PowerShares Income ETFs

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1 Invesco PowerShares Leading the Intelligent ETF Revolution PowerShares Income ETFs 1 P-BROOKS-PPT-1I FOR US INSTITUTIONAL USE ONLY NOT FOR USE WITH THE PUBLIC

2 Fixed Income ETFs: Significant growth in recent years The first fixed income ETFs were launched in 2002, but 84% of total flows have been post Nearly 40 million shares of fixed income ETFs trade on an average day, with a notional value of over $3B. Source: Morningstar Direct, Bloomberg LP, as of July 31,

3 Fixed Income ETF Sector Timeline: Slicing and dicing the fixed income market Intermediate Corporate # of Funds as of July 31, 2012 Long Corporate Intermediate Gov t Foreign Bond Short Gov t TIPS High Yield Emerging Markets Long Gov t Short Corporate Mortgage Backed Ultra Short Corp. Nat l Long California NY Nat l Short Nat l Interm HY Bank Loan Source: Morningstar Direct, as of July 31,

4 Senior Loans: A different form of debt capital Senior Secured Floating Rate In the event of financial hardship, senior loans have first claim to repayment. Company assets are typically pledged as collateral to secure senior loans. The coupons on senior loans are generally in addition to LIBOR. Priority of Repayment in the Event of Default: High Priority Senior Secured Loans Bonds Preferred Stock Common Stock Low Priority Average Ultimate Recovery Rates: Prices Fixed Rate Bonds Floating Rate Loans Interest Rates For illustrative purposes only. Does not represent actual prices. Loans 80.3% Subordinated Bonds 28.7% Source: Moody s Annual Default Study, February 2012 Senior Loans are typically non investment grade, or high yield, securities (junk bonds). High yield securities have additional risks, including interest rate changes, decreased market liquidity and a larger amount of outstanding debt than investment grade securities. Investors of senior loans may not be able to enforce all rights and remedies under the loan including any associated collateral. If the loan is foreclosed, the investor may become part owner of any collateral and may bear the costs and liabilities of owning and disposing of the collateral. 4

5 PowerShares Senior Loan Portfolio Fund Details: Ticker: BKLN Underlying Index: S&P/LSTA U.S Leveraged Loan 100 Index Listing Exchange: NYSE Arca Inception Date: March 3, 2011 Net Expense Ratio: 0.76% Creation Unit Size: 100,000 shares Creation/Redemption: Cash Distribution Frequency: Monthly Management: Passive/Sampled August 27, 2012 AUM: $717M 5

6 Low Volatility: Source of Income 6 Source: Bloomberg LP, S&P, May 5, 2011 to August 27, 2012 S&P Low Volatility Index S&P 500 Index Annualized Return (%) Standard Deviation Return/Risk Average Daily Yield (%) An investor cannot invest directly in an index. The results assume that no cash was added to or assets withdrawn from the Index. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.

7 PowerShares Low Volatility Portfolio Fund Details: Ticker: SPLV Underlying Index: S&P 500 Low Volatility Index Listing Exchange: NYSE Arca Inception Date: May 5, 2011 Net Expense Ratio: 0.25% Creation Unit Size: 50,000 shares Creation/Redemption: In kind Distribution Frequency: Monthly Management: Passive/Replication August 27, 2012 AUM: $2.3B 7

8 PowerShares Income ETF Lineup As of June 30, 2012 Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares when redeemed, may be worth more or less than their original cost. See invescopowershares.com to find the most recent month end performance numbers. 8

9 Thematic Income Portfolios For illustrative purposes only and not intended to depict actual portfolios. Yields and expense ratios are a weighted average of the funds represented in each model. Yields are SEC 30 day yields as of June 30,

10 Important Risk Information for BKLN The Fund s use of a representative sampling approach will result in its holding a smaller number of securities than are in the underlying Index, and may be subject to greater volatility. The Fund is considered non diversified and may be subject to greater risks than a diversified fund. Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility than more diversified investments. The Fund may invest in non investment grade, or high yield, securities (junk bonds). High yield securities have additional risks, including interest rate changes, decreased market liquidity and a larger amount of outstanding debt than investment grade securities. The Fund currently intends to effect creations and redemptions principally for cash, rather than principally in kind because of the nature of the Fund s investments. As such, investments in the Fund may be less tax efficient than investments in ETFs that create and redeem in kind. Investments in loans are subject to interest rate risk and credit risk. Interest rate risk refers to fluctuations in the value of a loan resulting from changes in the general level of interest rates. Credit risk refers to the possibility that the borrower of a loan will be unable and/or unwilling to make timely interest payments and/or repay the principal on its obligation. There is no organized exchange on which loans are traded and reliable market quotations may not be readily available. As the purchaser of a loan assignment, the Fund typically succeeds to all assigning institution rights and obligations and becomes a lender under the credit agreement with respect to the debt obligation. However, the Fund may not be able to enforce all rights and remedies under the loan including any associated collateral. If the loan is foreclosed, the Fund may become part owner of any collateral and may bear the costs and liabilities of owning and disposing of the collateral. The Fund may be required to pass on to a purchaser that buys a loan from the Fund a portion of fees it is entitled to under the loan. In connection with purchasing loan participations, the Fund will have no right to enforce borrower compliance with the terms of the loan agreement, nor any rights of set off against the borrower, and the Fund may not benefit from any collateral supporting the loan. Consequently, the Fund will be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, the Fund may be treated as the lender s general creditor and may not benefit from any set off between the lender and the borrower. Proceeds from a current investment of the Fund, both interest payments and principal payments, may be reinvested in instruments that offer lower yields than the current investment due in part to market conditions and the interest rate environment at the time of reinvestment. The Fund may invest all or a portion of its assets in loans of non U.S. borrowers. Loans of non U.S. borrowers have additional risks, including decreased market liquidity, political instability and taxation by foreign governments. 10

11 SPLV Risk Information The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Unforeseen market conditions may prevent the fund from achieving its goal of providing low volatility. The Fund is non diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC ("Standard & Poor's") and have been licensed for use by the Adviser. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's or its Affiliates, and Standard & Poor's and its Affiliates make no representation, warranty or condition regarding the advisability of buying, selling or holding shares of the Fund. Invesco Distributors, Inc. is the distributor of the PowerShares Exchange Traded Fund Trust, the PowerShares Exchange Traded Fund Trust II, the PowerShares India Exchange Traded Fund Trust and the PowerShares Actively Managed Exchange Traded Fund Trust. PowerShares is a registered trademark of Invesco PowerShares Capital Management LLC. Invesco PowerShares Capital Management LLC (Invesco PowerShares) and Invesco Distributors, Inc. are indirect, wholly owned subsidiaries of Invesco Ltd. An investor should consider the Funds investment objectives, risks, charges and expenses carefully before investing. For this and more complete information about the Funds call or visit invescopowershares.com for a prospectus. Please read the prospectus carefully before investing. 11