investing in international corporate...

P-PICB-PPT-1I 03.111

Investing in International Corporate Bonds

Invesco PowerShares Leading the Intelligent ETF Revolution®

Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 50,000 Shares.

NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE

P-PICB-PPT-1I 03.11 invescopowershares.com2

Investing in International Corporate Bonds │ Important Information

Important InformationPowerShares® 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. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and have been licensed for use by Invesco PowerShares Capital Management LLC. The fund is not sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P and its affiliates make no representation, warranty or condition regarding the advisability of buying, selling or holding units/shares in the fund.

There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply.

The Fund invests in debt securities, which carry interest rate and credit risk. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. Credit risk is the risk of loss on an investment due to the deterioration of an issuer’s financial health.

The Fund invests in corporate bonds issued by non-U.S. companies. Much of the income received by the Fund will be in foreign currencies and is subject to the fluctuation of foreign currencies relative to the U.S. dollar. Foreign securities have additional risks, including exchange-rate changes, decreased market liquidity, political instability and taxation by foreign governments.

The Fund’s underlying securities may be subject to call risk, which may result in the Fund having to reinvest the proceeds at lower interest rates, resulting in a decline in the Fund’s income.

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.Unlike most ETFs, the Fund currently intends to effect redemptions principally for cash and partially in-kind, rather than primarily in-kind redemptions because of the nature of the Fund’s investments. As such, investments in Shares may be less tax efficient than investments in conventional ETFs.Invesco Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust II. An investor should consider the Fund’s investment objective, risks, charges and expenses carefully before investing. For this and more complete information about the Fund call 800 983 0903 or visit invescopowershares.com for a prospectus. Please read the prospectus carefully before investing.Note: Not all products, materials or services available at all firms.

Shares are not individually redeemable and owners of the shares may acquire those shares from the Fund and tender those shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 50,000 shares.


Investing in International Corporate Bonds │ Agenda

Objectives for Today’s Discussion

International bonds: Convergence of global macroeconomic factors

Corporate bonds: Rounding out a fixed-income portfolio

Gaining access


International Bonds: Convergence of global macroeconomic factors


Sovereign Debt Yields (%)

0

2

4

6

8

10

1986 1989 1992 1995 1998 2001 2004 2007 2010

U.SInternational

Domestic vs. International YieldsInvesting in International Corporate Bonds │ Convergence of Global Macroeconomic Factors

International and U.S. sovereign debt yields (which are the basis for country-specific yield spreads) have at times exhibited significant levels of disparity:

Source: Bloomberg L.P., as of December 2010, based on all available data.

U.S. sovereign debt represented by the BofA Merrill Lynch U.S. Treasury Master Index. International sovereign debt represented by the BofA Merrill Lynch Global Government Excluding the US Index. All yields are yield to maturity.


International bonds tend to perform differently than domestic bonds. Adding them to a domestic portfolio may help offset a downturn in the U.S. bond market:

Past performance does not guarantee future returns.Source: Bloomberg L.P., as of December 2010, based on all available data.

International bonds represented by the Merrill Lynch Global Broad Market Ex US Dollar Index. U.S. bonds represented by the Merrill Lynch US Broad Market Index, measured in US dollars.Both indexes measured in local currency.

Investing in International Corporate Bonds │ Convergence of Global Macroeconomic Factors

Domestic vs. International Performance

-15%

-5%

5%

15%

25%

35%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

International Outperformed U.S. Outperformed

International U.S.

Rolling 12-Month Returns



International Bonds represented by the Merrill Lynch Global Broad Market Ex US Dollar Index

Foreign currency exposure has been a significant determinant of the performance of international bonds for U.S investors.

Within the investment-grade international corporate bond market, S&P estimates that currency exposure has accounted for 46% of the returns since 2001.

Currency Matters: Two Measures of the Same Index

Source: Bloomberg L.P., as of December 2010. Past performance does not guarantee future returns.

In Local Currency

In U.S. Dollar Terms

Annualized Performance of International Bonds 1997 - 2010

5.36%

6.67%

0%

2%

4%

6%

8%




* Please note that these returns are cumulative.

ReturnCorrelation

to USDX

PICB Total Return 13.51% -0.68

PICB Price Return 10.64% -0.67

USDX -10.97% -

PICB vs. U.S. Dollar Index (USDX)

Performance Since PICB Inception* (June 3, 2010)

Source: Bloomberg, as of Feb. 28, 2011



U.S. dollar represented by the U.S. Dollar Index (USDX). International Bonds represented by the Merrill Lynch Global Broad Market Ex US Dollar Index

International bonds have provided a meaningful way for investors to take a position against the U.S. dollar:

Currency Matters: Two Measures of the Same Index

In Local Currency

In U.S. Dollar Terms


Correlation of International Bonds with U.S. Dollar 1997 - 2010

-0.13

-0.92

-1.00

-0.75

-0.50

-0.25

0.00


Corporate Bonds: Rounding Out a Fixed-Income Portfolio


Investing in International Corporate Bonds │ Rounding out a Fixed-Income Portfolio

The global ex-U.S. investment-grade corporate bond market makes up approximately 8% of the outstanding value of the global investment-grade bond market:

Source: Bloomberg L.P., as of December 2010

Sizing up the global bond market

$39T

$22T $21T

$7T$3T0

5

10

15

20

25

30

35

40

45

Global Market Ex-U.S.Market

SovereignMarket

CorporateMarket

Ex-U.S.Corporate

Market

Segmentation of the Global Investment-Grade Bond Market ($Trillion)


Since 1997, investment-grade corporate bonds have yielded an average of 157 additional basis points over investment-grade sovereign debt. Adding international corporate bonds to a portfolio may help increase its overall yield:

Global sovereign bonds represented by BofA Merrill Lynch Global Sovereign Broad Market Plus IndexGlobal corporate bonds represented by BofA Merrill Lynch Global Broad Market Corporate Index.Sovereign debt is backed by the full faith and credit of issuing country; corporate bonds are not. All yields are yield to maturity.


Investing in International Corporate Bonds │ Rounding out a fixed-income portfolio

Yield spreads around the globe

1

2

3

4

5

6

7

8

1996 1998 2000 2002 2004 2006 2008 2010

Global Bond Yields (%)

SovereignsCorporates


Investment-grade corporate bonds around the globe have consistently exhibited a lower default rate than their speculative-grade counterparts. Adding investment-grade corporate bonds to a portfolio may help to reduce its overall default risk.

Average Annual Global Corporate Default Rates: 1995 – 2009

Investment Grade Speculative Grade

0.15% 4.29%

Source: Default, Transition and Recovery: 2009 Annual Global Corporate Default Study and Rating Transitions, Standard & Poor’s, March 17, 2010. Past performance does not guarantee future returns.

Investing in International Corporate Bonds │ Rounding out a fixed-income portfolio

Investment Grade vs. Speculative Grade

0

2

4

6

8

10

1995 1997 1999 2001 2003 2005 2007 2009

Global Default Rates (%): 1995 - 2009

Investment Grade

Speculative Grade


Gaining Access


PICB seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P International Corporate Bond Index®.

Investing in International Corporate Bonds │ Gaining Access

PowerShares International Corporate Portfolio (PICB)

Source: Invesco PowerShares, as of Feb. 28, 2011

Fund Details:

Ticker: PICB

SEC 30-Day Yield: 3.80%

Inception Date: June 3, 2010

Expense Ratio: 0.50%

Reconstitution Frequency: Monthly

Distribution Frequency: Monthly

Fund History (%) Since InceptionNAV 10.33

After Tax Held 9.57

After Tax Sold 6.71

Market Price 10.30

Standardized Performance:

As of Dec. 31, 2010

This is a new Fund and therefore has no full-year of Fund performance to report as of the most recent quarter end. Performance data quoted represents past performance. As stated in the Fund’s prospectus, the expense ratio of 0.50% is expressed as a unitary fee to cover expenses incurred in connection with managing the portfolio. 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. After Tax Held represents total return after taxes on distributions and assumes Shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of Fund Shares. After-tax returns reflect the highest federal income tax rate but exclude state and local taxes. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times.


Emerging Market Exposure?

EXCLUDED. Only allows bonds from G10 developed countries

Currency Cap? YES. Single currency exposure capped at 50%

Yield Used in Selection Criteria?

YES. The index removes the lowest yielding quartile of bonds in each currency with more than 10 eligible bonds.

U.S. Domiciled Companies? NO. International, non-dollar bonds only

Sources: Standard & Poor’s, as of December 2010.

The S&P International Corporate Bond Index


Underlying Index


Ways that PICB may add value to your clients’ portfolios:

Yield

Monthly distribution

Low expense ratio

Exposure to foreign currencies

Potential hedge against the U.S. dollar

Intra-day liquidity1

Daily transparency2

Tax efficiency3

Summary

For answers to questions regarding international corporate bonds

or PICB, please contact Invesco PowerShares at 800 983 0903.


1 Shares are not individually redeemable and owners of the shares may acquire those shares from the Funds and tender thoseshares for redemption to the Funds in Creation Unit aggregations only, typically consisting of 50,000 shares.

2 ETFs disclose their full portfolio holdings daily.3 Invesco PowerShares does not offer tax advice. Please consult your own tax adviser for information regarding your own tax

situation.


Invesco PowerSharesLeading the Intelligent ETF Revolution®

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