PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (the Fund) is based on the FTSE RAFI Developed ex-U.S. Mid-Small 1500 Index (the Index). The Index is designed to track the performance of small and mid-capitalization equities of companies domiciled in developed international markets (excluding the United States), selected based on four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities with the highest fundamental strength are weighted according to their fundamental scores. The Fundamentals Weighted portfolio is rebalanced and reconstituted annually. The Fund’s investment advisor is Invesco PowerShares Capital Management LLC.