-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U80wOCHuTu8jvtCXeVu5Nx2QNkaedIj6ZHRsPmb2alGmvv2+pT7Bze2bRtgcYBHs 8ss0lconIspjHD7ArfvK2w== 0001047469-06-000199.txt : 20060106 0001047469-06-000199.hdr.sgml : 20060106 20060106121147 ACCESSION NUMBER: 0001047469-06-000199 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051031 FILED AS OF DATE: 20060106 DATE AS OF CHANGE: 20060106 EFFECTIVENESS DATE: 20060106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POWERSHARES EXCHANGE TRADED FUND TRUST CENTRAL INDEX KEY: 0001209466 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21265 FILM NUMBER: 06515611 MAIL ADDRESS: STREET 1: 227 E PRAIRIE AVE CITY: WHEATON STATE: IL ZIP: 60187 N-CSRS 1 a2165862zn-csrs.txt N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File number 811-21265 --------- PowerShares Exchange-Traded Fund Trust ----------------------------------------------------------------------- (Exact name of registrant as specified in charter) 301 W. Roosevelt Road Wheaton, IL 60187 ----------------------------------------------------------------------- (Address of principal executive offices) (Zip code) H. Bruce Bond 301 W. Roosevelt Road Wheaton, IL 60187 ----------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 800-983-0903 -------------- Date of fiscal year end: April 30, 2006 ---------------- Date of reporting period: October 31, 2005 ----------------- ITEM 1. REPORTS TO STOCKHOLDERS. The Registrant's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: 2005 SEMI-ANNUAL REPORT TO SHAREHOLDERS 31 OCTOBER 2005 [POWERSHARES(TM) XCHANGE TRADED FUNDS(TM) LOGO] [GRAPHIC] POWERSHARES DYNAMIC MARKET PORTFOLIO POWERSHARES DYNAMIC OTC PORTFOLIO POWERSHARES GOLDEN DRAGON HALTER USX CHINA PORTFOLIO POWERSHARES HIGH YIELD EQUITY DIVIDEND ACHIEVERS(TM) PORTFOLIO POWERSHARES WILDERHILL CLEAN ENERGY PORTFOLIO POWERSHARES DYNAMIC LARGE CAP GROWTH PORTFOLIO POWERSHARES DYNAMIC LARGE CAP VALUE PORTFOLIO POWERSHARES DYNAMIC MID CAP GROWTH PORTFOLIO POWERSHARES DYNAMIC MID CAP VALUE PORTFOLIO POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO POWERSHARES DYNAMIC SMALL CAP VALUE PORTFOLIO POWERSHARES DYNAMIC BIOTECHNOLOGY & GENOME PORTFOLIO POWERSHARES DYNAMIC FOOD & BEVERAGE PORTFOLIO POWERSHARES DYNAMIC LEISURE & ENTERTAINMENT PORTFOLIO POWERSHARES DYNAMIC MEDIA PORTFOLIO POWERSHARES DYNAMIC NETWORKING PORTFOLIO POWERSHARES DYNAMIC PHARMACEUTICALS PORTFOLIO POWERSHARES DYNAMIC SEMICONDUCTORS PORTFOLIO POWERSHARES DYNAMIC SOFTWARE PORTFOLIO POWERSHARES ZACKS MICRO CAP PORTFOLIO POWERSHARES INTERNATIONAL DIVIDEND ACHIEVERS(TM) PORTFOLIO POWERSHARES HIGH GROWTH RATE DIVIDEND ACHIEVERS(TM) PORTFOLIO POWERSHARES DIVIDEND ACHIEVERS(TM) PORTFOLIO POWERSHARES DYNAMIC OIL & GAS SERVICES PORTFOLIO POWERSHARES DYNAMIC INSURANCE PORTFOLIO POWERSHARES DYNAMIC RETAIL PORTFOLIO POWERSHARES DYNAMIC BUILDING & CONSTRUCTION PORTFOLIO POWERSHARES DYNAMIC UTILITIES PORTFOLIO POWERSHARES DYNAMIC ENERGY EXPLORATION & PRODUCTION PORTFOLIO POWERSHARES LUX NANOTECH PORTFOLIO POWERSHARES AEROSPACE & DEFENSE PORTFOLIO TABLE OF CONTENTS Shareholder Letter 5 Managers' Analysis 7 Fees and Expenses 41 Portfolio Summary PowerShares Dynamic Market Portfolio 47 Schedule of Investments PowerShares Dynamic Market Portfolio 48 Portfolio Summary PowerShares Dynamic OTC Portfolio 50 Schedule of Investments PowerShares Dynamic OTC Portfolio 51 Portfolio Summary PowerShares Golden Dragon Halter USX China Portfolio 53 Schedule of Investments PowerShares Golden Dragon Halter USX China Portfolio 54 Portfolio Summary PowerShares High Yield Equity Dividend Achievers(TM) Portfolio 55 Schedule of Investments PowerShares High Yield Equity Dividend Achievers(TM) Portfolio 56 Portfolio Summary PowerShares WilderHill Clean Energy Portfolio 57 Schedule of Investments PowerShares WilderHill Clean Energy Portfolio 58 Portfolio Summary PowerShares Dynamic Large Cap Growth Portfolio 59 Schedule of Investments PowerShares Dynamic Large Cap Growth Portfolio 60 Portfolio Summary PowerShares Dynamic Large Cap Value Portfolio 61 Schedule of Investments PowerShares Dynamic Large Cap Value Portfolio 62 Portfolio Summary PowerShares Dynamic Mid Cap Growth Portfolio 63
Schedule of Investments PowerShares Dynamic Mid Cap Growth Portfolio 64 Portfolio Summary PowerShares Dynamic Mid Cap Value Portfolio 65 Schedule of Investments PowerShares Dynamic Mid Cap Value Portfolio 66 Portfolio Summary PowerShares Dynamic Small Cap Growth Portfolio 67 Schedule of Investments PowerShares Dynamic Small Cap Growth Portfolio 68 Portfolio Summary PowerShares Dynamic Small Cap Value Portfolio 70 Schedule of Investments PowerShares Dynamic Small Cap Value Portfolio 71 Portfolio Summary PowerShares Dynamic Biotechnology & Genome Portfolio 73 Schedule of Investments PowerShares Dynamic Biotechnology & Genome Portfolio 74 Portfolio Summary PowerShares Dynamic Food & Beverage Portfolio 75 Schedule of Investments PowerShares Dynamic Food & Beverage Portfolio 76 Portfolio Summary PowerShares Dynamic Leisure & Entertainment Portfolio 77 Schedule of Investments PowerShares Dynamic Leisure & Entertainment Portfolio 78 Portfolio Summary PowerShares Dynamic Media Portfolio 79 Schedule of Investments PowerShares Dynamic Media Portfolio 80 Portfolio Summary PowerShares Dynamic Networking Portfolio 81 Schedule of Investments PowerShares Dynamic Networking Portfolio 82
Portfolio Summary PowerShares Dynamic Pharmaceuticals Portfolio 83 Schedule of Investments PowerShares Dynamic Pharmaceuticals Portfolio 84 Portfolio Summary PowerShares Dynamic Semiconductors Portfolio 85 Schedule of Investments PowerShares Dynamic Semiconductors Portfolio 86 Portfolio Summary PowerShares Dynamic Software Portfolio 87 Schedule of Investments PowerShares Dynamic Software Portfolio 88 Portfolio Summary Zacks Micro Cap Portfolio 89 Schedule of Investments Zacks Micro Cap Portfolio 90 Portfolio Summary PowerShares International Dividend Achievers(TM) Portfolio 95 Schedule of Investments PowerShares International Dividend Achievers(TM) Portfolio 96 Portfolio Summary PowerShares High Growth Rate Dividend Achievers(TM) Portfolio 97 Schedule of Investments PowerShares High Growth Rate Dividend Achievers(TM) Portfolio 98 Portfolio Summary PowerShares Dividend Achievers(TM) Portfolio 100 Schedule of Investments PowerShares Dividend Achievers(TM) Portfolio 101 Portfolio Summary PowerShares Dynamic Oil & Gas Services Portfolio 105 Schedule of Investments PowerShares Dynamic Oil & Gas Services Portfolio 106 Portfolio Summary PowerShares Dynamic Insurance Portfolio 107
Schedule of Investments PowerShares Dynamic Insurance Portfolio 108 Portfolio Summary PowerShares Dynamic Retail Portfolio 109 Schedule of Investments PowerShares Dynamic Retail Portfolio 110 Portfolio Summary PowerShares Dynamic Building & Construction Portfolio 111 Schedule of Investments PowerShares Dynamic Building & Construction Portfolio 112 Portfolio Summary PowerShares Dynamic Utilities Portfolio 113 Schedule of Investments PowerShares Dynamic Utilities Portfolio 114 Portfolio Summary PowerShares Dynamic Energy Exploration & Production Portfolio 115 Schedule of Investments PowerShares Dynamic Energy Exploration & Production Portfolio 116 Portfolio Summary PowerShares Lux Nanotech Portfolio 117 Schedule of Investments PowerShares Lux Nanotech Portfolio 118 Portfolio Summary PowerShares Aerospace & Defense Portfolio 119 Schedule of Investments PowerShares Aerospace & Defense Portfolio 120 Statements of Assets and Liabilities 122 Statements of Operations 128 Statements of Changes in Net Assets 134 Financial Highlights 142 Notes to Financial Statements 158 Supplemental Information (Unaudited) 170
TO OUR VALUED SHAREHOLDERS: I am happy to announce that PowerShares Exchange-Traded Fund Trust has experienced tremendous and welcome growth in Assets Under Management (AUM) over the last year. Assets grew to from $241 million a year earlier to $2.537 billion as of November 15th, a growth rate of over 14x. Contributing to this impressive growth is PowerShares' position and visibility in the financial industry as the leader of the "Intelligent ETF Revolution." Currently at 36 ETFs, PowerShares has continued to introduce exciting and innovative financial products for discerning investors, whether they seek active or passive approaches to asset management. The result is that PowerShares has the second largest and one of the most diverse ETF offerings available today and is the undisputed leader in "Intelligent ETFs." PowerShares Intelligent ETFs operate like traditional ETFs in that they seek to replicate the performance of an underlying index. They are distinctive in the marketplace in that the indexes they replicate are themselves sophisticated asset management methodologies which evaluate securities for their investment potential as the core determinant of their inclusion in the index. This approach is very different from that of benchmark indexes which simply seek to be barometers of stock groups without regard to the investment value of the underlying securities. Since April of this year alone, PowerShares has launched twenty new ETFs including: PowerShares Zacks Micro Cap Portfolio (PZI), one of the first micro cap ETFs, provides an investor with exposure to those emerging micro cap companies with greater capital appreciation potential. This index is unique in that it is also designed with the ability to evaluate and remove company components on a weekly basis to better achieve timely adjustments in the micro cap market. PowerShares three additional Dividend Achievers(TM) Portfolios based on Mergent's Dividend Achievers(TM) Indexes which seek to provide consistent, reliable and growing dividend income and capital appreciation to the investor. The Dividend Achievers(TM) Portfolio is based upon the Broad Dividend Achievers(TM) Index, which is comprised of those companies with a minimum of ten consecutive years of annual dividend increases. The High Growth Rate Dividend Achievers(TM) Index is based upon the 100 Dividend Achievers(TM) companies with the fastest dividend growth rate over the last ten years. The International Dividend Achievers(TM) Index is based upon U.S. listed foreign companies with a minimum of five consecutive years of annual dividend increases. PowerShares Dynamic Industry Portfolios are based on indexes which seek to provide intelligent exposure to Pharmaceuticals (PWP), Biotech and Genome (PBE), Leisure & Entertainment (PEJ), Media (PBS), Networking (PXQ), Semiconductors (PSI), Software (PSJ) and Food & Beverage (PBJ) Industries, which we launched in June, and Building & Construction (PKB), Energy Exploration & Production (PXE), Insurance (PIC), Oil & Gas Services (PXJ), Retail (PMR) and Utilities (PUI), which we launched in October. PowerShares Lux Nanotech Portfolio (PXN), the first ETF providing the investor exposure to the nanotechnology sector, is based on an index which seeks to identify those companies involved in developing, manufacturing and funding of nanotechnology and nanotechnology applications. PowerShares Aerospace & Defense Portfolio (PPA) is based on an index which seeks to identify those companies involved in the development, manufacture and support of U.S. defense, homeland security and aerospace operations. As of the end of this reporting period, PowerShares had thirty-one ETF portfolio funds. Twenty-nine of those have been introduced in just the last twelve months. 5 If you are interested in learning more about these funds, you may obtain prospectuses and more complete information on risks, fees and expenses by visiting powershares.com. The prospectus should be read carefully before investing. On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I want to thank you for your participation in the PowerShares family of exchange-traded funds. We look forward to serving you in the future. Best regards, /s/ H. Bruce Bond H. Bruce Bond President and Chairman of the Board of Trustees PowerShares Exchange-Traded Fund Trust 6 MANAGER'S ANALYSIS THE MARKET ENVIRONMENT The U.S. equity markets started the year on a flat note as inflation concerns, Iraq and rising fuel costs weighed on investors. Sentiment picked up in May as slowing but healthy corporate profits along with increased productivity boosted managers' hiring and spending plans. This combined with economic resiliency in the face of Hurricane Katrina and high oil prices gave investors confidence going into the latter part of the year. As a result, the market posted respectable single digit growth during the reporting period. Benefiting from elevated oil prices, energy stocks continued to lead the market, followed by insurance, computer hardware and biotech names. Pharmaceutical and media stocks underperformed. Results were particularly strong in mid and small cap growth stocks which outperformed the market as a whole, while large cap stocks continued to lag their peers. POWERSHARES DYNAMIC MARKET PORTFOLIO (TICKER: PWC) The PowerShares Dynamic Market Portfolio continued to outpace the market during the semi-annual reporting period, furthering its outperformance from the prior year. Over the past six months, the Dynamic Market Portfolio returned 13.44%, while the S&P 500 Index returned 5.26% and the Russell 3000 returned 6.67%. The fund has accomplished this performance without paying any capital gains distributions since the inception of the fund. Stock selection within the oil and gas, consumer staples and media space provided the strongest contributions to the fund's performance; while selections in computer hardware, financial services and biotech tended to lag. Relative to the market, the fund benefited from over-weightings in insurance and healthcare provider stocks and from under-weightings in pharmaceutical and industrial stocks. Stock selection was most effective in large-cap names, and to a lesser extent, the fund benefited from allocating more to mid and small cap stocks when compared to conventional cap-weighted benchmarks. The PowerShares Dynamic Market Portfolio bases its stock selection, portfolio management and asset allocation decisions on an "intelligent" index called the Dynamic Market Intellidex Index. The Index's investment decisions are derived from a proprietary methodology which incorporates technically advanced and robust institutional investment research available in the marketplace today. Domestic companies are evaluated for inclusion in the index across numerous investment criteria including fundamentals, valuation, timeliness and risk perspectives, providing a comprehensive determination of company's overall investment potential. Securities identified by the methodology that possess the greatest capital appreciation potential are selected for the index and incorporated by the portfolio manager. The fund utilized a direct index replication method during the reporting period (less fees and expenses). 7 POWERSHARES DYNAMIC MARKET PORTFOLIO (TICKER: PWC) - - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION 6 MONTH 1 YEAR AVG ANN CUMULATIVE Index Dynamic Market Intellidex 13.03 23.49 23.45 69.33 S&P 500 Index 5.26 8.71 13.60 37.53 Russell 3000 Index 6.67 10.60 15.31 42.77 Fund NAV 13.44 22.61 22.53 66.24 Share Price Return 13.87 22.58 22.40 64.93
Fund Inception: 1 May 2003 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The S&P 500 Index and the Russell 3000 Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of 500 and 3000 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The Fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Valero Energy Corp. 3.57 Coca-Cola (The) Co. 3.16 Kellogg Co. 3.14 Express Scripts, Inc. 2.91 Murphy Oil Corp. 2.69 UnitedHealth Group, Inc. 2.56 Nordstrom, Inc. 2.55 Aetna, Inc. 2.54 Yum! Brands, Inc. 2.53 Prudential Financial, Inc. 2.52 TOTAL 28.17
8 POWERSHARES DYNAMIC OTC PORTFOLIO (TICKER: PWO) The PowerShares Dynamic OTC Portfolio continued to outperform the Nasdaq market during the semi-annual reporting period, building on already solid results from the prior year. Over the past six months, the Dynamic OTC Portfolio returned 12.53%, while the Nasdaq 100 Index returned 11.15% and the Nasdaq Composite Index return 10.34%. The fund has accomplished this performance without paying any capital gains distributions since the inception of the fund. Stock selection within the commercial banks, software and semiconductors provided the strongest contributions to the fund's performance; while selections in media and pharmaceuticals tended to lag. Relative to the Nasdaq market, the fund benefited from over-weightings in healthcare provider, capital markets and IT services stocks and from small under-weightings in communications equipment stocks. Stock selection was most effective in large-cap growth names; the fund did not benefit from allocating more to mid and small cap stocks when compared to conventional cap-weighted benchmarks. The PowerShares Dynamic OTC Portfolio bases its stock selection, portfolio management and asset allocation decisions on an "intelligent" index called the Dynamic OTC Intellidex index. The Index's investment decisions are derived from a proprietary methodology which incorporates technically advanced and robust institutional investment research available in the marketplace today. Domestic Nasdaq companies are evaluated for inclusion in the index across numerous investment criteria including fundamentals, valuation, timeliness and risk perspectives, providing a comprehensive determination of a company's overall investment potential. Securities identified by the methodology that possess the greatest capital appreciation potential are selected for the index and incorporated by the portfolio manager. The Fund utilized a direct index replication method during the reporting period (less fees and expenses). - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION 6 MONTH 1 YEAR AVG ANN CUMULATIVE Index Dynamic OTC Intellidex 12.39 19.65 24.13 71.67 Nasdaq 100 Index 11.15 6.22 15.31 42.78 Nasdaq Composite Index 10.34 7.36 15.96 44.80 Fund NAV 12.53 18.95 22.74 66.95 Share Price Return 12.95 18.78 24.37 66.53
Fund Inception: 1 May 2003 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Nasdaq 100 Index and the Nasdaq Composite Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of 100 and approximately 3,300 widely held Nasdaq stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. 9 POWERSHARES DYNAMIC OTC PORTFOLIO (TICKER: PWO) - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Symantec Corp. 3.35 Adobe Systems, Inc. 3.35 Lam Research Corp. 3.23 Starbucks Corp. 3.13 Autodesk, Inc. 3.12 Express Scripts, Inc. 2.98 Cisco Systems, Inc. 2.87 BEA Systems, Inc. 2.82 Fiserv, Inc. 2.80 Staples, Inc. 2.79 TOTAL 30.44
10 POWERSHARES GOLDEN DRAGON HALTER USX CHINA PORTFOLIO (TICKER: PGJ) The PowerShares Golden Dragon Halter USX China Portfolio is based on the USX China Index(SM). The USX China Index(SM) is comprised of U.S. listed securities of companies deriving a majority of their revenues from the People's Republic of China. The index is designed to provide insight and access to the unique economic opportunities taking place in China. The portfolio is reconstituted and rebalanced quarterly. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index USX China Index 1.39 -7.87 MSCI EAFE Index 7.38 8.11 S&P 500 Index 5.26 3.62 Fund NAV 2.57 -8.38 Share Price Return 2.70 -8.68
Fund Inception: 9 December 2004 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The MSCI EAFE Index and the S&P 500 Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 1000 and 500 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY PetroChina Co. Ltd. ADR 5.86 China Mobile (Hong Kong) Ltd. ADR 5.77 Aluminum Corp. of China Ltd. ADR 5.08 China Life Insurance Co. Ltd. ADR 4.55 China Netcom Group Corp. (Hong Kong) Ltd. ADR 4.39 China Petroleum and Chemical Corp. ADR 4.38 China Unicom Ltd. ADR 4.35 CNOOC Ltd. ADR 4.31 Huaneng Power International, Inc. ADR 4.31 Sinopec Shanghai Petrochemical Co. Ltd. ADR 4.22 TOTAL 47.22
11 POWERSHARES HIGH YIELD EQUITY DIVIDEND ACHIEVERS(TM) PORTFOLIO (TICKER: PEY) The PowerShares High Yield Equity Dividend Achievers(TM) Portfolio is based on the Dividend Achievers(TM) 50 Index. The Dividend Achievers(TM) 50 Index seeks to deliver high current income and capital appreciation. It is comprised of the fifty highest yielding companies with at least ten years of consecutive dividend increases. The yield weighted portfolio is rebalanced quarterly and reconstituted annually. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index Dividend Achievers(TM) 50 Index 2.95 2.80 S&P 500 Index 5.26 3.62 S&P Barra Large Value Index 6.41 4.91 Fund NAV 4.61 3.10 Share Price Return 5.99 3.27
Fund Inception: 9 December 2004 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The S&P 500 Index and the S&P Barra Large Cap Value Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of 500 and approximately 250 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Merck & Co., Inc. 2.88 Peoples Energy Corp. 2.84 F.N.B. Corp. 2.76 Progress Energy, Inc. 2.67 SBC Communications, Inc. 2.66 First Commonwealth Financial Corp. 2.53 Washington Mutual, Inc. 2.52 Bank of America Corp. 2.37 Consolidated Edison, Inc. 2.37 National City Corp. 2.22 TOTAL 25.82
12 POWERSHARES WILDERHILL CLEAN ENERGY PORTFOLIO (TICKER: PBW) The PowerShares WilderHill Clean Energy Portfolio is based on the WilderHill Clean Energy Index. The WilderHill Clean Energy Index seeks to deliver capital appreciation. It is comprised of companies that focus on greener and generally renewable sources of energy and technologies facilitating cleaner energy. The modified equal-weighted portfolio is rebalanced and reconstituted quarterly. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index WilderHill Clean Energy Index 20.24 -0.50 Nasdaq Composite 5.26 0.85 S&P 500 Index 10.34 2.55 Fund NAV 20.24 -0.90 Share Price Return 20.39 -0.90
Fund Inception: 3 March 2005 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Nasdaq Composite and S&P 500 Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 3300 and 500 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Distributed Energy Systems Corp. 3.31 Cree, Inc. 3.26 Emcore Corp. 3.25 Ultralife Batteries, Inc. 3.25 Maxwell Technologies, Inc. 3.24 Evergreen Solar, Inc. 3.23 Cypress Semiconductor Corp. 3.22 Intermagnetics General Corp. 3.21 Power Integrations, Inc. 3.21 KYOCERA Corp. ADR (Japan) 3.08 TOTAL 32.26
13 POWERSHARES DYNAMIC STYLE PORTFOLIOS PowerShares Dynamic Style Portfolios are based on enhanced indexes called Intellidexes. Their investment decisions are derived from a proprietary methodology which incorporates technically advanced and robust institutional investment research available in the marketplace today. The Style Intellidexes apply a rigorous ten factor style isolation process to objectively segregate companies into their appropriate investment style and size universe. Next, each company considered for the Intellidex is thoroughly evaluated to determine its investment merit by analyzing numerous unique financial characteristics from four broad financial perspectives: fundamental, valuation, timeliness and risk. 14 POWERSHARES DYNAMIC LARGE CAP GROWTH PORTFOLIO (TICKER: PWB) The PowerShares Dynamic Large Cap Growth Portfolio is based on the Dynamic Large Cap Growth Intellidex(SM) Index which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index Dynamic Large Cap Growth Intellidex 8.35 4.65 Dow Jones Large Cap Growth Index 1.95 -1.47 S&P Barra Large Cap Growth Index 7.59 2.89 Fund NAV 8.35 3.08 Share Price Return 8.09 2.49
Fund Inception: 3 March 2005 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Dow Jones Large Cap Growth Index and the S&P Barra Large Cap Growth Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 108 and 178 widely held common stocks. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY UnitedHealth Group, Inc. 3.92 Motorola, Inc. 3.59 American Express Co. 3.53 United Parcel Service, Inc., Class B 3.50 Cisco Systems, Inc. 3.43 Target Corp. 3.42 QUALCOMM, Inc. 3.41 Oracle Corp. 3.36 Amgen, Inc. 3.29 Lowe's Cos., Inc. 3.29 TOTAL 34.74
15 POWERSHARES DYNAMIC LARGE CAP VALUE PORTFOLIO (TICKER: PWV) The PowerShares Dynamic Large Cap Value Portfolio is based on the Dynamic Large Cap Value Intellidex(SM) Index which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index Dynamic Large Cap Value Intellidex 8.50 6.33 Dow Jones Large Cap Value Index 6.15 0.95 S&P Barra Large Cap Value Index 4.82 1.03 Fund NAV 9.31 5.91 Share Price Return 9.28 5.72
Fund Inception: 3 March 2005 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Dow Jones Large Cap Value Index and the S&P Barra Large Cap Value Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 130 and 322 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Merrill Lynch & Co., Inc. 3.71 Altria Group, Inc. 3.53 ConocoPhillips 3.46 Morgan Stanley 3.45 Hewlett-Packard Co. 3.40 Wells Fargo & Co. 3.35 Bank of America Corp. 3.34 Merck & Co., Inc. 3.34 Wachovia Corp. 3.33 International Business Machines Corp. 3.33 TOTAL 34.24
16 POWERSHARES DYNAMIC MID CAP GROWTH PORTFOLIO (TICKER: PWJ) The PowerShares Dynamic Mid Cap Growth Portfolio is based on the Dynamic Mid Cap Growth Intellidex(SM) Index which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index Dynamic Mid Cap Growth Intellidex 16.94 9.01 Dow Jones Mid Cap Growth Index 14.52 7.42 S&P Barra Mid Cap Growth Index 11.37 4.65 Fund NAV 16.94 8.41 Share Price Return 17.45 8.31
Fund Inception: 3 March 2005 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Dow Jones Mid Cap Growth Index and the S&P Barra Mid Cap Growth Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 210 and 182 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Chicago Mercantile Exchange Holdings, Inc. 4.19 Express Scripts, Inc. 4.04 Freeport-McMoRan Copper & Gold, Inc., Class B 3.87 Chico's Fas, Inc. 3.59 Network Appliance, Inc. 3.55 PacifiCare Health Systems, Inc. 3.41 Autodesk, Inc. 3.37 Electronic Data Systems Corp. 3.26 Nordstrom, Inc. 3.26 AES (The) Corp. 3.15 TOTAL 35.69
17 POWERSHARES DYNAMIC MID CAP VALUE PORTFOLIO (TICKER: PWP) The PowerShares Dynamic Mid Cap Value Portfolio is based on the Dynamic Mid Cap Value Intellidex(SM) Index which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index Dynamic Mid Cap Value Intellidex 8.91 5.78 Dow Jones Mid Cap Value Index 6.57 1.96 S&P Barra Mid Cap Value Index 9.83 5.92 Fund NAV 9.58 5.12 Share Price Return 9.81 4.87
Fund Inception: 3 March 2005 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Dow Jones Mid Cap Growth Index and the S&P Barra Mid Cap Growth Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 229 and 218 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Computer Sciences Corp. 3.72 AON Corp. 3.69 Phelps Dodge Corp. 3.69 CNA Financial Corp. 3.38 AmerisourceBergen Corp. 3.34 Georgia-Pacific Corp. 3.34 Cincinnati Financial Corp. 3.31 Rohm & Haas Co. 3.26 Lincoln National Corp. 3.23 Sempra Energy 3.20 TOTAL 34.16
18 POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO (TICKER: PWT) The PowerShares Dynamic Small Cap Growth Portfolio is based on the Dynamic Small Cap Growth Intellidex(SM) Index which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index Dynamic Small Cap Growth Intellidex 13.14 4.53 Dow Jones Small Cap Growth Index 9.85 1.84 S&P Barra Small Cap Growth Index 13.15 1.50 Fund NAV 13.15 4.07 Share Price Return 13.67 3.76
Fund Inception: 3 March 2005 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Dow Jones Small Cap Growth Index and the S&P Barra Small Cap Growth Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 305 and 242 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY JLG Industries, Inc. 3.02 Centennial Communications Corp. 2.86 Carter's, Inc. 2.78 UNOVA, Inc. 2.75 Engineered Support Systems, Inc. 2.66 Quest Software, Inc. 2.58 Grey Wolf Inc. 2.57 Brookfield Homes Corp. 2.51 Superior Energy Services, Inc. 2.50 Greif, Inc., Class A 2.48 TOTAL 26.71
19 POWERSHARES DYNAMIC SMALL CAP VALUE PORTFOLIO (TICKER: PWY) The PowerShares Dynamic Small Cap Value Portfolio is based on the Dynamic Small Cap Value Intellidex(SM) Index which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
6 MONTH FUND INCEPTION Index Dynamic Small Cap Value Intellidex 10.52 2.11 Dow Jones Small Cap Value Index 11.83 3.36 S&P Barra Small Cap Value Index 11.35 2.86 Fund NAV 10.97 1.58 Share Price Return 11.71 1.35
Fund Inception: 3 March 2005 After Tax Held represents total return after taxes on distributions and assumes shares have not been sold. After Tax Sold represents total return after taxes on distributions and the sale of fund shares. Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. The Dow Jones Small Cap Value Index and the S&P Barra Small Cap Value Index are unmanaged indexes that are broad measurements of change in stock market conditions based on the average performance of approximately 373 and 358 widely held common stocks, respectively. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, absent which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Cathay General Bancorp 2.76 Frontier Oil Corp. 2.74 Lennox International, Inc. 2.70 Commercial Metals Co. 2.62 Ohio Casualty Corp. 2.59 Flowers Foods, Inc. 2.59 Zenith National Insurance Corp. 2.53 Carpenter Technology Corp. 2.47 AptarGroup, Inc. 2.46 Domino's Pizza, Inc. 2.45 TOTAL 25.91
20 POWERSHARES DYNAMIC BIOTECHNOLOGY & GENOME PORTFOLIO (TICKER: PBE) The PowerShares Dynamic Biotechnology & Genome Portfolio is based on the Dynamic Biotechnology & Genome Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Biotechnology & Genome Intellidex 10.81 Fund NAV 10.68 Share Price Return 10.66
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Gilead Sciences, Inc. 5.94 Applera Corp. - Applied Biosystems Group 5.94 Sigma-Aldrich Corp. 5.36 Genentech, Inc. 5.21 Biogen Idec, Inc. 5.11 Amgen, Inc. 4.97 Waters Corp. 4.16 Invitrogen Corp. 4.02 Cubist Pharmaceuticals, Inc. 3.30 New River Pharmaceuticals, Inc. 3.26 TOTAL 47.27
21 POWERSHARES DYNAMIC FOOD & BEVERAGE PORTFOLIO (TICKER: PBJ) The PowerShares Dynamic Food & Beverage Portfolio is based on the Dynamic Food & Beverage Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Food & Beverage Intellidex -2.87 Fund NAV -3.08 Share Price Return -2.92
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY PepsiCo, Inc. 5.38 Archer-Daniels-Midland Co. 5.36 Yum! Brands, Inc. 5.15 General Mills, Inc. 5.09 Coca-Cola (The) Co. 4.86 Kellogg Co. 4.84 Hershey (The) Co. 4.83 Sysco Corp. 4.70 7-Eleven, Inc. 3.59 Seaboard Corp. 3.15 TOTAL 46.95
22 POWERSHARES DYNAMIC LEISURE & ENTERTAINMENT PORTFOLIO (TICKER: PEJ) The PowerShares Dynamic Leisure & Entertainment Portfolio is based on the Dynamic Leisure & Entertainment Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Leisure & Entertainment Intellidex -3.68 Fund NAV -3.87 Share Price Return -4.31
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Starbucks Corp. 5.87 IAC/InterActiveCorp. 5.46 Yum! Brands, Inc. 5.35 Carnival Corp. 5.12 Starwood Hotels & Resorts Worldwide, Inc. 5.06 Royal Caribbean Cruises Ltd. 4.86 McDonald's Corp. 4.84 Hilton Hotels Corp. 4.16 Vail Resorts, Inc. 3.41 IHOP Corp. 3.28 TOTAL 47.41
23 POWERSHARES DYNAMIC MEDIA PORTFOLIO (TICKER: PBS) The PowerShares Dynamic Media Portfolio is based on the Dynamic Media Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Media Intellidex -6.41 Fund NAV -6.64 Share Price Return -6.83
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Omnicom Group, Inc. 5.44 McGraw-Hill Cos. (The), Inc. 5.40 Time Warner, Inc. 5.36 Liberty Media Corp. 5.12 Walt Disney (The) Co. 5.08 Comcast Corp. 4.75 EchoStar Communications Corp. 4.73 Tribune Co. 4.45 aQuantive, Inc. 3.78 Catalina Marketing Corp. 3.16 Total 47.27
24 POWERSHARES DYNAMIC NETWORKING PORTFOLIO (TICKER: PXQ) The PowerShares Dynamic Networking Portfolio is based on the Dynamic Networking Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Networking Intellidex 1.23 Fund NAV 0.91 Share Price Return 0.27
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Motorola, Inc. 5.28 Juniper Networks, Inc. 5.11 Broadcom Corp. 5.11 Cisco Systems, Inc. 5.05 Qualcomm, Inc. 5.02 McAfee, Inc. 5.02 Scientific-Atlanta, Inc. 4.86 Lucent Technologies, Inc. 4.70 F5 Networks, Inc. 3.51 Websense, Inc. 3.43 TOTAL 47.09
25 POWERSHARES DYNAMIC PHARMACEUTICALS PORTFOLIO (TICKER: PJP) The PowerShares Dynamic Pharmaceuticals Portfolio is based on the Dynamic Pharmaceuticals Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Pharmaceuticals Intellidex 5.46 Fund NAV 5.18 Share Price Return 5.15
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Merck & Co., Inc. 5.15 Johnson & Johnson 5.11 Genentech, Inc. 5.10 Wyeth 4.94 Amgen, Inc. 4.86 Abbott Laboratories 4.86 Eli Lilly & Co. 4.71 Pfizer, Inc. 4.41 Medimmune, Inc. 3.60 Barr Pharmaceuticals, Inc. 3.50 TOTAL 46.24
26 POWERSHARES DYNAMIC SEMICONDUCTORS PORTFOLIO (TICKER: PSI) The PowerShares Dynamic Semiconductors Portfolio is based on the Dynamic Semiconductors Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Semiconductors Intellidex 0.78 Fund NAV 0.49 Share Price Return 0.47
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Advanced Micro Devices, Inc. 5.70 Analog Devices, Inc. 5.04 KLA-Tencor Corp. 4.88 Intel Corp. 4.76 National Semiconductor Corp. 4.73 Applied Materials, Inc. 4.70 Texas Instruments, Inc. 4.59 Altera Corp. 4.02 Sirf Technology Holdings, Inc. 3.36 Triquint Semiconductor, Inc. 3.32 TOTAL 45.10
27 POWERSHARES DYNAMIC SOFTWARE PORTFOLIO (TICKER: PSJ) The PowerShares Dynamic Software Portfolio is based on the Dynamic Software Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Software Intellidex 13.52 Fund NAV 13.22 Share Price Return 11.86
Fund Inception: 23 June 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Symantec Corp. 5.68 Adobe Systems, Inc. 5.67 Citrix Systems, Inc. 5.59 Autodesk, Inc. 5.28 DST Systems, Inc. 5.13 McAfee, Inc. 4.83 Oracle Corp. 4.76 Microsoft Corp. 4.61 Intergraph Corp. 3.18 Investment Technology Group, Inc. 3.16 TOTAL 47.89
28 POWERSHARES ZACKS MICRO CAP PORTFOLIO (TICKER: PZI) The PowerShares Zacks Micro Cap Portfolio is based on the Dynamic Zacks Micro Cap Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Zacks Micro Cap Index -2.17 Fund NAV -2.28 Share Price Return -2.43
Fund Inception: 18 August 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY CalAmp Corp. 0.37 Mesa Air Group, Inc. 0.35 Merge Technologies, Inc. 0.35 Natus Medical, Inc. 0.35 Encore Wire Corp. 0.34 Hi-Tech Pharmacal Co., Inc. 0.32 NU Horizons Electronics Corp. 0.32 Quidel Corp. 0.32 Supertex, Inc. 0.32 Matrix Service Co. 0.32 TOTAL 3.36
29 POWERSHARES INTERNATIONAL DIVIDEND ACHIEVERS(TM) PORTFOLIO (TICKER: PID) The PowerShares International Dividend Achievers(TM) Portfolio is based on the International Dividend Achievers(TM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index International Dividend Achievers(TM) Index -3.18 Fund NAV -3.20 Share Price Return -3.14
Fund Inception: 15 September 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY ABN AMRO Holding NV ADR 4.98 Barclays PLC ADR 4.28 Aracruz Celulose SA ADR 4.23 HSBC Holdings PLC ADR 3.98 Huaneng Power International, Inc. ADR 3.91 Canadian Imperial Bank of Commerce 3.60 Allied Irish Bank PLC ADR 3.59 Bank of Ireland ADR 3.44 Volvo AB ADR 3.33 Unilever PLC ADR 3.25 TOTAL 38.59
30 POWERSHARES HIGH GROWTH RATE DIVIDEND ACHIEVERS(TM) PORTFOLIO (TICKER: PHJ) The PowerShares High Growth Rate Dividend Achievers(TM) Portfolio is based on the High Growth Rate Dividend Achievers(TM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dividend Achievers(TM) High Growth Rate Index -0.15 Fund NAV -0.06 Share Price Return 0.07
Fund Inception: 15 September 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Wal-Mart Stores, Inc. 4.12 Washington Mutual, Inc. 4.09 Home Depot (The), Inc. 4.06 Pfizer, Inc. 4.03 American International Group, Inc. 4.01 Johnson & Johnson 3.98 Wells Fargo & Co. 3.94 Citigroup, Inc. 3.94 McDonald's Corp. 3.92 Freddie Mac 3.90 TOTAL 39.99
31 POWERSHARES DIVIDEND ACHIEVERS(TM) PORTFOLIO (TICKER: PFM) The PowerShares Dividend Achievers(TM) Portfolio is based on the Dividend Achievers(TM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dividend Achievers(TM) Index -0.96 Fund NAV -1.03 Share Price Return -0.94
Fund Inception: 15 September 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY General Electric Co. 4.96 Exxon Mobil Corp. 4.94 Citigroup, Inc. 4.84 Wal-Mart Stores, Inc. 4.11 Johnson & Johnson 3.89 Bank of America Corp. 3.67 American International Group, Inc. 3.51 Pfizer, Inc. 3.35 Altria Group, Inc. 3.25 Procter & Gamble (The) Co. 2.88 TOTAL 39.40
32 POWERSHARES DYNAMIC OIL & GAS SERVICES PORTFOLIO (TICKER: PXJ) The PowerShares Dynamic Oil & Gas Services Portfolio is based on the Dynamic Oil Services Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Oil Services Intellidex 1.05 Fund NAV 1.04 Share Price Return 1.34
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY BJ Services Co. 5.33 Schlumberger Ltd. 5.04 National-Oilwell Varco, Inc. 4.88 Halliburton Co. 4.71 Transocean, Inc. 4.66 Diamond Offshore Drilling, Inc. 4.66 Baker Hughes, Inc. 4.51 Noble Corp. 4.30 Todco, Class A 3.71 McDermott International, Inc. 3.64 TOTAL 45.44
33 POWERSHARES DYNAMIC INSURANCE PORTFOLIO (TICKER: PIC) The PowerShares Dynamic Insurance Portfolio is based on the Dynamic Insurance Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Insurance Intellidex 2.90 Fund NAV 2.88 Share Price Return 2.45
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Progressive (The) Corp. 5.59 Prudential Financial, Inc. 5.28 AFLAC, Inc. 5.07 Hartford Financial Services Group, Inc. 4.97 Chubb Corp. 4.97 Loews Corp. 4.94 MetLife, Inc. 4.71 Allstate (The) Corp. 4.22 W.R. Berkley Corp. 3.09 RLI Corp. 3.02 TOTAL 45.86
34 POWERSHARES DYNAMIC RETAIL PORTFOLIO (TICKER: PMR) The PowerShares Dynamic Retail Portfolio is based on the Dynamic Retail Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Retail Intellidex 2.03 Fund NAV 2.02 Share Price Return 1.65
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Nordstrom, Inc. 5.34 Home Depot, Inc. 5.23 Kroger (The) Co. 5.19 Staples, Inc. 5.17 J.C. Penney Co., Inc. 5.12 Genuine Parts Co. 5.05 Best Buy Co., Inc. 4.88 Gap (The), Inc. 4.62 7-Eleven, Inc. 3.68 ShopKo Stores, Inc. 3.24 TOTAL 47.52
35 POWERSHARES DYNAMIC BUILDING & CONSTRUCTION PORTFOLIO (TICKER: PKB) The PowerShares Dynamic Building & Construction Portfolio is based on the Dynamic Building & Construction Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Building & Construction Intellidex 1.20 Fund NAV 1.18 Share Price Return 1.37
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Georgia-Pacific Corp. 5.23 Home Depot, Inc. 5.14 Caterpillar, Inc. 4.91 Lowe's Cos., Inc. 4.80 KB HOME 4.65 D.R. Horton, Inc. 4.45 American Standard Cos., Inc. 4.25 Toll Brothers, Inc. 3.94 JLG Industries, Inc. 3.40 Cascade Corp. 3.24 TOTAL 44.01
36 POWERSHARES DYNAMIC UTILITIES PORTFOLIO (TICKER: PUI) The PowerShares Dynamic Utilities Portfolio is based on the Dynamic Utilities Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Utilities Intellidex 2.28 Fund NAV 2.26 Share Price Return 2.28
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY American Electric Power Co., Inc. 5.30 Edison International 5.18 PPL Corp. 5.16 Exelon Corp. 5.11 PG&E Corp. 5.03 FirstEnergy Corp. 4.84 Duke Energy Corp. 4.72 Entergy Corp. 4.71 Black Hills Corp. 3.01 Equitable Resources, Inc. 3.01 TOTAL 46.07
37 POWERSHARES DYNAMIC ENERGY EXPLORATION & PRODUCTION PORTFOLIO (TICKER: PXE) The PowerShares Dynamic Energy Exploration & Production Portfolio is based on the Dynamic Energy Exploration & Production Intellidex(SM) Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Dynamic Energy Exploration & Production Intellidex 1.55 Fund NAV 1.54 Share Price Return 1.62
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Valero Energy Corp. 5.66 EOG Resources, Inc. 5.39 Burlington Resources, Inc. 5.19 ConocoPhillips 5.08 Devon Energy Corp. 5.03 Anadarko Petroleum Corp. 5.01 Occidental Petroleum Corp. 4.85 Exxon Mobil Corp. 4.62 Vintage Petroleum, Inc. 3.78 Giant Industries, Inc. 3.67 TOTAL 48.28
38 POWERSHARES LUX NANOTECH PORTFOLIO (TICKER: PXN) The PowerShares Lux Nanotech Portfolio is based on the Lux Nanotech Index(TM) which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index Lux Nanotech Index -2.04 Fund NAV -2.05 Share Price Return -2.09
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY Symyx Technologies 4.97 Immunicon Corp. 4.76 Elan Corp. PLC ADR (Ireland) 4.75 Flamel Technologies ADR (France) 4.66 Accelrys, Inc. 4.65 Veeco Instruments, Inc. 4.64 Harris & Harris Group, Inc. 4.52 FEI Co. 4.49 American Pharmaceutical Partners, Inc. 4.43 Westaim (The) Corp. (Canada) 4.32 TOTAL 46.19
39 POWERSHARES AEROSPACE & DEFENSE PORTFOLIO (TICKER: PPA) The PowerShares Aerospace & Defense Portfolio is based on the SPADE(TM) Defense Index which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. - FUND PERFORMANCE HISTORY (%) AS OF 31 OCTOBER 2005
FUND INCEPTION Index SPADE(TM) Aerospace & Defense Index -0.35 Fund NAV -0.36 Share Price Return -0.40
Fund Inception: 26 October 2005 Investment objective, risks and expenses should also be considered when comparing investment returns. The index performance results are hypothetical. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. The fund's performance reflects fee waivers, without which, performance would have been lower. See powershares.com to find the most recent month-end performance numbers. - TOP TEN FUND HOLDINGS (% OF FUND'S NET ASSETS) AS OF 31 OCTOBER 2005 SECURITY United Technologies Corp. 7.31 Boeing Co. 7.19 Honeywell International, Inc. 6.27 Lockheed Martin Corp. 5.76 General Dynamics Corp. 5.01 Northrop Grumman Corp. 4.67 Raytheon Co. 4.63 DIRECTV Group (The), Inc. 4.43 Computer Sciences Corp. 4.10 L-3 Communications Holdings, Inc. 4.03 TOTAL 53.40
40 FEES AND EXPENSES (UNAUDITED) As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust, you incur advisory fees and other fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month (or shorter) period ended October 31, 2005. ACTUAL EXPENSES The first line in the following tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading "Expenses Paid During the Six-Month Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line in the following tables provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
BEGINNING ENDING ANNUALIZED ACCOUNT ACCOUNT EXPENSE RATIO EXPENSES PAID VALUE VALUE BASED ON THE DURING THE 05/01/05 10/31/05 SIX-MONTH PERIOD SIX-MONTH PERIOD (1) PowerShares Dynamic Market Portfolio Actual $ 1,000.00 $ 1,134.40 0.61% $ 3.26 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.15 0.61% $ 3.09 PowerShares Dynamic OTC Portfolio Actual $ 1,000.00 $ 1,125.30 0.60% $ 3.22 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.18 0.60% $ 3.06 PowerShares Golden Dragon Halter USX China Portfolio Actual $ 1,000.00 $ 1,025.70 0.73% $ 3.71 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.54 0.73% $ 3.70
41
BEGINNING ENDING ANNUALIZED ACCOUNT ACCOUNT EXPENSE RATIO EXPENSES PAID VALUE VALUE BASED ON THE DURING THE 05/01/05 10/31/05 SIX-MONTH PERIOD SIX-MONTH PERIOD (1) PowerShares High Yield Equity Dividend Achievers(TM) Portfolio Actual $ 1,000.00 $ 1,046.10 0.61% $ 3.14 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.13 0.61% $ 3.11 PowerShares WilderHill Clean Energy Portfolio Actual $ 1,000.00 $ 1,202.40 0.73% $ 4.04 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.53 0.73% $ 3.71 PowerShares Dynamic Large Cap Growth Portfolio Actual $ 1,000.00 $ 1,083.50 0.66% $ 3.48 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.87 0.66% $ 3.38 PowerShares Dynamic Large Cap Value Portfolio Actual $ 1,000.00 $ 1,093.10 0.68% $ 3.61 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.75 0.68% $ 3.49 PowerShares Dynamic Mid Cap Growth Portfolio Actual $ 1,000.00 $ 1,169.40 0.70% $ 3.83 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.68 0.70% $ 3.57 PowerShares Dynamic Mid Cap Value Portfolio Actual $ 1,000.00 $ 1,095.80 0.71% $ 3.77 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.61 0.71% $ 3.63 PowerShares Dynamic Small Cap Growth Portfolio Actual $ 1,000.00 $ 1,131.50 0.71% $ 3.83 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.62 0.71% $ 3.63 PowerShares Dynamic Small Cap Value Portfolio Actual $ 1,000.00 $ 1,109.70 0.69% $ 3.66 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.74 0.69% $ 3.51
42
EXPENSES PAID BEGINNING DURING PERIOD (2) ACCOUNT VALUE ANNUALIZED JUNE 23, 2005 JUNE 23, 2005 EXPENSE RATIO (COMMENCEMENT (COMMENCEMENT ENDING BASED ON OF INVESTMENT OF INVESTMENT ACCOUNT VALUE NUMBER OF DAYS OPERATIONS) TO OPERATIONS) OCTOBER 31, 2005 IN THE PERIOD OCTOBER 31, 2005 PowerShares Dynamic Biotechnology & Genome Portfolio Actual $ 1,000.00 $ 1,106.80 0.65% $ 2.45 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.62 0.65% $ 2.34 PowerShares Dynamic Food & Beverage Portfolio Actual $ 1,000.00 $ 969.20 0.72% $ 2.54 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.36 0.72% $ 2.60 PowerShares Dynamic Leisure & Entertainment Portfolio Actual $ 1,000.00 $ 961.30 0.72% $ 2.54 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.36 0.72% $ 2.61 PowerShares Dynamic Media Portfolio Actual $ 1,000.00 $ 933.60 0.71% $ 2.48 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.38 0.71% $ 2.58 PowerShares Dynamic Networking Portfolio Actual $ 1,000.00 $ 1,009.10 0.72% $ 2.58 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.38 0.72% $ 2.59 PowerShares Dynamic Pharmaceuticals Portfolio Actual $ 1,000.00 $ 1,051.80 0.70% $ 2.59 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.42 0.70% $ 2.55 PowerShares Dynamic Semiconductors Portfolio Actual $ 1,000.00 $ 1,004.90 0.67% $ 2.41 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.54 0.67% $ 2.42 PowerShares Dynamic Software Portfolio Actual $ 1,000.00 $ 1,132.20 0.70% $ 2.68 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.43 0.70% $ 2.54
43
EXPENSES PAID BEGINNING DURING PERIOD (3) ACCOUNT VALUE ANNUALIZED AUGUST 18, 2005 AUGUST 18, 2005 EXPENSE RATIO (COMMENCEMENT (COMMENCEMENT ENDING BASED ON OF INVESTMENT OF INVESTMENT ACCOUNT VALUE NUMBER OF DAYS OPERATIONS) TO OPERATIONS) OCTOBER 31, 2005 IN THE PERIOD OCTOBER 31, 2005 PowerShares Zacks Micro Cap Portfolio Actual $ 1,000.00 $ 977.20 0.72% $ 1.45 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,008.80 0.72% $ 1.48 EXPENSES PAID BEGINNING DURING PERIOD (4) ACCOUNT VALUE ANNUALIZED SEPTEMBER 15, 2005 SEPTEMBER 15, 2005 EXPENSE RATIO (COMMENCEMENT (COMMENCEMENT ENDING BASED ON OF INVESTMENT OF INVESTMENT ACCOUNT VALUE NUMBER OF DAYS OPERATIONS) TO OPERATIONS) OCTOBER 31, 2005 IN THE PERIOD OCTOBER 31, 2005 PowerShares International Dividend Achievers(TM) Portfolio Actual $ 1,000.00 $ 968.00 0.64% $ 0.81 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,005.62 0.64% $ 0.82 PowerShares High Growth Rate Dividend Achievers(TM) Portfolio Actual $ 1,000.00 $ 999.40 0.68% $ 0.87 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,005.56 0.68% $ 0.88 PowerShares Dividend Achievers(TM) Portfolio Actual $ 1,000.00 $ 989.70 0.68% $ 0.87 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,005.56 0.68% $ 0.88
44
EXPENSES PAID BEGINNING DURING PERIOD (5) ACCOUNT VALUE ANNUALIZED OCTOBER 26, 2005 OCTOBER 26, 2005 EXPENSE RATIO (COMMENCEMENT (COMMENCEMENT ENDING BASED ON OF INVESTMENT OF INVESTMENT ACCOUNT VALUE NUMBER OF DAYS OPERATIONS) TO OPERATIONS) OCTOBER 31, 2005 IN THE PERIOD OCTOBER 31, 2005 PowerShares Dynamic Oil & Gas Services Portfolio Actual $ 1,000.00 $ 1,010.40 0.69% $ 0.11 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.71 0.69% $ 0.11 PowerShares Dynamic Insurance Portfolio Actual $ 1,000.00 $ 1,028.80 1.22% $ 0.20 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.62 1.22% $ 0.20 PowerShares Dynamic Retail Portfolio Actual $ 1,000.00 $ 1,020.20 0.72% $ 0.12 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.70 0.72% $ 0.12 PowerShares Dynamic Building & Construction Portfolio Actual $ 1,000.00 $ 1,011.80 1.24% $ 0.20 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.62 1.24% $ 0.20 PowerShares Dynamic Utilities Portfolio Actual $ 1,000.00 $ 1,022.60 1.22% $ 0.20 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.62 1.22% $ 0.20 PowerShares Dynamic Energy Exploration & Production Portfolio Actual $ 1,000.00 $ 1,015.40 0.70% $ 0.12 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.71 0.70% $ 0.11 PowerShares Lux Nanotech Portfolio Actual $ 1,000.00 $ 979.50 0.79% $ 0.13 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.69 0.79% $ 0.13
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EXPENSES PAID BEGINNING DURING PERIOD (5) ACCOUNT VALUE ANNUALIZED OCTOBER 26, 2005 OCTOBER 26, 2005 EXPENSE RATIO (COMMENCEMENT (COMMENCEMENT ENDING BASED ON OF INVESTMENT OF INVESTMENT ACCOUNT VALUE NUMBER OF DAYS OPERATIONS) TO OPERATIONS) OCTOBER 31, 2005 IN THE PERIOD OCTOBER 31, 2005 PowerShares Aerospace & Defense Portfolio Actual $ 1,000.00 $ 996.40 1.15% $ 0.19 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,000.63 1.15% $ 0.19
(1) Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended October 31, 2005. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 184 and then dividing the result by 365. Expense ratios for the most recent half-year may differ from expense ratios based on the one year data in the financial highlights. (2) Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period June 23, 2005 (commencement of investment operations) to October 31, 2005. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 131 and then dividing the result by 365. (3) Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period August 18, 2005 (commencement of investment operations) to October 31, 2005. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 75 and then dividing the result by 365. (4) Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period September 15, 2005 (commencement of investment operations) to October 31, 2005. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 47 and then dividing the result by 365. (5) Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period October 26, 2005 (commencement of investment operations) to October 31, 2005. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 6 and then dividing the result by 365. 46 PORTFOLIO SUMMARY POWERSHARES DYNAMIC MARKET PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 05/01/03 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 20.4 Information Technology 16.3 Health Care 13.3 Consumer Discretionary 13.0 Consumer Staples 9.1 Energy 8.9 Industrials 8.9 Utilities 3.4 Materials 3.3 Telecommunications 3.3 Money Market Fund 0.1 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $537.2 47 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC MARKET PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------- --------------- COMMON STOCKS--99.9% CONSUMER DISCRETIONARY--13.0% 53,517 Arbitron, Inc. $ 2,002,071 127,515 Bluegreen Corp.* 1,934,403 29,698 Building Material Holding Corp. 2,524,627 196,596 Charming Shoppes, Inc.* 2,201,875 378,378 D.R. Horton, Inc. 11,612,421 1,332,261 Ford Motor Co. 11,084,412 76,976 GTECH Holdings Corp. 2,450,916 63,427 Jack in the Box, Inc.* 1,883,782 72,723 K-Swiss, Inc., Class A 2,214,415 395,979 Nordstrom, Inc. 13,720,671 48,120 Papa John's International, Inc.* 2,498,872 119,127 Payless ShoeSource, Inc.* 2,188,363 266,662 Yum! Brands, Inc. 13,565,096 --------------- 69,881,924 --------------- CONSUMER STAPLES--9.1% 87,678 7-Eleven, Inc.* 3,280,034 109,767 Archer-Daniels-Midland Co. 2,675,022 396,215 Coca-Cola (The) Co. 16,950,077 112,093 Coca-Cola Enterprises, Inc. 2,118,558 382,274 Kellogg Co. 16,885,043 85,967 Pepsi Bottling Group, Inc. 2,444,042 100,092 PepsiAmericas, Inc. 2,334,145 77,110 Pilgrim's Pride Corp. 2,427,423 --------------- 49,114,344 --------------- ENERGY--8.9% 85,354 Giant Industries, Inc.* 4,881,395 308,400 Murphy Oil Corp. 14,448,540 473,367 Parker Drilling Co.* 4,184,564 182,196 Valero Energy Corp. 19,174,308 97,035 Vintage Petroleum, Inc. 5,035,146 --------------- 47,723,953 --------------- FINANCIALS--20.4% 61,518 Allmerica Financial Corp.* 2,343,836 204,915 Allstate (The) Corp. 10,817,463 76,231 American Financial Group, Inc. 2,605,576 70,833 Asset Acceptance Capital Corp.* 1,876,366 137,146 Chubb Corp. 12,750,463 44,271 Commerce Group, Inc. 2,515,478 159,835 Hartford Financial Services Group, Inc. 12,746,840 136,313 Loews Corp. 12,674,383 244,282 MetLife, Inc. 12,069,974 66,747 Nationwide Financial Services, Inc., Class A 2,695,911 104,596 Ohio Casualty Corp. 2,853,379 185,958 Prudential Financial, Inc. 13,535,882 73,633 Safety Insurance Group, Inc. 2,769,337 31,548 StanCorp Financial Group, Inc. 2,905,571 88,257 State Auto Financial Corp. 2,907,186 83,444 UICI 3,013,997 64,418 United Fire & Casualty Co. 2,900,098 71,248 W. R. Berkley Corp. 3,113,538 61,885 Zenith National Insurance Corp. 2,786,063 --------------- 109,881,341 --------------- HEALTH CARE--13.3% 154,074 Aetna, Inc. $ 13,644,793 55,227 AMERIGROUP Corp.* 923,395 148,587 Beverly Enterprises, Inc.* 1,744,411 106,175 CIGNA Corp. 12,302,497 70,030 DJ Orthopedics, Inc.* 2,036,472 62,369 Endo Pharmaceuticals Holdings, Inc.* 1,678,973 207,524 Express Scripts, Inc.* 15,649,386 29,233 Idexx Laboratories, Inc.* 2,050,110 126,367 King Pharmaceuticals, Inc.* 1,949,843 27,848 Sierra Health Services, Inc.* 2,088,600 48,193 United Surgical Partners International, Inc.* 1,727,719 237,393 UnitedHealth Group, Inc. 13,742,682 26,462 WellChoice, Inc.* 2,001,850 --------------- 71,540,731 --------------- INDUSTRIALS--8.9% 49,794 Cascade Corp. 2,424,968 621,616 Cendant Corp. 10,828,551 89,992 Copart, Inc.* 2,104,913 219,897 ExpressJet Holdings, Inc.* 1,976,874 51,485 GATX Corp. 1,923,994 91,484 Labor Ready, Inc.* 2,136,151 85,317 Laidlaw International, Inc. 1,940,109 204,918 Lockheed Martin Corp. 12,409,834 260,784 Rockwell Collins, Inc. 11,949,123 --------------- 47,694,517 --------------- INFORMATION TECHNOLOGY--16.3% 270,559 Autodesk, Inc. 12,210,327 41,155 DST Systems, Inc.* 2,309,619 106,001 Emulex Corp.* 1,962,079 54,338 Fair Isaac Corp. 2,269,155 250,788 Fiserv, Inc.* 10,954,420 200,036 infoUSA, Inc. 2,144,386 101,690 Interactive Data Corp. 2,359,208 132,598 MEMC Electronic Materials, Inc.* 2,378,808 29,398 MicroStrategy, Inc., Class A* 2,084,318 529,470 Motorola, Inc. 11,733,055 453,469 National Semiconductor Corp. 10,262,003 360,664 Parametric Technology Corp.* 2,347,923 93,127 Per-Se Technologies, Inc.* 2,070,213 77,104 Reynolds & Reynolds (The) Co., Class A 2,046,340 63,936 Rofin-Sinar Technologies, Inc.* 2,356,681 122,517 Syntel, Inc. 2,485,870 85,060 Transaction Systems Architects, Inc.* 2,297,471 115,925 TriZetto Group (The), Inc.* 1,642,657 852,982 Xerox Corp.* 11,574,966 --------------- 87,489,499 --------------- MATERIALS--3.3% 30,367 FMC Corp.* 1,653,179 41,581 Lubrizol Corp. 1,729,354 25,908 Martin Marietta Materials, Inc. 2,044,400 281,583 Rohm & Haas Co. 12,257,309 --------------- 17,684,242 ---------------
SEE NOTES TO FINANCIAL STATEMENTS. 48
NUMBER OF SHARES VALUE - ------------- --------------- COMMON STOCKS (CONTINUED) TELECOMMUNICATIONS--3.3% 89,287 ALLTEL Corp. $ 5,523,294 283,414 AT&T Corp. 5,605,928 44,330 CenturyTel, Inc. 1,450,921 39,411 Commonwealth Telephone Enterprises, Inc. 1,414,461 185,902 Premiere Global Services, Inc.* 1,576,449 51,779 West Corp.* 2,042,682 --------------- 17,613,735 --------------- UTILITIES--3.4% 74,283 Energen Corp. 2,793,041 90,174 NorthWestern Corp. 2,682,677 289,079 Sempra Energy 12,806,199 --------------- 18,281,917 --------------- TOTAL COMMON STOCKS (Cost $511,972,133) 536,906,203 --------------- MONEY MARKET FUND--0.1% 502,278 AIM Liquid Asset Portfolio Private Class (Cost $502,278) 502,278 --------------- TOTAL INVESTMENTS (Cost $512,474,411)--100.0% 537,408,481 Liabilities in excess of other assets--(0.0%) (234,596) --------------- NET ASSETS--100.0% $ 537,173,885 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 49 PORTFOLIO SUMMARY POWERSHARES DYNAMIC OTC PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 05/01/03 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 50.4 Consumer Discretionary 15.2 Health Care 12.6 Financials 10.0 Telecommunications 4.5 Industrials 4.4 Consumer Staples 1.8 Energy 0.6 Materials 0.5 Money Market Fund 0.1 Other (0.1)
- PORTFOLIO STATISTICS Net Assets ($million): $133.4 50 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC OTC PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--15.2% 132,610 American Eagle Outfitters, Inc. $ 3,122,966 10,395 Building Material Holding Corp. 883,679 68,800 Charming Shoppes, Inc.* 770,560 30,828 Conn's, Inc.* 902,336 25,453 K-Swiss, Inc., Class A 775,044 42,694 Monarch Casino & Resort, Inc.* 826,983 128,586 O'Reilly Automotive, Inc.* 3,626,125 16,840 Papa John's International, Inc.* 874,501 163,561 Staples, Inc. 3,717,742 147,476 Starbucks Corp.* 4,170,620 33,271 Stein Mart, Inc. 610,523 ------------- 20,281,079 ------------- CONSUMER STAPLES--1.8% 14,235 J & J Snack Foods Corp. 802,996 41,229 Lancaster Colony Corp. 1,652,871 ------------- 2,455,867 ------------- ENERGY--0.6% 22,819 Patterson-UTI Energy, Inc. 778,812 ------------- FINANCIALS--10.0% 109,374 Ameritrade Holding Corp.* 2,300,135 12,725 Asset Acceptance Capital Corp.* 337,085 12,498 ASTA Funding, Inc. 339,071 4,451 BancFirst Corp. 369,789 41,608 Commerce Bancshares, Inc. 2,210,633 10,719 Hancock Holding Co. 382,347 10,146 Navigators Group, Inc.* 393,665 15,339 Ohio Casualty Corp. 418,448 10,796 Safety Insurance Group, Inc. 406,038 60,291 SEI Investments Co. 2,339,291 7,959 Selective Insurance Group, Inc. 437,029 12,942 State Auto Financial Corp. 426,309 34,106 T. Rowe Price Group, Inc. 2,234,625 9,446 United Fire & Casualty Co. 425,259 13,342 United PanAm Financial Corp.* 297,393 ------------- 13,317,117 ------------- HEALTH CARE--12.6% 21,047 CNS, Inc. 548,695 101,708 Endo Pharmaceuticals Holdings, Inc.* 2,737,979 52,748 Express Scripts, Inc.* 3,977,727 74,156 Gilead Sciences, Inc.* 3,503,871 12,389 Hologic, Inc.* 687,094 47,691 IDEXX Laboratories, Inc.* 3,344,570 34,500 Meridian Bioscience, Inc. 722,430 66,267 OraSure Technologies, Inc.* 729,600 14,975 United Surgical Partners International, Inc.* 536,854 ------------- 16,788,820 ------------- INDUSTRIALS--4.4% 44,826 ABX Air, Inc.* 358,160 35,078 Albany Molecular Research, Inc.* 470,045 15,376 Clean Harbors, Inc. 521,246 94,297 Copart, Inc.* 2,205,607 11,008 GulfMark Offshore, Inc.* $ 314,168 15,389 Marten Transport, Ltd.* 408,886 20,874 Matthews International Corp., Class A 750,212 9,173 Portfolio Recovery Associates, Inc.* 356,830 20,324 PRA International* 539,805 ------------- 5,924,959 ------------- INFORMATION TECHNOLOGY--50.4% 26,189 ADE Corp.* 534,256 138,549 Adobe Systems, Inc. 4,468,204 15,673 ANSYS, Inc.* 583,976 212,374 Applied Materials, Inc. 3,478,686 92,287 Autodesk, Inc. 4,164,912 426,650 BEA Systems, Inc.* 3,763,053 43,874 Blackbaud, Inc. 631,786 219,209 Cisco Systems, Inc.* 3,825,197 436,912 Compuware Corp.* 3,534,618 17,049 Comtech Telecommunications Corp.* 654,000 37,684 Covansys Corp.* 602,944 28,604 CSG Systems International, Inc.* 672,480 22,046 Digital Insight Corp.* 657,632 51,513 Digitas, Inc.* 556,340 16,723 Diodes, Inc.* 606,376 62,712 EarthLink, Inc.* 690,459 85,540 Fiserv, Inc.* 3,736,387 13,166 Hyperion Solutions Corp.* 636,708 51,102 Informatica Corp.* 608,114 52,979 InfoUSA, Inc.* 567,935 150,108 Intel Corp. 3,527,538 15,182 iPayment, Inc.* 545,945 42,113 JDA Software Group, Inc.* 680,967 15,340 Komag, Inc.* 411,419 127,738 Lam Research Corp.* 4,309,880 19,650 Mantech International Corp.* 544,305 141,425 Microsoft Corp. 3,634,623 7,786 MicroStrategy, Inc.* 552,027 35,658 MRO Software, Inc.* 584,078 14,062 MTS Systems Corp. 561,918 26,960 NETGEAR, Inc.* 527,068 95,521 Parametric Technology Corp.* 621,842 28,934 Per-Se Technologies, Inc.* 643,203 19,016 Progress Software Corp.* 592,158 109,385 QLogic Corp.* 3,299,052 16,934 Rofin-Sinar Technologies, Inc.* 624,187 51,513 Secure Computing Corp.* 617,126 27,279 SPSS, Inc.* 621,961 57,579 SYKES Enterprises, Inc.* 831,441 187,617 Symantec Corp.* 4,474,664 32,449 Syntel, Inc. 658,390 16,969 TALX Corp. 670,785 22,528 Transaction Systems Architects, Inc.* 608,481 16,874 Trimble Navigation Ltd.* 487,152 36,014 TriZetto Group (The), Inc.* 510,318 44,724 United Online, Inc. 599,749 22,661 WebEx Communications, Inc.* 519,164 ------------- 67,233,504 -------------
SEE NOTES TO FINANCIAL STATEMENTS. 51
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS (CONTINUED) MATERIALS--0.5% 7,420 Sigma-Aldrich Corp. $ 472,654 6,385 Silgan Holdings, Inc. 205,405 ------------- 678,059 ------------- TELECOMMUNICATIONS--4.5% 29,014 Commonwealth Telephone Enterprises, Inc. 1,041,312 123,773 Telewest Global, Inc.* 2,822,025 54,255 West Corp.* 2,140,360 ------------- 6,003,697 ------------- TOTAL COMMON STOCKS (Cost $127,631,215) 133,461,914 ------------- MONEY MARKET FUND--0.1% 79,205 AIM Liquid Asset Portfolio Private Class (Cost $79,205) 79,205 ------------- TOTAL INVESTMENTS (Cost $127,710,420)--100.1% 133,541,119 Liabilities in excess of other assets--(0.1%) (104,953) ------------- NET ASSETS--100.0% $ 133,436,166 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 52 PORTFOLIO SUMMARY POWERSHARES GOLDEN DRAGON HALTER USX CHINA PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 12/09/04 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 28.8 Telecommunications 20.4 Materials 16.7 Energy 14.6 Industrials 6.0 Financials 4.6 Utilities 4.3 Consumer Discretionary 3.7 Health Care 0.8 Money Market Fund 0.2 Other (0.1)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) China 73.9 Hong Kong 22.1 United States 2.3 Cayman Islands 0.7 Singapore 0.6 South Korea 0.5 Other (0.1)
- PORTFOLIO STATISTICS Net Assets ($million): $65.9 53 SCHEDULE OF INVESTMENTS POWERSHARES GOLDEN DRAGON HALTER USX CHINA PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--99.9% CONSUMER DISCRETIONARY--3.7% 42,629 Brilliance China Automotive Holdings Ltd. ADR $ 555,882 26,453 China Automotive Systems, Inc.* 118,242 41,410 China Yuchai International Ltd. 383,043 17,470 Deswell Industries, Inc. 240,213 43,441 Focus Media Holding Ltd. ADR 1,140,760 ------------- 2,438,140 ------------- ENERGY--14.6% 71,699 China Petroleum and Chemical Corp. ADR 2,885,885 43,231 CNOOC Ltd. ADR 2,840,277 50,335 PetroChina Co. Ltd. ADR 3,862,203 ------------- 9,588,365 ------------- FINANCIALS--4.6% 102,207 China Life Insurance Co. Ltd. ADR* 2,999,775 ------------- HEALTH CARE--0.8% 40,743 Sinovac Biotech Ltd.* 207,789 83,587 Tiens Biotech Group USA, Inc.* 309,272 ------------- 517,061 ------------- INDUSTRIALS--6.0% 16,292 51job, Inc. ADR* 209,352 57,030 China Eastern Airlines Corp. Ltd. ADR 799,561 28,943 China Energy Savings Technology, Inc.* 139,505 102,510 China Southern Airlines Co. Ltd. ADR 1,343,906 101,605 Guangshen Railway Co. Ltd. ADR 1,450,920 ------------- 3,943,244 ------------- INFORMATION TECHNOLOGY--28.8% 31,799 ASAT Holdings Ltd. ADR* 23,213 54,749 AsiaInfo Holdings, Inc.* 211,331 38,434 Baidu.com ADR 2,668,858 130,025 CDC Corp., Class A* 445,986 4,656 China Finance Online Co. Ltd. ADR* 27,983 36,846 Comtech Group, Inc.* 229,919 18,413 Ctrip.com International Ltd. ADR* 1,059,300 23,342 eLong, Inc. ADR* 254,661 25,920 INTAC International, Inc.* 146,966 37,205 International DisplayWorks, Inc.* 219,137 40,285 KongZhong Corp. ADR* 510,814 50,068 Nam Tai Electronics, Inc. 1,134,040 34,704 Netease.com, Inc. ADR* 2,646,874 41,002 Ninetowns Digital World Trade Holdings Ltd. ADR* 198,860 12,571 PacificNet, Inc.* 103,711 22,253 Radica Games Ltd. 196,049 389,901 Semiconductor Manufacturing International Corp. ADR* 2,631,832 82,316 Shanda Interactive Entertainment Ltd. ADR* 2,038,967 62,198 SINA Corp.* 1,576,719 42,542 Sohu.com, Inc.* 644,086 28,341 The9 Ltd. ADR* 533,944 61,522 Tom Online, Inc. ADR* $ 1,107,396 50,659 Webzen, Inc. ADR 349,547 ------------- 18,960,193 ------------- MATERIALS--16.7% 55,417 Aluminum Corp. of China Ltd. ADR 3,348,849 64,383 Jilin Chemical Industrial Co. Ltd. ADR* 2,263,062 91,350 Sinopec Shanghai Petrochemical Co. Ltd. ADR 2,783,435 82,511 Yanzhou Coal Mining Co. Ltd. ADR 2,626,325 ------------- 11,021,671 ------------- TELECOMMUNICATIONS--20.4% 169,324 China Mobile (Hong Kong) Ltd. ADR 3,801,323 91,132 China Netcom Group Corp. (Hong Kong) Ltd. ADR 2,892,529 83,848 China Telecom Corp. Ltd. ADR 2,735,122 371,854 China Unicom Ltd. ADR 2,863,276 29,308 Linktone Ltd. ADR* 298,942 21,253 Qiao Xing Universal Telephone, Inc.* 127,731 138,655 UTStarcom, Inc.* 765,376 ------------- 13,484,299 ------------- UTILITIES--4.3% 105,056 Huaneng Power International, Inc. ADR 2,837,563 ------------- TOTAL COMMON STOCKS (Cost $69,185,024) 65,790,311 ------------- MONEY MARKET FUND--0.2% 135,620 AIM Liquid Asset Portfolio Private Class (Cost $135,620) 135,620 ------------- TOTAL INVESTMENTS (Cost $69,320,644)--100.1% 65,925,931 Liabilities in excess of other assets--(0.1%) (42,022) ------------- NET ASSETS--100.0% $ 65,883,909 =============
ADR American Depositary Receipt. * Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 54 PORTFOLIO SUMMARY POWERSHARES HIGH YIELD EQUITY DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 12/09/04 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 52.3 Utilities 32.2 Consumer Staples 8.3 Health Care 2.9 Telecommunications 2.6 Industrials 1.6 Money Market Fund 0.2 Other (0.1)
- PORTFOLIO STATISTICS Net Assets ($million): $464.5 55 SCHEDULE OF INVESTMENTS POWERSHARES HIGH YIELD EQUITY DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--99.9% CONSUMER STAPLES--8.3% 123,265 Altria Group, Inc. $ 9,251,038 431,148 ConAgra Foods, Inc. 10,032,815 537,638 Sara Lee Corp. 9,596,838 261,417 Universal Corp. 9,787,452 ------------- 38,668,143 ------------- FINANCIALS--52.3% 368,297 AmSouth Bancorp. 9,292,133 306,175 Arthur J. Gallagher & Co. 9,007,669 355,981 BancorpSouth, Inc. 7,892,099 251,273 Bank of America Corp. 10,990,681 213,656 BB&T Corp. 9,046,195 194,469 Citigroup, Inc. 8,902,791 152,884 Comerica, Inc. 8,833,638 891,836 First Commonwealth Financial Corp. 11,745,480 159,190 First Indiana Corp. 5,565,282 328,683 First Merchants Corp. 8,263,091 371,100 FirstMerit Corp. 9,785,907 716,561 F.N.B. Corp. 12,840,772 192,420 Hudson United Bancorp 7,979,657 292,551 KeyCorp 9,431,844 178,068 Marsh & McLennan Cos., Inc. 5,190,682 319,483 National City Corp. 10,296,937 378,883 Old National Bancorp 8,301,327 310,169 Regions Financial Corp. 10,096,001 256,092 Sky Financial Group, Inc. 7,191,063 395,484 Susquehanna Bancshares, Inc. 9,131,726 371,899 Valley National Bancorp 9,014,832 358,370 Washington Federal, Inc. 8,238,926 295,639 Washington Mutual, Inc. 11,707,304 136,109 Wells Fargo & Co. 8,193,762 309,918 WesBanco, Inc. 9,514,483 325,117 Whitney Holding Corp. 8,778,159 201,804 Wilmington Trust Corp. 7,650,390 ------------- 242,882,831 ------------- HEALTH CARE--2.9% 473,944 Merck & Co., Inc. 13,374,700 ------------- INDUSTRIALS--1.6% 589,518 ServiceMaster (The) Co. 7,416,136 ------------- TELECOMMUNICATIONS--2.6% 518,635 SBC Communications, Inc. 12,369,445 ------------- UTILITIES--32.2% 205,804 American States Water Co. 6,449,897 387,218 Atmos Energy Corp. 10,183,833 165,536 Black Hills Corp. 6,881,332 241,520 Consolidated Edison, Inc. 10,989,161 261,443 MGE Energy, Inc. 9,265,540 260,217 National Fuel Gas Co. 7,842,940 261,446 Nicor, Inc. 10,248,683 285,291 Otter Tail Corp. 8,515,936 354,457 Peoples Energy Corp. 13,185,801 362,179 Piedmont Natural Gas Co., Inc. 8,569,155 243,015 Pinnacle West Capital Corp. 10,148,306 284,754 Progress Energy, Inc. $ 12,412,428 238,325 UGI Corp. 5,624,470 370,042 Vectren Corp. 10,046,640 316,729 WGL Holdings, Inc. 9,843,937 168,370 WPS Resources Corp. 9,186,267 ------------- 149,394,326 ------------- TOTAL COMMON STOCKS (Cost $470,427,119) 464,105,581 ------------- MONEY MARKET FUND--0.2% 822,280 AIM Liquid Asset Portfolio Private Class (Cost $822,280) 822,280 ------------- TOTAL INVESTMENTS (Cost $471,249,399)--100.1% 464,927,861 Liabilities in excess of other assets--(0.1%) (403,850) ------------- NET ASSETS--100.0% $ 464,524,011 =============
SEE NOTES TO FINANCIAL STATEMENTS. 56 PORTFOLIO SUMMARY POWERSHARES WILDERHILL CLEAN ENERGY PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 03/03/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 34.9 Utilities 17.8 Energy 16.5 Industrials 11.8 Materials 10.5 Health Care 3.2 Consumer Discretionary 2.8 Consumer Staples 2.6 Money Market Fund 0.0 Other (0.1)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) United States 87.0 Canada 5.4 United Kingdom 4.6 Japan 3.1 Other (0.1)
- PORTFOLIO STATISTICS Net Assets ($million): $168.6 57 SCHEDULE OF INVESTMENTS POWERSHARES WILDERHILL CLEAN ENERGY PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.1% CONSUMER DISCRETIONARY--2.8% 918,851 IMPCO Technologies, Inc.* $ 4,768,837 ------------- CONSUMER STAPLES--2.6% 406,155 MGP Ingredients, Inc. 4,362,064 ------------- ENERGY--16.5% 982,793 Ballard Power Systems, Inc. (Canada)* 4,845,169 660,965 Evergreen Solar, Inc.* 5,452,961 481,134 FuelCell Energy, Inc.* 4,214,734 1,363,223 Hydrogenics Corp. (Canada)* 4,171,462 773,042 Plug Power, Inc.* 4,483,644 1,404,760 Quantum Fuel Systems Technologies Worldwide, Inc.* 4,677,851 ------------- 27,845,821 ------------- HEALTH CARE--3.2% 188,915 Intermagnetics General Corp.* 5,412,415 ------------- INDUSTRIALS--11.8% 216,213 American Power Conversion Corp. 4,624,796 1,484,429 Magnetek, Inc.* 4,705,640 298,475 Medis Technologies Ltd.* 5,035,273 451,656 Ultralife Batteries, Inc.* 5,474,071 ------------- 19,839,780 ------------- INFORMATION TECHNOLOGY--34.9% 495,715 American Superconductor Corp.* 4,069,820 228,329 Cree, Inc.* 5,489,028 399,498 Cypress Semiconductor Corp.* 5,433,173 620,636 Echelon Corp.* 4,809,929 990,277 Emcore Corp.* 5,486,135 121,428 International Rectifier Corp.* 3,593,055 118,065 Itron, Inc.* 5,131,105 79,983 KYOCERA Corp. ADR (Japan) 5,195,696 436,189 Maxwell Technologies, Inc. 5,469,810 1,385,571 Mechanical Technology, Inc.* 4,350,693 256,174 Power Integrations, Inc.* 5,407,833 1,145,484 UQM Technologies, Inc.* 4,329,930 ------------- 58,766,207 ------------- MATERIALS--10.5% 76,232 Air Products & Chemicals, Inc. 4,363,520 102,557 BOC Group PLC ADR (United Kingdom) 4,056,129 88,932 Praxair, Inc. 4,394,130 544,178 Zoltek Cos., Inc.* 4,897,602 ------------- 17,711,381 ------------- UTILITIES--17.8% 1,415,408 Active Power, Inc.* 4,600,076 1,355,932 Capstone Turbine Corp.* 3,281,355 695,408 Distributed Energy Systems Corp.* 5,584,127 140,585 Energy Conversion Devices, Inc.* 4,349,700 123,935 IDACORP, Inc. 3,578,003 244,018 Ormat Technologies, Inc. 4,973,087 92,672 Scottish Power PLC ADR (United Kingdom) $ 3,623,475 ------------- 29,989,823 ------------- TOTAL COMMON STOCKS (Cost $180,476,451) 168,696,328 ------------- MONEY MARKET FUND--0.0% 4,724 AIM Liquid Asset Portfolio Private Class (Cost $4,724) 4,724 ------------- TOTAL INVESTMENTS (Cost $180,481,175)--100.1% 168,701,052 Liabilities in excess of other assets--(0.1%) (112,687) ------------- NET ASSETS--100.0% $ 168,588,365 =============
ADR American Depositary Receipt. * Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 58 PORTFOLIO SUMMARY POWERSHARES DYNAMIC LARGE CAP GROWTH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 03/03/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 31.4 Consumer Discretionary 22.4 Health Care 18.1 Financials 8.3 Industrials 7.9 Consumer Staples 7.2 Energy 3.2 Materials 1.5 Money Market Fund 0.0 Other 0.0
- PORTFOLIO STATISTICS Net Assets ($million): $44.3 59 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC LARGE CAP GROWTH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--22.4% 8,444 Apollo Group, Inc.* $ 532,141 15,743 Bed Bath & Beyond, Inc.* 637,906 14,121 Best Buy Co., Inc. 624,995 13,063 Carnival Corp. 648,839 19,297 Coach, Inc.* 620,977 48,999 Comcast Corp.* 1,363,642 7,497 Fortune Brands, Inc. 569,547 79,042 Liberty Media Corp.* 629,965 23,995 Lowe's Cos., Inc. 1,458,176 29,161 Staples, Inc. 662,830 10,963 Starwood Hotels & Resorts Worldwide, Inc. 640,568 27,228 Target Corp. 1,516,328 ------------- 9,905,914 ------------- CONSUMER STAPLES--7.2% 15,068 Costco Wholesale Corp. 728,689 22,420 CVS Corp. 547,272 11,158 Hershey (The) Co. 634,109 19,365 Sysco Corp. 617,937 14,082 Walgreen Co. 639,745 ------------- 3,167,752 ------------- ENERGY--3.2% 10,747 EOG Resources, Inc. 728,431 11,348 Halliburton Co. 670,667 ------------- 1,399,098 ------------- FINANCIALS--8.3% 14,789 AFLAC, Inc. 706,618 31,483 American Express Co. 1,566,910 8,090 Franklin Resources, Inc. 714,913 13,320 Moody's Corp. 709,423 ------------- 3,697,864 ------------- HEALTH CARE--18.1% 8,358 Aetna, Inc. 740,184 19,268 Amgen, Inc.* 1,459,744 16,712 Baxter International, Inc. 638,900 12,391 Becton Dickinson & Co. 628,843 14,224 Caremark Rx, Inc.* 745,338 15,827 Gilead Sciences, Inc.* 747,826 14,241 McKesson Corp. 646,969 30,050 UnitedHealth Group, Inc. 1,739,594 8,959 WellPoint, Inc.* 669,058 ------------- 8,016,456 ------------- INDUSTRIALS--7.9% 12,265 Danaher Corp. 639,007 17,811 Norfolk Southern Corp. 716,002 16,638 Raytheon Co. 614,774 21,253 United Parcel Service, Inc., Class B 1,550,194 ------------- 3,519,977 ------------- INFORMATION TECHNOLOGY--31.4% 23,600 Adobe Systems, Inc. $ 761,100 14,204 Apple Computer, Inc.* 818,008 87,128 Cisco Systems, Inc.* 1,520,384 33,840 Corning, Inc.* 679,846 42,922 Dell, Inc.* 1,368,353 59,663 Intel Corp. 1,402,081 56,212 Microsoft Corp. 1,444,648 71,781 Motorola, Inc. 1,590,666 117,520 Oracle Corp.* 1,490,154 38,043 QUALCOMM, Inc. 1,512,590 31,959 Symantec Corp.* 762,222 20,265 Texas Instruments, Inc. 578,566 ------------- 13,928,618 ------------- MATERIALS--1.5% 13,418 Praxair, Inc. 662,983 ------------- TOTAL COMMON STOCKS (Cost $43,152,722) 44,298,662 ------------- MONEY MARKET FUND--0.0% 21,145 AIM Liquid Asset Portfolio Private Class (Cost $21,145) 21,145 ------------- TOTAL INVESTMENTS (Cost $43,173,867)--100.0% 44,319,807 Other assets less liabilities--0.0% 20,670 ------------- NET ASSETS--100.0% $ 44,340,477 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 60 PORTFOLIO SUMMARY POWERSHARES DYNAMIC LARGE CAP VALUE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 03/03/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 39.6 Energy 15.8 Utilities 9.5 Consumer Staples 9.2 Information Technology 8.2 Health Care 7.6 Telecommunications 4.6 Industrials 2.5 Materials 1.5 Consumer Discretionary 1.2 Money Market Fund 0.2 Other 0.1
- PORTFOLIO STATISTICS Net Assets ($million): $29.9 61 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC LARGE CAP VALUE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--99.7% CONSUMER DISCRETIONARY--1.2% 42,960 Ford Motor Co. $ 357,427 ------------- CONSUMER STAPLES--9.2% 14,096 Altria Group, Inc. 1,057,905 18,678 Archer-Daniels-Midland Co. 455,183 14,332 Campbell Soup Co. 417,061 8,949 General Mills, Inc. 431,879 6,779 Kimberly-Clark Corp. 385,318 ------------- 2,747,346 ------------- ENERGY--15.8% 6,270 Burlington Resources, Inc. 452,819 16,493 Chevron Corp. 941,256 15,827 ConocoPhillips 1,034,770 7,277 Devon Energy Corp. 439,385 16,764 Exxon Mobil Corp. 941,131 5,372 Occidental Petroleum Corp. 423,743 4,696 Valero Energy Corp. 494,207 ------------- 4,727,311 ------------- FINANCIALS--39.6% 7,202 Allstate (The) Corp. 380,194 22,859 Bank of America Corp. 999,853 4,823 Chubb (The) Corp. 448,394 13,437 Genworth Financial, Inc. 425,819 5,620 Hartford Financial Services Group (The), Inc. 448,195 4,026 Lehman Brothers Holdings, Inc. 481,791 4,790 Loews Corp. 445,374 3,969 M&T Bank Corp. 426,985 16,871 MBNA Corp. 431,391 13,171 Mellon Financial Corp. 417,389 17,145 Merrill Lynch & Co., Inc. 1,109,967 8,587 MetLife, Inc. 424,284 18,996 Morgan Stanley 1,033,572 9,144 Principal Financial Group, Inc. 453,817 4,350 Progressive (The) Corp. 503,774 9,383 St. Paul Travelers (The) Cos., Inc. 422,516 33,645 U.S. Bancorp 995,219 19,763 Wachovia Corp. 998,427 16,660 Wells Fargo & Co. 1,002,932 ------------- 11,849,893 ------------- HEALTH CARE--7.6% 3,722 CIGNA Corp. 431,268 35,403 Merck & Co., Inc. 999,072 39,348 Pfizer, Inc. 855,426 ------------- 2,285,766 ------------- INDUSTRIALS--2.5% 20,615 Cendant Corp. 359,113 7,558 Northrop Grumman Corp. 405,487 ------------- 764,600 ------------- INFORMATION TECHNOLOGY--8.2% 36,256 Hewlett-Packard Co. $ 1,016,618 12,182 International Business Machines Corp. 997,462 32,015 Xerox Corp.* 434,444 ------------- 2,448,524 ------------- MATERIALS--1.5% 10,563 E.I. du Pont de Nemours & Co. 440,371 ------------- TELECOMMUNICATIONS--4.6% 21,715 AT&T Corp. 429,523 30,040 Verizon Communications, Inc. 946,560 ------------- 1,376,083 ------------- UTILITIES--9.5% 11,396 American Electric Power Co., Inc. 432,592 14,554 Duke Energy Corp. 385,390 9,657 Edison International 422,590 5,432 Entergy Corp. 384,151 8,023 Exelon Corp. 417,437 8,325 FirstEnergy Corp. 395,438 11,288 PG&E Corp. 410,657 ------------- 2,848,255 ------------- TOTAL COMMON STOCKS (Cost $29,055,226) 29,845,576 ------------- MONEY MARKET FUND--0.2% 65,631 AIM Liquid Asset Portfolio Private Class (Cost $65,631) 65,631 ------------- TOTAL INVESTMENTS (Cost $29,120,857)--99.9% 29,911,207 Other assets less liabilities--0.1% 27,313 ------------- NET ASSETS--100.0% $ 29,938,520 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 62 PORTFOLIO SUMMARY POWERSHARES DYNAMIC MID CAP GROWTH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 03/03/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 28.4 Health Care 21.9 Consumer Discretionary 16.5 Industrials 11.9 Financials 9.6 Materials 5.2 Utilities 3.7 Consumer Staples 1.2 Telecommunications 1.1 Energy 0.6 Other (0.1)
- PORTFOLIO STATISTICS Net Assets ($million): $26.0 63 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC MID CAP GROWTH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.1% CONSUMER DISCRETIONARY--16.5% 14,010 Abercrombie & Fitch Co. $ 728,380 3,507 Advance Auto Parts, Inc.* 131,513 5,204 American Eagle Outfitters, Inc. 122,554 23,660 Chico's Fas, Inc* 935,516 33,499 Hilton Hotels Corp. 651,556 24,459 Nordstrom, Inc. 847,504 5,045 O'Reilly Automotive, Inc.* 142,269 4,417 The Men's Wearhouse, Inc.* 109,100 17,212 Toll Brothers, Inc.* 635,295 ------------- 4,303,687 ------------- CONSUMER STAPLES--1.2% 5,085 7-Eleven, Inc.* 190,229 3,772 Church & Dwight Co., Inc. 132,209 ------------- 322,438 ------------- ENERGY--0.6% 4,242 Grant Prideco, Inc.* 164,971 ------------- FINANCIALS--9.6% 2,989 Chicago Mercantile Exchange Holdings, Inc. 1,091,432 5,602 Eaton Vance Corp. 139,434 7,586 Legg Mason, Inc. 814,054 3,580 Leucadia National Corp. 153,797 3,939 SEI Investments Co. 152,833 3,021 SVB Financial Group* 150,174 ------------- 2,501,724 ------------- HEALTH CARE--21.9% 3,164 Barr Pharmaceuticals, Inc.* 181,772 1,843 Bausch & Lomb, Inc. 136,732 12,636 C. R. Bard, Inc. 788,234 1,835 Cerner Corp.* 154,966 3,979 Dade Behring Holdings, Inc. 143,284 3,211 DaVita, Inc.* 157,917 4,780 Endo Pharmaceuticals Holdings, Inc.* 128,678 13,932 Express Scripts, Inc.* 1,050,612 17,155 Humana, Inc.* 761,510 2,241 IDEXX Laboratories, Inc.* 157,161 2,078 Kos Pharmaceuticals, Inc.* 124,680 3,378 Lincare Holdings, Inc.* 137,991 10,782 PacifiCare Health Systems, Inc.* 888,006 3,660 Respironics, Inc.* 131,284 2,132 Sierra Health Services, Inc.* 159,900 2,638 Techne Corp.* 143,032 2,957 Triad Hospitals, Inc* 121,621 3,714 Varian Medical Systems, Inc.* 169,210 6,067 VCA Antech, Inc.* 156,529 ------------- 5,693,119 ------------- INDUSTRIALS--11.9% 3,598 Ametek, Inc. 146,547 4,745 C.H. Robinson Worldwide, Inc. 167,309 6,330 Copart, Inc.* 148,059 1,804 Corporate Executive Board Co. 149,083 8,637 Crown Holdings, Inc.* $ 140,092 3,178 Goodrich Corp. 114,630 4,714 Herman Miller, Inc. 129,211 2,525 HNI Corp. 123,473 3,356 IDEX Corp. 134,307 9,978 L-3 Communications Holdings, Inc. 776,487 3,537 Oshkosh Truck Corp., Class B 154,072 16,565 Rockwell Collins, Inc. 759,007 4,275 Thomas & Betts Corp.* 166,383 ------------- 3,108,660 ------------- INFORMATION TECHNOLOGY--28.4% 3,386 Amphenol Corp., Class A 135,338 19,453 Autodesk, Inc.* 877,915 17,562 Cognizant Technology Solutions Corp., Class A* 772,377 16,383 Compuware Corp.* 132,538 2,703 DST Systems, Inc.* 151,692 36,461 Electronic Data Systems Corp. 849,907 18,030 Fiserv, Inc.* 787,550 4,380 Global Payments, Inc. 187,683 3,845 Harris Corp. 158,030 27,402 Jabil Circuit, Inc.* 817,950 4,789 Lam Research Corp.* 161,581 4,752 McAfee, Inc.* 142,703 32,602 National Semiconductor Corp. 737,783 33,779 Network Appliance, Inc.* 924,194 23,679 Parametric Technology Corp.* 154,150 3,894 Scientific-Atlanta, Inc. 138,003 4,220 SRA International, Inc., Class A* 138,500 4,182 Trimble Navigation Ltd.* 120,734 ------------- 7,388,628 ------------- MATERIALS--5.2% 2,878 Florida Rock Industries, Inc. 163,758 20,406 Freeport-McMoRan Copper & Gold, Inc., Class B 1,008,465 2,163 Martin Marietta Materials, Inc. 170,682 ------------- 1,342,905 ------------- TELECOMMUNICATIONS--1.1% 2,673 US Cellular Corp.* 136,323 3,642 West Corp.* 143,677 ------------- 280,000 ------------- UTILITIES--3.7% 51,667 AES (The) Corp.* 820,989 4,971 Allegheny Energy, Inc.* 140,480 ------------- 961,469 ------------- TOTAL INVESTMENTS (Cost $24,959,853)--100.1% 26,067,601 Liabilities in excess of other assets--(0.1%) (31,966) ------------- NET ASSETS--100.0% $ 26,035,635 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 64 PORTFOLIO SUMMARY POWERSHARES DYNAMIC MID CAP VALUE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 03/03/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 35.2 Materials 16.1 Consumer Discretionary 12.6 Utilities 11.6 Consumer Staples 8.6 Energy 6.0 Information Technology 4.3 Health Care 3.9 Industrials 0.5 Telecommunications 0.5 Money Market Fund 0.7 Other 0.0
- PORTFOLIO STATISTICS Net Assets ($million): $18.9 65 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC MID CAP VALUE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--99.3% CONSUMER DISCRETIONARY--12.6% 5,234 AutoNation, Inc.* $ 104,052 2,874 Barnes & Noble, Inc. 103,924 7,088 Black & Decker (The) Corp. 582,136 2,796 Brinker International, Inc. 106,584 4,542 Claire's Stores, Inc. 118,319 3,388 Darden Restaurants, Inc. 109,839 13,515 Genuine Parts Co. 599,660 22,581 H&R Block, Inc. 561,364 1,806 VF Corp. 94,364 ------------- 2,380,242 ------------- CONSUMER STAPLES--8.6% 27,342 Coca-Cola Enterprises, Inc. 516,764 2,947 Dean Foods Co.* 106,534 3,729 Pepsi Bottling Group, Inc. 106,015 4,344 PepsiAmericas, Inc. 101,302 3,347 Pilgrim's Pride Corp. 105,364 3,125 SUPERVALU, Inc. 98,219 14,343 UST, Inc. 593,656 ------------- 1,627,854 ------------- ENERGY--6.0% 6,993 Kerr-McGee Corp. 594,684 11,396 Murphy Oil Corp. 533,903 ------------- 1,128,587 ------------- FINANCIALS--35.2% 2,452 A.G. Edwards, Inc. 103,769 2,573 Allmerica Financial Corp.* 98,031 3,187 American Financial Group, Inc. 108,932 20,614 AON Corp. 697,784 2,850 Assurant, Inc. 108,870 2,124 Bank of Hawaii Corp. 109,131 14,707 Cincinnati Financial Corp. 625,783 1,514 City National Corp. 111,097 20,749 CNA Financial Corp.* 638,862 4,657 Colonial BancGroup (The), Inc. 113,398 10,113 Comerica, Inc. 584,329 2,034 Commerce Bancshares, Inc. 108,066 1,851 Commerce Group, Inc. 105,174 5,126 Conseco, Inc.* 104,058 2,812 Fidelity National Financial, Inc. 105,338 2,627 First American Corp. 115,115 2,163 Jefferson-Pilot Corp. 118,705 12,058 Lincoln National Corp. 610,255 1,829 Mercury General Corp. 110,563 2,790 Nationwide Financial Services, Inc., Class A 112,688 4,257 Old Republic International Corp. 110,299 2,611 PMI Group (The), Inc. 104,127 2,599 Protective Life Corp. 113,940 2,051 Radian Group, Inc. 106,857 2,037 SAFECO Corp. 113,461 1,320 Stancorp Financial Group, Inc. 121,572 2,035 Torchmark Corp. 107,509 8,807 UnionBanCal Corp. $ 603,103 2,980 W. R. Berkley Corp. 130,226 1,588 WFS Financial, Inc.* 114,225 2,916 Wilmington Trust Corp. 110,546 1,533 Zions Bancorp. 112,630 ------------- 6,638,443 ------------- HEALTH CARE--3.9% 8,276 AmerisourceBergen Corp. 631,211 7,245 King Pharmaceuticals, Inc.* 111,790 ------------- 743,001 ------------- INDUSTRIALS--0.5% 3,655 TRW Automotive Holdings Corp.* 98,868 ------------- INFORMATION TECHNOLOGY--4.3% 3,641 Arrow Electronics, Inc.* 107,446 13,733 Computer Sciences Corp.* 703,816 ------------- 811,262 ------------- MATERIALS--16.1% 1,828 Ashland, Inc. 97,816 2,209 Eastman Chemical Co. 116,547 1,899 FMC Corp.* 103,382 19,398 Georgia-Pacific Corp. 631,017 2,600 Lubrizol Corp. 108,134 5,787 Phelps Dodge Corp. 697,160 9,635 PPG Industries, Inc. 577,811 14,140 Rohm & Haas Co. 615,514 1,776 USG Corp.* 104,997 ------------- 3,052,378 ------------- TELECOMMUNICATIONS--0.5% 3,031 CenturyTel, Inc. 99,205 ------------- UTILITIES--11.6% 10,333 Constellation Energy Group, Inc. 566,248 2,917 Energen Corp. 109,679 2,825 KeySpan Corp. 97,660 4,512 NiSource, Inc. 106,709 19,268 PPL Corp. 603,859 13,674 Sempra Energy 605,759 4,022 UGI Corp. 94,919 ------------- 2,184,833 ------------- TOTAL COMMON STOCKS (Cost $18,541,982) 18,764,673 ------------- MONEY MARKET FUND--0.7% 136,022 Aim Liquid Asset Portfolio Private Class (Cost $136,022) 136,022 ------------- TOTAL INVESTMENTS (Cost $18,678,004)--100.0% 18,900,695 Other assets less liabilities--0.0% 5,009 ------------- NET ASSETS--100.0% $ 18,905,704 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 66 PORTFOLIO SUMMARY POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 03/03/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 31.3 Industrials 21.4 Health Care 18.1 Consumer Discretionary 8.4 Energy 5.6 Consumer Staples 5.2 Materials 4.9 Telecommunications 3.3 Financials 2.0 Other (0.2)
- PORTFOLIO STATISTICS Net Assets ($million): $18.9 67 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.2% CONSUMER DISCRETIONARY--8.4% 3,663 Aaron Rents, Inc. $ 72,161 2,234 Bright Horizons Family Solutions, Inc.* 89,293 9,447 Brookfield Homes Corp. 473,200 8,310 Carter's, Inc.* 524,777 3,579 Hibbett Sporting Goods, Inc.* 93,877 2,525 Phillips-Van Heusen Corp. 71,836 3,562 Stein Mart, Inc. 65,363 3,039 Vail Resorts, Inc.* 101,807 3,689 Ventiv Health, Inc.* 93,110 ------------- 1,585,424 ------------- CONSUMER STAPLES--5.2% 10,891 Longs Drug Stores Corp. 454,263 15,047 Performance Food Group Co.* 415,147 8,164 Playtex Products, Inc.* 109,316 ------------- 978,726 ------------- ENERGY--5.6% 63,217 Grey Wolf, Inc.* 485,507 11,343 Parker Drilling Co.* 100,272 23,164 Superior Energy Services, Inc.* 472,082 ------------- 1,057,861 ------------- FINANCIALS--2.0% 2,912 Asset Acceptance Capital Corp.* 77,139 20,229 Universal American Financial Corp.* 299,389 ------------- 376,528 ------------- HEALTH CARE--18.1% 10,478 American Healthways, Inc.* 424,988 36,239 Beverly Enterprises, Inc.* 425,445 2,883 Centene Corp.* 58,092 2,113 Chemed Corp. 101,593 3,137 DJ Orthopedics, Inc.* 91,224 3,453 Greatbatch, Inc.* 89,985 2,012 Haemonetics Corp.* 97,481 4,055 HealthExtras, Inc.* 85,358 1,786 Hologic, Inc.* 99,052 3,028 Immucor, Inc.* 78,486 10,507 Kyphon, Inc.* 421,226 2,133 LCA-Vision, Inc. 89,607 2,375 Matria Healthcare, Inc.* 79,634 1,778 Psychiatric Solutions, Inc.* 97,257 3,237 Radiation Therapy Services, Inc.* 97,239 2,786 Sunrise Senior Living, Inc.* 90,099 11,755 United Surgical Partners International, Inc.* 421,417 1,686 USANA Health Sciences, Inc.* 74,218 4,909 ViroPharma, Inc.* 94,056 12,567 WellCare Health Plans, Inc.* 395,861 ------------- 3,412,318 ------------- INDUSTRIALS--21.4% 4,772 AAR Corp.* $ 76,018 2,409 Administaff, Inc. 101,949 1,623 Advisory Board (The) Co.* 78,310 5,879 Continental Airlines, Class B* 76,133 12,402 Engineered Support Systems, Inc. 501,661 9,168 ESCO Technologies, Inc.* 396,608 1,972 Esterline Technologies Corp.* 74,246 2,469 Forward Air Corp. 87,526 4,421 GenCorp, Inc.* 81,081 10,477 Jacuzzi Brands, Inc.* 77,320 14,836 JLG Industries, Inc. 569,109 4,374 Korn/Ferry International* 75,320 3,760 Labor Ready, Inc.* 87,796 2,099 Portfolio Recovery Associates, Inc.* 81,651 2,930 PRA International* 77,821 16,367 Resources Connection, Inc.* 467,278 22,965 Rollins, Inc. 436,794 2,309 Teledyne Technologies, Inc.* 81,415 16,758 UNOVA, Inc.* 519,498 3,435 WABTEC Corp. 93,432 ------------- 4,040,966 ------------- INFORMATION TECHNOLOGY--31.3% 2,271 ANSYS, Inc.* 84,617 10,323 Anteon International Corp.* 466,600 5,067 aQuantive, Inc.* 109,701 7,850 Arris Group, Inc.* 64,920 6,358 Blackbaud, Inc. 91,555 2,471 Comtech Telecommunications Corp.* 94,788 3,194 Digital Insight Corp.* 95,277 7,465 Digitas, Inc.* 80,622 2,423 Diodes, Inc.* 87,858 3,303 DSP Group, Inc.* 81,188 22,149 Emulex Corp.* 409,978 6,441 Epicor Software Corp.* 79,095 13,224 Factset Research Systems, Inc. 463,766 3,179 Filenet Corp.* 89,489 7,405 Informatica Corp.* 88,120 2,200 iPayment, Inc.* 79,112 1,772 Itron, Inc.* 77,011 2,847 Mantech International Corp.* 78,862 96,638 Maxtor Corp.* 338,233 3,215 Mercury Computer Systems, Inc.* 61,053 9,786 MICROS Systems, Inc.* 449,373 1,128 MicroStrategy, Inc.* 79,975 3,906 NETGEAR, Inc.* 76,362 84,760 ON Semiconductor Corp.* 393,286 4,172 Per-Se Technologies, Inc.* 92,744 4,149 Photronics, Inc.* 74,682 3,911 Power Integrations, Inc.* 82,561 2,756 Progress Software Corp.* 85,822
SEE NOTES TO FINANCIAL STATEMENTS. 68
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS (CONTINUED) 1,313 Quality Systems, Inc.* $ 87,774 35,012 Quest Software, Inc.* 487,016 2,307 SS&C Technologies, Inc. 82,683 2,459 TALX Corp. 97,204 3,264 Transaction Systems Architects, Inc.* 88,161 5,193 TriZetto Group (The), Inc* 73,585 3,284 WebEx Communications, Inc.* 75,236 1,769 Websense, Inc.* 104,513 34,604 Wind River Systems, Inc.* 453,312 ------------- 5,906,134 ------------- MATERIALS--4.9% 7,684 Greif, Inc., Class A 468,724 12,006 Headwaters, Inc.* 382,271 2,701 LKQ Corp.* 81,840 ------------- 932,835 ------------- TELECOMMUNICATIONS--3.3% 36,384 Centennial Communications Corp.* 538,847 11,044 Dobson Communications Corp.* 80,511 ------------- 619,358 ------------- TOTAL INVESTMENTS (Cost $18,980,640)--100.2% 18,910,150 Liabilities in excess of other assets--(0.2%) (42,918) ------------- NET ASSETS--100.0% $ 18,867,232 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 69 PORTFOLIO SUMMARY POWERSHARES DYNAMIC SMALL CAP VALUE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 03/03/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 31.6 Consumer Discretionary 17.0 Materials 13.6 Industrials 8.9 Information Technology 7.8 Utilities 7.5 Consumer Staples 4.7 Energy 3.1 Health Care 2.9 Telecommunications 2.7 Money Market Fund 0.1 Other 0.1
- PORTFOLIO STATISTICS Net Assets ($million): $29.0 70 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC SMALL CAP VALUE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--99.8% CONSUMER DISCRETIONARY--17.0% 27,227 American Greetings Corp. $ 687,482 6,599 ArvinMeritor, Inc. 105,782 7,052 Bluegreen Corp.* 106,979 3,191 Buckle (The), Inc. 117,556 1,641 Building Material Holding Corp. 139,501 5,200 Catalina Marketing Corp. 135,512 6,668 Cato (The) Corp. 133,227 10,873 Charming Shoppes, Inc.* 121,778 7,369 CSK Auto Corp.* 111,493 29,666 Domino's Pizza, Inc. 709,610 3,171 Genesco, Inc.* 116,693 3,063 IHOP Corp. 144,635 3,509 Jack in the Box, Inc.* 104,217 7,811 Journal Communications, Inc. 110,526 2,661 Papa John's International, Inc.* 138,186 6,590 Payless ShoeSource, Inc.* 121,058 3,119 Pre-Paid Legal Services, Inc. 133,493 33,532 Rent-A-Center, Inc.* 604,247 5,039 ShopKo Stores, Inc.* 144,468 5,696 Tupperware Corp. 130,609 3,229 UniFirst Corp. 113,209 20,382 United Auto Group, Inc. 687,485 ------------- 4,917,746 ------------- CONSUMER STAPLES--4.7% 25,570 Flowers Foods, Inc. 749,201 15,379 Lancaster Colony Corp. 616,544 ------------- 1,365,745 ------------- ENERGY--3.1% 21,539 Frontier Oil Corp. 794,359 2,811 Swift Energy Co.* 122,728 ------------- 917,087 ------------- FINANCIALS--31.6% 1,918 Alabama National BanCorp. 124,056 4,049 Amcore Financial, Inc. 120,296 4,166 Anchor BanCorp Wisconsin, Inc. 131,896 5,281 Argonaut Group, Inc.* 153,994 1,464 BancFirst Corp. 121,629 7,270 Bristol West Holdings, Inc. 140,166 20,467 Cathay General Bancorp 798,007 3,415 City Holding Co. 125,126 5,382 Community Bank System, Inc. 127,823 11,686 Corus Bankshares, Inc. 641,561 14,417 Delphi Financial Group, Inc., Class A 675,292 48,516 Doral Financial Corp. 415,297 2,603 First Community Bancorp 130,983 17,847 First Midwest Bancorp, Inc. 678,543 3,528 Hancock Holding Co. 125,844 6,436 Horace Mann Educators Corp. 124,923 3,858 Infinity Property & Casualty Corp. 143,595 2,109 LandAmerica Financial Group, Inc. $ 133,204 26,868 Odyssey Re Holdings Corp. 689,970 27,472 Ohio Casualty Corp. 749,436 2,823 ProAssurance Corp.* 132,116 2,731 RLI Corp. 146,791 3,552 Safety Insurance Group, Inc. 133,591 4,946 Santander BanCorp. 125,925 2,619 Selective Insurance Group, Inc. 143,809 4,257 State Auto Financial Corp. 140,226 2,703 Stewart Information Services Corp. 137,664 9,717 TrustCo Bank Corp. 125,349 24,999 Trustmark Corp. 700,972 4,026 UICI 145,419 3,109 United Fire & Casualty Co. 139,967 16,248 Zenith National Insurance Corp. 731,485 ------------- 9,154,955 ------------- HEALTH CARE--2.9% 4,915 Alpharma, Inc., Class A 122,334 19,811 Apria Healthcare Group, Inc.* 457,040 4,446 Owens & Minor, Inc. 130,935 3,510 Varian, Inc.* 129,063 ------------- 839,372 ------------- INDUSTRIALS--8.9% 15,144 ABX Air, Inc.* 121,001 2,580 Banta Corp. 129,877 3,021 Cascade Corp. 147,123 3,899 EnPro Industries, Inc.* 108,782 13,342 ExpressJet Holdings, Inc.* 119,945 2,703 Genlyte Group, Inc.* 137,772 3,016 John H. Harland Co. 125,435 28,000 Lennox International, Inc. 780,919 4,066 Moog, Inc., Class A* 120,557 17,896 Toro (The) Co. 653,383 1,515 Woodward Governor Co. 121,049 ------------- 2,565,843 ------------- INFORMATION TECHNOLOGY--7.8% 8,061 Covansys Corp.* 128,976 6,119 CSG Systems International, Inc.* 143,858 13,415 EarthLink, Inc.* 147,699 6,459 eFunds Corp.* 133,249 16,191 Imation Corp. 693,136 3,419 MAXIMUS, Inc. 123,939 23,787 Reynolds & Reynolds (The) Co., Class A 631,307 3,624 Rofin-Sinar Technologies, Inc.* 133,581 9,569 United Online, Inc. 128,320 ------------- 2,264,065 ------------- MATERIALS--13.6% 13,934 AptarGroup, Inc. 713,281 5,176 Arch Chemicals, Inc. 135,974
SEE NOTES TO FINANCIAL STATEMENTS. 71
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS (CONTINUED) 11,835 Carpenter Technology Corp. $ 713,651 23,852 Commercial Metals Co. 758,255 3,844 H.B. Fuller Co. 115,205 52,578 Hercules, Inc.* 585,719 11,767 Quanex Corp. 681,427 4,043 Silgan Holdings, Inc. 130,063 16,477 Terra Industries, Inc.* 100,674 ------------- 3,934,249 ------------- TELECOMMUNICATIONS--2.7% 3,109 Commonwealth Telephone Enterprises, Inc. 111,582 14,627 United Stationers, Inc.* 663,627 ------------- 775,209 ------------- UTILITIES--7.5% 14,910 Allete, Inc. 656,190 3,190 Black Hills Corp. 132,608 5,479 Cleco Corp. 116,155 36,941 Duquesne Light Holdings, Inc. 616,545 20,979 WGL Holdings, Inc. 652,027 ------------- 2,173,525 ------------- TOTAL COMMON STOCKS (Cost $28,718,150) 28,907,796 ------------- MONEY MARKET FUND--0.1% 27,524 AIM Liquid Asset Portfolio Private Class (Cost $27,524) 27,524 ------------- TOTAL INVESTMENTS (Cost $28,745,674)--99.9% 28,935,320 Other assets less liabilities--0.1% 15,472 ------------- NET ASSETS--100.0% $ 28,950,792 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 72 PORTFOLIO SUMMARY POWERSHARES DYNAMIC BIOTECHNOLOGY & GENOME PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Health Care 94.8 Materials 5.4 Other (0.2)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) United States 97.6 Iceland 2.6 Other (0.2)
- PORTFILIO STATISTICS Net Assets ($million): $122.1 73 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC BIOTECHNOLOGY & GENOME PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.2% HEALTH CARE--94.8% 72,156 Affymetrix, Inc.* $ 3,278,047 199,020 Alkermes, Inc.* 3,242,036 80,128 Amgen, Inc.* 6,070,497 111,763 Amylin Pharmaceuticals, Inc.* 3,755,237 298,949 Applera Corp. - Applied Biosystems Group 7,255,492 305,690 Applera Corp. - Celera Genomics Group* 3,631,597 153,591 Biogen Idec, Inc.* 6,240,402 439,774 BioMarin Pharmaceutical, Inc.* 3,694,102 199,481 Cubist Pharmaceuticals, Inc.* 4,031,511 361,623 deCODE genetics, Inc. (Iceland)* 3,153,353 70,042 Dionex Corp.* 3,392,134 70,202 Genentech, Inc.* 6,360,301 340,838 Geron Corp.* 3,077,767 153,591 Gilead Sciences, Inc.* 7,257,176 142,936 ICOS Corp.* 3,856,413 478,976 Incyte Corp.* 2,390,090 77,272 Invitrogen Corp.* 4,913,726 351,993 Medarex, Inc.* 3,076,419 56,470 Millipore Corp.* 3,457,093 125,556 Momenta Pharmaceuticals, Inc.* 2,703,221 190,209 Myriad Genetics, Inc.* 3,686,250 83,695 New River Pharmaceuticals, Inc.* 3,983,045 63,419 Techne Corp.* 3,438,578 49,472 United Therapeutics Corp.* 3,654,002 97,784 Varian, Inc.* 3,595,518 201,942 Viropharma, Inc.* 3,869,209 140,298 Waters Corp.* 5,078,788 208,933 Zymogenetics, Inc.* 3,660,506 ------------- 115,802,510 ------------- MATERIALS--5.4% 102,819 Sigma-Aldrich Corp. 6,549,570 ------------- TOTAL INVESTMENTS (Cost $124,244,653)--100.2% 122,352,080 Liabilities in excess of other assets--(0.2%) (249,772) ------------- NET ASSETS--100.0% $ 122,102,308 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 74 PORTFOLIO SUMMARY POWERSHARES DYNAMIC FOOD & BEVERAGE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Consumer Staples 84.2 Consumer Discretionary 15.8 Money Market Fund 0.0 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $23.0 75 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC FOOD & BEVERAGE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--15.8% 22,255 ARAMARK Corp., Class B $ 565,722 51,552 CKE Restaurants, Inc. 655,741 17,599 Jack in the Box, Inc.* 522,690 13,352 Papa John's International, Inc.* 693,369 23,255 Yum! Brands, Inc. 1,182,983 ------------- 3,620,505 ------------- CONSUMER STAPLES--84.2% 22,010 7-Eleven, Inc.* 823,394 50,516 Archer-Daniels-Midland Co. 1,231,075 10,798 Brown-Forman Corp., Class B 683,945 21,146 Campbell Soup Co. 615,349 26,052 Coca-Cola (The) Co. 1,114,505 28,143 Coca-Cola Enterprises, Inc. 531,903 17,056 Dean Foods Co.* 616,574 23,559 Flowers Foods, Inc. 690,279 24,203 General Mills, Inc. 1,168,037 35,747 Gold Kist, Inc.* 614,491 19,493 Hershey (The) Co. 1,107,787 11,417 J & J Snack Foods Corp. 644,033 25,135 Kellogg Co. 1,110,213 31,833 Kroger (The) Co.* 633,477 14,171 Lancaster Colony Corp. 568,115 21,581 Pepsi Bottling Group, Inc. 613,548 25,128 PepsiAmericas, Inc. 585,985 20,900 PepsiCo, Inc. 1,234,771 20,468 Performance Food Group Co.* 564,712 19,360 Pilgrim's Pride Corp. 609,453 26,213 Ruddick Corp. 576,948 509 Seaboard Corp. 723,289 18,083 SUPERVALU, Inc. 568,349 33,833 Sysco Corp. 1,079,611 35,179 Tyson Foods, Inc., Class A 626,186 ------------- 19,336,029 ------------- TOTAL COMMON STOCKS (Cost $23,763,458) 22,956,534 ------------- MONEY MARKET FUND--0.0% 574 AIM Liquid Asset Portfolio Private Class (Cost $574) 574 ------------- TOTAL INVESTMENTS (Cost $23,764,032)--100.0% 22,957,108 Liabilities in excess of other assets--(0.0%) (4,159) ------------- NET ASSETS--100.0% $ 22,952,949 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 76 PORTFOLIO SUMMARY POWERSHARES DYNAMIC LEISURE & ENTERTAINMENT PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Consumer Discretionary 100.1 Money Market Fund 0.0 Other (0.1)
- PORTFOLIO STATISTICS Net Assets ($million): $24.1 77 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC LEISURE & ENTERTAINMENT PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.1% CONSUMER DISCRETIONARY--100.1% 28,146 Ameristar Casinos, Inc. $ 600,354 30,199 Applebees International, Inc. 661,660 24,271 ARAMARK Corp., Class B 616,969 38,585 Bluegreen Corp.* 585,334 17,639 Brinker International, Inc.* 672,399 24,888 Carnival Corp. 1,236,187 19,572 CEC Entertainment, Inc.* 661,729 21,069 Choice Hotels International, Inc. 697,173 56,223 CKE Restaurants, Inc. 715,157 21,375 Darden Restaurants, Inc. 692,978 29,812 Domino's Pizza, Inc. 713,103 23,292 GTECH Holdings Corp. 741,617 51,581 Hilton Hotels Corp. 1,003,250 51,495 IAC/InterActiveCorp.* 1,318,272 16,759 IHOP Corp. 791,360 12,034 International Speedway Corp. 621,917 19,194 Jack in the Box, Inc.* 570,062 36,975 McDonald's Corp. 1,168,410 14,562 Papa John's International, Inc.* 756,205 32,108 Priceline.com, Inc.* 609,089 24,394 Rare Hospitality International, Inc.* 745,481 14,689 Red Robin Gourmet Burgers, Inc.* 708,450 28,334 Royal Caribbean Cruises Ltd. 1,174,161 21,395 Sonic Corp.* 619,171 50,098 Starbucks Corp.* 1,416,771 20,889 Starwood Hotels & Resorts Worldwide, Inc. 1,220,544 24,545 Vail Resorts, Inc.* 822,258 56,270 World Wrestling Entertainment, Inc. 717,443 25,362 Yum! Brands, Inc. 1,290,165 ------------- TOTAL COMMON STOCKS (Cost $24,774,689) 24,147,669 ------------- MONEY MARKET FUND--0.0% 4,125 AIM Liquid Asset Portfolio Private Class (Cost $4,125) 4,125 ------------- TOTAL INVESTMENTS (Cost $24,778,814)--100.1% 24,151,794 Liabilities in excess of other assets--(0.1%) (16,010) ------------- NET ASSETS--100.0% $ 24,135,784 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 78 PORTFOLIO SUMMARY POWERSHARES DYNAMIC MEDIA PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Consumer Discretionary 80.6 Information Technology 11.7 Telecommunications 4.7 Industrials 3.1 Money Market Fund 0.0 Other (0.1)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) United States 97.6 China 2.5 Money Market Fund 0.0 Other (0.1)
- PORTFOLIO STATISTICS Net Assets ($million): $23.7 79 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC MEDIA PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.1% CONSUMER DISCRETIONARY--80.6% 21,424 ADVO, Inc. $ 529,173 16,352 Arbitron, Inc. 611,728 27,882 Belo Corp., Class A 602,251 28,715 Catalina Marketing Corp. 748,313 40,394 Comcast Corp.* 1,124,165 8,108 Getty Images, Inc.* 673,045 26,119 Harte-Hanks, Inc. 668,646 26,361 Hearst-Argyle Television, Inc. 631,610 58,717 Insight Communications Co., Inc.* 675,246 43,146 Journal Communications, Inc. 610,516 152,043 Liberty Media Corp.* 1,211,783 10,488 McClatchy (The) Co., Class A 657,388 26,113 McGraw-Hill Cos. (The), Inc. 1,277,970 10,512 Media General, Inc., Class A 554,508 13,772 Meredith Corp. 687,223 15,525 Omnicom Group, Inc. 1,287,953 19,857 ProQuest Co.* 588,760 34,781 Regal Entertainment Group, Class A 641,014 72,291 Sinclair Broadcast Group, Inc., Class A 599,292 71,173 Time Warner, Inc. 1,269,015 33,399 Tribune Co. 1,052,402 17,245 Valassis Communications, Inc.* 538,906 49,340 Walt Disney (The) Co. 1,202,416 836 Washington Post (The) Co., Class B 622,820 ------------- 19,066,143 ------------- INDUSTRIALS--3.1% 22,133 Monster Worldwide, Inc.* 726,184 ------------- INFORMATION TECHNOLOGY--11.7% 41,315 aQuantive, Inc.* 894,470 60,866 Digitas, Inc.* 657,353 31,722 Schawk, Inc. 632,219 38,341 Sohu.com, Inc. (China)* 580,483 ------------- 2,764,525 ------------- TELECOMMUNICATIONS--4.7% 41,632 EchoStar Communications Corp.* 1,118,652 ------------- TOTAL COMMON STOCKS (Cost $25,187,561) 23,675,504 MONEY MARKET FUND--0.0% 6,576 AIM Liquid Asset Portfolio Private Class (Cost $6,576) 6,576 ------------- TOTAL INVESTMENTS (Cost $25,194,137)--100.1% 23,682,080 Liabilities in excess of other assets--(0.1%) (16,757) ------------- NET ASSETS--100.0% $ 23,665,323 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 80 PORTFOLIO SUMMARY POWERSHARES DYNAMIC NETWORKING PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 100.2 Other (0.2)
- PORTFOLIO STATISTICS Net Assets ($million): $24.1 81 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC NETWORKING PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.2% INFORMATION TECHNOLOGY--100.2% 29,579 ADC Telecommunications, Inc.* $ 516,154 24,967 Adtran, Inc. 755,252 58,557 Agere System, Inc.* 608,993 57,144 Andrew Corp.* 606,869 62,241 Arris Group, Inc.* 514,733 66,089 Avaya, Inc.* 761,345 29,045 Broadcom Corp.* 1,233,251 168,669 Brocade Communications Systems, Inc.* 627,449 69,842 Cisco Systems, Inc.* 1,218,743 27,770 Citrix Systems, Inc.* 765,619 19,588 Comtech Telecommunications Corp.* 751,396 389,923 Conexant Systems, Inc.* 756,451 26,190 DSP Group, Inc.* 643,750 32,256 Emulex Corp.* 597,059 16,307 F5 Networks, Inc.* 848,453 30,199 Internet Security Systems, Inc.* 743,801 52,906 Juniper Networks, Inc.* 1,234,296 398,446 Lucent Technologies, Inc.* 1,135,571 40,374 McAfee, Inc.* 1,212,431 129,467 McData Corp., Class A* 622,736 17,719 Mercury Interactive Corp.* 616,444 57,541 Motorola, Inc. 1,275,108 30,975 NETGEAR, Inc.* 605,561 19,010 QLogic Corp.* 573,342 30,496 Qualcomm, Inc. 1,212,521 52,235 RSA Security, Inc.* 595,479 33,104 Scientific-Atlanta, Inc. 1,173,206 33,177 Tekelec* 455,188 74,985 Tellabs, Inc.* 716,857 14,026 Websense, Inc.* 828,656 ------------- TOTAL INVESTMENTS (Cost $23,994,693)--100.2% 24,206,714 Liabilities in excess of other assets--(0.2%) (58,606) ------------- NET ASSETS--100.0% $ 24,148,108 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 82 PORTFOLIO SUMMARY POWERSHARES DYNAMIC PHARMACEUTICALS PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Health Care 100.0 Money Market Fund 0.0 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $31.2 83 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC PHARMACEUTICALS PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.0% HEALTH CARE--100.0% 35,216 Abbott Laboratories $ 1,516,049 9,256 Allergan, Inc. 826,561 34,203 Alpharma, Inc., Class A 851,313 20,020 Amgen, Inc.* 1,516,715 19,000 Barr Pharmaceuticals, Inc.* 1,091,550 20,932 Biogen Idec, Inc.* 850,467 35,844 Bristol-Myers Squibb Co. 758,817 17,578 Celgene Corp.* 986,126 29,494 Eli Lilly & Co. 1,468,506 28,706 Endo Pharmaceuticals Holdings, Inc.* 772,766 40,915 First Horizon Pharmaceutical Corp.* 590,403 19,439 Forest Laboratories, Inc.* 736,932 17,539 Genentech, Inc.* 1,589,033 12,502 Genzyme Corp.* 903,895 20,932 Gilead Sciences, Inc.* 989,037 35,712 ICOS Corp.* 963,510 25,432 Johnson & Johnson 1,592,552 58,173 King Pharmaceuticals, Inc.* 897,609 12,481 Kos Pharmaceuticals, Inc.* 748,860 25,701 Medicis Pharmaceutical Corp., Class A 758,180 32,073 Medimmune, Inc.* 1,121,914 56,947 Merck & Co., Inc. 1,607,044 47,920 Mylan Laboratories, Inc. 920,543 63,285 Pfizer, Inc. 1,375,816 41,566 Salix Pharmaceuticals Ltd.* 745,694 41,506 Schering-Plough Corp. 844,232 17,508 Sepracor, Inc.* 984,825 45,079 Valeant Pharmaceuticals International 773,556 24,761 Watson Pharmaceuticals, Inc.* 855,740 34,575 Wyeth 1,540,662 ------------- TOTAL COMMON STOCKS (Cost $31,177,045) 31,178,907 ------------- MONEY MARKET FUND--0.0% 8,035 AIM Liquid Asset Portfolio Private Class (Cost $8,035) 8,035 ------------- TOTAL INVESTMENTS (Cost $31,185,080)--100.0% 31,186,942 Liabilities in excess of other assets--(0.0%) (6,686) ------------- NET ASSETS--100.0% $ 31,180,256 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 84 PORTFOLIO SUMMARY POWERSHARES DYNAMIC SEMICONDUCTORS PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/2005 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 100.2 Other (0.2)
- PORTFOLIO STATISTICS Net Assets ($million): $60.0 85 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC SEMICONDUCTORS PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ---------- ------------- COMMON STOCKS--100.2% INFORMATION TECHNOLOGY--100.2% 147,239 Advanced Micro Devices, Inc.* $ 3,418,890 148,990 Agere System, Inc.* 1,549,496 144,826 Altera Corp.* 2,411,353 87,001 Analog Devices, Inc. 3,025,895 172,162 Applied Materials, Inc. 2,820,014 57,601 ATMI, Inc.* 1,573,083 217,060 Cirrus Logic, Inc.* 1,423,914 52,672 Cymer, Inc.* 1,835,619 48,886 Diodes, Inc.* 1,772,606 66,636 DSP Group, Inc.* 1,637,913 163,268 Entegris, Inc.* 1,593,496 121,686 Intel Corp. 2,859,621 83,493 Intersil Corp. 1,900,301 63,232 KLA-Tencor Corp. 2,927,009 56,483 Lam Research Corp.* 1,905,736 174,412 LSI Logic Corp.* 1,414,481 102,651 MEMC Electronic Materials, Inc.* 1,841,559 137,791 Micrel, Inc.* 1,377,910 54,652 Microchip Technology, Inc. 1,648,851 73,297 Microsemi Corp.* 1,698,291 96,430 MKS Instruments, Inc.* 1,819,634 125,386 National Semiconductor Corp. 2,837,485 58,318 NVIDIA Corp.* 1,956,569 115,045 Omnivision Technologies, Inc.* 1,482,930 314,071 ON Semiconductor Corp.* 1,457,289 83,700 Photronics, Inc.* 1,506,600 78,885 Power Integrations, Inc.* 1,665,262 78,299 Sirf Technology Holdings, Inc.* 2,019,331 96,445 Texas Instruments, Inc. 2,753,505 475,088 Triquint Semiconductor, Inc.* 1,995,370 ------------- TOTAL INVESTMENTS (Cost $62,571,049)--100.2% 60,130,013 Liabilities in excess of other assets--(0.2%) (100,150) ------------- NET ASSETS--100.0% $ 60,029,863 =============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 86 PORTFOLIO SUMMARY POWERSHARES DYNAMIC SOFTWARE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 06/23/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 91.3 Financials 6.0 Health Care 2.9 Other (0.2)
- PORTFOLIO STATISTICS Net Assets ($million): $32.2 87 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC SOFTWARE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.2% FINANCIALS--6.0% 31,320 Investment Technology Group, Inc.* $ 1,018,213 23,434 SEI Investments Co. 909,239 --------------- 1,927,452 --------------- HEALTH CARE--2.9% 10,910 Cerner Corp.* 921,350 --------------- INFORMATION TECHNOLOGY--91.3% 56,648 Adobe Systems, Inc. 1,826,898 23,109 ANSYS, Inc.* 861,041 37,733 Autodesk, Inc. 1,702,890 95,151 BEA Systems, Inc.* 839,232 64,688 Blackbaud, Inc. 931,507 65,334 Citrix Systems, Inc.* 1,801,258 42,174 CSG Systems International, Inc.* 991,511 32,505 Digital Insight Corp.* 969,624 29,469 DST Systems, Inc.* 1,653,800 44,513 eFunds Corp.* 918,303 21,213 Fair Isaac Corp. 885,855 19,412 Hyperion Solutions Corp.* 938,764 75,345 Informatica Corp.* 896,606 21,155 Intergraph Corp.* 1,023,479 51,811 McAfee, Inc.* 1,555,884 57,824 Microsoft Corp. 1,486,077 11,480 MicroStrategy, Inc.* 813,932 120,893 Oracle Corp.* 1,532,923 140,836 Parametric Technology Corp.* 916,842 28,037 Progress Software Corp.* 873,072 30,111 Reynolds & Reynolds (The) Co., Class A 799,146 76,710 Symantec Corp.* 1,829,535 25,019 Talx Corp. 989,001 33,215 Transaction Systems Architects, Inc.* 897,137 52,835 TriZetto Group* 748,672 33,411 WebEx Communications, Inc.* 765,446 --------------- 29,448,435 --------------- TOTAL INVESTMENTS (Cost $29,312,550)--100.2% 32,297,237 Liabilities in excess of other assets--(0.2%) (68,579) --------------- NET ASSETS--100.0% $ 32,228,658 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 88 PORTFOLIO SUMMARY POWERSHARES ZACKS MICRO CAP PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 08/18/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Information Technology 22.9 Industrials 18.9 Financials 17.3 Consumer Discretionary 17.2 Health Care 9.6 Energy 6.1 Materials 4.6 Consumer Staples 1.7 Telecommunications 1.0 Utilities 0.7 Other (0.0)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) United States 95.1 Israel 1.2 Canada 1.0 Bermuda 0.7 Cayman Islands 0.5 Hong Kong 0.3 Luxembourg 0.3 Panama 0.3 China 0.2 Greece 0.2 Taiwan 0.2 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $83.8 89 SCHEDULE OF INVESTMENTS POWERSHARES ZACKS MICRO CAP PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--17.2% 17,374 Action Performance Co., Inc. $ 213,005 11,815 Aftermarket Technology Corp.* 217,750 8,942 Aldila, Inc. 219,168 44,872 Alloy, Inc.* 206,411 7,412 Andersons (The), Inc. 258,308 12,755 Asbury Automotive Group, Inc.* 215,560 15,521 Audiovox Corp.* 220,553 12,084 Benihana, Inc., Class A* 229,475 5,881 Blair Corp. 221,714 12,299 Bluegreen Corp.* 186,576 49,249 Bombay (The) Co., Inc.* 197,488 11,171 Bon-Ton Stores (The), Inc. 223,979 24,141 Books-A-Million, Inc. 219,683 35,769 Buca, Inc.* 208,176 7,438 California Pizza Kitchen, Inc.* 238,090 34,265 Carriage Services, Inc.* 206,961 10,902 Cato (The) Corp. 217,822 32,869 Cavalier Homes, Inc.* 203,459 5,988 Cavco Industries, Inc.* 236,286 8,700 Charles & Colvard Ltd. 201,840 16,273 Dave & Buster's, Inc.* 220,987 13,615 Dixie Group (The), Inc.* 186,798 15,978 Dover Downs Gaming & Entertainment, Inc. 200,684 58,701 Drugstore.Com* 186,082 9,721 DXP Enterprises, Inc.* 140,371 25,591 Elscint Ltd. (Israel)* 202,425 9,264 Forward Industries, Inc.* 190,283 30,425 Franklin Covey Co.* 205,673 21,053 Gaiam, Inc., Class A* 220,846 23,819 Gottschalks, Inc.* 207,463 33,164 Hartmarx Corp.* 231,485 44,040 Home Solutions of America, Inc.* 244,862 36,198 IMPCO Technologies, Inc.* 187,868 13,373 Jakks Pacific, Inc.* 245,796 105,426 Jameson Inns, Inc.* 219,286 19,039 K2, Inc.* 190,961 9,479 Levitt Corp. 186,262 7,492 Lithia Motors, Inc., Class A 204,082 7,197 LKQ Corp.* 218,069 8,351 Lone Star Steakhouse & Saloon, Inc. 215,539 16,622 Luby's, Inc.* 209,105 39,474 Main Street Restaurant Group, Inc.* 225,002 10,849 Marcus Corp. 238,244 8,513 MarineMax, Inc.* 210,271 12,782 Monarch Casino & Resort, Inc.* 247,587 11,601 Movado Group, Inc. 203,366 15,172 O'Charleys, Inc.* 208,008 11,171 Palm Harbor Homes, Inc.* 205,882 15,414 Playboy Enterprises, Inc., Class B* 233,368 19,791 Retail Ventures, Inc.* 205,628 15,843 Rex Stores Corp.* 211,029 7,600 Rocky Shoes & Boots, Inc.* $ 187,872 15,468 Russell Corp. 209,282 23,201 Sands Regent (The) 220,665 13,642 Shoe Carnival, Inc.* 228,367 38,642 Smith & Wesson Holding Corp.* 197,074 19,630 Source Interlink Cos., Inc.* 199,833 9,479 Steven Madden Ltd.* 243,042 16,944 Stride Rite Corp. 220,611 16,542 Sunterra Corp.* 198,669 16,219 Syms Corp. 220,903 30,855 Systemax, Inc.* 220,613 69,174 Tarrant Apparel Group* 116,904 27,525 Trans World Entertainment Corp.* 175,610 65,012 Unifi, Inc.* 190,485 28,438 United Retail Group, Inc.* 260,208 14,689 West Marine, Inc.* 199,330 48,256 Wet Seal (The), Inc., Class A* 249,484 --------------- 14,384,568 --------------- CONSUMER STAPLES--1.7% 13,749 Ingles Markets, Inc., Class A 221,634 3,759 J & J Snack Foods Corp. 212,045 13,964 M&F Worldwide Corp.* 235,294 5,156 Nash Finch Co. 160,145 7,465 Parlux Fragrances, Inc.* 172,889 19,281 Pathmark Stores, Inc.* 187,990 21,080 Spartan Stores, Inc.* 208,481 --------------- 1,398,478 --------------- ENERGY--6.1% 9,909 Adams Resources & Energy, Inc. 192,136 8,781 Arena Resources, Inc.* 203,895 4,458 Atlas Pipeline Partners, LP 209,481 16,891 Brigham Exploration Co.* 238,839 10,365 Callon Petroleum Co.* 189,680 10,473 Castle Energy Corp. 184,639 5,022 Clayton Williams Energy, Inc.* 190,233 7,170 Dawson Geophysical Co.* 193,805 8,217 Edge Petroleum Corp.* 199,098 9,264 Goodrich Petroleum Corp.* 206,587 7,546 Gulf Island Fabrication, Inc. 201,931 26,639 Infinity Energy Resources, Inc.* 198,993 5,961 K-Sea Transportation Partners LP 206,370 4,995 Lufkin Industries, Inc. 232,268 83,219 Magellan Petroleum Corp.* 125,661 6,794 Maritrans, Inc. 202,597 26,988 Matrix Service Co.* 265,291 8,566 NATCO Group, Inc.* 194,277 15,575 NGAS Resources, Inc.* 165,251 15,521 Parallel Petroleum Corp.* 205,343 7,009 Petroleum Helicopters* 212,793 12,997 T-3 Energy Services, Inc.* 161,813 14,447 Top Tankers, Inc. (Greece) 186,077
SEE NOTES TO FINANCIAL STATEMENTS. 90
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) 6,123 Toreador Resources Corp.* $ 168,566 27,176 TransMontaigne, Inc.* 150,827 13,695 Willbros Group, Inc. (Panama)* 213,779 --------------- 5,100,230 --------------- FINANCIALS--17.3% 63,508 Aether Holdings, Inc.* 208,306 9,050 American Campus Communities, Inc. 223,988 19,146 American Equity Investment Life Holdings Co. 222,859 4,431 American Physicians Capital, Inc.* 187,298 12,594 American Safety Insurance Holdings Ltd. (Bermuda)* 210,698 21,483 AmNet Mortgage, Inc.* 217,838 26,263 Anworth Mortgage Asset Corp. 211,155 7,734 Arbor Realty Trust, Inc. 203,868 20,194 Ashford Hospitality Trust 212,037 7,143 ASTA Funding, Inc. 193,790 20,113 Banc (The) Corp. 224,662 17,482 Boykin Lodging Co.* 192,826 11,896 Bristol West Holdings, Inc. 229,355 2,551 Capital Southwest Corp. 223,085 29,351 Capital Title Group, Inc. 195,184 15,011 Cedar Shopping Centers, Inc. 210,454 12,916 Clark, Inc. 197,615 15,280 CNA Surety Corp.* 214,531 8,271 Columbia Banking Systems, Inc. 239,114 9,291 Commonwealth Bankshares, Inc. 231,439 7,385 Correctional Properties Trust 207,519 27,740 Crawford & Co., Class B 194,735 6,499 Crescent Banking Co. 220,771 12,621 CRIIMI MAE, Inc.* 247,244 10,016 Donegal Group, Inc., Class A 221,955 14,125 Extra Space Storage, Inc. 206,225 13,534 EZCORP, Inc., Class A* 198,814 8,915 Federal Agricultural Mortgage Corp., Class C 231,790 6,364 First Indiana Corp. 222,485 8,459 First Potomac Realty Trust 214,351 2,766 First Regional Bancorp* 185,931 10,258 First State Bancorporation 228,856 48,256 First Union Real Estate Equity & Mortgage Investments 233,076 17,804 FirstCity Financial Corp.* 204,746 6,042 FPIC Insurance Group, Inc.* 227,481 13,454 Franklin Bank Corp.* 232,082 9,076 Gramercy Capital Corp. 214,103 21,160 Highland Hospitality Corp. 222,392 4,082 IBERIABANK Corp. 218,183 10,339 Integrity Financial Corp. 207,917 4,135 ITLA Capital Corp.* 205,799 13,937 KNBT Bancorp, Inc. 222,574 25,000 LaBranche & Co., Inc.* $ 238,500 10,231 LTC Properties, Inc. 209,633 38,776 Meadowbrook Insurance Group, Inc.* 212,880 21,912 Medallion Financial Corp. 201,590 16,381 Mercer Insurance Group, Inc.* 226,549 15,280 MortgageIT Holdings, Inc. 193,750 5,827 Navigators Group, Inc.* 226,088 21,429 Nicholas Financial, Inc. 220,719 8,915 NYMAGIC, Inc. 218,418 18,851 Partners Trust Financial Group, Inc. 219,614 24,061 Penn Treaty American Corp.* 205,481 24,732 PMA Capital Corp., Class A* 219,373 12,057 Presidential Life Corp. 228,118 15,521 PSB Bancorp, Inc.* 208,137 6,096 Safety Insurance Group, Inc. 229,271 15,199 SCPIE Holdings, Inc.* 229,505 17,884 Sizeler Property Investors, Inc. 207,812 9,882 Southwest Bancorp, Inc. 231,338 13,239 SWS Group, Inc. 234,463 11,708 Tarragon Corp.* 219,642 5,747 Taylor Capital Group, Inc. 236,432 8,244 TierOne Corp. 232,975 11,842 United America Indemnity Ltd. (Cayman Islands)* 227,722 8,700 United PanAm Financial Corp.* 193,923 14,205 Windrose Medical Properties Trust 215,206 --------------- 14,506,270 --------------- HEALTH CARE--9.6% 19,173 Air Methods Corp.* 222,982 17,831 Albany Molecular Research, Inc.* 238,935 88,992 Allos Therapeutics* 184,213 9,587 American Dental Partners, Inc.* 203,244 11,520 American Retirement Corp.* 220,147 40,226 AMICAS, Inc.* 176,592 21,939 Arena Pharmaceuticals, Inc.* 228,166 27,740 Arqule, Inc.* 198,064 39,931 BSD Medical Corp.* 201,252 26,021 Capital Senior Living Corp.* 207,908 24,517 Cerus Corp.* 162,548 8,325 CNS, Inc. 217,033 11,708 Cross Country Healthcare, Inc.* 212,734 8,378 Cutera, Inc.* 229,557 46,215 Encore Medical Corp.* 231,537 90,872 Entremed, Inc.* 205,371 31,472 Five Star Quality Care, Inc.* 212,121 44,415 Gene Logic, Inc.* 167,889 7,922 Greatbatch, Inc.* 206,447 28,196 Hanger Orthopedic Group, Inc.* 173,123 21,805 HealthTronics, Inc.* 198,207 7,224 Hi-Tech Pharmacal Co., Inc.* 271,261 8,002 Horizon Health Corp.* 158,760
SEE NOTES TO FINANCIAL STATEMENTS. 91
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) 7,707 Kendle International, Inc.* $ 185,585 17,965 Lifecore Biomedical, Inc.* 256,540 9,157 Medcath Corp.* 168,397 12,702 Merge Technologies, Inc.* 293,036 17,857 Natus Medical, Inc.* 292,676 37,890 Osteotech, Inc.* 128,826 57,923 PainCare Holdings, Inc.* 207,944 15,521 Pediatric Services of America, Inc.* 241,196 22,960 Quidel Corp.* 266,566 69,604 Repligen Corp.* 257,535 14,098 Res-Care, Inc.* 227,542 61,011 Rita Medical Systems, Inc.* 203,777 57,600 Savient Pharmaceuticals, Inc.* 216,000 8,405 Symbion, Inc.* 190,205 9,748 Vital Images, Inc.* 226,641 --------------- 8,090,557 --------------- INDUSTRIALS--18.9% 12,648 AAR Corp.* 201,483 10,956 Alamo Group, Inc. 213,094 9,640 Allied Defense Group (The), Inc.* 214,972 4,672 Ameron International Corp. 199,728 8,110 Amrep Corp.* 212,644 12,702 Apogee Enterprises, Inc. 208,059 7,653 Astec Industries, Inc.* 217,039 10,580 AZZ, Inc.* 186,314 5,532 Badger Meter, Inc. 182,556 9,506 Barrett Business Services, Inc.* 253,810 15,199 Bowne & Co., Inc. 216,130 4,458 Cascade Corp. 217,105 7,358 CDI Corp. 202,860 9,748 Celadon Group, Inc.* 225,764 7,922 CIRCOR International, Inc. 223,163 9,184 Columbus McKinnon Corp.* 209,579 24,651 Comfort Systems USA, Inc. 209,534 14,769 Cornell Cos., Inc.* 203,221 5,210 CRA International, Inc.* 230,595 17,804 Cronos Group (The) (Luxembourg) 210,871 26,048 Distributed Energy Systems Corp.* 209,165 9,882 Dynamic Materials Corp. 205,743 9,989 Eastern (The) Co. 214,764 13,346 Encore Wire Corp.* 287,872 26,853 ENGlobal Corp.* 176,961 10,016 Essex Corp.* 179,988 23,282 Evergreen Solar, Inc.* 192,077 7,385 First Advantage Corp., Class A* 193,339 22,208 Frontier Airlines, Inc.* 209,866 20,704 Frozen Food Express Industries, Inc.* 233,541 7,787 Gehl Co.* 178,867 6,525 Greenbrier Cos. (The), Inc. 179,764 14,796 Hardinge, Inc. 247,093 13,292 Hurco Cos., Inc. 236,996 14,930 Infrasource Services, Inc.* $ 193,194 5,854 International Aluminum Corp. 237,672 12,728 International Shipholding Corp.* 220,194 10,607 Kaman Corp. 248,522 21,080 Kforce, Inc.* 227,664 16,381 L.B. Foster Co., Class A* 211,315 12,460 Ladish Co., Inc.* 249,075 11,842 Lamson & Sessions (The) Co.* 232,103 9,211 Layne Christensen Co.* 193,892 11,440 LSI Industries, Inc. 205,806 16,783 Mac-Gray Corp.* 201,564 8,593 Marten Transport Ltd.* 228,316 26,316 Mesa Air Group, Inc.* 296,843 8,325 Michael Baker Corp.* 216,866 22,342 Modtech Holdings, Inc.* 226,324 3,169 Patriot Transportation Holding, Inc.* 221,291 6,176 Pico Holdings, Inc.* 207,390 4,592 Preformed Line Products Co. 201,543 7,089 Providence Service Corp.* 218,837 18,260 RailAmerica, Inc.* 216,381 15,172 Republic Airways Holdings, Inc.* 236,683 9,667 Robbins & Myers, Inc. 208,711 14,205 Rush Enterprises, Inc., Class A* 213,927 18,529 Sea Containers Ltd. (Bermuda) 207,710 77,553 Sitel Corp.* 233,435 10,124 Sourcecorp* 230,321 28,572 Spherion Corp.* 254,290 14,528 Standard Register (The) Co. 220,826 8,378 Sterling Construction Co., Inc.* 157,842 8,942 Sun Hydraulics Corp. 198,155 23,121 Supreme Industries, Inc., Class A 208,089 46,215 Synagro Technologies, Inc. 203,346 5,854 Triumph Group, Inc.* 203,953 14,286 TRM Corp.* 193,004 5,505 Twin Disc, Inc. 203,685 8,593 USA Truck, Inc.* 199,444 58,701 Waste Services, Inc.* 219,542 10,688 Water Pik Technologies, Inc.* 211,088 47,316 Westaff, Inc.* 223,805 20,489 World Air Holdings, Inc.* 215,135 --------------- 15,882,340 --------------- INFORMATION TECHNOLOGY--22.9% 30,855 24/7 Real Media, Inc.* 197,163 15,011 Actel Corp.* 209,403 12,890 Agilysys, Inc. 192,577 20,006 American Technical Ceramics Corp.* 200,060 10,339 Applied Films Corp.* 200,783 34,641 ASE Test Ltd. (Taiwan)* 191,218 44,765 AsiaInfo Holdings, Inc. (China)* 172,793 21,644 Bell Microproducts, Inc.* 149,127 11,359 Brightpoint, Inc.* 245,241
SEE NOTES TO FINANCIAL STATEMENTS. 92
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) 26,800 CalAmp Corp.* $ 306,861 29,216 Ciber, Inc.* 186,398 11,842 Click Commerce, Inc.* 216,235 9,184 Cohu, Inc. 212,701 15,414 Convera Corp.* 168,783 13,615 Covansys Corp.* 217,840 17,938 CTS Corp. 211,310 5,988 Diodes, Inc.* 217,125 12,890 DTS, Inc.* 208,818 14,608 eCollege.com, Inc.* 232,413 42,670 ECtel Ltd. (Israel)* 215,057 21,107 EFJ, Inc.* 209,804 35,473 Emcore Corp.* 196,520 16,649 ePlus, Inc.* 226,926 15,494 Exar Corp.* 195,069 43,529 Exfo Electro-Optical Engineering, Inc. (Canada)* 190,222 12,433 Fargo Electronics, Inc.* 234,238 20,247 Fundtech Ltd. (Israel)* 202,875 60,501 Glenayre Technologies, Inc.* 228,089 51,102 Innovex, Inc.* 163,015 25,860 Integrated Silicon Solutions, Inc.* 199,639 48,900 Intellisync Corp.* 212,715 24,651 Internet Capital Group, Inc.* 210,520 26,585 Interwoven, Inc.* 249,899 21,053 Intevac, Inc.* 192,424 12,057 Intrado, Inc.* 233,182 20,570 IXYS Corp.* 210,637 14,313 JDA Software Group, Inc.* 231,441 16,730 Keynote Systems, Inc.* 217,992 31,257 Kopin Corp.* 176,602 50,753 Lattice Semiconductor Corp.* 222,298 14,635 LeCroy Corp.* 224,794 26,880 Lightbridge, Inc.* 217,728 10,285 LoJack Corp.* 195,518 83,863 Management Network Group, Inc.* 223,914 17,723 Mapinfo Corp.* 217,816 13,104 Marchex, Inc., Class B* 220,802 19,925 Mastec, Inc.* 203,036 41,435 McDATA Corp., Class A* 199,302 27,552 Micromuse, Inc.* 197,548 12,890 MRO Software, Inc.* 211,138 18,556 Nanometrics, Inc.* 192,055 54,298 Napster, Inc.* 196,559 12,970 Neoware Systems, Inc.* 244,095 15,602 Newport Corp.* 203,450 8,244 NovAtel, Inc. (Canada)* 235,284 29,995 NU Horizons Electronics Corp.* 267,256 40,737 Nuance Communications, Inc.* 209,388 13,803 O2Micro International Ltd. (Cayman Islands)* 180,819 20,516 Online Resources Corp.* $ 246,192 10,500 Optimal Group, Inc. (Canada)* 196,035 8,674 Orckit Communications Ltd. (Israel)* 185,537 13,749 OSI Systems, Inc.* 228,233 30,156 PacificNet, Inc. (Hong Kong)* 248,787 9,452 PAR Technology Corp.* 230,534 13,078 PDF Solutions, Inc.* 194,731 28,841 Phoenix Technologies Ltd.* 171,316 26,048 PLX Technology, Inc.* 195,100 70,275 Quantum Corp.* 212,231 71,672 Quovadx, Inc.* 209,282 21,053 Radiant Systems, Inc.* 239,162 11,198 RadiSys Corp.* 179,952 15,897 RADVision Ltd. (Israel)* 206,661 93,611 Raindance Communications, Inc.* 187,222 21,885 Redback Networks, Inc.* 230,011 5,720 Rofin-Sinar Technologies, Inc.* 210,839 7,009 SI International, Inc.* 202,350 34,211 SonicWALL, Inc.* 238,109 9,050 SPSS, Inc.* 206,340 25,350 Stellent, Inc.* 232,460 37,192 Stratos International, Inc.* 189,679 7,250 Supertex, Inc.* 265,640 17,965 TechTeam Global, Inc.* 167,434 25,108 Tier Technologies, Inc.* 201,366 25,672 Tollgrade Communications, Inc.* 249,018 61,709 Triquint Semiconductor, Inc.* 259,178 51,102 Tumbleweed Communications Corp.* 174,769 19,684 Ulticom, Inc.* 207,273 13,642 Vignette Corp.* 226,594 30,720 webMethods, Inc.* 213,811 14,769 Xyratex Ltd. (Bermuda)* 199,972 14,179 Zygo Corp.* 188,297 --------------- 19,190,630 --------------- MATERIALS--4.6% 12,111 A. Schulman, Inc. 247,186 12,406 AM Castle & Co.* 247,252 11,815 Chesapeake Corp. 237,954 27,740 Empire Resources, Inc. 196,954 74,115 ICO, Inc. 191,958 10,607 Metals USA, Inc.* 220,413 18,663 Myers Industries, Inc. 213,131 8,378 Northwest Pipe Co.* 189,594 5,827 Novamerican Steel, Inc. (Canada)* 224,747 12,433 Olympic Steel, Inc.* 221,059 10,849 Roanoke Electric Steel Corp. 237,702 14,393 Rock-Tenn Co., Class A 199,631 10,204 Ryerson Tull, Inc. 206,019 8,378 Steel Technologies, Inc. 219,587 9,130 Terra Nitrogen Co. LP 213,551 12,916 Universal Stainless & Alloy* 192,448
SEE NOTES TO FINANCIAL STATEMENTS. 93
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) 28,169 US Concrete, Inc.* $ 171,831 34,319 Wellman, Inc. 224,446 --------------- 3,855,463 --------------- TELECOMMUNICATIONS--1.0% 47,316 @ Road, Inc.* 217,654 44,496 Cogent Communications Group, Inc.* 233,603 63,132 SunCom Wireless Holdings, Inc., Class A* 184,977 23,040 Talk America Holdings, Inc.* 222,106 --------------- 858,340 --------------- UTILITIES--0.7% 6,499 American States Water Co. 203,679 9,506 Empire District Electric (The) Co. 192,021 32,949 SEMCO Energy, Inc.* 197,694 --------------- 593,394 --------------- TOTAL INVESTMENTS (Cost $86,801,192)--100.0% 83,860,270 Liabilities in excess of other assets--(0.0%) (12,983) --------------- NET ASSETS--100.0% $ 83,847,287 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 94 PORTFOLIO SUMMARY POWERSHARES INTERNATIONAL DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 09/15/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 46.9 Utilities 10.6 Materials 10.3 Energy 7.3 Consumer Discretionary 6.6 Consumer Staples 6.5 Health Care 5.4 Information Technology 5.2 Industrials 1.2 Other 0.0
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) Canada 21.7 United Kingdom 16.0 Bermuda 8.8 Ireland 7.0 Spain 5.5 Netherlands 5.0 South Africa 4.3 Brazil 4.2 China 3.9 Germany 3.7 Italy 3.4 Sweden 3.3 Hong Kong 3.2 France 2.8 Switzerland 1.7 Cayman Islands 1.3 Denmark 1.2 Japan 1.1 Peru 1.0 Israel 0.6 India 0.3 Other 0.0
- PORTFOLIO STATISTICS Net Assets ($million): $53.6 95 SCHEDULE OF INVESTMENTS POWERSHARES INTERNATIONAL DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--6.6% 31,534 Thomson (The) Corp. $ 1,073,417 43,456 Volvo AB ADR 1,784,739 14,067 WPP Group PLC ADR 692,940 --------------- 3,551,096 --------------- CONSUMER STAPLES--6.5% 29,755 Imperial Tobacco Group PLC ADR 1,717,459 42,900 Unilever PLC ADR 1,741,740 --------------- 3,459,199 --------------- ENERGY--7.3% 10,446 Eni SpA ADR 1,397,152 4,173 Imperial Oil Ltd. 366,515 30,883 Sasol Ltd. ADR 987,638 9,027 Total SA ADR 1,137,583 --------------- 3,888,888 --------------- FINANCIALS--46.9% 112,478 ABN AMRO Holding NV ADR 2,670,227 18,514 ACE Ltd. 964,579 45,789 Allied Irish Banks PLC ADR 1,925,885 115,134 Banco Santander Central Hispanic SA ADR 1,461,050 29,607 Bank of Ireland ADR 1,843,036 33,485 Bank of Montreal 1,641,435 44,591 Bank of Nova Scotia 1,622,221 57,954 Barclays PLC ADR 2,296,137 31,408 Canadian Imperial Bank of Commerce 1,928,765 27,055 HSBC Holdings PLC ADR 2,130,852 19,331 PartnerRe Ltd. 1,231,771 25,069 RenaissanceRe Holdings Ltd. 948,862 20,777 Royal Bank of Canada 1,469,142 30,313 Toronto-Dominion Bank (The) 1,434,108 24,776 XL Capital Ltd., Class A 1,587,151 --------------- 25,155,221 --------------- HEALTH CARE--5.4% 20,625 Fresenius Medical Care AG ADR 624,938 17,367 Luxottica Group SpA ADR 416,808 16,454 Novartis AG ADR 885,554 12,523 Novo-Nordisk A/S ADR 645,686 8,377 Teva Pharmaceutical Industries Ltd. ADR 319,331 --------------- 2,892,317 --------------- INDUSTRIALS--1.2% 8,686 Canadian National Railway Co. 629,561 --------------- INFORMATION TECHNOLOGY--5.2% 11,129 CANON, Inc. ADR 590,616 6,589 Dassault Systemes SA ADR 340,585 2,470 Infosys Technologies Ltd. ADR 167,960 75,015 Nam Tai Electronics, Inc. 1,699,090 --------------- 2,798,251 --------------- MATERIALS--10.3% 59,211 Aracruz Celulose SA ADR $ 2,267,782 20,770 Compania de Minas Buenaventura SA ADR 535,243 46,074 Enbridge, Inc. 1,414,011 135,707 Sappi Ltd. ADR 1,327,214 --------------- 5,544,250 --------------- UTILITIES--10.6% 37,915 Consolidated Water Co. Ltd. 699,153 45,215 E.ON AG ADR 1,365,945 60,699 Endesa SA ADR 1,504,728 77,654 Huaneng Power International, Inc. ADR 2,097,435 --------------- 5,667,261 --------------- TOTAL INVESTMENTS (Cost $55,026,813)--100.0% 53,586,044 Other assets less liabilities--0.0% 7,117 --------------- NET ASSETS--100.0% $ 53,593,161 ===============
ADR American Depositary Receipt. SEE NOTES TO FINANCIAL STATEMENTS. 96 PORTFOLIO SUMMARY POWERSHARES HIGH GROWTH RATE DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 09/15/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 50.6 Health Care 14.3 Consumer Discretionary 10.9 Consumer Staples 8.4 Industrials 6.2 Information Technology 5.8 Materials 3.4 Utilities 0.2 Other 0.2
- PORTFOLIO STATISTICS Net Assets ($million): $26.6 97 SCHEDULE OF INVESTMENTS POWERSHARES HIGH GROWTH RATE DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--99.8% CONSUMER DISCRETIONARY--10.9% 2,268 Applebee's International, Inc. $ 49,692 7,874 Harley-Davidson, Inc. 389,999 26,316 Home Depot (The), Inc. 1,080,010 5,411 Leggett & Platt, Inc. 108,436 32,962 McDonald's Corp. 1,041,599 2,488 Pier 1 Imports, Inc. 25,676 4,176 Ross Stores, Inc. 112,919 756 Superior Industries International, Inc. 15,385 1,548 Talbots (The), Inc. 40,387 1,693 Wolverine World Wide, Inc. 35,468 --------------- 2,899,571 --------------- CONSUMER STAPLES--8.4% 2,638 Alberto-Culver Co. 114,516 18,666 Archer-Daniels-Midland Co. 454,890 342 Courier Corp. 11,201 17,990 Sysco Corp. 574,061 23,170 Wal-Mart Stores, Inc. 1,096,172 --------------- 2,250,840 --------------- FINANCIALS--50.6% 14,395 AFLAC, Inc. 687,793 16,460 American International Group, Inc. 1,066,607 648 Anchor BanCorp Wisconsin, Inc. 20,516 2,732 Arthur J. Gallagher & Co. 80,375 216 BancFirst Corp. 17,945 1,962 Brown & Brown, Inc. 106,595 1,314 Chittenden Corp. 37,804 22,864 Citigroup, Inc. 1,046,713 1,386 City National Corp. 101,705 4,962 Commerce Bancorp, Inc. 151,192 954 Commerce Group, Inc. 54,206 792 Corus Bankshares, Inc. 43,481 1,556 Cullen/Frost Bankers, Inc. 82,188 1,746 CVB Financial Corp. 34,414 3,097 Doral Financial Corp. 26,510 3,762 Eaton Vance Corp. 93,636 648 Essex Property Trust, Inc. 58,242 4,963 Fidelity National Financial, Inc. 185,914 15,957 Fifth Third Bancorp 640,993 396 First Bancorp 8,320 270 First Oak Brook Bancshares, Inc. 7,155 432 First State Bancorp. 9,638 1,602 FNB Corp. 28,708 2,900 Forest City Enterprises, Inc., Class A 106,981 16,885 Freddie Mac 1,035,895 897 Glacier Bancorp, Inc. 26,444 8,826 Golden West Financial Corp. 518,351 774 Harleysville National Corp. 15,875 934 Home Properties, Inc. 36,286 1,278 Hudson United Bancorp 52,999 630 Independent Bank Corp. 18,012 3,226 Legg Mason, Inc. $ 346,182 2,507 Liberty Property Trust 104,517 3,222 M&T Bank Corp. 346,623 918 MAF Bancorp, Inc. 38,134 36,092 MBNA Corp. 922,872 486 MBT Financial Corp. 9,113 1,548 Mercury General Corp. 93,577 13,727 North Fork Bancorp, Inc. 347,842 1,322 Pacific Capital Bancorp 47,685 4,059 People's Bank 130,700 7,668 Popular, Inc. 155,354 2,402 Realty Income Corp. 53,493 1,980 Republic Bancorp, Inc. 27,027 2,862 SEI Investments Co. 111,046 3,084 Sky Financial Group, Inc. 86,599 12,011 SLM Corp. 666,971 2,140 South Financial Group (The), Inc. 59,000 401 Southwest Bancorp, Inc. 9,387 9,413 State Street Corp. 519,880 522 Sterling Bancorp 10,169 8,946 Synovus Financial Corp. 245,747 3,750 T. Rowe Price Group, Inc. 245,700 3,834 TCF Financial Corp. 103,901 4,979 TD Banknorth, Inc. 143,345 1,404 Texas Regional Bancshares, Inc., Class A 41,179 27,457 Washington Mutual, Inc. 1,087,296 17,418 Wells Fargo & Co. 1,048,563 936 Westamerica Bancorp 49,898 --------------- 13,453,293 --------------- HEALTH CARE--14.3% 1,260 Arrow International, Inc. 36,464 2,286 DENTSPLY International, Inc. 126,050 16,894 Johnson & Johnson 1,057,903 18,243 Medtronic, Inc. 1,033,648 744 Meridian Bioscience, Inc. 15,579 49,286 Pfizer, Inc. 1,071,479 11,578 Stryker Corp. 475,508 --------------- 3,816,631 --------------- INDUSTRIALS--6.2% 19,419 Caterpillar, Inc. 1,021,245 4,819 Cintas Corp. 195,507 3,059 Expeditors International of Washington, Inc. 185,590 630 Franklin Electric Co., Inc. 27,348 1,188 Granite Construction, Inc. 40,523 558 LSI Industries, Inc. 10,038 900 Matthews International Corp., Class A 32,346 702 McGrath RentCorp 20,042 504 Raven Industries, Inc. 15,846 2,456 Roper Industries, Inc. 92,591 --------------- 1,641,076 ---------------
SEE NOTES TO FINANCIAL STATEMENTS. 98
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) INFORMATION TECHNOLOGY--5.8% 16,569 Automatic Data Processing, Inc. $ 773,110 2,629 Jack Henry & Associates, Inc. 47,269 8,810 Linear Technology Corp. 292,580 10,874 Paychex, Inc. 421,476 --------------- 1,534,435 --------------- MATERIALS--3.4% 1,337 Albemarle Corp. 46,915 4,483 Nucor Corp. 268,308 9,248 Praxair, Inc. 456,943 1,944 Sigma-Aldrich Corp. 123,833 --------------- 895,999 --------------- UTILITIES--0.2% 1,089 WPS Resources Corp. 59,416 --------------- TOTAL INVESTMENTS (Cost $26,482,770)--99.8% 26,551,261 Other assets less liabilities--0.2% 42,320 --------------- NET ASSETS--100.0% $ 26,593,581 ===============
SEE NOTES TO FINANCIAL STATEMENTS. 99 PORTFOLIO SUMMARY POWERSHARES DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 09/15/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 32.5 Consumer Staples 20.1 Health Care 13.6 Industrials 12.3 Energy 7.5 Consumer Discretionary 7.0 Telecommunications 2.2 Materials 2.0 Utilities 1.3 Information Technology 1.2 Other 0.3
- PORTFOLIO STATISTICS Net Assets ($million): $26.4 100 SCHEDULE OF INVESTMENTS POWERSHARES DIVIDEND ACHIEVERS(TM) PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--99.7% CONSUMER DISCRETIONARY--7.0% 431 Applebees International, Inc. $ 9,443 108 Bandag, Inc. 4,590 288 Cedar Fair, L.P. 7,940 72 Courier Corp. 2,358 898 Family Dollar Stores, Inc. 19,882 1,349 Gannett Co., Inc. 84,528 952 Genuine Parts Co. 42,240 1,515 Harley-Davidson, Inc. 75,038 126 Haverty Furniture Co. 1,542 11,819 Home Depot, Inc. 485,053 316 John Wiley & Sons, Inc., Class A 12,387 1,043 Johnson Controls, Inc. 70,976 287 La-Z-Boy, Inc. 3,398 1,041 Leggett & Platt, Inc. 20,862 4,305 Lowe's Cos., Inc. 261,615 6,884 McDonald's Corp. 217,534 2,064 McGraw-Hill (The) Cos., Inc. 101,012 126 Media General, Inc., Class A 6,647 269 Meredith Corp. 13,423 467 Pier 1 Imports, Inc. 4,819 808 Ross Stores, Inc. 21,848 764 Sherwin-Williams (The), Co. 32,508 449 Stanley Works (The) 21,521 144 Superior Industries International, Inc. 2,930 305 Talbots (The), Inc. 7,957 4,885 Target Corp. 272,046 611 VF Corp. 31,925 323 Wolverine World Wide, Inc. 6,767 --------------- 1,842,789 --------------- CONSUMER STAPLES--20.1% 503 Alberto-Culver Co. 21,835 11,460 Altria Group, Inc. 860,074 4,289 Anheuser-Busch Cos., Inc. 176,964 3,592 Archer-Daniels-Midland Co. 87,537 2,585 Avon Products, Inc. 69,769 664 Brown-Forman Corp., Class B 42,058 844 Clorox Co. 45,677 13,179 Coca-Cola (The) Co. 563,798 2,868 Colgate-Palmolive Co. 151,889 2,865 ConAgra Foods, Inc. 66,669 1,327 Hershey (The) Co. 75,413 754 Hormel Foods Corp. 23,977 2,630 Kimberly-Clark Corp. 149,489 180 Lancaster Colony Corp. 7,216 736 McCormick & Co., Inc. 22,293 9,162 PepsiCo, Inc. 541,291 13,591 Procter & Gamble (The) Co. 760,960 4,332 Sara Lee Corp. 77,326 753 SUPERVALU, Inc. 23,667 3,438 Sysco Corp. 109,707 288 Tootsie Roll Industries, Inc. $ 8,726 143 Universal Corp. 5,354 22,986 Wal-Mart Stores, Inc. 1,087,469 5,608 Walgreen Co. 254,771 1,222 Wm. Wrigley Jr. Co. 84,929 --------------- 5,318,858 --------------- ENERGY--7.5% 11,507 Chevron Corp. 656,704 23,274 Exxon Mobil Corp. 1,306,603 287 Helmerich & Payne, Inc. 15,900 179 Holly Corp. 10,310 --------------- 1,989,517 --------------- FINANCIALS--32.5% 2,770 AFLAC, Inc. 132,351 431 Alfa Corp. 7,232 3,629 Allstate (The) Corp. 191,575 583 AMBAC Financial Group, Inc. 41,329 14,330 American International Group, Inc. 928,584 1,914 AmSouth Bancorp. 48,290 126 Anchor BanCorp Wisconsin, Inc. 3,989 503 Arthur J. Gallagher & Co. 14,798 752 Associated Banc-Corp. 23,470 36 BancFirst Corp. 2,991 431 BancorpSouth, Inc. 9,555 22,160 Bank of America Corp. 969,278 287 Bank of Hawaii Corp. 14,746 3,023 BB&T Corp. 127,994 377 Brown & Brown, Inc. 20,482 90 Capital City Bank Group, Inc. 3,287 341 CBL & Associates Properties, Inc. 12,736 143 Chemical Financial Corp. 4,603 251 Chittenden Corp. 7,221 1,095 Chubb Corp. 101,802 953 Cincinnati Financial Corp. 40,550 27,935 Citigroup, Inc. 1,278,865 269 City National Corp. 19,739 222 Colonial Properties Trust 9,704 916 Comerica, Inc. 52,926 955 Commerce Bancorp, Inc. 29,099 359 Commerce Bancshares, Inc. 19,074 180 Commerce Group, Inc. 10,228 287 Commercial Net Lease Realty 5,562 162 Community Bank System, Inc. 3,848 126 Community Banks, Inc. 3,625 682 Compass Bancshares, Inc. 33,254 161 Corus Bankshares, Inc. 8,839 287 Cullen/Frost Bankers, Inc. 15,159 341 CVB Financial Corp. 6,721 592 Doral Financial Corp. (Puerto Rico) 5,068 790 Duke Realty Corp. 26,939 125 EastGroup Properties, Inc. 5,463
SEE NOTES TO FINANCIAL STATEMENTS. 101
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) 718 Eaton Vance Corp. $ 17,871 126 Essex Property Trust, Inc. 11,325 5,345 Fannie Mae 253,994 287 Federal Realty Investment Trust 17,407 951 Fidelity National Financial, Inc. 35,624 3,071 Fifth Third Bancorp 123,362 72 First Bancorp 1,513 162 First Charter Corp. 4,129 377 First Commonwealth Financial Corp. 4,965 54 First Community Bancshares, Inc. 1,637 72 First Financial Holdings, Inc. 2,089 72 First Indiana Corp. 2,517 107 First Merchants Corp. 2,690 251 First Midwest Bancorp, Inc. 9,543 54 First Oak Brook Bancshares, Inc. 1,431 89 First State Bancorporation/NM 1,986 466 FirstMerit Corp. 12,288 305 FNB Corp. 5,466 556 Forest City Enterprises, Inc., Class A 20,511 1,389 Franklin Resources, Inc. 122,746 3,813 Freddie Mac 233,928 880 Fulton Financial Corp. 14,793 1,292 General Growth Properties, Inc. 54,884 179 Glacier Bancorp, Inc. 5,277 1,698 Golden West Financial Corp. 99,724 162 Harleysville Group, Inc. 3,937 144 Harleysville National Corp. 2,953 736 Health Care Property Investors, Inc. 18,731 269 Healthcare Realty Trust, Inc. 10,179 197 Hilb, Rogal & Hobbs Co. 7,378 179 Home Properties of New York, Inc. 6,954 251 Hudson United Bancorp 10,409 125 Independent Bank Corp. 3,574 161 Irwin Financial Corp. 3,360 738 Jefferson-Pilot Corp. 40,501 2,260 Keycorp 72,862 1,239 Kimco Realty Corp. 36,699 598 Legg Mason, Inc. 64,171 287 Lexington Corporate Properties Trust 6,251 484 Liberty Property Trust 20,178 951 Lincoln National Corp. 48,130 619 M&T Bank Corp. 66,592 323 Macerich (The) Co. 20,759 179 MAF Bancorp, Inc. 7,436 2,956 Marsh & McLennan Cos., Inc. 86,167 1,286 Marshall & Ilsley Corp. 55,247 736 MBIA, Inc. 42,865 6,946 MBNA Corp. 177,609 90 MBT Financial Corp. 1,688 431 Mercantile Bankshares Corp. 24,291 305 Mercury General Corp. 18,437 107 Midland (The) Co. 4,041 3,458 National City Corp. $ 111,451 246 National Penn Bancshares, Inc. 4,824 2,621 North Fork Bancorp, Inc. 66,416 1,186 Northern Trust Corp. 63,570 413 Nuveen Investments, Inc. 16,714 377 Old National Bancorp 8,260 1,005 Old Republic International Corp. 26,040 251 Pacific Capital Bancorp 9,054 72 Park National Corp. 7,792 772 People's Bank 24,858 54 Peoples Bancorp, Inc. 1,552 1,471 Popular, Inc. (Puerto Rico) 29,802 1,080 Progressive (The) Corp. 125,075 1,339 ProLogis 57,577 377 Protective Life Corp. 16,528 462 Realty Income Corp. 10,289 341 Regency Centers Corp. 18,983 2,507 Regions Financial Corp. 81,603 377 Republic Bancorp, Inc. 5,146 143 RLI Corp. 7,686 144 S&T Bancorp, Inc. 5,358 556 SEI Investments Co. 21,573 252 Shurgard Storage Center, Inc. 14,220 574 Sky Financial Group, Inc. 16,118 2,311 SLM Corp. 128,330 413 South Financial Group (The), Inc. 11,386 72 Southwest Bancorp, Inc./OK 1,686 3,730 St. Paul Travelers (The) Cos., Inc. 167,962 216 State Auto Financial Corp. 7,115 1,796 State Street Corp. 99,193 107 Sterling Bancorp 2,084 251 Sterling Bancshares, Inc. 3,712 161 Sterling Financial Corp. 3,387 107 Sun Communities, Inc. 3,261 1,995 SunTrust Banks, Inc. 144,598 252 Susquehanna Bancshares, Inc. 5,819 1,705 Synovus Financial Corp. 46,836 705 T. Rowe Price Group, Inc. 46,192 170 Tanger Factory Outlet Centers 4,571 736 TCF Financial Corp. 19,946 951 TD Banknorth, Inc. 27,379 269 Texas Regional Bancshares, Inc., Class A 7,890 359 Transatlantic Holdings, Inc. 20,786 305 Trustmark Corp. 8,552 233 United Bankshares, Inc. 8,505 754 United Dominion Realty Trust, Inc. 16,686 71 Universal Health Realty Income Trust 2,311 610 Valley National Bancorp 14,786 484 Washington Federal, Inc. 11,127 5,508 Washington Mutual, Inc. 218,117 233 Washington Real Estate Investment Trust 6,955 72 Washington Trust Bancorp, Inc. 2,033
SEE NOTES TO FINANCIAL STATEMENTS. 102
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) 288 Webster Financial Corp. $ 13,297 485 Weingarten Realty Investors 17,247 9,272 Wells Fargo & Co. 558,174 126 WesBanco, Inc. 3,868 36 Wesco Financial Corp. 12,483 179 Westamerica Bancorp 9,542 341 Whitney Holding Corp. 9,207 377 Wilmington Trust Corp. 14,292 --------------- 8,593,879 --------------- HEALTH CARE--13.6% 8,583 Abbott Laboratories 369,498 251 Arrow International, Inc. 7,264 341 Beckman Coulter, Inc. 16,798 1,382 Becton Dickinson & Co. 70,137 575 C. R. Bard, Inc. 35,869 437 DENTSPLY International, Inc. 24,096 6,261 Eli Lilly & Co. 311,735 341 Hillenbrand Industries 15,710 16,426 Johnson & Johnson 1,028,597 6,687 Medtronic, Inc. 378,885 12,124 Merck & Co., Inc. 342,139 126 Meridian Bioscience, Inc. 2,638 40,699 Pfizer, Inc. 884,796 2,228 Stryker Corp. 91,504 179 West Pharmaceutical Services, Inc. 4,292 --------------- 3,583,958 --------------- INDUSTRIALS--12.3% 4,225 3M Co. 321,015 162 A.O. Smith Corp. 5,246 269 ABM Industries, Inc. 5,321 610 Avery Dennison Corp. 34,557 143 Banta Corp. 7,199 269 Brady Corp., Class A 7,739 287 Briggs & Stratton Corp. 9,178 169 Carlisle Companies, Inc. 11,271 3,737 Caterpillar, Inc. 196,528 934 Cintas Corp. 37,892 287 Clarcor, Inc. 7,893 1,676 Danaher Corp. 87,320 1,113 Dover Corp. 43,385 2,263 Emerson Electric Co. 157,392 579 Expeditors International of Washington, Inc. 35,128 125 Franklin Electric Co., Inc. 5,426 1,088 General Dynamics Corp. 126,534 38,698 General Electric Co. 1,312,248 233 Granite Construction, Inc. 7,948 233 Harsco Corp. 14,970 305 HNI Corp. 14,915 1,577 Illinois Tool Works, Inc. 133,667 108 LSI Industries, Inc. 1,943 2,355 Masco Corp. 67,118 179 Matthews International Corp., Class A $ 6,433 143 McGrath RentCorp 4,083 198 Mine Safety Appliances Co. 8,294 45 NACCO Industries, Inc., Class A 5,225 198 Nordson Corp. 7,360 653 Parker-Hannifin Corp. 40,930 556 Pentair, Inc. 18,064 1,257 Pitney Bowes, Inc. 52,895 1,167 R. R. Donnelley & Sons Co. 40,868 107 Raven Industries, Inc. 3,364 467 Roper Industries, Inc. 17,606 1,597 ServiceMaster (The) Co. 20,090 216 Teleflex, Inc. 14,297 54 Tennant Co. 2,352 386 TEPPCO Partners, L.P. 15,093 5,625 United Technologies Corp. 288,449 107 Universal Forest Products, Inc. 5,921 502 W.W. Grainger, Inc. 33,624 --------------- 3,236,781 --------------- INFORMATION TECHNOLOGY--1.2% 3,168 Automatic Data Processing, Inc. 147,819 395 Diebold, Inc. 14,275 503 Jack Henry & Associates, Inc. 9,044 1,695 Linear Technology Corp. 56,291 2,093 Paychex, Inc. 81,125 --------------- 308,554 --------------- MATERIALS--2.0% 1,245 Air Products & Chemicals, Inc. 71,264 252 Albemarle Corp. 8,843 197 AptarGroup, Inc. 10,084 592 Bemis Co., Inc. 15,641 1,400 Ecolab, Inc. 46,312 161 H.B. Fuller Co. 4,825 252 Martin Marietta Materials, Inc. 19,885 197 Myers Industries, Inc. 2,250 879 Nucor Corp. 52,608 934 PPG Industries, Inc. 56,012 1,756 Praxair, Inc. 86,763 1,221 Rohm & Haas Co. 53,150 646 RPM International, Inc. 12,029 377 Sigma-Aldrich Corp. 24,015 539 Sonoco Products Co. 15,254 574 Valspar Corp. 12,657 557 Vulcan Materials Co. 36,205 --------------- 527,797 --------------- TELECOMMUNICATIONS--2.2% 1,808 ALLTEL Corp. 111,843 718 CenturyTel, Inc. 23,500 18,244 SBC Communications, Inc. 435,119 628 Telephone & Data Systems, Inc. 23,751 --------------- 594,213 ---------------
SEE NOTES TO FINANCIAL STATEMENTS. 103
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS (CONTINUED) UTILITIES--1.3% 90 American States Water Co. $ 2,821 521 Aqua America, Inc. 17,651 431 Atmos Energy Corp. 11,335 179 Black Hills Corp. 7,441 107 California Water Service Group 3,825 1,329 Consolidated Edison, Inc. 60,469 395 Energen Corp. 14,852 646 MDU Resources Group, Inc. 21,299 108 MGE Energy, Inc. 3,828 466 National Fuel Gas Co. 14,045 234 Nicor, Inc. 9,173 161 Otter Tail Corp. 4,806 215 Peoples Energy Corp. 7,998 413 Piedmont Natural Gas Co., Inc. 9,772 539 Pinnacle West Capital Corp. 22,509 1,364 Progress Energy, Inc. 59,457 467 Questar Corp. 36,776 574 UGI Corp. 13,546 413 Vectren Corp. 11,213 269 WGL Holdings, Inc. 8,361 215 WPS Resources Corp. 11,730 --------------- 352,907 --------------- TOTAL INVESTMENTS (Cost $26,537,326)--99.7% 26,349,253 Other assets less liabilities--0.3% 92,256 --------------- NET ASSETS--100.0% $ 26,441,509 ===============
SEE NOTES TO FINANCIAL STATEMENTS. 104 PORTFOLIO SUMMARY POWERSHARES DYNAMIC OIL & Gas Services Portfolio OCTOBER 31, 2005 (UNAUDITED) - Inception Date 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Energy 91.8 Industrials 8.2 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $33.2 105 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC OIL & GAS SERVICES PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% ENERGY--91.8% 27,260 Baker Hughes, Inc. $ 1,498,210 50,900 BJ Services Co. 1,768,774 15,540 Cal Dive International, Inc.* 956,332 11,920 Cooper Cameron Corp. 878,862 27,380 Diamond Offshore Drilling, Inc. 1,545,875 21,100 Dril-Quip, Inc.* 862,990 21,300 ENSCO International, Inc. 971,067 77,600 Global Industries Ltd.* 986,296 24,500 Grant Prideco, Inc.* 952,805 114,660 Grey Wolf, Inc.* 880,589 26,440 Halliburton Co. 1,562,604 14,840 Helmerich & Payne, Inc. 822,136 13,560 Hydril* 899,570 19,860 Lufkin Industries, Inc. 923,490 25,960 National-Oilwell Varco, Inc.* 1,621,720 22,160 Noble Corp. 1,426,661 26,840 Oil States International, Inc.* 888,404 112,020 Parker Drilling Co.* 990,257 26,020 Patterson-UTI Energy, Inc. 888,063 55,600 Pioneer Drilling Co.* 952,428 41,280 RPC, Inc. 1,133,549 18,440 Schlumberger Ltd. 1,673,798 42,020 Superior Energy Services, Inc.* 856,368 27,540 Todco, Class A 1,232,415 26,900 Transocean, Inc.* 1,546,481 17,160 Unit Corp.* 899,184 26,520 Veritas DGC, Inc.* 854,209 --------------- 30,473,137 --------------- INDUSTRIALS--8.2% 29,300 Gulfmark Offshore, Inc.* 836,222 33,260 McDermott International, Inc.* 1,208,336 14,320 Overseas Shipholding Group, Inc. 681,632 --------------- 2,726,190 --------------- TOTAL INVESTMENTS (Cost $30,571,125)--100.0% 33,199,327 Liabilities in excess of other assets--(0.0%) (233) --------------- NET ASSETS--100.0% $ 33,199,094 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 106 PORTFOLIO SUMMARY POWERSHARES DYNAMIC INSURANCE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Financials 100.0 Other (0.0)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) United States 97.4 Bermuda 2.6 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $4.8 107 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC INSURANCE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% FINANCIALS--100.0% 5,055 AFLAC, Inc. $ 241,528 2,913 Allmerica Financial Corp.* 110,985 3,810 Allstate (The) Corp. 201,130 3,609 American Financial Group, Inc. 123,356 2,550 Chubb Corp. 237,074 2,097 Commerce Group, Inc. 119,152 5,799 Conseco, Inc.* 117,720 2,598 Delphi Financial Group, Inc., Class A 121,690 3,465 Fidelity National Financial, Inc. 129,799 2,973 First American Corp. 130,277 2,973 Hartford Financial Services Group, Inc. 237,097 6,315 Horace Mann Educators Corp. 122,574 2,535 Loews Corp. 235,704 4,542 MetLife, Inc. 224,420 3,159 Nationwide Financial Services, Inc., Class A 127,592 4,950 Ohio Casualty Corp. 135,036 1,956 PartnerRe Ltd. (Bermuda) 124,636 2,769 ProAssurance Corp.* 129,589 2,301 Progressive (The) Corp. 266,479 2,943 Protective Life Corp. 129,021 3,459 Prudential Financial, Inc. 251,781 2,679 RLI Corp. 143,996 3,486 Safety Insurance Group, Inc. 131,108 2,568 Selective Insurance Group, Inc. 141,009 1,494 StanCorp Financial Group, Inc. 137,597 4,179 State Auto Financial Corp. 137,656 3,951 UICI 142,710 3,048 United Fire & Casualty Co. 137,221 3,372 W. R. Berkley Corp. 147,356 2,928 Zenith National Insurance Corp. 131,819 --------------- TOTAL INVESTMENTS (Cost $4,537,419)--100.0% 4,767,112 Liabilities in excess of other assets--(0.0%) (197) --------------- NET ASSETS--100.0% $ 4,766,915 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 108 PORTFOLIO SUMMARY POWERSHARES DYNAMIC RETAIL PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Consumer Discretionary 83.2 Consumer Staples 16.8 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $30.9 109 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC RETAIL PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--83.2% 37,420 Aaron Rents, Inc. $ 737,174 20,940 Advance Auto Parts, Inc.* 785,250 31,080 American Eagle Outfitters, Inc. 731,934 41,760 AutoNation, Inc.* 830,189 22,940 Barnes & Noble, Inc. 829,510 34,020 Best Buy Co., Inc. 1,505,725 46,120 Cato (The) Corp. 921,478 75,220 Charming Shoppes, Inc.* 842,464 36,240 Claire's Stores, Inc. 944,052 33,700 Conn's, Inc.* 986,399 37,780 Copart, Inc.* 883,674 50,980 CSK Auto Corp.* 771,327 82,480 Gap (The), Inc. 1,425,254 35,160 Genuine Parts Co. 1,560,049 39,320 Home Depot, Inc. 1,613,693 30,860 J. C. Penney Co., Inc. 1,580,032 26,360 Men's Wearhouse (The), Inc.* 651,092 47,620 Nordstrom, Inc. 1,650,034 30,120 O'Reilly Automotive, Inc.* 849,384 45,580 Payless ShoeSource, Inc.* 837,305 42,600 Rent-A-Center, Inc.* 767,652 34,860 ShopKo Stores, Inc.* 999,436 26,120 Sports Authority (The), Inc.* 727,181 70,260 Staples, Inc. 1,597,010 36,380 Stein Mart, Inc. 667,573 --------------- 25,694,871 --------------- CONSUMER STAPLES--16.8% 30,360 7-Eleven, Inc.* 1,135,768 22,080 Buckle (The), Inc. 813,427 80,480 Kroger (The) Co.* 1,601,552 20,440 Longs Drug Stores Corp. 852,552 24,940 SUPERVALU, Inc. 783,864 --------------- 5,187,163 --------------- TOTAL INVESTMENTS (Cost $30,093,713)--100.0% 30,882,034 Liabilities in excess of other assets--(0.0%) (3,545) --------------- NET ASSETS--100.0% $ 30,878,489 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 110 PORTFOLIO SUMMARY POWERSHARES DYNAMIC BUILDING & CONSTRUCTION PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - Inception Date 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Consumer Discretionary 43.7 Industrials 34.4 Materials 21.9 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $4.6 111 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC BUILDING & CONSTRUCTION PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--43.7% 2,616 Brookfield Homes Corp. $ 131,035 1,677 Building Material Holding Corp. 142,562 6,717 D.R. Horton, Inc. 206,145 5,802 Home Depot, Inc. 238,113 13,293 Interface, Inc.* 102,622 3,297 KB HOME 215,459 3,657 Lowe's Cos., Inc. 222,236 150 NVR, Inc.* 102,825 1,812 Ryland Group, Inc. 121,948 3,654 SCP Pool Corp. 131,434 3,015 Standard Pacific Corp. 116,319 4,947 Toll Brothers, lnc.* 182,594 927 William Lyon Homes, Inc.* 110,174 --------------- 2,023,466 --------------- INDUSTRIALS--34.4% 5,175 American Standard Cos., Inc. 196,856 3,084 Cascade Corp. 150,191 4,320 Caterpillar, Inc. 227,188 2,328 EMCOR Group, Inc.* 142,008 2,202 Jacobs Engineering Group, Inc.* 140,378 4,107 JLG Industries, Inc. 157,545 5,250 Lennox International, Inc. 146,423 2,748 Manitowoc Co. 146,221 2,682 Terex Corp.* 147,430 3,105 Walter Industries, Inc. 141,805 --------------- 1,596,045 --------------- MATERIALS--21.9% 1,254 Eagle Materials, Inc. 133,538 2,535 Florida Rock Industries, Inc. 144,242 7,449 Georgia-Pacific Corp. 242,316 1,956 Lafarge North America, Inc. 118,358 5,193 Louisiana-Pacific Corp. 129,461 2,436 Texas Industries, Inc. 120,826 2,091 USG Corp.* 123,620 --------------- 1,012,361 --------------- TOTAL INVESTMENTS (Cost $4,511,814)--100.0% 4,631,872 Liabilities in excess of other assets--(0.0%) (915) --------------- NET ASSETS--100.0% $ 4,630,957 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 112 PORTFOLIO SUMMARY POWERSHARES DYNAMIC UTILITIES PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Utilities 99.9 Other 0.1
- PORTFOLIO STATISTICS Net Assets ($million): $4.7 113 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC UTILITIES PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--99.9% UTILITIES--99.9% 8,466 AES (The) Corp.* $ 134,525 4,578 Allegheny Energy, Inc.* 129,374 2,922 Allete, Inc. 128,597 6,558 American Electric Power Co., Inc. 248,941 3,405 Black Hills Corp. 141,546 9,525 CenterPoint Energy, Inc. 126,111 5,850 Cleco Corp. 124,020 8,229 CMS Energy Corp.* 122,694 2,262 Constellation Energy Group, Inc. 123,958 4,926 DPL, Inc. 126,943 8,376 Duke Energy Corp. 221,796 7,242 Duquesne Light Holdings, Inc. 120,869 5,559 Edison International 243,262 3,126 Entergy Corp. 221,071 3,660 Equitable Resources, Inc. 141,459 4,617 Exelon Corp. 240,223 4,791 FirstEnergy Corp. 227,573 4,269 Great Plains Energy, Inc. 122,563 3,480 KeySpan Corp. 120,304 5,553 NiSource, Inc. 131,328 4,359 NorthWestern Corp. 129,680 3,996 ONEOK, Inc. 114,845 4,431 Otter Tail Corp. 132,265 5,808 Pepco Holdings, Inc. 124,814 6,498 PG&E Corp. 236,397 5,517 Piedmont Natural Gas Co., Inc. 130,532 7,737 PPL Corp. 242,478 3,171 SCANA Corp. 125,794 2,994 Sempra Energy 132,634 3,411 Wisconsin Energy Corp. 129,038 --------------- TOTAL INVESTMENTS (Cost $4,539,240)--99.9% 4,695,634 Other assets less liabilities--0.1% 2,788 --------------- NET ASSETS--100.0% $ 4,698,422 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 114 PORTFOLIO SUMMARY POWERSHARES DYNAMIC ENERGY EXPLORATION & Production Portfolio OCTOBER 31, 2005 (UNAUDITED) - INCEPTION DATE 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Energy 100.0 Other 0.0
- PORTFOLIO STATISTICS Net Assets ($million): $40.7 115 SCHEDULE OF INVESTMENTS POWERSHARES DYNAMIC ENERGY EXPLORATION & PRODUCTION PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% ENERGY--100.0% 8,750 Amerada Hess Corp. $ 1,094,625 22,500 Anadarko Petroleum Corp. 2,040,975 23,875 Atlas America, Inc.* 1,112,575 29,225 Burlington Resources, Inc. 2,110,629 26,100 Cabot Oil & Gas Corp. 1,195,119 37,975 Chesapeake Energy Corp. 1,218,998 31,625 ConocoPhillips 2,067,643 24,225 Denbury Resources, Inc.* 1,056,937 33,925 Devon Energy Corp. 2,048,392 29,075 Energen Corp. 1,093,220 32,350 EOG Resources, Inc. 2,192,682 33,500 Exxon Mobil Corp. 1,880,690 24,875 Forest Oil Corp.* 1,086,540 34,200 Frontier Oil Corp. 1,261,296 26,100 Giant Industries, Inc.* 1,492,659 12,400 Kerr-McGee Corp. 1,054,496 20,225 Murphy Oil Corp. 947,541 25,250 Noble Energy, Inc. 1,011,263 25,025 Occidental Petroleum Corp. 1,973,972 20,875 Penn Virginia Corp. 1,134,765 19,425 Pogo Producing Co. 980,963 33,900 St. Mary Land & Exploration Co. 1,152,939 20,200 Stone Energy Corp.* 927,180 16,850 Sunoco, Inc. 1,255,325 24,300 Swift Energy Co.* 1,060,938 20,725 Tesoro Corp. 1,267,334 21,900 Valero Energy Corp. 2,304,755 29,675 Vintage Petroleum, Inc. 1,539,836 50,850 Williams (The) Cos., Inc. 1,133,955 --------------- TOTAL INVESTMENTS (Cost $37,912,203)--100.0% 40,698,242 Other assets less liabilities--0.0% 5,262 --------------- NET ASSETS--100.0% $ 40,703,504 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 116 PORTFOLIO SUMMARY POWERSHARES LUX NANOTECH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED) - Inception Date 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Health Care 30.8 Information Technology 29.7 Materials 22.1 Consumer Discretionary 6.9 Industrials 6.0 Financials 4.5 Other (0.0)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) United States 77.3 Ireland 4.7 France 4.7 Canada 4.3 United Kingdom 3.4 Germany 2.9 Japan 2.7 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $30.0 117 SCHEDULE OF INVESTMENTS POWERSHARES LUX NANOTECH PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--6.9% 28,340 General Motors Corp. $ 776,516 408,600 Westaim (The), Corp. (Canada)* 1,295,262 --------------- 2,071,778 --------------- FINANCIALS--4.5% 122,580 Harris & Harris Group, Inc.* 1,358,186 --------------- HEALTH CARE--30.8% 213,420 Accelrys, Inc.* 1,395,767 30,900 American Pharmaceutical Partners, Inc.* 1,330,245 422,300 BioSante Pharmaceuticals, Inc.* 1,266,900 172,700 Elan Corp. PLC ADR (Ireland)* 1,424,775 78,480 Flamel Technologies ADR (France)* 1,398,514 370,360 Immunicon Corp.* 1,429,218 148,940 SkyePharma PLC ADR (United Kingdom)* 1,008,324 --------------- 9,253,743 --------------- INDUSTRIALS--6.0% 11,920 3M Co. 905,682 25,920 General Electric Co. 878,947 --------------- 1,784,629 --------------- INFORMATION TECHNOLOGY--29.7% 577,140 Altair Nanotechnologies, Inc.* 1,281,251 184,680 Cambridge Display Technology, Inc.* 1,063,757 71,280 FEI Co.* 1,347,192 30,740 Hewlett-Packard Co. 861,950 11,180 International Business Machines Corp. 915,418 161,200 NEC Corp. ADR (Japan) 804,388 91,660 NVE Corp.* 1,252,992 87,720 Veeco Instruments, Inc.* 1,393,871 --------------- 8,920,819 --------------- MATERIALS--22.1% 15,820 Air Products & Chemicals, Inc. 905,537 11,960 BASF AG ADR (Germany) 861,000 22,700 El Du Pont de Nemours & Co. 946,363 36,900 Headwaters, Inc.* 1,174,896 227,820 Nanophase Technologies Corp.* 1,250,732 55,800 Symyx Technologies* 1,492,092 --------------- 6,630,620 --------------- TOTAL INVESTMENTS (Cost $30,110,719)--100.0% 30,019,775 Liabilities in excess of other assets--(0.0%) (3,894) --------------- NET ASSETS--100.0% $ 30,015,881 ===============
ADR American Depositary Receipt. * Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 118 PORTFOLIO SUMMARY POWERSHARES AEROSPACE & Defense Portfolio OCTOBER 31, 2005 (UNAUDITED) - Inception Date 10/26/05 - SECTOR BREAKDOWN (% OF THE FUND'S NET ASSETS) Industrials 65.3 Information Technology 16.9 Consumer Discretionary 14.6 Materials 1.9 Telecommunications 1.3 Other (0.0)
- COUNTRY OF INCORPORATION (% OF THE FUND'S NET ASSETS) United States 97.3 Cayman Islands 2.7 Other (0.0)
- PORTFOLIO STATISTICS Net Assets ($million): $4.5 119 SCHEDULE OF INVESTMENTS POWERSHARES AEROSPACE & DEFENSE PORTFOLIO OCTOBER 31, 2005 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------ --------------- COMMON STOCKS--100.0% CONSUMER DISCRETIONARY--14.6% 13,887 DIRECTV Group (The), Inc.* $ 197,473 6,396 EchoStar Communications Corp., Class A* 171,861 25,620 Sirius Satellite Radio, Inc.* 159,869 4,281 XM Satellite Radio Holdings, Inc., Class A* 123,421 --------------- 652,624 --------------- INDUSTRIALS--65.3% 717 Alliant Techsystems, Inc.* 50,348 384 ARGON ST, Inc.* 10,176 666 Armor Holdings, Inc.* 29,777 4,959 Boeing Co. 320,549 474 Ceradyne, Inc.* 18,581 516 Cubic Corp. 8,468 537 DRS Technologies, Inc. 26,453 390 EDO Corp. 11,271 807 Engineered Support Systems, Inc. 32,643 411 Essex Corp.* 7,386 489 Esterline Technologies Corp.* 18,411 1,056 GenCorp, Inc.* 19,367 1,920 General Dynamics Corp. 223,296 2,346 Goodrich Corp. 84,620 276 Herley Industries, Inc.* 4,667 8,172 Honeywell International, Inc. 279,481 1,644 ITT Industries, Inc. 167,030 282 KVH Industries, Inc.* 2,606 2,307 L-3 Communications Holdings, Inc. 179,531 4,242 Lockheed Martin Corp. 256,896 744 Moog, Inc., Class A* 22,060 303 MTC Technologies, Inc.* 9,790 3,876 Northrop Grumman Corp. 207,947 1,038 Orbital Sciences Corp.* 12,072 1,416 Oshkosh Truck Corp. 61,681 2,565 Precision Castparts Corp. 121,478 5,580 Raytheon Co. 206,181 3,408 Rockwell Collins, Inc. 156,155 1,185 Taser International, Inc.* 7,288 642 Teledyne Technologies, Inc.* 22,637 225 United Industrial Corp. 7,940 6,351 United Technologies Corp. 325,679 --------------- 2,912,465 --------------- INFORMATION TECHNOLOGY--16.9% 3,135 Andrew Corp.* 33,294 714 Anteon International Corp.* 32,273 222 Applied Signal Technology, Inc. 3,810 732 CACI International, Inc., Class A* 39,923 1,782 Cogent, Inc.* 47,312 3,564 Computer Sciences Corp.* 182,656 1,344 Flir Systems, Inc.* 28,170 2,079 Garmin Ltd. (Cayman Islands) 119,397 2,571 Harris Corp. 105,668 555 Intergraph Corp.* 26,851 636 Mantech International Corp.* $ 17,617 405 Mercury Computer Systems, Inc.* 7,691 315 OSI Systems, Inc.* 5,229 483 SafeNet, Inc.* 16,021 216 SI International, Inc.* 6,236 1,053 SRA International, Inc., Class A* 34,559 1,035 Trimble Navigation Ltd.* 29,880 519 Viasat, Inc.* 12,866 930 Viisage Technology, Inc.* 4,278 --------------- 753,731 --------------- MATERIALS--1.9% 2,106 Ball Corp. 82,913 --------------- TELECOMMUNICATIONS--1.3% 2,364 PanAmSat Holding Corp. 56,429 --------------- TOTAL INVESTMENTS (Cost $4,470,862)--100.0% 4,458,162 Liabilities in excess of other assets--(0.0%) (805) --------------- NET ASSETS--100.0% $ 4,457,357 ===============
* Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS. 120 This page intentionally left blank STATEMENTS OF ASSETS AND LIABILITIES POWERSHARES EXCHANGE TRADED FUNDS OCTOBER 31, 2005 (UNAUDITED)
POWERSHARES POWERSHARES HIGH YIELD EQUITY POWERSHARES POWERSHARES GOLDEN DRAGON DIVIDEND DYNAMIC MARKET DYNAMIC OTC HALTER USX CHINA ACHIEVERS(TM) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO -------------- ------------- ---------------- ----------------- ASSETS: Investments at value, (Cost $512,474,411, $127,710,420, $69,320,644, $471,249,399, $180,481,175, $43,173,867, $29,120,857, $24,959,853, $18,678,004, $18,980,640, $28,745,674, respectively) $ 537,408,481 $ 133,541,119 $ 65,925,931 $ 464,927,861 Cash -- -- -- 34,306 Receivables: Investments sold -- -- -- 24,055,301 Capital stock sold -- -- -- 16,325,125 Dividends 277,469 1,481 -- 1,488,507 Interest 1,161 239 353 1,442 Due from Advisor -- -- -- -- -------------- ------------- ---------------- ----------------- TOTAL ASSETS 537,687,111 133,542,839 65,926,284 506,832,542 -------------- ------------- ---------------- ----------------- LIABILITIES: Due to custodian 456 3,056 242 -- Payables: Investments purchased -- -- -- 25,369,187 Capital stock purchased -- -- -- 16,325,125 Accrued net advisory fees 440,806 56,207 7,654 256,934 Accrued expenses 71,964 47,410 34,479 357,285 -------------- ------------- ---------------- ----------------- TOTAL LIABILITIES 513,226 106,673 42,375 42,308,531 -------------- ------------- ---------------- ----------------- NET ASSETS $ 537,173,885 $ 133,436,166 $ 65,883,909 $ 464,524,011 ============== ============= ================ ================= NET ASSETS CONSIST OF: Paid-in capital $ 513,127,349 $ 131,086,623 $ 70,002,568 $ 468,205,830 Undistributed net investment income (loss)/distributions in excess of net investment income 39,157 (64,726) (34,282) 622,812 Accumulated net realized gain (loss) on investments (926,691) (3,416,430) (689,664) 2,016,907 Net unrealized appreciation/depreciation on investments 24,934,070 5,830,699 (3,394,713) (6,321,538) -------------- ------------- ---------------- ----------------- NET ASSETS $ 537,173,885 $ 133,436,166 $ 65,883,909 $ 464,524,011 ============== ============= ================ ================= Shares outstanding (unlimited amount authorized, $0.01 par value) 12,152,228 2,801,424 5,000,000 31,300,000 Net asset value $ 44.20 $ 47.63 $ 13.18 $ 14.84 ============== ============= ================ =================
SEE NOTES TO FINANCIAL STATEMENTS. 122
POWERSHARES POWERSHARES POWERSHARES WILDERHILL CLEAN DYNAMIC LARGE CAP DYNAMIC LARGE CAP ENERGY GROWTH VALUE PORTFOLIO PORTFOLIO PORTFOLIO ----------------- ----------------- ----------------- ASSETS: Investments at value, (Cost $512,474,411, $127,710,420, $69,320,644, $471,249,399, $180,481,175, $43,173,867, $29,120,857, $24,959,853, $18,678,004, $18,980,640, $28,745,674, respectively) $ 168,701,052 $ 44,319,807 $ 29,911,207 Cash -- 27,493 -- Receivables: Investments sold -- -- -- Capital stock sold -- -- -- Dividends 41,291 12,890 34,507 Interest 20 40 112 Due from Advisor -- 5,238 19,407 ----------------- ----------------- ----------------- TOTAL ASSETS 168,742,363 44,365,468 29,965,233 ----------------- ----------------- ----------------- LIABILITIES: Due to custodian 38,797 -- 2,432 Payables: Investments purchased -- -- -- Capital stock purchased -- -- -- Accrued net advisory fees 100,401 -- -- Accrued expenses 14,800 24,991 24,281 ----------------- ----------------- ----------------- TOTAL LIABILITIES 153,998 24,991 26,713 ----------------- ----------------- ----------------- NET ASSETS $ 168,588,365 $ 44,340,477 $ 29,938,520 ================= ================= ================= NET ASSETS CONSIST OF: Paid-in capital $ 178,854,361 $ 43,022,257 $ 28,994,121 Undistributed net investment income (loss)/distributions in excess of net investment income (109,524) (7,528) 32,558 Accumulated net realized gain (loss) on investments 1,623,651 179,808 121,491 Net unrealized appreciation/depreciation on investments (11,780,123) 1,145,940 790,350 ----------------- ----------------- ----------------- NET ASSETS $ 168,588,365 $ 44,340,477 $ 29,938,520 ================= ================= ================= Shares outstanding (unlimited amount authorized, $0.01 par value) 10,900,000 2,900,000 1,900,000 Net asset value $ 15.47 $ 15.29 $ 15.76 ================= ================= ================= POWERSHARES POWERSHARES DYNAMIC MID CAP DYNAMIC MID CAP GROWTH VALUE PORTFOLIO PORTFOLIO ----------------- ----------------- ASSETS: Investments at value, (Cost $512,474,411, $127,710,420, $69,320,644, $471,249,399, $180,481,175, $43,173,867, $29,120,857, $24,959,853, $18,678,004, $18,980,640, $28,745,674, respectively) $ 26,067,601 $ 18,900,695 Cash -- -- Receivables: Investments sold -- -- Capital stock sold -- -- Dividends 6,115 11,173 Interest -- 283 Due from Advisor 21,466 26,495 ----------------- ----------------- TOTAL ASSETS 26,095,182 18,938,646 ----------------- ----------------- LIABILITIES: Due to custodian 34,273 9,905 Payables: Investments purchased -- -- Capital stock purchased -- -- Accrued net advisory fees -- -- Accrued expenses 25,274 23,037 ----------------- ----------------- TOTAL LIABILITIES 59,547 32,942 ----------------- ----------------- NET ASSETS $ 26,035,635 $ 18,905,704 ================= ================= NET ASSETS CONSIST OF: $ 24,829,282 $ 18,335,604 Paid-in capital Undistributed net investment income (loss)/distributions in excess of net investment income (16,024) 95,239 Accumulated net realized gain (loss) on investments 114,629 252,170 Net unrealized appreciation/depreciation on investments 1,107,748 222,691 ----------------- ----------------- NET ASSETS $ 26,035,635 $ 18,905,704 ================= ================= Shares outstanding (unlimited amount authorized, $0.01 par value) 1,600,000 1,200,000 Net asset value $ 16.27 $ 15.75 ================= ================= POWERSHARES POWERSHARES DYNAMIC SMALL CAP DYNAMIC SMALL CAP GROWTH VALUE PORTFOLIO PORTFOLIO ----------------- ----------------- ASSETS: Investments at value, (Cost $512,474,411, $127,710,420, $69,320,644, $471,249,399, $180,481,175, $43,173,867, $29,120,857, $24,959,853, $18,678,004, $18,980,640, $28,745,674, respectively) $ 18,910,150 $ 28,935,320 Cash -- -- Receivables: Investments sold -- -- Capital stock sold -- 1,523,737 Dividends -- 17,990 Interest -- 50 Due from Advisor 26,112 18,309 ----------------- ----------------- TOTAL ASSETS 18,936,262 30,495,406 ----------------- ----------------- LIABILITIES: Due to custodian 47,241 1,039 Payables: Investments purchased -- 1,521,496 Capital stock purchased -- -- Accrued net advisory fees -- -- Accrued expenses 21,789 22,079 ----------------- ----------------- TOTAL LIABILITIES 69,030 1,544,614 ----------------- ----------------- NET ASSETS $ 18,867,232 $ 28,950,792 ================= ================= NET ASSETS CONSIST OF: Paid-in capital $ 18,644,408 $ 28,857,393 Undistributed net investment income (loss)/distributions in excess of net investment income (26,671) 11,210 Accumulated net realized gain (loss) on investments 319,985 (107,457) Net unrealized appreciation/depreciation on investments (70,490) 189,646 ----------------- ----------------- NET ASSETS $ 18,867,232 $ 28,950,792 ================= ================= Shares outstanding (unlimited amount authorized, $0.01 par value) 1,200,000 1,900,000 Net asset value $ 15.72 $ 15.24 ================= =================
123
POWERSHARES DYNAMIC POWERSHARES POWERSHARES POWERSHARES BIOTECHNOLOGY & DYNAMIC FOOD & DYNAMIC LEISURE & DYNAMIC GENOME BEVERAGE ENTERTAINMENT MEDIA PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------------- --------------- ------------------ ------------ ASSETS: Investments at value, (Cost $124,244,653, $23,764,032, $24,778,814, $25,194,137, $23,994,693, $31,185,080, $62,571,049, $29,312,550, $86,801,192, $55,026,813, $26,482,770, respectively) $ 122,352,080 $ 22,957,108 $ 24,151,794 $ 23,682,080 Cash -- 618 -- -- Receivables: Investments sold -- -- -- -- Capital stock sold -- -- -- -- Dividends -- 14,468 10,846 3,903 Interest -- 8 423 18 --------------- --------------- ------------------ ------------ TOTAL ASSETS 122,352,080 22,972,202 24,163,063 23,686,001 --------------- --------------- ------------------ ------------ LIABILITIES: Due to custodian 134,893 -- 8,542 110 Payables: Investments purchased -- -- -- -- Capital stock purchased -- -- -- -- Accrued net advisory fees 97,013 10,311 9,824 11,579 Accrued expenses 17,866 8,942 8,913 8,989 --------------- --------------- ------------------ ------------ TOTAL LIABILITIES 249,772 19,253 27,279 20,678 --------------- --------------- ------------------ ------------ NET ASSETS $ 122,102,308 $ 22,952,949 $ 24,135,784 $ 23,665,323 =============== =============== ================== ============ NET ASSETS CONSIST OF: Paid-in capital $ 122,592,410 $ 24,004,920 $ 25,377,188 $ 25,577,827 Undistributed net investment income (loss)/distributions in excess of net investment income (179,714) (4,203) (3,121) (10,071) Net realized gain (loss) on investments 1,582,185 (240,844) (611,263) (390,376) Net unrealized appreciation/depreciation on investments (1,892,573) (806,924) (627,020) (1,512,057) --------------- --------------- ------------------ ------------ NET ASSETS $ 122,102,308 $ 22,952,949 $ 24,135,784 $ 23,665,323 =============== =============== ================== ============ Shares outstanding (unlimited amount authorized, $0.01 par value) 7,500,000 1,600,000 1,700,000 1,700,000 Net asset value $ 16.28 $ 14.35 $ 14.20 $ 13.92 =============== =============== ================== ============
SEE NOTES TO FINANCIAL STATEMENTS. 124
POWERSHARES POWERSHARES POWERSHARES POWERSHARES DYNAMIC DYNAMIC DYNAMIC DYNAMIC NETWORKING PHARMACEUTICALS SEMICONDUCTORS SOFTWARE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------ --------------- -------------- ------------ ASSETS: Investments at value, (Cost $124,244,653, $23,764,032, $24,778,814, $25,194,137, $23,994,693, $31,185,080, $62,571,049, $29,312,550, $86,801,192, $55,026,813, $26,482,770, respectively) $ 24,206,714 $ 31,186,942 $ 60,130,013 $ 32,297,237 Cash -- -- -- -- Receivables: Investments sold -- -- -- -- Capital stock sold -- -- -- -- Dividends -- 20,492 2,893 -- Interest -- 27 -- -- ------------ --------------- -------------- ------------ TOTAL ASSETS 24,206,714 31,207,461 60,132,906 32,297,237 ------------ --------------- -------------- ------------ LIABILITIES: Due to custodian 37,454 171 44,331 41,510 Payables: Investments purchased -- -- -- -- Capital stock purchased -- -- -- -- Accrued net advisory fees 11,949 17,631 46,090 17,804 Accrued expenses 9,203 9,403 12,622 9,265 ------------ --------------- -------------- ------------ TOTAL LIABILITIES 58,606 27,205 103,043 68,579 ------------ --------------- -------------- ------------ NET ASSETS $ 24,148,108 $ 31,180,256 $ 60,029,863 $ 32,228,658 ============ =============== ============== ============ NET ASSETS CONSIST OF: Paid-in capital $ 23,974,086 $ 30,433,342 $ 61,882,785 $ 28,819,701 Undistributed net investment income (loss)/distributions in excess of net investment income (57,974) (4,353) (77,157) (61,061) Net realized gain (loss) on investments 19,975 749,405 665,271 485,331 Net unrealized appreciation/depreciation on investments 212,021 1,862 (2,441,036) 2,984,687 ------------ --------------- -------------- ------------ NET ASSETS $ 24,148,108 $ 31,180,256 $ 60,029,863 $ 32,228,658 ============ =============== ============== ============ Shares outstanding (unlimited amount authorized, $0.01 par value) 1,600,000 2,000,000 4,000,000 1,900,000 Net asset value $ 15.09 $ 15.59 $ 15.01 $ 16.96 ============ =============== ============== ============ POWERSHARES POWERSHARES POWERSHARES INTERNATIONAL HIGH GROWTH RATE ZACKS MICRO CAP DIVIDEND ACHIEVERS(TM) DIVIDEND ACHIEVERS(TM) PORTFOLIO PORTFOLIO PORTFOLIO --------------- ---------------------- ---------------------- ASSETS: Investments at value, (Cost $124,244,653, $23,764,032, $24,778,814, $25,194,137, $23,994,693, $31,185,080, $62,571,049, $29,312,550, $86,801,192, $55,026,813, $26,482,770, respectively) $ 83,860,270 $ 53,586,044 $ 26,551,261 Cash 494,523 79,524 51,879 Receivables: Investments sold -- 3,927,752 528,640 Capital stock sold -- 1,448,46 -- Dividends 32,738 65,374 28,135 Interest -- -- -- --------------- ---------------------- ---------------------- TOTAL ASSETS 84,387,531 59,107,158 27,159,915 --------------- ---------------------- ---------------------- LIABILITIES: Due to custodian -- -- -- Payables: Investments purchased 439,843 4,024,790 546,019 Capital stock purchased -- 1,448,46 -- Accrued net advisory fees 74,994 22,382 6,993 Accrued expenses 25,407 18,361 13,322 --------------- ---------------------- ---------------------- TOTAL LIABILITIES 540,244 5,513,997 566,334 --------------- ---------------------- ---------------------- NET ASSETS $ 83,847,287 $ 53,593,161 $ 26,593,581 =============== ====================== ====================== NET ASSETS CONSIST OF: Paid-in capital $ 87,598,295 $ 55,153,967 $ 26,479,308 Undistributed net investment income (loss)/distributions in excess of net investment income (3,134) 90,040 48,325 Net realized gain (loss) on investments (806,952) (210,077) (2,543) Net unrealized appreciation/depreciation on investments (2,940,922) (1,440,769) 68,491 --------------- ---------------------- ---------------------- NET ASSETS $ 83,847,287 $ 53,593,161 $ 26,593,581 =============== ====================== ====================== Shares outstanding (unlimited amount authorized, $0.01 par value) 5,800,000 3,700,000 1,800,000 Net asset value $ 14.46 $ 14.48 $ 14.77 =============== ====================== ======================
125
POWERSHARES POWERSHARES DIVIDEND DYNAMIC ACHIEVERS(TM) OIL & GAS SERVICES PORTFOLIO PORTFOLIO ------------- ------------------ ASSETS: Investments at value, (Cost $26,537,326, $30,571,125, $4,537,419, $30,093,713, $4,511,814, $4,539,240, $37,912,203, $30,110,719, $4,470,862, respectively) $ 26,349,253 $ 33,199,327 Receivables: Investments sold 355,273 -- Dividends 31,682 3,423 Due from Advisor -- -- ------------- ------------------ TOTAL ASSETS 26,736,208 33,202,750 ------------- ------------------ LIABILITIES: Due to custodian 2,837 -- Payables: Investments purchased 271,689 -- Accrued net advisory fees 7,047 1,741 Accrued expenses 13,126 1,915 ------------- ------------------ TOTAL LIABILITIES 294,699 3,656 ------------- ------------------ NET ASSETS $ 26,441,509 $ 33,199,094 ============= ================== NET ASSETS CONSIST OF: Paid-in capital $ 26,629,518 $ 30,571,126 Undistributed net investment income (loss) 29,167 (234) Net realized loss (29,103) -- Net unrealized appreciation/depreciation on investments (188,073) 2,628,202 ------------- ------------------ NET ASSETS $ 26,441,509 $ 33,199,094 ============= ================== Shares outstanding (unlimited amount authorized, $0.01 par value) 1,800,000 2,000,000 Net asset value $ 14.69 $ 16.60 ============= ==================
SEE NOTES TO FINANCIAL STATEMENTS. 126
POWERSHARES POWERSHARES POWERSHARES DYNAMIC POWERSHARES DYNAMIC DYNAMIC BUILDING & DYNAMIC INSURANCE RETAIL CONSTRUCTION UTILITIES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------ ------------ -------------- ------------ ASSETS: Investments at value, (Cost $26,537,326, $30,571,125, $4,537,419, $30,093,713, $4,511,814, $4,539,240, $37,912,203, $30,110,719, $4,470,862, respectively) $ 4,767,112 $ 30,882,034 $ 4,631,872 $ 4,695,634 Receivables: Investments sold -- -- -- -- Dividends 732 -- -- 3,712 Due from Advisor 701 -- 713 705 ------------ ------------ -------------- ------------ TOTAL ASSETS 4,768,545 30,882,034 4,632,585 4,700,051 ------------ ------------ -------------- ------------ LIABILITIES: Due to custodian -- -- -- -- Payables: Investments purchased -- -- -- -- Accrued net advisory fees -- 1,519 -- -- Accrued expenses 1,630 2,026 1,628 1,629 ------------ ------------ -------------- ------------ TOTAL LIABILITIES 1,630 3,545 1,628 1,629 ------------ ------------ -------------- ------------ NET ASSETS $ 4,766,915 $ 30,878,489 $ 4,630,957 $ 4,698,422 ============ ============ ============== ============ NET ASSETS CONSIST OF: Paid-in capital $ 4,537,419 $ 30,093,713 $ 4,511,814 $ 4,539,240 Undistributed net investment income (loss) (197) (3,545) (915) 2,788 Net realized loss -- -- -- -- Net unrealized appreciation/depreciation on investments 229,693 788,321 120,058 156,394 ------------ ------------ -------------- ------------ NET ASSETS $ 4,766,915 $ 30,878,489 $ 4,630,957 $ 4,698,422 ============ ============ ============== ============ Shares outstanding (unlimited amount authorized, $0.01 par value) 300,000 2,000,000 300,000 300,000 Net asset value $ 15.89 $ 15.44 $ 15.44 $ 15.66 ============ ============ ============== ============ POWERSHARES DYNAMIC POWERSHARES ENERGY EXPLORATION & POWERSHARES AEROSPACE & PRODUCTION LUX NANOTECH DEFENSE PORTFOLIO PORTFOLIO PORTFOLIO --------------------- ------------ ------------ ASSETS: Investments at value, (Cost $26,537,326, $30,571,125, $4,537,419, $30,093,713, $4,511,814, $4,539,240, $37,912,203, $30,110,719, $4,470,862, respectively) $ 40,698,242 $ 30,019,775 $ 4,458,162 Receivables: Investments sold -- -- -- Dividends 9,803 -- 28 Due from Advisor -- -- 719 --------------------- ------------ ------------ TOTAL ASSETS 40,708,045 30,019,775 4,458,909 --------------------- ------------ ------------ LIABILITIES: Due to custodian -- -- -- Payables: Investments purchased -- -- -- Accrued net advisory fees 2,372 1,524 -- Accrued expenses 2,169 2,370 1,552 --------------------- ------------ ------------ TOTAL LIABILITIES 4,541 3,894 1,552 --------------------- ------------ ------------ NET ASSETS $ 40,703,504 $ 30,015,881 $ 4,457,357 ===================== ============ ============ NET ASSETS CONSIST OF: Paid-in capital $ 37,912,203 $ 30,110,719 $ 4,470,862 Undistributed net investment income (loss) 5,262 (3,894) (805) Net realized loss -- -- -- Net unrealized appreciation/depreciation on investments 2,786,039 (90,944) (12,700) --------------------- ------------ ------------ NET ASSETS $ 40,703,504 $ 30,015,881 $ 4,457,357 ===================== ============ ============ Shares outstanding (unlimited amount authorized, $0.01 par value) 2,500,000 2,000,000 300,000 Net asset value $ 16.28 $ 15.01 $ 14.86 ===================== ============ ============
127 STATEMENTS OF OPERATIONS
POWERSHARES POWERSHARES HIGH YIELD EQUITY POWERSHARES POWERSHARES GOLDEN DRAGON DIVIDEND DYNAMIC MARKET DYNAMIC OTC HALTER USX CHINA ACHIEVERS(TM) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------- ----------------- ----------------- ----------------- SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------------- ----------------- ----------------- ----------------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $0, $0, $0, $0, $0, $0, $0, $23, $0, $0, $669, respectively) $ 2,578,395 $ 445,675 $ 733,142 $ 8,457,429 Interest 4,429 1,773 2,907 5,039 ----------------- ----------------- ----------------- ----------------- TOTAL INCOME 2,582,824 447,448 736,049 8,462,468 ----------------- ----------------- ----------------- ----------------- EXPENSES: Advisory fees 1,060,818 294,351 152,462 840,321 Licensing 63,649 17,661 30,492 210,080 Administration fees 55,048 30,246 25,466 50,347 Accounting 33,831 27,725 22,935 28,434 Printing 24,720 6,842 20,484 126,099 Custodian and transfer agent fees 12,822 5,243 1,880 11,715 Registration & filings 10,788 1,524 9,317 57,399 Audit 9,074 9,074 12,412 18,912 Legal 8,241 2,470 5,497 35,125 Trustees 7,450 2,062 1,709 7,746 Listing fee and expenses 7,011 5,571 5,957 11,876 Offering costs -- -- 7,092 30,794 Other expenses 14,061 9,703 5,362 7,340 ----------------- ----------------- ----------------- ----------------- TOTAL EXPENSES 1,307,513 412,472 301,065 1,436,188 Less fees waived: Advisory (21,027) (58,943) (79,524) (155,764) Less: Other fees assumed by the Adviser -- -- -- -- ----------------- ----------------- ----------------- ----------------- NET EXPENSES 1,286,486 353,529 221,541 1,280,424 ----------------- ----------------- ----------------- ----------------- NET INVESTMENT INCOME (LOSS) 1,296,338 93,919 514,508 7,182,044 ----------------- ----------------- ----------------- ----------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from: Investments (13,756,802) (4,000,166) (2,425,698) (999,558) In-kind redemptions 27,312,922 8,415,261 1,739,282 6,173,159 ----------------- ----------------- ----------------- ----------------- Net realized gain (loss) 13,556,120 4,415,095 (686,416) 5,173,601 Net change in unrealized appreciation/depreciation on investments 28,345,974 4,834,492 522,100 2,018,065 ----------------- ----------------- ----------------- ----------------- Net realized and unrealized gain (loss) on investments 41,902,094 9,249,587 (164,316) 7,191,666 ----------------- ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 43,198,432 $ 9,343,506 $ 350,192 $ 14,373,710 ================= ================= ================= =================
SEE NOTES TO FINANCIAL STATEMENTS. 128
POWERSHARES POWERSHARES POWERSHARES POWERSHARES WILDERHILL CLEAN DYNAMIC LARGE CAP DYNAMIC LARGE CAP DYNAMIC MID CAP ENERGY GROWTH VALUE GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------- ----------------- ----------------- ----------------- SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------------- ----------------- ----------------- ----------------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $0, $0, $0, $0, $0, $0, $0, $23, $0, $0, $669, respectively) $ 179,069 $ 86,872 $ 202,541 $ 38,485 Interest 20 100 403 4 ----------------- ----------------- ----------------- ----------------- TOTAL INCOME 179,089 86,972 202,944 38,489 ----------------- ----------------- ----------------- ----------------- EXPENSES: Advisory fees 198,163 72,669 45,268 38,938 Licensing 39,632 4,360 2,716 2,336 Administration fees 13,224 10,005 8,922 8,623 Accounting 10,582 8,437 7,716 7,516 Printing 14,613 4,981 5,115 4,486 Custodian and transfer agent fees 3,076 1,593 1,074 1,374 Registration & filings 5,572 1,569 1,884 1,586 Audit 6,870 6,870 6,870 6,870 Legal 2,317 173 205 155 Trustees 2,036 1,292 810 1,154 Listing fee and expenses 11,399 11,634 11,630 11,627 Offering costs 8,115 1,517 1,748 1,872 Other expenses 3,503 3,189 3,085 4,613 ----------------- ----------------- ----------------- ----------------- TOTAL EXPENSES 319,102 128,289 97,043 91,150 Less fees waived: Advisory (30,489) (32,005) (35,040) (36,637) Less: Other fees assumed by the Adviser -- -- -- -- ----------------- ----------------- ----------------- ----------------- NET EXPENSES 288,613 96,284 62,003 54,513 ----------------- ----------------- ----------------- ----------------- NET INVESTMENT INCOME (LOSS) (109,524) (9,312) 140,941 (16,024) ----------------- ----------------- ----------------- ----------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from: Investments (2,405,402) (382,748) (80,999) (440,341) In-kind redemptions 4,310,561 553,952 202,490 554,970 ----------------- ----------------- ----------------- ----------------- Net realized gain (loss) 1,905,159 171,204 121,491 114,629 Net change in unrealized appreciation/depreciation on investments (7,544,333) 1,526,263 1,083,418 1,680,219 ----------------- ----------------- ----------------- ----------------- Net realized and unrealized gain (loss) on investments (5,639,174) 1,697,467 1,204,909 1,794,848 ----------------- ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations $ (5,748,698) $ 1,688,155 $ 1,345,850 $ 1,778,824 ================= ================= ================= ================= POWERSHARES POWERSHARES POWERSHARES DYNAMIC MID CAP DYNAMIC SMALL CAP DYNAMIC SMALL CAP VALUE GROWTH VALUE PORTFOLIO PORTFOLIO PORTFOLIO ----------------- ----------------- ----------------- SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------------- ----------------- ----------------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $0, $0, $0, $0, $0, $0, $0, $23, $0, $0, $669, respectively) $ 128,896 $ 19,300 $ 140,642 Interest 876 -- 167 ----------------- ----------------- ----------------- TOTAL INCOME 129,772 19,300 140,809 ----------------- ----------------- ----------------- EXPENSES: Advisory fees 31,864 32,284 45,496 Licensing 1,912 1,937 2,730 Administration fees 8,422 8,396 8,679 Accounting 7,382 7,364 7,553 Printing 4,991 4,908 4,783 Custodian and transfer agent fees 1,327 969 1,541 Registration & filings 1,889 1,925 1,918 Audit 6,870 6,870 6,870 Legal 190 188 193 Trustees 582 594 808 Listing fee and expenses 11,625 11,628 11,630 Offering costs 2,090 2,057 2,042 Other expenses 3,413 3,656 3,652 ----------------- ----------------- ----------------- TOTAL EXPENSES 82,557 82,776 97,895 Less fees waived: Advisory (31,864) (32,284) (35,291) Less: Other fees assumed by the Adviser (5,234) (4,521) -- ----------------- ----------------- ----------------- NET EXPENSES 45,459 45,971 62,604 ----------------- ----------------- ----------------- NET INVESTMENT INCOME (LOSS) 84,313 (26,671) 78,205 ----------------- ----------------- ----------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from: Investments (239,347) (856,814) (748,054) In-kind redemptions 492,476 1,176,800 640,492 ----------------- ----------------- ----------------- Net realized gain (loss) 253,129 319,986 (107,562) Net change in unrealized appreciation/depreciation on investments 654,205 751,128 1,069,944 ----------------- ----------------- ----------------- Net realized and unrealized gain (loss) on investments 907,334 1,071,114 962,382 ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 991,647 $ 1,044,443 $ 1,040,587 ================= ================= =================
129
POWERSHARES DYNAMIC POWERSHARES POWERSHARES POWERSHARES BIOTECHNOLOGY & DYNAMIC FOOD & DYNAMIC LEISURE & DYNAMIC GENOME BEVERAGE ENTERTAINMENT MEDIA PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------------ ------------------ ------------------ ------------------ FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JUNE 23, 2005* JUNE 23, 2005* JUNE 23, 2005* JUNE 23, 2005* THROUGH THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------ ------------------ ------------------ ------------------ INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $0, $0, $0, $0, $0, $0, $0, $0, $0, $18,386, $0, respectively) $ 24,071 $ 128,790 $ 55,958 $ 83,308 Interest -- 156 455 78 ------------------ ------------------ ------------------ ------------------ 24,071 128,946 56,413 83,386 ------------------ ------------------ ------------------ ------------------ EXPENSES: Advisory fees 157,405 41,906 41,289 44,640 Licensing 9,444 2,514 2,477 2,678 Administration fees 8,734 2,383 2,345 2,537 Listing fee and expenses 6,055 6,053 6,053 6,054 Accounting 5,586 1,545 1,520 1,644 Audit 5,248 5,248 5,248 5,248 Offering costs 4,228 5,227 5,228 5,248 Custodian and transfer agent fees 2,414 971 961 1,007 Registration & filings 1,261 1,261 1,261 1,261 Printing 630 630 630 630 Trustees 389 362 358 386 Legal 215 200 198 214 Other expenses 3,151 3,133 3,131 3,149 ------------------ ------------------ ------------------ ------------------ TOTAL EXPENSES 204,760 71,433 70,699 74,696 Less fees waived: Advisory (975) (11,116) (11,165) (10,921) ------------------ ------------------ ------------------ ------------------ NET EXPENSES 203,785 60,317 59,534 63,775 ------------------ ------------------ ------------------ ------------------ NET INVESTMENT INCOME (LOSS) (179,714) 68,629 (3,121) 19,611 ------------------ ------------------ ------------------ ------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from: Investments (352,635) (440,646) (756,161) (547,520) In-kind redemptions 1,934,820 199,802 144,898 157,144 ------------------ ------------------ ------------------ ------------------ Net realized gain (loss) 1,582,185 (240,844) (611,263) (390,376) Net unrealized appreciation/depreciation on investments (1,892,573) (806,924) (627,020) (1,512,057) ------------------ ------------------ ------------------ ------------------ Net realized and unrealized gain (loss) on investments (310,388) (1,047,768) (1,238,283) (1,902,433) ------------------ ------------------ ------------------ ------------------ Net increase (decrease) in net assets resulting from operations $ (490,102) $ (979,139) $ (1,241,404) $ (1,882,822) ================== ================== ================== ==================
* Commencement of Investment Operations. SEE NOTES TO FINANCIAL STATEMENTS. 130
POWERSHARES POWERSHARES POWERSHARES POWERSHARES DYNAMIC DYNAMIC DYNAMIC DYNAMIC NETWORKING PHARMACEUTICALS SEMICONDUCTORS SOFTWARE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------------ ------------------ ------------------ ------------------ FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JUNE 23, 2005* JUNE 23, 2005* JUNE 23, 2005* JUNE 23, 2005* THROUGH THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------ ------------------ ------------------ ------------------ INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $0, $0, $0, $0, $0, $0, $0, $0, $0, $18,386, $0, respectively) $ 4,989 $ 97,178 $ 44,185 $ 12,904 Interest -- 119 -- -- ------------------ ------------------ ------------------ ------------------ 4,989 97,297 44,185 12,904 ------------------ ------------------ ------------------ ------------------ EXPENSES: Advisory fees 43,995 51,007 90,573 52,723 Licensing 2,640 3,060 5,434 3,163 Administration fees 2,495 2,875 5,075 2,980 Listing fee and expenses 6,052 6,055 6,054 6,055 Accounting 1,615 1,854 3,264 1,926 Audit 5,248 5,248 5,248 5,248 Offering costs 5,247 5,239 5,248 5,253 Custodian and transfer agent fees 995 1,080 1,587 1,107 Registration & filings 1,261 1,261 1,261 1,261 Printing 630 630 630 630 Trustees 356 386 375 389 Legal 197 213 208 215 Other expenses 3,130 3,149 3,142 3,151 ------------------ ------------------ ------------------ ------------------ TOTAL EXPENSES 73,861 82,057 128,099 84,101 Less fees waived: Advisory (10,898) (10,267) (6,757) (10,136) ------------------ ------------------ ------------------ ------------------ NET EXPENSES 62,963 71,790 121,342 73,965 ------------------ ------------------ ------------------ ------------------ NET INVESTMENT INCOME (LOSS) (57,974) 25,507 (77,157) (61,061) ------------------ ------------------ ------------------ ------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from: Investments (385,872) 32,378 (306,757) (125,449) In-kind redemptions 405,847 717,027 972,028 610,780 ------------------ ------------------ ------------------ ------------------ Net realized gain (loss) 19,975 749,405 665,271 485,331 Net unrealized appreciation/depreciation on investments 212,021 1,862 (2,441,036) 2,984,687 ------------------ ------------------ ------------------ ------------------ Net realized and unrealized gain (loss) on investments 231,996 751,267 (1,775,765) 3,470,018 ------------------ ------------------ ------------------ ------------------ Net increase (decrease) in net assets resulting from operations $ 174,022 $ 776,774 $ (1,852,922) $ 3,408,957 ================== ================== ================== ================== POWERSHARES POWERSHARES POWERSHARES INTERNATIONAL HIGH GROWTH RATE ZACKS MICRO CAP DIVIDEND ACHIEVERS(TM) DIVIDEND ACHIEVERS(TM) PORTFOLIO PORTFOLIO PORTFOLIO ------------------ ---------------------- ---------------------- FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD AUGUST 18, 2005* SEPTEMBER 15, 2005* SEPTEMBER 15, 2005* THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------ ---------------------- ---------------------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $0, $0, $0, $0, $0, $0, $0, $0, $0, $18,386, $0, respectively) $ 109,469 $ 130, 885 $ 168,831 Interest -- -- -- ------------------ ---------------------- ---------------------- 109,469 130,885 68,831 ------------------ ---------------------- ---------------------- EXPENSES: Advisory fees 78,746 25,634 12,074 Licensing 15,749 6,409 3,019 Administration fees 4,233 1,623 1,761 Listing fee and expenses 3,658 1,996 1,996 Accounting 2,658 982 460 Audit 3,662 2,576 2,577 Offering costs 1,024 1,545 1,545 Custodian and transfer agent fees 1,052 357 180 Registration & filings 1,210 470 470 Printing 1,463 792 792 Trustees 500 239 239 Legal 277 132 132 Other expenses 2,122 1,342 1,342 ------------------ ---------------------- ---------------------- TOTAL EXPENSES 116,354 44,097 25,587 Less fees waived: Advisory (3,751) (3,252) (5,081) ------------------ ---------------------- ---------------------- NET EXPENSES 112,603 40,845 20,506 ------------------ ---------------------- ---------------------- NET INVESTMENT INCOME (LOSS) (3,134) 90,040 48,325 ------------------ ---------------------- ---------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from: Investments (2,250,752) (258,277) (2,543) In-kind redemptions 1,443,800 48,200 -- ------------------ ---------------------- ---------------------- Net realized gain (loss) (806,952) (210,077) (2,543) Net unrealized appreciation/depreciation on investments (2,940,922) (1,440,769) 68,491 ------------------ ---------------------- ---------------------- Net realized and unrealized gain (loss) on investments (3,747,874) (1,650,846) 65,948 ------------------ ---------------------- ---------------------- Net increase (decrease) in net assets resulting from operations $ (3,751,008) $ (1,560,806) $ 114,273 ================== ====================== ======================
SEE NOTES TO FINANCIAL STATEMENTS. 131
POWERSHARES POWERSHARES DIVIDEND DYNAMIC ACHIEVERS(TM) OIL & GAS SERVICES PORTFOLIO PORTFOLIO -------------------- ----------------- FOR THE PERIOD FOR THE PERIOD SEPTEMBER 15, 2005* OCTOBER 26, 2005* THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) -------------------- ----------------- INVESTMENT INCOME: Dividends $ 49,743 $ 3,422 -------------------- ----------------- EXPENSES: Advisory fees 12,121 2,658 Licensing 3,030 159 Audit 2,577 539 Listing fee and expenses 1,996 250 Offering costs 1,545 197 Printing 792 54 Administration fees 765 133 Registration & filings 470 159 Accounting 461 80 Trustees 239 13 Custodian and transfer agent fees 181 27 Legal 132 20 Other expenses 1,341 284 -------------------- ----------------- TOTAL EXPENSES 25,650 4,573 Less fees waived: Advisory (5,074) (917) Less: Other fees assumed by the Adviser -- -- -------------------- ----------------- NET EXPENSES 20,576 3,656 -------------------- ----------------- NET INVESTMENT INCOME (LOSS) 29,167 (234) -------------------- ----------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss from: Investments (29,103) -- -------------------- ----------------- Net unrealized appreciation/depreciation on investments (188,073) 2,628,202 -------------------- ----------------- Net realized and unrealized gain (loss) on investments (217,176) 2,628,202 -------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ (188,009) $ 2,627,968 ==================== =================
* Commencement of Investment Operations. SEE NOTES TO FINANCIAL STATEMENTS. 132
POWERSHARES POWERSHARES POWERSHARES DYNAMIC DYNAMIC DYNAMIC BUILDING & INSURANCE RETAIL CONSTRUCTION PORTFOLIO PORTFOLIO PORTFOLIO ----------------- -------------------- ----------------- FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD OCTOBER 26, 2005* OCTOBER 26, 2005* OCTOBER 26, 2005* THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------------- -------------------- ----------------- INVESTMENT INCOME: Dividends $ 732 $ -- $ -- ----------------- -------------------- ----------------- EXPENSES: Advisory fees 381 2,457 370 Licensing 23 147 22 Audit 539 539 539 Listing fee and expenses 389 392 389 Offering costs 197 197 197 Printing 8 53 8 Administration fees 19 123 19 Registration & filings 159 159 159 Accounting 11 74 11 Trustees 2 13 2 Custodian and transfer agent fees 4 25 4 Legal 3 19 3 Other expenses 276 284 275 ----------------- -------------------- ----------------- TOTAL EXPENSES 2,011 4,482 1,998 Less fees waived: Advisory (381) (937) (370) Less: Other fees assumed by the Adviser (701) -- (713) ----------------- -------------------- ----------------- NET EXPENSES 929 3,545 915 ----------------- -------------------- ----------------- NET INVESTMENT INCOME (LOSS) (197) (3,545) (915) ----------------- -------------------- ----------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss from: Investments -- -- -- ----------------- -------------------- ----------------- Net unrealized appreciation/depreciation on investments 229,693 788,321 120,058 ----------------- -------------------- ----------------- Net realized and unrealized gain (loss) on investments 229,693 788,321 120,058 ----------------- -------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 229,496 $ 784,776 $ 119,143 ================= ==================== ================= POWERSHARES POWERSHARES DYNAMIC POWERSHARES DYNAMIC ENERGY EXPLORATION & POWERSHARES AEROSPACE & UTILITIES PRODUCTION LUX NANOTECH DEFENSE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------- -------------------- ----------------- ----------------- FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD OCTOBER 26, 2005* OCTOBER 26, 2005* OCTOBER 26, 2005* OCTOBER 26, 2005* THROUGH THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------------- -------------------- ----------------- ----------------- INVESTMENT INCOME: Dividends $ 3,712 $ 9,804 $ -- $ 28 ----------------- -------------------- ----------------- ----------------- EXPENSES: Advisory fees 377 3,248 2,461 363 Licensing 23 195 492 44 Audit 539 539 539 539 Listing fee and expenses 389 393 392 293 Offering costs 197 197 197 197 Printing 8 67 53 7 Administration fees 19 162 123 18 Registration & filings 159 159 159 159 Accounting 11 98 74 11 Trustees 2 17 13 2 Custodian and transfer agent fees 4 33 25 4 Legal 3 24 19 3 Other expenses 275 286 284 275 ----------------- -------------------- ----------------- ----------------- TOTAL EXPENSES 2,006 5,418 4,831 1,915 Less fees waived: Advisory (377) (876) (937) (363) Less: Other fees assumed by the Adviser (705) -- -- (719) ----------------- -------------------- ----------------- ----------------- NET EXPENSES 924 4,542 3,894 833 ----------------- -------------------- ----------------- ----------------- NET INVESTMENT INCOME (LOSS) 2,788 5,262 (3,894) (805) ----------------- -------------------- ----------------- ----------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss from: Investments -- -- -- -- ----------------- -------------------- ----------------- ----------------- Net unrealized appreciation/depreciation on investments 156,394 2,786,039 (90,944) (12,700) ----------------- -------------------- ----------------- ----------------- Net realized and unrealized gain (loss) on investments 156,394 2,786,039 (90,944) (12,700) ----------------- -------------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 159,182 $ 2,791,301 $ (94,838) $ (13,505) ================= ==================== ================= =================
133 STATEMENTS OF CHANGES IN NET ASSETS
POWERSHARES POWERSHARES DYNAMIC MARKET DYNAMIC OTC PORTFOLIO PORTFOLIO ------------------------------------ ------------------------------------ SIX MONTHS ENDED FOR THE YEAR SIX MONTHS ENDED FOR THE YEAR OCTOBER 31, 2005 ENDED OCTOBER 31, 2005 ENDED (UNAUDITED) APRIL 30, 2005 (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- ---------------- ---------------- OPERATIONS: Net investment income (loss) $ 1,296,338 $ 1,281,300 $ 93,919 $ (30,229) Net realized gain (loss) on investments 13,556,120 18,332,720 4,415,095 1,444,299 Net change in unrealized appreciation/depreciation on investments 28,345,974 (2,695,196) 4,834,492 3,831,933 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 43,198,432 16,918,824 9,343,506 5,246,003 ---------------- ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (1,425,946) (1,056,515) (158,645) -- ---------------- ---------------- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 522,069,895 485,012,060 135,756,730 93,231,719 Value of shares repurchased (310,288,827) (303,199,586) (77,252,480) (67,548,001) ---------------- ---------------- ---------------- ---------------- Net increase in net assets resulting from share transactions 211,781,068 181,812,474 58,504,250 25,683,718 ---------------- ---------------- ---------------- ---------------- INCREASE IN NET ASSETS 253,553,554 197,674,783 67,689,111 30,929,721 NET ASSETS: Beginning of period 283,620,331 85,945,548 65,747,055 34,817,334 ---------------- ---------------- ---------------- ---------------- End of period $ 537,173,885 $ 283,620,331 $ 133,436,166 $ 65,747,055 ================ ================ ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ 39,157 $ 168,765 $ (64,726) $ -- ================ ================ ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 12,150,000 12,700,000 2,900,000 2,250,000 Shares repurchased (7,250,000) (7,900,000) (1,650,000) (1,650,000) Shares outstanding, beginning of period 7,252,228 2,452,228 1,551,424 951,424 ---------------- ---------------- ---------------- ---------------- Shares outstanding, end of period 12,152,228 7,252,228 2,801,424 1,551,424 ================ ================ ================ ================
* Commencement of Investment Operations. SEE NOTES TO FINANCIAL STATEMENTS. 134
POWERSHARES POWERSHARES HIGH YIELD EQUITY GOLDEN DRAGON DIVIDEND HALTER USX CHINA ACHIEVERS(TM) PORTFOLIO PORTFOLIO ------------------------------------ ------------------------------------ FOR THE PERIOD FOR THE PERIOD SIX MONTHS ENDED DECEMBER 9, 2004* SIX MONTHS ENDED DECEMBER 9, 2004* OCTOBER 31, 2005 THROUGH OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- ---------------- ---------------- OPERATIONS: Net investment income (loss) $ 514,508 $ 185,418 $ 7,182,044 $ 2,874,452 Net realized gain (loss) on investments (686,416) 487,615 5,173,601 (1,810,498) Net change in unrealized appreciation/depreciation on investments 522,100 (3,916,813) 2,018,065 (8,339,603) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 350,192 (3,243,780) 14,373,710 (7,275,649) ---------------- ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (734,208) -- (6,710,112) (2,710,823) ---------------- ---------------- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 23,877,876 59,495,034 180,651,278 349,078,454 Value of shares repurchased (6,994,005) (6,867,200) (38,036,054) (24,846,793) ---------------- ---------------- ---------------- ---------------- Net increase in net assets resulting from share transactions 16,883,871 52,627,834 142,615,224 324,231,661 ---------------- ---------------- ---------------- ---------------- INCREASE IN NET ASSETS 16,499,855 49,384,054 150,278,822 314,245,189 NET ASSETS: Beginning of period 49,384,054 -- 314,245,189 -- ---------------- ---------------- ---------------- ---------------- End of period $ 65,883,909 $ 49,384,054 $ 464,524,011 $ 314,245,189 ================ ================ ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (34,282) $ 185,418 $ 622,812 $ 150,880 ================ ================ ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 1,700,000 4,300,000 12,000,000 23,500,000 Shares repurchased (500,000) (500,000) (2,500,000) (1,700,000) Shares outstanding, beginning of period 3,800,000 -- 21,800,000 -- ---------------- ---------------- ---------------- ---------------- Shares outstanding, end of period 5,000,000 3,800,000 31,300,000 21,800,000 ================ ================ ================ ================ POWERSHARES WILDERHILL CLEAN ENERGY PORTFOLIO ------------------------------------ FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- OPERATIONS: Net investment income (loss) $ (109,524) $ (12,511) Net realized gain (loss) on investments 1,905,159 (216,715) Net change in unrealized appreciation/depreciation on investments (7,544,333) (4,235,790) ---------------- ---------------- Net increase (decrease) in net assets resulting from operations (5,748,698) (4,465,016) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- -- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 160,761,090 32,906,261 Value of shares repurchased (13,436,464) (1,428,808) ---------------- ---------------- Net increase in net assets resulting from share transactions 147,324,626 31,477,453 ---------------- ---------------- INCREASE IN NET ASSETS 141,575,928 27,012,437 NET ASSETS: Beginning of period 27,012,437 -- ---------------- ---------------- End of period $ 168,588,365 $ 27,012,437 ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (109,524) $ -- ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 9,600,000 2,200,000 Shares repurchased (800,000) (100,000) Shares outstanding, beginning of period 2,100,000 -- ---------------- ---------------- Shares outstanding, end of period 10,900,000 2,100,000 ================ ================
135
POWERSHARES POWERSHARES DYNAMIC LARGE CAP DYNAMIC LARGE CAP GROWTH VALUE PORTFOLIO PORTFOLIO ------------------------------------ ------------------------------------ FOR THE PERIOD FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- ---------------- ---------------- OPERATIONS: Net investment income (loss) $ (9,312) $ 1,784 $ 140,941 $ 33,128 Net realized gain (loss) on investments 171,204 8,604 121,491 -- Net change in unrealized appreciation/depreciation on investments 1,526,263 (380,323) 1,083,418 (293,068) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 1,688,155 (369,935) 1,345,850 (259,940) ---------------- ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- -- (132,957) (8,554) ---------------- ---------------- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 41,767,094 8,836,990 21,619,332 10,434,433 Value of shares repurchased (7,581,827) -- (3,059,644) -- ---------------- ---------------- ---------------- ---------------- Net increase in net assets resulting from share transactions 34,185,267 8,836,990 18,559,688 10,434,433 ---------------- ---------------- ---------------- ---------------- INCREASE IN NET ASSETS 35,873,422 8,467,055 19,772,581 10,165,939 NET ASSETS: Beginning of period 8,467,055 -- 10,165,939 -- ---------------- ---------------- ---------------- ---------------- End of period $ 44,340,477 $ 8,467,055 $ 29,938,520 $ 10,165,939 ================ ================ ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (7,528) $ 1,784 $ 32,558 $ 24,574 ================ ================ ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 2,800,000 600,000 1,400,000 700,000 Shares repurchased (500,000) -- (200,000) -- Shares outstanding, beginning of period 600,000 -- 700,000 -- ---------------- ---------------- ---------------- ---------------- Shares outstanding, end of period 2,900,000 600,000 1,900,000 700,000 ================ ================ ================ ================
* Commencement of Investment Operations. SEE NOTES TO FINANCIAL STATEMENTS. 136
POWERSHARES POWERSHARES DYNAMIC MID CAP DYNAMIC MID CAP GROWTH VALUE PORTFOLIO PORTFOLIO ------------------------------------ ------------------------------------ FOR THE PERIOD FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- ---------------- ---------------- OPERATIONS: Net investment income (loss) $ (16,024) $ (2,756) $ 84,313 $ 107,020 Net realized gain (loss) on investments 114,629 48 253,129 (959) Net change in unrealized appreciation/depreciation on investments 1,680,219 (572,471) 654,205 (431,514) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 1,778,824 (575,179) 991,647 (325,453) ---------------- ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- -- (82,024) (14,070) ---------------- ---------------- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 22,184,624 8,924,219 14,065,050 10,465,342 Value of shares repurchased (6,276,853) -- (6,194,788) -- ---------------- ---------------- ---------------- ---------------- Net increase in net assets resulting from share transactions 15,907,771 8,924,219 7,870,262 10,465,342 ---------------- ---------------- ---------------- ---------------- INCREASE IN NET ASSETS 17,686,595 8,349,040 8,779,885 10,125,819 NET ASSETS: Beginning of period 8,349,040 -- 10,125,819 -- ---------------- ---------------- ---------------- ---------------- End of period $ 26,035,635 $ 8,349,040 $ 18,905,704 $ 10,125,819 ================ ================ ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (16,024) $ -- $ 95,239 $ 92,950 ================ ================ ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 1,400,000 600,000 900,000 700,000 Shares repurchased (400,000) -- (400,000) -- Shares outstanding, beginning of period 600,000 -- 700,000 -- ---------------- ---------------- ---------------- ---------------- Shares outstanding, end of period 1,600,000 600,000 1,200,000 700,000 ================ ================ ================ ================ POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO ------------------------------------ FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- OPERATIONS: Net investment income (loss) $ (26,671) $ (7,226) Net realized gain (loss) on investments 319,986 (1) Net change in unrealized appreciation/depreciation on investments 751,128 (821,618) ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 1,044,443 (828,845) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- -- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 14,347,998 10,556,073 Value of shares repurchased (6,252,437) -- ---------------- ---------------- Net increase in net assets resulting from share transactions 8,095,561 10,556,073 ---------------- ---------------- INCREASE IN NET ASSETS 9,140,004 9,727,228 NET ASSETS: Beginning of period 9,727,228 -- ---------------- ---------------- End of period $ 18,867,232 $ 9,727,228 ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (26,671) $ -- ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 900,000 700,000 Shares repurchased (400,000) -- Shares outstanding, beginning of period 700,000 -- ---------------- ---------------- Shares outstanding, end of period 1,200,000 700,000 ================ ================
137
POWERSHARES DYNAMIC POWERSHARES POWERSHARES BIOTECHNOLOGY & DYNAMIC FOOD & DYNAMIC SMALL CAP GENOME BEVERAGE VALUE PORTFOLIO PORTFOLIO PORTFOLIO ------------------------------------ ---------------- ---------------- FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JUNE 23, 2005* JUNE 23, 2005* SIX MONTHS ENDED MARCH 3, 2005* THROUGH THROUGH OCTOBER 31, 2005 THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) APRIL 30, 2005 (UNAUDITED) (UNAUDITED) ---------------- ---------------- ---------------- ---------------- OPERATIONS: Net investment income (loss) $ 78,205 $ 6,769 $ (179,714) $ 68,629 Net realized gain (loss) on investments (107,562) 105 1,582,185 (240,844) Net unrealized appreciation/depreciation on investments 1,069,944 (880,298) (1,892,573) (806,924) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 1,040,587 (873,424) (490,102) (979,139) ---------------- ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (73,764) -- -- (72,832) ---------------- ---------------- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 22,896,593 10,524,352 141,226,942 26,885,819 Value of shares repurchased (4,563,552) -- (18,634,532) (2,880,899) ---------------- ---------------- ---------------- ---------------- Net increase in net assets resulting from share transactions 18,333,041 10,524,352 122,592,410 24,004,920 ---------------- ---------------- ---------------- ---------------- INCREASE IN NET ASSETS 19,299,864 9,650,928 122,102,308 22,952,949 NET ASSETS: Beginning of period 9,650,928 -- -- -- ---------------- ---------------- ---------------- ---------------- End of period $ 28,950,792 $ 9,650,928 $ 122,102,308 $ 22,952,949 ================ ================ ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ 11,210 $ 6,769 $ (179,714) $ (4,203) ================ ================ ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 1,500,000 700,000 8,600,000 1,800,000 Shares repurchased (300,000) -- (1,100,000) (200,000) Shares outstanding, beginning of period 700,000 -- -- -- ---------------- ---------------- ---------------- ---------------- Shares outstanding, end of period 1,900,000 700,000 7,500,000 1,600,000 ================ ================ ================ ================
* Commencement of Investment Operations. SEE NOTES TO FINANCIAL STATEMENTS. 138
POWERSHARES POWERSHARES POWERSHARES POWERSHARES DYNAMIC LEISURE & DYNAMIC DYNAMIC DYNAMIC ENTERTAINMENT MEDIA NETWORKING PHARMACEUTICALS PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------- ---------------- ---------------- ---------------- FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JUNE 23, 2005* JUNE 23, 2005* JUNE 23, 2005* JUNE 23, 2005* THROUGH THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------------- ---------------- ---------------- ---------------- OPERATIONS: Net investment income (loss) $ (3,121) $ 19,611 $ (57,974) $ 25,507 Net realized gain (loss) on investments (611,263) (390,376) 19,975 749,405 Net unrealized appreciation/depreciation on investments (627,020) (1,512,057) 212,021 1,862 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations (1,241,404) (1,882,822) 174,022 776,774 ---------------- ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- (29,682) -- (29,860) ---------------- ---------------- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 28,186,695 28,554,924 27,048,309 33,661,108 Value of shares repurchased (2,809,507) (2,977,097) (3,074,223) (3,227,766) ---------------- ---------------- ---------------- ---------------- Net increase in net assets resulting from share transactions 25,377,188 25,577,827 23,974,086 30,433,342 ---------------- ---------------- ---------------- ---------------- INCREASE IN NET ASSETS 24,135,784 23,665,323 24,148,108 31,180,256 NET ASSETS: Beginning of period -- -- -- -- ---------------- ---------------- ---------------- ---------------- End of period $ 24,135,784 $ 23,665,323 $ 24,148,108 $ 31,180,256 ================ ================ ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (3,121) $ (10,071) $ (57,974) $ (4,353) ================ ================ ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 1,900,000 1,900,000 1,800,000 2,200,000 Shares repurchased (200,000) (200,000) (200,000) (200,000) Shares outstanding, beginning of period -- -- -- -- ---------------- ---------------- ---------------- ---------------- Shares outstanding, end of period 1,700,000 1,700,000 1,600,000 2,000,000 ================ ================ ================ ================ POWERSHARES POWERSHARES DYNAMIC DYNAMIC POWERSHARES SEMICONDUCTORS SOFTWARE ZACKS MICRO CAP PORTFOLIO PORTFOLIO PORTFOLIO ---------------- ---------------- ---------------- FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JUNE 23, 2005* JUNE 23, 2005* AUGUST 18, 2005* THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) ---------------- ---------------- ---------------- OPERATIONS: Net investment income (loss) $ (77,157) $ (61,061) $ (3,134) Net realized gain (loss) on investments 665,271 485,331 (806,952) Net unrealized appreciation/depreciation on investments (2,441,036) 2,984,687 (2,940,922) ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations (1,852,922) 3,408,957 (3,751,008) ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- -- -- ---------------- ---------------- ---------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 71,440,004 32,051,698 99,489,719 Value of shares repurchased (9,557,219) (3,231,997) (11,891,424) ---------------- ---------------- ---------------- Net increase in net assets resulting from share transactions 61,882,785 28,819,701 87,598,295 ---------------- ---------------- ---------------- INCREASE IN NET ASSETS 60,029,863 32,228,658 83,847,287 NET ASSETS: Beginning of period -- -- -- ---------------- ---------------- ---------------- End of period $ 60,029,863 $ 32,228,658 $ 83,847,287 ================ ================ ================ Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (77,157) $ (61,061) $ (3,134) ================ ================ ================ CHANGES IN SHARES OUTSTANDING: Shares sold 4,600,000 2,100,000 6,600,000 Shares repurchased (600,000) (200,000) (800,000) Shares outstanding, beginning of period -- -- -- ---------------- ---------------- ---------------- Shares outstanding, end of period 4,000,000 1,900,000 5,800,000 ================ ================ ================
139
POWERSHARES POWERSHARES INTERNATIONAL HIGH GROWTH RATE POWERSHARES POWERSHARES DIVIDEND DIVIDEND DIVIDEND DYNAMIC ACHIEVERS(TM) ACHIEVERS(TM) ACHIEVERS(TM) OIL & GAS SERVICES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------------- ------------------- ------------------- ------------------ FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD SEPTEMBER 15, 2005* SEPTEMBER 15, 2005* SEPTEMBER 15, 2005* OCTOBER 26, 2005* THROUGH THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------- ------------------- ------------------- ------------------ OPERATIONS: Net investment income (loss) $ 90,040 $ 48,325 $ 29,167 $ (234) Net realized loss on investments (210,077) (2,543) (29,103) -- Net unrealized appreciation/depreciation on investments (1,440,769) 68,491 (188,073) 2,628,202 ------------------- ------------------- ------------------- ------------------ Net increase (decrease) in net assets resulting from operations (1,560,806) 114,273 (188,009) 2,627,968 ------------------- ------------------- ------------------- ------------------ SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 56,602,431 26,479,308 26,629,518 30,571,126 Value of shares repurchased (1,448,464) -- -- -- ------------------- ------------------- ------------------- ------------------ Net increase in net assets resulting from share transactions 55,153,967 26,479,308 26,629,518 30,571,126 ------------------- ------------------- ------------------- ------------------ INCREASE IN NET ASSETS 53,593,161 26,593,581 26,441,509 33,199,094 NET ASSETS: Beginning of period -- -- -- -- ------------------- ------------------- ------------------- ------------------ End of period $ 53,593,161 $ 26,593,581 $ 26,441,509 $ 33,199,094 =================== =================== =================== ================== Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ 90,040 $ 48,325 $ 29,167 $ (234) =================== =================== =================== ================== CHANGES IN SHARES OUTSTANDING: Shares sold 3,800,000 1,800,000 1,800,000 2,000,000 Shares repurchased (100,000) -- -- -- Shares outstanding, beginning of period -- -- -- -- ------------------- ------------------- ------------------- ------------------ Shares outstanding, end of period 3,700,000 1,800,000 1,800,000 2,000,000 =================== =================== =================== ==================
* Commencement of Investment Operations. SEE NOTES TO FINANCIAL STATEMENTS. 140
POWERSHARES POWERSHARES POWERSHARES DYNAMIC POWERSHARES DYNAMIC DYNAMIC BUILDING & DYNAMIC INSURANCE RETAIL CONSTRUCTION UTILITIES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------------- ------------------- ------------------- ------------------ FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD OCTOBER 26, 2005* OCTOBER 26, 2005* OCTOBER 26, 2005* OCTOBER 26, 2005* THROUGH THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------- ------------------- ------------------- ------------------ OPERATIONS: Net investment income (loss) $ (197) $ (3,545) $ (915) $ 2,788 Net realized loss on investments -- -- -- -- Net unrealized appreciation/depreciation on investments 229,693 788,321 120,058 156,394 ------------------- ------------------- ------------------- ------------------ Net increase (decrease) in net assets resulting from operations 229,496 784,776 119,143 159,182 ------------------- ------------------- ------------------- ------------------ SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 4,537,419 30,093,713 4,511,814 4,539,240 Value of shares repurchased -- -- -- -- ------------------- ------------------- ------------------- ------------------ Net increase in net assets resulting from share transactions 4,537,419 30,093,713 4,511,814 4,539,240 ------------------- ------------------- ------------------- ------------------ INCREASE IN NET ASSETS 4,766,915 30,878,489 4,630,957 4,698,422 NET ASSETS: Beginning of period -- -- -- -- ------------------- ------------------- ------------------- ------------------ End of period $ 4,766,915 $ 30,878,489 $ 4,630,957 $ 4,698,422 =================== =================== =================== ================== Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ (197) $ (3,545) $ (915) $ 2,788 =================== =================== =================== ================== CHANGES IN SHARES OUTSTANDING: Shares sold 300,000 2,000,000 300,000 300,000 Shares repurchased -- -- -- -- Shares outstanding, beginning of period -- -- -- -- ------------------- ------------------- ------------------- ------------------ Shares outstanding, end of period 300,000 2,000,000 300,000 300,000 =================== =================== =================== ================== POWERSHARES DYNAMIC POWERSHARES ENERGY EXPLORATION POWERSHARES AEROSPACE & & PRODUCTION LUX NANOTECH DEFENSE PORTFOLIO PORTFOLIO PORTFOLIO ------------------- ------------------- ------------------- FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD OCTOBER 26, 2005* OCTOBER 26, 2005* OCTOBER 26, 2005* THROUGH THROUGH THROUGH OCTOBER 31, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005 (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------- ------------------- ------------------- OPERATIONS: Net investment income (loss) $ 5,262 $ (3,894) $ (805) Net realized loss on investments -- -- -- Net unrealized appreciation/depreciation on investments 2,786,039 (90,944) (12,700) ------------------- ------------------- ------------------- Net increase (decrease) in net assets resulting from operations 2,791,301 (94,838) (13,505) ------------------- ------------------- ------------------- SHAREHOLDER TRANSACTIONS: Proceeds from shares sold 37,912,203 30,110,719 4,470,862 Value of shares repurchased -- -- -- ------------------- ------------------- ------------------- Net increase in net assets resulting from share transactions 37,912,203 30,110,719 4,470,862 ------------------- ------------------- ------------------- INCREASE IN NET ASSETS 40,703,504 30,015,881 4,457,357 NET ASSETS: Beginning of period -- -- -- ------------------- ------------------- ------------------- End of period $ 40,703,504 $ 30,015,881 $ 4,457,357 =================== =================== =================== Undistributed net investment income (loss)/(distributions in excess of net investment income) at end of period $ 5,262 $ (3,894) $ (805) =================== =================== =================== CHANGES IN SHARES OUTSTANDING: Shares sold 2,500,000 2,000,000 300,000 Shares repurchased -- -- -- Shares outstanding, beginning of period -- -- -- ------------------- ------------------- ------------------- Shares outstanding, end of period 2,500,000 2,000,000 300,000 =================== =================== ===================
141 FINANCIAL HIGHLIGHTS POWERSHARES DYNAMIC MARKET PORTFOLIO
FOR THE YEAR SIX MONTHS ENDED FOR THE YEAR MAY 1, 2003* OCTOBER 31, 2005 ENDED THROUGH (UNAUDITED) APRIL 30, 2005 APRIL 30, 2004 ---------------- -------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 39.11 $ 35.05 $ 26.99+ ---------------- ---------------- ---------------- Net investment income** 0.13 0.26 0.15+ Net realized and unrealized gain on investments 5.12 4.02 8.09+ ---------------- ---------------- ---------------- Total from operations 5.25 4.28 8.24+ ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.16) (0.22) (0.18)+ ---------------- ---------------- ---------------- Net asset value at end of period $ 44.20 $ 39.11 $ 35.05+ ---------------- ---------------- ---------------- TOTAL RETURN*** 13.44% 12.23% 30.50% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 537,174 $ 283,620 $ 85,946 Ratio to average net assets of: Expenses, net of waivers 0.61%++ 0.60% 0.60% Expenses, prior to waivers 0.62%++ 0.70% 1.26% Net investment income, net of waivers 0.61%++ 0.68% 0.46% Portfolio turnover rate +++ 35% 94% 58%
POWERSHARES DYNAMIC OTC PORTFOLIO
FOR THE YEAR SIX MONTHS ENDED FOR THE YEAR MAY 1, 2003* OCTOBER 31, 2005 ENDED THROUGH (UNAUDITED) APRIL 30, 2005 APRIL 30, 2004 ---------------- -------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 42.38 $ 36.59 $ 28.57+ ---------------- ---------------- ---------------- Net investment income (loss)** 0.04 (0.03) (0.04)+ Net realized and unrealized gain on investments 5.27 5.82 8.06+ ---------------- ---------------- ---------------- Total from operations 5.31 5.79 8.02+ ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.06) -- -- ---------------- ---------------- ---------------- Net asset value at end of period $ 47.63 $ 42.38 $ 36.59+ ---------------- ---------------- ---------------- TOTAL RETURN:*** 12.53% 15.81% 28.07% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 133,436 $ 65,747 $ 34,817 Ratio to average net assets of: Expenses, net of waivers 0.60%++ 0.60% 0.60% Expenses, prior to waivers 0.70%++ 1.06% 1.66% Net investment income (loss), net of waivers 0.16%++ (0.06)% (0.10)% Portfolio turnover rate +++ 35% 112% 79%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Per share amounts have been adjusted for 4 for 1 stock split (See Note 8). ++ Annualized. +++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 142 POWERSHARES GOLDEN DRAGON HALTER USX CHINA PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED DECEMBER 9, 2004* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 13.00 $ 14.55 ---------------- ---------------- Net investment income** 0.14 0.06 Net realized and unrealized gain (loss) on investments 0.20 (1.61) ---------------- ---------------- Total from operations 0.34 (1.55) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.16) -- ---------------- ---------------- Net asset value at end of period $ 13.18 $ 13.00 ---------------- ---------------- TOTAL RETURN:*** 2.57% (10.68)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 65,884 $ 49,384 Ratio to average net assets of: Expenses, net of waivers 0.73%+ 0.70%+ Expenses, prior to waivers 0.99%+ 0.97%+ Net investment income, net of waivers 1.69%+ 1.24%+ Portfolio turnover rate ++ 2% 9%
POWERSHARES HIGH YIELD EQUITY DIVIDEND ACHIEVERS(TM) PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED DECEMBER 9, 2004* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.41 $ 14.79 ---------------- ---------------- Net investment income** 0.26 0.18 Net realized and unrealized gain (loss) on investments 0.41 (0.39) ---------------- ---------------- Total from operations 0.67 (0.21) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.24) (0.17) ---------------- ---------------- Net asset value at end of period $ 14.84 $ 14.41 ---------------- ---------------- TOTAL RETURN:*** 4.61% (1.44)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 464,524 $ 314,245 Ratio to average net assets of: Expenses, net of waivers 0.61%+ 0.60%+ Expenses, prior to waivers 0.68%+ 0.66%+ Net investment income, net of waivers 3.42%+ 3.57%+ Portfolio turnover rate ++ 3% 21%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 143 POWERSHARES WILDERHILL CLEAN ENERGY PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 12.86 $ 15.61 ---------------- ---------------- Net investment loss** (0.02) (0.01) Net realized and unrealized gain (loss) on investments 2.63 (2.74) ---------------- ---------------- Total from operations 2.61 (2.75) ---------------- ---------------- Net asset value at end of period $ 15.47 $ 12.86 ---------------- ---------------- TOTAL RETURN:*** 20.24% (17.59)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 168,588 $ 27,012 Ratio to average net assets of: Expenses, net of waivers 0.73%+ 0.70%+ Expenses, prior to waivers 0.81%+ 1.35%+ Net investment loss, net of waivers (0.28)%+ (0.31)%+ Portfolio turnover rate ++ 2% 9%
POWERSHARES DYNAMIC LARGE CAP GROWTH PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.11 $ 14.83 ---------------- ---------------- Net investment income (loss)** (0.01) 0.00(a) Net realized and unrealized gain (loss) on investments 1.19 (0.72) ---------------- ---------------- Total from operations 1.18 (0.72) ---------------- ---------------- Net asset value at end of period $ 15.29 $ 14.11 ---------------- ---------------- TOTAL RETURN:*** 8.35% (4.87)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 44,340 $ 8,467 Ratio to average net assets of: Expenses, net of waivers 0.66%+ 0.63%+ Expenses, prior to waivers 0.88%+ 2.45%+ Net investment income (loss), net of waivers (0.06)%+ 0.13%+ Portfolio turnover rate ++ 75% 2%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 144 POWERSHARES DYNAMIC LARGE CAP VALUE PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.52 $ 15.00 ---------------- ---------------- Net investment income** 0.12 0.05 Net realized and unrealized gain (loss) on investments 1.24 (0.52) ---------------- ---------------- Total from operations 1.36 (0.47) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.12) (0.01) ---------------- ---------------- Net asset value at end of period $ 15.76 $ 14.52 ---------------- ---------------- TOTAL RETURN:*** 9.31% (3.11)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 29,938 $ 10,166 Ratio to average net assets of: Expenses, net of waivers 0.68%+ 0.63%+ Expenses, prior to waivers 1.07%+ 2.16%+ Net investment income, net of waivers 1.56%+ 1.99%+ Portfolio turnover rate ++ 25% 0%
POWERSHARES DYNAMIC MID CAP GROWTH PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 13.92 $ 15.01 ---------------- ---------------- Net investment loss** (0.02) (0.01) Net realized and unrealized gain (loss) on investments 2.37 (1.08) ---------------- ---------------- Total from operations 2.35 (1.09) ---------------- ---------------- Net asset value at end of period $ 16.27 $ 13.92 ---------------- ---------------- TOTAL RETURN:*** 16.94% (7.30)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 26,036 $ 8,349 Ratio to average net assets of: Expenses, net of waivers 0.70%+ 0.63%+ Expenses, prior to waivers 1.17%+ 2.45%+ Net investment loss, net of waivers (0.21)%+ (0.20)%+ Portfolio turnover rate ++ 58% 1%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 145 POWERSHARES DYNAMIC MID CAP VALUE PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.47 $ 15.10 ---------------- ---------------- Net investment income** 0.10 0.15 Net realized and unrealized gain (loss) on investments 1.28 (0.76) ---------------- ---------------- Total from operations 1.38 (0.61) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.10) (0.02) ---------------- ---------------- Net asset value at end of period $ 15.75 $ 14.47 ---------------- ---------------- TOTAL RETURN:*** 9.58% (4.07)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 18,906 $ 10,126 Ratio to average net assets of: Expenses, net of waivers 0.71%+ 0.63%+ Expenses, prior to waivers 1.30%+ 2.14%+ Net investment income, net of waivers 1.32%+ 6.34%+ Portfolio turnover rate ++ 52% 1%
POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 13.90 $ 15.11 ---------------- ---------------- Net investment loss** (0.03) (0.01) Net realized and unrealized gain (loss) on investments 1.85 (1.20) ---------------- ---------------- Total from operations 1.82 (1.21) ---------------- ---------------- Net asset value at end of period $ 15.72 $ 13.90 ---------------- ---------------- TOTAL RETURN:*** 13.15% (8.02)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 18,867 $ 9,727 Ratio to average net assets of: Expenses, net of waivers 0.71%+ 0.63%+ Expenses, prior to waivers 1.28%+ 2.34%+ Net investment loss, net of waivers (0.41)%+ (0.48)%+ Portfolio turnover rate ++ 61% 0%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 146 POWERSHARES DYNAMIC SMALL CAP VALUE PORTFOLIO
FOR THE PERIOD SIX MONTHS ENDED MARCH 3, 2005* OCTOBER 31, 2005 THROUGH (UNAUDITED) APRIL 30, 2005 ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 13.79 $ 15.06 ---------------- ---------------- Net investment income** 0.07 0.01 Net realized and unrealized gain (loss) on investments 1.44 (1.28) ---------------- ---------------- Total from operations 1.51 (1.27) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.06) -- ---------------- ---------------- Net asset value at end of period $ 15.24 $ 13.79 ---------------- ---------------- TOTAL RETURN:*** 10.97% (8.46)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 28,951 $ 9,651 Ratio to average net assets of: Expenses, net of waivers 0.69%+ 0.63%+ Expenses, prior to waivers 1.08%+ 2.36%+ Net investment income, net of waivers 0.86%+ 0.45%+ Portfolio turnover rate ++ 76% 0%
POWERSHARES DYNAMIC BIOTECHNOLOGY & GENOME PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.71 ---------------- Net investment loss** (0.03) Net realized and unrealized gain on investments 1.60 ---------------- Total from operations 1.57 ---------------- Net asset value at end of period $ 16.28 ---------------- TOTAL RETURN:*** 10.68% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 122,102 Ratio to average net assets of: Expenses, net of waivers 0.65%+ Expenses, prior to waivers 0.65%+ Net investment loss, net of waivers (0.57)%+ Portfolio turnover rate ++ 28%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 147 POWERSHARES DYNAMIC FOOD & BEVERAGE PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.85 ---------------- Net investment income** 0.04 Net realized and unrealized loss on investments (0.49) ---------------- Total from operations (0.45) ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income** (0.05) ---------------- Net asset value at end of period $ 14.35 ---------------- TOTAL RETURN:*** (3.08)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 22,953 Ratio to average net assets of: Expenses, net of waivers 0.72%+ Expenses, prior to waivers 0.85%+ Net investment income, net of waivers 0.82%+ Portfolio turnover rate ++ 40%
POWERSHARES DYNAMIC LEISURE & ENTERTAINMENT PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.77 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized loss on investments (0.57) ---------------- Total from operations (0.57) ---------------- Net asset value at end of period $ 14.20 ---------------- TOTAL RETURN:*** (3.87)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 24,136 Ratio to average net assets of: Expenses, net of waivers 0.72%+ Expenses, prior to waivers 0.86%+ Net investment loss, net of waivers (0.04)%+ Portfolio turnover rate ++ 29%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 148 POWERSHARES DYNAMIC MEDIA PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.93 ---------------- Net investment income** 0.01 Net realized and unrealized loss on investments (1.00) ---------------- Total from operations (0.99) ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income** (0.02) ---------------- Net asset value at end of period $ 13.92 ---------------- TOTAL RETURN:*** (6.64)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 23,665 Ratio to average net assets of: Expenses, net of waivers 0.71%+ Expenses, prior to waivers 0.84%+ Net investment income, net of waivers 0.22%+ Portfolio turnover rate ++ 21%
POWERSHARES DYNAMIC NETWORKING PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.96 ---------------- Net investment loss** (0.04) Net realized and unrealized gain on investments 0.17 ---------------- Total from operations 0.13 ---------------- Net asset value at end of period $ 15.09 ---------------- TOTAL RETURN:*** 0.91% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 24,148 Ratio to average net assets of: Expenses, net of waivers 0.72%+ Expenses, prior to waivers 0.84%+ Net investment loss, net of waivers (0.66)%+ Portfolio turnover rate ++ 23%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 149 POWERSHARES DYNAMIC PHARMACEUTICALS PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.84 ---------------- Net investment income** 0.01 Net realized and unrealized gain on investments 0.75 ---------------- Total from operations 0.76 ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income** (0.01) ---------------- Net asset value at end of period $ 15.59 ---------------- TOTAL RETURN:*** 5.18% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 31,180 Ratio to average net assets of: Expenses, net of waivers 0.70%+ Expenses, prior to waivers 0.80%+ Net investment income, net of waivers 0.25%+ Portfolio turnover rate ++ 7%
POWERSHARES DYNAMIC SEMICONDUCTORS PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.93 ---------------- Net investment loss** (0.02) Net realized and unrealized gain on investments 0.10 ---------------- Total from operations 0.08 ---------------- Net asset value at end of period $ 15.01 ---------------- TOTAL RETURN:*** 0.49% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 60,030 Ratio to average net assets of: Expenses, net of waivers 0.67%+ Expenses, prior to waivers 0.71%+ Net investment loss, net of waivers (0.43)%+ Portfolio turnover rate ++ 25%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 150 POWERSHARES DYNAMIC SOFTWARE PORTFOLIO
FOR THE PERIOD JUNE 23, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.98 ---------------- Net investment loss** (0.03) Net realized and unrealized gain on investments 2.01 ---------------- Total from operations 1.98 ---------------- Net asset value at end of period $ 16.96 ---------------- TOTAL RETURN:*** 13.22% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 32,229 Ratio to average net assets of: Expenses, net of waivers 0.70%+ Expenses, prior to waivers 0.80%+ Net investment loss, net of waivers (0.58)%+ Portfolio turnover rate ++ 29%
POWERSHARES ZACKS MICRO CAP PORTFOLIO
FOR THE PERIOD AUGUST 18, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.79 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized loss on investments (0.33) ---------------- Total from operations (0.33) ---------------- Net asset value at end of period $ 14.46 ---------------- TOTAL RETURN:*** (2.28)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 83,847 Ratio to average net assets of: Expenses, net of waivers 0.72%+ Expenses, prior to waivers 0.74%+ Net investment loss, net of waivers (0.02)%+ Portfolio turnover rate ++ 47%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 151 POWERSHARES INTERNATIONAL DIVIDEND ACHIEVERS(TM) PORTFOLIO
FOR THE PERIOD SEPTEMBER 15, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.96 ---------------- Net investment income** 0.03 Net realized and unrealized loss on investments (0.51) ---------------- Total from operations (0.48) ---------------- Net asset value at end of period $ 14.48 ---------------- TOTAL RETURN:*** (3.20)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 53,593 Ratio to average net assets of: Expenses, net of waivers 0.64%+ Expenses, prior to waivers 0.69%+ Net investment income, net of waivers 1.40%+ Portfolio turnover rate ++ 0%
POWERSHARES HIGH GROWTH RATE DIVIDEND ACHIEVERS(TM) PORTFOLIO
FOR THE PERIOD SEPTEMBER 15, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.78 ---------------- Net investment income** 0.03 Net realized and unrealized loss on investments (0.04) ---------------- Total from operations (0.01) ---------------- Net asset value at end of period $ 14.77 ---------------- TOTAL RETURN:*** (0.06)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 26,594 Ratio to average net assets of: Expenses, net of waivers 0.68%+ Expenses, prior to waivers 0.85%+ Net investment income, net of waivers 1.60%+ Portfolio turnover rate ++ 2%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. SEE NOTES TO FINANCIAL STATEMENTS. 152 POWERSHARES DIVIDEND ACHIEVERS(TM) PORTFOLIO
FOR THE PERIOD SEPTEMBER 15, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.84 ---------------- Net investment income** 0.02 Net realized and unrealized loss on investments (0.17) ---------------- Total from operations (0.15) ---------------- Net asset value at end of period $ 14.69 ---------------- TOTAL RETURN:*** (1.03)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 26,442 Ratio to average net assets of: Expenses, net of waivers 0.68%+ Expenses, prior to waivers 0.85%+ Net investment income, net of waivers 0.96%+ Portfolio turnover rate ++ 2%
POWERSHARES DYNAMIC OIL & GAS SERVICES PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 16.43 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized gain on investments 0.17 ---------------- Total from operations 0.17 ---------------- Net asset value at end of period $ 16.60 ---------------- TOTAL RETURN:*** 1.04% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 33,199 Ratio to average net assets of: Expenses, net of waivers 0.69%+ Expenses, prior to waivers 0.86%+ Net investment loss, net of waivers (0.04)%+ Portfolio turnover rate ++ 0%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 153 POWERSHARES DYNAMIC INSURANCE PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 15.44 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized gain on investments 0.45 ---------------- Total from operations 0.45 ---------------- Net asset value at end of period $ 15.89 ---------------- TOTAL RETURN:*** 2.88% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 4,767 Ratio to average net assets of: Expenses, net of waivers 1.22%+ Expenses, prior to waivers 2.64%+ Net investment loss, net of waivers (0.26)%+ Portfolio turnover rate ++ 0%
POWERSHARES DYNAMIC RETAIL PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 15.13 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized gain on investments 0.31 ---------------- Total from operations 0.31 ---------------- Net asset value at end of period $ 15.44 ---------------- TOTAL RETURN:*** 2.02% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 30,878 Ratio to average net assets of: Expenses, net of waivers 0.72%+ Expenses, prior to waivers 0.91%+ Net investment loss, net of waivers (0.72)%+ Portfolio turnover rate ++ 0%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 154 POWERSHARES DYNAMIC BUILDING & CONSTRUCTION PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 15.26 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized gain on investments 0.18 ---------------- Total from operations 0.18 ---------------- Net asset value at end of period $ 15.44 ---------------- TOTAL RETURN:*** 1.18% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 4,631 Ratio to average net assets of: Expenses, net of waivers 1.24%+ Expenses, prior to waivers 2.70%+ Net investment loss, net of waivers (1.24)%+ Portfolio turnover rate ++ 0%
POWERSHARES DYNAMIC UTILITIES PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 15.32 ---------------- Net investment income** 0.01 Net realized and unrealized gain on investments 0.33 ---------------- Total from operations 0.34 ---------------- Net asset value at end of period $ 15.66 ---------------- TOTAL RETURN:*** 2.26% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 4,698 Ratio to average net assets of: Expenses, net of waivers 1.22%+ Expenses, prior to waivers 2.66%+ Net investment income, net of waivers 3.70%+ Portfolio turnover rate ++ 0%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 155 POWERSHARES DYNAMIC ENERGY EXPLORATION & PRODUCTION PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 16.03 ---------------- Net investment income** 0.00(a) Net realized and unrealized gain on investments 0.25 ---------------- Total from operations 0.25 ---------------- Net asset value at end of period $ 16.28 ---------------- TOTAL RETURN:*** 1.54% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 40,704 Ratio to average net assets of: Expenses, net of waivers 0.70%+ Expenses, prior to waivers 0.83%+ Net investment income, net of waivers 0.81%+ Portfolio turnover rate ++ 0%
POWERSHARES LUX NANOTECH PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 15.32 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized loss on investments (0.31) ---------------- Total from operations (0.31) ---------------- Net asset value at end of period $ 15.01 ---------------- TOTAL RETURN:*** (2.05)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 30,016 Ratio to average net assets of: Expenses, net of waivers 0.79%+ Expenses, prior to waivers 0.98%+ Net investment loss, net of waivers (0.79)%+ Portfolio turnover rate ++ 0%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 156 POWERSHARES AEROSPACE & DEFENSE PORTFOLIO
FOR THE PERIOD OCTOBER 26, 2005* THROUGH OCTOBER 31, 2005 (UNAUDITED) ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $ 14.91 ---------------- Net investment loss** (0.00)(a) Net realized and unrealized loss on investments (0.05) ---------------- Total from operations (0.05) ---------------- Net asset value at end of period $ 14.86 ---------------- TOTAL RETURN:*** (0.36)% RATIOS/SUPPLEMENTAL DATA: Net assets at end of period (000's omitted) $ 4,457 Ratio to average net assets of: Expenses, net of waivers 1.15%+ Expenses, prior to waivers 2.64%+ Net investment loss, net of waivers (1.11)%+ Portfolio turnover rate ++ 0%
* Commencement of Investment Operations. ** Based on average shares outstanding. *** Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. + Annualized. ++ Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions. (a) Amount represents less than $0.01. SEE NOTES TO FINANCIAL STATEMENTS. 157 NOTES TO FINANCIAL STATEMENTS POWERSHARES EXCHANGE-TRADED FUND TRUST October 31, 2005 (UNAUDITED) Note 1. Organization PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of thirty-one portfolios: PowerShares Dynamic Market Portfolio - "Dynamic Market Portfolio" PowerShares Dynamic OTC Portfolio - "Dynamic OTC Portfolio" PowerShares Golden Dragon Halter USX China Portfolio - "Golden Dragon Halter USX China Portfolio" PowerShares High Yield Equity Dividend Achievers(TM) Portfolio - "High Yield Equity Dividend Achievers(TM) Portfolio" PowerShares WilderHill Clean Energy Portfolio - "WilderHill Clean Energy Portfolio" PowerShares Dynamic Large Cap Growth Portfolio - "Dynamic Large Cap Growth Portfolio" PowerShares Dynamic Large Cap Value Portfolio - "Dynamic Large Cap Value Portfolio" PowerShares Dynamic Mid Cap Growth Portfolio - "Dynamic Mid Cap Growth Portfolio" PowerShares Dynamic Mid Cap Value Portfolio - "Dynamic Mid Cap Value Portfolio" PowerShares Dynamic Small Cap Growth Portfolio - "Dynamic Small Cap Growth Portfolio" PowerShares Dynamic Small Cap Value Portfolio - "Dynamic Small Cap Value Portfolio" PowerShares Dynamic Biotechnology & Genome Portfolio - "Dynamic Biotechnology & Genome Portfolio" PowerShares Dynamic Food & Beverage Portfolio - "Dynamic Food & Beverage Portfolio" PowerShares Dynamic Leisure & Entertainment Portfolio - "Dynamic Leisure & Entertainment Portfolio" PowerShares Dynamic Media Portfolio - "Dynamic Media Portfolio" PowerShares Dynamic Networking Portfolio - "Dynamic Networking Portfolio" PowerShares Dynamic Pharmaceuticals Portfolio - "Dynamic Pharmaceuticals Portfolio" PowerShares Dynamic Semiconductors Portfolio - "Dynamic Semiconductors Portfolio" PowerShares Dynamic Software Portfolio - "Dynamic Software Portfolio" PowerShares Zacks Micro Cap Portfolio - "Zacks Micro Cap Portfolio" PowerShares International Dividend Achievers(TM) Portfolio - "International Dividend Achievers(TM) Portfolio" 158 PowerShares High Growth Rate Dividend Achievers(TM) Portfolio - "High Growth Rate Dividend Achievers(TM) Portfolio" PowerShares Dividend Achievers(TM) Portfolio - "Dividend Achievers(TM) Portfolio" PowerShares Dynamic Oil & Gas Services Portfolio - "Dynamic Oil & Gas Services Portfolio" PowerShares Dynamic Insurance Portfolio - "Dynamic Insurance Portfolio" PowerShares Dynamic Retail Portfolio - "Dynamic Retail Portfolio" PowerShares Dynamic Building & Construction Portfolio - "Dynamic Building & Construction Portfolio" PowerShares Dynamic Utilities Portfolio - "Dynamic Utilities Portfolio" PowerShares Dynamic Energy Exploration & Production Portfolio - "Dynamic Energy Exploration & Production Portfolio" PowerShares Lux Nanotech Portfolio - "Lux Nanotech Portfolio" PowerShares Aerospace & Defense Portfolio - "Aerospace & Defense Portfolio" Each portfolio represents a separate series of beneficial interest in the Trust (the "Fund" or "Funds"). The Funds' shares are listed on the American Stock Exchange and traded on the American Stock Exchange at market prices that may differ to some degree from net asset value of the shares of each Fund. Unlike conventional mutual funds, each Fund issues and redeems shares on a continuous basis, at net asset value, only in a large specified number of shares called a "Creation Unit." Creation Units are issued and redeemed principally in-kind for securities included in the relevant index. Except when aggregated in Creation Units, shares are not individually redeemable securities of the Funds. The investment objective of each Fund is to seek investment results that correspond generally to the price and yield (before each Fund's fees and expenses) of the following equity indices: Dynamic Market Portfolio - the Dynamic Market Intellidex Index Dynamic OTC Portfolio - the Dynamic OTC Intellidex Index Golden Dragon Halter USX China Portfolio - the USX China Index High Yield Equity Dividend Achievers(TM) Portfolio - the Dividend Achievers(TM) 50 Index WilderHill Clean Energy Portfolio - the WilderHill Clean Energy Index Dynamic Large Cap Growth Portfolio - the Dynamic Large Cap Growth Intellidex Index Dynamic Large Cap Value Portfolio - the Dynamic Large Cap Value Intellidex Index Dynamic Mid Cap Growth Portfolio - the Dynamic Mid Cap Growth Intellidex Index 159 Dynamic Mid Cap Value Portfolio - the Dynamic Mid Cap Value Intellidex Index Dynamic Small Cap Growth Portfolio - the Dynamic Small Cap Growth Intellidex Index Dynamic Small Cap Value Portfolio - the Dynamic Small Cap Value Intellidex Index Dynamic Biotechnology & Genome Portfolio - the Dynamic Biotechnology & Genome Intellidex(SM) Index Dynamic Food & Beverage Portfolio - the Dynamic Food & Beverage IntellidexSM Index Dynamic Leisure & Entertainment Portfolio - the Dynamic Leisure & Entertainment Intellidex(SM) Index Dynamic Media Portfolio - the Dynamic Media Intellidex(SM) Index Dynamic Networking Portfolio - the Dynamic Networking Intellidex(SM) Index Dynamic Pharmaceuticals Portfolio - the Dynamic Pharmaceuticals Intellidex(SM) Index Dynamic Semiconductors Portfolio - the Dynamic Semiconductors Intellidex(SM) Index Dynamic Software Portfolio - the Dynamic Software Intellidex(SM) Index Zacks Micro Cap Portfolio - the Zacks Micro Cap Index International Dividend Achievers(TM) Portfolio - the International Dividend Achievers(TM) Index High Growth Rate Dividend Achievers(TM) Portfolio - the High Growth Rate Dividend Achievers(TM) Index Dividend Achievers(TM) Portfolio - the Broad Dividend Achievers(TM) Index Dynamic Oil & Gas Services Portfolio - the Dynamic Oil Services Intellidex(SM) Index Dynamic Insurance Portfolio - the Dynamic Insurance Intellidex(SM) Index Dynamic Retail Portfolio - the Dynamic Retail Intellidex(SM) Index Dynamic Building & Construction Portfolio - the Dynamic Building & Construction Intellidex(SM) Index Dynamic Utilities Portfolio - the Dynamic Utilities Intellidex(SM) Index Dynamic Energy Exploration & Production Portfolio - the Dynamic Energy Exploration & Production Intellidex(SM) Index Lux Nanotech Portfolio - the Lux Nanotech Index(TM) Aerospace & Defense Portfolio - the SPADE(TM) Defense Index 160 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. A. SECURITY VALUATION Securities are valued based on their last sale price. Price information on listed securities is taken from the exchange where the security is primarily traded. Securities regularly traded in an over-the-counter market are valued at the latest quoted sale price in such market or in the case of NASDAQ, at the NASDAQ official closing price. Other portfolio securities and assets for which market quotations are not readily available are valued based on fair value as determined in accordance with procedures adopted by the Board of Trustees. B. FEDERAL INCOME TAXES Each Fund intends to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and will distribute all net investment income and net taxable capital gains to its shareholders. Therefore, no provision for Federal income taxes is required. Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States. These differences are primarily due to differing book and tax treatments for in-kind transactions, losses deferred due to wash sales, losses deferred due to post-October losses, and excise tax regulations. C. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. The value of additional securities received as dividend payments is recorded as income and as an increase to the cost basis of such securities. D. EXPENSES Expenses of the Trust which are directly identifiable to a specific Fund are applied to that Fund. Expenses which are not readily identifiable to a specific Fund are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative net assets of each Fund. E. INVESTMENT TRANSACTIONS Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are calculated on the identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date. F. DIVIDENDS AND DISTRIBUTION TO SHAREHOLDERS Each Fund declares and pays dividends from net investment income to its shareholders quarterly and distributes net realized taxable capital gains, if any, annually. Note 3. Advisory, Administration and Other Transactions with Affiliates PowerShares Capital Management LLC ("Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business 161 affairs, and providing certain clerical, bookkeeping and other administrative services. The Adviser's fee is accrued daily and is payable at the following annual rates:
% OF AVERAGE DAILY NET ASSETS ---------------- Dynamic Market Portfolio .50% Dynamic OTC Portfolio .50% Golden Dragon Halter USX China Portfolio .50% High Yield Equity Dividend Achievers(TM) Portfolio .40% WilderHill Clean Energy Portfolio .50% Dynamic Large Cap Growth Portfolio .50% Dynamic Large Cap Value Portfolio .50% Dynamic Mid Cap Growth Portfolio .50% Dynamic Mid Cap Value Portfolio .50% Dynamic Small Cap Growth Portfolio .50% Dynamic Small Cap Value Portfolio .50% Dynamic Biotechnology & Genome Portfolio .50% Dynamic Food & Beverage Portfolio .50% Dynamic Leisure & Entertainment Portfolio .50% Dynamic Media Portfolio .50% Dynamic Networking Portfolio .50% Dynamic Pharmaceuticals Portfolio .50% Dynamic Semiconductors Portfolio .50% Dynamic Software Portfolio .50% Zacks Micro Cap Portfolio .50% International Dividend Achievers(TM) Portfolio .40% High Growth Rate Dividend Achievers(TM) Portfolio .40% Dividend Achievers(TM) Portfolio .40% Dynamic Oil & Gas Services Portfolio .50% Dynamic Insurance Portfolio .50% Dynamic Retail Portfolio .50% Dynamic Building & Construction Portfolio .50% Dynamic Utilities Portfolio .50% Dynamic Energy Exploration & Production Portfolio .50% Lux Nanotech Portfolio .50% Aerospace & Defense Portfolio .50%
For the period ended October 31, 2005, the Adviser waived and assumed the following fees and expenses:
FEES WAIVED EXPENSES ASSUMED --------------- ----------------- Dynamic Market Portfolio $ 21,027 $ -- Dynamic OTC Portfolio 58,943 -- Golden Dragon Halter USX China Portfolio 79,524 -- High Yield Equity Dividend Achievers(TM) Portfolio 155,764 -- WilderHill Clean Energy Portfolio 30,489 -- Dynamic Large Cap Growth Portfolio 32,005 -- Dynamic Large Cap Value Portfolio 35,040 -- Dynamic Mid Cap Growth Portfolio 36,637 -- Dynamic Mid Cap Value Portfolio 31,864 5,234 Dynamic Small Cap Growth Portfolio 32,284 4,521 Dynamic Small Cap Value Portfolio 35,291 -- Dynamic Biotechnology & Genome Portfolio 975 -- Dynamic Food & Beverage Portfolio 11,116 --
162
FEES WAIVED EXPENSES ASSUMED --------------- ----------------- Dynamic Leisure & Entertainment Portfolio $ 11,165 $ -- Dynamic Media Portfolio 10,921 -- Dynamic Networking Portfolio 10,898 -- Dynamic Pharmaceuticals Portfolio 10,267 -- Dynamic Semiconductors Portfolio 6,757 -- Dynamic Software Portfolio 10,136 -- Zacks Micro Cap Portfolio 3,751 -- International Dividend Achievers(TM) Portfolio 3,252 -- High Growth Rate Dividend Achievers(TM) Portfolio 5,081 -- Dividend Achievers(TM) Portfolio 5,074 -- Dynamic Oil & Gas Services Portfolio 917 -- Dynamic Insurance Portfolio 381 701 Dynamic Retail Portfolio 937 -- Dynamic Building & Construction Portfolio 370 713 Dynamic Utilities Portfolio 377 705 Dynamic Energy Exploration & Production Portfolio 876 -- Lux Nanotech Portfolio 937 -- Aerospace & Defense Portfolio 363 719
The Bank of New York is the administrator, custodian and fund accounting and transfer agent for each Fund. Each Fund is responsible for all of its expenses, including the investment advisory fees, costs of transfer agency, custody, fund administration, legal, audit and other services, interest, taxes, brokerage commissions and other expenses connected with executions of portfolio transactions, any distribution fees or expenses and extraordinary expenses. Pursuant to the Investment Advisory Agreement with the Trust, the Adviser has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent the operating expenses of the Funds (excluding interest expense, brokerage commissions and other trading expenses, licensing fees (except as to the Dynamic Market Portfolio and the Dynamic OTC Portfolio), offering costs, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the High Yield Equity Dividend Achievers(TM) Portfolio, International Dividend Achievers(TM) Portfolio, High Growth Rate Dividend Achievers(TM) Portfolio and Dividend Achievers(TM) Portfolio) of average net assets per year, at least until April 30, 2006 while some extend at least until 4/30/07. Offering costs excluded from the expense cap are: (a) legal fees pertaining to the Fund's Shares offered for sale; (b) Securities and Exchange Commission ("SEC") and state registration fees; and (c) initial fees paid to be listed on an exchange. The Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which the Adviser has agreed to waive its investment advisory fees and/or assume certain operating expenses of the Fund in order to maintain the expense ratio of each Fund at or below 0.60% (or 0.50%, as is the case with the High Yield Equity Dividend Achievers(TM) Portfolio, International Dividend Achievers(TM) Portfolio, High Growth Rate Dividend Achievers(TM) Portfolio and Dividend Achievers(TM) Portfolio), excluding the expenses set forth above (the "Expense Cap"). Except as to the Dynamic Market Portfolio and the Dynamic OTC Portfolio, expenses borne by the Adviser are subject to reimbursement by the Fund up to three years from the date the fee or expense was incurred, but no reimbursement payment will be made by the Fund if it would result in the Fund exceeding its Expense Cap: Dynamic Market Portfolio .60% Dynamic OTC Portfolio .60% Golden Dragon Halter USX China Portfolio .60% High Yield Equity Dividend Achievers(TM) Portfolio .50%
163 WilderHill Clean Energy Portfolio .60% Dynamic Large Cap Growth Portfolio .60% Dynamic Large Cap Value Portfolio .60% Dynamic Mid Cap Growth Portfolio .60% Dynamic Mid Cap Value Portfolio .60% Dynamic Small Cap Growth Portfolio .60% Dynamic Small Cap Value Portfolio .60% Dynamic Biotechnology & Genome Portfolio .60% Dynamic Food & Beverage Portfolio .60% Dynamic Leisure & Entertainment Portfolio .60% Dynamic Media Portfolio .60% Dynamic Networking Portfolio .60% Dynamic Pharmaceuticals Portfolio .60% Dynamic Semiconductors Portfolio .60% Dynamic Software Portfolio .60% Zacks Micro Cap Portfolio .60% International Dividend Achievers(TM) Portfolio .50% High Growth Rate Dividend Achievers(TM) Portfolio .50% Dividend Achievers(TM) Portfolio .50% Dynamic Oil & Gas Services Portfolio .60% Dynamic Insurance Portfolio .60% Dynamic Retail Portfolio .60% Dynamic Building & Construction Portfolio .60% Dynamic Utilities Portfolio .60% Dynamic Energy Exploration & Production Portfolio .60% Lux Nanotech Portfolio .60% Aerospace & Defense Portfolio .60%
The Expense Agreement does not apply to the Dynamic Market Portfolio and Dynamic OTC Portfolio. Accordingly, expenses of these Funds borne by the Adviser are not subject to reimbursement. There were no expenses reimbursed to the Adviser during the period ended October 31, 2005 under the Expense Agreement. NOTE 4. FEDERAL INCOME TAX At October 31, 2005, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:
UNREALIZED APPRECIATION/ GROSS UNREALIZED GROSS UNREALIZED COST DEPRECIATION APPRECIATION DEPRECIATION --------------- --------------- ---------------- ---------------- Dynamic Market Portfolio $ 512,474,411 $ 24,934,070 $ 42,464,100 $ (17,530,030) Dynamic OTC Portfolio 127,710,420 5,830,699 9,961,864 (4,131,165) Golden Dragon Halter USX China Portfolio 69,320,644 (3,394,713) 4,586,120 (7,980,833) High Yield Equity Dividend Achievers(TM) Portfolio 471,249,399 (6,321,538) 9,434,118 (15,755,656) WilderHill Clean Energy Portfolio 180,481,175 (11,780,123) 3,697,062 (15,477,185) Dynamic Large Cap Growth Portfolio 43,173,867 1,145,940 2,165,030 (1,019,090) Dynamic Large Cap Value Portfolio 29,120,857 790,350 1,446,176 (655,826) Dynamic Mid Cap Growth Portfolio 24,959,853 1,107,748 1,850,262 (742,514) Dynamic Mid Cap Value Portfolio 18,678,004 222,691 668,325 (445,634)
164
UNREALIZED APPRECIATION/ GROSS UNREALIZED GROSS UNREALIZED COST DEPRECIATION APPRECIATION DEPRECIATION --------------- --------------- ---------------- ---------------- Dynamic Small Cap Growth Portfolio $ 18,980,640 $ (70,490) $ 899,806 $ (970,296) Dynamic Small Cap Value Portfolio 28,745,674 189,646 1,144,572 (954,926) Dynamic Biotechnology & Genome Portfolio 124,244,653 (1,892,573) 4,960,472 (6,853,045) Dynamic Food & Beverage Portfolio 23,764,032 (806,924) 586,193 (1,393,117) Dynamic Leisure & Entertainment Portfolio 24,778,814 (627,020) 804,550 (1,431,570) Dynamic Media Portfolio 25,194,137 (1,512,057) 515,073 (2,027,130) Dynamic Networking Portfolio 23,994,693 212,021 1,540,216 (1,328,195) Dynamic Pharmaceuticals Portfolio 31,185,080 1,862 1,898,336 (1,896,474) Dynamic Semiconductors Portfolio 62,571,049 (2,441,036) 1,722,901 (4,163,937) Dynamic Software Portfolio 29,312,550 2,984,687 3,135,134 (150,447) Zacks Micro Cap Portfolio 86,801,192 (2,940,922) 2,958,807 (5,899,729) International Dividend Achievers(TM) Portfolio 55,026,813 (1,440,769) 411,160 (1,851,929) High Growth Rate Dividend Achievers(TM) Portfolio 26,482,770 68,491 789,850 (721,359) Dividend Achievers(TM) Portfolio 26,537,326 (188,073) 546,737 (734,810) Dynamic Oil & Gas Services Portfolio 30,571,125 2,628,202 2,628,202 -- Dynamic Insurance Portfolio 4,537,419 229,693 232,712 (3,019) Dynamic Retail Portfolio 30,093,713 788,321 861,879 (73,558) Dynamic Building & Construction Portfolio 4,511,814 120,058 144,938 (24,880) Dynamic Utilities Portfolio 4,539,240 156,394 156,879 (485) Dynamic Energy Exploration & Production Portfolio 37,912,203 2,786,039 2,786,039 -- Lux Nanotech Portfolio 30,110,719 (90,944) 448,124 (539,068) Aerospace & Defense Portfolio 4,470,862 (12,700) 74,767 (87,467)
At April 30, 2005, the components of accumulated loss on a tax-basis were as follows:
NET ACCUMULATED UNREALIZED ACCUMULATED CAPITAL AND OTHER APPRECIATION/ GROSS UNREALIZED GROSS UNREALIZED TOTAL ACCUMULATED EARNINGS GAINS/LOSSES DEPRECIATION APPRECIATION DEPRECIATION EARNINGS/LOSS ----------- ----------------- ------------- --------------- ---------------- ----------------- Dynamic Market Portfolio $ 168,765 $ (14,168,077) $ (3,726,638) $ 11,428,563 $ (15,155,201) $ (17,725,950) Dynamic OTC Portfolio -- (6,200,881) 776,264 4,332,503 (3,556,239) (5,424,617) Golden Dragon Halter USX China Portfolio 281,200 -- (4,015,843) 740,128 (4,755,971) (3,734,643) High Yield Equity Dividend Achievers(TM) Portfolio 150,880 -- (8,785,461) 2,433,973 (11,219,434) (8,634,581) WilderHill Clean Energy Portfolio -- -- (4,429,677) 493,896 (4,923,573) (4,429,677) Dynamic Large Cap Growth Portfolio 10,388 -- (380,323) 63,031 (443,354) (369,935) Dynamic Large Cap Value Portfolio 24,574 -- (293,068) 103,880 (396,948) (268,494) Dynamic Mid Cap Growth Portfolio -- -- (572,471) 182,197 (754,668) (572,471) Dynamic Mid Cap Value Portfolio 92,950 -- (431,514) 271,448 (702,962) (338,564) Dynamic Small Cap Growth Portfolio -- -- (821,618) 336,926 (1,158,544) (821,618) Dynamic Small Cap Value Portfolio 6,874 -- (880,298) 138,509 (1,018,807) (873,424)
165 DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the period ended April 30, 2005 was as follows:
DISTRIBUTIONS PAID FROM ORDINARY INCOME ------------------ Dynamic Market Portfolio $ 1,056,515 High Yield Equity Dividend Achievers(TM) Portfolio 2,710,823 Dynamic Large Cap Value Portfolio 8,554 Dynamic Mid Cap Value Portfolio 14,070
Certain Funds use the accounting practice of equalization. This accounting method is used to keep the continuing shareholders' per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital stock. Equalization is calculated on a per share basis whereby a portion of the proceeds from sales and costs of repurchases of capital stock is applied to undistributed net investment income. The distribution to shareholders of amounts so applied may be deemed to be a return of capital, for tax purposes. At April 30, 2005, for Federal income tax purposes, the Funds have capital loss carryforwards available as shown in the table below, to the extent provided by the regulations, to offset future capital gains through the years indicated. To the extent that these loss carryforwards are used to offset future capital gains, it is probable that the capital gains so offset will not be distributed to shareholders. DYNAMIC MARKET PORTFOLIO
CAPITAL LOSS AVAILABLE THROUGH AMOUNT ----------------- ---------------- 2011 $ 225,469 2012 8,920,879 2013 5,021,729 ---------------- $ 14,168,077
DYNAMIC OTC PORTFOLIO
CAPITAL LOSS AVAILABLE THROUGH AMOUNT ----------------- ---------------- 2011 $ 252,044 2012 651,452 2013 5,297,385 ---------------- $ 6,200,881
Capital losses incurred after October 31 ("post-October losses") within the taxable year are deemed to arise on the first business day of the fund's next taxable year. 166 During the period ended April 30, 2005, the following Funds incurred and will elect to defer net capital losses as follows:
POST-OCTOBER LOSSES ----------------- Dynamic Market Portfolio $ 1,064,390(a) Dynamic OTC Portfolio 1,410,701 High Yield Equity Dividend Achievers(TM) Portfolio 2,710,836 WilderHill Clean Energy Portfolio 87,621 Dynamic Mid Cap Value Portfolio 959 Dynamic Small Cap Growth Portfolio 1
(a) Amount was deferred for tax year December 31, 2004 and recognized during the short tax year for the period January 1, 2005 to April 30, 2005. At April 30, 2005, in order to present paid-in capital and accumulated net realized gains or losses on the Statements of Assets and Liabilities that more closely represent their tax character, the following adjustments have been made to additional paid-in capital, undistributed net investment income and accumulated net realized gains or losses on investments. For the period ended April 30, 2005, the adjustments were as follows:
UNDISTRIBUTED UNDISTRIBUTED CAPITAL GAINS/ NET INVESTMENT (ACCUMULATED PAID IN INCOME (LOSS) LOSSES) CAPITAL ------------- --------------- -------------- Dynamic Market Portfolio $ (10,428) $ (31,845,606) $ 31,856,034 Dynamic OTC Portfolio 30,229 (8,352,995) 8,322,766 Golden Dragon Halter USX China Portfolio -- (490,863) 490,863 High Yield Equity Dividend Achievers(TM) Portfolio (12,749) (1,346,196) 1,358,945 WilderHill Clean Energy Portfolio 12,511 (64,793) 52,282 Dynamic Mid Cap Growth Portfolio 2,756 (48) (2,708) Dynamic Small Cap Growth Portfolio 7,226 -- (7,226)
NOTE 5. DISTRIBUTION AGREEMENT ALPS Distributors, Inc. (the "Distributor") serves as the Distributor of Creation Units of each Fund pursuant to a Distribution Agreement between the Distributor and the Trust. The Distributor does not maintain a secondary market in Shares. The Board of Trustees of the Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with its Rule 12b-1 plan, each Fund is authorized to pay an amount up to a maximum annual rate of 0.25% of the average daily net assets of each year for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees. 167 NOTE 6. INVESTMENT TRANSACTIONS For the period ended October 31, 2005, the cost of securities purchased and proceeds from sales of securities, excluding short-term securities and in-kind transactions, were as follows:
PURCHASES SALES --------------- --------------- Dynamic Market Portfolio $ 146,852,334 $ 150,448,516 Dynamic OTC Portfolio 39,972,659 41,849,145 Golden Dragon Halter USX China Portfolio 1,046,278 4,964,457 High Yield Equity Dividend Achievers(TM) Portfolio 12,777,689 23,318,460 WilderHill Clean Energy Portfolio 1,305,588 10,386,105 Dynamic Large Cap Growth Portfolio 21,780,256 21,778,558 Dynamic Large Cap Value Portfolio 4,527,410 4,756,029 Dynamic Mid Cap Growth Portfolio 9,146,845 9,097,902 Dynamic Mid Cap Value Portfolio 6,527,547 6,675,583 Dynamic Small Cap Growth Portfolio 8,088,270 8,074,261 Dynamic Small Cap Value Portfolio 13,936,690 13,985,016 Dynamic Biotechnology & Genome Portfolio 25,594,706 25,912,695 Dynamic Food & Beverage Portfolio 9,364,376 9,286,099 Dynamic Leisure & Entertainment Portfolio 6,786,315 6,803,918 Dynamic Media Portfolio 5,126,391 5,464,002 Dynamic Networking Portfolio 5,839,985 5,716,661 Dynamic Pharmaceuticals Portfolio 2,316,627 2,047,143 Dynamic Semiconductors Portfolio 13,662,656 13,411,742 Dynamic Software Portfolio 8,687,869 8,826,322 Zacks Micro Cap Portfolio 35,937,828 36,894,556 International Dividend Achievers(TM) Portfolio 4,030 3,292,828 High Growth Rate Dividend Achievers(TM) Portfolio 565,983 547,429 Dividend Achievers(TM) Portfolio 614,489 658,131 Dynamic Oil & Gas Services Portfolio -- -- Dynamic Insurance Portfolio -- -- Dynamic Retail Portfolio -- -- Dynamic Building & Construction Portfolio -- -- Dynamic Utilities Portfolio -- -- Dynamic Energy Exploration & Production Portfolio -- -- Lux Nanotech Portfolio -- -- Aerospace & Defense Portfolio -- --
For the period ended October 31, 2005, in-kind transactions were as follows:
PURCHASES SALES --------------- --------------- Dynamic Market Portfolio $ 528,047,965 $ 312,867,710 Dynamic OTC Portfolio 135,651,950 75,275,772 Golden Dragon Halter USX China Portfolio 27,686,025 6,990,374 High Yield Equity Dividend Achievers(TM) Portfolio 190,002,915 36,480,842 WilderHill Clean Energy Portfolio 169,881,101 13,542,134 Dynamic Large Cap Growth Portfolio 41,769,334 7,635,328 Dynamic Large Cap Value Portfolio 21,099,552 2,371,631
168
PURCHASES SALES --------------- --------------- Dynamic Mid Cap Growth Portfolio $ 20,812,137 $ 4,940,377 Dynamic Mid Cap Value Portfolio 13,803,427 5,831,102 Dynamic Small Cap Growth Portfolio 13,782,045 5,692,042 Dynamic Small Cap Value Portfolio 22,613,847 4,259,591 Dynamic Biotechnology & Genome Portfolio 141,271,295 18,290,837 Dynamic Food & Beverage Portfolio 26,669,000 2,742,975 Dynamic Leisure & Entertainment Portfolio 27,928,311 2,524,756 Dynamic Media Portfolio 28,432,464 2,516,916 Dynamic Networking Portfolio 27,104,798 3,253,404 Dynamic Pharmaceuticals Portfolio 33,040,727 2,882,571 Dynamic Semiconductors Portfolio 70,782,128 9,127,265 Dynamic Software Portfolio 32,761,598 3,795,977 Zacks Micro Cap Portfolio 99,453,763 10,888,890 International Dividend Achievers(TM) Portfolio 59,668,536 1,142,848 High Growth Rate Dividend Achievers(TM) Portfolio 26,466,759 -- Dividend Achievers(TM) Portfolio 26,610,071 -- Dynamic Oil & Gas Services Portfolio 30,571,125 -- Dynamic Insurance Portfolio 4,537,419 -- Dynamic Retail Portfolio 30,093,713 -- Dynamic Building & Construction Portfolio 4,511,814 -- Dynamic Utilities Portfolio 4,539,240 -- Dynamic Energy Exploration & Production Portfolio 37,912,203 -- Lux Nanotech Portfolio 30,110,720 -- Aerospace & Defense Portfolio 4,470,862 --
There were no purchases or sales of U.S. government or government agency obligations for the period ended October 31, 2005. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes. NOTE 7. CAPITAL Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000 (50,000 for Dynamic Market and Dynamic OTC Portfolios). Transaction fees at scheduled amounts ranging from $500 to $2,000 per Creation Unit are charged to those persons creating or redeeming Creation Units. Such transactions are generally permitted on an in-kind basis, with a balancing cash component to equate the transaction to the net asset value per unit of each Fund of the Trust on the transaction date. NOTE 8. STOCK SPLIT On July 15, 2003, the Board of Trustees of the Trust declared a 4-for-1 stock split for each Fund based on the shares outstanding at the close of business on July 15, 2003. The stock split entitled each shareholder of record three additional shares for every share of the Fund. Consequently, 901,671 shares were issued for PowerShares Dynamic Market Portfolio and 601,068 shares were issued for PowerShares Dynamic OTC Portfolio. All capital share activity and per share data have been restated to reflect these stock splits. Note 9. Indemnifications The Trust enters into contracts that contain a variety of indemnifications. The Funds' maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. 169 SUPPLEMENTAL INFORMATION (UNAUDITED) TRUSTEES AND OFFICERS The Trustees who are affiliated with the Adviser or affiliates of the Adviser and executive officers of the Trust, their term of office and length of time served, their principal business occupations during the past five years, the number of portfolios in the Fund Complex overseen by each Management Trustee and the other directorships, if any, held by the Trustee, are shown below.
NUMBER OF PORTFOLIOS IN FUND LENGTH OF PRINCIPAL COMPLEX NAME, ADDRESS AND AGE OF POSITION(S) TIME OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS MANAGEMENT TRUSTEES WITH TRUST SERVED* PAST 5 YEARS BY TRUSTEES HELD BY TRUSTEES - ---------------------------------------------------------------------------------------------------------------------------------- H. Bruce Bond (42) Trustee and Since Managing Director, 31 None PowerShares Capital Chief 2003 PowerShares Capital Management LLC Executive Management LLC 301 W. Roosevelt Road Officer (August 2002- Wheaton, IL 60187 Present); Manager, Nuveen Investments (April 1998- August 2002) John Southard (36) Trustee and Since Managing Director, 31 None PowerShares Capital Treasurer 2003 PowerShares Capital Management LLC Management LLC 301 W. Roosevelt Road (August 2002- Wheaton, IL 60187 Present); Analyst, Charles A. Schwab Securities (May 2001- August 2002); Analyst, Nike Securities (October 1992- May 2001)
- ---------- * This is the date the Trustee began serving the Funds. 170
NUMBER OF PORTFOLIOS IN FUND LENGTH OF PRINCIPAL COMPLEX NAME, ADDRESS AND POSITION(S) TIME OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS AGE OF TRUSTEES WITH TRUST SERVED* PAST 5 YEARS BY TRUSTEES HELD BY TRUSTEES - ---------------------------------------------------------------------------------------------------------------------------------- D. Mark McMillan (42) Trustee Since Member, Bell, Boyd & 31 None c/o PowerShares Capital 2003 Lloyd LLC (1989- Management LLC Present) 301 W. Roosevelt Road Wheaton, IL 60187 Philip M. Nussbaum (44) Trustee Since Managing Director, 31 Director of the c/o PowerShares Capital 2003 Communication Betzold Companies; Management LLC Institute; formerly Director of the 301 W. Roosevelt Road Principal, Betzold, Communication Wheaton, IL 60187 Berg, Nussbaum & Institute Heitman, Inc. (July 1999- December 2000); formerly Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994- July 1999) Ronn R. Bagge (47) Trustee Since YQA Capital 31 Advisor of Park YQA Capital 2003 Management LLC Industries, Inc. Management, LLC (July1998-Present); (manufacturer); 1755 S. Naperville Rd., formerly Owner/CEO Director of Suite 100 of Electronic Dynamic MasterCare Experts, Wheaton, IL 60187 Balancing Co., Inc. Inc. (consumer (high-speed rotating services); Advisor of equipment service IVCF Great Lakes provider) Region (non-profit); Director of Living Waters Wilderness Adventure Inc. (non- profit); Director of Wheaton Christian Grammar School
- ---------- * This is the date the Trustee began serving the Funds. 171
LENGTH OF NAME, ADDRESS AND POSITION(S) TIME AGE OF OFFICERS WITH TRUST SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS - ---------------------------------------------------------------------------------------------------------------------------------- Keith Ovitt (43) Secretary Since Managing Director, PowerShares Capital Management PowerShares Capital 2003 LLC (April 2003-Present); President, Ovitech Management LLC (2002-2003); Vice President of Information Systems 301 W. Roosevelt Road for DFG Foods, LLC (Division of FoodBrands Wheaton, IL 60187 America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999) Kevin R. Gustafson (40) Chief Since General Counsel and Chief Compliance Officer, PowerShares Capital Compliance 2004 PowerShares Capital Management LLC (September Management LLC Oficer 2004-Present); Attorney, Nyberg & Gustafson (2001- 301 W. Roosevelt Road 2004); Attorney, Burke, Warren, McKay & Serritella, Wheaton, IL 60187 P.C. (1997-2000)
172 PROXY VOTING POLICIES AND PROCEDURES A description of the Funds' proxy voting policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available, without charge and upon request, by calling (800) 843-2639. This information is also available on the Securities and Exchange Commission's ("Commission") website at www.sec.gov. Information regarding how the Funds voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is also available, without charge and upon request, by (i) calling (800) 843-2639; or (ii) accessing the Funds' Form N-PX on the Commission's website at www.sec.gov. QUARTERLY PORTFOLIOS The Funds file their complete schedules of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the Commission's website at www.sec.gov. The Funds' Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. SEMI-ANNUAL REPORT The financial statements contained herein have been created from the respective funds' books and records without any involvement of the funds' independent registered public accounting firm. THERE ARE RISKS INVOLVED IN INVESTING IN ETFs, INCLUDING POSSIBLE LOSS OF MONEY. INVESTING IN SECURITIES OF SMALL AND MEDIUM SIZED COMPANIES INVOLVES GREATER RISK THAN IS CUSTOMARILY ASSOCIATED WITH INVESTING IN MORE ESTABLISHED COMPANIES, AND INVESTMENTS IN CONCENTRATED INDUSTRY SECTORS INVOLVE GREATER RISKS THAN INVESTMENTS THAT ARE MORE DIVERSIFIED. POWERSHARES ARE NOT ACTIVELY MANAGED AND ARE SUBJECT TO RISKS SIMILAR TO STOCKS, INCLUDING THOSE RELATED TO SHORT SELLING AND MARGIN MAINTENANCE. POWERSHARES ARE NOT FDIC INSURED, MAY LOSE VALUE AND HAVE NO BANK GUARANTEE. POWERSHARES IS A REGISTERED TRADEMARK OF POWERSHARES CAPITAL MANAGEMENT LLC. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALPS DISTRIBUTORS, INC. IS THE DISTRIBUTOR OF THE POWERSHARES EXCHANGE-TRADED FUND TRUST. AN INVESTOR SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. FOR MORE COMPLETE INFORMATION ABOUT POWERSHARES CALL 800.THE.AMEX OR VISIT OUR WEBSITE powershares.com FOR A PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. [POWERSHARES(TM) LOGO] 301 W. Roosevelt Road Wheaton, IL 60187 800.983.0903 www.powershares.com ITEM 2. CODE OF ETHICS. Not required for a semi-annual period. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not required for a semi-annual period. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not required for a semi-annual period. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not required for a semi-annual period. ITEMS 6. SCHEDULE OF INVESTMENTS. The Schedule of Investments is included as a part of the report to shareholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable until fiscal year ending December 31, 2005. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein. ITEM 11. CONTROLS AND PROCEDURES. a) Based on their evaluation of the Registrant's disclosure controls and procedures (as defined in Rule 30a-3-(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the Registrant's President (principal executive officer) and Treasurer (principal financial officer) have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized and reported on a timely basis. B) There were no significant changes in the Registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant's most recent fiscal half-year (the Registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) Certifications of the Registrant's Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached as Exhibit 99.CERT. (b) Certifications of the Registrant's Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) PowerShares Exchange-Traded Fund Trust ---------------------------------------- By: /s/ H. Bruce Bond ------------------------------- Name: H. Bruce Bond Title: Chairman and Chief Executive Officer Date: December 22, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ H. Bruce Bond ------------------------------- Name: H. Bruce Bond Title: Chairman and Chief Executive Officer Date: December 22, 2005 By: /s/ John W. Southard ------------------------------- Name: John W. Southard Title: Vice President and Treasurer Date: December 22, 2005 EX-99.CERT 2 a2165862zex-99_cert.txt EX-99.CERT Exhibit 99.Cert. EXHIBIT (a) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, H. Bruce Bond, certify that: 1. I have reviewed this report on Form N-CSR of PowerShares Exchange-Traded Fund Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: December 22, 2005 ----------------- /s/ H. Bruce Bond ------------------------ H. Bruce Bond, Chairman and Chief Executive Officer CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, John W. Southard, certify that: 1. I have reviewed this report on Form N-CSR of PowerShares Exchange-Traded Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: December 22, 2005 ----------------- /s/ John W. Southard ------------------------ John W. Southard, Vice President and Treasurer EX-99.906CERT 3 a2165862zex-99_906cert.txt EX-99.906CERT Exhibit 99.906 Cert. EXHIBIT (b) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of PowerShares Exchange-Traded Fund Trust (the "Registrant"), do hereby certify, to such officer's knowledge, that: (1) The Form N-CSR of the Registrant for the period ended October 31, 2005 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: December 22, 2005 ----------------- /s/ H. Bruce Bond - ----------------------------------- Name: H. Bruce Bond Title: Chairman and Chief Executive Officer Dated: December 22, 2005 ----------------- /s/ John W. Southard - ----------------------------------- Name: John W. Southard Title: Vice President and Treasurer This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----