Company Overview

Invesco DB Base Metals Fund is a commodity pool that trades futures contracts in aluminum, copper, and zinc with the goal of tracking the DBIQ Optimum Yield Industrial Metals Index. The Fund was formed in 2006 and is managed by Invesco Capital Management LLC.

The Fund has returned -1.86% over the past three months based on its net asset value (NAV). This was driven by falling aluminum and zinc futures prices, partially offset by rising copper futures. The Fund’s market price per share has decreased from $18.31 to $17.95 over the quarter.

Revenue and Profit Analysis

The Fund had a net loss of $2.2 million over the past three months. This loss was caused by:

• $1.6 million in interest income
• $(0.1) million net realized trading loss
• $(3.5) million loss from the change in unrealized value of futures positions
• $0.2 million in operating expenses

The unrealized trading losses show that the value of the Fund’s open futures positions has declined, likely driven by the drop in aluminum and zinc futures. The realized trading loss was minor, indicating the Fund’s trading activity was not highly profitable. Interest income made up the majority of the Fund’s revenue.

Balance Sheet and Liquidity

The Fund meets asset margin requirements and pays expenses by holding U.S. Treasury Bills, money market mutual funds, and affiliated ETFs. The Fund held around $6 million in Treasury Bills during the quarter.

The Fund has no outstanding debt or liquidity issues. It is able to generate cash when needed by issuing new shares to authorized participants or as futures positions are closed. The Fund is not using any off-balance sheet financing structures.

Market and Credit Risk Discussion

The Fund has market risk tied to the volatility of commodity futures prices. There is an inherent uncertainty in the futures market that could lead to losses. Credit risk also exists where counterparties may default on their obligations in relation to the Fund’s trading activities.

No trends were noted to significantly impact the Fund’s liquidity going forward. The Fund appears to have strong access to capital and cash.

Outlook

There are no known material trends, demands, or uncertainties expected to affect the Fund’s performance or capital resources. Performance is primarily driven by the Fund’s trading strategy and broader commodity futures price changes.

While industrial metal performance was mixed this quarter, fundamentals seem largely positive - particularly for copper. Supply shortfalls and expanded Chinese smelting could continue to support copper and nickel prices. However, China’s weakening property sector may weigh on metals like iron ore and zinc.