Company Overview

Invesco DB US Dollar Index Bearish Fund is an exchange-traded fund (ETF) that aims to track changes in the Deutsche Bank Short US Dollar Currency Portfolio Index. The ETF does this by taking short positions in currency futures contracts linked to the US dollar versus a basket of major currencies (euro, yen, pound, Canadian dollar, Swedish krona, Swiss franc). The company uses investors’ capital to trade these currency futures while also holding some cash and US Treasury bonds to earn extra interest income.

Financial Performance

In the first three months of 2024, the ETF’s net asset value (NAV) per share fell 2.33% from $18.42 to $17.99. This compares to a NAV gain of 1.51% in the first quarter of 2023. The losses in early 2024 were driven by a rise in the US dollar versus major currencies, which led to declines in the Deutsche Bank currency index that the ETF aims to track.

Over the past year, the ETF has seen declines in both revenue and profits. Net investment income was $0.21 per share in Q1 2024, down from $0.17 per share in Q1 2023. Meanwhile, net realized and unrealized losses on investments widened from $0.11 per share to $0.64 per share over the same period.

Investment Strategy Performance

The ETF aims to match performance of the Deutsche Bank Short USD Currency Portfolio Index Excess Return. This index fell 2.17% in the first three months of 2024, which explains most of the 2.33% NAV decline for the ETF itself.

The index and ETF lost ground as the US dollar strengthened versus a basket of major currencies. This led to declines in the value of short US dollar positions held by the ETF.

So far in 2024, the ETF has seen poor returns from its investment strategy of shorting the US dollar. However, performance was positive in 2023 as the US dollar weakened.

Financial Position

As of March 31, 2024, the ETF had total assets of $XXX million, with around X% of assets held in cash, money market funds and US Treasury bonds. The large cash and bond position is used to back the currency futures trades and provide extra income.

The fund has no outstanding debt on its balance sheet. From an operational perspective, expenses are dominated by management fees paid to the investment manager as well as trading commissions. Both are variable based on the size and trading volume of the fund.

Liquidity risk appears low as the ETF offers creation/redemption baskets to authorized participants on a daily basis. This helps ensure the fund can meet redemptions.

Future Outlook

The near-term outlook depends primarily on direction of the US dollar versus other major currencies. If the recent dollar rally stalls or reverses, the ETF’s short dollar strategy could begin working again. However, further dollar strength would lead to additional losses.

Beyond currency moves, rising interest rates could provide a small boost to income generated from the Treasury bonds held by the fund. However, higher rates would also feed into dollar strength.

The ETF will aim to maintain high correlation with the Deutsche Bank currency index by actively managing its portfolio of short-dated currency futures contracts. However, investors should expect some performance differences from fees and income generation.

Tables:

Net Asset Value per Share

| March 31, 2024 | March 31, 2023 |

$17.99

$18.78

Total Return at Net Asset Value

| March 31, 2024 | March 31, 2023 |

-2.33%

1.51%

Expenses Ratio

| March 31, 2024 | March 31, 2023 |

0.72%

0.74%