The PowerShares S&P SmallCap Financials Portfolio (Fund) is based on the S&P SmallCap 600 Capped Financials 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. financial services companies. These companies are principally engaged in the business of providing services and products, including banking, investment services, insurance and real estate finance services. <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.