BSMR | Invesco BulletShares 2027 Municipal Bond ETF

BSMR ISSUER

The INVESCO ETF, managed by Invesco Indexing LLC, maintains a strategic focus on the U.S. municipal bond market through its investment in the Underlying Index. This index, overseen by the affiliated Index Provider, aims to track the performance of U.S. dollar-denominated investment-grade municipal bonds maturing or effectively maturing in 2027, including those with embedded issuer call options. The selection process for inclusion in the index involves rigorous criteria such as federal tax exemption, fixed interest payments, and minimum credit ratings from major agencies. With a market value weighting system and limits on individual issuers, the index provides diversified exposure to the municipal bond landscape. As the Fund approaches its termination date in December 2027, it will shift its investments towards variable rate demand obligations (VRDOs), derivatives, ETFs, and other instruments to ensure an orderly wind-down process. Notably, the Fund's investment strategy is distinct from target date funds, utilizing a sampling methodology and concentration policy to effectively manage sectoral risks while seeking to achieve its investment objectives.

BSMR DIVIDEND

The INVESCO ETF, which tracks the performance of the Underlying Index managed by Invesco Indexing LLC, operates with a unique approach to dividends. Given its focus on U.S. dollar-denominated investment-grade municipal bonds maturing or effectively maturing in 2027, the ETF primarily generates income through fixed interest payments from its bond holdings. As such, investors can expect periodic distributions reflecting the interest income earned by the underlying bonds held within the portfolio. However, it's important to note that the Fund's dividend payouts may vary based on factors such as changes in interest rates, bond maturities, and any embedded issuer call options within the bond holdings. Additionally, as the Fund approaches its termination date in December 2027, the composition of its holdings may evolve to include other instruments such as variable rate demand obligations (VRDOs), derivatives, or ETFs, potentially impacting its dividend distribution pattern. Investors should carefully consider these factors when evaluating the dividend potential of the INVESCO ETF.

BSMR TRACKING

The tracking performance of the INVESCO ETF, which seeks to replicate the performance of the Underlying Index managed by Invesco Indexing LLC, is central to its investment strategy. With a focus on U.S. dollar-denominated investment-grade municipal bonds maturing or effectively maturing in 2027, the ETF employs a meticulous methodology to track the index's movements. This includes strict adherence to the index's guidelines and criteria, overseen by the affiliated Index Provider, to compile and maintain an optimized portfolio of municipal bonds. Through market value weighting and limits on individual issuers, the ETF endeavors to closely mirror the performance of the index while managing risks associated with concentration and sectoral exposure. However, factors such as changes in interest rates, bond maturities, and market conditions may impact tracking performance over time. Nevertheless, the Fund aims to provide investors with efficient exposure to the municipal bond market, offering a reliable tool for accessing this segment of the fixed income universe.

BSMR CORRELATION

The correlation between the INVESCO ETF and its benchmark, the Underlying Index managed by Invesco Indexing LLC, is a critical aspect of evaluating its performance and effectiveness. With a focus on U.S. dollar-denominated investment-grade municipal bonds maturing or effectively maturing in 2027, the ETF strives to closely track the movements of the index. This correlation is influenced by various factors, including the ETF's adherence to the index's guidelines, the selection of constituent bonds, and market conditions affecting the municipal bond market. While the ETF aims to replicate the performance of the index, perfect correlation may not always be achievable due to factors such as tracking error, market volatility, and liquidity constraints. Nonetheless, investors can expect the ETF to exhibit a strong correlation with the index over time, providing a reliable means of gaining exposure to the targeted segment of the fixed income market.

BSMR SECTOR

The sector focus of the INVESCO ETF centers around the U.S. municipal bond market, specifically targeting U.S. dollar-denominated investment-grade municipal bonds with maturities or effective maturities in 2027. This sectoral emphasis aligns with the objective of the Underlying Index managed by Invesco Indexing LLC, which seeks to measure the performance of such bonds. As a result, the ETF's portfolio predominantly consists of municipal bonds issued by U.S. states, state agencies, territories and possessions of the United States, the District of Columbia, or local governments. These bonds typically finance public infrastructure projects and essential services at the local level, contributing to the stability and growth of communities across the nation. With a sectoral concentration on municipal bonds, the INVESCO ETF offers investors exposure to a segment of the fixed income market known for its relative stability and tax-exempt income benefits, thus serving as a potential diversification tool within broader investment portfolios.

BSMR EXPOSURE

The exposure provided by the INVESCO ETF revolves around the U.S. municipal bond market, specifically targeting U.S. dollar-denominated investment-grade municipal bonds with maturities or effective maturities in 2027. Managed by Invesco Indexing LLC, the ETF seeks to replicate the performance of the Underlying Index by investing in a diversified portfolio of municipal bonds issued by various entities within the United States. These bonds typically finance critical infrastructure projects and essential services at the local level, offering investors the potential for stable income streams and tax-exempt benefits. The ETF's exposure strategy emphasizes adherence to the index's guidelines and criteria, ensuring alignment with the targeted segment of the fixed income market. However, investors should be mindful of factors such as interest rate fluctuations, credit risk, and liquidity constraints, which may impact the ETF's exposure and performance over time. Overall, the INVESCO ETF provides a convenient and efficient means for investors to gain exposure to the U.S. municipal bond market within their investment portfolios.