization of taxable income and/or
gains to shareholders, or the Fund may be required to sell its more liquid Fund
investments to meet a large redemption, in which case the Fund’s remaining
assets may be less liquid, more volatile, and more difficult to price. To the
extent the Fund permits cash purchases, large purchases of Shares may adversely
affect the Fund’s performance to the extent that the Fund is delayed in
investing new cash and is required to maintain a larger cash position than it
ordinarily would. To the extent these large shareholders transact in shares on
the secondary market, such transactions may account for a large percentage of
the trading volume on the Fund’s exchange and may, therefore, have a material
upward or downward effect on the market price of the Shares. To the extent the
Fund permits redemptions in cash, the Fund may hold a relatively large
proportion of its assets in cash in anticipation of large redemptions, diluting
its investment returns.
Leverage
Risk.
To the extent that the Fund borrows money, it may be leveraged. Leveraging
generally exaggerates the effect on NAV of any increase or decrease in the
market value of the Fund’s portfolio securities. Borrowing creates interest
expenses and other expenses (e.g., commitment fees) for the Fund that affect the
Fund’s performance. Interest expenses are excluded from the Fund expenses borne
by the Adviser under the unitary management fee.
Licensing,
Custody and Settlement Risk. Approval of
governmental authorities may be required prior to investing in the securities of
companies based in certain foreign countries. Delays in obtaining such an
approval would delay investments in the particular country, and, as a
consequence, the Fund may not be able to invest in all of the securities
included in the Underlying Index while an approval is pending. Rules adopted
under the 1940 Act permit the Fund to maintain its foreign securities and cash
in the custody of certain eligible non-U.S. banks and securities depositories.
Certain banks in foreign countries that are eligible foreign sub-custodians may
be recently organized or otherwise lack extensive operating experience. In
addition, in certain countries there may be legal restrictions or limitations on
the ability of the Fund to recover assets held in custody by a foreign
sub-custodian in the event of the bankruptcy of the sub-custodian. Settlement
systems in emerging markets may be less well organized than in developed
markets. Thus, there may be a risk that settlement may be
9
delayed and that
cash or securities of the Fund may be in jeopardy because of failures of or
defects in the systems. Under the laws of certain countries in which the Fund
invests, the Fund may be required to release local shares before receiving cash
payment or may be required to make cash payment prior to receiving local
shares.
Money
Market Funds Risk. Money market funds
are subject to management fees and other expenses, and the Fund's investments in
money market funds will cause it to bear proportionately the costs incurred by
the money market funds' operations while simultaneously paying its own
management fees and expenses. An investment in a money market fund is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency; it is possible to lose money by investing in a money market
fund. To the extent that the Fund invests in money market funds, the Fund will
be subject to the same risks that investors experience when investing in money
market funds. These risks may include the impact of significant fluctuations in
assets as a result of the cash sweep program or purchase and redemption activity
in those funds.
Money
market funds are open-end registered investment companies that historically
have traded at a stable $1.00 per share price. However, money market funds that
do not meet the definition of a “retail money market fund” or “government money
market fund” under the 1940 Act are required to transact at a floating NAV per
share (i.e., in a manner similar to how all other non-money market mutual funds
transact), instead of at a $1.00 stable share price. Money market funds may also
impose liquidity fees and redemption gates for use in times of market stress. If
the Fund invested in a money market fund with a floating NAV, the impact on the
trading and value of the money market instrument may negatively affect the
Fund's return potential.
Natural
Disaster/Epidemic Risk. Natural or
environmental disasters, such as earthquakes, fires, floods, hurricanes,
tsunamis and other severe weather-related phenomena generally, and widespread
disease, including pandemics and epidemics, have been and may be highly
disruptive to economies and markets, adversely impacting individual companies,
sectors, industries, markets, currencies, interest and inflation rates, credit
ratings, investor sentiment, and other factors affecting the value of the Fund’s
investments. Additionally, if a sector or sectors in which the Underlying Index
is concentrated is negatively impacted to a greater extent by such events, the
Fund may experience heightened volatility. Given the increasing interdependence
among global economies and markets, conditions in one country, market, or region
are increasingly likely to adversely affect markets, issuers, and/or foreign
exchange rates in other countries, including the U.S. Any such events could have
a significant adverse impact on the value of the Fund’s
investments.
Repurchase
Agreements Risk. Repurchase
agreements are agreements pursuant to which the Fund acquires securities from a
third party with the understanding that the seller will repurchase them at a
fixed price on an agreed date. Repurchase agreements may be characterized as
loans secured by the underlying securities. If the seller of securities under a
repurchase agreement defaults on its obligation to repurchase the underlying
securities, as a result of its bankruptcy or otherwise, the Fund will seek to
dispose of such securities, which could involve costs or delays. If the seller
becomes insolvent and subject to liquidation or reorganization under applicable
bankruptcy or other laws, the Fund’s ability to dispose of the underlying
securities may be restricted. If the seller fails to repurchase the securities,
the Fund may suffer a loss to the extent proceeds from the sale of the
underlying securities are less than the repurchase prices.
Risks
of Futures and Options.
The
Fund may enter into U.S. futures contracts, options and options on futures
contracts to simulate full investment in the Underlying Index, or to manage cash
flows. The Fund will not use futures or options for speculative purposes. The
Fund intends to use futures and options contracts to limit its risk exposure to
levels comparable to direct investment in securities.
An
option gives a holder the right to buy or sell a specific security or an
index
at a specified price within a specified period of time. An option on a
futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in the underlying futures contract at a specified price at any time
prior to the expiration date of the option. Options can offer large amounts of
leverage, which may result in the Fund’s NAV being more sensitive to changes in
the value of the related instrument. The purchase of put or call options could
be based upon predictions as to anticipated trends; such predictions could prove
to be incorrect resulting in loss of part or all of the premium paid. The risk
of trading uncovered call options in some strategies (e.g., selling uncovered
stock index futures contracts) potentially is unlimited.
Futures
contracts provide for the future sale by one party and purchase by another party of
a specified amount of a specific instrument or index at a specified future time
and at a specified price. Because futures contracts project price levels in the
future, market circumstances may cause a discrepancy between the price of the
stock index future and the movement in the Underlying Index. In the event of
adverse price movements, the Fund would remain required to make daily cash
payments to maintain its required margin. There is no assurance that a liquid
secondary market will exist for any particular futures contract at any
particular time. The risk of loss in trading futures contracts potentially is
unlimited.
Securities
Lending Risk. Securities lending
involves a risk of loss because the borrower may fail to return the securities
in a timely manner or at all. If the Fund lends its securities and is unable to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Any cash received as
collateral for loaned securities will be invested in an affiliated money market
fund. This investment is subject to market appreciation or depreciation and the
Fund will bear any loss on the investment of its cash collateral.
Structured
Notes Risk. Investments in
structured notes involve risks including interest rate risk, credit risk and
market risk. Depending on the factors used, changes in interest rates and
movement of such factors may cause significant price fluctuations. Structured
notes may be less liquid than other types of securities and more volatile than
the reference factor underlying the note. This means that the Fund may lose
money if the issuer of the note defaults, as the Fund may not be able to readily
close out its investment in such notes without incurring losses.
Trading
Issues Risk. Investors buying or
selling Shares in the secondary market may pay brokerage commissions or other
charges, which may be a significant proportional cost for investors seeking to
buy or sell relatively small amounts of Shares. Moreover, trading in Shares on
the NYSE Arca, Inc. (the “Exchange”) may be halted due to market conditions or
for reasons that, in the view of the Exchange, make trading in Shares
inadvisable. In addition, trading in Shares on the Exchange is subject to
trading halts caused by extraordinary market volatility pursuant to the
Exchange’s “circuit breaker” rules. There can be no assurance that the
requirements of the Exchange necessary to maintain the listing of the Fund will
continue to be met or will remain unchanged. Foreign exchanges may be open on
days when Shares are not priced, and therefore, if the Fund holds securities
that are primarily listed on such exchanges, the value of such securities in the
Fund’s portfolio may change on days when shareholders will not be able to
purchase or sell Shares.
Tax Structure of ETFs
Unlike interests in
conventional mutual funds, which typically are bought and sold only at closing
NAVs, Shares are traded throughout the day in the secondary market on a national
securities exchange, and are created and redeemed principally in-kind in
Creation Units at each day’s next calculated NAV. These in-kind arrangements are
designed to protect shareholders from the adverse effects on the Fund’s
portfolio that could arise from frequent cash creation and redemption
transactions. In a conventional mutual fund,
10
redemptions can
have an adverse tax impact on taxable shareholders because the mutual fund may
need to sell portfolio securities to obtain cash to meet such redemptions. These
sales may generate taxable gains that must be distributed to the shareholders of
the mutual fund, whereas the Shares’ in-kind redemption mechanism generally will
not lead to such taxable events for the Fund or its shareholders.
The
Fund may recognize gains as a result of rebalancing its securities holdings to reflect
changes in the securities included in the Underlying Index. The Fund also may be
required to distribute any such gains to its shareholders to avoid adverse
federal income tax consequences. For information concerning the tax consequences
of distributions, see the section entitled “Dividends, Other Distributions and
Taxes” in this prospectus.
Portfolio Holdings
A description of
the Trust's policies and procedures with respect to the disclosure of the Fund’s
portfolio holdings is available in the Fund’s SAI, which is available at
www.invesco.com/ETFs.
Management of the Fund
Invesco Capital
Management LLC is a registered investment adviser with its offices at 3500 Lacey
Road, Suite 700, Downers Grove, IL 60515. Invesco Capital Management LLC
serves as the investment adviser to the Invesco Actively Managed Exchange-Traded
Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust,
Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II,
Invesco Exchange-Traded Self-Indexed Fund Trust and Invesco India
Exchange-Traded Fund Trust, a family of ETFs, with combined assets under
management of $173.9 billion as of December 31, 2022.
As
the Fund’s investment adviser, the Adviser has overall responsibility
for
selecting and continuously monitoring the Fund’s investments, managing the
Fund’s business affairs, and providing certain clerical, bookkeeping and other
administrative services for the Trust.
Portfolio
Managers
The Adviser uses a
team of portfolio managers, investment strategists and other investment
specialists in managing the Fund. This team approach brings together many
disciplines and leverages the Adviser's extensive resources. In this regard,
Peter Hubbard, Richard Ose, Gary Jones and Gregory Meisenger (the
“Portfolio Managers”) are jointly and primarily responsible for the day-to-day
management of the Fund.
Each
Portfolio Manager is responsible for various functions related to portfolio
management, including investing cash flows, coordinating with other team members
to focus on certain asset classes, implementing investment strategies and
researching and reviewing investment strategies.
Each
Portfolio Manager has limitations on their authority for
risk management and compliance purposes that the Adviser believes to be
appropriate.
◾
Peter Hubbard, Head
of Equities and Director of Portfolio Management of the Adviser and Vice
President of the Trust, has been responsible for the management of the Fund
since June 2013. He has been responsible for the management of certain funds in
the Invesco family of ETFs since June 2007 and has been associated with the
Adviser since 2005.
◾
Richard Ose, Senior
Portfolio Manager of the Adviser, has been responsible for the management of the
Fund since June 2013. He has been responsible for the management of certain
funds in the Invesco family of ETFs since October 2013 and has been associated
with the Adviser since 2011.
◾
Gary Jones,
Portfolio Manager of the Adviser, has been responsible for the management of the
Fund since June 2013. He has been responsible for the management of certain
funds in the Invesco family of ETFs since January 2012 and has been associated
with the Adviser since 2010.
◾
Gregory Meisenger,
Portfolio Manager of the Adviser, has been responsible for the management of the
Fund since February 2020. He has been responsible for the management of certain
funds in the Invesco family of ETFs since May 2018 and has been associated with
the Adviser since March 2018. Prior to joining the Adviser, Mr. Meisenger was a
Portfolio Manager with Columbia Management Investment Advisers, LLC since
2015.
The
Fund's SAI provides additional information about the Portfolio Managers’
compensation structure, other accounts that the Portfolio Managers manage and
the Portfolio Managers' ownership of Shares.
Advisory
Fees
Pursuant to an
investment advisory agreement between the Adviser and the Trust (the “Investment
Advisory Agreement”), the Fund pays the Adviser an annual management fee equal
to 0.35% of its average daily net assets (the “Advisory Fee”).
The
Advisory Fee paid by the Fund to the Adviser is an annual unitary management fee. Out
of the unitary management fee, the Adviser pays for substantially all expenses
of the Fund, 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 election of any Board member who is an “interested
person” of the Trust, or (iii) any other matters that directly benefit the
Adviser).
The
Fund may invest 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 (collectively, “Underlying Affiliated Investments”). The indirect
portion of the advisory fees that the Fund incurs through such Underlying
Affiliated Investments is in addition to the Advisory Fee payable to the Adviser
by the Fund. Therefore, the Adviser has agreed to waive the Advisory Fee payable
by the 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 Underlying Affiliated Investments or (ii) the Advisory Fee
available to be waived. This waiver does
not
apply to the Fund's investment of cash collateral received for securities
lending. This waiver is in place through at least August 31, 2024, and there is
no guarantee that the Adviser will extend it past that date.
A
discussion regarding the basis for the Board’s approval of the Investment Advisory
Agreement with respect to the Fund is available in the Fund’s Semi-Annual Report
to Shareholders for the fiscal period ended April 30, 2022.
How to Buy and Sell Shares
The Fund issues or
redeems its Shares at NAV per Share only in Creation Units or Creation Unit
Aggregations.
Most
investors buy and sell Shares in secondary market transactions through brokers.
Shares are listed for trading on the secondary market on the Exchange. Shares
can be bought and sold throughout the trading day like other publicly traded
shares. There is no minimum investment. Although Shares generally are purchased
and sold in “round lots” of 100 Shares, brokerage firms typically permit
investors to purchase or sell Shares in smaller “odd lots,” at no per share
price differential. When buying or selling Shares through a broker, you will
incur customary brokerage commissions and charges, and you may pay some or all
of the spread between the bid
11
and the offered
price in the secondary market on each leg of a round trip (purchase and sale)
transaction.
The
Shares trade on the Exchange under the symbol “PGHY.”
Share
prices are reported in dollars and cents per Share.
APs
may acquire Shares directly from the Fund, and APs may tender their Shares for
redemption directly to the Fund, at NAV per Share, only in Creation Units or
Creation Unit Aggregations, and in accordance with the procedures described in
the SAI.
Under
normal circumstances, the Fund will pay out redemption proceeds to a
redeeming AP within two days after the AP’s redemption request is received, in
accordance with the process set forth in the Fund’s SAI and in the agreement
between the AP and the Fund’s distributor. However, the Fund reserves the right,
including under stressed market conditions, to take up to seven days after the
receipt of a redemption request to pay an AP, all as permitted by the 1940 Act.
If the Fund has foreign investments in a country where local market holiday(s)
prevent the Fund from delivering such foreign investments to an AP in response
to a redemption request, the Fund may take up to 15 days after the receipt of
the redemption request to deliver such investments to the AP.
The
Fund anticipates meeting redemption requests either by paying redemption proceeds
to an AP primarily through in-kind redemptions or in cash. Cash used for
redemptions will be raised from the sale of portfolio assets or may come from
existing holdings of cash or cash equivalents. If the Fund holds Rule 144A
securities, an AP that is not a “qualified institutional buyer,” as such term is
defined under Rule 144A of the Securities Act of 1933, as amended (the
“Securities Act”), will not be able to receive those Rule 144A
securities.
The
Fund may liquidate and terminate at any time without shareholder approval.
Book
Entry
Shares are held in
book-entry form, which means that no stock certificates are issued. The
Depository Trust Company (“DTC”) or its nominee is the record owner of all
outstanding Shares and is recognized as the record owner of all Shares for all
purposes.
Investors
owning Shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all Shares.
Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
Shares, you are not entitled to receive physical delivery of stock certificates
or to have Shares registered in your name, and you are not considered a
registered owner of Shares. Therefore, to exercise any right as an owner of
Shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other stocks that you hold in
book entry or “street name” form.
Share
Trading Prices
The trading prices
of Shares on the Exchange may differ from the Fund’s daily NAV. Market forces of
supply and demand, economic conditions and other factors may affect the trading
prices of Shares.
Frequent Purchases and Redemptions of Shares
Shares may be
purchased and redeemed directly from the Fund only in Creation Units by APs. The
vast majority of trading in Shares occurs on the secondary market and does not
involve the Fund directly. In-kind purchases and redemptions of Creation Units
by APs and cash trades on the secondary market are unlikely to cause many of the
harmful effects of frequent purchases or redemptions of the Shares. Cash
purchases and/or redemptions of Creation Units, however, can result in increased
tracking error, disruption of portfolio management, dilution to the Fund and
increased transaction costs, which could negatively impact the Fund’s ability to
achieve its
investment objective, and may lead to the realization of capital gains. These
consequences may increase as the frequency of cash purchases and redemptions of
Creation Units by APs increases. However, direct trading by APs is critical to
ensuring that Shares trade at or close to NAV.
To
minimize these potential consequences of frequent purchases and redemptions of
Shares, the Fund imposes transaction fees on purchases and redemptions of
Creation Units to cover the custodial and other costs the Fund incurs in
effecting trades. In addition, the Adviser monitors trades by APs for patterns
of abusive trading and the Fund reserves the right not to accept orders from APs
that the Adviser has determined may be disruptive to the management of the Fund,
or otherwise are not in the best interests of the Fund. For these reasons, the
Board has not adopted policies and procedures with respect to frequent purchases
and redemptions of Shares.
Dividends, Other Distributions and Taxes
Dividends
and Other Distributions
Generally,
dividends from net investment income, if any, are declared and paid monthly by
the Fund. The Fund also intends to distribute its net realized capital gains, if
any, to shareholders annually. Dividends and other distributions may be declared
and paid more frequently to comply with the distribution requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and
to avoid a federal excise tax imposed on regulated investment
companies.
Distributions
in cash may be reinvested automatically in additional whole Shares only
if the broker through whom you purchased Shares makes such option
available.
Taxes
The Fund intends to
qualify each year as a regulated investment company (“RIC”) and, as such, is not
subject to entity-level tax on the income and gain it distributes. If you are a
taxable investor, dividends and distributions you receive generally are taxable
to you whether you reinvest distributions in additional Shares or take them in
cash. Every year, you will be sent information showing the amount of dividends
and distributions you received during the prior calendar year. In addition,
investors in taxable accounts should be aware of the basic tax points listed
below:
Fund
Tax Basics
◾
The Fund earns
income generally in the form of dividends or interest on its investments. This
income, less expenses incurred in the operation of the Fund, constitutes the
Fund’s net investment income from which dividends may be paid to shareholders.
If you are a taxable investor, distributions of net investment income generally
are taxable to you as ordinary income.
◾
Distributions of
net short-term capital gains are taxable to you as ordinary income. A fund with
a high portfolio turnover rate (a measure of how frequently assets within the
fund are bought and sold) is more likely to generate short-term capital gains
than a fund with a low portfolio turnover rate.
◾
Distributions of
net long-term capital gains are taxable to you as long-term capital gains no
matter how long you have owned your Shares.
◾
A portion of income
dividends paid by the Fund may be reported as qualified dividend income eligible
for taxation by individual shareholders at long-term capital gain rates,
provided certain holding period requirements are met. These reduced rates
generally are available for dividends derived from the Fund’s investment in
stocks of domestic corporations and
12
qualified foreign
corporations. If the Fund invests primarily in debt securities, either none or
only a nominal portion of the dividends paid by the Fund will be eligible for
taxation at these reduced rates.
◾
The use of
derivatives by the Fund may cause the Fund to realize higher amounts of ordinary
income or short-term capital gain, distributions from which are taxable to
individual shareholders at ordinary income tax rates rather than at the more
favorable tax rates for long-term capital gain.
◾
Distributions
declared to shareholders with a record date in October, November or December—if
paid to you by the end of January—are taxable for federal income tax purposes as
if received in December.
◾
Any long-term or
short-term capital gains realized on the sale of your Shares will be subject to
federal income tax.
◾
If the Fund is
terminated, a shareholder will receive a liquidating distribution(s) which
should be treated as payment in exchange for the Shares held by the shareholder.
As a result, each shareholder should recognize gain or loss in an amount equal
to the difference between the shareholder’s adjusted tax basis in his or her
shares and the liquidating distribution(s) he or she receives, except to the
extent the Shares are held in a tax-advantaged arrangement. A liquidating
distribution may be subject to backup withholding as described
below.
◾
A shareholder’s
cost basis information will be provided on the sale of any of the shareholder’s
Shares, subject to certain exceptions for exempt recipients. Please contact the
broker (or other nominee) that holds your Shares with respect to reporting of
your cost basis and available elections for your account.
◾
At the time you
purchase your Shares, the Fund’s NAV may reflect undistributed income or
undistributed capital gains. A subsequent distribution to you of such amounts,
although constituting a return of your investment, would be taxable. Buying
Shares just before the Fund declares an income dividend or capital gains
distribution is sometimes known as “buying a dividend.” In addition, the Fund’s
NAV may, at any time, reflect net unrealized appreciation, which may result in
future taxable distributions to you.
◾
By law, if you do
not provide the Fund with your proper taxpayer identification number and certain
required certifications, you may be subject to backup withholding on any
distributions of income, capital gains, or proceeds from the sale of your
Shares. The Fund also must withhold if the IRS instructs it to do so. When
withholding is required, the amount will be 24% of any distributions or proceeds
paid.
◾
An additional 3.8%
Medicare tax is imposed on certain net investment income (including ordinary
dividends and capital gain distributions received from the Fund and net gains
from taxable dispositions of Shares) of U.S. individuals, estates and trusts to
the extent that such person’s “modified adjusted gross income” (in the case of
an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you
on, and paid with, your federal income tax return.
◾
You will not be
required to include the portion of dividends paid by the Fund derived from
interest on U.S. government obligations in your gross income for purposes of
personal and, in some cases, corporate income taxes in many state and local tax
jurisdictions. The percentage of dividends that constitutes dividends derived
from interest on federal obligations will be determined annually. This
percentage may differ from the actual percentage of interest received by the
Fund on federal obligations for the particular days on which you hold
shares.
◾
Fund distributions
and gains from the sale of Shares generally are subject to state and local
income taxes.
◾
If the Fund
qualifies to pass through the tax benefits from foreign taxes it pays on its
investments, and elects to do so, then any foreign taxes it pays on these
investments may be passed through to you. You will then be required to include
your pro rata share of these taxes in gross income, even though not
actually received by you, and will be entitled either to deduct your share of
these taxes in computing your taxable income, or to claim a foreign tax credit
for these taxes against your U.S. federal income tax.
◾
Foreign investors
should be aware that U.S. withholding, special certification requirements to
avoid U.S. backup withholding and claim any treaty benefits, and estate taxes
may apply to an investment in the Fund.
◾
Under the Foreign
Account Tax Compliance Act (“FATCA”), a 30% withholding tax is imposed on income
dividends made by the Fund to certain foreign entities, referred to as foreign
financial institutions or non-financial foreign entities, that fail to comply
(or be deemed compliant) with extensive reporting and withholding requirements
designed to inform the U.S. Department of the Treasury of U.S.-owned foreign
investment accounts. After December 31, 2018, FATCA withholding also would have
applied to certain capital gain distributions, return of capital distributions
and the proceeds arising from the sale of Shares; however, based on proposed
regulations issued by the IRS, which can be relied upon currently, such
withholding is no longer required unless final regulations provide otherwise
(which is not expected). The Fund may disclose the information that it receives
from its shareholders to the IRS, non-U.S. taxing authorities or other parties
as necessary to comply with FATCA or similar laws. Withholding also may be
required if a foreign entity that is a shareholder of the Fund fails to provide
the Fund with appropriate certifications or other documentation concerning its
status under FATCA.
◾
To the extent the
Fund invests in an underlying fund that is taxed as a RIC, please see the
section titled
“Taxes
–
Taxation of the
Funds” in the Fund’s SAI for more information regarding the tax consequences of
such investment.
◾
The above
discussion concerning the taxability of Fund dividends and distributions and of
sales of Shares is inapplicable to investors that generally are exempt from
federal income tax, such as retirement plans that are qualified under Section
401 and 403 of the Code and individual retirement accounts (“IRAs”) and Roth
IRAs.
Taxes
on Purchase and Redemption of Creation Units
To the extent that
the Fund permits in-kind transactions, an AP that exchanges equity securities
for a Creation Unit generally will recognize a capital gain or loss equal to the
difference between the market value of the Creation Units at the time of
exchange (plus any cash received by the AP as part of the issue) and the sum of
the AP's aggregate basis in the securities surrendered plus any cash component
paid. Similarly, an AP that redeems a Creation Unit in exchange for securities
generally will recognize a capital gain or loss equal to the difference between
the AP's basis in the Creation Units (plus any cash paid by the AP as part of
the redemption) and the aggregate market value of the securities received (plus
any cash received by the AP as part of the redemption). The IRS, however, may
assert that a loss realized upon an exchange of securities for a Creation Unit,
or of a Creation Unit for securities, cannot be deducted currently under the
rules governing “wash sales” or on the ground that there has been no significant
change in the AP's economic position. An AP exchanging securities should consult
its own tax advisor(s) with respect to whether wash sale rules apply and when a
loss otherwise might not be deductible.
Any
capital gain or loss realized on a redemption of a Creation Unit generally is
treated as long-term capital gain or loss if the Shares have been held for more
than one year and as short-term capital gain or loss if the Shares have been
held for one year or less, assuming that such Creation Units are held as a
capital asset. If you purchase or redeem one or more
13
Creation Units, you
will be sent a confirmation statement showing how many Shares you purchased or
sold and at what price.
The
foregoing discussion summarizes some of the more important
possible consequences under current federal, state and local tax law of an
investment in the Fund. It is not a substitute for personal tax advice. You also
may be subject to state, local and/or foreign tax on the Fund's distributions
and sales and/or redemptions of Shares. Consult your personal tax advisor(s)
about the potential tax consequences of an investment in the Shares under all
applicable tax laws.
Distributor
Invesco
Distributors, Inc. (the “Distributor”) serves as the distributor of Creation
Units for the Fund on an agency basis. The Distributor does not maintain a
secondary market in Shares. The Distributor is an affiliate of the
Adviser.
Net Asset Value
The NAV for the
Fund will be calculated and disseminated daily on each day that the NYSE is open
for trading. The Bank of New York Mellon (“BNYM”) normally calculates the Fund’s
NAV as of the regularly scheduled close of business of the NYSE (normally 4:00
p.m., Eastern time). The Fund’s NAV is based on prices at the time of closing,
and U.S. fixed-income assets may be valued as of the announced closing time for
trading in fixed-income instruments in a particular market or exchange. NAV is
calculated by deducting all of the Fund’s liabilities from the total value of
its assets and then dividing the result by the number of Shares outstanding,
rounding to the nearest cent. Generally, the portfolio securities are recorded
in the NAV no later than the trade date plus one day. In determining
NAV,
expenses are
accrued and applied daily and securities and other assets for which market
quotations are readily available and reliable are valued at market value. The
Trust’s Board has designated the Adviser to fair value the Fund’s portfolio
securities and other assets for which market quotations are not readily
available and reliable in accordance with Board-approved policies and related
Adviser procedures (the “Valuation Procedures”), subject to the Board’s
oversight.
Securities
listed or traded on an exchange (except convertible securities)
generally are valued at the last trade price or official closing price that day
as of the close of the exchange where the security primarily trades. 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,
whereas securities of investment companies that are exchange-traded
are
valued at the last trade price or official closing price on the exchange on
which they primarily trade. Deposits, other obligations of U.S. and non-U.S.
banks and financial institutions, and cash equivalents are valued at their daily
account value. Fixed-income securities (including convertible securities)
normally are valued on the basis of prices provided by independent pricing
services. Pricing services generally value fixed-income
securities assuming
orderly transactions of institutional round lot size, but the Fund may hold or
transact in the same securities in smaller, odd lot sizes. Odd lots often trade
at lower prices than institutional round lots, and their value may be adjusted
accordingly. 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 principally trade. 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. 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.
Foreign
exchange-traded equity securities are valued at their market value if market
quotations are available and reliable. The Adviser may use various pricing
services to obtain market quotations as well as fair value prices. The Adviser
may discontinue the use of any pricing service at any time.
At
times, a listed security’s market price may not be readily available.
Moreover, even when
market quotations are available for a security, they may be stale or unreliable.
A security’s last market quotation may become stale because, among other
reasons, (i) the security is not traded frequently, (ii) the security ceased
trading before its exchange closed; (iii) market or issuer-specific events
occurred after the security ceased trading; or (iv) the passage of time between
when the security’s trading market closes and when the Fund calculates its NAV
caused the quotation to become stale. A security’s last market quotation may
become unreliable because of (i) certain issuer- or security-specific events,
including a merger or insolvency, (ii) events which affect a geographical area
or an industry segment, such as political events or natural disasters, or (iii)
market events, such as a significant movement in the U.S. market. When a
security’s market price is not readily available, or the Adviser
determines,
in its
judgment, that such price is stale or unreliable, the Adviser will value the
security at fair value in good faith using the Valuation
Procedures.
Fair
value pricing involves subjective judgments, and fair value pricing methods may change
from time to time. Consequently, while such determinations may be made in good
faith, it may nevertheless be more difficult for the Adviser to accurately
assign a daily value, and 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, it is possible that
a fair value determination for a security is materially different than the value
that could be realized upon the sale of the security. There is no assurance that
the Fund could sell a portfolio security for the value established for it at any
time, and it is possible that the Fund would incur a loss if a security is sold
at a discount to its established value. Because the Fund seeks to track the
Underlying Index, the use of fair value pricing could result in a difference
between the prices used to calculate the Fund’s NAV and the prices used by the
Underlying Index, which may increase the Fund’s tracking error.
Fund Service Providers
BNYM, 240 Greenwich
Street, New York, New York 10286, is the administrator, custodian, transfer
agent and fund accounting and dividend disbursing agent for the
Fund.
Stradley Ronon
Stevens & Young, LLP, 191 North Wacker Drive, Suite 1601, Chicago, Illinois
60606, and 2000 K Street, NW, Suite 700, Washington, D.C. 20006, serves as legal
counsel to the Trust.
PricewaterhouseCoopers
LLP (“PwC”), One North Wacker Drive, Chicago, Illinois 60606, serves as the
Fund’s independent registered public accounting firm. PwC is responsible for
auditing the annual financial statements of the Fund and assists in the
preparation and/or review of the Fund’s federal and state income tax
returns.
14
Financial Highlights
The financial
highlights table below is intended to help you understand the Fund’s financial
performance for the past five fiscal years. Certain information reflects
financial results for a single Share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in the
Fund (assuming reinvestment of all dividends and other
distributions).
This information has been derived from the Fund’s financial statements, which
have been audited by PwC, whose report, along with the Fund’s financial
statements, is included in the Fund’s Annual Report for the fiscal year ended
October 31, 2022, which is available upon request.
|
|
Years
Ended October 31, | ||||
|
|
2022 |
2021 |
2020 |
2019 |
2018 |
|
Per
Share Operating Performance: |
|
|
|
|
|
|
Net
asset value at beginning of year |
$21.59 |
$21.58 |
$22.82 |
$23.14 |
$24.14 |
|
Net
investment income(a) |
0.86 |
0.96 |
1.18 |
1.20 |
1.24 |
|
Net
realized and unrealized gain (loss) on investments |
(2.40) |
0.18 |
(1.20) |
(0.32) |
(1.00) |
|
Total
from investment operations |
(1.54) |
1.14 |
(0.02) |
0.88 |
0.24 |
|
Distributions
to shareholders from: |
|
|
|
|
|
|
Net
investment income |
(0.87) |
(0.96) |
(1.19) |
(1.20) |
(1.24) |
|
Return
of capital |
(0.12) |
(0.17) |
(0.03) |
- |
- |
|
Total
distributions |
(0.99) |
(1.13) |
(1.22) |
(1.20) |
(1.24) |
|
Net
asset value at end of year |
$19.06 |
$21.59 |
$21.58 |
$22.82 |
$23.14 |
|
Market
price at end of year(b) |
$18.96 |
$21.62 |
$21.59 |
$22.81 |
$23.03 |
|
Net
Asset Value Total Return(c) |
(7.26)% |
5.33% |
0.02% |
3.90% |
1.05% |
|
Market
Price Total Return(c) |
(7.87)% |
5.42% |
0.15% |
4.36% |
0.36% |
|
Ratios/Supplemental
Data: |
|
|
|
|
|
|
Net
assets at end of year (000’s omitted) |
$186,805 |
$236,363 |
$196,355 |
$230,477 |
$216,400 |
|
Ratio
to average net assets of: |
|
|
|
|
|
|
Expenses |
0.35% |
0.35% |
0.35% |
0.35% |
0.35% |
|
Net
investment income |
4.29% |
4.36% |
5.39% |
5.21% |
5.25% |
|
Portfolio
turnover rate(d) |
58% |
59% |
54% |
57% |
42% |
|
(a) |
Based
on average shares outstanding. |
|
(b) |
The
mean between the last bid and ask prices. |
|
(c) |
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. |
|
(d) |
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. |
15
Index Provider
No entity that
creates, compiles, sponsors or maintains the Underlying Index is or will be an
affiliated person, as defined in Section 2(a)(3) of the 1940 Act, or an
affiliated person of an affiliated person, of the Trust, the Adviser, the
Distributor or a promoter of the Fund.
Neither
the Adviser nor any affiliate of the Adviser has any rights to influence the
selection of the securities in the Underlying Index.
The
Underlying Index is calculated and maintained by the Index Provider or its affiliate,
agent or partner. The Index Provider is not affiliated with the Trust, the
Adviser or the Distributor. The Adviser has entered into a license agreement
with the Index Provider. The Fund is entitled to use the Underlying Index
pursuant to a sub-licensing agreement with the Adviser.
The
DB Global Short Maturity High Yield Bond Index is a trademark of DB and has been
licensed for use for certain purposes by the Adviser.
Disclaimers
The Fund is not
sponsored, endorsed, sold or promoted by DB, its affiliates, or its third party
licensors. Deutsche Bank® and DB Global
Short Maturity High Yield Bond Index are marks of Deutsche Bank Securities Inc.
and have been licensed for use for certain purposes by the Adviser.
DB
makes no representation or warranty, express or implied, to the owners of Shares of
the Fund or any member of the public regarding the advisability of investing in
securities generally or in Shares of the Fund particularly. As the Index
Provider for the Fund, DB’s only relationship to the Distributor, the Adviser or
the Trust is through the licensing of certain trademarks and trade names of DB
and the Underlying Index.
The
Underlying Index is selected and calculated without regard to the Distributor, the
Adviser, the Trust or any holders of Shares of the Fund. DB has no obligation to
take the needs of the Distributor, the Adviser, the Trust or the owners of
Shares of the Fund into consideration when determining, composing or calculating
the Underlying Index. DB is not responsible for and has not participated in the
determination of the prices and amount of Shares of the Fund or the timing of
the issuance or sale of Shares of the Fund or in the determination of any
financial calculations relating thereto. DB has no obligation or liability in
connection with the administration of the Trust or marketing of the Shares of
the Fund. DB does not guarantee the accuracy, timeliness, and/or the
completeness of the Underlying Index or any data included therein, and DB shall
have no liability for any errors, omissions, delays, or interruptions therein.
DB makes no warranty, express or implied, as to results to be obtained by the
Distributor, the Adviser, the Trust or owners of Shares of the Fund, or any
other person or entity, from the use of the Underlying Index or any data
included therein.
DB
MAKES NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE UNDERLYING INDEX, OR ANY DATA INCLUDED THEREIN, OR THE FUND, THE
TRUST, OR THE SHARES OF THE FUND. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL DB HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) RESULTING FROM THE USE OF THE
UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN, EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY
AGREEMENTS OR ARRANGEMENTS BETWEEN DEUTSCHE BANK SECURITIES INC. AND THE
ADVISER.
No
purchaser, seller or holder of this security, or any other person or
entity, should use
or refer to any DB trade name, trademark or service mark to sponsor, endorse,
market or promote this product without first contacting DB to determine whether
DB’s permission is required. Under no
circumstances may
any person or entity claim any affiliation with DB without the written
permission of DB.
The
Adviser does not guarantee the accuracy and/or the completeness of the Underlying
Index or any data included therein, and the Adviser shall have no liability for
any errors, omissions, restatements, re-calculations or interruptions therein.
The Adviser makes no warranty, express or implied, as to results to be obtained
by the Fund, owners of the Shares or any other person or entity from the use of
the Underlying Index or any data included therein. The Adviser makes no express
or implied warranties and expressly disclaims all warranties of merchantability
or fitness for a particular purpose or use with respect to the Underlying Index
or any data included therein. Without limiting any of the foregoing, in no event
shall the Adviser have any liability for any special, punitive, direct, indirect
or consequential damages (including lost profits) arising out of matters
relating to the use of the Underlying Index, even if notified of the possibility
of such damages.
Premium/Discount Information
Information showing
the number of days the market price of the Shares was greater (at a premium) and
less (at a discount) than the Fund’s NAV for the most recently completed
calendar year and the most recently completed calendar quarters since that year
(or the life of the Fund, if shorter) is available on the Fund’s website at
www.invesco.com/ETFs.
Other Information
Continuous
Offering
The method by which
Creation Unit Aggregations of Shares are created and traded may raise certain
issues under applicable securities laws. Because new Creation Unit Aggregations
of Shares are issued and sold by the Fund on an ongoing basis, a “distribution,”
as such term is used in the Securities Act, may occur at any point.
Broker-dealers and other persons are cautioned that some activities on their
part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the prospectus delivery requirement and
liability provisions of the Securities Act.
For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Unit Aggregations after placing an order with
the Distributor, breaks them down into constituent Shares and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving the solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker-dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a characterization
as an underwriter.
Broker-dealer
firms also should note that dealers who are not “underwriters” but
are effecting transactions in Shares, whether or not participating in the
distribution of Shares, generally are required to deliver a prospectus. This is
because the prospectus delivery exemption in Section 4(a)(3)(C) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the 1940 Act. As a result, broker-dealer firms should note that
dealers who are not “underwriters” but are participating in a distribution (as
contrasted with engaging in ordinary secondary market transactions), and thus
dealing with the Shares that are part of an overallotment within the meaning of
Section 4(a)(3)(C) of the
16
Securities Act,
will be unable to take advantage of the prospectus delivery exemption provided
by Section 4(a)(3) of the Securities Act. For delivery of prospectuses to
exchange members, the prospectus delivery mechanism of Rule 153 under the
Securities Act only is available with respect to transactions on a national
exchange.
Delivery
of Shareholder Documents–Householding
Householding is an
option available to certain investors of the Fund. Householding is a method of
delivery, based on the preference of the individual investor, in which a single
copy of certain shareholder documents can be delivered to investors who share
the same address, even if their accounts are registered under different names.
Householding for the Fund is available through certain broker-dealers. If you
are interested in enrolling in householding and receiving a single copy of the
prospectus and other shareholder documents, please contact your broker-dealer.
If you currently are enrolled in householding and wish to change your
householding status, please contact your broker-dealer.
For
More Information
For more detailed
information on the Trust, the Fund and the Shares, you may request a copy of the
Fund’s SAI. The SAI provides detailed information about the Fund and is
incorporated by reference into this prospectus. This means that the SAI legally
is a part of this prospectus. Additional information about the Fund’s
investments also is available in the Fund’s Annual and Semi-Annual Reports to
Shareholders. In the Fund’s current Annual Report, you will find a discussion of
the market conditions and investment strategies that significantly affected the
Fund's performance during the last fiscal year.
If you have
questions about the Fund or Shares or you wish to obtain the SAI, Annual Report
and/or Semi-Annual Report, free of charge, or to make shareholder inquiries,
please:
|
Call: |
Invesco
Distributors, Inc. at 1-800-983-0903
Monday
through Friday
8:00
a.m. to 5:00 p.m. Central Time |
|
Write: |
Invesco
Exchange-Traded Fund Trust II
c/o
Invesco Distributors, Inc.
11
Greenway Plaza, Suite 1000
Houston,
Texas 77046-1173 |
|
Visit: |
www.invesco.com/ETFs |
Reports
and other information about the Fund are available on the EDGAR Database on
the SEC's Internet site at www.sec.gov, and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: [email protected].
No
person is authorized to give any information or to make any representations
about the Fund and its Shares not contained in this prospectus, and you should
not rely on any other information. Read and keep this prospectus for future
reference.
Dealers
effecting transactions in the Shares, whether or not participating
in this distribution, generally are required to deliver a prospectus. This is in
addition to any obligation of dealers to deliver a prospectus when acting as
underwriters.
The
Trust's registration number under the 1940 Act is 811-21977.
17
