What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-07 · 70 added, 67 removed, 283 unchanged (33% of the section changed)

75 unchanged sentences

The composition of the Index may be adjusted in the event that the Index Sponsor is not able to calculate the closing prices of the Index Commodities.

The following table reflects the Fund weights of each Index Commodity or related futures contracts, as applicable, as of June 30, 2024:

The following table reflects the Fund weights of each Index Commodity or related futures contracts, as applicable, as of September 30, 2024:

Index Commodity

1 unchanged sentence

Copper-Grade A

Closing Level as of June 30, 2024:

Closing Level as of September 30, 2024:

Please see http://www.invesco.com/ETFs with respect to the most recently available weighted composition of the Fund and the composition of the Index.

33 unchanged sentences

The day on which a redemption order is settled is the redemption order settlement date.

As provided below, the redemption order settlement date may occur up to two business days after the redemption order date.

As provided below, the redemption order settlement date may occur up to one business day after the redemption order date.

Redemption orders are irrevocable.

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Unless otherwise agreed to by the Managing Owner and the Authorized Participant as provided in the next sentence, by placing a redemption order, an Authorized Participant agrees to deliver the Creation Units to be redeemed through DTC’s book-entry system to the Fund no later than the redemption order settlement date as of 2:45 p.m., Eastern Time, on the business day immediately following the redemption order date.

Upon submission of a redemption order, the Authorized Participant may request the Managing Owner to agree to a redemption order settlement date up to two business days after the redemption order date.

Upon submission of a redemption order, the Authorized Participant may request the Managing Owner to agree to a redemption order settlement date up to one business day after the redemption order date.

By placing a redemption order, and prior to receipt of the redemption proceeds, an Authorized Participant’s DTC account is charged the non-refundable transaction fee due for the redemption order.

23 unchanged sentences

Operating Activities

Net cash flow provided by (used in) operating activities was $(35.0) million and $39.7 million for the six months ended June 30, 2024 and 2023, respectively.

Net cash flow provided by (used in) operating activities was $9.4 million and $62.8 million for the nine months ended September 30, 2024 and 2023, respectively.

These amounts primarily include net income (loss), net purchases and sales of money market mutual funds and net purchases and sales of United States Treasury Obligations and affiliated investments.

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While the Fund's performance reflects the appreciation and depreciation of those holdings, the Fund's performance, whether positive or negative, is driven primarily by its strategy of trading futures contracts with the aim of seeking to track the Index.

During the six months ended June 30, 2024, $74.0 million was paid to purchase United States Treasury Obligations and $57.0 million was received from sales and maturing United States Treasury Obligations.

During the six months ended June 30, 2023, $191.0 million was paid to purchase United States Treasury Obligations and $284.0 million was received from sales and maturing United States Treasury Obligations.

$104.8 million was received from sales of affiliated investments and $86.0 million was paid to purchase affiliated investments during the six months ended June 30, 2024.

$381.0 million was received from sales of affiliated investments and $333.9 million was paid to purchase affiliated investments during the six months ended June 30, 2023.

During the nine months ended September 30, 2024, $74.0 million was paid to purchase United States Treasury Obligations and $57.0 million was received from sales and maturing United States Treasury Obligations.

During the nine months ended September 30, 2023, $202.8 million was paid to purchase United States Treasury Obligations and $296.0 million was received from sales and maturing United States Treasury Obligations.

$152.6 million was received from sales of affiliated investments and $127.6 million was paid to purchase affiliated investments during the nine months ended September 30, 2024.

$417.8 million was received from sales of

affiliated investments and $339.0 million was paid to purchase affiliated investments during the nine months ended September 30, 2023.

Financing Activities

The Fund’s net cash flow provided by (used in) financing activities was $35.0 million and $(41.7) million during the six months ended June 30, 2024 and 2023, respectively.

This included $82.6 million and $79.0 million from Shares purchased by Authorized Participants and $(47.2) million and $(120.7) million from Shares redeemed by Authorized Participants during the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, distributions paid to Shareholders were $0.4 million.

No distributions were paid to Shareholders during the six months ended June 30, 2023.

The Fund’s net cash flow provided by (used in) financing activities was $(9.4) million and $(64.8) million during the nine months ended September 30, 2024 and 2023, respectively.

This included $91.2 million and $79.9 million from Shares purchased by Authorized Participants and $(100.2) million and $(144.7) million from Shares redeemed by Authorized Participants during the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, distributions paid to Shareholders were $0.4 million.

No distributions were paid to Shareholders during the nine months ended September 30, 2023.

Results of Operations

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

The following graphs illustrate the percentage changes in (i) the market price of the Shares (as reflected by the line “Market”), (ii) the Fund’s NAV (as reflected by the line “NAV”), and (iii) the closing levels of the Index (as reflected by the line “DBIQ-OY Industrial Metals ER”).

4 unchanged sentences

COMPARISON OF MARKET, NAV AND DBIQ-OY INDUSTRIAL METALS ER

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

NEITHER THE PAST PERFORMANCE OF THE FUND NOR THE PRIOR INDEX LEVELS AND CHANGES,

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Performance Summary

This Report covers the three and six months ended June 30, 2024 and 2023.

This Report covers the three and nine months ended September 30, 2024 and 2023.

Past performance of the Fund is not necessarily indicative of future performance.

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Past results of the DBIQ-OY Industrial Metals TR are not necessarily indicative of future changes, positive or negative, in the closing levels of the DBIQ-OY Industrial Metals TR.

The section “Summary of the DBIQ-OY Industrial Metals TR and Underlying Index Commodity Returns for the Three and Six Months Ended June 30, 2024 and 2023” below provides an overview of the changes in the closing levels of the DBIQ-OY Industrial Metals TR by disclosing the change in market value of each underlying component Index Commodity through a “surrogate” (and analogous) index that also reflects 3-month United States Treasury Obligations returns.

The section “Summary of the DBIQ-OY Industrial Metals TR and Underlying Index Commodity Returns for the Three and Nine Months Ended September 30, 2024 and 2023” below provides an overview of the changes in the closing levels of the DBIQ-OY Industrial Metals TR by disclosing the change in market value of each underlying component Index Commodity through a “surrogate” (and analogous) index that also reflects 3-month United States Treasury Obligations returns.

Please note also that the Fund’s objective is to track the Index (not the DBIQ-OY Industrial Metals TR), and the Fund does not attempt to outperform or underperform the Index.

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Summary of the DBIQ-OY Industrial Metals TR and Underlying Index Commodity

Returns for the Three and Six Months Ended June 30, 2024 and 2023

Returns for the Three and Nine Months Ended September 30, 2024 and 2023

AGGREGATE RETURNS FOR INDICES IN THE DBIQ-OY INDUSTRIAL METALS TR

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Underlying Index

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If the Fund’s fees and expenses were to exceed the Fund’s Treasury Income, Money Market Income and T-Bill ETF Income, if any, the aggregate return on an investment in the Fund is expected to underperform the Excess Return Index.

FOR THE THREE MONTHS ENDED JUNE 30, 2024 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2023

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2023

Fund Share Price Performance

For the three months ended June 30, 2024, the NYSE Arca market value of each Share increased from $17.95 per Share to $20.11 per Share.

The Share price low and high for the three months ended June 30, 2024 and related change from the Share price on March 31, 2024 was as follows:

Shares traded at a low of $18.10 per Share (0.81%) on April 1, 2024 and a high of $21.65 per Share (20.58%) on May 24, 2024.

For the three months ended September 30, 2024 the NYSE Arca market value of each Share increased from $20.11 per Share to $20.80 per Share.

The Share price low and high for the three months ended September 30, 2024 and related change from the Share price on June 30, 2024 was as follows:

Shares traded at a low of $18.09 per Share (-10.07%) on August 7, 2024 and a high of $20.99 per Share (+4.35%) on September 26, 2024.

The total return for the Fund on a market value basis was +3.43%.

Industrial metals saw strong positive performance in the second quarter of 2024.

Zinc was the top performer among the three metals included in the Fund, with front month prices up over 20% as the consequences of tight concentrate supplies and plunging treatment charges rippled through the processing chains.

Copper and aluminum also continued their supply-driven gains through most of May, with copper even experiencing a short squeeze, sending prices to a record high.

However, both retreated on increased profit-taking and hawkish Federal Reserve rhetoric.

This dented broader investor risk appetite which had improved in the first quarter on hopes that the Federal Reserve would start cutting rates imminently.

Adding to the bullish sentiment, the US and United Kingdom ("UK") issued fresh sanctions on Russian copper, aluminum, and nickel in April.

However, physical markets did turn weaker in June as China remained well-supplied in copper and European zinc smelters announced plans to restart.

For the three months ended June 30, 2023, the NYSE Arca market value of each Share decreased from $20.19 per Share to $17.97 per Share.

The Share price low and high for the three months ended June 30, 2023 and related change from the Share price on March 31, 2023 was as follows:

Shares traded at a low of $17.50 per Share (-13.30% ) on May 25, 2023 and a high of $20.09 per Share (-0.50%) on April 18, 2023.

Industrial metals performed positively in the third quarter of 2024.

While China’s stalled economy continued to paint a more pessimistic backdrop, anticipation leading into the first Federal Reserve interest rate cut and China’s optimistic stimulus announcement provided a boost for the complex to end the quarter.

The kickoff of the Federal Reserve's easing of interest rates and the surprise hike in Japanese rates also weighed on the US dollar.

Commodity-wise, zinc was the strongest performer supported by persisting concentrate supply tightness.

For the three months ended September 30, 2023, the NYSE Arca market value of each Share increased from $17.97 per Share to $19.15 per Share.

The Share price low and high for the three months ended September 30, 2023 and related change from the Share price on June 30, 2023 was as follows:

Shares traded at a low of $17.69 per Share (-1.59%) on August 16, 2023 and a high of $19.22 per Share (+6.93%) on July 31, 2023.

The total return for the Fund on a market value basis was +6.57%.

Following the slight positive performance in the first quarter, industrial metals plunged sharply in the second quarter of 2023 with aluminum, copper and zinc all detracting from the Fund’s performance.

Zinc fared the worst among the three with front month prices dropping nearly 20% through the quarter as Chinese demand continued to disappoint and smelters were expected to restart amid the plunge in energy prices.

Aluminum front month futures also fell over 10% on the same reasons, though production curtailments in Yunnan, China due to their hydropower shortage limited some of the downside.

China stimulus expectations also provided some support for copper, but the metal still posted a loss.

Base metals posted positive performance in the third quarter of 2023, though most of it was attributed to the improving macro sentiment.

Despite the Federal Reserve’s commitment to its higher-for-longer narrative, confidence that the tightening was near an end grew.

However, China continued to be a key headwind with the steady stream of disappointing economic data and lack of clarity around additional stimulus measures driving the growth in bearish positions and capping the upside.

Aluminum and zinc both surged to end September as LME stocks once again fell towards historically low levels due to large withdrawals in Asia, which led to a round of short covering among bearish investors which helped to push prices even higher.

Copper, on the other hand, remained pressured as inventories continued to recover amid the China gloom.

US dollar strength also pressured prices.

Fund Share Net Asset Performance

For the three months ended June 30, 2024, the NAV of each Share increased from $17.94 per Share to $20.16 per Share.

Rising commodity futures contract prices for aluminum, zinc and copper during the three months June 30, 2024 contributed to an overall 11.20% increase in the level of the Index and to a 12.70% increase in the level of the DBIQ-OY Industrial Metals TR.

For the three months ended September 30, 2024, the NAV of each Share increased from $20.16 per Share to $20.81 per Share.

Rising commodity futures contract prices for aluminum, zinc and copper during the three months September 30, 2024 contributed to an overall 2.04% increase in the level of the Index and to a 3.40% increase in the level of the DBIQ-OY Industrial Metals TR.

The total return for the Fund on a NAV basis was +3.22%.

Net income (loss) for the three months ended June 30, 2024 was $14.6 million, primarily resulting from $2.0 million of income, net realized gain (loss) of $6.7 million, net change in unrealized gain of $6.2 million and net operating expenses of $0.3 million.

For the three months ended June 30, 2023, the NAV of each Share decreased from $20.21 per Share to $17.94 per Share.

Falling commodity futures contract prices for aluminum, zinc and copper during the three months ended June 30, 2023 contributed to an overall 12.44% decrease in the level of the Index and to a 11.31% decrease in the level of the DBIQ-OY Industrial Metals TR.

Net income (loss) for the three months ended September 30, 2024 was $2.0 million, primarily resulting from $1.7 million of income, net realized gain (loss) of $0.2 million, net change in unrealized gain of $0.4 million and net operating expenses of $0.3 million.

For the three months ended September 30, 2023, the NAV of each Share increased from $17.95 per Share to $19.12 per Share.

Rising commodity futures contract prices for aluminum, zinc and copper during the three months ended September 30, 2023 contributed to an overall 5.31% increase in the level of the Index and to a 6.73% increase in the level of the DBIQ-OY Industrial Metals TR.

The total return for the Fund on a NAV basis was +6.52%.

Net income (loss) for the three months ended June 30, 2023 was $(24.4) million, primarily resulting from $3.1 million of income, net realized gain (loss) of $(30.8) million, net change in unrealized gain (loss) of $3.6 million and net operating expenses of $0.4 million.

FOR THE SIX MONTHS ENDED JUNE 30, 2024 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2023

Net income (loss) for the three months ended September 30, 2023 was $10.1 million, primarily resulting from $2.3 million of income, net realized gain (loss) of $(10.4) million, net change in unrealized gain (loss) of $18.6 million and net operating expenses of $0.3 million.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2023

Fund Share Price Performance

For the six months ended June 30, 2024, the NYSE Arca market value of each Share increased from $18.31 per Share to $20.11 per Share.

The Share price low and high for the six months ended June 30, 2024 and related change from the Share price on December 31, 2023 was as follows:

For the nine months ended September 30, 2024, the NYSE Arca market value of each Share increased from $18.31 per Share to $20.80 per Share.

The Share price low and high for the nine months ended September 30, 2024, and related change from the Share price on December 31, 2023 was as follows:

Shares traded at a low of $16.80 per Share (-8.25%) on February 9, 2024, and a high of $21.65 per Share (+18.25%) on May 21, 2024.

The total return for the Fund on a market value basis was +13.60%.

Industrial metals ended the first half of 2024 in positive territory with all three metals included in the Fund posting gains.

Industrial metals ended the first three quarters of 2024 in positive territory with all three metals included in the Fund posting gains.

Copper and zinc were supported by shortfalls in concentrate supplies and plunging treatment and refining charges i.e., the profit for smelters to refine the metal, forcing cutbacks in refined metal supply.

Aluminum was the weakest of the three but still gained significantly on tightening physical fundamentals.

Adding to this, the US and UK issued fresh sanctions on Russian copper, aluminum, and nickel in April.

Furthermore, an improving macro backdrop, bolstered by expectations for a soft landing in the US and brighter Chinese outlook, underpinned stronger prices.

However, the sector did retreat sharply through June with Federal Reserve rate cut expectations repeatedly being pushed out and physical markets turning weaker – China remained well-supplied in copper and European zinc smelters announced plans to restart idled capacity.

For the six months ended June 30, 2023, the NYSE Arca market value of each Share decreased from $19.57 per Share to $17.97 per Share.

The Share price low and high for the six months ended June 30, 2023 and related change from the Share price on December 31, 2022 was as follows:

Adding to this, the US and United Kingdom issued fresh sanctions on Russian copper, aluminum, and nickel in April.

Furthermore, an improving macro backdrop, bolstered by expectations for a soft landing in the US and brighter Chinese outlook, underpinned stronger prices especially in the third quarter.

The kickoff of the Federal Reserve's easing cycle and China’s surprise stimulus in September marked a key shift in sentiment.

For the nine months ended September 30, 2023, the NYSE Arca market value of each Share decreased from $19.57 per Share to $19.15 per Share.

The Share price low and high for the nine months ended September 30, 2023 and related change from the Share price on December 31, 2022 was as follows:

Shares traded at a low of $17.50 per Share (-10.58%) on May 25, 2023, and a high of $22.28 per Share (+13.82%) on January 26, 2023.

The total return for the Fund on a market value basis was -2.15%.

While industrial metals posted slight positive performance in the first quarter, the complex plunged sharply in the second quarter of 2023, leaving the Fund in deep negative territory year-to-date.

For the first quarter, while all of the Fund’s components rallied in January, continuing its China and “Fed-pivot” driven rally from year-end 2022, prices eased through February and the first half of March, pressured by hotter-than-expected labor data, resilient US inflation and a lack of bullish data out of China to support indications the country was reopening.

A broader risk-off move triggered by the turmoil in the banking sector also pressured the commodities in general to end the quarter.

However, in the second quarter, continued disappointing Chinese data, coupled with expectations for smelter restarts amid weak energy prices and easing supply concerns, dealt a heavy blow to the commodity sector.

Industrial metals ended the first three quarters of 2023 down slightly.

A broader risk-off move triggered by the turmoil in the banking sector also pressured commodities in general, to end the quarter.

In the second quarter, continued disappointing Chinese data, coupled with expectations for smelter restarts amid weaker energy prices and easing supply concerns, dealt a heavy blow to the commodity sector.

While the sector recovered a bit in the third quarter on improving macro sentiment and renewed supply concerns, triggering a short covering rally, it still fell short of reversing second quarter losses.

Fund Share Net Asset Performance

For the six months ended June 30, 2024, the NAV of each Share increased from $18.28 per Share to $20.16 per Share.

Rising commodity futures contract prices for aluminum, zinc and copper during the six months ended June 30, 2024 contributed to an overall 7.88% increase in the level of the Index and to a 10.79% increase in the level of the DBIQ-OY Industrial Metals TR.

For the nine months ended September 30, 2024, the NAV of each Share increased from $18.28 per Share to $20.81 per Share.

Rising commodity futures contract prices for aluminum, zinc and copper during the nine months ended September 30, 2024 contributed to an overall 10.09% increase in the level of the Index and to a 14.56% increase in the level of the DBIQ-OY Industrial Metals TR.

The total return for the Fund on a NAV basis was +13.84%.

Net income (loss) for the six months ended June 30, 2024 was $12.4 million, primarily resulting from $3.7 million of income, net realized gain (loss) of $6.6 million, net change in unrealized gain of $2.6 million and net operating expenses of $0.5 million.

For the six months ended June 30, 2023, the NAV of each Share decreased from $19.50 per Share to $17.95 per Share.

Falling commodity futures contract prices for aluminum and zinc were partially offset by rising commodity for copper during the six months ended June 30, 2023 contributed to an overall 10.45% decrease in the level of the Index and to a 8.22% decrease in the level of the DBIQ-OY Industrial Metals TR.

Net income (loss) for the nine months ended September 30, 2024 was $14.4 million, primarily resulting from $5.4 million of income, net realized gain (loss) of $6.8 million, net change in unrealized gain (loss) of $3.0 million and net operating expenses of $0.8 million.

For the nine months ended September 30, 2023, the NAV of each Share decreased from $19.50 per Share to $19.12 per Share.

Falling commodity futures contract prices for aluminum and zinc were partially offset by rising commodity for copper during the nine months ended September 30, 2023, contributing to an overall 5.70% decrease in the level of the Index and to a 2.04% decrease in the level of the DBIQ-OY Industrial Metals TR.

The total return for the Fund on a NAV basis was -1.95%.

Net income (loss) for the six months ended June 30, 2023 was $(18.6) million, primarily resulting from $6.8 million of income, net realized gain (loss) of $(42.9) million, net change in unrealized gain (loss) of $18.3 million and net operating expenses of $0.8 million.

Net income (loss) for the nine months ended September 30, 2023 was $(8.5) million, primarily resulting from $9.0 million of income, net realized gain (loss) of $(53.3) million, net change in unrealized gain (loss) of $36.9 million and net operating expenses of $1.1 million.

Critical Accounting Estimates

21 unchanged sentences

The Fund calculates VaR using the actual historical market movements of the Fund’s net assets.

The following table indicates the trading VaR associated with the Fund’s net assets as of June 30, 2024.

For the Six Months Ended

June 30, 2024

The following table indicates the trading VaR associated with the Fund’s net assets as of September 30, 2024.

For the Nine Months Ended

September 30, 2024

Daily Volatility

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The following qualitative disclosures regarding the Fund’s market risk exposures—except for those disclosures that are statements of historical fact—constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.

The Fund’s primary market risk exposures are subject to numerous uncertainties, contingencies and

The Fund’s primary market risk exposures are subject to numerous uncertainties, contingencies and risks.

Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures of the Fund.

1 unchanged sentence

Investors may lose all or substantially all of their investment in the Fund.

The following were the primary trading risk exposures of the Fund as of June 30, 2024 by Index Commodity:

The following were the primary trading risk exposures of the Fund as of September 30, 2024 by Index Commodity:

The price of aluminum is volatile.

31 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis