"With more than $48 billion in Build America Bonds being issued thus far, we have seen a great deal of interest in the program; however, retail investors for the most part have had limited access to this important market," said Ben Fulton, executive vice president -- global product development of Invesco PowerShares. "We believe the PowerShares Build America Bond Portfolio provides a convenient, cost effective way to invest in taxable, investment grade municipal bonds, which tend to have yields commensurate with similarly rated corporate bonds. Furthermore, we believe the fund will bring much-needed liquidity to a market that will be pivotal in the rebuilding of America's infrastructure." Since 1997, 10-year AAA-rated taxable municipal bonds have, on average, yielded just five basis points less than 10-year AAA-rated corporate bonds.(1)

The PowerShares Build America Bond Portfolio is based on the BofA Merrill Lynch Build America Bond Index. The Fund will normally invest at least 80% of its total assets in the securities that comprise the index. The index is designed to track the performance of U.S. dollar-denominated investment grade taxable municipal debt publicly issued under the Build America Bond program in the U.S. domestic market.

Qualifying securities must have an investment grade rating, a fixed coupon schedule and a minimum amount outstanding of $1 million. In addition, qualifying securities must be "direct pay" (i.e., a direct federal subsidy is paid to the issuer). Securities included in the index are capitalization-weighted based on their current amount outstanding, and the index is rebalanced on a monthly basis.

The Build America Bond program was created under the American Recovery and Reinvestment Act of 2009, which provides for the issuance of taxable municipal securities on which the issuer receives federal support of the interest paid. Unlike most other municipal obligations, interest received on Build America Bonds is subject to federal income tax. Issuers of "direct pay" Build America Bonds (i.e., taxable municipal bonds issued to provide funds for qualified capital expenditures) are entitled to receive payments from the U.S. Treasury over the life of the bond equal to 35% (or 45% in the case of Recovery Zone Economic Development Bonds) of the interest paid. The federal interest subsidy continues for the life of the bonds.

Build America Bonds offer an alternative form of financing to state and local governments whose primary means for accessing the capital markets has been through issuance of tax-free municipal bonds. Issuance of Build America Bonds will cease on Dec. 31, 2010, unless the relevant provisions of the American Recovery and Reinvestment Act of 2009 are extended.