Filed Pursuant to Rule 424(b)(3)
Registration Nos. 333-228404
333-228404-02
333-228404-03
333-228404-04
333-228404-05
PROSPECTUS SUPPLEMENT NO. 1
(to Prospectus dated August 27, 2019)
INVESCO DB MULTI-SECTOR COMMODITY TRUST
INVESCO DB OIL FUND
49,000,000 Common Units of Beneficial Interest
INVESCO DB PRECIOUS METALS FUND
19,600,000 Common Units of Beneficial Interest
INVESCO DB GOLD FUND
11,600,000 Common Units of Beneficial Interest
INVESCO DB BASE METALS FUND
21,200,000 Common Units of Beneficial Interest
This Prospectus Supplement No. 1 (“Supplement No. 1”) supplements and amends the Prospectus dated August 27, 2019 (the “Prospectus”).
Effective immediately, the following risk factor is added to the section of the Prospectus titled “Risk Factors—Futures Risks” immediately after the section heading on page 17.
Margin Requirements and Risk Limits for Futures Contracts may Limit a Fund’s Ability to Achieve Sufficient Exposure and Prevent the Fund from Achieving its Investment Objective
“Initial” or “original” margin is the minimum amount of funds that must be deposited by a futures trader with his commodity broker in order to initiate futures trading or to maintain an open position in futures contracts. “Maintenance” margin is the amount (generally less than initial margin) to which a trader’s account may decline before he must deliver additional margin. A margin deposit is like a cash performance bond. It helps assure the futures trader’s performance of the futures contract that the trader purchases or sells. Futures contracts are customarily bought and sold on margin that represents a very small percentage (ranging upward from less than 2%) of the purchase price of the underlying commodity being traded. Because of such low margins, price fluctuations occurring in the futures markets may create profits and losses that are greater, in relation to the amount invested, than are customary in other forms of investments. The minimum amount of margin required in connection with a particular futures contract is set from time to time by the exchange on which such contract is traded, and may be modified from time to time by the exchange during the term of the contract. With respect to the Managing Owner’s trading, only the Managing Owner, and not a Fund or its Shareholders personally, will be subject to margin calls.
Brokerage firms carrying accounts for traders in futures contracts may not accept lower, and generally require higher, amounts of margin as a matter of policy in order to afford further protection for themselves.
An FCM may compute margin requirements multiple times per day and must do so at least once per day. When a Fund has an open futures contract position, it is subject to daily variation margin calls by an FCM that could be substantial in the event of adverse price movements. Because futures contracts require only a small initial investment in the form of a deposit or initial margin, they involve a high degree of leverage. A Fund with open positions is subject to maintenance or variation margin on its open positions. When the market value of a particular open futures contract position changes to a point where the margin on deposit does not satisfy maintenance margin requirements, a margin call is made by the FCM. If the margin call is not met within a reasonable time, the FCM may close out a Fund’s position, which may result in reduced returns to the Fund’s investors or impair the Fund from achieving its investment objective. If a Fund has insufficient cash to meet daily variation margin requirements, it may need to sell assets at a time when doing
so is disadvantageous. Futures markets are highly volatile in general, and may become more volatile during periods of market or economic volatility, and the use of or exposure to futures contracts may increase volatility of a Fund’s NAV.
In addition, an FCM may impose margin requirements in addition to those imposed by the clearinghouse. Margin requirements are subject to change on any given day, and may be raised in the future on a single day or on multiple or successive days by either or both of the clearinghouse and the FCM. High margin requirements could prevent a Fund from obtaining sufficient exposure to futures contracts and may adversely affect the Fund’s ability to achieve its investment objective. An FCM’s failure to return required margin to a Fund on a timely basis may cause the Fund to delay redemption settlement dates or restrict, postpone, or limit the right of redemption.
Futures contracts are subject to liquidity risk. An FCM may impose risk limits on a Fund, which restrict the amount of exposure to futures contracts that the Fund can obtain through the FCM. If the risk limits imposed by an FCM do not provide sufficient exposure, a Fund may not be able to achieve its investment objective.
Furthermore, effective immediately, the following disclosure is added after the first full paragraph in the risk factor titled “There May Be Circumstances That Could Prevent a Fund from Being Operated in a Manner Consistent with its Investment Objective” on page 25 of the section of the Prospectus titled “Risk Factors—Other Risks”.
Additionally, 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 a Fund’s investments. 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 a Fund’s investments and could result in increased premiums or discounts to the Fund’s NAV. Additionally, the Funds rebalance their portfolios in accordance with the applicable Index, and, therefore, any changes to an Index’s rebalance schedule will result in corresponding changes to the relevant Fund’s rebalance schedule.
Finally, effective immediately, the following risk factor is added to the section of the Prospectus titled “Risk Factors—Other Risks” after the last paragraph beginning on page 26.
Risk that the Invesco DB Oil Fund Will Experience Losses As a Result of Global Economic Shocks
In March 2020, U.S. equity markets entered a bear market in the fastest such move in the history of U.S. financial markets. Although oil prices rallied during 2019 with higher prices supported by continued compliance with OPEC+ production cuts, US sanctions against Venezuela and Iran, and tension in the Gulf region, prices fell to an18-year low in March 2020. Contemporaneous with the onset of the novel coronavirus(COVID-19) pandemic in the US, oil experienced shocks to supply and demand, impacting the price and volatility of oil. The global economic shocks being experienced as of the date hereof may cause significant losses to the Invesco DB Oil Fund.
Shares of the Invesco DB Oil Fund, Invesco DB Precious Metals Fund, Invesco DB Gold Fund and Invesco DB Base Metals Fund are listed on NYSE Arca, Inc. under the symbols “DBO,” “DBP,” “DGL” and “DBB,” respectively.
Investing in the Shares involves significant risks. See“RISK FACTORS” starting on page 14 of the Prospectus.
These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission passed upon the adequacy or accuracy of the Prospectus or this Prospectus Supplement No. 1. Any representation to the contrary is a criminal offense.
The Funds are not mutual funds or any other type of investment company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
The date of this Prospectus Supplement No. 1 is April 7, 2020.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
P-DBMSC-PRO-1-SUP-1 040720
