Prospectus
Invesco
Exchange-Traded Fund Trust II
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Invesco
Equal Weight 0-30 Year Treasury ETF (formerly,
Invesco 1-30 Laddered
Treasury
ETF) |
The
Nasdaq Stock Market LLC |
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
The
Invesco Equal Weight 0-30 Year Treasury ETF (the “Fund”) seeks to track the investment results (before fees and expenses)
of the ICE 1-30 Year Laddered Maturity US Treasury Index (the “Underlying Index”).
This
table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and
example below.
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Management
Fees1
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% |
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Other
Expenses |
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Total
Annual Fund Operating Expenses1
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1
The example assumes that
you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. This example does
not include brokerage commissions that investors may pay to buy and sell Shares. Although your actual costs may be higher or lower, your
costs, based on these assumptions, would be:
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1
Year |
3
Years |
5
Years |
10
Years |
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$
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$
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$
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$
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The
Fund generally will invest at least 80% of its total assets in the components of the Underlying Index.
Strictly
in accordance with its guidelines and mandated procedures, ICE Data
Indices, LLC (the “Index Provider”) compiles, maintains and calculates the Underlying Index, which is designed to track the
performance of up to 30 U.S. Treasury Notes or Bonds representing the annual February maturity ladder across the yield curve. Eligible
securities must be U.S. dollar denominated sovereign debt publicly issued by the U.S. government in the U.S. domestic market. The Underlying
Index is structured with 30 different annual maturity points, or “rungs,” which are equally weighted at each annual February
rebalancing. Securities eligible for the Underlying Index must: (i) have a fixed coupon schedule; (ii) a minimum amount outstanding of
$1 billion (excluding any amount held by the Federal Reserve's System Open Market Account (SOMA)); and (iii) have at least 18 months to
final maturity at the time of issuance. The Index Provider selects for each rung securities with February maturities (a “Primary
Selection”), which, once selected, will remain in the index, provided they continue to meet the
eligibility criteria.
If no February maturity is available for a given rung, then the next-closest maturing security is selected as long as it is within six
months of the February target maturity (a “Secondary Selection”).
The
securities selected for each rung of the Underlying Index from 1 to 30
years are equally weighted. The weights of any rungs for which no securities are available are re-allocated equally to the securities
of closest rungs on both sides of the ladder.
As
of July 31, 2023, the Underlying Index was comprised of 28
constituents with market capitalizations ranging from $10.19
billion to $121.14 billion.
The
Fund employs a “full replication” methodology in seeking to track the
Underlying Index, meaning that the Fund generally invests in all of the securities comprising the Underlying Index in proportion to their
weightings in the Underlying Index.
Concentration
Policy. The
Fund will concentrate its investments (i.e., invest 25% or more of the value of its total assets) in securities of issuers in any one
industry or group of industries only to the extent that the Underlying Index reflects a concentration in that industry or group of industries.
The Fund will not otherwise concentrate its investments in securities of issuers in any one industry or group of industries.
The
following summarizes the principal risks of investing in the Fund.
1
The
bar chart below shows how the Fund has performed. The table below the bar chart shows the Fund’s average annual total returns (before
and
2
after taxes). The
bar chart and table provide an indication of the risks of investing in the Fund by showing how the Fund’s total returns have varied
from year to year and by showing how the Fund’s average annual total returns compared with a broad measure of market performance
and an additional index with characteristics relevant to the Fund. The Fund's performance reflects fee waivers,
if any, absent which performance would have been lower. Although
the information shown in the bar chart and the table gives you some idea of the risks involved in investing in the Fund, the Fund’s
past performance (before and after taxes) is not necessarily indicative of how the Fund will perform in the future.
Updated
performance information is available online at www.invesco.com/ETFs .
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Period
Ended |
Returns
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-
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Average Annual Total Returns (for the periods ended December 31, 2022)
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Inception
Date
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1
Year
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5
Years
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10
Years
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Return
Before Taxes |
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-
% |
-
% |
% |
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Return
After Taxes on Distributions |
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-
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-
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-
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Return
After Taxes on Distributions and Sale of
Fund
Shares |
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-
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-
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ICE
1-30 Year Laddered Maturity US Treasury
Index
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Ryan/NASDAQ
U.S. 1-30 Year Treasury Laddered
Index
(reflects no deduction for fees, expenses or
taxes)
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-
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Bloomberg
U.S. Treasury Index (reflects no
deduction
for fees, expenses or taxes) |
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-
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(1)
Effective after the close of markets on August 25, 2023, the Fund changed its underlying index from the
Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index to the ICE 1-30 Year Laddered Maturity US Treasury Index. Performance information is
not available for periods prior to the ICE 1-30 Year Laddered Maturity US Treasury Index's commencement date of June 13, 2023.
Management
of the Fund
Investment
Adviser. Invesco Capital Management LLC (the “Adviser”).
Portfolio
Managers
The
following individuals are responsible jointly and primarily for the day-to-day management of the Fund’s portfolio:
|
Name
|
Title
with Adviser/Trust |
Date
Began
Managing
the
Fund |
|
Peter
Hubbard |
Head
of Equities and Director of
Portfolio
Management of the
Adviser;
Vice President of the Trust |
October
2007 |
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Richard
Ose |
Senior
Portfolio Manager of the
Adviser
|
December
2021 |
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Tom
Boksa |
Portfolio
Manager of the Adviser |
December
2019 |
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Gregory
Meisenger |
Portfolio
Manager of the Adviser |
December
2019 |
|
| ||
Purchase
and Sale of Shares
The
Fund issues and redeems Shares at NAV only with APs and only in large blocks of 10,000 Shares (each block of Shares is called a “Creation
Unit”) or multiples thereof (“Creation Unit Aggregations”), generally in exchange for the deposit or delivery of a basket
of securities. However, the Fund also reserves the right to permit or require Creation Units to be issued in exchange for cash. Except
when aggregated in Creation Units, the Shares are not redeemable securities of the Fund.
Individual
Shares may only be bought and sold in the secondary market (i.e.,
on a national securities exchange) through a broker or dealer at a market price. Because the Shares trade at market prices rather than
NAV, Shares may trade at a price greater than NAV (at a premium), at NAV, or less than NAV (at a discount). An investor may incur costs
attributable to the difference between the highest price a buyer is willing to pay to purchase Shares (bid) and the lowest price a seller
is willing to accept for Shares (ask) when buying or selling shares in the secondary market (the “bid-ask spread”).
Recent
information, including information on the Fund’s NAV, market price,
premiums and discounts, and bid-ask spreads, is available online at www.invesco.com/ETFs.
Tax
Information
The
Fund’s distributions generally are taxed as ordinary income, capital gains or some combination of both, unless you are investing
through a tax-advantaged arrangement, such as a 401(k) plan or an individual retirement account, in which case your distributions may
be taxed as ordinary income when withdrawn from such account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund’s distributor
or its related companies may pay the intermediary for certain Fund-related activities, including those that are designed to make the intermediary
more knowledgeable about exchange-traded products, such as the Fund, as well as for marketing, education or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary
and your salesperson or financial adviser to recommend the Fund over another investment. Ask your salesperson or financial adviser or
visit your financial intermediary’s website for more information.
Additional Information About the Fund’s Strategies and Risks
Principal
Investment Strategies
The
Fund generally will invest at least 80% of its total assets in components that comprise the Underlying Index. The Fund operates as an
index fund and is not actively managed, meaning that it does not seek to outperform the Underlying Index. Rather, the Fund seeks to generally
track the performance of the Underlying Index as closely as possible (i.e., it seeks to obtain a high degree of correlation with the Underlying
Index and to minimize “tracking error” between the two). Tracking error means the variation between the
3
Fund’s annual return
and the return of the Underlying Index. Because the Underlying Index is a financial calculation based on a grouping of financial instruments,
while the Fund is an actual investment portfolio, the Fund may experience tracking error for a number of reasons when tracking the performance
of the Underlying Index. For example, the Fund incurs operating expenses and transaction costs not applicable to the Underlying Index.
Moreover, as an index fund, the Fund does not take temporary defensive positions during periods of adverse market, economic or other conditions.
The
Fund employs a “full replication” methodology in seeking to track the
Underlying Index, meaning that it generally invests in all of the securities comprising the Underlying Index in proportion to the weightings
of the securities in the Underlying Index. However, under various circumstances, it may not be possible or practicable to purchase all
of those securities in those same weightings. In those circumstances, the Fund may purchase a sample of securities in the Underlying Index.
A
“sampling” methodology means that the Adviser uses a quantitative analysis
to select securities from the Underlying Index universe to obtain a representative sample of securities that have, in the aggregate, investment
characteristics similar to the Underlying Index in terms of key risk factors, performance attributes and other characteristics. These
include duration, maturity, credit quality, yield and coupon. When employing a sampling methodology, the Adviser bases the quantity of
holdings in the Fund on a number of factors, including asset size of the Fund, and generally expects the Fund to hold less than the total
number of securities in the Underlying Index. However, the Adviser reserves the right to invest the Fund in as many securities as it believes
necessary to achieve the Fund’s investment objective. To the extent the Fund uses a sampling strategy, it may have a larger tracking
error than if it used a full replication strategy.
At
times, the Fund may utilize one or more additional investment techniques
in seeking to track the Underlying Index. Such techniques may include: (i) overweighting or underweighting a component security in the
Fund’s portfolio compared to its weight in the Underlying Index, (ii) purchasing securities not contained in the Underlying Index
that the Adviser believes are appropriate to substitute for certain securities in the Underlying Index, (iii) selling securities included
in the Underlying Index in anticipation of their removal from the Underlying Index, or (iv) purchasing securities not included in the
Underlying Index in anticipation of their addition to the Underlying Index.
Additional
information about the construction of the Underlying Index is set
forth below.
ICE
1-30 Year Laddered Maturity US Treasury Index
The
Index Provider compiles, maintains and calculates the Underlying Index, which is designed to track the performance of up to 30 U.S. Treasury
Notes or Bonds representing the annual February maturity ladder across the yield curve. Eligible securities must be U.S. dollar denominated
sovereign debt publicly issued by the U.S. government in the U.S. domestic market. The Underlying Index is structured with 30 different
annual maturity points, or “rungs,” which are equally weighted at each annual February rebalancing. Securities eligible for
the Underlying Index must: (i) have a fixed coupon schedule; (ii) a minimum amount outstanding of $1 billion (excluding any amount held
by the Federal Reserve's System Open Market Account (SOMA)); and (iii) have at least 18 months to final maturity at the time of issuance.
The Index Provider selects for each rung securities with February maturities (a “Primary Selection”), which, once selected,
will remain in the index, provided they continue to meet the eligibility criteria. If no February maturity is available for a given rung,
then the next-closest maturing security is selected as long as it is within six months of the February target maturity (a “Secondary
Selection”). If more than one Primary Selection exists, the security with the highest SOMA-adjusted face amount outstanding will
be selected; if two exist with the same SOMA-adjusted face
amount outstanding, the
most recently issued security is selected. The same process is followed in cases where more than one Secondary Selection exists.
The
securities selected for each rung of the Underlying Index from 1 to 30
years are equally weighted. The weights of any rungs for which no securities are available are re-allocated equally to the closest rungs
on both sides of the ladder.
The
Underlying Index is rebalanced monthly to reinvest cash and populate
any vacant rungs. Also, any Secondary Selections will be replaced with a qualifying Primary Selection, and if no Primary Selection is
available, a Secondary Selection will be replaced with any newly issued securities with closer-to-target maturities.
The
Fund is rebalanced in accordance with the Underlying Index.
Principal
Risks of Investing in the Fund
The
following provides additional information regarding certain of the principal risks identified under “Principal Risks of Investing
in the Fund” in the Fund's “Summary Information” section. Any of the following risks may impact the Fund’s NAV
which could result in the Fund trading at a premium or discount to NAV.
Market
Risk. Securities in the Underlying Index are subject to market
fluctuations, and the Fund could lose money due to short-term market movements and over longer periods during market downturns. You should
anticipate that the value of the Shares will decline, more or less, in correlation with any decline in value of the securities in the
Underlying Index. The value of a security may decline due to general market conditions, economic trends or events that are not specifically
related to the issuer of the security or due to factors that affect a particular industry or group of industries. During a general downturn
in the securities markets, multiple asset classes may be negatively affected. Additionally, natural or environmental disasters, widespread
disease or other public health issues, war, military conflicts, acts of terrorism, economic crises or other events could result in increased
premiums or discounts to the Fund’s NAV.
Market
Disruption Risks Related to Russia-Ukraine Conflict.
Following Russia’s invasion of Ukraine in late February 2022,
various countries, including the United States, as well as North Atlantic Treaty Organization (NATO) member countries and the European
Union, issued broad-ranging economic sanctions against Russia. The war in Ukraine (and the potential for further sanctions in response
to Russia’s continued military activity) may escalate. These and other corresponding events have had, and could continue to have,
severe negative effects on regional and global economic and financial markets, including increased volatility, reduced liquidity, and
overall uncertainty. The negative impacts may be particularly acute in certain sectors including, but not limited to, energy and financials.
Russia may take additional countermeasures or retaliatory actions (including cyberattacks), which could exacerbate negative consequences
on global financial markets. The duration of the conflict and corresponding sanctions and related events cannot be predicted. The foregoing
may result in a negative impact on Fund performance and the value of an investment in the Fund, even beyond any direct investment exposure
the Fund may have to Russian issuers or the adjoining geographic regions.
Index
Risk. Unlike many investment companies that are “actively
managed,” the Fund is a “passive” investor and therefore does not utilize an investing strategy that seeks returns in
excess of the Underlying Index. Therefore, the Fund would not necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is underperforming. If a specific security is removed from the
Underlying Index, the Fund may be forced to sell such security at an inopportune time or for a price lower than the security’s current
market value. The Underlying Index may not contain the appropriate mix of securities for any particular economic cycle. Additionally,
the Fund rebalances its portfolio in accordance with the Underlying Index, and, therefore, any changes to the Underlying Index’s
rebalance schedule will
4
result in corresponding
changes to the Fund’s rebalance schedule. Further, unlike with an actively managed fund, the Adviser does not use techniques or
defensive strategies designed to lessen the impact of periods of market volatility or market decline. This means that, based on certain
market and economic conditions, the Fund’s performance could be lower than other types of funds with investment advisers that actively
manage their portfolio assets to take advantage of market opportunities or defend against market events.
U.S.
Government Obligations Risk. The Fund may invest in U.S. government
obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities, including bills, notes and bonds issued by
the U.S. Treasury. U.S. Government securities include securities that are issued or guaranteed by the United States Treasury, by various
agencies of the U.S. Government, or by various instrumentalities which have been established or sponsored by the U.S. Government. U.S.
Treasury securities are backed by the “full faith and credit” of the United States, which may be negatively affected by an
actual or threatened failure of the U.S. Government to pay its obligations. Securities issued or guaranteed by federal agencies and U.S.
Government-sponsored instrumentalities may or may not be backed by the full faith and credit of the United States. In the case of those
U.S. Government securities not backed by the full faith and credit of the United States, the investor must look principally to the agency
or instrumentality issuing or guaranteeing the security for ultimate repayment, and may not be able to assert a claim against the United
States itself in the event that the agency or instrumentality does not meet its commitment. The U.S. Government, its agencies and instrumentalities
do not guarantee the market value of their securities, and consequently, the value of such securities may fluctuate.
Fixed-Income
Securities Risk. The Fund invests in fixed-income securities, which
are subject to interest rate risk and credit risk. Interest rate risk refers to fluctuations in the value of a fixed-income security resulting
from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. Fixed-income
securities with longer maturities typically are more sensitive to changes in interest rates, making them more volatile than securities
with shorter maturities. Credit risk refers to the possibility that the issuer of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt. Debt instruments are subject to varying degrees of credit risk, which may be
reflected in credit ratings. There is a possibility that the credit rating of a fixed-income security may be downgraded after purchase,
which may occur quickly and without advance warning following sudden market downturns or unexpected developments involving an issuer,
and which may adversely affect the liquidity and value of the security. Securities issued by the U.S. Government historically have been
subject to limited credit risk; however, the actual or threatened failure of the U.S. Government to pay its obligations will increase
credit risks and securities issued by U.S. Government agencies are not necessarily backed by the full faith and credit of the U.S. Government.
Due to recent events in the fixed-income markets, including the Federal Reserve Board ending its quantitative easing program, the Fund
is subject to heightened interest rate risk as a result of a rise in interest rates. In addition, the Fund is subject to the risk that
interest rates may exhibit increased volatility, which could cause the Fund’s NAV to fluctuate more. A decrease in fixed-income
market maker capacity may act to decrease liquidity in the fixed-income markets and act to further increase volatility, affecting the
Fund’s returns.
Changing
Fixed-Income Market Conditions Risk. Increases in the federal funds
and equivalent foreign interest rates or other changes to monetary policy or regulatory actions may expose fixed-income markets to heightened
volatility and reduced liquidity for certain fixed-income investments, particularly those with longer maturities. It is difficult to predict
the impact of interest rate changes on various markets. In addition, decreases in fixed-income dealer market-making capacity may also
potentially lead to
heightened volatility
and reduced liquidity in the fixed-income markets. As a result, the value of the Fund's investments and share price may decline. Changes
in central bank policies could also result in higher than normal redemptions by APs (as defined herein), which could potentially increase
the Fund's portfolio turnover rate and transaction costs and potentially lower the Fund’s performance returns.
Industry
Concentration Risk. In following its methodology, the Underlying
Index from time to time may be concentrated to a significant degree in securities of issuers operating in a single industry or industry
group. To the extent that the Underlying Index concentrates in the securities of issuers in a particular industry or industry group, the
Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or industry
group, the Fund may face more risks than if it were diversified broadly over numerous industries or industry groups. Such industry-based
risks, any of which may adversely affect the companies in which the Fund invests, may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively affect supply and demand in a particular industry, competition
for resources, adverse labor relations, political or world events, obsolescence of technologies, and increased competition or new product
introductions that may affect the profitability or viability of companies in an industry. In addition, at times, such industry or industry
group may be out of favor and underperform other industries or the market as a whole. Information about the Fund’s exposure to a
particular sector, industry or industry group is available in the Fund’s Annual and Semi-Annual Reports to Shareholders, as well
as on required forms filed with the SEC.
Call
Risk.
If interest rates fall, it is possible that issuers of callable
securities with high interest coupons will “call” (or prepay) their bonds before their maturity date. If an issuer exercises
such a call during a period of declining interest rates, the Fund may have to replace such called security with a lower yielding security.
If that were to happen, the Fund’s net investment income could fall.
Reinvestment
Risk. Reinvestment risk is the risk that the Fund will not be able
to reinvest income or principal at the same return it is currently earning. Reinvestment risk is greater during periods of declining interest
rates, as prepayments often occur faster. This may require the Fund to reinvest the proceeds at an earlier date, and it may be able to
do so only at lower yields, thereby reducing its return.
Issuer-Specific
Changes Risk. The performance of the Fund depends on the performance
of individual securities to which the Fund has exposure. The value of an individual security or particular type of security may be more
volatile than the market as a whole and may perform worse than the market as a whole, causing the value of its securities to decline.
Poor performance may be caused by poor management decisions, competitive pressures, changes in technology, expiration of patent protection,
disruptions in supply, labor problems or shortages, corporate restructurings, fraudulent disclosures or other factors. Issuers may, in
times of distress or at their own discretion, decide to reduce or eliminate dividends, which may also cause their stock prices to decline.
Non-Correlation
Risk. The Fund’s returns may not match the returns of the
Underlying Index (that is, it may experience tracking error) for a number of reasons. For example, the Fund incurs operating expenses
not applicable to the Underlying Index and incurs costs in buying and selling securities, especially when rebalancing the Fund’s
securities holdings to reflect changes in the composition of the Underlying Index. To the extent that the Fund has recently commenced
operations and/or otherwise has a relatively small amount of assets, such transaction costs could have a proportionally greater impact
on the Fund. Additionally, if the Fund uses a sampling approach, it may result in returns for the Fund that are not as well-correlated
with the return of the Underlying Index as would be the case if the Fund purchased all of the securities in the Underlying Index in the
proportions represented in the Underlying Index.
The
performance of the Fund and the Underlying Index may vary due to asset
valuation differences and differences between the Fund’s portfolio and
5
the Underlying Index
resulting from legal restrictions, costs or liquidity constraints. Additionally, if the Fund issues or redeems Creation Units principally
for cash, it will incur higher costs in buying or selling securities than if it issued and redeemed Creation Units principally in-kind,
which may contribute to tracking error. The Fund may fair value certain of the securities it holds. To the extent the Fund calculates
its NAV based on fair value prices, the Fund’s ability to track the Underlying Index may be adversely affected. Since the Underlying
Index is not subject to the tax diversification requirements to which the Fund must adhere, the Fund may be required to deviate its investments
from the securities contained in, and relative weightings of, the Underlying Index. The Fund may not invest in certain securities included
in the Underlying Index due to liquidity constraints. Liquidity constraints also may delay the Fund’s purchase or sale of securities
included in the Underlying Index. For tax efficiency purposes, the Fund may sell certain securities to realize losses, causing it to deviate
from the Underlying Index.
The
Fund generally attempts to remain fully invested in the constituents of
the Underlying Index. However, the Adviser may not fully invest the Fund’s assets at times, either as a result of cash flows into
the Fund, to retain a reserve of cash to meet redemptions and expenses, or because of low assets.
The
investment activities of one or more of the Adviser’s affiliates, including
other subsidiaries of the Adviser’s parent company, Invesco Ltd., for their proprietary accounts and for client accounts also may
adversely impact the Fund’s ability to track the Underlying Index. For example, in regulated industries, certain emerging or international
markets and under corporate and regulatory ownership definitions, there may be limits on the aggregate amount of investment by affiliated
investors that may not be exceeded, or that may not be exceeded without the grant of a license or other regulatory or corporate consent,
or, if exceeded, may cause the Adviser, the Fund or other client accounts to suffer disadvantages or business restrictions. As a result,
the Fund may be restricted in its ability to acquire particular securities due to positions held by the Fund and the Adviser’s affiliates.
Authorized
Participant Concentration Risk. Only APs may engage in creation
or redemption transactions directly with the Fund. The Fund has a limited number of institutions that may act as APs, and such APs have
no obligation to submit creation or redemption orders. Consequently, there is no assurance that APs will establish or maintain an active
trading market for the Shares. The risk may be heightened to the extent that securities held by the Fund are traded outside a collateralized
settlement system. In that case, APs may be required to post collateral on certain trades on an agency basis (i.e., on behalf of other
market participants), which only a limited number of APs may be able to do. In addition, to the extent that APs exit the business or are
unable to proceed with creation and/or redemption orders with respect to the Fund and no other AP is able to step forward to create or
redeem Creation Units, this may result in a significantly diminished trading market for Shares, and Shares may be more likely to trade
at a premium or discount to NAV and to face trading halts and/or delisting. Investments in non-U.S. securities, which may have lower trading
volumes or could experience extended market closures or trading halts, may increase the risk that APs may not be able to effectively create
or redeem Creation Units or the risk that the Shares may be halted and/or delisted.
Market
Trading Risk. The Fund faces numerous market trading risks, including
losses from trading in secondary markets, periods of high volatility and disruption in the creation/redemption process of the Fund. Although
Shares are listed for trading on a securities exchange, there can be no assurance that an active trading market for Shares will develop
or be maintained by market makers or APs, that Shares will continue to trade on any such exchange or that Shares will continue to meet
the requirements for listing on an exchange. Any of these factors, among others, may lead to the Shares trading at a premium or discount
to the Fund’s NAV. As a result, an investor could lose money over short or long periods. Further, the Fund may experience low trading
volume and wide bid/ask spreads. Bid/ask
spreads vary over time
based on trading volume and market liquidity (including for the underlying securities held by the Fund), and are generally lower if Shares
have more trading volume and market liquidity and higher if Shares have little trading volume and market liquidity.
In
stressed market conditions, the market for Shares may become less liquid
in response to deteriorating liquidity in the markets for the Fund’s portfolio holdings, which may cause a variance in the market
price of Shares and their underlying NAV. In addition, an exchange or market may issue trading halts on specific securities or financial
instruments. As a result, the ability to trade certain securities or financial instruments may be restricted, which may disrupt the Fund’s
creation/redemption process, potentially affect the price at which Shares trade in the secondary market, and/or result in the Fund being
unable to trade certain securities or financial instruments at all. In these circumstances, the Fund may be unable to rebalance its portfolio,
may be unable to accurately price its investments and/or may incur substantial trading losses.
Operational
Risk. The Fund is exposed to operational risks arising from a number
of factors, including, but not limited to, human error, processing and communication errors, errors of the Fund’s service providers,
counterparties or other third-parties, failed or inadequate processes and technology or systems failures. The Fund and the Adviser seek
to reduce these operational risks through controls and procedures. However, these measures do not address every possible risk and may
be inadequate to address these risks.
Shares
May Trade at Prices Different than NAV. Shares trade on a stock
exchange at prices at, above or below the Fund’s most recent NAV. The Fund’s NAV is calculated at the end of each business
day and fluctuates with changes in the market value of the Fund’s holdings. The trading price of the Shares fluctuates continuously
throughout trading hours on the exchange, based on both the relative market supply of, and demand for, the Shares and the underlying value
of the Fund’s portfolio holdings. As a result, the trading prices of the Shares may deviate from the Fund’s NAV. ANY OF THESE
FACTORS, AMONG OTHERS, MAY LEAD TO THE SHARES TRADING AT A PREMIUM OR DISCOUNT TO NAV. The Adviser cannot predict whether the Shares will
trade below, at or above the Fund’s NAV. Exchange prices are not expected to correlate exactly with the Fund’s NAV due to
timing reasons, supply and demand imbalances and other factors. In addition, disruptions to creations and redemptions, including disruptions
at market makers, APs, or other market participants, or periods of significant market volatility or stress, may result in trading prices
for the Shares that differ significantly from the value of the Fund’s underlying holdings, with the result that investors may pay
significantly more or receive significantly less than the underlying value of the Shares bought or sold. This can be reflected as a spread
between the bid and ask prices for the Fund quoted during the day or a premium or discount in the closing price from the Fund’s
NAV. Additionally, APs may be less willing to create or redeem the Shares if there is a lack of an active market for such Shares or the
Fund’s underlying investments, which may contribute to the Shares trading at a premium or discount.
Non-Principal
Investment Strategies
The
Fund, after investing at least 80% of its total assets in the components that comprise the Underlying Index, may invest its remaining
assets in securities (including other funds) not included in the Underlying Index, and in money market instruments, including repurchase
agreements and other funds, including affiliated funds, that invest exclusively in money market instruments (subject to applicable limitations
under the Investment Company Act of 1940, as amended (the “1940 Act”), or exemptions therefrom), convertible securities,
structured notes (notes on which the amount of principal repayment and interest payments is based on the movement of one or more specified
factors, such as the movement of a particular security or securities index) and in futures contracts, options and options on futures contracts.
The Fund may use futures contracts, options,
6
options on futures contracts,
convertible securities and structured notes to seek performance that corresponds to the Underlying Index, and to manage cash flows.
The
Adviser anticipates that it may take approximately two business days
(a business day is any day that the New York Stock Exchange (“NYSE”) is open) for additions to and deletions from the Underlying
Index to fully settle in the portfolio composition of the Fund.
In
accordance with 1940 Act rules, the Fund has adopted a policy to invest,
under normal circumstances, at least 80% of the value of its net assets, plus the amount of any borrowing for investment purposes, in
the particular types of securities, and/or in securities of companies operating in the particular industries, economic sectors, countries
or geographical regions, that are suggested by the Fund’s name (the “80% investment policy”). The Fund considers the
securities suggested by its name to be those components that comprise the Underlying Index. Therefore, the Fund anticipates meeting its
80% investment policy because it already generally invests at least 80% of its total assets in the components that comprise the Underlying
Index, in accordance with its principal investment strategies.
The
Fund’s investment objective and the 80% investment policy are non-fundamental
policies that the Board of Trustees (the “Board”) of the Invesco Exchange-Traded Fund Trust II (the “Trust”) may
change without shareholder approval upon 60 days’ prior written notice to shareholders.
The
fundamental and non-fundamental policies of the Fund are set forth in
the Fund’s Statement of Additional Information (“SAI”) under the section “Investment Restrictions.”
Borrowing
Money
The
Fund may borrow money up to the limits set forth in the Fund’s SAI under the section “Investment Restrictions.”
Securities
Lending
The
Fund may lend its portfolio securities to brokers, dealers, and other financial institutions. In connection with such loans, the Fund
receives liquid collateral equal to at least 102% (105% for international securities) of the value of the loaned portfolio securities.
This collateral is marked-to-market on a daily basis.
Additional
Risks of Investing in the Fund
The
Fund may also be subject to certain other non-principal risks associated with its investments and investment strategies. The following
provides additional non-principal risk information regarding investing in the Fund.
Cash
Transaction Risk. The Fund generally expects to make in-kind redemptions
to avoid being taxed at the fund level on gains on the distributed portfolio securities. However, from time to time, the Fund reserves
the right to effect redemptions for cash, rather than in-kind. In such circumstances, the Fund may be required to sell portfolio securities
to obtain the cash needed to distribute redemption proceeds. Therefore, the Fund may recognize a capital gain on these sales that might
not have been incurred if the Fund had made a redemption in-kind. This may decrease the tax efficiency of the Fund compared to utilizing
an in-kind redemption process.
Convertible
Securities Risk. A convertible security generally is a preferred
stock that may be converted within a specified period of time into common stock. Convertible securities nevertheless remain subject to
the risks of both debt securities and equity securities. As with other equity securities, the value of a convertible security tends to
increase as the price of the underlying stock goes up, and to decrease as the price of the underlying stock goes down. Declining common
stock values therefore also may cause the value of the Fund’s investments to decline. Like a debt security, a convertible security
provides a fixed-income stream and also tends to decrease in value when interest rates rise. Moreover, many convertible securities have
credit ratings that are below investment grade and are subject to the same risks as lower-rated debt securities, which are considered
to have more speculative characteristics and greater
susceptibility to default
or decline in market value than investment grade (or higher-rated) securities.
Cybersecurity
Risk. With the increased use of technologies such as the Internet
to conduct business, the Fund, like all companies, may be susceptible to operational, information security and related risks. Cybersecurity
incidents involving the Fund and its service providers (including, without limitation, the Adviser, fund accountant, custodian, transfer
agent and financial intermediaries) have the ability to cause disruptions and impact business operations, potentially resulting in financial
losses, impediments to trading, the inability of Fund shareholders to transact business, violations of applicable privacy and other laws,
regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs. Similar
adverse consequences could result from cybersecurity incidents affecting issuers of securities in which the Fund invests, counterparties
with which the Fund engages, governmental and other regulatory authorities, exchanges and other financial market operators, banks, brokers,
dealers, insurance companies, other financial institutions and other parties. The Fund and its shareholders could be negatively impacted
as a result.
Derivatives
Risk. The Fund may invest in derivatives, such as futures contracts,
options, and options on futures contracts, as applicable. Derivatives are financial instruments that derive their value from an underlying
asset, such as a security, index or exchange rate. Their use is a highly specialized activity that involves investment techniques and
risks different from those associated with ordinary portfolio securities transactions. Derivatives may be riskier than other types of
investments and may be more volatile, less tax efficient and less liquid than other securities.
Derivatives
may be used to create synthetic exposure to an underlying asset
or to hedge a portfolio risk. If the Fund uses derivatives to “hedge” a portfolio risk, the change in value of a derivative
may not correlate as expected with the underlying asset being hedged, and it is possible that the hedge therefore may not succeed. In
addition, given their complexity, derivatives may be difficult to value.
Derivatives
are subject to a number of risks including credit risk, interest
rate risk, and market risk. Credit risk refers to the possibility that a counterparty will be unable and/or unwilling to perform under
the agreement. Interest rate risk refers to fluctuations in the value of an asset resulting from changes in the general level of interest
rates. Over-the-counter derivatives are also subject to counterparty risk (sometimes referred to as “default risk”), which
is the risk that the other party to the contract will not fulfill its contractual obligations.
Derivatives
may be especially sensitive to changes in economic and market conditions,
and their use may give rise to a form of leverage. Leverage may cause the portfolio of the Fund to be more volatile than if the portfolio
had not been leveraged because leverage can exaggerate the effect of any increase or decrease in the value of securities and other instruments
held by the Fund. For some derivatives, such leverage could result in losses that exceed the original amount invested in the derivative.
The Fund’s use of derivatives may be limited by the requirements for taxation of the Fund as a regulated investment company, as
well as by regulatory changes.
Index
Provider Risk. The Fund seeks to track the investment results,
before fees and expenses, of the Underlying Index, as published by the Index Provider. There is no assurance that the Index Provider will
compile the Underlying Index accurately, or that the Underlying Index will be determined, composed or calculated accurately. While the
Index Provider gives descriptions of what the Underlying Index is designed to achieve, the Index Provider generally does not provide any
warranty or accept any liability in relation to the quality, accuracy or completeness of data in the Underlying Index, and it generally
does not guarantee that the Underlying Index will be in line with its methodology. Errors made by the Index Provider with respect to the
quality, accuracy and completeness of the data within the Underlying Index may occur from time to time and may not be identified and corrected
by the Index Provider for a period of time, if at all. Therefore, gains, losses or
7
costs associated with
Index Provider errors will generally be borne by the Fund and its shareholders.
Index
Rebalancing Risk. Pursuant to the methodology that the Index Provider
uses to calculate and maintain the Underlying Index, a security may be removed from the Underlying Index in the event that it does not
comply with the eligibility requirements of the Underlying Index. As a result, the Fund may be forced to sell securities at inopportune
times or for prices other than at current market values or may elect not to sell such securities on the day that they are removed from
the Underlying Index, due to market conditions or otherwise. Due to these factors, the variation between the Fund’s annual return
and the return of the Underlying Index may increase significantly.
Apart
from scheduled rebalances, the Index Provider may carry out additional
ad hoc rebalances to the Underlying Index, for example, to correct an error in the selection of index constituents. When the Fund in turn
rebalances its portfolio, any transaction costs and market exposure arising from such portfolio rebalancing will be borne by the Fund
and its shareholders. Unscheduled rebalances also expose the Fund to additional tracking error risk. Therefore, errors and additional
ad hoc rebalances carried out by the Index Provider may increase the Fund’s costs and market exposure.
Large
Shareholder Risk. Certain shareholders, including a third party
investor, the Adviser or an affiliate of the Adviser, an AP, a lead market maker, or another entity, may from time to time own a substantial
amount of Shares or may invest in the Fund and hold its investment for a limited period of time solely to facilitate the commencement
of the Fund or to facilitate the Fund achieving a specified size or scale. There can be no assurance that any large shareholder would
not redeem its investment. Dispositions of a large number of Shares by these shareholders may adversely affect the Fund’s liquidity
and net assets to the extent such transactions are executed directly with the Fund in the form of redemptions through an AP, rather than
executed in the secondary market. These redemptions may also force the Fund to sell portfolio securities when it might not otherwise do
so, which may negatively impact the Fund’s NAV and increase the Fund’s brokerage costs. Further, such sales may accelerate
the realization of taxable income and/or gains to shareholders, or the Fund may be required to sell its more liquid Fund investments to
meet a large redemption, in which case the Fund’s remaining assets may be less liquid, more volatile, and more difficult to price.
To the extent the Fund permits cash purchases, large purchases of Shares may adversely affect the Fund’s performance to the extent
that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. To the extent
these large shareholders transact in shares on the secondary market, such transactions may account for a large percentage of the trading
volume on the Fund’s exchange and may, therefore, have a material upward or downward effect on the market price of the Shares. To
the extent the Fund permits redemptions in cash, the Fund may hold a relatively large proportion of its assets in cash in anticipation
of large redemptions, diluting its investment returns.
Leverage
Risk. To the extent that the Fund borrows money, it may be leveraged.
Leveraging generally exaggerates the effect on NAV of any increase or decrease in the market value of the Fund’s portfolio securities.
Borrowing creates interest expenses and other expenses (e.g., commitment fees) for the Fund that affect the Fund’s performance.
Interest expenses are excluded from the Fund expenses borne by the Adviser under the unitary management fee.
Money
Market Funds Risk. Money market funds are subject to management
fees and other expenses, and the Fund's investments in money market funds will cause it to bear proportionately the costs incurred by
the money market funds' operations while simultaneously paying its own management fees and expenses. An investment in a money market fund
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency; it is possible to lose money
by investing in a money market fund. To the extent that the Fund invests in money market funds, the Fund will be subject to the same risks
that investors experience
when investing in money
market funds. These risks may include the impact of significant fluctuations in assets as a result of the cash sweep program or purchase
and redemption activity in those funds.
Money
market funds are open-end registered investment companies that
historically have traded at a stable $1.00 per share price. However, money market funds that do not meet the definition of a “retail
money market fund” or “government money market fund” under the 1940 Act are required to transact at a floating NAV per
share (i.e., in a manner similar to how all other non-money market mutual funds transact), instead of at a $1.00 stable share price. Money
market funds may also impose liquidity fees and redemption gates for use in times of market stress. If the Fund invested in a money market
fund with a floating NAV, the impact on the trading and value of the money market instrument may negatively affect the Fund's return potential.
Natural
Disaster/Epidemic Risk. Natural or environmental disasters, such
as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including
pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors,
industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value
of the Fund’s investments. Additionally, if a sector or sectors in which the Underlying Index is concentrated is negatively impacted
to a greater extent by such events, the Fund may experience heightened volatility. Given the increasing interdependence among global economies
and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign
exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s
investments.
Repurchase
Agreements Risk. Repurchase agreements are agreements pursuant
to which the Fund acquires securities from a third party with the understanding that the seller will repurchase them at a fixed price
on an agreed date. Repurchase agreements may be characterized as loans secured by the underlying securities. If the seller of securities
under a repurchase agreement defaults on its obligation to repurchase the underlying securities, as a result of its bankruptcy or otherwise,
the Fund will seek to dispose of such securities, which could involve costs or delays. If the seller becomes insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws, the Fund’s ability to dispose of the underlying securities
may be restricted. If the seller fails to repurchase the securities, the Fund may suffer a loss to the extent proceeds from the sale of
the underlying securities are less than the repurchase prices.
Risks
of Futures and Options.
The Fund may enter into U.S. futures contracts, options and options
on futures contracts to simulate full investment in the Underlying Index, or to manage cash flows. The Fund will not use futures or options
for speculative purposes. The Fund intends to use futures and options contracts to limit its risk exposure to levels comparable to direct
investment in securities.
An
option gives a holder the right to buy or sell a specific security or an index
at a specified price within a specified period of time. An option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in the underlying futures contract at a specified price at any time prior to the expiration date of
the option. Options can offer large amounts of leverage, which may result in the Fund’s NAV being more sensitive to changes in the
value of the related instrument. The purchase of put or call options could be based upon predictions as to anticipated trends; such predictions
could prove to be incorrect resulting in loss of part or all of the premium paid. The risk of trading uncovered call options in some strategies
(e.g., selling uncovered stock index futures contracts) potentially is unlimited.
Futures
contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific instrument or index at a specified future time and at a specified price. Because futures
contracts project price levels in the future, market circumstances may cause a
8
discrepancy between the
price of the stock index future and the movement in the Underlying Index. In the event of adverse price movements, the Fund would remain
required to make daily cash payments to maintain its required margin. There is no assurance that a liquid secondary market will exist
for any particular futures contract at any particular time. The risk of loss in trading futures contracts potentially is unlimited.
Securities
Lending Risk. Securities lending involves a risk of loss because
the borrower may fail to return the securities in a timely manner or at all. If the Fund lends its securities and is unable to recover
the securities loaned, it may sell the collateral and purchase a replacement security in the market. Lending securities entails a risk
of loss to the Fund if and to the extent that the market value of the loaned securities increases and the collateral is not increased
accordingly. Any cash received as collateral for loaned securities will be invested in an affiliated money market fund. This investment
is subject to market appreciation or depreciation and the Fund will bear any loss on the investment of its cash collateral.
Structured
Notes Risk. Investments in structured notes involve risks including
interest rate risk, credit risk and market risk. Depending on the factors used, changes in interest rates and movement of such factors
may cause significant price fluctuations. Structured notes may be less liquid than other types of securities and more volatile than the
reference factor underlying the note. This means that the Fund may lose money if the issuer of the note defaults, as the Fund may not
be able to readily close out its investment in such notes without incurring losses.
Trading
Issues Risk. Investors buying or selling Shares in the secondary
market may pay brokerage commissions or other charges, which may be a significant proportional cost for investors seeking to buy or sell
relatively small amounts of Shares. Moreover, trading in Shares on The Nasdaq Stock Market LLC (the “Exchange”) may be halted
due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading in
Shares on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Fund will
continue to be met or will remain unchanged. Foreign exchanges may be open on days when Shares are not priced, and therefore, if the Fund
holds securities that are primarily listed on such exchanges, the value of such securities in the Fund’s portfolio may change on
days when shareholders will not be able to purchase or sell Shares.
Tax Structure of ETFs
Unlike
interests in conventional mutual funds, which typically are bought and sold only at closing NAVs, Shares are traded throughout the day
in the secondary market on a national securities exchange, and are created and redeemed principally in-kind in Creation Units at each
day’s next calculated NAV. These in-kind arrangements are designed to protect shareholders from the adverse effects on the Fund’s
portfolio that could arise from frequent cash creation and redemption transactions. In a conventional mutual fund, redemptions can have
an adverse tax impact on taxable shareholders because the mutual fund may need to sell portfolio securities to obtain cash to meet such
redemptions. These sales may generate taxable gains that must be distributed to the shareholders of the mutual fund, whereas the Shares’
in-kind redemption mechanism generally will not lead to such taxable events for the Fund or its shareholders.
The
Fund may recognize gains as a result of rebalancing its securities holdings
to reflect changes in the securities included in the Underlying Index. The Fund also may be required to distribute any such gains to its
shareholders to avoid adverse federal income tax consequences. For information concerning the tax consequences of distributions, see the
section entitled “Dividends, Other Distributions and Taxes” in this prospectus.
Portfolio Holdings
A description
of the Trust's policies and procedures with respect to the disclosure of the Fund’s portfolio holdings is available in the Fund’s
SAI, which is available at www.invesco.com/ETFs.
Management of the Fund
Invesco
Capital Management LLC is a registered investment adviser with its offices at 3500 Lacey Road, Suite 700, Downers Grove, IL 60515.
Invesco Capital Management LLC serves as the investment adviser to the Invesco Actively Managed Exchange-Traded Commodity Fund Trust,
Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco
Exchange-Traded Self-Indexed Fund Trust and Invesco India Exchange-Traded Fund Trust, a family of ETFs, with combined assets under management
of $194.6 billion
as of June 30,
2023.
As
the Fund’s investment adviser, the Adviser has overall responsibility for
selecting and continuously monitoring the Fund’s investments, managing the Fund’s business affairs, and providing certain
clerical, bookkeeping and other administrative services for the Trust.
Portfolio
Managers
The
Adviser uses a team of portfolio managers, investment strategists and other investment specialists in managing the Fund. This team approach
brings together many disciplines and leverages the Adviser's extensive resources. In this regard, Peter Hubbard, Richard Ose, Tom Boksa,
and Gregory Meisenger (the “Portfolio Managers”) are jointly and primarily responsible for the day-to-day management of the
Fund.
Each
Portfolio Manager is responsible for various functions related to portfolio
management, including investing cash flows, coordinating with other team members to focus on certain asset classes, implementing investment
strategies and researching and reviewing investment strategies.
Each
Portfolio Manager has limitations on their authority for risk management
and compliance purposes that the Adviser believes to be appropriate.
◾
Peter
Hubbard, Head of Equities and Director of Portfolio Management of the Adviser and Vice President of the Trust, has been responsible for
the management of the Fund since October 2007. He has been responsible for the management of certain funds in the Invesco family of ETFs
since June 2007 and has been associated with the Adviser since 2005.
◾
Richard
Ose, Senior Portfolio Manager of the Adviser, has been responsible for the management of the Fund since December 2021. He has been responsible
for the management of certain funds in the Invesco family of ETFs since October 2013 and has been associated with the Adviser since 2011.
◾
Tom
Boksa, Portfolio Manager of the Adviser, has been responsible for the management of the Fund since December 2019. He has been responsible
for the management of certain funds in the Invesco family of ETFs since August 2019 and has been associated with the Adviser since 2013.
◾
Gregory
Meisenger, Portfolio Manager of the Adviser, has been responsible for the management of the Fund since December 2019. He has been responsible
for the management of certain funds in the Invesco family of ETFs since May 2018 and has been associated with the Adviser since March
2018.
The
Fund's SAI provides additional information about the Portfolio Managers’
compensation structure, other accounts that the Portfolio Managers manage and the Portfolio Managers' ownership of Shares.
9
Advisory
Fees
Pursuant
to an investment advisory agreement between the Adviser and the Trust (the “Investment Advisory Agreement”) effective on June
26, 2023, the Fund pays the Adviser an annual management fee equal to 0.15% of its average daily net assets (the “Advisory Fee”).
Prior to June 26, 2023, the Fund paid an Advisory Fee equal to 0.25% of its average daily net assets.
The
Advisory Fee paid by the Fund to the Adviser is an annual unitary management
fee. Out of the unitary management fee, the Adviser pays for substantially all expenses of the Fund, including the cost of transfer agency,
custody, fund administration, legal, audit and other services, except for distribution fees, if any, brokerage expenses, taxes, interest,
Acquired Fund Fees and Expenses, if any, litigation expenses, and other extraordinary expenses, including proxy expenses (except for such
proxies related to: (i) changes to the Investment Advisory Agreement, (ii) the election of any Board member who is an “interested
person” of the Trust, or (iii) any other matters that directly benefit the Adviser).
The
Fund may invest in money market funds that are managed by affiliates
of the Adviser and other funds (including ETFs) managed by the Adviser or affiliates of the Adviser (collectively, “Underlying Affiliated
Investments”). The indirect portion of the advisory fees that the Fund incurs through such Underlying Affiliated Investments is
in addition to the Advisory Fee payable to the Adviser by the Fund. Therefore, the Adviser has agreed to waive the Advisory Fee payable
by the Fund in an amount equal to the lesser of: (i) 100% of the net advisory fees earned by the Adviser or an affiliate of the Adviser
that are attributable to the Fund's Underlying Affiliated Investments or (ii) the Advisory Fee available to be waived. This waiver does
not apply to the Fund's investment of cash collateral received for securities lending. This waiver is in place through at least August
31, 2025, and there is no guarantee that the Adviser will extend it past that date.
A
discussion regarding the basis for the Board’s approval of the Investment
Advisory Agreement with respect to the Fund at the Board’s April 2023 meeting will be available in the Fund’s Annual Report
to Shareholders for the fiscal year ended August 31, 2023.
How to Buy and Sell Shares
The
Fund issues or redeems its Shares at NAV per Share only in Creation Units or Creation Unit Aggregations.
Most
investors buy and sell Shares in secondary market transactions through
brokers. Shares are listed for trading on the secondary market on the Exchange. Shares can be bought and sold throughout the trading day
like other publicly traded shares. There is no minimum investment. Although Shares generally are purchased and sold in “round lots”
of 100 Shares, brokerage firms typically permit investors to purchase or sell Shares in smaller “odd lots,” at no per share
price differential. When buying or selling Shares through a broker, you will incur customary brokerage commissions and charges, and you
may pay some or all of the spread between the bid and the offered price in the secondary market on each leg of a round trip (purchase
and sale) transaction.
The
Shares trade on the Exchange under the symbol “GOVI.”
Share
prices are reported in dollars and cents per Share.
APs
may acquire Shares directly from the Fund, and APs may tender their
Shares for redemption directly to the Fund, at NAV per Share, only in Creation Units or Creation Unit Aggregations, and in accordance
with the procedures described in the SAI.
Under
normal circumstances, the Fund will pay out redemption proceeds
to a redeeming AP within two days after the AP’s redemption request is received, in accordance with the process set forth in the
Fund’s SAI and in the agreement between the AP and the Fund’s distributor. However, the Fund reserves the right, including
under stressed market conditions, to take up to seven days after the receipt of a redemption request to pay an AP, all as permitted by
the Investment Company Act of 1940, as amended (the “1940 Act”). If the Fund has foreign investments in
a country where local
market holiday(s) prevent the Fund from delivering such foreign investments to an AP in response to a redemption request, the Fund may
take up to 15 days after the receipt of the redemption request to deliver such investments to the AP.
The
Fund anticipates meeting redemption requests either by paying redemption
proceeds to an AP primarily through in-kind redemptions or in cash. Cash used for redemptions will be raised from the sale of portfolio
assets or may come from existing holdings of cash or cash equivalents. If the Fund holds Rule 144A securities, an AP that is not a “qualified
institutional buyer,” as such term is defined under Rule 144A of the Securities Act of 1933, as amended (the “Securities
Act”), will not be able to receive those Rule 144A securities.
The
Fund may liquidate and terminate at any time without shareholder approval.
Book
Entry
Shares
are held in book-entry form, which means that no stock certificates are issued. The Depository Trust Company (“DTC”) or its
nominee is the record owner of all outstanding Shares and is recognized as the record owner of all Shares for all purposes.
Investors
owning Shares are beneficial owners as shown on the records of
DTC or its participants. DTC serves as the securities depository for all Shares. Participants in DTC include securities brokers and dealers,
banks, trust companies, clearing corporations and other institutions that directly or indirectly maintain a custodial relationship with
DTC. As a beneficial owner of Shares, you are not entitled to receive physical delivery of stock certificates or to have Shares registered
in your name, and you are not considered a registered owner of Shares. Therefore, to exercise any right as an owner of Shares, you must
rely upon the procedures of DTC and its participants. These procedures are the same as those that apply to any other stocks that you hold
in book entry or “street name” form.
Share
Trading Prices
The
trading prices of Shares on the Exchange may differ from the Fund’s daily NAV. Market forces of supply and demand, economic conditions
and other factors may affect the trading prices of Shares.
Frequent Purchases and Redemptions of Shares
Shares may be purchased
and redeemed directly from the Fund only in Creation Units by APs. The vast majority of trading in Shares occurs on the secondary market
and does not involve the Fund directly. In-kind purchases and redemptions of Creation Units by APs and cash trades on the secondary market
are unlikely to cause many of the harmful effects of frequent purchases or redemptions of the Shares. Cash purchases and/or redemptions
of Creation Units, however, can result in increased tracking error, disruption of portfolio management, dilution to the Fund and increased
transaction costs, which could negatively impact the Fund’s ability to achieve its investment objective, and may lead to the realization
of capital gains. These consequences may increase as the frequency of cash purchases and redemptions of Creation Units by APs increases.
However, direct trading by APs is critical to ensuring that Shares trade at or close to NAV.
To
minimize these potential consequences of frequent purchases and redemptions
of Shares, the Fund imposes transaction fees on purchases and redemptions of Creation Units to cover the custodial and other costs the
Fund incurs in effecting trades. In addition, the Adviser monitors trades by APs for patterns of abusive trading and the Fund reserves
the right not to accept orders from APs that the Adviser has determined may be disruptive to the management of the Fund, or otherwise
are not in the best interests of the Fund. For these reasons, the Board has not adopted policies and procedures with respect to frequent
purchases and redemptions of Shares.
10
Dividends, Other Distributions and Taxes
Dividends
and Other Distributions
Generally,
dividends from net investment income, if any, are declared and paid monthly by the Fund. The Fund also intends to distribute its net realized
capital gains, if any, to shareholders annually. Dividends and other distributions may be declared and paid more frequently to comply
with the distribution requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and to avoid
a federal excise tax imposed on regulated investment companies.
Distributions
in cash may be reinvested automatically in additional whole Shares
only if the broker through whom you purchased Shares makes such option available.
Taxes
The
Fund intends to qualify each year as a regulated investment company (“RIC”) and, as such, is not subject to entity-level tax
on the income and gain it distributes. If you are a taxable investor, dividends and distributions you receive generally are taxable to
you whether you reinvest distributions in additional Shares or take them in cash. Every year, you will be sent information showing the
amount of dividends and distributions you received during the prior calendar year. In addition, investors in taxable accounts should be
aware of the basic tax points listed below:
Fund
Tax Basics
◾
The
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of the Fund, constitutes the Fund’s net investment income from which dividends may be paid to shareholders. If you are a taxable
investor, distributions of net investment income generally are taxable to you as ordinary income.
◾
Distributions
of net short-term capital gains are taxable to you as ordinary income. A fund with a high portfolio turnover rate (a measure of how frequently
assets within the fund are bought and sold) is more likely to generate short-term capital gains than a fund with a low portfolio turnover
rate.
◾
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Shares.
◾
A
portion of income dividends paid by the Fund may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from the Fund’s investment in stocks of domestic corporations and qualified foreign corporations. If the Fund
invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible for taxation
at these reduced rates.
◾
The
use of derivatives by the Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
◾
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
◾
Any
long-term or short-term capital gains realized on the sale of your Shares will be subject to federal income tax.
◾
If
the Fund is terminated, a shareholder will receive a liquidating distribution(s) which should be treated as payment in exchange for the
Shares held by the shareholder. As a result, each shareholder should
recognize
gain or loss in an amount equal to the difference between the shareholder’s adjusted tax basis in his or her shares and the liquidating
distribution(s) he or she receives, except to the extent the Shares are held in a tax-advantaged arrangement. A liquidating distribution
may be subject to backup withholding as described below.
◾
A
shareholder’s cost basis information will be provided on the sale of any of the shareholder’s Shares, subject to certain exceptions
for exempt recipients. Please contact the broker (or other nominee) that holds your Shares with respect to reporting of your cost basis
and available elections for your account.
◾
At
the time you purchase your Shares, the Fund’s NAV may reflect undistributed income or undistributed capital gains. A subsequent
distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying Shares just before the
Fund declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.” In addition, the
Fund’s NAV may, at any time, reflect net unrealized appreciation, which may result in future taxable distributions to you.
◾
By
law, if you do not provide the Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your Shares. The Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
◾
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from the Fund and net gains from taxable dispositions of Shares) of U.S. individuals, estates and trusts to the extent that such
person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in
the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your
federal income tax return.
◾
You
will not be required to include the portion of dividends paid by the Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
◾
Fund
distributions and gains from the sale of Shares generally are subject to state and local income taxes.
◾
If
the Fund qualifies to pass through the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any foreign
taxes it pays on these investments may be passed through to you. You will then be required to include your pro rata share of
these taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes
in computing your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
◾
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in the Fund.
◾
Under
the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax is imposed on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment
11
accounts.
After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions, return of capital distributions
and the proceeds arising from the sale of Shares; however, based on proposed regulations issued by the IRS, which can be relied upon currently,
such withholding is no longer required unless final regulations provide otherwise (which is not expected). The Fund may disclose the information
that it receives from its shareholders to the IRS, non-U.S. taxing authorities or other parties as necessary to comply with FATCA or similar
laws. Withholding also may be required if a foreign entity that is a shareholder of the Fund fails to provide the Fund with appropriate
certifications or other documentation concerning its status under FATCA.
◾
To
the extent the Fund invests in an underlying fund that is taxed as a RIC, please see the section titled “Taxes – Taxation
of the Funds” in the Fund’s SAI for more information regarding the tax consequences of such investment.
◾
The
above discussion concerning the taxability of Fund dividends and distributions and of sales of Shares is inapplicable to investors that
generally are exempt from federal income tax, such as retirement plans that are qualified under Section 401 and 403 of the Code and individual
retirement accounts (“IRAs”) and Roth IRAs.
Taxes
on Purchase and Redemption of Creation Units
To
the extent that the Fund permits in-kind transactions, an AP that exchanges equity securities for a Creation Unit generally will recognize
a capital gain or loss equal to the difference between the market value of the Creation Units at the time of exchange (plus any cash received
by the AP as part of the issue) and the sum of the AP's aggregate basis in the securities surrendered plus any cash component paid. Similarly,
an AP that redeems a Creation Unit in exchange for securities generally will recognize a capital gain or loss equal to the difference
between the AP's basis in the Creation Units (plus any cash paid by the AP as part of the redemption) and the aggregate market value of
the securities received (plus any cash received by the AP as part of the redemption). The IRS, however, may assert that a loss realized
upon an exchange of securities for a Creation Unit, or of a Creation Unit for securities, cannot be deducted currently under the rules
governing “wash sales” or on the ground that there has been no significant change in the AP's economic position. An AP exchanging
securities should consult its own tax advisor(s) with respect to whether wash sale rules apply and when a loss otherwise might not be
deductible.
Any
capital gain or loss realized on a redemption of a Creation Unit generally
is treated as long-term capital gain or loss if the Shares have been held for more than one year and as short-term capital gain or loss
if the Shares have been held for one year or less, assuming that such Creation Units are held as a capital asset. If you purchase or redeem
one or more Creation Units, you will be sent a confirmation statement showing how many Shares you purchased or sold and at what price.
The
foregoing discussion summarizes some of the more important
possible consequences under current federal, state and local tax law of an investment in the Fund. It is not a substitute for personal
tax advice. You also may be subject to state, local and/or foreign tax on the Fund's distributions and sales and/or redemptions of Shares.
Consult your personal tax advisor(s) about the potential tax consequences of an investment in the Shares under all applicable tax laws.
Distributor
Invesco
Distributors, Inc. (the “Distributor”) serves as the distributor of Creation Units for the Fund on an agency basis. The Distributor
does not maintain a secondary market in Shares. The Distributor is an affiliate of the Adviser.
Net Asset Value
The NAV for the Fund
will be calculated and disseminated daily on each day that the NYSE is open for trading. The Bank of New York Mellon (“BNYM”)
normally calculates the Fund’s NAV as of the regularly scheduled close of business of the NYSE (normally 4:00 p.m., Eastern time).
The Fund’s NAV is based on prices at the time of closing, and U.S. fixed-income assets may be valued as of the announced closing
time for trading in fixed-income instruments in a particular market or exchange. NAV is calculated by deducting all of the Fund’s
liabilities from the total value of its assets and then dividing the result by the number of Shares outstanding, rounding to the nearest
cent. Generally, the portfolio securities are recorded in the NAV no later than the trade date plus one day. In determining NAV, expenses
are accrued and applied daily and securities and other assets for which market quotations are readily available and reliable are valued
at market value. The Trust’s Board has designated the Adviser to fair value the Fund’s portfolio securities and other assets
for which market quotations are not readily available and reliable in accordance with Board-approved policies and related Adviser procedures
(the “Valuation Procedures”), subject to the Board’s oversight.
Securities
listed or traded on an exchange (except convertible securities)
generally are valued at the last trade price or official closing price that day as of the close of the exchange where the security primarily
trades. Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s
end-of-business day NAV per share, whereas securities of investment companies that are exchange-traded are valued at the last trade price
or official closing price on the exchange on which they primarily trade. Deposits, other obligations of U.S. and non-U.S. banks and financial
institutions, and cash equivalents are valued at their daily account value. Fixed-income securities (including convertible securities)
normally are valued on the basis of prices provided by independent pricing services. Pricing services generally value fixed-income securities
assuming orderly transactions of institutional round lot size, but the Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. Futures contracts
are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued
at the mean between the last bid and asked prices from the exchange on which they principally trade. Non-U.S. exchange-traded options
are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally
are valued using pricing provided from independent pricing services. Unlisted securities will be valued using prices provided by independent
pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance
with the Valuation Procedures. Foreign exchange-traded equity securities are valued at their market value if market quotations are available
and reliable. The Adviser may use various pricing services to obtain market quotations as well as fair value prices. The Adviser may discontinue
the use of any pricing service at any time.
At
times, a listed security’s market price may not be readily available. Moreover,
even when market quotations are available for a security, they may be stale or unreliable. A security’s last market quotation may
become stale because, among other reasons, (i) the security is not traded frequently, (ii) the security ceased trading before its exchange
closed; (iii) market or issuer-specific events occurred after the security ceased trading; or (iv) the passage of time between when the
security’s trading market closes and when the Fund calculates its NAV caused the quotation to become stale. A security’s last
market quotation may become unreliable because of (i) certain issuer- or security-specific events, including a merger or insolvency, (ii)
events which affect a geographical area or an industry segment, such as political events or natural disasters, or (iii) market events,
such as a significant movement in the U.S. market. When a security’s market price is not readily available, or the Adviser determines,
in its judgment, that such
12
price is stale or unreliable,
the Adviser will value the security at fair value in good faith using the Valuation Procedures.
Fair
value pricing involves subjective judgments, and fair value pricing methods
may change from time to time. Consequently, while such determinations may be made in good faith, it may nevertheless be more difficult
for the Adviser to accurately assign a daily value, and Fund securities that are fair valued may be subject to greater fluctuation in
their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation,
and the degree of subjectivity in such decisions, it is possible that a fair value determination for a security is materially different
than the value that could be realized upon the sale of the security. There is no assurance that the Fund could sell a portfolio security
for the value established for it at any time, and it is possible that the Fund would incur a loss if a security is sold at a discount
to its established value. Because the Fund seeks to track the Underlying Index, the use of fair value pricing could result in a difference
between the prices used to calculate the Fund’s NAV and the prices used by the Underlying Index, which may increase the Fund’s
tracking error.
Fund Service Providers
BNYM,
240 Greenwich Street, New York, New York 10286, is the administrator, custodian, transfer agent and fund accounting and dividend disbursing
agent for the Fund.
Stradley
Ronon Stevens & Young, LLP, 191 North Wacker Drive, Suite 1601, Chicago, Illinois 60606, and 2000 K Street, NW, Suite 700, Washington,
D.C. 20006, serves as legal counsel to the Trust.
PricewaterhouseCoopers
LLP (“PwC”), One North Wacker Drive, Chicago, Illinois 60606, serves as the Fund’s independent registered public accounting
firm. PwC
is responsible for auditing the annual financial statements of the Fund and assists in the preparation and/or review of the Fund’s
federal and state income tax returns.
13
Financial Highlights
The
financial highlights table below is intended to help you understand the Fund’s financial performance for the past five fiscal years and
the semiannual period ended February 28, 2023. Certain information reflects financial results for a single Share. The total returns in
the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends
and other distributions). This information has been derived from the Fund’s financial statements, which for the past five fiscal
years have been audited by PwC. The
information
for the semiannual period ended February 28, 2023 has not been audited.
PwC's report, along with the Fund’s financial statements,
is included in the Fund’s Annual Report for the fiscal year ended August 31, 2022, which is available upon request. The unaudited
interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results
for the interim period presented. In addition, all such adjustments are of a normal recurring nature.
|
|
Six
Months Ended
February
28,
2023
(Unaudited)
|
Years
Ended August 31, |
Ten
Months Ended
August
31,
2018
|
Year
Ended
October
31,
2017
| |||
|
|
2022
|
2021
|
2020
|
2019
| |||
|
Per
Share Operating Performance: |
|
|
|
|
|
|
|
|
Net
asset value at beginning of period |
$30.75
|
$37.04
|
$39.21
|
$36.19
|
$31.68
|
$32.59
|
$33.81
|
|
Net
investment income(a)
|
0.32
|
0.53
|
0.41
|
0.47
|
0.69
|
0.57
|
0.66
|
|
Net
realized and unrealized gain (loss) on investments |
(1.93)
|
(6.31)
|
(2.21)
|
3.04
|
4.51
|
(0.91)
|
(1.22)
|
|
Total
from investment operations |
(1.61)
|
(5.78)
|
(1.80)
|
3.51
|
5.20
|
(0.34)
|
(0.56)
|
|
Distributions
to shareholders from: |
|
|
|
|
|
|
|
|
Net
investment income |
(0.32)
|
(0.51)
|
(0.37)
|
(0.49)
|
(0.69)
|
(0.57)
|
(0.66)
|
|
Net
asset value at end of period |
$28.82
|
$30.75
|
$37.04
|
$39.21
|
$36.19
|
$31.68
|
$32.59
|
|
Market
price at end of period(b)
|
$28.84
|
$30.65
|
$37.04
|
$39.14
|
$36.23
|
$31.64
|
$32.59
|
|
Net
Asset Value Total Return(c)
|
(5.23)%
|
(15.71)%
|
(4.60)%
|
9.82%
|
16.71%
|
(1.04)%
|
(1.63)%
|
|
Market
Price Total Return(c)
|
(4.86)%
|
(15.99)%
|
(4.43)%
|
9.50%
|
16.98%
|
(1.17)%
|
(1.72)%
|
|
Ratios/Supplemental
Data: |
|
|
|
|
|
|
|
|
Net
assets at end of period (000's omitted) |
$604,318
|
$524,987
|
$414,835
|
$203,903
|
$179,124
|
$153,634
|
$187,393
|
|
Ratio
to average net assets of: |
|
|
|
|
|
|
|
|
Expenses
|
0.25%(d)
|
0.25%
|
0.25%
|
0.25%
|
0.26%(e)
|
0.25%(d)
|
0.25%
|
|
Net
investment income |
2.24%(d)
|
1.57%
|
1.12%
|
1.25%
|
2.13%(e)
|
2.13%(d)
|
2.02%
|
|
Portfolio
turnover rate(f)
|
13%
|
5%
|
3%
|
9%
|
5%
|
5%
|
5%
|
|
(a)
|
Based
on average shares outstanding. |
|
(b)
|
The
mean between the last bid and ask prices. |
|
(c)
|
Net
asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment
of all dividends and distributions at net asset value
during
the period, and redemption at net asset value on the last day of the period. Net asset value total return includes adjustments in accordance
with accounting principles generally accepted in
the
United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns
for
shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning
of the period, reinvestment of all dividends and
distributions
at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for
a period of less than one year are not annualized. |
|
(d)
|
Annualized.
|
|
(e)
|
Ratios
include non-recurring costs associated with a proxy statement of 0.01%. |
|
(f)
|
Portfolio
turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from
processing creations or redemptions. |
14
Index Provider
No entity that creates,
compiles, sponsors or maintains the Underlying Index is or will be an affiliated person, as defined in Section 2(a)(3) of the 1940
Act, or an affiliated person of an affiliated person, of the Trust, the Adviser, the Distributor or a promoter of the Fund.
Neither
the Adviser nor any affiliate of the Adviser has any rights to influence
the selection of the securities in the Underlying Index.
The
Underlying Index is calculated and maintained by the Index Provider or
its affiliate, agent or partner. The Index Provider is not affiliated with the Trust, the Adviser or the Distributor. The Adviser has
entered into a license agreement with the Index Provider. The Fund is entitled to use the Underlying Index pursuant to a sub-licensing
agreement with the Adviser.
Disclaimers
Source
ICE Data Indices, LLC (“ICE Data”), is used with permission. “ICE®”
is a trademark of ICE Data or its affiliates. This trademark has been licensed, along with the Underlying Index for use by the Adviser
in connection with the Fund. Neither the Adviser, the Trust, nor the Fund, as applicable, is sponsored, endorsed, sold or promoted by
ICE Data, its affiliates or its third-party suppliers (“ICE Data and its Suppliers”). ICE Data and its Suppliers make no representations
or warranties regarding the advisability of investing in securities generally, in the Fund particularly, the Trust or the ability of the
Underlying Index to track general stock market performance. ICE Data’s only relationship to the Adviser is the licensing of certain
trademarks and trade names and the Underlying Index or components thereof. The Underlying Index is determined, composed and calculated
by ICE Data without regard to the Adviser or the Fund or its holders. ICE Data has no obligation to take the needs of the Adviser or the
holders of the Fund into consideration in determining, composing or calculating the Underlying Index. ICE Data is not responsible for
and has not participated in the determination of the timing of, prices of, or quantities of the Fund to be issued or in the determination
or calculation of the equation by which the Fund is to be priced, sold, purchased, or redeemed. Except for certain custom index calculation
services, all information provided by ICE Data is general in nature and not tailored to the needs of the Adviser or any other person,
entity or group of persons. ICE Data has no obligation or liability in connection with the administration, marketing, or trading of the
Fund. ICE Data is not an investment advisor. Inclusion of a security within an index is not a recommendation by ICE Data to buy, sell,
or hold such security, nor is it considered to be investment advice.
ICE
DATA. AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS,
EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE UNDERLYING
INDEX, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE DATA AND ITS SUPPLIERS
SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE UNDERLYING
INDEX AND THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK.
The
Adviser does not guarantee the accuracy and/or the completeness of
the Underlying Index or any data included therein, and the Adviser shall have no liability for any errors, omissions, restatements, re-calculations
or interruptions therein. The Adviser makes no warranty, express or implied, as to results to be obtained by the Fund, owners of the Shares
or any other person or entity from the use of the Underlying Index or any data included therein. The Adviser makes no express or implied
warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the Underlying
Index or any data included therein.
Without limiting any
of the foregoing, in no event shall the Adviser have any liability for any special, punitive, direct, indirect or consequential damages
(including lost profits) arising out of matters relating to the use of the Underlying Index, even if notified of the possibility of such
damages.
Premium/Discount Information
Information
showing the number of days the market price of the Shares was greater (at a premium) and less (at a discount) than the Fund’s NAV
for the most recently completed calendar year and the most recently completed calendar quarters since that year (or the life of the Fund,
if shorter) is available on the Fund’s website at www.invesco.com/ETFs.
Other Information
Continuous
Offering
The
method by which Creation Unit Aggregations of Shares are created and traded may raise certain issues under applicable securities laws.
Because new Creation Unit Aggregations of Shares are issued and sold by the Fund on an ongoing basis, a “distribution,” as
such term is used in the Securities Act, may occur at any point. Broker-dealers and other persons are cautioned that some activities on
their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render
them statutory underwriters and subject them to the prospectus delivery requirement and liability provisions of the Securities Act.
For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Unit Aggregations after placing an order with the Distributor, breaks them down into constituent Shares
and sells such Shares directly to customers, or if it chooses to couple the creation of a supply of new Shares with an active selling
effort involving the solicitation of secondary market demand for Shares. A determination of whether one is an underwriter for purposes
of the Securities Act must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its
client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities
that could lead to a characterization as an underwriter.
Broker-dealer
firms also should note that dealers who are not “underwriters”
but are effecting transactions in Shares, whether or not participating in the distribution of Shares, generally are required to deliver
a prospectus. This is because the prospectus delivery exemption in Section 4(a)(3)(C) of the Securities Act is not available in respect
of such transactions as a result of Section 24(d) of the 1940 Act. As a result, broker-dealer firms should note that dealers who are not
“underwriters” but are participating in a distribution (as contrasted with engaging in ordinary secondary market transactions),
and thus dealing with the Shares that are part of an overallotment within the meaning of Section 4(a)(3)(C) of the Securities Act, will
be unable to take advantage of the prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act. For delivery of prospectuses
to exchange members, the prospectus delivery mechanism of Rule 153 under the Securities Act only is available with respect to transactions
on a national exchange.
Delivery
of Shareholder Documents–Householding
Householding
is an option available to certain investors of the Fund. Householding is a method of delivery, based on the preference of the individual
investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their
accounts are registered under different names. Householding for the Fund is
15
available through certain
broker-dealers. If you are interested in enrolling in householding and receiving a single copy of the prospectus and other shareholder
documents, please contact your broker-dealer. If you currently are enrolled in householding and wish to change your householding status,
please contact your broker-dealer.
For
More Information
For
more detailed information on the Trust, the Fund and the Shares, you may request a copy of the Fund’s SAI. The SAI provides detailed
information about the Fund and is incorporated by reference into this prospectus. This means that the SAI legally is a part of this prospectus.
Additional information about the Fund’s investments also is available in the Fund’s Annual and Semi-Annual Reports to Shareholders.
In the Fund’s current Annual Report, you will find a discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during the last fiscal year. If you have questions about the Fund or Shares or you wish to obtain the
SAI, Annual Report and/or Semi-Annual Report, free of charge, or to make shareholder inquiries, please:
|
Call:
|
Invesco
Distributors, Inc. at 1-800-983-0903
Monday
through Friday
8:00
a.m. to 5:00 p.m. Central Time |
|
Write:
|
Invesco
Exchange-Traded Fund Trust II
c/o
Invesco Distributors, Inc.
11
Greenway Plaza
Houston,
Texas 77046-1173 |
|
Visit:
|
www.invesco.com/ETFs
|
Reports
and other information about the Fund are available on the EDGAR
Database on the SEC's Internet site at www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
No
person is authorized to give any information or to make any representations
about the Fund and its Shares not contained in this prospectus, and you should not rely on any other information. Read and keep this prospectus
for future reference.
Dealers
effecting transactions in the Shares, whether or not participating
in this distribution, generally are required to deliver a prospectus. This is in addition to any obligation of dealers to deliver a prospectus
when acting as underwriters.
The
Trust's registration number under the 1940 Act is 811-21977.
16
