UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number            811-22927                    

 

   Invesco Actively Managed Exchange-Traded Commodity Fund Trust  
   (Exact name of registrant as specified in charter)  

 

   3500 Lacey Road   
   Downers Grove, IL 60515   
   (Address of principal executive offices) (Zip code)   

 

   Daniel E. Draper   
  

President

  
   3500 Lacey Road   
   Downers Grove, IL 60515   
   (Name and address of agent for service)   

Registrant’s telephone number, including area code:  800-983-0903

Date of fiscal year end:  October 31

Date of reporting period:  October 31, 2019

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

Item 1. Reports to Stockholders.

The Registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:

 

LOGO

 

 

Invesco Annual Report to Shareholders

October 31, 2019

 

PDBC   Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you hold accounts through a financial intermediary, you may contact your financial intermediary to enroll in electronic delivery. Please note that not all financial intermediaries may offer this service.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

 

Table of Contents

 

The Market Environment      3  

Manager’s Analysis

     4  
Consolidated Schedule of Investments      7  
Consolidated Statement of Assets and Liabilities      12  
Consolidated Statement of Operations      13  
Consolidated Statement of Changes in Net Assets      14  
Consolidated Financial Highlights      15  
Notes to Consolidated Financial Statements      16  
Report of Independent Registered Public Accounting Firm      26  
Fund Expenses      27  
Tax Information      28  
Proxy Results      29  
Trustees and Officers      30  

 

 

  2  

 

 

The Market Environment

 

 

 

Commodity Market

For the reporting period, the major broad-based commodity indices all produced negative returns. The Deutsche Bank OY Diversified Index was down (7.98)%, as strong losses in agriculture, base metals and energy outweighed strong returns in precious metals. The S&P Goldman Sachs Commodity (GSCI) Index returned (10.01)% over the period, as its relatively higher allocation to energy and lower exposure to precious metals hurt performance. The Bloomberg Commodity TR finished down (2.58)% during the reporting period as its modified equal weight methodology insulated against the impact of weak energy markets and benefitted from strength in precious metals.

The DB precious metals sector was the best performing sector during the reporting period, up 23.85%. Gold gained 24.55% and Silver 27.08% against the backdrop of rising equity market volatility and trade tensions between the U.S. and China. Increased uncertainty around global economic growth drove the U.S. Federal Reserve to cut interest rates three times over the fiscal period providing a boost to safe haven assets. After posting the weakest commodity sector returns in the prior fiscal year, the fall in base metals prices tapered down a modest decline of 2.16%, mostly treading water as the market waits for signs of an inflection point in the U.S. China trade relationship. Aluminum posted the steepest decline, down 10.16%, while copper and zinc fell 3.25% and 0.42%, respectively.

The DB energy sector posted a loss of (15.71)% as the continuation of the trade conflict between the U.S. and China put a damper on sentiment regarding global demand growth for oil. Brent crude and WTI Crude declined 18.97% and 16.85%, respectively. Heating oil declined 16.56% while gasoline fell 11.19% over the fiscal period.

Agricultural commodities also struggled as the sector fell 6.56% over the period. Wheat was the weakest performer, down 26.34%, as crop yields came in better than expected and US Dollar strength put downward pressure on globally traded commodities. Geopolitics also hit U.S. grown soybean prices as the Chinese placed retaliatory tariffs on the crop in response to U.S. tariff’s on certain Chinese exports. Lastly, sugar fell 11.30 % over the period as excess inventory and a weakening demand forced prices lower.

Fixed Income

Throughout the fiscal year, US economic data remained supportive of continued economic expansion as 2019 3rd quarter GDP grew 1.9%. The US economy continued to add jobs, pushing the unemployment rate to 3.6% at the close of the fiscal year, while inflation remained subdued.1 Against this backdrop, the US Federal Reserve (the Fed) lowered the federal funds target rate from a range of 2.00% to 2.25% at the start of the reporting period to a range of 1.50% to 1.75% at the close of the reporting period. This was accomplished with one 0.25% rate hike December, followed by three 0.25% rate cuts in July, September, and October 2019.2 Working against these positive developments, however, were global macroeconomic headwinds in the form of geopolitical trade tension, sub-optimal inflation, and the lingering unknown of Brexit—the decision by UK voters to leave the European Union. These headwinds, coupled with continued low US inflation, could encourage further Fed rate cuts in the near-term. These actions continued to drive overseas investments into higher yielding segments of the fixed income markets.

The 10-year US Treasury yield continued to move upward at the start of the fiscal year and spiked in November 2018 due to continued strength of the global economy, increased risk of inflation and the high probability of additional Fed rate hikes throughout the fiscal year. However, elevated volatiltiy levels in December led to a severe risk-off tone in the markets driving US Treasury yields lower. Throughout the remainder of the fiscal year US Treasury yields continued to decline as the Fed adopted a more dovish stance and continued geopolitical uncertainty forced investors to seek higher quality fixed income instruments. The 10-year US Treasury yield ended the reporting period at 1.69%, 145 basis points lower than at the beginning of the fiscal year.3 (A basis point is one one-hundredth of a percentage point.)

The broader bond market, as represented by the Bloomberg Barclays U.S. Aggregate Bond Index, gained 11.51% for the fiscal year. Strong performance for the index was largely attributable to the sharp decline in US Treasury yields. The four primary sectors of the Bloomberg Barclays U.S. Aggregate Bond Index—government-related, corporate, securitized and treasury—posted positive returns for the fiscal year. Out-of-index exposure, such as high yield and US dollar-denominated emerging market (EM) corporate debt, provided gains despite concerns over global growth, a volatile geopolitical environment and a series of juxtaposed Fed actions. Helping to support returns in high yield and US dollar-denominated EM corporate debt were very accommodative central bank policies.

 

1 

Bureau of Labor Statistics

2 

US Federal Reserve

3 

US Treasury Department

 

 

 

  3  

 

 

 

PDBC    Manager’s Analysis
   Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)

 

The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (the “Fund”) is an actively managed exchange-traded fund (“ETF”) that seeks long-term capital appreciation. The Fund seeks to achieve its investment objective by investing in a combination of financial instruments that are economically linked to the world’s most heavily traded commodities. Commodities are assets that have tangible properties, such as oil, agricultural produce or raw metals.

Under normal circumstances, the Fund invests, either directly or through a wholly-owned subsidiary (the “Subsidiary”), in a combination of four categories of investments: (i) exchange- traded futures contracts on underlying commodities (“Commodities Futures”); (ii) other instruments whose value is derived from or linked to price movements of underlying physical commodities, represented by exchange-traded futures contracts on commodity indices, commodity-linked notes, exchange-traded options on Commodities Futures, swaps on commodities and commodity-related forward contracts (collectively, these are “Commodity-Linked Instruments”); (iii) exchange-traded products related to or providing exposure to commodities (i.e., commodity- linked equity securities, investment companies, other ETFs, exchange-traded notes and commodity pools) (collectively, the “Commodity-Related Assets”); and (iv) cash, cash-like instruments or high-quality securities (collectively, “Collateral”). The Collateral may consist of (1) U.S. Government securities, such as bills, notes and bonds issued by the U.S. Treasury; (2) money market funds; and/or (3) corporate debt securities, such as commercial paper and other short-term unsecured promissory notes issued by businesses that are rated investment grade or of comparable quality. Such Collateral is designed to provide liquidity, serve as margin or otherwise collateralize investments in the Commodities Futures and Commodity-Linked Instruments.

While the Fund may invest directly in Commodity-Related Assets and Collateral, it may not invest directly in physical commodities, Commodities Futures or Commodity-Linked Instruments. Instead, the Fund attempts to obtain investment returns that are highly correlated to the commodities markets by investing in these instruments indirectly through its Subsidiary. The Fund’s investment in the Subsidiary is expected to provide the Fund with exposure to Commodities Futures and Commodity-Linked Instruments in accordance with the limits of the federal tax laws, which limit the ability of investment companies like the Fund to invest directly in such investments. The Fund’s investment in the Subsidiary may not exceed 25% of the Fund’s total assets at each quarter-end of the Fund’s fiscal year. The Subsidiary operates under Cayman Islands law. It is wholly-owned and controlled by the Fund and advised by Invesco Capital Management LLC. The Subsidiary has the same investment objective as the Fund and will follow the same general investment policies and restrictions, except that unlike the Fund, it may invest without limit in Commodities Futures and Commodity-Linked Instruments. Except

as noted, references to the Fund’s investment strategies and risks include those of its Subsidiary.

The Subsidiary will invest in Commodities Futures (or gain exposure to Commodities Futures through the use of swaps) that generally are representative of the components of the DBIQ Optimum Yield Diversified Commodity Index Excess Return (the “Benchmark Index”), an index composed of futures contracts on 14 of the most heavily traded commodities across the energy, precious metals, industrial metals and agriculture sectors: aluminum, Brent crude oil, copper, corn, gold, New York Harbor Ultra Low Sulphur Diesel (“NY Harbor ULSD” previously referred to as Heating Oil), WTI crude oil, natural gas, “RBOB” gasoline, silver, soybeans, sugar, wheat and zinc. Although the Subsidiary generally provides exposure to the components of the Benchmark Index, the Fund is not an “index tracking” ETF and instead seeks to exceed the performance of the Benchmark Index. Therefore, the Subsidiary may not seek exposure to all of the Benchmark Index’s components or in the same proportion as the Benchmark Index. The Subsidiary may invest in Commodities Futures (or gain exposure to such Commodities Futures through the use of swaps) that are not included in the Benchmark Index, but reference a commodity represented in the Benchmark Index by a different futures contract. At times, it also may invest in Commodities Futures outside the Benchmark Index, invest in Commodities Futures with expirations beyond those contained in the Benchmark Index or emphasize some commodity sectors more than others.

For the fiscal year ended October 31, 2019, on a market price basis, the Fund returned (9.63)%. On a net asset value (“NAV”) basis, the Fund returned (9.66)%. During the same time period, the Benchmark Index returned (10.01)%. Additionally, the DBIQ Optimum Yield Diversified Commodity Index Total Return (“Total Return Benchmark Index”) returned (7.98)%. The Total Return Benchmark Index is similar to the Benchmark Index except that the Total Return Benchmark Index performance includes the return that would be generated by the Collateral. The majority of the Fund’s underperformance relative to the Total Return Benchmark Index is due to active investments, fees, operating expenses and trading costs (including costs related to swap transactions) incurred by the Fund during the fiscal year.

Positions that contributed most significantly to the Fund’s return for the fiscal year ended October 31, 2019 included the COMEX Gold 100 Troy Ounces contracts, COMEX Silver contracts and LME Zinc contracts. Positions that detracted most significantly from the Fund’s return included the NYMEX WTI Crude contracts, ICE Brent Crude contracts and NYMEX NY Harbor ULSD contracts.

 

 

 

  4  

 

 

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) (continued)

 

 

Risk Allocation*
(% of the Fund’s Net Assets)

as of October 31, 2019

 
Asset Class    Risk Contribution by Sector  
Commodities      
   Energy      51.67 % 
   Agriculture      22.60  
   Precious Metals      13.02  
   Base Metals      12.71  

 

*

Based on notional value of futures contracts.

Growth of a $10,000 Investment Since Inception

 

LOGO

Fund Performance History as of October 31, 2019

 

    1 Year    

3 Years

Average
Annualized

   

3 Years

Cumulative

          Fund Inception  
Index         Average
Annualized 		    Cumulative  
DBIQ Optimum Yield Diversified Commodity Index Excess Return     (10.01 )%      0.57 %      1.71 %        (6.70 )%      (29.22 )% 
DBIQ Optimum Yield Diversified Commodity Index Total Return     (7.98 )      2.19       6.73         (5.74 )      (25.52 ) 
Fund            
NAV Return     (9.66 )      0.78       2.34         (6.73 )      (29.31 ) 
Market Price Return     (9.63 )      0.73       2.20         (6.76 )      (29.42 ) 

 

 

  5  

 

 

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) (continued)

 

 

Fund Inception: November 7, 2014

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information. The adviser has contractually agreed to waive fees and/or pay certain Fund expenses through August 31, 2021. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.60% (0.58% after fee waiver) includes the unitary management fee of 0.59% and acquired fund fees and expenses of 0.01%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. The returns shown in the table

above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See invesco.com/ETFs to find the most recent month-end performance numbers.

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

Notes Regarding Indexes and Fund Performance History:

 

-

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

 

 

 

  6  

 

 

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)

October 31, 2019

Consolidated Schedule of Investments(a)

 

     Principal
Amount 		     Value  

U.S. Treasury Securities-85.73%

 

  

U.S. Treasury Bills-85.73%(b)

     

1.81%-1.85%, 12/19/2019

   $ 104,000,000      $ 103,799,626  

2.02%, 01/09/2020(c)

     675,000,000        673,023,796  

1.59%, 02/06/2020

     400,000,000        398,358,976  

1.85%, 03/05/2020

     245,000,000        243,700,564  
     

 

 

 

Total U.S. Treasury Securities
(Cost $1,417,818,880)

        1,418,882,962  
     

 

 

 
     Shares         

Money Market Funds-11.60%

 

  

Invesco Premier U.S. Government Money Portfolio, Institutional Class, 1.67%(d)

     126,655,719        126,655,719  
     Shares      Value  

Money Market Funds-(continued)

 

  

Invesco STIC (Global Series) PLC,
U.S. Dollar Liquidity Portfolio,
Institutional Class, 1.91%(d)

     65,317,922      $ 65,317,922  
     

 

 

 

Total Money Market Funds
(Cost $191,973,641)

        191,973,641  
     

 

 

 

TOTAL INVESTMENTS IN SECURITIES-97.33%
(Cost $1,609,792,521)

 

     1,610,856,603  

OTHER ASSETS LESS LIABILITIES-2.67%

 

     44,262,327  
     

 

 

 

NET ASSETS-100.00%

      $ 1,655,118,930  
     

 

 

 
 

Notes to Consolidated Schedule of Investments:

(a) 

The Consolidated Schedule of Investments includes the accounts of the wholly-owned subsidiary. All inter-company accounts and transactions have been eliminated in consolidations.

(b) 

Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund.

(c) 

$59,820,000 was pledged as collateral to cover margin requirements for open futures contracts. See Note 2J.

(d) 

The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2019.

Open Futures Contracts

 

 

Long Futures Contracts

   Number of
Contracts 		     Expiration
Month 		     Notional
Value 		     Value     Unrealized
Appreciation
(Depreciation) 		 

Commodity Risk

             

Brent Crude Oil

     799           January-2020      $ 47,636,380      $ 1,477,686     $ 1,477,686  

Corn

     1,203           December-2020        24,405,862        227,484       227,484  

Gasoline RBOB

     794           November-2019        53,176,721        710,309       710,309  

Gold

     287           December-2019        43,474,760        958,326       958,326  

LME Copper

     121           June-2020        17,620,625        258,787       258,787  

LME Primary Aluminum

     365           December-2019        16,114,750        (290,477 )      (290,477 ) 

LME Zinc

     304           December-2019        19,053,200        886,057       886,057  

Natural Gas

     825           December-2019        22,539,000        1,203,728       1,203,728  

NY Harbor ULSD

     608           December-2019        47,900,429        (1,338,257 )      (1,338,257 ) 

Silver

     122           December-2019        11,020,870        222,470       222,470  

Soybean

     509           July-2020        24,616,512        196,311       196,311  

Sugar No. 11

     1,492           September-2020        21,639,968        479,287       479,287  

Wheat

     873           July-2020        22,839,863        692,435       692,435  

WTI Crude Oil

     877           December-2019        47,515,860        (4,861,074 )      (4,861,074 ) 
           

 

 

   

 

 

 

Total Futures Contracts

            $ 823,072     $ 823,072  
           

 

 

   

 

 

 

Open Over-The-Counter Total Return Swap Agreements(a)(b)

 

 

Counterparty

  Pay/
Receive 		   

Reference Entity(c)

  Fixed
Rate 		    Payment
Frequency 		    Maturity Date     Notional
Value 		    Upfront
Payments
Paid
(Received) 		    Value     Unrealized
Appreciation 		 

Commodity Risk

                 

Citibank, N.A.

    Receive     Citigroup Gobal Markets Limited Commodity Index     0.21%       Monthly       November-2019       $125,000,000       $–     $   3,418,766     $   3,418,766  

 

 

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

 

      7         
  

 

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)–(continued)

October 31, 2019

 

Open Over-The-Counter Total Return Swap Agreements(a)(b)–(continued)

 

Counterparty

  Pay/
Receive 		 

Reference Entity(c)

  Fixed
Rate 		    Payment
Frequency 		    Maturity Date   Notional
Value 		    Upfront
Payments
Paid
(Received) 		  Value     Unrealized
Appreciation 		 
Goldman Sachs International   Receive   Goldman Sachs Commodity i-Select Strategy 1063     0.28 %      Monthly     November-2019   $ 260,000,000     $–   $ 5,735,642     $ 5,735,642  
Macquarie Bank Ltd.   Receive   Macquarie Commodity Customized Product 253E Index     0.26       Monthly     November-2019     260,000,000     –     5,751,523       5,751,523  
Morgan Stanley Capital Services LLC   Receive   Morgan Stanley MSCB008 Index     0.24       Monthly     November-2019     200,000,000     –     5,466,194       5,466,194  
Royal Bank of Canada   Receive   RBC Enhanced Commodity PS01 Index     0.24       Monthly     November-2019     260,000,000     –     6,932,553       6,932,553  
UBS AG   Receive   UBS Custom UBSIB327 Index     0.22       Monthly     November-2019     100,000,000     –     2,732,205       2,732,205  
             

 

 

 

 

   

 

 

 

Total - Total Return Swap Agreements

          $–   $ 30,036,883     $ 30,036,883  
             

 

 

 

 

   

 

 

 

 

(a) 

Open Over-The-Counter Total Return Swap Agreements are collateralized by cash held with the swap Counterparties in the amount of $21,740,000.

(b) 

The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively.

(c) 

The tables below include additional information regarding the underlying components of certain reference entities that are not publicly available.

 

Reference Entity Components

 

Reference Entity

  

Underlying Components

   Percentage  

Citigroup Global Markets

  

Limited Commodity Index

  
   Long Futures Contracts   
   RBOB Gasoline      12.31%  
   Heating Oil      11.43     
   WTI Crude Oil      11.34     
   Brent Crude Oil      11.21     
   Gold      10.40     
   Soybean      6.09     
   Corn      5.96     
   Wheat      5.47     
   Natural Gas      5.25     
   Sugar      5.18     
   Zinc      4.63     
   Copper      4.24     
   Aluminium      3.88     
   Silver      2.61     
     

 

 

 
   Total      100.00%  
     

 

 

 
 

 

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

 

      8         
  

 

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)–(continued)

October 31, 2019

 

Reference Entity Components–(continued)

 

Reference Entity

  

Underlying Components

   Percentage  
Goldman Sachs Commodity      
i-Select Strategy 1063      
  

Long Futures Contracts

 

  
  

RBOB Gasoline

 

     12.23%  
  

Heating Oil

 

     11.48     
  

WTI Crude Oil

 

     11.33     
  

Brent Crude Oil

 

     11.11     
  

Gold

 

     10.43     
  

Soybean

 

     6.11     
  

Corn

 

     5.97     
  

Wheat

 

     5.49     
  

Natural Gas

 

     5.26     
  

Sugar

 

     5.19     
  

Zinc

 

     4.64     
  

Copper

 

     4.25     
  

Aluminium

 

     3.89     
  

Silver

 

     2.62     
     

 

 

 
  

Total

 

     100.00%  
     

 

 

 

Macquarie Commodity

     

Customized Product 253E

     

Index

     
  

Long Futures Contracts

 

  
  

RBOB Gasoline

 

     12.17%  
  

Heating Oil

 

     11.50     
  

WTI Crude Oil

 

     11.37     
  

Brent Crude Oil

 

     11.11     
  

Gold

 

     10.43     
  

Soybean

 

     6.11     
  

Corn

 

     5.97     
  

Wheat

 

     5.49     
  

Natural Gas

 

     5.26     
  

Sugar

 

     5.19     
  

Zinc

 

     4.64     
  

Copper

 

     4.25     
  

Aluminium

 

     3.89     
  

Silver

 

     2.62     
     

 

 

 
  

Total

 

     100.00%  
     

 

 

 
 

 

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

 

      9         
  

 

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)–(continued)

October 31, 2019

 

Reference Entity Components–(continued)

 

 

Reference Entity

  

Underlying Components

   Percentage  

Morgan Stanley MSCB008

  

Index

 

     
  

Long Futures Contracts

 

  
  

RBOB Gasoline

 

    

 

12.31%  

 

 

 

  

Heating Oil

 

    

 

11.43

 

 

 

  

WTI Crude Oil

 

    

 

11.34

 

 

 

  

Brent Crude Oil

 

    

 

11.21

 

 

 

  

Gold

 

    

 

10.40

 

 

 

  

Soybean

 

    

 

6.09

 

 

 

  

Corn

 

    

 

5.96

 

 

 

  

Wheat

 

    

 

5.47

 

 

 

  

Natural Gas

 

    

 

5.25

 

 

 

  

Sugar

 

    

 

5.18

 

 

 

  

Zinc

 

    

 

4.63

 

 

 

  

Copper

 

    

 

4.24

 

 

 

  

Aluminium

 

    

 

3.88

 

 

 

  

Silver

 

    

 

2.61

 

 

 

     

 

 

 
  

Total

 

    

 

100.00%

 

 

 

     

 

 

 

RBC Enhanced Commodity

  

PSO1 Index

 

     
  

Long Futures Contracts

 

  
  

RBOB Gasoline

 

    

 

12.40%  

 

 

 

  

Heating Oil

 

    

 

11.39

 

 

 

  

WTI Crude Oil

 

    

 

11.33

 

 

 

  

Brent Crude Oil

 

    

 

11.23

 

 

 

  

Gold

 

    

 

10.39

 

 

 

  

Soybean

 

    

 

6.09

 

 

 

  

Corn

 

    

 

5.95

 

 

 

  

Wheat

 

    

 

5.47

 

 

 

  

Natural Gas

 

    

 

5.24

 

 

 

  

Sugar

 

    

 

5.17

 

 

 

  

Zinc

 

    

 

4.62

 

 

 

  

Copper

 

    

 

4.24

 

 

 

  

Aluminium

 

    

 

3.87

 

 

 

  

Silver

 

    

 

2.61

 

 

 

     

 

 

 
  

Total

 

    

 

100.00%

 

 

 

     

 

 

 
 

 

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

 

      10         
  

 

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)–(continued)

October 31, 2019

 

Reference Entity Components–(continued)

 

 

Reference Entity

  

Underlying Components

   Percentage  

UBS Custom UBSIB327

  

Index

 

     
  

Long Futures Contracts

 

  
  

RBOB Gasoline

 

    

 

12.42%  

 

 

 

  

Heating Oil

 

    

 

11.42

 

 

 

  

WTI Crude Oil

 

    

 

11.32

 

 

 

  

Brent Crude Oil

 

    

 

11.20

 

 

 

  

Gold

 

    

 

10.38

 

 

 

  

Soybean

 

    

 

6.09

 

 

 

  

Corn

 

    

 

5.95

 

 

 

  

Wheat

 

    

 

5.47

 

 

 

  

Natural Gas

 

    

 

5.24

 

 

 

  

Sugar

 

    

 

5.17

 

 

 

  

Zinc

 

    

 

4.62

 

 

 

  

Copper

 

    

 

4.24

 

 

 

  

Aluminium

 

    

 

3.87

 

 

 

  

Silver

 

    

 

2.61

 

 

 

     

 

 

 
   Total      100.00%  
     

 

 

 
 

 

 

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

 

      11         
  

 

Consolidated Statement of Assets and Liabilities

October 31, 2019

 

     Invesco Optimum
Yield Diversified
Commodity Strategy
No K-1  ETF
(PDBC) 		 

 

Assets:

  

Unaffiliated investments in securities, at value

   $ 1,418,882,962  

Affiliated investments in securities, at value

     191,973,641  

Other investments:

  

Unrealized appreciation on LME futures contracts

     1,144,844  

Unrealized appreciation on swap agreements – OTC

     30,036,883  

Cash

     20,789  

Deposits with brokers:

  

Cash collateral-OTC derivatives

     21,740,000  

Receivable for:

  

Dividends

     232,385  
  

 

 

 

Total assets

     1,664,031,504  
  

 

 

 

 

Liabilities:

  

Other investments:

  

Unrealized depreciation on LME futures contracts

     290,477  

Payable for:

  

Variation margin on non-LME futures contracts

     2,391,163  

LME futures contracts

     5,351,005  

Accrued unitary management fees

     766,929  

Accrued expenses

     113,000  
  

 

 

 

Total liabilities

     8,912,574  
  

 

 

 

Net Assets

   $ 1,655,118,930  
  

 

 

 

Net assets consist of:

  

Shares of beneficial interest

   $ 1,632,692,292  

Distributable earnings

     22,426,638  
  

 

 

 

Net Assets

   $ 1,655,118,930  
  

 

 

 

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

     104,104,000  

Net asset value

   $ 15.90  
  

 

 

 

Market price

   $ 15.89  
  

 

 

 

Unaffiliated investments in securities, at cost

   $ 1,417,818,880  
  

 

 

 

Affiliated investments in securities, at cost

   $ 191,973,641  
  

 

 

 

 

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

 

      12         
  

 

Consolidated Statement of Operations

For the year ended October 31, 2019

 

     Invesco Optimum
Yield Diversified
Commodity Strategy
No K-1 ETF
(PDBC) 		 

Investment income:

  

Unaffiliated interest income

   $ 36,413,358  

Affiliated dividend income

     5,633,919  
  

 

 

 

Total investment income

     42,047,277  
  

 

 

 

Expenses:

  

Unitary management fees

     11,152,412  

Proxy fees

     113,000  
  

 

 

 

Total expenses

     11,265,412  
  

 

 

 

Less: Waivers

     (433,390 ) 
  

 

 

 

Net expenses

     10,832,022  
  

 

 

 

Net investment income

     31,215,255  
  

 

 

 

Realized and unrealized gain (loss) from:

  

Net realized gain (loss) from:

  

Investment securities

     272,342  

Futures contracts

     (102,534,609 ) 

Swap agreements

     (397,513,524 ) 
  

 

 

 

Net realized gain (loss)

     (499,775,791 ) 
  

 

 

 

Change in net unrealized appreciation of:

  

Investment securities

     1,363,678  

Futures contracts

     30,125,108  

Swap agreements

     188,261,530  
  

 

 

 

Change in net unrealized appreciation

     219,750,316  
  

 

 

 

Net realized and unrealized gain (loss)

     (280,025,475 ) 
  

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ (248,810,220 ) 
  

 

 

 

 

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

 

      13         
  

 

Consolidated Statement of Changes in Net Assets

For the years ended October 31, 2019 and 2018

 

     Invesco Optimum Yield
    Diversified Commodity Strategy    
No K-1 ETF (PDBC) 		 
     2019     2018  

Operations:

    

Net investment income

   $ 31,215,255     $ 17,604,270  

Net realized gain (loss)

     (499,775,791 )      199,227,371  

Change in net unrealized appreciation (depreciation)

     219,750,316       (215,788,590 ) 
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     (248,810,220 )      1,043,051  
  

 

 

   

 

 

 

Distributions to Shareholders from:

    

Distributable earnings

     (18,571,771 )      (27,638,159 ) 
  

 

 

   

 

 

 

Shareholder Transactions:

    

Proceeds from shares sold

     670,219,223       2,247,727,166  

Value of shares repurchased

     (1,251,058,287 )      (328,399,428 ) 
  

 

 

   

 

 

 

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

     (580,839,064 )      1,919,327,738  
  

 

 

   

 

 

 

Net increase (decrease) in net assets

     (848,221,055 )      1,892,732,630  
  

 

 

   

 

 

 

Net assets:

    

Beginning of year

     2,503,339,985       610,607,355  
  

 

 

   

 

 

 

End of year

   $ 1,655,118,930     $ 2,503,339,985  
  

 

 

   

 

 

 

Changes in Shares Outstanding:

    

Shares sold

     41,000,000       123,800,000  

Shares repurchased

     (77,700,000 )      (18,000,000 ) 

Shares outstanding, beginning of year

     140,804,000       35,004,000  
  

 

 

   

 

 

 

Shares outstanding, end of year

     104,104,000       140,804,000  
  

 

 

   

 

 

 

 

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

 

      14         
  

 

Consolidated Financial Highlights

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)

 

                     For the Period
November 5, 2014(a)
Through
October  31,
     Years Ended October 31,
     2019   2018   2017   2016   2015

Per Share Operating Performance:

                             

Net asset value at beginning of period

     $ 17.78     $ 17.44     $ 17.40     $ 17.64          $ 25.00    
    

 

 

     

 

 

     

 

 

     

 

 

          

 

 

     

Net investment income (loss)(b)

       0.27       0.22       0.02       (0.04 )            (0.09 )    

Net realized and unrealized gain (loss) on investments

       (2.00 )       0.79       1.14       (0.20 )            (7.27 )    
    

 

 

     

 

 

     

 

 

     

 

 

          

 

 

     

Total from investment operations

       (1.73 )       1.01       1.16       (0.24 )            (7.36 )    
    

 

 

     

 

 

     

 

 

     

 

 

          

 

 

     

Distributions to shareholders from:

                             

Net investment income

       (0.15 )       (0.67 )       (1.12 )       -            -    
    

 

 

     

 

 

     

 

 

     

 

 

          

 

 

     

Net asset value at end of period

     $ 15.90     $ 17.78     $ 17.44     $ 17.40          $ 17.64    
    

 

 

     

 

 

     

 

 

     

 

 

          

 

 

     

Market price at end of period(c)

     $ 15.89     $ 17.76     $ 17.47     $ 17.41          $ 17.64    
    

 

 

     

 

 

     

 

 

     

 

 

          

 

 

     

Net Asset Value Total Return(d)

       (9.66 )%       6.04 %       6.84 %       (1.36 )%            (29.44 )%(e)    

Market Price Total Return(d)

       (9.63 )%       5.73 %       6.95 %       (1.30 )%            (29.44 )%(e)    

Ratios/Supplemental Data:

                             

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

     $ 1,655,119     $ 2,503,340     $ 610,607     $ 381,039          $ 7,128    

Ratio to average net assets of:

                             

Expenses, after Waivers(f)

       0.57 %(g)       0.57 %       0.57 %       0.55 %            0.50 %(h)    

Expenses, prior to Waivers(f)

       0.60 %(g)       0.59 %       0.59 %       0.59 %            0.59 %(h)    

Net investment income (loss)

       1.65 %(g)       1.20 %       0.11 %       (0.25 )%            (0.47 )%(h)    

 

(a) 

Commencement of investment operations.

(b) 

Based on average shares outstanding.

(c) 

The mean between the last bid and ask prices.

(d) 

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

(e) 

The net asset value total return from Fund Inception (November 7, 2014, the first day of trading on the Exchange) to October 31, 2015 was (29.97)%. The market price total return from Fund Inception to October 31, 2015 was (30.03)%.

(f) 

In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.

(g) 

Ratios include non-recurring costs associated with a proxy statement of 0.01%.

(h) 

Annualized.

 

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

 

      15         
  

 

Notes to Consolidated Financial Statements

Invesco Actively Managed Exchange-Traded Commodity Fund Trust

October 31, 2019

NOTE 1–Organization

Invesco Actively Managed Exchange-Traded Commodity Fund Trust (the “Trust”) was organized as a Delaware statutory trust on December 23, 2013 and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). This report includes Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) (the “Fund”).

The Fund represents a separate series of the Trust. The shares of the Fund are referred to herein as “Shares” or “Fund’s Shares.” The Fund’s Shares are listed and traded on The Nasdaq Stock Market.

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

The Fund’s investment objective is to seek long-term capital appreciation. The Fund seeks to achieve its investment objective by investing in financial instruments that provide economic exposure to the commodities markets primarily through investment in Invesco DB Optimum Yield Diversified Commodity Strategy Cayman Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. The Fund may invest up to 25% of its total assets in the Subsidiary.

NOTE 2–Significant Accounting Policies

The following is a summary of the significant accounting policies followed by the Fund in preparation of its consolidated financial statements.

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

A.

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

A security listed or traded on an exchange (except convertible securities) is generally valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded or, lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter (“OTC”) market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded, or at the final settlement price set by such exchange. Swaps and options not listed on an exchange are valued by an independent source. For purposes of determining NAV per Share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investment companies are valued using such company’s NAV per share, unless the shares are exchange-traded, in which case they are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but 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. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that Invesco Capital Management LLC (the “Adviser”) determines are significant and make the closing price unreliable, the Fund may fair

 

      16         
  

 

value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, the potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Total return swap agreements are valued on a daily basis in accordance with the agreements, using observable inputs, such as valuation indications provided by index providers, whenever available. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.

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

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith following procedures approved by the Board of Trustees. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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

Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.

B.

Other Risks

Active Trading Risk. Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.

Authorized Participant Concentration Risk. Only Authorized Participants (“APs”) may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of institutions that may act as APs, and such APs have no obligation to submit creation or redemption orders. Consequently, there is no assurance that those APs will establish or maintain an active trading market for the Shares. This risk may be heightened to the extent that securities underlying the Fund is 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 Fund Shares, which may be more likely to trade at a premium or discount to the Fund’s NAV and possibly face trading halts and/or delisting.

Cash Transaction Risk. Most exchange-traded funds (“ETFs”) generally make in-kind redemptions to avoid being taxed on gains on the distributed portfolio securities at the fund level. However, the Fund currently intends to effect creations and redemptions principally for cash, rather than principally in-kind, due to the nature of the Fund’s investments. As such, 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 ETFs that utilize an in-kind redemption process and there may be a substantial difference in the after-tax rate of the return between the Fund and conventional ETFs.

Commodity-Linked Derivative Risk. Investments linked to the prices of commodities may be considered speculative. The Fund’s significant investment exposure to commodities may subject the Fund to greater volatility than investments in traditional securities. Therefore, the value of such instruments may be volatile and fluctuate widely based on a variety of macroeconomic factors or commodity-specific factors. At times, price fluctuations may be quick and significant and may not correlate to price movements in other asset classes, such as stocks, bonds and cash.

Commodity Pool Risk. The Fund may invest in futures contracts, which cause it to be deemed to be a commodity pool, thereby subjecting the Fund to regulation under the Commodity Exchange Act and rules of the Commodity Futures Trading Commission (“CFTC”). The Adviser is registered as a Commodity Pool Operator (“CPO”) and as a commodity trading advisor (“CTA”), and the Fund will be operated in accordance with CFTC rules. Registration as a CPO or CTA subjects the Adviser to

 

      17         
  

 

additional laws, regulations and enforcement policies, all of which could increase compliance costs and may affect the operations and financial performance of the Fund. Registration as a commodity pool may have negative effects on the ability of the Fund to engage in its planned investment program.

Derivatives Risk. Derivatives involve risks different from, or possibly greater than, risks associated with other types of investments. Derivatives may be harder to value and may also be less tax efficient. To the extent that the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or market segment, in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an instrument which would usually operate as a hedge provides no hedging benefits at all. 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 regulatory changes.

Futures Contract Risk. Risks of futures contracts include: (i) an imperfect correlation between the value of the futures contract and the underlying commodity or commodity index; (ii) possible lack of a liquid secondary market; (iii) the inability to close a futures contract when desired; (iv) losses caused by unanticipated market movements, which may be unlimited; (v) an obligation for the Fund to make daily cash payments to maintain its required margin, particularly at times when the Fund may have insufficient cash or must sell securities to meet those margin requirements; (vi) the possibility that a failure to close a position may result in the Fund receiving an illiquid commodity; and (vii) unfavorable execution prices from rapid selling.

Leverage Risk. The Subsidiary may invest in portfolio investments that can give rise to a form of economic leverage. Because derivatives may have a component of economic leverage, adverse changes in the value or level of the underlying asset can result in the magnification of gains or losses on the investment held by the Fund, and may potentially result in a loss greater than the amount invested in the derivative itself. The use of leverage may cause the Fund to liquidate portfolio positions to satisfy its obligations or to meet any required asset segregation requirements when it may not be advantageous for the Fund to do so.

Liquidity Risk. For the Fund, 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.

Management Risk. The Fund is subject to management risk because it is an actively managed portfolio. In managing the Fund’s portfolio securities, the Adviser or a sub-adviser (as applicable and as set forth below), applies investment techniques and risk analyses in making investment decisions, but there can be no guarantee that these will produce the desired results.

Pooled Investment Vehicle Risk. The Fund faces the risk that a pooled investment vehicle will not achieve its investment objective. The Fund also is subject to the risks of the underlying commodities in which the pooled vehicles invest. As a shareholder in such a vehicle, the Fund will incur duplicative expenses, bearing its share of that vehicle’s expenses while also paying its own advisory and administrative fees. In addition, the Fund will incur brokerage costs when purchasing and selling shares of pooled investment vehicles.

Subsidiary Investment Risk. By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the 1940 Act; therefore the Fund will not receive all protections offered to investors in registered investment companies. In addition, changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Fund and/or the Subsidiary to operate as intended and could negatively affect the Fund and its shareholders.

Tax Risk. To qualify as a regulated investment company (“RIC”), the Fund must meet certain requirements concerning the source of its income. The Fund’s investment in the Subsidiary is intended to provide exposure to commodities in a manner consistent with the “qualifying income” requirement applicable to RICs. The Internal Revenue Service (“IRS”) has ceased issuing private revenue rulings regarding whether the use of subsidiaries by investment companies to invest in commodity-linked instruments constitutes qualifying income. If the IRS determines that this source of income is not “qualifying income,” the Fund may cease to qualify as a RIC. Failure to qualify as a RIC could subject the Fund to adverse tax consequences, including a federal income tax on its net income at regular corporate rates, as well as a tax to shareholders on such income when distributed as an ordinary dividend.

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 fluctuation 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.

C.

Investment Transactions and Investment Income - Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Interest income is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted

 

      18         
  

 

over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by the Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

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

D.

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

E.

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

F.

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

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

The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.

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

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

G.

Expenses - The Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Fund, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, acquired fund fees and expenses, if any, litigation expenses and other extraordinary expenses.

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

H.

Accounting Estimates - The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements, including estimates and assumptions related to taxation. Actual results could differ from these estimates. All inter-company accounts and transactions have been eliminated in consolidation. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the consolidated financial statements are released to print.

I.

Indemnifications - Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Also, under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund and/or the Subsidiary, respectively. Each Board member who is not an “interested person” (as defined in the 1940 Act) of the Trust (each, an “Independent Trustee”) is also indemnified against certain liabilities arising out of the

 

      19         
  

 

performance of his duties to the Trust pursuant to an Indemnification Agreement between such trustee and the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

J.

Futures Contracts - The Subsidiary invests in commodity-linked futures contracts that generally are representative of the components of the DBIQ Optimum Yield Diversified Commodity Index Excess Return (the “Benchmark Index”), an index composed of future contracts on 14 of the most heavily traded commodities across the energy, precious metals, industrial metals and agriculture sectors: aluminum, Brent crude oil, copper, corn, gold, New York Harbor Ultra Low Sulphur Diesel (previously referred to as heating oil), WTI crude oil, natural gas, “RBOB” gasoline, silver, soybeans, sugar, wheat and zinc.

A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying commodity or financial instrument for a specified price at a future date. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant broker. During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made on commodity futures contracts that do not trade on the London Metals Exchange (the “LME”), depending upon whether unrealized gains or losses are incurred. These amounts are reflected as a receivable or payable on the Consolidated Statement of Assets and Liabilities. For LME contracts, subsequent or variation margin payments are not made and the value of the contracts is presented as net unrealized appreciation (depreciation) on the Consolidated Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Consolidated Statement of Operations.

For settlement of LME commodity futures contracts, cash is not transferred until the settled futures contracts expire. Net realized gains or losses on LME contracts which have been closed out but for which the contract has not yet expired are reflected as a receivable or payable on the Consolidated Statement of Assets and Liabilities.

The primary risks associated with futures contracts are market risk, leverage risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and may be required to continue to maintain the margin deposits on the futures contracts until the position expired or matured. As futures contracts approach expiration, they may be replaced by similar contracts that have a later expiration. This process is referred to as “rolling”. If the market for these contracts is in “contango,” meaning that the prices of futures contracts in the nearer months are lower than the price of contracts in the distant months, the sale of the near-term month contract would be at a lower price than the longer-term contract, resulting in a cost to “roll” the futures contract. The actual realization of a potential roll cost will depend on the difference in price of the near and distant contracts. In addition, the Fund may not “roll” futures contracts on a predefined schedule as they approach expiration; instead the Adviser may determine to roll to another futures contract (chosen from a list of tradable futures with expirations beyond those contained in the Benchmark Index) in an attempt to generate maximum yield. There can be no guarantee that such a strategy will produce the desired results.

K.

Swap Agreements - The Fund may enter into various swap transactions, including interest rate, total return, index, currency exchange rate and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. These agreements may contain, among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any.

Interest rate, total return, index and currency exchange rate swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.

Changes in the value of swap agreements are recognized as unrealized gains (losses) in the Consolidated Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Consolidated Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of the Fund under any swap transaction. Cash

 

      20         
  

 

held as collateral is recorded as deposits with brokers on the Consolidated Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and counterparty risk in excess of amounts recognized on the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate, the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

NOTE 3–Investment Advisory Agreement and Other Agreements

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

Pursuant to the Investment Advisory Agreement, the Fund accrues daily and pays monthly to the Adviser an annual unitary management fee of 0.59% of the Fund’s average daily net assets. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Fund, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, acquired fund fees and expenses, if any, litigation expenses and other extraordinary expenses.

The Adviser has contractually agreed, through at least August 31, 2021, to waive a portion of the Fund’s management fee in an amount equal to 100% of the net advisory fees an affiliate of the Adviser receives that are attributable to certain of the Fund’s investments in money market funds managed by that affiliate (excluding investments of cash collateral from securities lending). The Adviser cannot discontinue this waiver prior to its expiration.

For the fiscal year ended October 31, 2019, the Adviser waived fees of $433,390.

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

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

NOTE 4–Additional Valuation Information

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

         Level 1 –   Prices are determined using quoted prices in an active market for identical assets.
  Level 2 –   Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 –   Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent

 

      21         
  

 

uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.

 

     Level 1     Level 2      Level 3    Total  

Investments in Securities

          

U.S. Treasury Securities

   $ -     $ 1,418,882,962      $-    $ 1,418,882,962  

Money Market Funds

     191,973,641       -      -      191,973,641  
  

 

 

   

 

 

    

 

  

 

 

 

Total Investments in Securities

     191,973,641       1,418,882,962      -      1,610,856,603  
  

 

 

   

 

 

    

 

  

 

 

 

Other Investments - Assets(a)

          

Futures Contracts

     7,312,880       -      -      7,312,880  

Swap Agreements

     -       30,036,883      -      30,036,883  
  

 

 

   

 

 

    

 

  

 

 

 
     7,312,880       30,036,883      -      37,349,763  
  

 

 

   

 

 

    

 

  

 

 

 

Other Investments - Liabilities(a)

          

Futures Contracts

     (6,489,808 )      -      -      (6,489,808 ) 
  

 

 

   

 

 

    

 

  

 

 

 

Total Other Investments

     823,072       30,036,883      -      30,859,955  
  

 

 

   

 

 

    

 

  

 

 

 

Total Investments

   $ 192,796,713     $ 1,448,919,845      $-    $ 1,641,716,558  
  

 

 

   

 

 

    

 

  

 

 

 

 

(a)

Unrealized appreciation (depreciation).

NOTE 5–Derivative Investments

The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a Fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.

    For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Consolidated Statement of Assets and Liabilities.

Value of Derivative Investments at Period-End

The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2019:

 

     Value  

Derivative Assets

 

   Commodity
Risk 		 

Unrealized appreciation on futures contracts–Exchange-Traded(a)

   $ 7,312,880  

Unrealized appreciation on swap agreements–OTC

     30,036,883  
  

 

 

 

Total Derivative Assets

     37,349,763  
  

 

 

 

Derivatives not subject to master netting agreements

     (7,312,880 ) 
  

 

 

 

Total Derivative Assets subject to master netting agreements

   $ 30,036,883  
  

 

 

 
     Value  
Derivative Liabilities    Commodity
Risk 		 

Unrealized depreciation on futures contracts–Exchange-Traded(a)

   $ (6,489,808 ) 

Derivatives not subject to master netting agreements

     6,489,808  
  

 

 

 

Total Derivative Liabilities subject to master netting agreements

   $ -  
  

 

 

 

 

(a)

Includes cumulative appreciation (depreciation) on futures contracts. Only current day’s variation margin receivable (payable) is reported within the Consolidated Statement of Assets and Liabilities for non-LME futures contracts.

 

      22         
  

 

Offsetting Assets and Liabilities

The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of October 31, 2019:

 

     Financial Derivative
Assets 		     Financial Derivative
Liabilities 		             Collateral
(Received)/Pledged 		         
Counterparty    Swap Agreements      Swap Agreements    Net Value of
Derivatives 		     Non-Cash    Cash    Net Amount  

Citibank, N.A.

      $ 3,418,766            $–       $ 3,418,766      $-    $-    $ 3,418,766  

Goldman Sachs International

        5,735,642            –         5,735,642      -    -      5,735,642  

Macquarie Bank Ltd.

        5,751,523            –         5,751,523      -    -      5,751,523  

Morgan Stanley Capital Services LLC

        5,466,194            –         5,466,194      -    -      5,466,194  

Royal Bank of Canada

               6,932,553                            –                  6,932,553      -    -      6,932,553  

UBS AG

        2,732,205            –         2,732,205      -    -      2,732,205  
     

 

 

          

 

     

 

 

    

 

  

 

  

 

 

 

Total

      $ 30,036,883            $–       $ 30,036,883      $-    $-    $ 30,036,883  
     

 

 

          

 

     

 

 

    

 

  

 

  

 

 

 

Effect of Derivative Investments for the Fiscal Year Ended October 31, 2019

The table below summarizes the Fund’s gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:

 

     Location of Gain (Loss)
on Consolidated
Statement of Operations
     Commodity
Risk

Realized Gain (Loss):

    

Futures contracts

     $ (102,534,609 )

Swap agreements

       (397,513,524 )

Change in Net Unrealized Appreciation:

    

Futures contracts

       30,125,108

Swap agreements

       188,261,530
    

 

 

 

Total

     $ (281,661,495 )
    

 

 

 

The table below summarizes the average notional value of derivatives held during the period.

 

     Futures Contracts      Swap Agreements  

Average notional value

     $456,567,723        $1,463,792,308  

NOTE 6–Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2019 and 2018:

 

     2019    2018

Ordinary income

       $18,571,771        $27,638,159
Tax Components of Net Assets at Fiscal Year-End:          

Undistributed ordinary income

          $ 20,508,894

Net unrealized appreciation – investments

            1,918,448

Capital loss carryforward

            (704 )

Shares of beneficial interest

            1,632,692,292
         

 

 

 

Total net assets

          $ 1,655,118,930
         

 

 

 

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

 

      23         
  

 

The following table presents available capital loss carryforwards for the Fund as of October 31, 2019:

 

   

No expiration

    
   

Short-Term

  

Long-Term

  

Total*

  $704    $ -    $704

 

*

Capital loss carryforwards as of the date listed above are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

NOTE 7–Investment Transactions

For the fiscal year ended October 31, 2019, the cost of securities purchased and proceeds from sales of securities (other than short-term securities, U.S. Treasury obligations, money market funds and in-kind transactions, if any) were $0 and $0, respectively.

    At October 31, 2019, the aggregate cost of investments, including any derivatives, on a tax basis includes adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end:

 

 Aggregate unrealized appreciation of investments

     $ 38,413,845

 Aggregate unrealized (depreciation) of investments

       (36,495,397 )
    

 

 

 

 Net unrealized appreciation of investments

     $ 1,918,448
    

 

 

 

Cost of investments for tax purposes is $1,639,798,110.

NOTE 8–Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of income from the Subsidiary, amounts were reclassified between undistributed net investment income (loss), undistributed net realized gain (loss) and Shares of beneficial interest. These reclassifications had no effect on the net assets of each Fund. For the fiscal year ended October 31, 2019, the reclassifications were as follows:

 

 Undistributed Net Investment Income

   $ (35,883,196 ) 

 Undistributed Net Realized Gain

     316,149,767  

 Shares of Beneficial Interest

     (280,266,571 ) 

NOTE 9–Trustees’ and Officer’s Fees

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

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

NOTE 10–Capital

Shares are issued and redeemed by the Fund only in Creation Units of 100,000 Shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Fund. Unlike most ETFs, the Fund currently effects creations and redemptions principally in exchange for the deposit or delivery of cash, rather than principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”) because of the nature of the Fund’s investments. If an in-kind transaction is permitted, there will be a balancing cash component to equate the transaction to the NAV per Share of the Fund on the transaction date. However, cash in an amount equivalent to the value of certain securities may be substituted for any otherwise permitted in-kind transaction, generally when the securities are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances.

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

 

      24         
  

 

Certain transaction fees may be charged by the Fund for creations and redemptions, which are treated as increases in capital. Transactions in the Fund’s Shares are disclosed in detail in the Consolidated Statement of Changes in Net Assets.

 

      25         
  

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Shareholders of Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF and its subsidiary (one of the funds constituting Invesco Actively Managed Exchange-Traded Commodity Fund Trust, referred to hereafter as the “Fund”) as of October 31, 2019, the related consolidated statement of operations for the year ended October 31, 2019, the consolidated statement of changes in net assets for each of the two years in the period ended October 31, 2019, including the related notes, and the consolidated financial highlights for each of the four years in the period ended October 31, 2019 and for the period November 5, 2014 (commencement of investment operations) through October 31, 2015 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended October 31, 2019 and the financial highlights for each of the four years in the period ended October 31, 2019 and for the period November 5, 2014 (commencement of investment operations) through October 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of October 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

December 23, 2019

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

 

      26         
  

 

Calculating your ongoing Fund expenses

 

Example

As a shareholder of the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (the “Fund”), a series of the Invesco Actively Managed Exchange-Traded Commodity Fund Trust, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest, including acquired fund fees and expenses, if any, litigation expenses and other extraordinary expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.

In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. The amount of fees and expenses incurred indirectly by the Fund will vary because the investment companies have varied expenses and fee levels and the Fund may own different proportions of the investment companies at different times. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

    Beginning
Account Value
May 1, 2019 		  Ending
Account Value
October 31, 2019 		  Annualized
Expense Ratio
Based on the
Six-Month Period 		  Expenses Paid
During the
Six-Month Period(1)

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)

               

Actual

      $1,000.00       $   944.70       0.58 %       $2.84

Hypothetical (5% return before expenses)

      1,000.00       1,022.28       0.58       2.96

 

(1) 

Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended October 31, 2019. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expense ratios based on the annualized data in the Consolidated Financial Highlights.

 

      27         
  

 

Tax Information

 

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

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

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2019:

 

Qualified Dividend Income*

     0 % 

Corporate Dividends Received Deduction*

     0 % 

Qualified Interest Income*

     24 % 

U.S. Treasury Obligations*

     91 % 

Long-Term Capital Gains

   $ 0  

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

 

      28         
  

 

Proxy Results

 

A Special Meeting (“Meeting”) of Shareholders of Invesco Actively Managed Exchange-Traded Commodity Fund Trust was held on August 19, 2019. The Meeting was held for the following purpose:

(1). To elect ten (10) trustees to the Board of Trustees of the Trust.

The results of the voting on the above matter was as follows:

 

Matter

   Votes For      Votes
Withheld 		 
(1).   Ronn R. Bagge      118,814,581.00        286,935.00  
  Todd J. Barre      118,931,184.00        170,332.00  
  Kevin M. Carome      118,931,781.00        169,735.00  
  Edmund P. Giambastiani, Jr.      118,897,940.00        203,576.00  
  Victoria J. Herget      118,944,480.00        157,036.00  
  Marc M. Kole      118,826,946.00        274,570.00  
  Yung Bong Lim      118,936,470.00        165,046.00  
  Joanne Pace      118,948,967.00        152,549.00  
  Gary R. Wicker      118,931,557.00        169,959.00  
  Donald H. Wilson      118,830,175.00        271,341.00  

 

 

  29  

 

 

Trustees and Officers

 

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

As of October 31, 2019

 

Name, Address and Year of
Birth of Independent Trustees 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal
Occupation(s) During
the Past 5 Years 		   Number of
Portfolios
in Fund
Complex
Overseen by
Independent
Trustees 		   Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years

Ronn R. Bagge—1958

c/o Invesco Capital

Management LLC 3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Vice Chairman of the Board; Chairman of the Nominating and Governance Committee and Trustee    Vice Chairman since 2018; Chairman of the Nominating and Governance Committee and Trustee since 2014    Founder and Principal, YQA Capital Management LLC (1998-Present); formerly, Owner/CEO, Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).    246   

Trustee and

Investment Oversight Committee member, Mission Aviation Fellowship (2017-Present).

Todd J. Barre—1957

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2014    Assistant Professor of Business, Trinity Christian College (2010-2016); formerly, Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.    246    None

Edmund P. Giambastiani, Jr.—1948

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2019    President, Giambastiani Group LLC (national security and energy consulting) (2007-Present); Director, The Boeing Company (2009-Present); Trustee, MITRE Corporation (federally-funded research development) (2008-Present); Director, THL Credit, Inc. (alternative credit investment manager) (2016-Present); Trustee, U.S. Naval Academy Foundation Athletic & Scholarship Program (2010-Present); Advisory Board Member, Massachusetts Institute of Technology Lincoln Laboratory (federally-funded research development) (2010-Present); Defense Advisory Board Member, Lawrence Livermore National Laboratory (2013-Present); formerly, Chairman (2015-2016), Lead Director    246    Formerly, Trustee, certain funds of the Oppenheimer Funds complex (2013-2019); Director, Mercury Defense Systems Inc. (information technology) (2011-2013); Independent Director, QinetiQ Group Plc (defense technology and

 

*

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

 

 

  30  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Independent Trustees 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal
Occupation(s) During
the Past 5 Years 		   Number of
Portfolios
in Fund
Complex
Overseen by
Independent
Trustees 		   Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years
         (2011-2015) and Director (2008-2011), Monster Worldwide, Inc. (career services); Advisory Board Member, Maxwell School of Citizenship and Public Affairs of Syracuse University (2012-2016); United States Navy, career nuclear submarine officer (1970-2007); Seventh Vice Chairman of the Joint Chiefs of Staff (2005-2007); first NATO Supreme Allied Commander Transformation (2003-2005); Commander, U.S. Joint Forces Command (2002-2005).       security) (2008-2011); Chairman, Alenia North America, Inc. (military and defense products) (2008-2009); Director, SRA International, Inc. (information technology and services) (2008- 2011).

Victoria J. Herget—1951

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2019    Formerly, Managing Director (1993-2001), Principal (1985-1993), Vice President (1978-1985) and Assistant Vice President (1973-1978), Zurich Scudder Investments (investment adviser) (and its predecessor firms).    246    Trustee (2000-Present) and Chair (2010-2017), Newberry Library; Trustee, Mather LifeWays (2001-Present); Trustee, Chikaming Open Lands (2014-Present); formerly, Trustee, certain funds in the Oppenheimer Funds complex (2012-2019); Board Chair (2008-2015) and Director (2004-2018), United Educators Insurance Company; Independent Director, First American Funds (2003-2011); Trustee (1992-2007), Chair of

 

*

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

 

 

  31  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Independent Trustees 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal
Occupation(s) During
the Past 5 Years 		   Number of
Portfolios
in Fund
Complex
Overseen by
Independent
Trustees 		   Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years
               the Board of Trustees (1999-2007), Investment Committee Chair (1994-1999) and Investment Committee member (2007-2010), Wellesley College; Trustee, BoardSource (2006-2009); Trustee, Chicago City Day School (1994-2005).

Marc M. Kole—1960

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Chairman of the Audit Committee and Trustee    Chairman of the Audit Committee and Trustee since 2014    Senior Director of Finance, By The Hand Club for Kids (not-for-profit) (2015-Present); formerly, Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Regional Chief Financial Officer, United Healthcare (2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).    246    Treasurer (2018-Present), Finance Committee Member (2015-Present) and Audit Committee Member (2015), Thornapple Evangelical Covenant Church; formerly, Board and Finance Committee Member (2009-2017) and Treasurer (2010-2015, 2017), NorthPointe Christian Schools.

 

*

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

 

 

  32  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Independent Trustees 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal
Occupation(s) During
the Past 5 Years 		   Number of
Portfolios
in Fund
Complex
Overseen by
Independent
Trustees 		   Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years

Yung Bong Lim—1964

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Chairman of the Investment Oversight Committee and Trustee    Chairman of the Investment Oversight Committee and Trustee since 2014    Managing Partner, RDG Funds LLC (real estate) (2008-Present); formerly, Managing Director, Citadel LLC (1999-2007).    246    Advisory Board Member, Performance Trust Capital Partners, LLC (2008-Present); Board Director, Beacon Power Services, Corp. (2019-Present).

Joanne Pace—1958

c/o Invesco Capital

Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2019    Formerly, Senior Advisor, SECOR Asset Management, LP (2010-2011); Managing Director and Chief Operating Officer, Morgan Stanley Investment Management (2006-2010); Partner and Chief Operating Officer, FrontPoint Partners, LLC (alternative investments) (2005-2006); Managing Director (2003-2005), Global Head of Human Resources and member of Executive Board and Operating Committee (2004-2005), Global Head of Operations and Product Control (2003-2004), Credit Suisse (investment banking); Managing Director (1997-2003), Controller and Principal Accounting Officer (1999-2003), Chief Financial Officer (temporary assignment) for the Oversight Committee, Long Term Capital Management (1998-1999), Morgan Stanley.    246    Board Director, Horizon Blue Cross Blue Shield of New Jersey (2012-Present); Advisory Board Director, The Alberleen Group LLC (2012-Present); Governing Council Member (2016-Present) and Chair of Education Committee (2017-Present), Independent Directors Council (IDC); Board Member, 100 Women in Finance (2015-Present); Advisory Council Member, Morgan Stanley Children’s Hospital (2012- Present); formerly, Trustee, certain funds in the Oppenheimer Funds complex (2012-2019);

 

*

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

 

 

  33  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Independent Trustees 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal
Occupation(s) During
the Past 5 Years 		   Number of
Portfolios
in Fund
Complex
Overseen by
Independent
Trustees 		   Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years
               Lead Independent Director and Chair of the Audit and Nominating Committee of The Global Chartist Fund, LLC, Oppenheimer Asset Management (2011-2012); Board Director, Managed Funds Association (2008-2010); Board Director (2007-2010) and Investment Committee Chair (2008-2010), Morgan Stanley Foundation.

Gary R. Wicker—1961

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   Trustee    Since 2014    Senior Vice President of Global Finance and Chief Financial Officer, RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (a division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005- 2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider); Senior Audit Manager (1994-1997), PricewaterhouseCoopers LLP.    246    Board Member and Treasurer, Our Daily Bread Ministries Canada (2015-Present); Board and Finance Committee Member, West Michigan Youth For Christ (2010-Present).

 

*

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

 

 

  34  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Independent Trustees 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal
Occupation(s) During
the Past 5 Years 		   Number of
Portfolios
in Fund
Complex
Overseen by
Independent
Trustees 		   Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years

Donald H. Wilson—1959

c/o Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

  

Chairman of

the Board and

Trustee

   Chairman and Trustee since 2014    Chairman, President and Chief Executive Officer, McHenry Bancorp Inc. and McHenry Savings Bank (subsidiary) (2018-Present); Chairman and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-Present); formerly, President and Chief Executive Officer, Stone Pillar Investments, Ltd. (advisory services to the financial sector) (2016- 2018); Chairman, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank—Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).    246    Director, Penfield Children’s Center (2004-Present); Board Chairman, Gracebridge Alliance, Inc. (2015-Present).

 

*

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

 

 

  35  

 

 

Trustees and Officers (continued)

 

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

 

Name, Address and Year of
Birth of Interested Trustee 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal
Occupation(s) During
Past 5 Years 		  

Number of
Portfolios
in Fund
Complex
Overseen by
Interested

Trustee

   Other
Directorships
Held by
Interested
Trustee During
the Past 5 Years

Kevin M. Carome—1956

Invesco Ltd.

Two Peachtree Pointe,

1555 Peachtree St., N.E.,

Suite 1800

Atlanta, GA 30309

   Trustee    Since 2014    Senior Managing Director, Secretary and General Counsel, Invesco Ltd. (2007-Present); Director, Invesco Advisers, Inc. (2009-Present); Director (2006-Present) and Executive Vice President (2008-Present), Invesco North American Holdings, Inc.; Executive Vice President (2008-Present), Invesco Investments (Bermuda) Ltd.; Manager, Horizon Flight Works LLC; Director and Secretary (2012-Present), Invesco Services (Bahamas) Private Limited; and Executive Vice President (2014-Present), INVESCO Asset Management (Bermuda) Ltd.; formerly, Director, Invesco Finance PLC (2011-2019); Director, INVESCO Asset Management (Bermuda) Ltd. (2014-2019); Director and Executive Vice President, Invesco Finance, Inc. (2011-2018); Director (2006-2018) and Executive Vice President (2008-2018), Invesco Group Services, Inc., Invesco Holding Company (US), Inc.; Director, Invesco Holding Company Limited (2007-2019); Director and Chairman, INVESCO Funds Group, Inc., Senior Vice President, Secretary and General Counsel, Invesco Advisers, Inc. (2003-2006); Director, Invesco Investments (Bermuda) Ltd. (2008-2016); Senior Vice President and General Counsel, Liberty Financial Companies, Inc. (2000-2001); General Counsel of certain investment management subsidiaries of Liberty Financial Companies, Inc. (1998-2000); Associate General Counsel, Liberty Financial Companies, Inc. (1993-1998); Associate, Ropes & Gray LLP.    246    None

 

*

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

 

 

  36  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Executive Officers 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal Occupation(s) During Past 5 Years

Daniel E. Draper—1968

Invesco Capital

Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

  

President and Principal

Executive Officer

   Since 2015    Chief Executive Officer, Manager and Principal Executive Officer, Invesco Specialized Products, LLC (2018-Present); President and Principal Executive Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2015-Present) and Invesco Exchange-Traded Self-Indexed Fund Trust (2016-Present); Chief Executive Officer and Principal Executive Officer (2016-Present) and Managing Director (2013-Present), Invesco Capital Management LLC; Senior Vice President, Invesco Distributors, Inc. (2014-Present); formerly, Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust (2013-2015) and Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-2015); Managing Director, Credit Suisse Asset Management (2010-2013) and Lyxor Asset Management/Societe Generale (2007-2010).

Kelli Gallegos—1970

Invesco Capital

Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

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

Peter Hubbard—1981

Invesco Capital

Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

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

Sheri Morris—1964

Invesco Capital Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

   Vice
President 		   Since
2014 		   Head of Global Fund Services, Invesco Ltd. (2019-Present); Vice President, OppenheimerFunds, Inc. (2019-Present); President and Principal Executive Officer, The Invesco Funds (2016-Present); Treasurer, The Invesco Funds (2008-Present); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present) and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust

 

*

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

 

 

  37  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Executive Officers 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal Occupation(s) During Past 5 Years
         (2012-Present), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present) and Invesco Exchange-Traded Self-Indexed Fund Trust (2016-Present); formerly, Vice President and Principal Financial Officer, The Invesco Funds (2008-2016); Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.

Anna Paglia—1974

Invesco Capital

Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

   Secretary    Since 2014    Head of Legal and Secretary, Invesco Specialized Products, LLC (2018-Present); Secretary, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust (2011-Present), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present) and Invesco Exchange-Traded Self-Indexed Fund Trust (2015-Present); Head of Legal (2010-Present) and Secretary (2015-Present), Invesco Capital Management LLC; Manager and Assistant Secretary, Invesco Indexing LLC (2017-Present); formerly, Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); Associate Counsel at Barclays Global Investors Ltd. (2004-2006).

Rudolf E. Reitmann—1971

Invesco Capital

Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

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

David Warren—1957

Invesco Canada Ltd.

5140 Yonge Street,

Suite 800

Toronto, Ontario M2N 6X7

   Vice President    Since 2014    Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, and Invesco Actively Managed Exchange-Traded Fund Trust (2009-Present), Invesco Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present) and Invesco Exchange-Traded Self-Indexed Fund Trust (2016-Present); Senior Vice President, Invesco Advisers, Inc. (2009-Present); Director, Invesco Inc. (2009-Present); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2011-Present); Chief Administrative Officer, North American Retail, Invesco Ltd. (2007-Present); Director, Invesco Corporate Class Inc. (2014-Present); Director, Invesco Global Direct Real Estate Feeder GP Ltd. (2015-Present); Director, Invesco Financial Services Ltd. / Services Financiers Invesco Ltée and Trimark Investments Ltd./Placements Trimark Ltée (2014-Present); Director, Invesco IP Holdings (Canada) Ltd. (2016-Present); Director, Invesco Global Direct Real Estate GP Ltd. (2015-Present); formerly, Director, Invesco Canada Holdings Inc. (2002-2019); Manager, Invesco Specialized Products, LLC (2018-2019); Managing Director—Chief Administrative Officer, Americas, Invesco Capital Management LLC (2013-2019); Senior Vice President, Invesco Management Group, Inc. (2007-2018); Executive Vice President and Chief Financial Officer, Invesco Inc. (2009-2015); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2000-2011).

 

*

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

 

 

  38  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of
Birth of Executive Officers 		   Position(s)
Held
with Trust 		   Term of
Office
and
Length of
Time
Served* 		   Principal Occupation(s) During Past 5 Years

Melanie Zimdars—1976

Invesco Capital

Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

  

Chief Compliance

Officer

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

Availability of Additional Information About the Trustees

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

 

*

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

 

 

  39  

 

Proxy Voting Policies and Procedures

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

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

Quarterly Portfolios

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

Frequency Distribution of Discounts and Premiums

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

 

©2019 Invesco Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

     P-PDBC-AR-1      invesco.com/ETFs

Item 2. Code of Ethics.

The Registrant has adopted a Code of Ethics that applies to the Registrant’s principal executive officer and principal financial officer. This Code is filed as an exhibit to this report on Form N-CSR under Item 13(a)(1). No substantive amendments to this Code were made during the reporting period. There were no waivers for the fiscal year ended October 31, 2019.

Item 3. Audit Committee Financial Expert.

The Registrant’s Board of Trustees (the “Board”) has determined that the Registrant has four “audit committee financial experts” serving on its audit committee: Mr. Marc M. Kole, Ms. Joanne Pace, Mr. Gary R. Wicker and Mr. Donald H. Wilson. Each of these audit committee members is “independent,” meaning that he/she is not an “interested person” of the Registrant (as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended) and he/she does not accept any consulting, advisory, or other compensatory fee from the Registrant (except in his/her capacity as a Board or committee member).

An “audit committee financial expert” is not an “expert” for any purpose, including for purposes of Section 11 of the Securities Act of 1933, as a result of being designated as an “audit committee financial expert.” Further, the designation of a person as an “audit committee financial expert” does not mean that a person has any greater duties, obligations, or liability than those imposed on a person without the “audit committee financial expert” designation.    Similarly, the designation of a person as an “audit committee financial expert” does not affect the duties, obligations, or liability of any other member of the audit committee or Board.

Item 4. Principal Accountant Fees and Services.

 

(a)

to (d)

Fees Billed by PwC to the Registrant

PricewaterhouseCoopers LLP (“PwC”), the Registrant’s independent registered public accounting firm, billed the Registrant aggregate fees for pre-approved services rendered to the Registrant for the last two fiscal years as shown in the following table. The Audit Committee pre-approved all audit and non-audit services provided to the Registrant.

 

     Fees Billed by PwC for Services Rendered
to the Registrant for Fiscal Year End 2019 		   Fees Billed by PwC for Services Rendered
to the Registrant for Fiscal Year End 2018
Audit Fees    $  32,720    $  32,720
Audit-Related Fees    $ 0    $ 0
Tax Fees(1)    $  26,298    $  14,885
All Other Fees    $ 0    $ 0
Total Fees    $  59,018    $  47,605

  (1)

Tax Fees for the fiscal year ended October 31, 2019 include fees billed for preparation of U.S. Tax Returns and Taxable Income calculations, including excise and year-to-date estimates for various book-to-tax differences. Tax Fees for the fiscal year ended October 31, 2018 include fees billed for reviewing tax returns, 2018 excise tax returns and excise tax distributions calculations.

Fees Billed by PwC Related to Invesco and Invesco Affiliates

PwC billed Invesco Capital Management LLC (“Invesco” or “Adviser”), the Registrant’s investment adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (“Affiliates”), aggregate fees for pre-approved non-audit services rendered to Invesco and Affiliates for the last two fiscal years as shown in the following table. The Audit Committee pre-approved all non-audit services provided to Invesco and Affiliates that were required to be pre-approved.

 

     Fees Billed for Non-
Audit Services
Rendered to
Invesco and
Affiliates for Fiscal
Year End 2019 That
Were Required
to be Pre-Approved
by the Registrant’s Audit Committee 		   Fees Billed for Non-
Audit Services
Rendered to
Invesco and
Affiliates for Fiscal
Year End 2018 That
Were Required
to be Pre-Approved
by the Registrant’s Audit Committee

Audit-Related Fees(1)

   $690,000    $ 662,000

Tax Fees

   $ 0    $ 0

All Other Fees

   $ 0    $ 0

Total Fees

   $690,000    $ 662,000

(1)    Audit-Related Fees for the fiscal years ended 2019 and 2018 include fees billed related to reviewing controls at a service organization.

(e)(1) Audit Committee Pre Approval Policies and Procedures

Pre-Approval of Audit and Non-Audit Services Policies and Procedures

As Adopted by the Audit Committee of the Invesco ETFs

Applicable to   

Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund

Trust, Invesco Actively Managed Exchange-Traded

Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust (collectively the “Funds”)

    

Risk Addressed by Policy   

Approval of Audit and Non-Audit Services

    

Relevant Law and Other Sources   

Sarbanes-Oxley Act of 2002; Regulation S-X.

    

Last Reviewed by Compliance for Accuracy   

June 15, 2018

    

Approved/Adopted Date   

June 2009

    

Statement of Principles

Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission (“SEC”) (“Rules”), the Audit Committee of the Funds’ (the “Audit Committee”) Board of Trustees (the “Board”) is responsible for the appointment, compensation and oversight of the work of independent accountants (an “Auditor”). As part of this responsibility and to assure that the Auditor’s independence is not impaired, the Audit Committee pre-approves the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds’ investment adviser and to affiliates of the adviser that provide ongoing services to the Funds (“Service Affiliates”) if the services directly impact the Funds’ operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations.

Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”) or require the specific pre-approval of the Audit Committee (“specific pre-approval”). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committee before payment is made. The Audit Committee will also consider the impact of additional fees on the Auditor’s independence when determining whether to approve any additional fees for previously pre-approved services.

The Audit Committee will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee. The term of any general pre-approval runs from the date of such pre-approval through June 30th of the following year, unless the Audit Committee considers a different period and states otherwise. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.

The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committee in fulfilling its responsibilities.

Delegation

The Chairman of the Audit Committee (or, in his or her absence, any member of the Audit Committee) may grant specific pre-approval for non-prohibited services. All such delegated pre-approvals shall be presented to the Audit Committee no later than the next Audit Committee meeting.

Audit Services

The annual Audit services engagement terms will be subject to specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committee will obtain, review and consider sufficient

information concerning the proposed Auditor to make a reasonable evaluation of the Auditor’s qualifications and independence.

In addition to the annual Audit services engagement, the Audit Committee may grant either general or specific pre-approval of other Audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

Non-Audit Services

The Audit Committee may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committee believes that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC’s Rules on auditor independence, and otherwise conforms to the Audit Committee’s general principles and policies as set forth herein.

Audit-Related Services

“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Funds’ financial statements or that are traditionally performed by the independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; and assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities.

Tax Services

“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy.

No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.

Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committee pre-approval of permissible Tax services, the Auditor shall:

 

  1.

Describe in writing to the Audit Committee, which writing may be in the form of the proposed engagement letter:

 

  a.

The scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the Fund, relating to the service; and

  b.

Any compensation arrangement or other agreement, such as a referral agreement, a referral fee or

fee-sharing arrangement, between the Auditor and any person (other than the Fund) with respect to the promoting, marketing, or recommending of a transaction covered by the service;

 

  2.

Discuss with the Audit Committee the potential effects of the services on the independence of the Auditor; and

 

  3.

Document the substance of its discussion with the Audit Committee.

All Other Auditor Services

The Audit Committee may pre-approve non-audit services classified as “All other services” that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy.

Pre-Approval Fee Levels or Established Amounts

Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committee. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committee at the quarterly Audit Committee meeting and will require specific approval by the Audit Committee before payment is made. The Audit Committee will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services.

Procedures

On an annual basis, the Auditor will submit to the Audit Committee for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request.

Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committee will be submitted to the Funds’ Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committee.

Each request to provide services that require specific approval by the Audit Committee shall be submitted to the Audit Committee jointly by the Funds’ Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the pre-approval policies and procedures and the SEC Rules.

Each request to provide Tax services under either the general or specific pre-approval of the Audit Committee will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and

the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committee the potential effects of the services on the Auditor’s independence and will document the substance of the discussion.

Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committee for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied.

On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services.

The Audit Committee has designated the Funds’ Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds’ Treasurer will report to the Audit Committee on a periodic basis as to the results of such monitoring. Both the Funds’ Treasurer and management will immediately report to the Chairman of the Audit Committee any breach of these policies and procedures that comes to the attention of the Funds’ Treasurer or senior management.

Adopted:  June 26, 2009

Amended:  June 15, 2018

Exhibit 1 to Pre-Approval of Audit and Non-Audit Services Policies and Procedures

Conditionally Prohibited Non-Audit Services (not prohibited if the Fund can reasonably conclude that the results of the service would not be subject to audit procedures in connection with the audit of the Fund’s financial statements)

  •  

Bookkeeping or other services related to the accounting records or financial statements of the audit client

  •  

Financial information systems design and implementation

  •  

Appraisal or valuation services, fairness opinions, or contribution-in-kind reports

  •  

Actuarial services

  •  

Internal audit outsourcing services

Categorically Prohibited Non-Audit Services

  •  

Management functions

  •  

Human resources

  •  

Broker-dealer, investment adviser, or investment banking services

  •  

Legal services

  •  

Expert services unrelated to the audit

  •  

Any service or product provided for a contingent fee or a commission

  •  

Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance

  •  

Tax services for persons in financial reporting oversight roles at the Fund

  •  

Any other service that the Public Company Oversight Board determines by regulation is

 

impermissible.

 

(e)(2)

There were no amounts that were pre-approved by the Audit Committee pursuant to the de minimus exception under Rule 2-01 of Regulation S-X.

 

     (f)

Not applicable.

 

    (g)

In addition to the amounts shown in the tables above, PwC billed Invesco and Affiliates aggregate fees of $3,294,000 for the fiscal year ended October 31, 2019 and $2,977,000 for the fiscal year ended October 31, 2018 for non-audit services not required to be pre-approved by the Registrant’s Audit Committee. In total, PwC billed the Registrant, Invesco and Affiliates aggregate non-audit fees of $4,010,298 for the fiscal year ended October 31, 2019 and $3,654,000 for the fiscal year ended October 31, 2018

 

    (h)

With respect to the non-audit services above billed to Invesco and Affiliates that were not required to be pre-approved by the Registrant’s Audit Committee, the Audit Committee received information from PwC about such services, including by way of comparison, that PwC provided audit services to entities within the Investment Company Complex, as defined by Rule 2-01(f)(14) of Regulation S-X, of approximately $34 million and non-audit services of approximately $21 million for the fiscal year ended 2019. The Audit Committee considered this information in evaluating PwC’s independence.

During the reporting period, PwC advised the Registrant’s Audit Committee of the following matters for consideration under the SEC auditor independence rules. PwC advised the Audit Committee that four PwC Managers and two PwC Partners each held financial interests either directly or, in the case of the two PwC Partners, indirectly through their respective spouse’s equivalent brokerage account or spouse’s employee benefit plan, respectively, in investment companies within the complex that includes the Funds as well as all registered investment companies advised by the Adviser and its affiliates, including other subsidiaries of the Adviser’s parent company, Invesco Ltd. (collectively, the “Invesco Fund Complex”) that were inconsistent with the requirements of Rule 2-01(c)(1) of Regulation S-X. With respect to the one PwC Partner, the financial interest was disposed of July 8, 2019. PwC noted, among other things, that during the time of its audit, or with respect to the one PwC Partner and three PwC Managers, until after it was disposed of or after they ceased providing services, the engagement team was not aware of the investments, the individuals were not in the chain of command of the audit or the audit partners of Invesco or the affiliates of the Registrant, the services provided by the PwC Manager were not relied upon by the audit engagement team with respect to the audit of the Registrant or its affiliates, or in the case of the two PwC Partners and three PwC Managers, the individuals either did not provide any audit services or did not provide services of any kind to the Registrant or its affiliates and the investments were not material to the net worth of each individual or their respective immediate family members which PwC considered in reaching its conclusion. PwC advised the Audit Committee that it believes its objectivity and impartiality has not been adversely affected by these matters as they relate to the audit of the Registrant.

Item 5. Audit Committee of Listed Registrants.

 

    (a)

The Registrant has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, which consists solely of independent trustees. The Audit Committee members are Marc M. Kole, Joanne Pace, Gary R. Wicker, and Donald H. Wilson.

 

    (b)

Not applicable.

Item 6. Schedule of Investments.

 

(a)

The Schedules of Investments are included as a part of the report to shareholders filed under Item 1 of this Form N-CSR.

 

(b)

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated

    Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the Board that would require disclosure herein.

Item 11. Controls and Procedures.

 

    (a)

Based on their evaluation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the Registrant’s President (principal executive officer) and Treasurer (principal financial officer) have concluded that such disclosure controls and procedures are effective.

 

    (b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable.

Item 13. Exhibits.

 

(a)(1)   Code of Ethics is attached as Exhibit 99.CODEETH.
(a)(2)  

Certifications of the Registrant’s President and Treasurer pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 and Section 302 of the Sarbanes-Oxley Act of 2002 are attached as Exhibit 99.CERT.

(a)(3)   Not applicable.
(a)(4)   Not applicable.
(b)  

Certifications of the Registrant’s President and Treasurer pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are attached as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)  Invesco Actively Managed Exchange-Traded Commodity Fund Trust

 

By:   /s/ Daniel E. Draper                  
Name:   Daniel E. Draper
Title:   President
Date:   January 3, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:

  /s/ Daniel E. Draper                  
Name:   Daniel E. Draper
Title:   President
Date:   January 3, 2020

 

By:   /s/ Kelli Gallegos                      
Name:   Kelli Gallegos
Title:   Treasurer
Date:   January 3, 2020
Invesco Optimum Yield Di... (NASDAQ:PDBC)
Historical Stock Chart
From Dec 2024 to Jan 2025 Click Here for more Invesco Optimum Yield Di... Charts.
Invesco Optimum Yield Di... (NASDAQ:PDBC)
Historical Stock Chart
From Jan 2024 to Jan 2025 Click Here for more Invesco Optimum Yield Di... Charts.