The PowerShares S&P SmallCap Industrials Portfolio (Fund) is based on the S&P SmallCap 600 Capped Industrials Index<SPAN class=super>R</SPAN> (Index). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is designed to measure the overall performance of common stocks of U.S. industrial companies. These companies are principally engaged in the business of providing industrial products and services, including engineering, heavy machinery, construction, electrical equipment, aerospace and defense and general manufacturing. <BR><BR>The Index is a subset of the S&P SmallCap 600 Index, which is a float-adjusted, market-capitalization-weighted index reflecting the U.S. small-cap market. The Fund is rebalanced and reconstituted quarterly.