The PowerShares S&P SmallCap Materials Portfolio (Fund) is based on the S&P SmallCap 600 Capped Materials 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. basic materials companies. These companies are principally engaged in the business of producing raw materials, including paper or wood products, chemicals, construction materials, and mining and metals. <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.