The PowerShares S&P SmallCap Energy Portfolio (Fund) is based on the S&P SmallCap 600 Capped Energy 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. energy companies. These companies are principally engaged in the business of producing, distributing or servicing energy related products, including oil and gas exploration and production, refining, oil services, pipeline, and solar, wind and other non-oil based energy. <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.