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Invesco PowerShares Lists Build America Bond ETF (BAB) on NYSE Arca
CHICAGO, IL--(Marketwire - November 17, 2009) - Invesco PowerShares, a leading provider of
exchange-traded funds (ETFs), announced the PowerShares Build America Bond
Portfolio began trading today on the NYSE Arca under the ticker symbol BAB.
The portfolio is the first ETF designed to provide investors access to the
Build America Bond program developed as part of the federal stimulus plan
enacted in February 2009.
"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. In the
event that the Build America Bond program is not extended, the portfolio
anticipates changing its investment strategy to invest in an index composed
of taxable municipal securities.
Invesco PowerShares Capital Management LLC is leading the intelligent ETF
revolution® through its family of more than 110 domestic and
international exchange-traded funds, which seek to outperform traditional
benchmark indexes while providing advisors and investors access to an
innovative array of focused investment opportunities. With franchise assets
of $41 billion as of Sept. 30, 2009, PowerShares ETFs trade on both U.S.
stock exchanges. For more information, please visit us at
www.invescopowershares.com.
Invesco PowerShares is a wholly owned subsidiary of Invesco Ltd., a leading
independent global investment management firm dedicated to helping people
worldwide build their financial security. Invesco provides a comprehensive
array of enduring investment solutions for retail, institutional and
high-net-worth clients around the world. Operating in 20 countries, the
firm is listed on the New York Stock Exchange under the symbol "IVZ."
Additional information is available at www.invesco.com.
(1) Source: BofA Merrill Lynch, Bloomberg, as of Oct. 19, 2009
There are risks involved with investing in ETFs including possible loss of
money. The Fund is not actively managed. Ordinary brokerage commissions
apply.
Invesco PowerShares does not offer tax advice. Please consult a tax advisor
for advice regarding your specific situation.
The credit quality of the Fund's holdings represents the weighted average
quality rating of the securities in the portfolio as assigned by Nationally
Recognized Statistical Rating Organizations based on assessment of the
credit worthiness of the underlying securities. The ratings range from AAA
(highest) to D (lowest).
While it is not Invesco PowerShares' intention, there is no guarantee that
the Funds will not distribute capital gains to their shareholders. Although
we do not intend to distribute capital gains, investors selling shares in
the market may incur capital gains. Investors should consult their tax
advisors regarding their own tax situations.
Municipal securities are subject to the risk that litigation, legislation
or other political events, local business or economic conditions or the
bankruptcy of the issuer could have a significant effect on an issuer's
ability to make payments of principal and/or interest. Municipal securities
can be significantly affected by political changes as well as uncertainties
in the municipal market related to taxation, legislative changes or the
rights of municipal security holders. Because many securities are issued to
finance similar projects, especially those relating to education, health
care, transportation and utilities, conditions in those sectors can affect
the overall municipal market. In addition, changes in the financial
condition of an individual municipal insurer can affect the overall
municipal market.
There is no guarantee that municipalities will continue to take advantage
of the Build America Bond (BAB) program in the future and there can be no
assurance that BABs will be actively traded. Furthermore, under the
American Recovery and Reinvestment Act of 2009, the ability of
municipalities to issue BABs expires on Dec. 31, 2010. If the BAB program
is not extended, the number of BABs available in the market will be
limited. In addition, illiquidity of the BABs may negatively affect the
value of the BABs.
Fixed-income securities are subject to interest rate risk and credit risk.
Generally, the prices of fixed-income securities tend to fall as interest
rates rise. To the extent the Fund invests a substantial portion of its
assets in fixed-income securities with longer term maturities, rising
interest rates may cause the value of the Fund's investments to decline
significantly. If interest rates fall, it is possible that issuers of
callable securities with high interest coupons will "call" (or prepay)
their bonds before their maturity date. Credit risk refers to the
possibility that the issuer of a security will be unable and/or unwilling
to make timely interest payments and/or repay the principal on its debt,
which may adversely affect the value of the security.
The Shares are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates and perceived trends in securities prices.
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. As
a result, an adverse development respecting an issuer of securities held by
the Fund could result in a greater decline in NAV than would be the case if
the Fund held all of the securities in the Underlying Index. To the extent
the assets in the Fund are smaller, these risks will be greater.
The Fund is non-diversified and can invest a greater portion of its assets
in securities of individual issuers than a diversified fund.
"BofA Merrill Lynch" and "The BofA Merrill Lynch Build America Bond
Index(SM)" are reprinted with permission. © Copyright 2009 Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("BofA Merrill Lynch"). All rights
reserved. "BofA Merrill Lynch" and "The BofA Merrill Lynch Build America
Bond Index(SM)" are service marks of BofA Merrill Lynch and/or its
affiliates and have been licensed for use for certain purposes by
PowerShares on behalf of the PowerShares Build America Bond Portfolio that
is based on the BofA Merrill Lynch Build America Bond Index(SM), and is not
issued, sponsored, endorsed or promoted by BofA Merrill Lynch and/or BofA
Merrill Lynch's affiliates nor is BofA Merrill Lynch and/or BofA Merrill
Lynch's affiliates an adviser to the PowerShares Build America Bond
Portfolio. BofA Merrill Lynch and BofA Merrill Lynch's affiliates make no
representation, express or implied, regarding the advisability of investing
in the PowerShares Build America Bond Portfolio or The BofA Merrill Lynch
Build America Bond Index(SM) and do not guarantee the quality, accuracy or
completeness of The BofA Merrill Lynch Build America Bond Index(SM), index
values or any index related data included herein, provided herewith or
derived therefrom and assume no liability in connection with their use. As
the index provider, BofA Merrill Lynch is licensing certain trademarks, The
BofA Merrill Lynch Build America Bond Index(SM) and trade names which are
composed by BofA Merrill Lynch without regard to PowerShares, the
PowerShares Build America Bond Portfolio or any investor. BofA Merrill
Lynch and BofA Merrill Lynch's affiliates do not provide investment advice
to PowerShares or the PowerShares Build America Bond Portfolio and are not
responsible for the performance of the PowerShares Build America Bond
Portfolio.
Invesco Aim Distributors, Inc. is the distributor of the PowerShares
Exchange-Traded Fund Trust II.
PowerShares® is a registered trademark of Invesco PowerShares Capital
Management LLC. Invesco PowerShares Capital Management LLC and Invesco Aim
Distributors, Inc. are indirect, wholly owned subsidiaries of Invesco Ltd.
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.
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
www.invescopowershares.com for a prospectus. Please read the prospectus
carefully before investing.