PowerShares FTSE RAFI Europe Portfolio (the Fund) is based on the FTSE RAFI Europe Index (the Index). The Index is designed to track the performance of the largest European equities, selected based on four fundamental measures of firm size: book value, income, sales and dividends. The 1,000 equities with the highest fundamental strength are weighted according to their fundamental scores. The fundamentally weighted portfolio is rebalanced and reconstituted annually. The Fund’s investment advisor is Invesco PowerShares Capital Management LLC.